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Speaker 1: Welcome to the Bloomberg Penel Podcast. I'm Paul swing you,

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Speaker 1: along with my co host Lisa Brahma wits. Each day

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Speaker 1: we bring you the most noteworthy and useful interviews for

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Speaker 1: you and your money. Whether at the grocery store or

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Speaker 1: the trading floor. Find a Bloomberg penl podcast on Apple

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Speaker 1: podcast or wherever you listen to podcasts, as well as

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Speaker 1: at Bloomberg dot com. Right now, they let us move

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Speaker 1: to the big story of the day, which is China

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Speaker 1: US trade relations and the apparent breakdown of talks at

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Speaker 1: the last minute that basically prompted President Trump to increase

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Speaker 1: tariffs on Chinese goods. Joining us now in our Bloomberg

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Speaker 1: eleven three oh studio is Patrick Shavannick. He is managing

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Speaker 1: director and chief strategist at Silver Crest Asset Management. So, Patrick,

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Speaker 1: I want to start with what happened here because it

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Speaker 1: seemed like markets were pricing in a deal would get

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Speaker 1: done in the near term. All of a sudden, everything

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Speaker 1: seemed to fall apart and it seemed kind of rapid.

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Speaker 1: Is that a correct read on the situation? Yes, markets

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Speaker 1: were pricing in that there would be a deal. Um

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Speaker 1: and uh. Starting on Sunday, when President Trump tweeted that

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Speaker 1: tariffs were on the table for Friday, UM things start,

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Speaker 1: you know, very different pictures started to get priced in UM.

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Speaker 1: The The word for the administration is that the Chinese

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Speaker 1: stepped back from a number of UM a number of

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Speaker 1: commitments that they made. The word from China is that

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Speaker 1: that was done by Chie Jim ping UM what kind

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Speaker 1: of leverage they felt they had. I mean, I think

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Speaker 1: both sides feel that they have the upper hand. UM.

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Speaker 1: The US. You know, it's just coming off of three

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Speaker 1: GDP growth in the first quarter. I think some of

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Speaker 1: the Trump administration feel that the US is fairly impervious

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Speaker 1: to the damage that terrorists would do. And I think

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Speaker 1: the Chinese feel that they're they've kind of got their

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Speaker 1: economy back under control and UM with stimulus, and that,

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Speaker 1: you know, they have the upper hand. So you've got

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Speaker 1: two sides that feel that they have the upper hand

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Speaker 1: and neither wants to give and they're going to test

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Speaker 1: out their assumptions. So Patrick, just looking at it from

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Speaker 1: the perspective of corporate America, it seems that corporate America

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Speaker 1: was could deal with tempers and tariffs on a limited

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Speaker 1: number of goods but now we're talking much higher tariffs

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Speaker 1: on more goods. How do you think Corporate America is

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Speaker 1: going to deal with these higher tariffs? Yes, well, the

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Speaker 1: first thing, I mean, we saw that in the fourth

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Speaker 1: quarter UM, where uh, you know a number of companies

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Speaker 1: and their earnings projections said precisely that that ten percent

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Speaker 1: was something that could handle and avoid was much more

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Speaker 1: difficult UM, and it weighed down on their earnings projections,

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Speaker 1: and that in turn is what helped contribute to the

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Speaker 1: sell off in the fourth quarter UM. And it wasn't

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Speaker 1: really driven by trade headlines per se. It was driven

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Speaker 1: by earnings calls that said, this is looking not very encouraging,

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Speaker 1: and I think we're back to that UM, and that

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Speaker 1: will be the mechanism through which you know, will feel

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Speaker 1: the first tangible impact because these tariffs actually don't go

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Speaker 1: into effect on goods and transit, so it will be

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Speaker 1: about a month before we actually start to feel an

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Speaker 1: economic impact from them. One thing that I find really

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Speaker 1: interesting is the more people who I speak who manage money,

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Speaker 1: the more diverse views I get in terms of what's

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Speaker 1: priced into the current market, with some people saying that

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Speaker 1: the downside risk is limited because really the markets have

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Speaker 1: rallied in response to the FED being on hold and

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Speaker 1: other people saying that the markets could tank if some

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Speaker 1: sort of trade agreement is not reached in these terrorists

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Speaker 1: were being in place, and I'm just wondering, where do

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Speaker 1: you stand on that? So I think it's useful to

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Speaker 1: stand step back a little bit from just the exclusive

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Speaker 1: issue of US China trade tensions. UM, you know, where

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Speaker 1: is the US economy? So, like I said, three growth

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Speaker 1: in in the first quarter, UM, decent earning season, but

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Speaker 1: I think that masked a number of vulnerabilities. You know,

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Speaker 1: the the actual domestic drivers of the U s economy

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Speaker 1: slowed to one point five percent in the first quarter.

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Speaker 1: A lot of the additional growth came from inventory build

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Speaker 1: up and came from UH slow down in imports, UH

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Speaker 1: in in corporate earnings. UM, yes, they're up two percent

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Speaker 1: year on year, but in fact, and they rebounded a

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Speaker 1: bit from a dismal fourth quarter, but that was led

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Speaker 1: primarily by finance and healthcare. And UH eight out of

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Speaker 1: eleven sectors in the SMP five hundred are actually we're

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Speaker 1: actually declined further UM in Q one and UH eight

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Speaker 1: out on different eight out of the eleven are down

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Speaker 1: year on year in terms of quarterly yearning. So there's

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Speaker 1: some softness there, Um that I think that the market

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Speaker 1: has focused on the headlines. Um, I'm not saying procession imminent.

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Speaker 1: I'm not saying I'm saying that the slowdown and some

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Speaker 1: of the vulnerabilities are um more serious than maybe some

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Speaker 1: of the headline numbers suggest. So, Patrick, we earlier in

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Speaker 1: the show here we had Michael McKee, Bloomberg's economics editor

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Speaker 1: on and he kind of explained that, you know, tariffs

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Speaker 1: are effectively a tax on consumers to some degree. What

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Speaker 1: is your view of the consumer in this scenario, in

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Speaker 1: this environment that may be developing for the remainder of

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Speaker 1: the year. So we are in a low inflation environment. Um.

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Speaker 1: You know inflay Shan really went to a crawl in

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Speaker 1: the first quarter. Um, but it started to tick up again.

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Speaker 1: I think that's one of the immediate concerns of any

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Speaker 1: tariff is the pass along cost. Uh. You know, so

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Speaker 1: it's a fairly friendly environment for that. But um, but yes,

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Speaker 1: they are attacks on consumers. I mean the question from

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Speaker 1: a strategic point of view is, you know, is it

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Speaker 1: worth taking some pain now to get some gain? And

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Speaker 1: and that gets them into the question of is this

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Speaker 1: an effective is this effective leverage against China? I think

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Speaker 1: multinational coordinated multinational UH pressure on China would be much

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Speaker 1: more effective and much harder for China to retaliate effectively

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Speaker 1: against than the go it alone bilateral tariffs that were imposing.

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Speaker 1: But you know, we'll find out. So whose economy stands

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Speaker 1: to suffer more from the imposition of these tariffs, the

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Speaker 1: US or China. So I think the US is more

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Speaker 1: vulnerable than like I said, the headline numbers would suggest

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Speaker 1: um and and I think we saw that in the

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Speaker 1: market response now but also in the fourth quarter to

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Speaker 1: some of those ranks projections and the hit that would

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Speaker 1: that companies would take from tariffs China. China has economic problems.

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Speaker 1: I don't think that they stem primarily from trade pressure

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Speaker 1: from the United States. I think they would exist with

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Speaker 1: or without a trade war from the United States, and

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Speaker 1: actually even if there was an agreement, they'd still have

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Speaker 1: big problems to deal with. I do think that the

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Speaker 1: trade war and trade tensions have focused attention on some

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Speaker 1: of those vulnerabilities in a way that maybe the Chinese

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Speaker 1: would like to avoid. So, just given the backdrop that

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Speaker 1: we have over the last few days about these rising

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Speaker 1: trade tensions. What is your view of the equity markets

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Speaker 1: right here? We've pulled back I guess about three percent

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Speaker 1: this week roughly on this news. What are you thinking

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Speaker 1: going forward here? Given this backdrop that seems to be developing.

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Speaker 1: So we've seen a solid rebound this year from the

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Speaker 1: sell off. UM. One of those issues, one of those issues,

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Speaker 1: which was the FED raising rates, is now off the

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Speaker 1: table that drove that. UM. The other, which was the

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Speaker 1: prospect of a trade war, UM, is sort of back

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Speaker 1: on the table. UM. So you know, I think I

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Speaker 1: think that given the vulnerabilities that I mentioned, given the

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Speaker 1: fact that the economy was slowing and the corporate earnings

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Speaker 1: were soft, there was, you know, the prospect and I

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Speaker 1: wrote about it at the beginning of the week, UM

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Speaker 1: in my monthly note of a correction in the market. UM.

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Speaker 1: I don't see a recession. I I look at the

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Speaker 1: recession leading indicators. Some of them maybe are yellow, UM,

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Speaker 1: but most of them are green. Okay, So you got

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Speaker 1: so I'm gonna keep my eye on. Very good. Patrick Shravannic,

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Speaker 1: Thank you very much. Patrick's managing director and chief strategist

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Speaker 1: at Silver Crest asset management management joinings live here in

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Speaker 1: our Bloomberg eleven three oh studios. We Lisa, all this

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Speaker 1: talk about terrorists reminds me that despite all my years

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Speaker 1: of business education, I need a refresher on actually how

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Speaker 1: tariffs work. Who pays them, who gets the money? Uh?

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Speaker 1: Fortunately for us, Michael McKee is with us. Michael's international

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Speaker 1: economics and policy correspondent for Bloomberg News. He joins us

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Speaker 1: here in a Bloomberg Interactive broker studio. So when tariffs

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Speaker 1: go on a ga jillion dollars worth of goods coming

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Speaker 1: in from China, where does that money go? Michael? Do

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Speaker 1: we does a treasury just all of a sudden get richer.

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Speaker 1: The treasury does get richer. It's a question who pays it? Uh.

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Speaker 1: In general, the tariffs are applied when goods arrive in aport.

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Speaker 1: Define that however you want airport or or seaport. And

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Speaker 1: then uh, most of them are purchased by middlemen, by importers,

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Speaker 1: which who handle the paperwork and deal with the transaction.

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Speaker 1: And then it goes on to the end user and

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Speaker 1: the importers UH pay the tariff. Then they either raise

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Speaker 1: their prices to the final user or they absorb it

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Speaker 1: in their margins. The big question for all companies now

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Speaker 1: is you know, how much more can you keeping your

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Speaker 1: margins and what do you have to pass along? And

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Speaker 1: then that money is collected by the Customs Agency Customers Bureau,

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Speaker 1: and then it goes into the General Treasury revenues and

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Speaker 1: you can see in the figures big spikes since we

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Speaker 1: started this whole round of tear. You go back to

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Speaker 1: the washing machines in February and last year. So so

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Speaker 1: this is how it works technically. And then we have

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Speaker 1: the discussion of who is benefiting from this because President

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Speaker 1: Trump tweeting today that it will be money that goes

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Speaker 1: into the coffers of the United States that can support farmers.

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Speaker 1: Can you walk us through how that actually would work.

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Speaker 1: That's two different things. It goes into the coffers of

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Speaker 1: the United States. Yes, it was a question who pays

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Speaker 1: for It's basically attacks on somebody along the way. It

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Speaker 1: could be the middleman who imported this stuff, it could

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Speaker 1: be the company, or the company can pass that along

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Speaker 1: to American consumers, and as tarffs go up and up,

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Speaker 1: it ends up in the consumer one on the number,

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Speaker 1: one way or another. So we've paid that tax into

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Speaker 1: the treasury. They have more money now we have a

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Speaker 1: much bigger deficit. So is there really extra money we've

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Speaker 1: got to fill this whole UH that has been created.

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Speaker 1: But even if you have it, can they spend it

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Speaker 1: on farmers? That's a really open question because the President proposes,

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Speaker 1: but Congress disposes as the saying goes, and they have

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Speaker 1: to approve the spending. They have to appropriate the money,

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Speaker 1: so the president can't just spend it as he wishes.

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Speaker 1: UM to go on from there and give you probably

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Speaker 1: more information than you want to know there is. There

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Speaker 1: are problems with the U. S Food aid UH situation

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Speaker 1: that have been there for years, and this has been

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Speaker 1: a controversy for years. First, our foreign UH money foreign

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Speaker 1: aid in food. The law requires it be US grown

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Speaker 1: and processed food that is then shipped overseas, and Foreign

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Speaker 1: Aid Relief Agency says that doesn't help because it takes

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Speaker 1: a very long time, bureaucracy, read tape, add to the cost.

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Speaker 1: They'd rather we just give them cash so they can

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Speaker 1: go to someplace close to Yemen and by the food

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Speaker 1: that is necessary. And the other is the Jones Act.

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Speaker 1: You heard about that in connection with Puerto Rico. All

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Speaker 1: food aid from the United States has to be carried

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Speaker 1: on U S flag chips, which A raises the cost

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Speaker 1: about thirty and b U there aren't always enough ships

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Speaker 1: available and so it slows the whole process down. So

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Speaker 1: there are bureaucratic impediments to making it work, even if

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Speaker 1: Congress agreed to spend the money. And we should note

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Speaker 1: that the president's fiscal year twenty budget cut food aid

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Speaker 1: assistance in half, so I'm not sure where why he

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Speaker 1: We're not sure how the tweets kind of agree with

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Speaker 1: actual with actual, So generally speaking, just stepping back, you know,

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Speaker 1: putting your economics hat on, are the tariffs? What's generally

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Speaker 1: the overall impact of tariffs in general? There's a short

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Speaker 1: term boost to the industries that are protected by tariffs,

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Speaker 1: and we saw that with the metals tariffs. Is steel tariffs.

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Speaker 1: As steel industry has has done well, uh, users down

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Speaker 1: the line, especially small shops that have to pay more

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Speaker 1: for their steel, have been suffering. We're also seeing now

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Speaker 1: the jobs. There were jobs added in the steel industry,

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Speaker 1: but that's starting to roll over and some of them

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Speaker 1: are starting to to cut workers. So there isn't necessarily

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Speaker 1: a long term benefit there, and there is a problem

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Speaker 1: with the secondary user, the user down the line. It

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Speaker 1: also increases inflation. The New York Fed did a study

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Speaker 1: of the tariffs in two thousand eighteen and found it

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Speaker 1: increased the CPI by about three tenths of a percentage point.

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Speaker 1: So we are seeing some inflation aspects that's really interested.

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Speaker 1: Probably wants that at this point, although they might call

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Speaker 1: it transitory. Well, although it could mask underlying weakness, right,

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Speaker 1: I mean that that basically wouldn't be necessarily the contin

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Speaker 1: inflation that they would want to see, and that would

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Speaker 1: increase consumers powers. Sort of interesting to me, And just

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Speaker 1: real quick, we were speaking with Senator Rick Scotten on

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Speaker 1: Bloomber Television earlier this morning, and he was saying that

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Speaker 1: he would like to see the money that the Treasury

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Speaker 1: Department collects from tariffs funneled back out in the term

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Speaker 1: basically the form of subsidies for farmers. Is this a

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Speaker 1: popular line here? Well, the President has a subsidy program

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Speaker 1: which they put into place last year, twelve billion dollars.

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Speaker 1: They're trying to do. Ye. Uh, they haven't gotten it

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Speaker 1: through yet, but they're they're working on it. And uh,

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Speaker 1: you know, I suppose you could say it gets funneled

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Speaker 1: back into it. But money is fungible. It's just more

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Speaker 1: money into the treasury. As I said, we have a

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Speaker 1: big deficit. They got to fund it somehow. Yeah, maybe

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Speaker 1: this is this is how it's gonna gonna happen. Mike McKee,

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Speaker 1: international economics and policy correspondent for Bloomberg, Thank you so

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Speaker 1: much for being with us. Boos stands to lose the

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Speaker 1: most from the escalating trade ten Chin. Some investors, including

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Speaker 1: Vanguard Asset Management, are pinpointing the emerging markets complex and

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Speaker 1: here joining us in our BLOOMBERGINGNA actor broker Studios dr

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Speaker 1: Andy Cooper. He is founder and chief executive officer of

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Speaker 1: leap Frog Investments. He has based on an airplane. Luckily

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Speaker 1: we actually have him on land today. Uh so, Andy,

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Speaker 1: I'd love to get your sense of whether you would

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Speaker 1: agree with this idea that escalating trade tensions will disproportionately

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Speaker 1: hit emerging markets debt. So we think that it's possible

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Speaker 1: that there will be short term ructions, but the fundamental

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Speaker 1: secular story is that these emerging markets are growing rapidly

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Speaker 1: based on four billion people rising out of low income

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Speaker 1: into the middle class. They've got new technologies like mobile uh,

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Speaker 1: and are constantly accessing things they couldn't access before, like

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Speaker 1: healthcare or financial tools for a hundreds of the cost

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Speaker 1: that they once could. So the opportunity for these folks

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Speaker 1: to access what they need to really rise is huge.

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Speaker 1: And busines this is that are serving them are going

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Speaker 1: to do incredibly well. So in the next ten years

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Speaker 1: there will be ups and downs for the markets, but

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Speaker 1: fundamentally that opportunity set is going to be incredibly strong.

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Speaker 1: So anyway I know it, leap rog you guys focus

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Speaker 1: on impact investing kind of describe what that is. So

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Speaker 1: impact investing is where you invest to generate both a

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Speaker 1: strong commercial return and a positive social outcome, so lower

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Speaker 1: income people, for example, getting healthcare or getting financial tools

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Speaker 1: like insurance or savings or pensions. The basic proposition is

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Speaker 1: that you can have profit with purpose. You can make

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Speaker 1: money and you can do good at the same time.

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Speaker 1: And that's because you focus on areas where customers are

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Speaker 1: served incredibly well and helped to rise. I'm going to

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Speaker 1: get existential here. What does it mean to do good? Huh?

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Speaker 1: I think since I trained in philosophy, I could give

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Speaker 1: you a very long answer. To that answer is that essentially,

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Speaker 1: our simple view is that people who are low income

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Speaker 1: have just as much agency, just as much capacity to

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Speaker 1: rise over time as anyone else, as long as they

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Speaker 1: get the essential services they need. And we believe that

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Speaker 1: when people get quality health care which is measurable, get

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Speaker 1: quality insurance which is measurable by hard ratios like claims ratios,

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Speaker 1: they are able to rise and then you're doing good. Okay.

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Speaker 1: So this is more from a sort of economic and

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Speaker 1: sort of income level point of view that you focus

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Speaker 1: on more than say environmental or corporate governance. Yes, although

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Speaker 1: we also take a very strong view on E s

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Speaker 1: G and governance we think is a key element in

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Speaker 1: getting alpha in these markets. So we've found that well

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Speaker 1: governed companies are actually able to extract a premium on exit.

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Speaker 1: And as a result, when we've sold companies at leap

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Speaker 1: Frog to the likes of Swissery or Prudential PLC, or

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Speaker 1: Standard Charted or Fidelity, we believe those companies have been

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Speaker 1: willing to pay a premium for well governed, high growth companies.

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Speaker 1: So any what are some of the markets in which

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Speaker 1: leap Frog has made investments recently. So we're very strong

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Speaker 1: on India, Kenya, Nigeria, Indonesia, Thailand, Vietnam. We think all

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Speaker 1: of these markets are growing exceptionally rapidly, driven by these

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Speaker 1: secular trends. Also, financial services and health care is are

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Speaker 1: often growing at double the rate of the economy. So

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Speaker 1: if you, as a private equity player, find a really

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Speaker 1: good company that's just growing slightly above average, you can

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Speaker 1: be getting to twenty or thirty percent growth rates in

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Speaker 1: your revenue per year. When we started talking, you were

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Speaker 1: talking long term, and you were saying, you see the

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Speaker 1: opportunity long term, there might be bumps along the way,

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Speaker 1: and I have to wonder, you know how that plays

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Speaker 1: into your role as a private equity investor versus public

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Speaker 1: equity or public debt where a lot of money has

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Speaker 1: flowed into emerging markets. How do you view that. One

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Speaker 1: of the exciting things about being a private equity investor

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Speaker 1: is that you can hold assets for different lengths of time,

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Speaker 1: and so when people are down on emerging markets, you

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Speaker 1: can buy at lower prices, and when people are up

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Speaker 1: on emerging on emerging markets, you can sell at higher prices.

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Speaker 1: So private equity gives you a distinct competitive advantage in

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Speaker 1: these markets and also allows you to form a really

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Speaker 1: deep relationship with the companies and their leadership so that

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Speaker 1: you can understand the dynamics in the market. And one

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Speaker 1: of the things we found has been crucial in generating

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Speaker 1: alpha is actually having great local and specialist talent, people

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Speaker 1: who are m d, pH d s or actuaries focused

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Speaker 1: on healthcare or insurance that are able to rarely see

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Speaker 1: what these companies need and engage very intensively with them,

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Speaker 1: real quickly, ten ten seconds. How are the returns? Well,

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Speaker 1: we think profit with purpose generates outside returns. We think

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Speaker 1: we have a lot of evidence for that, and we

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Speaker 1: think that we announced a seven hundred million dollar new

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Speaker 1: fund for emerging markets today that had forty institutional investors

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Speaker 1: in Italy, and the fact that that was achieved and

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Speaker 1: that so many folks diligence the ten year history of

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Speaker 1: leap Frog rarely shows that you can generate outsize returns,

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Speaker 1: and we think the evidence is in that the markets

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Speaker 1: are going to shift. Larry Thinks has been saying this

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Speaker 1: recently about purpose and profit, and we think the time

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Speaker 1: of profit with purpose has really come. Dr Andy Cooper,

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Speaker 1: thank you so much, Founder and CEO of leap Frog Investments,

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Speaker 1: talking to us about impact investments investing on from a

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Speaker 1: private equity perspective. Bloomberg Markets has brought to you by

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Speaker 1: common Wealth Financial Network the r I, a broker dealer

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Speaker 1: that's one the JD Power Award for Highest and Independent

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Speaker 1: Advisor satisfaction among financial investment firms five times in a row.

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Speaker 1: Visit Commonwealth dot com. But we are still awaiting the

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Speaker 1: opening of UBERT. I certainly expected this thing to be

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Speaker 1: trading indications here at three versus the i p O

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Speaker 1: price of forty five, So not a good indicated opening

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Speaker 1: for this highly anticipated IPO. To get more details, we

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Speaker 1: welcome our good friends Shire Overday, technology calumnist for Bloomberg

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Speaker 1: Opinion Sheet, joins us here in our Bloomberg Interactive Broker studio.

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Speaker 1: So sure, what do you make of this? Yeah, it's

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Speaker 1: obviously not good to break below the i p O price. Obviously.

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Speaker 1: The thing that I wonder is if it's trades below

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Speaker 1: the I p O price, does that mean something about

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Speaker 1: doubts about Uber specifically or is it today as a

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Speaker 1: down market? Right? People are really anxious about this China

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Speaker 1: renewed China trade uh kerfuffle and is that the thing

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Speaker 1: that's really driving down Uber shares. There are a lot

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Speaker 1: of questions here, right, which is, you know, how much

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Speaker 1: is this market story? How much is this a ride

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Speaker 1: sharing services story? Right because we have other IPO as

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Speaker 1: it did better. How much is this a money losing story?

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Speaker 1: Because Uber really is a pretty late stage company to

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Speaker 1: be going public and they're burning through cash faster at

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Speaker 1: least in the past twelve months than any other I

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Speaker 1: p O ever in history, according to at least Renaissance

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Speaker 1: Capital research company. So I'm just wondering from your perspective,

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Speaker 1: what do you think? Yes, so Uber is this weird?

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Speaker 1: It is basically emblematic of technology companies that started in

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Speaker 1: the last ten years that it is now going public,

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Speaker 1: so debuting on the stock market, but it's already very

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Speaker 1: large and mature fifty billion dollars and kind of transaction

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Speaker 1: value on Uber's platform in the last year, and also

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Speaker 1: highly unprofitable three billion dollars of operating losses, which is

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Speaker 1: a staggering number, and it's it's core business. Has just

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Speaker 1: open it change here forty two and change wow. That

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Speaker 1: is compared to an I p O price of forty

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Speaker 1: five dollars, which has on the low range, which has

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Speaker 1: tried to, which was trying to be a concession to

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Speaker 1: investors to say, hey, guys, we're gonna throw you a bone.

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Speaker 1: Well they did not get thrown a bone. Yeah, and

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Speaker 1: let me just point out that, um, basically everyone, every

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Speaker 1: new investor who bought Uber stock in the last since

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Speaker 1: December apart from soft bank, is now underwater on their investment.

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Speaker 1: Every single new shareholder, including people who bought in the IP. Yeah,

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Speaker 1: it's interesting. I was just gonna go to that point.

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Speaker 1: I think, you know, as people try to think about longer,

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Speaker 1: what does this mean for the tech market, for the

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Speaker 1: I P O market, I think one of the things

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Speaker 1: we can take away is that clearly, certainly for these

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Speaker 1: two ride sharing companies and maybe for some others, the

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Speaker 1: valuation differential between the private market and what the public market.

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Speaker 1: It's very stark here, i e. The public market at

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Speaker 1: a discount to the latest private market round. That's gotta

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Speaker 1: be disconcerning for the financiers on Sandhill Road in Silicon Valley. Yeah,

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Speaker 1: I would think so there's there's been some discrepancy, right lift,

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Speaker 1: Even though they've traded down as a public company, it's

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Speaker 1: still the share price is still higher than shares that

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Speaker 1: the company sold privately in in the last private stock

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Speaker 1: sale about a year ago. So you know, that's still

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Speaker 1: a gain for those venture capital investors, and people who

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Speaker 1: bought early did very well and and if they held on,

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Speaker 1: are still doing very well. So you know, it's a

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Speaker 1: little bit of a mixed bag. But yeah, look, if

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Speaker 1: you're funding trying to fund the next Uber and the

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Speaker 1: next Lift, you want these newly public private companies to

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Speaker 1: do well. You don't want them to seem like failures

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Speaker 1: because that makes it harder to sell your investors um

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Speaker 1: on billion dollars of investments in the next companies. Although

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Speaker 1: so Lift shares are currently priced still above where it

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Speaker 1: was valued at its last private route of funding, not

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Speaker 1: the same with Uber. Uber actually priced below that level

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Speaker 1: to start with, and now shares are trading down. And

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Speaker 1: I just have to wonder whether the incredible amount of

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Speaker 1: money that's flooded into private capital markets has worked frankly

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Speaker 1: the potential pop that we can see from these I

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Speaker 1: p o s, because frankly, a lot of the value

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Speaker 1: has already been sucked out or value read you know, gains. Yeah,

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Speaker 1: I think that's a that's a very fair question. And

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Speaker 1: to be fair. It's a question that people have been

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Speaker 1: asking for many years whether these companies, as they stay

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Speaker 1: private significant longer. Again, Uber is a ten year old company.

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00:24:18,720 --> 00:24:21,880
Speaker 1: This is not a baby company. As those tech companies

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00:24:21,920 --> 00:24:25,359
Speaker 1: stay private longer, does all of the value get sucked

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00:24:25,480 --> 00:24:29,160
Speaker 1: up by you know a small number of Silicon Valley

436
00:24:29,240 --> 00:24:32,880
Speaker 1: venture firms or increasingly you know these sort of global

437
00:24:32,960 --> 00:24:36,359
Speaker 1: funds like soft Bank or the Saudi Government Investment Fund.

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00:24:36,880 --> 00:24:38,600
Speaker 1: It's interesting. I bet you one group who's breathing a

439
00:24:38,640 --> 00:24:40,959
Speaker 1: sigh relief this morning, or the JP Morgan bankers who

440
00:24:41,040 --> 00:24:43,359
Speaker 1: lead the Lift I POC. They're probably saying, see, this

441
00:24:43,520 --> 00:24:45,879
Speaker 1: isn't so easy, you know, And yes, our stock is

442
00:24:45,920 --> 00:24:48,600
Speaker 1: trading down, but look at the big brother Ubert. It's

443
00:24:48,640 --> 00:24:54,120
Speaker 1: also having something absolutely Oh I absolutely know that, yes,

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00:24:54,200 --> 00:24:57,359
Speaker 1: exactly so. But it's really goes to it's it's it's interesting.

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00:24:57,400 --> 00:24:59,560
Speaker 1: I wonder if there's been a lot of press, certainly

446
00:24:59,600 --> 00:25:01,760
Speaker 1: over line, but really over the last couple of weeks

447
00:25:02,359 --> 00:25:05,480
Speaker 1: when you know, people are saying, gee, all these um

448
00:25:06,040 --> 00:25:09,119
Speaker 1: white collar workers at Uber and and and Lift are

449
00:25:09,160 --> 00:25:13,000
Speaker 1: making jillions of dollars I p O. But yet the drivers,

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00:25:13,080 --> 00:25:15,680
Speaker 1: the people on the backs that really drive this company. No,

451
00:25:15,800 --> 00:25:19,240
Speaker 1: no pun intended. They're working for essentially minimum wage. I

452
00:25:19,280 --> 00:25:21,119
Speaker 1: went to the bad Press kind of weighed in on

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00:25:21,240 --> 00:25:23,159
Speaker 1: some of the you know psyche of some of these

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00:25:23,200 --> 00:25:25,879
Speaker 1: i PO investors. Yeah, it's hard to know, you know,

455
00:25:25,960 --> 00:25:28,800
Speaker 1: don't have a really good sense of the investor sentiment

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00:25:28,840 --> 00:25:32,000
Speaker 1: if there is kind of a common investor sentiment. But yeah, look,

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00:25:32,400 --> 00:25:37,440
Speaker 1: Uber and Lift they are highly reliant on the you know,

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00:25:37,640 --> 00:25:43,280
Speaker 1: maintaining a a unique economic relationship with these drivers that

459
00:25:43,800 --> 00:25:46,320
Speaker 1: Uber and Lift need to pay them enough that they

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00:25:46,480 --> 00:25:49,960
Speaker 1: keep driving, but not so much that Uber and Left

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00:25:50,000 --> 00:25:52,200
Speaker 1: have to give away all of the economics from a

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00:25:52,359 --> 00:25:55,040
Speaker 1: from a ride to those drivers. So it's it's a

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00:25:55,080 --> 00:25:57,640
Speaker 1: really difficult balance, a tight rope to walk. And you've

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00:25:57,680 --> 00:26:01,040
Speaker 1: seen UM drivers not necessarily happy with their wages, and

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00:26:01,119 --> 00:26:05,040
Speaker 1: there were some uh sort of strikes and such this week.

466
00:26:05,480 --> 00:26:08,639
Speaker 1: So forty two dollars this is not the way that

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00:26:08,880 --> 00:26:12,080
Speaker 1: Uber wanted this morning on the New York Stock Exchange

468
00:26:12,119 --> 00:26:16,480
Speaker 1: to go that acquiring to Eric newcomer. Definitely a disappointing day.

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00:26:16,520 --> 00:26:20,080
Speaker 1: As we watch the shares UH scroll across the New

470
00:26:20,160 --> 00:26:24,080
Speaker 1: York Stock Exchange, Shira, do you expect this to dampen

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00:26:24,480 --> 00:26:26,960
Speaker 1: the I p O calendar later in the year. Yeah,

472
00:26:27,359 --> 00:26:31,080
Speaker 1: that's that is definitely something I wonder if um if

473
00:26:31,160 --> 00:26:34,800
Speaker 1: now Uber and Lift, assuming they stay below their ip

474
00:26:34,960 --> 00:26:40,240
Speaker 1: O price, that's not great news for Postmates, for Slack,

475
00:26:41,240 --> 00:26:47,000
Speaker 1: for a peloton, for Airbnb, other companies that are at

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00:26:47,080 --> 00:26:51,200
Speaker 1: various stages of the listing pipeline. Sure, overday, Thank you

477
00:26:51,280 --> 00:26:53,080
Speaker 1: so much. It's been, I know, a busy period of

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00:26:53,119 --> 00:26:55,000
Speaker 1: time for you, and you've written some tremendous column sua

479
00:26:55,080 --> 00:26:58,280
Speaker 1: ovidate technology columnists for a Bloomberg opinion, joining us here

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00:26:58,359 --> 00:27:01,200
Speaker 1: in our Bloomberg and active brokers Judios, Uber shares do

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00:27:01,320 --> 00:27:04,720
Speaker 1: to open forty two dollars below the forty five I

482
00:27:04,920 --> 00:27:08,680
Speaker 1: p O price. Lift shairs are at session lows as well.

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00:27:09,119 --> 00:27:12,800
Speaker 1: Big question is is this idiosyncratic to the ridehailing service

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00:27:13,000 --> 00:27:16,800
Speaker 1: industry or is this something more significant about I p

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00:27:16,960 --> 00:27:19,800
Speaker 1: O s today in two thousand. Thanks for listening to

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00:27:19,840 --> 00:27:22,480
Speaker 1: the Bloomberg pen l podcast. You can subscribe and listen

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00:27:22,520 --> 00:27:25,840
Speaker 1: to interviews at Apple Podcasts or whatever podcast platform you prefer.

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00:27:26,119 --> 00:27:28,760
Speaker 1: I'm Paul Sweeney. I'm on Twitter at pt Sweeney. I'm

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00:27:28,800 --> 00:27:31,480
Speaker 1: Lisa Abram Woyds. I'm on Twitter at Lisa abramwo wits

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00:27:31,560 --> 00:27:34,399
Speaker 1: one before the podcast. You can always catch us worldwide.

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Speaker 1: I'm Bloomberg Radio