1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox. 2 00:00:08,760 --> 00:00:11,520 Speaker 1: Along with my co host Lisa Bramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg p m L 6 00:00:20,840 --> 00:00:32,760 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. Well, 7 00:00:32,800 --> 00:00:36,479 Speaker 1: we are getting more information about President Trump's proposal to 8 00:00:36,680 --> 00:00:41,360 Speaker 1: potentially allow companies to report earnings every six months rather 9 00:00:41,400 --> 00:00:45,320 Speaker 1: than quarterly. On a quarterly basis, President Trump says the 10 00:00:45,360 --> 00:00:50,279 Speaker 1: idea comes from outgoing PepsiCo chief executive Indra Nuye, who 11 00:00:50,320 --> 00:00:54,240 Speaker 1: attended last week's at Bedminster business dinner, So that is 12 00:00:54,440 --> 00:00:57,760 Speaker 1: where the idea came from. Joining me now, I'm very 13 00:00:57,800 --> 00:01:00,280 Speaker 1: pleased to say, is Arthur Lovitt. He is the former 14 00:01:00,360 --> 00:01:03,760 Speaker 1: chairman of the U S Securities and Exchange Commission and 15 00:01:03,960 --> 00:01:07,759 Speaker 1: I believe the longest serving ever SEC chair. He also 16 00:01:07,880 --> 00:01:10,280 Speaker 1: is a current member of the board at Bloomberg LP. 17 00:01:10,520 --> 00:01:13,240 Speaker 1: He also is an advisor to the Promontory Financial Group. Arthur, 18 00:01:13,520 --> 00:01:16,319 Speaker 1: thank you so much for being with me today. What 19 00:01:16,520 --> 00:01:19,960 Speaker 1: was your reaction to President Trump's tweet this morning? About 20 00:01:20,280 --> 00:01:24,920 Speaker 1: allowing companies to report every six months. I don't like it. 21 00:01:25,200 --> 00:01:29,760 Speaker 1: I think that investors have much better results when they're 22 00:01:29,800 --> 00:01:34,560 Speaker 1: better informed, not less than the US capital markets with 23 00:01:34,720 --> 00:01:40,440 Speaker 1: their quarterly reporting have generated higher returns centers as a result, 24 00:01:40,959 --> 00:01:46,720 Speaker 1: attracted a lot more capital than those international capital markets 25 00:01:46,720 --> 00:01:51,800 Speaker 1: with semiannual reporting. Yeah. In the instance of Enron, they 26 00:01:51,840 --> 00:01:56,360 Speaker 1: reported serious problems in the third quarter of two thousand 27 00:01:56,400 --> 00:02:00,960 Speaker 1: and one in that earning call and Q and they 28 00:02:01,000 --> 00:02:05,600 Speaker 1: filed for bankruptcy the first Greek of December in two 29 00:02:05,640 --> 00:02:10,440 Speaker 1: thousand and two. With semi annual reporting, investors wouldn't have 30 00:02:10,480 --> 00:02:14,880 Speaker 1: received the bad news from October until two thousand and two, 31 00:02:15,280 --> 00:02:20,119 Speaker 1: by which time the company was broke. Otherwise you could say, 32 00:02:20,360 --> 00:02:26,560 Speaker 1: you know, it just doesn't doesn't make sense. So, coming 33 00:02:27,240 --> 00:02:30,720 Speaker 1: coming from your background at the end, oh go ahead, Arthur, 34 00:02:31,840 --> 00:02:35,000 Speaker 1: coming from your background at the SEC, I'm wondering what 35 00:02:35,120 --> 00:02:38,320 Speaker 1: the process would be like that it could potentially undergo 36 00:02:38,560 --> 00:02:42,240 Speaker 1: in order to make this happen. I mean, how long 37 00:02:42,240 --> 00:02:44,320 Speaker 1: would a study like this take and could they just 38 00:02:44,400 --> 00:02:49,480 Speaker 1: sort of implement this in the near term. I think 39 00:02:49,520 --> 00:02:53,400 Speaker 1: the study is likely to take at least six months, 40 00:02:54,400 --> 00:02:58,200 Speaker 1: and I don't believe they could do this virtually overnight. 41 00:02:59,480 --> 00:03:03,320 Speaker 1: I think this is a very hot button issue, and 42 00:03:04,200 --> 00:03:07,640 Speaker 1: I think it will raise a lot of attention, not 43 00:03:07,880 --> 00:03:12,399 Speaker 1: just in corporate America, but in academia, which is very 44 00:03:12,520 --> 00:03:17,560 Speaker 1: concerned about how information gets to the public and when 45 00:03:17,600 --> 00:03:21,360 Speaker 1: they can act on it. Do you think that if 46 00:03:21,440 --> 00:03:25,840 Speaker 1: we did move to a six month reporting period that 47 00:03:26,040 --> 00:03:32,320 Speaker 1: US markets have become less liquid. Yes, I think that 48 00:03:33,320 --> 00:03:37,360 Speaker 1: they would become less liquid, But more important than that, 49 00:03:39,040 --> 00:03:43,560 Speaker 1: we would have less information on which to base decisions. 50 00:03:43,680 --> 00:03:48,520 Speaker 1: And I think a market without information is not as 51 00:03:48,520 --> 00:03:51,480 Speaker 1: not as nearly as liquid, or as good as a 52 00:03:51,560 --> 00:03:56,200 Speaker 1: market where information is readily available on a regular basis. 53 00:03:57,400 --> 00:04:00,680 Speaker 1: I have to think that some people believe that this 54 00:04:00,760 --> 00:04:03,760 Speaker 1: was a good thing, that this would reduce short termism 55 00:04:04,000 --> 00:04:08,600 Speaker 1: among the C suite executives and that people would be 56 00:04:08,720 --> 00:04:12,440 Speaker 1: looking more longer term for business strategies. That makes sense. 57 00:04:12,840 --> 00:04:15,160 Speaker 1: What do you say to that, because there are even 58 00:04:15,200 --> 00:04:17,159 Speaker 1: some investors who think that this would be better for 59 00:04:17,200 --> 00:04:21,560 Speaker 1: them over the long term. I think from the perspective 60 00:04:21,839 --> 00:04:28,479 Speaker 1: of business, it would be less costly to relax these standards. 61 00:04:28,520 --> 00:04:33,600 Speaker 1: But I honestly believe that the best capital markets are 62 00:04:33,640 --> 00:04:38,440 Speaker 1: the ones which are the most often, report the most frequently, 63 00:04:39,120 --> 00:04:44,760 Speaker 1: and the argument for more information for individual investors trumps 64 00:04:44,839 --> 00:04:51,400 Speaker 1: the argument that providing this information is costly to American business. 65 00:04:52,160 --> 00:04:54,839 Speaker 1: When you were the SEC chair, did a lot of 66 00:04:54,839 --> 00:05:00,160 Speaker 1: executives petition you to make this change? No, h uh, 67 00:05:00,600 --> 00:05:05,279 Speaker 1: they did not. I think there is always a certain 68 00:05:05,320 --> 00:05:12,279 Speaker 1: amount of tension between business and regulation, and that's certainly existed, 69 00:05:12,880 --> 00:05:18,400 Speaker 1: but I was not pressured extensively in connection with this change. 70 00:05:19,000 --> 00:05:21,720 Speaker 1: I'm curious to know whether you think that the pendulum 71 00:05:21,760 --> 00:05:25,880 Speaker 1: has swung too far toward deregulating things, or how much 72 00:05:25,920 --> 00:05:28,320 Speaker 1: further it would have to swing before you get concerned 73 00:05:29,360 --> 00:05:35,039 Speaker 1: that we're sowing the seeds for another problem. I don't 74 00:05:35,080 --> 00:05:37,880 Speaker 1: think there's a specific moment that you can point to, 75 00:05:38,680 --> 00:05:43,240 Speaker 1: but clearly deregulation is in the air, and that's not bad. 76 00:05:44,080 --> 00:05:47,479 Speaker 1: I think the pendulum does shift, as you say, but 77 00:05:47,880 --> 00:05:51,760 Speaker 1: I think we've rolled back a number of things. We've 78 00:05:51,920 --> 00:05:56,080 Speaker 1: made it easier for business in a number of ways 79 00:05:56,160 --> 00:06:01,640 Speaker 1: in terms of regulatory context. But I think going much 80 00:06:01,680 --> 00:06:04,800 Speaker 1: further than we are now, we would do that at 81 00:06:04,839 --> 00:06:09,760 Speaker 1: the expense of investor interest and the greatest danger to 82 00:06:09,800 --> 00:06:14,320 Speaker 1: our capital markets. His lack of transparency, and so far 83 00:06:14,360 --> 00:06:18,640 Speaker 1: as investors are concerned, that's why I think we can 84 00:06:18,680 --> 00:06:23,279 Speaker 1: go so far and really not go any further. Just 85 00:06:23,400 --> 00:06:25,559 Speaker 1: a real quick here. I'm curious, are you worried about 86 00:06:25,560 --> 00:06:30,840 Speaker 1: as you see independence here? I haven't thought of that. 87 00:06:31,000 --> 00:06:37,240 Speaker 1: I think that agencies are independent, have been independent, and 88 00:06:37,279 --> 00:06:40,679 Speaker 1: I think any effort to change that would be terrible 89 00:06:41,360 --> 00:06:45,040 Speaker 1: for our markets. I don't regard this as an urgent 90 00:06:45,120 --> 00:06:47,520 Speaker 1: threat at this point in time, and a lot of 91 00:06:47,560 --> 00:06:51,480 Speaker 1: it depends on who's running the Commission, and the president 92 00:06:51,600 --> 00:06:55,840 Speaker 1: SEC chair is mindful of those risks, and I think 93 00:06:55,920 --> 00:06:59,240 Speaker 1: it's unlikely to move in that direction. Arthur Lovett, thank 94 00:06:59,240 --> 00:07:01,520 Speaker 1: you so much for taking of time. Always wonderful hearing 95 00:07:01,560 --> 00:07:05,120 Speaker 1: your insights, especially on an issue so close to your experiences. 96 00:07:05,200 --> 00:07:08,000 Speaker 1: Arthur Lovitt is former chairman of the U S Securities 97 00:07:08,000 --> 00:07:11,240 Speaker 1: and Exchange Commission, current member of the board of Bloomberg LP, 98 00:07:11,360 --> 00:07:14,800 Speaker 1: as well as an advisor to the Promontory Financial Group. 99 00:07:29,000 --> 00:07:33,800 Speaker 1: Dominating this otherwise relatively quiet Friday has been the President's 100 00:07:33,880 --> 00:07:39,560 Speaker 1: tweet respecting the SEC and how it requires companies to 101 00:07:39,600 --> 00:07:43,440 Speaker 1: report their earnings. Should we be moving to a six 102 00:07:43,560 --> 00:07:46,000 Speaker 1: months schedule rather than a quarterly one. I should just 103 00:07:46,120 --> 00:07:48,600 Speaker 1: note the White House just released a statement saying the 104 00:07:48,640 --> 00:07:50,960 Speaker 1: President is interested in examining this issue on whether short 105 00:07:51,040 --> 00:07:55,040 Speaker 1: term earnings reporting requirements for public companies reduce incentives for 106 00:07:55,080 --> 00:07:58,160 Speaker 1: them to engage in long term investing in the United States. 107 00:07:58,360 --> 00:08:01,400 Speaker 1: This is part of the administrations on going regulatory reform 108 00:08:01,440 --> 00:08:03,880 Speaker 1: efforts that aim to ensure that the U. S economy 109 00:08:04,200 --> 00:08:08,040 Speaker 1: remains the most productive in the world. Joining me now 110 00:08:08,080 --> 00:08:11,840 Speaker 1: Hans Olsen, chief investment officer at Fiduciary Trust, which overseas 111 00:08:11,880 --> 00:08:14,640 Speaker 1: about seventy eight billion dollars. It is based in Boston. 112 00:08:14,680 --> 00:08:18,560 Speaker 1: Hans joins me today in a very sweaty and warm 113 00:08:18,720 --> 00:08:21,040 Speaker 1: New York City in our eleven three oh studios. Hans, 114 00:08:21,160 --> 00:08:23,360 Speaker 1: thank you so much for being here. What do you 115 00:08:23,360 --> 00:08:26,760 Speaker 1: think of this idea of six months reporting six month reporting, Well, 116 00:08:26,800 --> 00:08:28,840 Speaker 1: you know, it's it's kind of moving, at least in 117 00:08:28,880 --> 00:08:32,439 Speaker 1: the same direction that the Europeans have moved in. They 118 00:08:32,440 --> 00:08:35,720 Speaker 1: were on a six month um schedule and I think 119 00:08:35,760 --> 00:08:37,400 Speaker 1: they went to three and then back to six. In 120 00:08:37,440 --> 00:08:40,800 Speaker 1: the UK, I think it's similarly the same thing. You know, 121 00:08:41,160 --> 00:08:44,480 Speaker 1: at the end of the day, it's probably less meaningful 122 00:08:44,520 --> 00:08:48,280 Speaker 1: for equity investors. Than it is for bond investors. Um um. 123 00:08:48,360 --> 00:08:50,160 Speaker 1: That said, if we went to six months, wouldn't be 124 00:08:50,200 --> 00:08:52,040 Speaker 1: the end of the world. But I do think that 125 00:08:52,160 --> 00:08:57,000 Speaker 1: in the interest of transparency, right um, more information is 126 00:08:57,040 --> 00:09:00,560 Speaker 1: better than less information. And I think this this whole 127 00:09:00,600 --> 00:09:05,640 Speaker 1: notion of quarterly capitalism, as the CEO of Unilever put it, um, 128 00:09:05,840 --> 00:09:09,760 Speaker 1: is of CEO's own making. We get into the earning 129 00:09:09,800 --> 00:09:13,360 Speaker 1: season they've released, they have analyst conference calls, we go 130 00:09:13,400 --> 00:09:16,320 Speaker 1: through the kabuki theater of of analysts calling in and 131 00:09:16,360 --> 00:09:19,400 Speaker 1: congratulating the CEO is in a good quarter and and 132 00:09:19,520 --> 00:09:22,320 Speaker 1: basically they're reading from the press release, right um. I 133 00:09:22,360 --> 00:09:25,200 Speaker 1: think a better way, right to relieve some of the 134 00:09:25,200 --> 00:09:28,560 Speaker 1: the emphasis around quarterly capitalism is to release the numbers 135 00:09:28,559 --> 00:09:31,520 Speaker 1: on a quarterly quarterly basis, but only do a semi 136 00:09:31,559 --> 00:09:34,280 Speaker 1: annual deep dive on the operations of the company. So 137 00:09:34,400 --> 00:09:38,240 Speaker 1: you keep the transparency and um uh, and you perhaps 138 00:09:38,679 --> 00:09:41,199 Speaker 1: less than this emphasis on quarter to quarter data. I 139 00:09:41,240 --> 00:09:44,200 Speaker 1: think it's really interesting what you just said about this 140 00:09:44,320 --> 00:09:47,800 Speaker 1: mattering more for bond investors than stock investors. And I 141 00:09:47,800 --> 00:09:49,319 Speaker 1: think that this really goes to the heart of the 142 00:09:49,360 --> 00:09:53,120 Speaker 1: short terms short termism is um versus long termism debate 143 00:09:53,600 --> 00:09:56,880 Speaker 1: that this really highlights, which is perhaps companies would be 144 00:09:56,920 --> 00:10:00,360 Speaker 1: incentivized to make better longer term decision as if they 145 00:10:00,360 --> 00:10:03,160 Speaker 1: didn't have to meet these sort of quarterly hurdles. But 146 00:10:03,240 --> 00:10:06,080 Speaker 1: for a bond investor, the key is, are you guys 147 00:10:06,120 --> 00:10:08,079 Speaker 1: losing money? Are you getting off track to the point 148 00:10:08,080 --> 00:10:09,520 Speaker 1: where you're not gonna be able to pay me back? 149 00:10:10,240 --> 00:10:13,760 Speaker 1: And so do you think that for equity investors six 150 00:10:13,840 --> 00:10:19,160 Speaker 1: month reporting would actually increase longer termism thought among corporate 151 00:10:19,160 --> 00:10:20,800 Speaker 1: executives or do you think it would just be less 152 00:10:20,840 --> 00:10:23,440 Speaker 1: transparency full stop? I don't. I don't think so. I mean, 153 00:10:23,480 --> 00:10:24,920 Speaker 1: at the end of the day, CEO is going to 154 00:10:24,960 --> 00:10:28,320 Speaker 1: be compensated on his or her UM stock price, right 155 00:10:28,920 --> 00:10:31,360 Speaker 1: and so UM you know from and that's on a 156 00:10:31,400 --> 00:10:34,199 Speaker 1: year to year basis. So if you are really talking 157 00:10:34,200 --> 00:10:38,679 Speaker 1: about long term, you're talking three to five years or more, 158 00:10:38,920 --> 00:10:42,200 Speaker 1: you know, a business cycle that's just too long for 159 00:10:42,200 --> 00:10:45,600 Speaker 1: for most investors UM to for you to be able 160 00:10:45,600 --> 00:10:49,720 Speaker 1: to evaluate a company standing or not. So I think 161 00:10:49,800 --> 00:10:53,200 Speaker 1: this is much to do about nothing really. All right, well, 162 00:10:53,280 --> 00:10:56,840 Speaker 1: let's move on to some things that are ado about something. 163 00:10:57,400 --> 00:10:59,319 Speaker 1: I do want to just let people know that there 164 00:10:59,440 --> 00:11:02,559 Speaker 1: is a headline crossing the Business Insider is now reporting 165 00:11:02,800 --> 00:11:06,400 Speaker 1: that Turkey is preparing to release the imprisoned US Pastor. 166 00:11:06,480 --> 00:11:08,880 Speaker 1: This of course at the heart of the dispute between 167 00:11:09,040 --> 00:11:12,280 Speaker 1: the US and Turkey, with the US threatening additional sanctions 168 00:11:12,640 --> 00:11:16,880 Speaker 1: on Turkey and unless they release this Pastor, so this 169 00:11:17,040 --> 00:11:20,640 Speaker 1: might be a softening of that issue. Hans, come on 170 00:11:20,679 --> 00:11:24,360 Speaker 1: in here, because you noted that you are underweight emerging markets. 171 00:11:24,480 --> 00:11:26,640 Speaker 1: And I'm wondering how much you see Turkey is an 172 00:11:26,679 --> 00:11:28,920 Speaker 1: iducent cradit case and how much you see it as 173 00:11:29,000 --> 00:11:31,880 Speaker 1: emblematic of broader weakness that is going to be felt 174 00:11:31,920 --> 00:11:34,599 Speaker 1: increasingly across the developing markets. So I think Turkey is 175 00:11:34,600 --> 00:11:37,439 Speaker 1: a unique case. And and this the issue of the 176 00:11:37,520 --> 00:11:42,559 Speaker 1: Pastor aside Turkey's problems is an old problem, UH that 177 00:11:43,200 --> 00:11:45,440 Speaker 1: is very familiar to emerging markets. Where you get a 178 00:11:45,440 --> 00:11:49,160 Speaker 1: country that's running a large current account deficit, UH that 179 00:11:49,160 --> 00:11:53,040 Speaker 1: that is financing it's spending from foreign sources and depending 180 00:11:53,080 --> 00:11:58,240 Speaker 1: upon exchange rates, and they're engaging in policies that are 181 00:11:58,280 --> 00:12:01,040 Speaker 1: are not prudent over time, and and finally you start 182 00:12:01,080 --> 00:12:03,679 Speaker 1: messing around with the country central bank, and you have 183 00:12:03,880 --> 00:12:07,040 Speaker 1: the cocktail for disaster, and that's essentially what's played out 184 00:12:07,320 --> 00:12:10,200 Speaker 1: in Turkey. The the issue with the pastor was a 185 00:12:10,320 --> 00:12:14,560 Speaker 1: secondary but perhaps exacerbating case, but it perhaps is moving 186 00:12:14,559 --> 00:12:17,880 Speaker 1: in the right direction. But Turkeys problems isn't going to 187 00:12:17,920 --> 00:12:20,679 Speaker 1: be cured by the release of this of this pastor. 188 00:12:21,240 --> 00:12:23,840 Speaker 1: It's really about maintaining the independence of the central bank 189 00:12:23,960 --> 00:12:26,520 Speaker 1: getting handled on their current account deficits and and the like. 190 00:12:27,280 --> 00:12:30,920 Speaker 1: Within a broader perspective, though, Lisa, the the emerging market 191 00:12:31,040 --> 00:12:36,000 Speaker 1: issue is we're underweight, and we're underweight because the notion 192 00:12:36,080 --> 00:12:37,880 Speaker 1: that when you start to have a price of money 193 00:12:37,920 --> 00:12:40,959 Speaker 1: here in the United States, uh, and people have a choice. 194 00:12:41,040 --> 00:12:44,360 Speaker 1: Where where when we had negative real rates and really 195 00:12:44,880 --> 00:12:49,040 Speaker 1: quite negative real rates on on on cash, money got 196 00:12:49,080 --> 00:12:51,720 Speaker 1: pushed into motion. It was looking for a return and 197 00:12:51,800 --> 00:12:54,160 Speaker 1: it had to go increasingly to places that it normally 198 00:12:54,200 --> 00:12:57,280 Speaker 1: wouldn't go emerging market debt, emerging market equities and the 199 00:12:57,360 --> 00:13:00,440 Speaker 1: like for a return. Now that we're getting a return 200 00:13:00,520 --> 00:13:04,280 Speaker 1: on cash, they're starting to be a choice. And and 201 00:13:04,360 --> 00:13:07,000 Speaker 1: as the dollar goes up and as interest rates go up, 202 00:13:07,000 --> 00:13:11,160 Speaker 1: which reinforces the currency, you know, uh, the attractiveness of 203 00:13:11,200 --> 00:13:14,120 Speaker 1: emerging markets become somewhat suspect right. I do want to 204 00:13:14,120 --> 00:13:16,880 Speaker 1: also talk about the attractiveness of risk assets in the US, 205 00:13:17,040 --> 00:13:20,160 Speaker 1: and you noted that you've been reducing high yield exposure 206 00:13:20,200 --> 00:13:22,040 Speaker 1: and some of your portfolios. I would love to get 207 00:13:22,080 --> 00:13:26,959 Speaker 1: your perspective on where. How why? Yeah, Yeah, So we've 208 00:13:27,000 --> 00:13:30,920 Speaker 1: been we've been essentially moving to eliminate our high yield 209 00:13:30,960 --> 00:13:37,320 Speaker 1: exposure was about three or four percent of portfolio three 210 00:13:37,440 --> 00:13:40,160 Speaker 1: or four pers three or four, so taking that out, 211 00:13:40,200 --> 00:13:42,400 Speaker 1: and the reason that we're doing is that we've seen 212 00:13:42,480 --> 00:13:47,720 Speaker 1: a progressively deteriorating UM backdrop for UM, the underwriting standards 213 00:13:47,760 --> 00:13:49,880 Speaker 1: for high yield, whether it be bonds or loans. So 214 00:13:50,000 --> 00:13:51,959 Speaker 1: when you look at the number of covenant light launs, 215 00:13:52,000 --> 00:13:55,920 Speaker 1: you look at the valuations spreads that have come to market, UM, 216 00:13:55,960 --> 00:13:59,600 Speaker 1: the protections that are normally afforded investor has been have 217 00:13:59,720 --> 00:14:03,560 Speaker 1: been systematically eroded UM as as people have sought for 218 00:14:03,640 --> 00:14:07,440 Speaker 1: yield and try to protect against rising interest rates. What 219 00:14:07,600 --> 00:14:10,480 Speaker 1: that doesn't do is protect against the next part of 220 00:14:10,520 --> 00:14:13,000 Speaker 1: the business cycle, when you know, you go into recession 221 00:14:13,520 --> 00:14:15,520 Speaker 1: and the fault rate start rise. You know, it was 222 00:14:15,559 --> 00:14:19,200 Speaker 1: interesting you noted before the segment that you've reduced all 223 00:14:19,280 --> 00:14:21,720 Speaker 1: you're gotten rid of all of your leverage loan exposure. 224 00:14:21,720 --> 00:14:25,119 Speaker 1: And part this has to do with the weakening underwriting standards. 225 00:14:25,240 --> 00:14:27,880 Speaker 1: And we were talking about this moody Is report showing 226 00:14:27,920 --> 00:14:30,440 Speaker 1: that recoveries the next downturn for leverage loans will be 227 00:14:30,440 --> 00:14:35,920 Speaker 1: sixty from pent historically, And I'm just wondering, you know, 228 00:14:36,000 --> 00:14:38,680 Speaker 1: why do you find it important to get rid of 229 00:14:38,720 --> 00:14:41,920 Speaker 1: things now before the cycle is turning? And just I'll 230 00:14:41,920 --> 00:14:44,720 Speaker 1: give you about sure, that's a good question, uh, position 231 00:14:44,760 --> 00:14:47,880 Speaker 1: of strength. You do it when the prices are good. 232 00:14:47,880 --> 00:14:50,400 Speaker 1: You do it ahead of the curve, when you're when 233 00:14:50,400 --> 00:14:52,680 Speaker 1: you do it when the information is out there, when 234 00:14:52,720 --> 00:14:55,160 Speaker 1: you're starting to suffer the adversity. It's too late because 235 00:14:55,160 --> 00:14:57,480 Speaker 1: the prices moved too quickly, as we you know, and 236 00:14:57,800 --> 00:15:00,640 Speaker 1: when you go looking forbids in this market, it'll be 237 00:15:00,720 --> 00:15:02,720 Speaker 1: hard to find them. So we're doing it ahead of 238 00:15:02,720 --> 00:15:05,360 Speaker 1: the curve. Interesting, So even if we're I don't know, 239 00:15:05,480 --> 00:15:07,920 Speaker 1: eighteen months out, now is the time in your view. 240 00:15:08,360 --> 00:15:10,640 Speaker 1: Hans Olsen, a pleasure speaking with you. Thank you so 241 00:15:10,720 --> 00:15:13,320 Speaker 1: much for coming in. Hans Olsen chief investment officer at 242 00:15:13,320 --> 00:15:16,240 Speaker 1: Fiduciary Trust based in Boston, but he joins us here 243 00:15:16,360 --> 00:15:19,520 Speaker 1: in our eleven three oh studios. I do want to 244 00:15:19,520 --> 00:15:23,520 Speaker 1: know that President Trump is talking to reporters and we 245 00:15:23,560 --> 00:15:27,280 Speaker 1: will take those uh comments to you when we get them. 246 00:15:27,440 --> 00:15:31,760 Speaker 1: He's talking about everything from Paul man Afford to John Brennan. 247 00:15:45,800 --> 00:15:49,920 Speaker 1: Housing market in the US has seen some signs of 248 00:15:49,960 --> 00:15:52,400 Speaker 1: stress this year. I'm looking at an index of home 249 00:15:52,440 --> 00:15:55,920 Speaker 1: builder shares in the SMP five hundred, down nearly eighteen 250 00:15:56,040 --> 00:15:59,800 Speaker 1: percent so far this year. The question is here, does 251 00:16:00,160 --> 00:16:04,240 Speaker 1: mark a prolonged takedown of the US housing market or 252 00:16:04,280 --> 00:16:06,440 Speaker 1: is this a blip to kind of create a more 253 00:16:06,480 --> 00:16:09,560 Speaker 1: even ground for people who to afford properties. Joining us 254 00:16:09,560 --> 00:16:12,800 Speaker 1: now to talk about this is Aaron Rozis, Economic research 255 00:16:12,840 --> 00:16:16,240 Speaker 1: director for Zillo. Aaron, I'm really glad that you're joining 256 00:16:16,320 --> 00:16:18,840 Speaker 1: us today because this has been sort of an underlying 257 00:16:18,960 --> 00:16:21,320 Speaker 1: theme for a lot of people, especially if they're barished 258 00:16:21,320 --> 00:16:23,200 Speaker 1: in the economy. They say, look at the home builders, 259 00:16:23,480 --> 00:16:25,000 Speaker 1: So what's going on? I mean, do you see that 260 00:16:25,040 --> 00:16:28,280 Speaker 1: the weakness that has been observed recently is a symptom 261 00:16:28,280 --> 00:16:30,960 Speaker 1: of some kind of deeper woe that will be expressed 262 00:16:31,160 --> 00:16:33,960 Speaker 1: throughout the rest of the year. You're you're something right 263 00:16:34,000 --> 00:16:35,880 Speaker 1: to point out that housing data have been coming in 264 00:16:35,880 --> 00:16:38,480 Speaker 1: a little bit weaker than expected. You look at home sales, 265 00:16:38,800 --> 00:16:42,000 Speaker 1: housing starts, home val appreciation. Although it's been very strong, 266 00:16:42,040 --> 00:16:45,120 Speaker 1: it's starting to slow down. We recently produce some data 267 00:16:45,160 --> 00:16:47,080 Speaker 1: showing that listings for the price cuts, you're seeing a 268 00:16:47,080 --> 00:16:49,640 Speaker 1: lot more price cuts out there on the market. That said, 269 00:16:49,760 --> 00:16:52,200 Speaker 1: it's important to put this in context. The housing market 270 00:16:52,280 --> 00:16:55,800 Speaker 1: has been first of all, leading the economic recovery, was 271 00:16:56,000 --> 00:16:58,920 Speaker 1: the first sectors to kind of start showing strength. And second, well, 272 00:16:58,960 --> 00:17:01,280 Speaker 1: it's been very strong the past few years. Um, I'm 273 00:17:01,320 --> 00:17:03,920 Speaker 1: normally strong. We saw a rebound and young adult home 274 00:17:03,960 --> 00:17:07,399 Speaker 1: ownership millennials in particular have been out in force buying homes, 275 00:17:07,560 --> 00:17:09,680 Speaker 1: and so I think in somewhat some recycle, we're starting 276 00:17:09,680 --> 00:17:11,760 Speaker 1: to see more of a normalization. Things are kind of 277 00:17:11,960 --> 00:17:15,240 Speaker 1: coming back to a more normal pace, not the fre netic, 278 00:17:15,280 --> 00:17:17,760 Speaker 1: hectic pace of the past two years. UM. But still 279 00:17:17,800 --> 00:17:20,320 Speaker 1: it's it's still very much of a solar's market. So 280 00:17:20,880 --> 00:17:23,879 Speaker 1: you noted in your recent reports that about four of 281 00:17:23,920 --> 00:17:26,560 Speaker 1: all listings across the US had a price cut in June. 282 00:17:26,880 --> 00:17:29,880 Speaker 1: That's up from a recent low of less than twelve 283 00:17:29,920 --> 00:17:33,280 Speaker 1: percent near the end of twenty sixteen. So you are 284 00:17:33,359 --> 00:17:35,800 Speaker 1: seeing people have to realize, Wow, if I really want 285 00:17:35,800 --> 00:17:38,639 Speaker 1: to sell this home, I have to ask for less. 286 00:17:38,800 --> 00:17:42,399 Speaker 1: I'm just wondering where you're seeing the biggest price cuts. 287 00:17:42,240 --> 00:17:44,119 Speaker 1: That's that's a great point because so much of this 288 00:17:44,160 --> 00:17:47,840 Speaker 1: story is where it's happening. First of all, it's happening 289 00:17:47,880 --> 00:17:50,040 Speaker 1: primarily at the top of the market. If you look 290 00:17:50,080 --> 00:17:53,360 Speaker 1: at that expensive third of the housing market, that's where 291 00:17:53,359 --> 00:17:56,399 Speaker 1: you see the biggest jump in price cuts and already 292 00:17:56,440 --> 00:17:59,520 Speaker 1: kind of more price cuts. We know that a subset 293 00:17:59,560 --> 00:18:02,560 Speaker 1: of the market that buyers are already being tested at 294 00:18:02,560 --> 00:18:06,040 Speaker 1: their limits. Um Also, I think the important important thing 295 00:18:06,080 --> 00:18:07,439 Speaker 1: to keep in mind here is when you look at 296 00:18:07,440 --> 00:18:10,199 Speaker 1: the size of the price cut, it's actually been pretty stable, 297 00:18:10,520 --> 00:18:13,000 Speaker 1: you know, the typical price cuts around two to What 298 00:18:13,119 --> 00:18:15,560 Speaker 1: that tells me is that some of these price cuts 299 00:18:15,600 --> 00:18:19,000 Speaker 1: that we're seeing has actually been sellers being rather aggressive 300 00:18:19,000 --> 00:18:21,680 Speaker 1: in their in their listing strategy and then just testing 301 00:18:21,720 --> 00:18:24,200 Speaker 1: what the market can tolerate. So, you know, they say, 302 00:18:24,400 --> 00:18:26,680 Speaker 1: the market is so hot, so fast moving, you know, 303 00:18:26,760 --> 00:18:30,160 Speaker 1: might as well list aggressively see if I get that 304 00:18:30,320 --> 00:18:33,880 Speaker 1: dream price. One thing I'm wondering, especially as you talk 305 00:18:33,920 --> 00:18:36,639 Speaker 1: about the high end homes, seeing the biggest price to clients. 306 00:18:36,960 --> 00:18:39,840 Speaker 1: How much is this tied to the tax policies and 307 00:18:40,040 --> 00:18:44,240 Speaker 1: places like New York, New Jersey, Connecticut that are typically 308 00:18:44,560 --> 00:18:48,640 Speaker 1: high tax states seeing price reductions in the homes due 309 00:18:48,680 --> 00:18:53,120 Speaker 1: to some of the changes that don't allow some deductions. 310 00:18:52,960 --> 00:18:55,280 Speaker 1: That's a great point, you know, I think kind of 311 00:18:55,320 --> 00:18:59,119 Speaker 1: there's two forces that have been squeezing that high end 312 00:18:59,720 --> 00:19:01,800 Speaker 1: on the demand side. You talked about the changes in 313 00:19:01,840 --> 00:19:05,160 Speaker 1: the tax structure, particularly changes in that state and local 314 00:19:05,560 --> 00:19:08,520 Speaker 1: tax deduction there. You know, we kepted that deduction at 315 00:19:08,560 --> 00:19:12,040 Speaker 1: ten tho dollars starting this year for most of these 316 00:19:12,280 --> 00:19:15,520 Speaker 1: very high end communities. Um, that's not even going to 317 00:19:15,600 --> 00:19:18,520 Speaker 1: cover local property taxes. And you know, it's something we've 318 00:19:18,560 --> 00:19:20,800 Speaker 1: been watching in the past few years, past few months, 319 00:19:20,840 --> 00:19:22,560 Speaker 1: and we are starting to see a little bit of 320 00:19:22,600 --> 00:19:26,040 Speaker 1: a significant effect of a larger slowdown in places that 321 00:19:26,080 --> 00:19:29,080 Speaker 1: rely more on that state and local tax deduction. Obviously, 322 00:19:29,080 --> 00:19:31,919 Speaker 1: the second factor is interest rates. Interest rates are creeping up. 323 00:19:31,960 --> 00:19:35,080 Speaker 1: Word that matters more at that high price point. One 324 00:19:35,080 --> 00:19:37,280 Speaker 1: thing that I found interesting in a recent report about 325 00:19:37,280 --> 00:19:41,120 Speaker 1: household debt by the government, it looked like people were 326 00:19:41,160 --> 00:19:46,200 Speaker 1: actually incurring a significant increase in mortgage debt recently, which 327 00:19:46,240 --> 00:19:48,760 Speaker 1: kind of flies against the theory that rising interest rates 328 00:19:48,760 --> 00:19:51,800 Speaker 1: would dampen the demand for mortgages. What do you make 329 00:19:51,840 --> 00:19:54,600 Speaker 1: of that, especially since it is toward higher quality borrowers. 330 00:19:54,600 --> 00:19:57,920 Speaker 1: This is not necessarily another subprime mortgage boom. Just to 331 00:19:57,960 --> 00:20:01,240 Speaker 1: be very clear that the that definitely right. You know, 332 00:20:01,280 --> 00:20:03,520 Speaker 1: the people who have been um borrowing tend to be 333 00:20:03,720 --> 00:20:07,359 Speaker 1: high credit borrowers, people with stable incomes, documentable income. I 334 00:20:07,359 --> 00:20:11,400 Speaker 1: think two factors are driving that increase in in debt outstanding. One, 335 00:20:11,520 --> 00:20:14,600 Speaker 1: as I've talked about a moment ago, young adults, first 336 00:20:14,600 --> 00:20:16,440 Speaker 1: time home buyers, have been out and forced the past 337 00:20:16,480 --> 00:20:19,879 Speaker 1: two years. They're acquiring more eage debts for the first time, 338 00:20:20,359 --> 00:20:24,600 Speaker 1: often mortgage debt in pricing markets where we know that 339 00:20:24,840 --> 00:20:28,479 Speaker 1: there has been a booming jobs uh you know, employment situation. UM, 340 00:20:28,520 --> 00:20:30,840 Speaker 1: so they're able to kind of buy homes, but very 341 00:20:30,880 --> 00:20:33,280 Speaker 1: pricing homes at that. I think the second part of 342 00:20:33,320 --> 00:20:37,399 Speaker 1: that rising debt is borrowing, people borrowing against their homes. 343 00:20:37,440 --> 00:20:40,680 Speaker 1: Home values have recovered very strongly from the bottom of 344 00:20:40,720 --> 00:20:42,600 Speaker 1: the market in twelve and so people are starting to 345 00:20:42,640 --> 00:20:45,040 Speaker 1: feel comfortable enough to borrow a little bit against their home, 346 00:20:45,080 --> 00:20:47,960 Speaker 1: perhaps to do renovations. Um perhaps you know to fund 347 00:20:48,000 --> 00:20:51,879 Speaker 1: any other um you know education, so so return of 348 00:20:51,920 --> 00:20:53,880 Speaker 1: the reverse more. It's just real quick here, Aaron, I'm 349 00:20:53,920 --> 00:20:56,400 Speaker 1: curious to know a year from now, your best guest, 350 00:20:56,440 --> 00:20:58,399 Speaker 1: do you think the prices on US homes will have 351 00:20:58,440 --> 00:21:01,919 Speaker 1: gone up? I think, uh, prices will certainly have gone up, 352 00:21:01,960 --> 00:21:03,640 Speaker 1: they will have gone up at a slower pace than 353 00:21:03,920 --> 00:21:05,479 Speaker 1: than they went up the past year. Do you think 354 00:21:05,480 --> 00:21:07,880 Speaker 1: about nationwide? Over the past year, we've seen home value 355 00:21:07,880 --> 00:21:11,040 Speaker 1: appreciation up about eight percent. I think we'll go down 356 00:21:11,040 --> 00:21:14,400 Speaker 1: to about six so slower than it's been, but still positive. 357 00:21:14,600 --> 00:21:16,560 Speaker 1: Aaron to rozz Is, thank you so much for joining us. 358 00:21:16,560 --> 00:21:20,719 Speaker 1: Really interesting. Aaron to ROZs is economic research director for Zillo. 359 00:21:20,920 --> 00:21:23,359 Speaker 1: And uh, yeah, those homebuilders have been really beaten up 360 00:21:23,400 --> 00:21:26,840 Speaker 1: this year, uh down nearly eighteen per cent. Of course, 361 00:21:26,880 --> 00:21:30,280 Speaker 1: the home builders have also been hit by higher lumber 362 00:21:30,359 --> 00:21:34,959 Speaker 1: prices and other higher costs tied to labor, so there 363 00:21:35,000 --> 00:21:37,680 Speaker 1: could be some other issues there, but certainly a big 364 00:21:37,680 --> 00:21:39,639 Speaker 1: wild card here. A lot of people looking at the 365 00:21:39,880 --> 00:21:43,160 Speaker 1: housing market is a possible leading indicator, though, as Aaron 366 00:21:43,240 --> 00:21:46,480 Speaker 1: just said, it has actually let the market up, so 367 00:21:46,560 --> 00:21:50,560 Speaker 1: perhaps it's just softening to keep up pace with everything else. 368 00:22:05,200 --> 00:22:09,040 Speaker 1: Corporate divorce court can be a bitter place. Joining us 369 00:22:09,040 --> 00:22:13,639 Speaker 1: now is Matthew Shettenham's media litigation analyst for Bloomberg Intelligence. 370 00:22:14,040 --> 00:22:16,240 Speaker 1: He has had his hands full recently with a number 371 00:22:16,240 --> 00:22:20,960 Speaker 1: of different issues, but in particular the Tribune versus Sinclair battle. 372 00:22:21,080 --> 00:22:25,360 Speaker 1: They obviously we're going to get married. Not so. This 373 00:22:25,480 --> 00:22:29,120 Speaker 1: was because the Federal Communications Commission chair, a g pie 374 00:22:29,240 --> 00:22:32,640 Speaker 1: for all intents and purposes, put the kabash on this 375 00:22:32,720 --> 00:22:35,000 Speaker 1: tie up. Matthew, thank you so much for being with me. 376 00:22:35,440 --> 00:22:39,040 Speaker 1: I'm curious from your perspective, you know, what's its stake 377 00:22:39,119 --> 00:22:41,920 Speaker 1: going forward between these two companies, how much money is 378 00:22:41,960 --> 00:22:43,800 Speaker 1: on the line, and what needs to happen now to 379 00:22:43,840 --> 00:22:48,399 Speaker 1: sort of finish out this chapter of would be Love, Yes, Lisa. 380 00:22:48,480 --> 00:22:51,720 Speaker 1: So it has been kind of an unfortunate saga for 381 00:22:51,720 --> 00:22:53,920 Speaker 1: for both of these companies over over the past year. 382 00:22:54,000 --> 00:22:57,240 Speaker 1: This was a deal that was announced in UH May 383 00:22:57,359 --> 00:23:02,080 Speaker 1: of seventeen. The companies had hoped to approved when approval 384 00:23:02,080 --> 00:23:06,359 Speaker 1: of their merger you know, early uh this year, and 385 00:23:06,440 --> 00:23:09,159 Speaker 1: that just never happened, and it all culminated, as you 386 00:23:09,200 --> 00:23:14,240 Speaker 1: said last week, UH, with Tribune saying enough is enough, 387 00:23:14,320 --> 00:23:16,720 Speaker 1: we're going to walk away from this deal. And at 388 00:23:16,720 --> 00:23:20,640 Speaker 1: the same time we're going to commence a lawsuit in 389 00:23:20,640 --> 00:23:25,080 Speaker 1: in the Delaware Court of Chancery against Sinclair for our 390 00:23:25,200 --> 00:23:27,600 Speaker 1: damages and in what you put us through for the 391 00:23:27,600 --> 00:23:30,680 Speaker 1: past year. And and as part of that they said, hey, 392 00:23:30,760 --> 00:23:33,120 Speaker 1: we we would also like to get one billion dollars 393 00:23:33,200 --> 00:23:36,280 Speaker 1: in in premium that have that's been lost to our 394 00:23:36,320 --> 00:23:38,919 Speaker 1: shareholders as as a result of this. So it's the 395 00:23:39,440 --> 00:23:42,440 Speaker 1: it's not the end of the story yet between these two. 396 00:23:42,600 --> 00:23:47,159 Speaker 1: How did Sinclair wrong Tribune Media Company? So it's perspective. 397 00:23:47,280 --> 00:23:50,159 Speaker 1: So yeah, so the you know, it's certainly not a 398 00:23:51,880 --> 00:23:54,280 Speaker 1: a breach of contract just to have a deal go bad. 399 00:23:54,760 --> 00:24:01,480 Speaker 1: Tribune says that Sinclair acted beyond the bounds of reasonableness 400 00:24:01,600 --> 00:24:04,240 Speaker 1: here and it had a duty in its contract it 401 00:24:04,359 --> 00:24:08,840 Speaker 1: committed to Tribune to take reasonable best efforts to to 402 00:24:08,920 --> 00:24:12,199 Speaker 1: make this deal happen, and including in working with the 403 00:24:12,200 --> 00:24:15,280 Speaker 1: two regulators involved here, the Department of Justice and the 404 00:24:15,320 --> 00:24:19,160 Speaker 1: Federal Communications Commission. And as part of that, Sinclair even 405 00:24:19,160 --> 00:24:22,360 Speaker 1: had committed they said, will divest stations in ten markets 406 00:24:22,359 --> 00:24:25,640 Speaker 1: that are that are most likely to to to cause concerns. 407 00:24:25,680 --> 00:24:28,399 Speaker 1: They said that in the agreement. What Tribune says is 408 00:24:28,440 --> 00:24:31,679 Speaker 1: that Sinclair then, when it actually got in negotiations with 409 00:24:31,720 --> 00:24:34,880 Speaker 1: those regulators, sort of pulled back on that and said 410 00:24:35,600 --> 00:24:38,720 Speaker 1: and consistently said, well, we don't actually want to divest 411 00:24:38,800 --> 00:24:41,000 Speaker 1: more than you know, maybe three or four stations of 412 00:24:41,000 --> 00:24:45,040 Speaker 1: those ten. And according to Tribune, by acting out of 413 00:24:45,080 --> 00:24:48,560 Speaker 1: its own self interest, uh and and and really kind 414 00:24:48,560 --> 00:24:51,760 Speaker 1: of going back on its own word and its contract. Uh, 415 00:24:51,840 --> 00:24:55,560 Speaker 1: the allegation is that Sinclair breached its contract and and 416 00:24:55,560 --> 00:24:58,680 Speaker 1: and lad to ultimate the ultimate demise of the deal. 417 00:24:59,000 --> 00:25:01,480 Speaker 1: This is really interesting, and perhaps it's not as much 418 00:25:01,480 --> 00:25:04,680 Speaker 1: on people's radar as it should be, because if Sinclair 419 00:25:04,720 --> 00:25:07,360 Speaker 1: were forced to pay Tribune one billion dollars, that could 420 00:25:07,359 --> 00:25:10,280 Speaker 1: be actually a significant loss for Sinclair and a significant 421 00:25:10,400 --> 00:25:13,040 Speaker 1: gain for Tribune, which has kind of had a rocky, 422 00:25:13,240 --> 00:25:16,440 Speaker 1: rocky bunch of years now, right right, and and so 423 00:25:16,440 --> 00:25:18,640 Speaker 1: so the way I see it, though, and I think 424 00:25:18,640 --> 00:25:23,080 Speaker 1: Tribune may have some merit to to its lawsuit generally speaking, 425 00:25:23,119 --> 00:25:26,200 Speaker 1: that the idea that that perhaps Sinclair went a little 426 00:25:26,200 --> 00:25:29,000 Speaker 1: bit beyond what was reasonable under the terms, I think 427 00:25:29,040 --> 00:25:32,480 Speaker 1: I think Tribune has a decent shot to to sway 428 00:25:32,560 --> 00:25:35,160 Speaker 1: the court on on that basis. It's gonna take some 429 00:25:35,160 --> 00:25:36,879 Speaker 1: some proof and it's gonna take some time, but I 430 00:25:36,920 --> 00:25:39,439 Speaker 1: think there's there's a valid chance. The idea that it 431 00:25:39,440 --> 00:25:42,840 Speaker 1: can recover a billion dollars in premium for its shareholders 432 00:25:42,960 --> 00:25:48,040 Speaker 1: is a longer shot though. Uh it's shareholders aren't named 433 00:25:48,080 --> 00:25:50,919 Speaker 1: in the contract. We're suing under a contract here, and 434 00:25:50,960 --> 00:25:53,840 Speaker 1: they're not named as beneficiaries under the contract. And at 435 00:25:53,880 --> 00:25:56,399 Speaker 1: least and at least one court has has in a 436 00:25:56,440 --> 00:26:00,160 Speaker 1: similar case said now, sorry, we you know, we we 437 00:26:00,359 --> 00:26:03,560 Speaker 1: this is about a contract. You the company can recover 438 00:26:03,640 --> 00:26:07,560 Speaker 1: damages because you will promised something shareholders weren't. And so 439 00:26:07,600 --> 00:26:10,720 Speaker 1: I think Tribune, uh it's it's throwing that number out there. 440 00:26:10,760 --> 00:26:12,879 Speaker 1: It's in its complaint. It's saying it's going after that 441 00:26:12,920 --> 00:26:16,960 Speaker 1: shareholder premium. I'm not so convinced that that that's really 442 00:26:17,040 --> 00:26:19,960 Speaker 1: likely here. So might just pad the bonuses of the 443 00:26:20,040 --> 00:26:24,000 Speaker 1: executives and nothing more right, And I mean it helps 444 00:26:24,040 --> 00:26:27,000 Speaker 1: with with with with settlement talks. It's a point of 445 00:26:27,040 --> 00:26:31,440 Speaker 1: Delaware law that isn't completely settled and so that it's not, 446 00:26:31,920 --> 00:26:34,320 Speaker 1: you know, frivolous to make the claim and and it 447 00:26:34,320 --> 00:26:37,080 Speaker 1: will help them in in negotiations and you know, maybe 448 00:26:37,119 --> 00:26:40,680 Speaker 1: settlement is where this ultimately goes, and this might help 449 00:26:40,720 --> 00:26:42,880 Speaker 1: in in in that effort. You know, I have to say, 450 00:26:43,119 --> 00:26:46,040 Speaker 1: you have one of the most interesting jobs of the 451 00:26:46,080 --> 00:26:48,560 Speaker 1: moment because there have been so many tie ups among 452 00:26:48,600 --> 00:26:51,719 Speaker 1: big media companies and everybody's trying to get ahead of 453 00:26:51,960 --> 00:26:55,080 Speaker 1: the next wave of new media. And while we're talking 454 00:26:55,080 --> 00:26:59,280 Speaker 1: about FCC chair a pie, uh, certainly we haven't really 455 00:26:59,280 --> 00:27:01,640 Speaker 1: been focused but probably should be, on all of the 456 00:27:01,720 --> 00:27:05,320 Speaker 1: net neutrality rules and the fact that the agency has 457 00:27:05,359 --> 00:27:10,119 Speaker 1: been examining possibly rolling back the Obama era regulations. Has 458 00:27:10,160 --> 00:27:13,040 Speaker 1: there been any progress made on that front? Yeah, So, 459 00:27:13,119 --> 00:27:16,760 Speaker 1: I mean the the the Republican controlled FCC is well 460 00:27:16,800 --> 00:27:20,280 Speaker 1: on its way to doing that. In fact, it's enacted 461 00:27:20,480 --> 00:27:25,159 Speaker 1: uh in order to undo the net neutrality regulations, and 462 00:27:25,200 --> 00:27:28,120 Speaker 1: that has actually taken effect. Now where we are now, 463 00:27:28,160 --> 00:27:30,080 Speaker 1: this is a story that here in d C will 464 00:27:30,160 --> 00:27:33,639 Speaker 1: will not go away. Uh, and and there's no sign 465 00:27:33,680 --> 00:27:36,720 Speaker 1: that it's going away anytime soon. Because now what what 466 00:27:36,760 --> 00:27:39,639 Speaker 1: you have is is the next litigation in that front, 467 00:27:40,400 --> 00:27:44,159 Speaker 1: where the net neutrality supporters are suing the Federal Communications 468 00:27:44,160 --> 00:27:48,320 Speaker 1: Commission to say no, you you can't undo those rules. Uh, 469 00:27:48,440 --> 00:27:51,440 Speaker 1: that that was an unlawful action that's going that won't 470 00:27:51,480 --> 00:27:54,280 Speaker 1: be decided this year, that will take until sometime next year, 471 00:27:54,480 --> 00:27:56,879 Speaker 1: could even go to the Supreme Court after that, and 472 00:27:56,920 --> 00:27:59,359 Speaker 1: then you look at hey, does the FCC change hands 473 00:27:59,359 --> 00:28:01,440 Speaker 1: in twenty need do we go back to a Democrat 474 00:28:01,520 --> 00:28:03,720 Speaker 1: controlled FCC and do we do this all over again? 475 00:28:03,760 --> 00:28:07,560 Speaker 1: In other words, net neutrality isn't going away any time soon. Correct. 476 00:28:07,760 --> 00:28:11,200 Speaker 1: The technicality, the technical requirement for it technically isn't on 477 00:28:11,240 --> 00:28:14,399 Speaker 1: the books right now. You know, in theory, Comcast and 478 00:28:14,480 --> 00:28:16,359 Speaker 1: Charter and the I S Peace could go ahead and 479 00:28:16,359 --> 00:28:19,120 Speaker 1: and and violate not neutrality, you know, as much as 480 00:28:19,119 --> 00:28:22,640 Speaker 1: they like because there are no rules there. But the 481 00:28:22,640 --> 00:28:25,120 Speaker 1: the whole idea that this is still hanging out there 482 00:28:25,520 --> 00:28:28,040 Speaker 1: is itself a form of a check I think on 483 00:28:28,119 --> 00:28:29,879 Speaker 1: the companies and that it sort of puts them on 484 00:28:29,920 --> 00:28:32,159 Speaker 1: their best behavior if they if they started to be 485 00:28:32,200 --> 00:28:34,960 Speaker 1: real egregious in their traffic management, I think you could 486 00:28:35,000 --> 00:28:38,160 Speaker 1: you could. You know, there's a real threat of of 487 00:28:38,160 --> 00:28:40,840 Speaker 1: of regulation and Congress stepping in with with something that 488 00:28:40,840 --> 00:28:44,600 Speaker 1: the companies wouldn't like. So not neutrality technically isn't required, 489 00:28:44,680 --> 00:28:47,840 Speaker 1: But practically speaking, I think it will be for for 490 00:28:47,840 --> 00:28:50,240 Speaker 1: for some time. Just real quick, can you just give 491 00:28:50,320 --> 00:28:53,480 Speaker 1: us a real quick primer on net neutrality, just in 492 00:28:53,480 --> 00:28:56,680 Speaker 1: caseity was listening. It sounds great, but I know it's 493 00:28:56,680 --> 00:28:59,200 Speaker 1: one of those things you know, you have to explain 494 00:28:59,240 --> 00:29:01,840 Speaker 1: every time. It's just a basic idea that that even 495 00:29:01,880 --> 00:29:05,600 Speaker 1: though the internet service providers Comcast, Charter and your phone companies, 496 00:29:05,720 --> 00:29:07,920 Speaker 1: even though they own the network, that doesn't mean they 497 00:29:07,960 --> 00:29:10,240 Speaker 1: get to control all the traffic or how it runs. 498 00:29:10,320 --> 00:29:12,440 Speaker 1: Over at the ideas that they should treat the network 499 00:29:12,480 --> 00:29:15,080 Speaker 1: as an open platform, like an open highway that anyone 500 00:29:15,160 --> 00:29:17,240 Speaker 1: can get on, and so they shouldn't be able to 501 00:29:17,240 --> 00:29:22,040 Speaker 1: to set fees to prioritize you know, Facebook over Netflix 502 00:29:22,160 --> 00:29:24,920 Speaker 1: or you know, the next Netflix doesn't doesn't need to 503 00:29:24,920 --> 00:29:27,720 Speaker 1: get special permission from Comcast in order to create the 504 00:29:27,760 --> 00:29:30,600 Speaker 1: next great media company. It should be an open platform. 505 00:29:30,720 --> 00:29:33,080 Speaker 1: And uh but but the the company's i sp s 506 00:29:33,080 --> 00:29:35,560 Speaker 1: push back and say, look, we invest billions of dollars 507 00:29:35,600 --> 00:29:38,120 Speaker 1: to build these networks and so we should be able 508 00:29:38,120 --> 00:29:40,160 Speaker 1: to control them. Thank you so much for being with 509 00:29:40,240 --> 00:29:42,560 Speaker 1: us again. I think you have probably one of the 510 00:29:42,640 --> 00:29:45,800 Speaker 1: most fascinating jobs at this moment of dramatic transformation. In 511 00:29:45,800 --> 00:29:49,160 Speaker 1: the media industry. Matthew shoulden Helm. He is media litigation 512 00:29:49,200 --> 00:29:56,440 Speaker 1: analyst for Bloomberg Intelligence. Thanks for listening to the Bloomberg 513 00:29:56,520 --> 00:29:59,200 Speaker 1: P and L podcast. You can subscribe and listen to 514 00:29:59,200 --> 00:30:03,760 Speaker 1: interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. 515 00:30:04,160 --> 00:30:07,720 Speaker 1: I'm pim Fox. I'm on Twitter at pim Fox. I'm 516 00:30:07,760 --> 00:30:11,040 Speaker 1: on Twitter at Lisa Abramo. It's one before the podcast. 517 00:30:11,080 --> 00:30:13,680 Speaker 1: You can always catch us worldwide on Bluebirg Radio.