WEBVTT - How Popeye's Chicken Sandwich Harnessed Social Media 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penel podcast. I'm Paul swing you, 0:00:05.360 --> 0:00:07.640 along with my co host Lisa Brahma wits. Each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money. Whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor. Find a Bloomberg Penl podcast on Apple 0:00:15.520 --> 0:00:17.959 podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:21.799 at Bloomberg dot com. At least, I'm not sure if 0:00:21.800 --> 0:00:24.720 you're aware, but there is a chicken war taking place 0:00:24.840 --> 0:00:27.200 out there in the marketplace. Popeyees is going up against 0:00:27.280 --> 0:00:30.160 Chick fil A in a Twitter war over which chain 0:00:30.240 --> 0:00:32.839 has the best chicken sandwich. I wasn't aware of it 0:00:32.920 --> 0:00:34.360 until just a day or two ago, but I'll tell you, 0:00:34.720 --> 0:00:36.800 I know it's pretty Who is aware of it. That 0:00:36.880 --> 0:00:39.960 is Mike Klin, Mike's senior restaurant analyst for Bloomberg Intelligence. 0:00:40.360 --> 0:00:42.720 He joins us on the phone. So, Mike, um, again, 0:00:42.760 --> 0:00:46.760 I'm not a big fan of the fried chicken sandwich. 0:00:46.800 --> 0:00:51.040 Tell us what's going on out there? Uh? Yeah, so 0:00:51.040 --> 0:00:55.560 so Popeye's debut, Uh their version of the chicken sandwich. 0:00:55.720 --> 0:00:57.279 You know, it's it's been the kind of a long 0:00:57.360 --> 0:00:59.200 time coming. I mean, they're really knowing for their bone 0:00:59.200 --> 0:01:01.600 and chicken, you know, so I guess this is kind 0:01:01.600 --> 0:01:06.080 of low hanging fruit for relatively new owner restaurant brands. 0:01:06.280 --> 0:01:08.880 And uh, you know, it came out and had some 0:01:08.920 --> 0:01:14.280 spectacular reviews and um. Surely after the sandwich debut, Chick 0:01:14.319 --> 0:01:19.039 fil A posted a tweet about their um their chicken sandwich, 0:01:19.520 --> 0:01:24.040 and Popeyes responded with y'all good, and it just sparked 0:01:24.080 --> 0:01:27.760 this massive Twitter war with you know, Wendy's jumping in 0:01:27.800 --> 0:01:31.960 the fray and Mike before which sandwich was better? Yeah, Mike, 0:01:32.000 --> 0:01:34.360 before you going further. I mean the idea that this 0:01:34.480 --> 0:01:37.200 is innovation is sort of amazing to me. It's you know, 0:01:37.280 --> 0:01:40.679 it's basically this company that focuses on chicken sitting around 0:01:40.680 --> 0:01:43.440 a boardroom and saying, I have a brilliant idea. Why 0:01:43.480 --> 0:01:45.840 don't we put it between bread? I mean, what's the 0:01:45.880 --> 0:01:49.920 big deal? What is so special about these chicken sandwiches? Well, 0:01:49.960 --> 0:01:54.000 listen for I mean, chicken sandwiches have just continued to 0:01:54.040 --> 0:01:56.480 grow in popularity, right, it continues to take kind of 0:01:56.480 --> 0:02:00.520 share from from burgers, you know, I mean, will look 0:02:00.560 --> 0:02:02.920 at it, you know, obviously fried chicken sandwiches aren't that 0:02:03.040 --> 0:02:04.680 healthy for you, but they look at it as a 0:02:04.720 --> 0:02:08.720 healthier alternative to burgers, and people are into chicken, right, 0:02:08.880 --> 0:02:12.480 and um, you know, Popeyes has a lot of fanboys, 0:02:12.560 --> 0:02:16.160 you know, I mean myself included. I absolutely love Popeyes. 0:02:16.200 --> 0:02:20.280 So I think when one did come out, there was uh, 0:02:20.320 --> 0:02:21.840 you know, I think Popeyes knew there was going to 0:02:21.919 --> 0:02:23.400 be a lot of buzz about it, right because, like 0:02:23.440 --> 0:02:25.440 I said, this is kind of a long time coming. 0:02:25.840 --> 0:02:28.600 You know, I don't think they saw this level though 0:02:28.960 --> 0:02:32.760 of of you know, like this this fever pitch obviously 0:02:32.800 --> 0:02:35.840 about about the sandwich. You know, it's it's interesting, like 0:02:35.880 --> 0:02:38.639 I've been reading and there's been apparently a shortage of 0:02:38.919 --> 0:02:43.079 chicken sandwiches for Popeyes. I've actually run out and as 0:02:43.120 --> 0:02:45.480 a so what's that say about the supply chain? Like 0:02:45.520 --> 0:02:48.919 where all the chickens going? Yeah, so that's interesting. So 0:02:49.040 --> 0:02:52.360 what I'm hearing it was that it was the buns. Um, 0:02:52.440 --> 0:02:54.320 I wouldn't be surprised if it's chicken as well, right, 0:02:54.320 --> 0:02:56.720 because these chicken sandwiches have to be made made to 0:02:56.800 --> 0:03:01.200 specifications by the supplies, And what Popeyes are saying is, 0:03:01.600 --> 0:03:04.040 you know, we already burned through. You know, in two weeks, 0:03:04.120 --> 0:03:06.600 we burned through all the supply we had pegged for 0:03:07.160 --> 0:03:10.680 um August and September. UM. So I won't be surprised 0:03:10.680 --> 0:03:12.600 if they did run out in some stores. You know, 0:03:12.639 --> 0:03:15.080 I don't think all stores are have run out, but 0:03:15.160 --> 0:03:18.040 I think what they're trying to do is kind of uh, 0:03:18.120 --> 0:03:23.520 you know, uh stop themselves from disappointing customers. You know, so, 0:03:23.840 --> 0:03:25.919 but they have it sounds like they have run out 0:03:25.960 --> 0:03:29.320 the supply chain. Um. You know, the supplier has to 0:03:29.320 --> 0:03:32.400 start making chickens and getting their hands on some buns 0:03:32.520 --> 0:03:35.760 because you know, obviously the demand is there. I mean 0:03:35.800 --> 0:03:40.280 also there's some speculation that they've deliberately restricted the supply 0:03:41.200 --> 0:03:45.560 um to kind of create even more hype, right, so 0:03:45.680 --> 0:03:48.360 like you have a sandwich now that everybody wants, but 0:03:48.440 --> 0:03:52.040 not everybody can get, so they can kind of um, 0:03:52.080 --> 0:03:57.360 you know extend you know, then the marketing behind this. Yet. Yeah, 0:03:57.840 --> 0:03:59.920 just to give you a sense of of the flip side, 0:04:00.160 --> 0:04:03.160 the dark underbelly of the craze, I was working like 0:04:03.240 --> 0:04:07.240 a slave. This according to one exhausted Papaye's employee, who 0:04:07.360 --> 0:04:11.440 is describing the harrowing experience of trying to uh serve 0:04:11.640 --> 0:04:14.640 this incredible craze. I'm wondering if you want to take 0:04:14.680 --> 0:04:17.280 a broader kind of take on this, what this says 0:04:17.320 --> 0:04:20.120 about Twitter and the use of it in terms of 0:04:20.160 --> 0:04:23.159 marketing for some of these fast food companies. Because we've 0:04:23.200 --> 0:04:27.440 seen this increasingly sort of burger King versus McDonald's or 0:04:27.480 --> 0:04:29.720 you know, just the rivals kind of going back and 0:04:29.760 --> 0:04:32.680 forth and trying to be pithy it. How much increasingly 0:04:32.800 --> 0:04:35.359 is that a mainstay of the advertising tool for some 0:04:35.440 --> 0:04:38.200 of these fast food chains. Yeah, that's a great question. 0:04:38.240 --> 0:04:39.880 Then there's a couple of pieces to that question. But 0:04:39.880 --> 0:04:42.159 the first thing I'll addresses them the you know, the 0:04:42.200 --> 0:04:45.320 marketing piece. I mean, listen, this is it's very low 0:04:45.400 --> 0:04:48.760 cost for you to hire, you know, a few marketing 0:04:48.800 --> 0:04:51.240 interns and have them tweet on your account all day. 0:04:51.720 --> 0:04:54.960 It's a lot cheaper than buying um television, which still 0:04:55.000 --> 0:04:57.080 has an R o I on it, but or buying 0:04:57.160 --> 0:05:02.200 radio time, or or putting ads in magazines very very 0:05:02.320 --> 0:05:06.400 high r o EYES associated with social media marketing. Um, 0:05:06.800 --> 0:05:10.720 you know, you're advertising directly where your customers are. Right, Like, 0:05:10.880 --> 0:05:13.159 my son doesn't watch TV anymore, but he has his 0:05:13.200 --> 0:05:15.279 phone in his hand all the time he's basically walking 0:05:15.279 --> 0:05:18.640 around with a billboard in his hand. You know. So, uh, 0:05:18.760 --> 0:05:21.960 this is gonna continue. Um, we we think it's just 0:05:22.000 --> 0:05:24.400 gonna Social media marketing is just going to continue to 0:05:24.440 --> 0:05:27.880 be a larger percentage of the AD budgets of these companies. 0:05:28.200 --> 0:05:31.840 You know. The other thing you mentioned about the employees, Um, 0:05:31.880 --> 0:05:33.640 that was kind of interesting. Yeah, there was an article 0:05:33.640 --> 0:05:36.600 out last week about a few a few Popey's employees 0:05:36.600 --> 0:05:38.600 that were talking about a horrible experience. They were so 0:05:38.680 --> 0:05:42.560 busy they quit mid shift. You know. But um, you know, 0:05:42.560 --> 0:05:46.120 I'd caution about believing everything you read in that article. 0:05:46.200 --> 0:05:49.080 I mean they only you know, Popeyes has thousands of 0:05:49.120 --> 0:05:53.839 stores and there was only there was only five employees interviewed. Um. 0:05:53.880 --> 0:05:56.000 You know, I know growing up working in a car 0:05:56.080 --> 0:05:59.240 wash when the day was busy, it went a lot 0:05:59.279 --> 0:06:03.159 faster and I kind preferred preferred it that way. So, uh, 0:06:03.520 --> 0:06:06.239 you know that that there's been a lot of hype 0:06:06.440 --> 0:06:12.080 and a lot of politicizing I guess of of this situation. 0:06:12.200 --> 0:06:14.520 You know, Mike Calin, thank you so much for being 0:06:14.560 --> 0:06:18.119 with us. Mike Calin, senior restaurant analyst and car wash 0:06:18.279 --> 0:06:21.600 expert for us here at Bloomberg Intelligence joining us on 0:06:21.680 --> 0:06:24.720 the phone. Have you had one, Paul? I have not, 0:06:24.960 --> 0:06:27.479 but now I have to go. I mean there's a 0:06:27.520 --> 0:06:30.560 line out the Chick fil A on electionson Avenue every day. 0:06:30.640 --> 0:06:33.520 I know, but it's it's really just chicken on bread, right, 0:06:33.560 --> 0:06:36.400 I mean, what what I'm just, I'm sort of my 0:06:36.440 --> 0:06:54.480 mind is boggled. People are getting older and they need 0:06:54.560 --> 0:06:57.720 health insurance and they want to get it less expensive 0:06:57.960 --> 0:07:01.000 than it is in most places. Enter e Health, which 0:07:01.040 --> 0:07:03.960 is a company who shares have returned more than two 0:07:04.200 --> 0:07:06.680 d P over the past twelve months. Joining us right now. 0:07:06.680 --> 0:07:09.760 Scott Flanders, chief executive officer of the Health U from 0:07:09.880 --> 0:07:13.640 Mountain View, California. Scott, thank you so much for joining us. 0:07:13.640 --> 0:07:16.040 So just tell us a little bit about, uh, the 0:07:16.080 --> 0:07:20.680 provenance of the health dot com. Well, we started over 0:07:20.720 --> 0:07:25.960 twenty years ago helping individuals and families compare insurance plans, 0:07:26.000 --> 0:07:29.640 and then we evolved to help them enroll. We're a 0:07:29.680 --> 0:07:32.680 broker and we get paid by the health insurance companies, 0:07:32.720 --> 0:07:36.400 but we're neutral on behalf of the consumer. So we 0:07:36.440 --> 0:07:39.520 are consumer centric company and our single mission is to 0:07:39.560 --> 0:07:44.160 make sure Americans have the best and right insurance for them. 0:07:44.280 --> 0:07:46.520 So Scotts, as Lisa mentioned, your stock is up over 0:07:46.560 --> 0:07:48.840 two over the trailing twelve months. What's really been the 0:07:48.920 --> 0:07:52.840 driver there for behind the stocks? Now, that's great, Um, 0:07:52.880 --> 0:07:57.760 it's at the result of the explosive growth in Medicare 0:07:58.040 --> 0:08:02.400 private Medicare plans better known as Medicare advantage or Medicare 0:08:02.440 --> 0:08:08.040 supplement plans. They're about sixty million eligible Americans for Medicare 0:08:08.280 --> 0:08:12.920 right now, and of those, about thirty six million have 0:08:13.120 --> 0:08:17.679 opted to buy private insurance plans, many of which millions 0:08:17.680 --> 0:08:21.320 and millions of which can get zero premium products through 0:08:21.440 --> 0:08:26.000 Medicare Advantage. And we've been growing because we are gaining 0:08:26.040 --> 0:08:29.880 share of that growing market. So it's got you basically 0:08:29.920 --> 0:08:32.560 are like an Expedia for health insurance plans, right it 0:08:32.600 --> 0:08:37.160 is that a fair way to sort of roughly characterized. No, 0:08:37.360 --> 0:08:41.360 it's the perfect description. And just as Expedia carries all 0:08:41.440 --> 0:08:46.319 the airlines and has all of the flight of plans 0:08:46.360 --> 0:08:49.840 and prices as well as all hotels, we have all 0:08:49.920 --> 0:08:53.600 the plans and all the carriers, every doctor, every hospital, 0:08:53.640 --> 0:08:57.000 every pharmacy, and so we are able to help seniors 0:08:57.000 --> 0:09:01.040 get into the right Medicare plan. And that real consequence 0:09:01.080 --> 0:09:03.600 for seniors. It's a it's a stressful decision for them 0:09:03.960 --> 0:09:06.760 because you know, they use a lot of healthcare at 0:09:06.800 --> 0:09:09.720 their age, and what we do is we're that neutral 0:09:09.800 --> 0:09:12.040 guide to get them into the right plan. And so 0:09:12.040 --> 0:09:15.080 we've been growing six seven times the growth of the 0:09:15.120 --> 0:09:18.240 industry because we're on the side of the consumer. Why 0:09:18.320 --> 0:09:23.520 would companies health insurance companies pay you if you are 0:09:23.640 --> 0:09:31.040 ultimately trying to make the premiums lower for the end consumer, right, Well, 0:09:31.400 --> 0:09:38.000 they their challenges. They also try to enroll seniors in 0:09:38.080 --> 0:09:40.400 their own plans, and they do a good job of that, 0:09:40.960 --> 0:09:43.480 but they can only offer the best plan for the 0:09:43.559 --> 0:09:49.360 senior that is that their company offers, whereas we offer 0:09:49.760 --> 0:09:54.080 all of the company's plans. And so the reason that 0:09:54.280 --> 0:09:57.600 they use brokers, and broker's account for half of all 0:09:57.760 --> 0:10:02.840 enrollments in Medicare is because we reach into millions of 0:10:02.920 --> 0:10:06.160 seniors that they don't reach, and so they're willing to 0:10:06.200 --> 0:10:09.400 pay us. It's an offset to cost they would have anyway, 0:10:09.679 --> 0:10:13.080 because it's expensive for the health insurance carriers to go 0:10:13.200 --> 0:10:17.720 out and find seniors and explain to them the benefits 0:10:17.920 --> 0:10:20.959 and get them enrolled, and so paying a broker is 0:10:21.000 --> 0:10:24.000 really an offset to a cost that the carrier would 0:10:24.000 --> 0:10:27.200 have anyway. So, Scott, what you know, as we approached 0:10:27.240 --> 0:10:31.480 the two presidential election, certainly a lot of Democratic candidates 0:10:31.480 --> 0:10:35.040 are talking about changes in healthcare laws and maybe even 0:10:35.120 --> 0:10:40.320 Medicare for all. How how would that impact your business? Yeah, 0:10:40.520 --> 0:10:44.240 Medicare for all is a great sound bye, and you know, 0:10:44.320 --> 0:10:48.120 it's great for a political debate where you're limited to 0:10:48.280 --> 0:10:51.680 thirty seconds. You know, the challenge of it is what 0:10:51.920 --> 0:10:55.760 is your definition of Medicare for all. The reason that 0:10:55.800 --> 0:11:00.559 it's popular when it's not explained is because Medicare working 0:11:00.640 --> 0:11:05.000 and seniors are happy with it. The twenty plus million 0:11:05.040 --> 0:11:08.640 Americans that are on a Medicare advantaged plan today, Our 0:11:08.720 --> 0:11:13.560 polling shows very high user satisfaction with Medicare advantage and 0:11:13.640 --> 0:11:18.199 it's been the Trump's administration's plan and objective to get 0:11:18.240 --> 0:11:21.600 more seniors on Medicare advantage plans because it's cheaper for 0:11:21.640 --> 0:11:26.400 the government, and colitical studies show it's better health care 0:11:26.440 --> 0:11:30.000 for seniors, and so seniors like it, and so of 0:11:30.080 --> 0:11:33.160 course it would be popular to say let's have Medicare 0:11:33.240 --> 0:11:36.280 for all. The first thing I point out is seniors 0:11:36.360 --> 0:11:39.040 don't want Medicare for All. They feel like they've paid 0:11:39.080 --> 0:11:42.880 into this for their entire working lives and they do 0:11:42.920 --> 0:11:47.240 not want the system flooded by a hundred and fifty 0:11:47.360 --> 0:11:52.240 million non seniors. They know that would cause their benefits 0:11:52.480 --> 0:11:56.040 to be reduced. That's one big obstacle to Medicare for 0:11:56.120 --> 0:11:59.800 All and seniors vote, as we all know. The second 0:12:00.120 --> 0:12:02.319 obstacle is we have a hundred and fifty two hundred 0:12:02.320 --> 0:12:08.480 and sixty million Americans covered by employer sponsored healthcare and 0:12:08.679 --> 0:12:11.840 they don't want to give that up. And so I 0:12:11.880 --> 0:12:15.679 believe the political reality of this as we get deeper 0:12:15.800 --> 0:12:19.719 into the cycle, it will become more clear. And you're 0:12:19.760 --> 0:12:25.160 already seeing many candidates like Kamala Harris backing off of 0:12:25.200 --> 0:12:28.079 Medicare for All, even though she had signed on to 0:12:28.240 --> 0:12:32.320 the original Bernie Sanders bill. As she's dug deeper into it, 0:12:32.480 --> 0:12:36.440 her view has evolved, and I think wisely so. Scott Flanders, 0:12:36.480 --> 0:12:37.920 thank you so much for joining us. Scott is a 0:12:38.000 --> 0:12:41.120 chief executive officer of Healthy Trains on the NASTAC under 0:12:41.160 --> 0:12:45.120 the symbol h TH Companies based in Mountain View, California. 0:12:45.160 --> 0:12:47.320 We appreciate Scott coming on giving some thoughts about his 0:12:47.400 --> 0:13:08.600 company and the state of the US healthcare industry. It's 0:13:08.760 --> 0:13:11.320 getting to be pretty predictable. When we do get some 0:13:11.360 --> 0:13:13.640 sort of softening and trade talks, the place to look 0:13:13.679 --> 0:13:17.400 at is the socks, the semiconductor index, which will inevitably 0:13:17.480 --> 0:13:20.520 pop vice versa if you have some sort of hardening 0:13:20.520 --> 0:13:22.839 and trade tensions. That's the one that falls out of BED. 0:13:22.920 --> 0:13:25.440 Joining us down to discuss what the outlook is for 0:13:25.559 --> 0:13:27.600 some of these se conductor shares, as well as tech 0:13:27.600 --> 0:13:30.559 in general. David Garretty, chief market strategist at laid Law 0:13:30.559 --> 0:13:33.680 and Company, also a partner at bt block. He's joining 0:13:33.760 --> 0:13:36.320 us here in our Bloomberg Interactive Broker studios. So we 0:13:36.400 --> 0:13:41.080 are seeing today popping socks stocks. Micron is up two 0:13:41.120 --> 0:13:44.320 point six percent, for example, the Socks Index of Philadelphia 0:13:44.400 --> 0:13:47.880 Sock Exchange Semiconductor Index up two point one per cent. 0:13:48.720 --> 0:13:52.080 How much more could you see this index and these 0:13:52.120 --> 0:13:56.839 stocks rally if there was a protracted softening in trade 0:13:56.840 --> 0:13:59.880 discussions between the US and China. Yeah, if we were 0:13:59.920 --> 0:14:02.040 to end up with the situation where we saw maybe 0:14:02.040 --> 0:14:05.640 a call for six month truce in terms of trade discussions, 0:14:05.720 --> 0:14:08.800 pushing things out into you know, it might be possible 0:14:08.800 --> 0:14:10.280 to see you know, if I do a ten percent 0:14:10.400 --> 0:14:13.320 rally in these names. But bear in mind that a 0:14:13.360 --> 0:14:15.120 lot of what's been going on in terms of the 0:14:15.160 --> 0:14:19.480 equity markets to date have been predicated primarily upon the 0:14:19.480 --> 0:14:21.960 fact that the Federal Reserve was gonna be accommodative in 0:14:22.040 --> 0:14:26.080 terms of monetary policy against any economic softening that would 0:14:26.080 --> 0:14:29.880 occur as a result of these artificially induced trade wars 0:14:30.440 --> 0:14:33.720 between the US and China. Uh So, certainly we might 0:14:33.760 --> 0:14:37.880 say that equities to begin with anyway, including the semiconductor shares, 0:14:38.080 --> 0:14:41.200 are probably trading at elevated levels, especially when you look 0:14:41.200 --> 0:14:44.760 at a backdrop where corporate profits already down ten percent 0:14:44.880 --> 0:14:48.040 year over year from the third quarter of two thousand eighteen. 0:14:48.120 --> 0:14:50.440 So you know, clearly it's not gonna be profits that 0:14:50.480 --> 0:14:53.200 are driving the stock market higher. It was either the 0:14:53.240 --> 0:14:55.200 expectation of one or two things. Either one of them 0:14:55.240 --> 0:14:57.840 is going to be monetary policy easing, which we think 0:14:57.920 --> 0:15:00.600 we saw the Federal Reserve potentially back away a bit 0:15:00.640 --> 0:15:04.240 from at least against expectations is shown by the futures market, 0:15:05.360 --> 0:15:07.360 or you know, obviously we need to see a softening 0:15:07.360 --> 0:15:11.040 here with respected trade negotiations, and clearly, you know there's 0:15:11.080 --> 0:15:13.880 some positive noises being made here. But the question really 0:15:13.880 --> 0:15:16.520 boils down to are you going to see enough maturity 0:15:16.600 --> 0:15:19.720 on the US side to say, Okay, we're going to 0:15:19.840 --> 0:15:23.000 back down and stop beating our chest. So and again, 0:15:23.000 --> 0:15:25.080 it seems that you kind of highlighted what it seems 0:15:25.120 --> 0:15:26.760 to be kind of the drivers of this market, the 0:15:26.760 --> 0:15:30.760 push and pull between trade uncertainty and the FEDS ability 0:15:30.880 --> 0:15:34.920 to perhaps you know, ameliorate some of the downside from 0:15:35.280 --> 0:15:38.480 trade uncertainty. Assuming you know the market is pricing in 0:15:38.600 --> 0:15:41.160 three four, gosh, maybe five rate cuts over the next 0:15:41.200 --> 0:15:43.680 eighteen months, do you think that would be Do you 0:15:43.680 --> 0:15:47.120 think the FED will be successful in continuing to drive 0:15:47.160 --> 0:15:49.800 the economy for it even if there is this uncertainty 0:15:49.800 --> 0:15:52.000 from trade. Well, I would say that trying to overcome 0:15:52.040 --> 0:15:54.920 the uncertainty not just from trade, but trying to overcome 0:15:54.960 --> 0:15:58.560 the uncertainty that's coming from the current administration is going 0:15:58.600 --> 0:16:00.840 to be something that the FEDS to be able to offset. 0:16:00.880 --> 0:16:02.560 Me A lot of what has been coming out in 0:16:02.680 --> 0:16:06.240 terms of, if we can call it policy volatility for 0:16:06.360 --> 0:16:09.800 the administration clearly has made it very very difficult for 0:16:09.880 --> 0:16:12.800 anybody running a business to plan over you know, a 0:16:13.280 --> 0:16:16.520 two to a five year horizon for fear of the 0:16:16.560 --> 0:16:18.600 fact that you know, someone could turn right around in 0:16:18.640 --> 0:16:21.800 twenty four hours and say something completely opposite of what 0:16:21.880 --> 0:16:26.000 had been said before. Difficult to plan in an uncertain environment, 0:16:26.360 --> 0:16:29.200 and unless the administration we're able to move to a 0:16:29.320 --> 0:16:34.720 stance where they could give consistent, stable policy views that 0:16:34.800 --> 0:16:37.360 people could actually plan around, most likely you're going to 0:16:37.480 --> 0:16:39.720 find that people who are going to be make committing 0:16:39.760 --> 0:16:42.120 capital not just to the stock market but to the 0:16:42.160 --> 0:16:44.400 real economy here are going to say, look, we'll just 0:16:44.400 --> 0:16:46.800 take a glow go slow approach until we've got somebody 0:16:46.800 --> 0:16:50.520 more stable that we can deal with. Which tech company 0:16:50.640 --> 0:16:54.600 big tech do you think has most immunized itself from 0:16:54.760 --> 0:16:56.440 some of the push pull that we're seeing in the 0:16:56.440 --> 0:17:00.520 trade talks. I mean, the view around technology g is 0:17:00.960 --> 0:17:04.280 um Certainly if we look at the ongoing strength that 0:17:04.280 --> 0:17:08.320 there is around online search, Google still remains a fairly 0:17:08.359 --> 0:17:11.960 strong factor. Google on their own had pulled out from China. 0:17:12.080 --> 0:17:15.800 Not granted, there have been issues where Google has been 0:17:15.800 --> 0:17:19.040 seen doing some development work, potentially in collaboration with China, 0:17:19.240 --> 0:17:21.280 but I would argue that on balance it's a fairly 0:17:21.280 --> 0:17:25.040 small part other overall business. Uh, you might also say 0:17:25.080 --> 0:17:27.480 that at the same time, Amazon, uh, you know, it 0:17:27.560 --> 0:17:31.480 certainly has some strength in terms of just being able 0:17:31.480 --> 0:17:34.480 to displace retail. Granted, this is all happening against a 0:17:34.560 --> 0:17:37.960 consumer environment where the impact of tariffs could have a 0:17:38.000 --> 0:17:42.440 major effect on holiday shopping in two thousand nineteen. This 0:17:42.480 --> 0:17:45.240 is not necessarily something from which Amazon would be immune. 0:17:45.240 --> 0:17:47.960 But one would argue if you look at other participants 0:17:47.960 --> 0:17:50.639 in the retail channel, probably Amazon is still in a 0:17:50.640 --> 0:17:54.199 position to gain greater share against that. So one might 0:17:54.400 --> 0:17:57.879 argue that if you want to get away from semiconductors 0:17:57.880 --> 0:18:02.679 where clearly they're directly exposed relative to trade negotiations, Apple 0:18:02.720 --> 0:18:04.919 to some extent, also the impact that it's had on 0:18:04.960 --> 0:18:07.600 the iPhone in the overseas markets. But looking in terms 0:18:07.600 --> 0:18:10.359 of some of the tech names, Google, Amazon would be 0:18:10.400 --> 0:18:12.080 some major names that we would look at as being 0:18:12.400 --> 0:18:15.359 somewhat insulated, you know, staying with tech stocks. One of 0:18:15.400 --> 0:18:18.800 the risks that seems so faded a little bit is 0:18:18.840 --> 0:18:22.160 the regulator the regulation risk for a tech I mean, 0:18:22.320 --> 0:18:24.480 you know, it seems like it's been a you know, 0:18:24.480 --> 0:18:26.720 a lifetime ago when we had to tech CEOs in 0:18:26.760 --> 0:18:28.760 front of Congress and so on and so forth. How 0:18:28.840 --> 0:18:30.360 much of a risk do you think that is an 0:18:30.400 --> 0:18:34.720 overhang for technology stocks. I'm looking at just the NASDACS 0:18:34.720 --> 0:18:37.000 down two percent from on a trailing twelve month basis. 0:18:37.119 --> 0:18:39.320 How much of regulatory risk is still out there for 0:18:39.359 --> 0:18:41.880 the tech sector. I would say the regulatory risk continues 0:18:41.920 --> 0:18:44.080 to be a concern. I mean, we obviously have a 0:18:44.119 --> 0:18:47.880 situation situation right now where Congress is adjourned, but obviously 0:18:47.920 --> 0:18:52.560 wait until September and hearings are reconvened. Also in the meanwhile, 0:18:52.600 --> 0:18:55.200 it's been interesting to see that tech companies such as 0:18:55.240 --> 0:18:58.800 Facebook in the area of digital currencies. Facebook, as we know, 0:18:58.840 --> 0:19:01.600 would come out back in June two thousand nineteen discussed 0:19:01.640 --> 0:19:05.160 their effort at developing a digital currency libra um. There 0:19:05.280 --> 0:19:09.000 was universal pushback from regulators in this regard, but their 0:19:09.040 --> 0:19:12.879 indications now that Facebook is still planning on pushing forward 0:19:12.920 --> 0:19:16.320 to have an early launch. So you know, the fact 0:19:16.359 --> 0:19:21.840 that a company like Facebook would essentially act against regulators 0:19:21.840 --> 0:19:24.560 in this case not work collaboratively with them, I would 0:19:24.560 --> 0:19:26.960 think just argues for further attention to be paid to 0:19:26.960 --> 0:19:30.280 this area. So further attention just to follow up on 0:19:30.320 --> 0:19:32.200 the libra Have we determined that it actually is a 0:19:32.240 --> 0:19:36.120 cryptocurrency at this point. Uh, it probably is whatever Mark 0:19:36.200 --> 0:19:39.280 Zuckerberg says it is um, but we would argue that 0:19:39.800 --> 0:19:43.359 I would But in terms of companies developing digital currencies, 0:19:43.480 --> 0:19:45.560 I'd much rather look at what JP Morgan is doing 0:19:45.560 --> 0:19:48.199 with the jpm coin and the fact of seeing that 0:19:48.280 --> 0:19:51.400 actually developed and deployed, uh, than than putting any great 0:19:51.440 --> 0:19:53.840 expectations on my part with respect to what Facebook and 0:19:53.920 --> 0:19:56.439 Libra may do. So touch about that jpm coin, what 0:19:56.560 --> 0:20:00.399 is that? Essentially? It was announced back in February of 0:20:00.400 --> 0:20:03.199 two thousand nineteen. The initial intention was this was a 0:20:03.240 --> 0:20:06.480 way of trying to put in place a blockchain platform 0:20:06.920 --> 0:20:10.080 UM with a settlement token, the jpm coin that would 0:20:10.119 --> 0:20:13.320 be used to speed transfers reduced costs of being able 0:20:13.320 --> 0:20:16.040 to move money. First, it was targeted mostly in terms 0:20:16.119 --> 0:20:19.359 of other inter bank transactions, but over time as it 0:20:19.480 --> 0:20:21.920 started to expand, it has the potential of going out 0:20:22.119 --> 0:20:25.720 to more enterprise or corporate clients, not just of JP 0:20:25.760 --> 0:20:31.240 Morgan Chase, but also it's network of correspondent banks worldwide. Interesting. 0:20:31.359 --> 0:20:33.280 David Garretty, thanks so much for joining us. David's a 0:20:33.320 --> 0:20:36.439 chief market strategist at lay Lad Company, also a partner 0:20:36.480 --> 0:20:38.879 at bt Block, joining us as he's wanted to do 0:20:38.920 --> 0:20:42.080 in our Bloomberg Interactive Broker studio. We appreciate your thoughts 0:20:42.119 --> 0:21:00.159 on the market and on technology and on cryptocurrencies. Well, 0:21:00.240 --> 0:21:03.600 last night, China indicated that it would not immediately retaliate 0:21:03.600 --> 0:21:06.200 against the latest U s tariff increases announced by President 0:21:06.200 --> 0:21:09.520 Trump last week, emphasizing the need to discuss ways to 0:21:09.600 --> 0:21:13.320 de escalate the trade war between the world's two largest economies. 0:21:13.320 --> 0:21:16.760 To get the latest on the US China trade discussions, 0:21:16.800 --> 0:21:20.000 we go to Christopher Balding, Associate professor at Fulbright University 0:21:20.000 --> 0:21:24.320 in Vietnam. He's also a Bloomberg opinion columnist. Usually he's 0:21:24.320 --> 0:21:27.600 based in Saigon, but today he is in Los Angeles, California. Christopher, 0:21:27.640 --> 0:21:29.960 thank you so much for joining us. So what do 0:21:30.000 --> 0:21:33.600 you make of the move by China last night to say, hey, 0:21:33.680 --> 0:21:37.000 let's maybe de escalate this a little bit. I wouldn't 0:21:37.000 --> 0:21:39.560 read too much into it. At the same time, yesterday, 0:21:39.600 --> 0:21:42.680 for instance, they were criticizing the US for freedom of 0:21:42.760 --> 0:21:45.840 navigation patrols in the South China See. They were also 0:21:45.920 --> 0:21:50.080 calling for uh um an ending of the embargo against Huawei. 0:21:50.560 --> 0:21:53.760 Excuse me, um so I I'd be a little cautious 0:21:53.800 --> 0:21:56.800 reading too much into that one particular statement. So I 0:21:56.800 --> 0:21:59.000 want to read you something that Jim Bianco of Bianco 0:21:59.080 --> 0:22:02.359 Research said in an interview with the Market n z 0:22:02.480 --> 0:22:06.600 Z it's a German UH newspaper. He was talking about 0:22:06.640 --> 0:22:09.520 President Trump's tactics UH in the trade war, and he 0:22:09.560 --> 0:22:12.720 referred Spinal Tap, the sort of cult film from the 0:22:12.760 --> 0:22:16.000 nine eighties, saying, I think Trump is going to eleven 0:22:16.000 --> 0:22:18.240 on trade. He's going to turn it up so high 0:22:18.240 --> 0:22:20.000 that there is going to have to be a deal. 0:22:20.320 --> 0:22:21.760 That's the way he wants to do this. He will 0:22:21.840 --> 0:22:24.200 just make it intolerable so everybody has to sit down 0:22:24.480 --> 0:22:27.400 and cut a deal. Do you agree. I think there's 0:22:27.400 --> 0:22:30.479 some truth to that with with with a caveat, And 0:22:30.480 --> 0:22:32.040 what I mean by that is is if you if 0:22:32.080 --> 0:22:35.120 you actually go back and look over the past eighteen months, UM, 0:22:35.160 --> 0:22:37.320 there has been some back and forth, and there have 0:22:37.600 --> 0:22:40.800 been some stops and starts, but in reality, the trendline 0:22:40.840 --> 0:22:44.240 has been slow and steady escalation for the past eighteen months, 0:22:44.480 --> 0:22:46.720 which is where we're at today. UM. So if we 0:22:46.760 --> 0:22:51.600 stripped the rhetoric out, UM, it's actually been pretty pretty steady. UM. However, 0:22:51.640 --> 0:22:55.520 I think what's always important to remember is that UM, domestically, 0:22:55.640 --> 0:22:59.440 China has a lot more control over its economy, especially 0:22:59.440 --> 0:23:02.240