Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Jason Kelly. We're here every day bringing you the latest
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Speaker 1: Week on iTunes, SoundCloud, or Bloomberg dot Com. You can
Speaker 1: also listen to our radio show weekdays at two pm
Speaker 1: Eastern only on Bloomberg Radio. Six new cases of the
Speaker 1: virus reported in l A. Ten Americans now have died.
Speaker 1: According to Vice President Mike Penn's total coronavirus cases while
Speaker 1: globally topping more than I think ninety three thousands. So
Speaker 1: our finance team, as we do so well here at Bloomberg,
Speaker 1: looking at the virus it's impact on the financial sector,
Speaker 1: specifically M and A and on Wall Street traders. Here
Speaker 1: with that the Nan new and she is finance reporter
Speaker 1: at Bloomberg News, along with Nabila Ahmed Emin a reporter
Speaker 1: at Bloomberg News. So both of them in our Bloomberg
Speaker 1: Interactive Broker Studio. So let's start with M and A
Speaker 1: because I feel like, you know, Nabila, M and A
Speaker 1: is always import and right to kind of get an
Speaker 1: understanding of, you know, stuff happening in the financial sector,
Speaker 1: and I feel like when it stops, it's not a
Speaker 1: good thing. What are you seeing? What are you hearing? Well, Already,
Speaker 1: by the end of February, M and A was down
Speaker 1: twenty seven percent this year, and that has more to
Speaker 1: do that there are other issues that play here other
Speaker 1: than the coronavirus. But the timing was already bad, and
Speaker 1: we're seeing that people are pausing, hitting the paws button
Speaker 1: on deals. We've got an advisor who has been who
Speaker 1: is a confirmed Corona virus victim, so that deals on pause.
Speaker 1: We've got people putting the pause button on poles even
Speaker 1: as their deal meetings on the plane. Billion dollar plaus
Speaker 1: so cultimillion, multibillion dollar deals. Yeah, and so is there
Speaker 1: any sense of timing? I mean, did they just say
Speaker 1: we'll pick this up in the next quarter. We're going
Speaker 1: to try and do what we can buy phone. I mean,
Speaker 1: we were talking about with Lenan yesterday about this notion
Speaker 1: of even with recruiting filmaking is a face to face game.
Speaker 1: You know, you really are looking the other person in
Speaker 1: the eye in many cases to try and figure out
Speaker 1: do I want to enter into this transaction? Right? So
Speaker 1: how does this play out? Well? Exactly. One of the
Speaker 1: ones we know that was that was postponed was that
Speaker 1: they wanted to go and do a site visit into China,
Speaker 1: and of course, you know with the travel restrictions, that's
Speaker 1: not possible at the moment. And I think that we
Speaker 1: won't really know how it's going to play out until
Speaker 1: we know what's going to happen with the travel restrictions.
Speaker 1: We're not talking about putting in stricter restrictions, all right.
Speaker 1: So M and A folks stuck at their desk, so
Speaker 1: to our traders, and we often hear that because traders
Speaker 1: are busy, but it's taken on a whole new meeting.
Speaker 1: Lean in that's right, stuck at the desk used to
Speaker 1: me and that you're having a good busy day on
Speaker 1: the desk. But these days banks are looking at how
Speaker 1: to move traders off the desk in the event of
Speaker 1: an illness, and it's really tricky to do that because
Speaker 1: Wall Street traders are dealing with super fast internet. I
Speaker 1: don't know how faster internet is at home, but it's
Speaker 1: certainly never fast enough when I'm trying to exactly. So
Speaker 1: if it's not fast enough for homeland, it's not fast
Speaker 1: enough for high speed trading. On top of which, they
Speaker 1: have a ton of data all of these internal systems,
Speaker 1: and also they have to be recorded and monitored by clients. Right. Well,
Speaker 1: there's that whole security element. And and there's also even
Speaker 1: with all the machines, there's a human element. Uh, that's
Speaker 1: there as well. We we talked about that yesterday. So
Speaker 1: are people sort of creating workarounds? What are they doing?
Speaker 1: So it's all happening in progress as we speak. Different
Speaker 1: banks are trying to figure out, Okay, first of all,
Speaker 1: who are the critical employees. How do we split them
Speaker 1: up into different shifts to make sure that not everyone
Speaker 1: gets sick all at once? Dust off the disaster recovery sides,
Speaker 1: go to their places in New Jersey or wherever, and
Speaker 1: dust off those machines, make sure they work. Um. And
Speaker 1: but I used to say that that doesn't even become problematic, right,
Speaker 1: depending on how severe the virus become. That's true. So
Speaker 1: there is a lot of scenario planning. Right now, we
Speaker 1: still don't know how it's going to play out, and
Speaker 1: so there's a lot of thinking about different types of scenarios,
Speaker 1: whether disaster sites are even affected as well. Maybe a
Speaker 1: lot you know, come back in on M and A.
Speaker 1: So let's say we see you're already seeing a slowdown.
Speaker 1: I mean, I do wonder again, Jason, I talked about
Speaker 1: this a lot that once we have a better idea
Speaker 1: of how big the virus out break is going to
Speaker 1: be um here in the US, so really globally, until
Speaker 1: we start to see less cases and we get our
Speaker 1: hands around it, um you know, until we get to
Speaker 1: that point, it's hard to predict, like do all those
Speaker 1: M and A deals that are maybe putting on the
Speaker 1: shelf right now or on the side, do they come
Speaker 1: back in the next half of the year. It's hard
Speaker 1: to know because it depends with the market and the
Speaker 1: economic environments are There's a lot of variables out there exactly.
Speaker 1: And also the election campaign is a big headway they see,
Speaker 1: and nobody wants to go into that campaign the deal
Speaker 1: outstanding in front of the regulators. But I will say
Speaker 1: but that for some deals it's actually proving to be
Speaker 1: good news. For example, Thermo Fisher bought kayajin yesterday ten
Speaker 1: billion plus deal and the only reason to see you
Speaker 1: told us that they were able to come to an
Speaker 1: agreement was the market volatility. Uh sort of jolted the
Speaker 1: share price, and he said they've allowed them to come
Speaker 1: to a midpoint and do that deal because they'd been
Speaker 1: in talks for months. I did wonder about with some
Speaker 1: of some of the share prices being beaten up, where
Speaker 1: somebody might say, especially if it's a stock deal, you know,
Speaker 1: to buy something, it could be cheaper at that point.
Speaker 1: I don't know if you're buying with your own and
Speaker 1: if he's been wanting to sell your company but you've
Speaker 1: been holding out for that last dollar or two dollars,
Speaker 1: you're probably looking at the market and saying, you know what,
Speaker 1: I'll just let it go, right, I want to get
Speaker 1: this done. All right? What happens next on Wall Street? Linda?
Speaker 1: I mean, what do you hear from people in terms
Speaker 1: of either is it a wait and see sort of
Speaker 1: thing or people sort of moving ahead as if not
Speaker 1: to be too crazy about it, but like armageddon is
Speaker 1: upon it? Like what do you want to know? I
Speaker 1: think it's a precautionary mode right now. So they are
Speaker 1: dusting off the playbooks trying to figure out where to
Speaker 1: put people if the virus should spread, um, looking at
Speaker 1: what happened in Asia. But at the same time, Asia
Speaker 1: is a different case because they can always kick things
Speaker 1: around to London and New York. What happens if this
Speaker 1: becomes a bigger global phenomenon, where do people go? So
Speaker 1: there's a lot of planning still being done right now,
Speaker 1: and it's still very much up in the air. They're
Speaker 1: also talking to regulators about this. Could we see a part,
Speaker 1: you know, a scenario where there is no trading or
Speaker 1: trading volumes are reduced dramatically. I think that's possible, um,
Speaker 1: But I wouldn't raise that alarm just yet. I think
Speaker 1: people are still trying to plan business as usual as
Speaker 1: possible cases right now. So what can we do to
Speaker 1: make sure that continuity, continuity continues And so far people
Speaker 1: are very focused on resilience and continuity rather than that
Speaker 1: armageddon scenario. And meanwhile, we're gonna talk about this later
Speaker 1: on in the show with Heather Prolberg. Steve Schwartzman giving
Speaker 1: an interview over in India, was like, we're in we're
Speaker 1: buying here, you know, evaluations down and Carol sent sent
Speaker 1: me the story this morning and it just said crisis
Speaker 1: playbook totally right. Funding opportunity, especially with beaten you know,
Speaker 1: beating up assets. Absolutely, and you know, even if you
Speaker 1: look at Clorox, for example, that stock is up. Yeah,
Speaker 1: it's a great story, exactly. Don't touch my Clorox wixact
Speaker 1: they're all gone. I used them all. And Collegi's offering
Speaker 1: ten dollars to that half bottle of hands. We're going
Speaker 1: to start a bidding war here, all right, Novilla, I'm
Speaker 1: thank you so much. M and a reporter on the
Speaker 1: D team here at Bloomberg and Leninuin finance reporter for Bloomberg,
Speaker 1: keeping an eye on Wall Street and its reaction really
Speaker 1: in terms of doing its business amid all of this
Speaker 1: virus worry. And my god, I loved George Harrison's I
Speaker 1: just love it. Um Hey, check this out, everybody, because
Speaker 1: life insurance companies are pursuing wealthy private colleges and yeah,
Speaker 1: this is what they're doing to loan them money. So
Speaker 1: what is this all about. Let's get into the details
Speaker 1: with Janet Lawrence. She's Endowment's reporter here at Bloomberg News
Speaker 1: made her way into our interactive brokers studio. What's going
Speaker 1: on here, Janet? So if you think about who's borrowing money,
Speaker 1: colleges are very likely to do so. They've got to
Speaker 1: renovate dorms, they've got to build dorms, they've got to
Speaker 1: make improvements to classrooms. So why not when the money
Speaker 1: and they've typically go out to the public markets, you know,
Speaker 1: tax exempt or taxabow bonds, but life insurance companies, you know,
Speaker 1: they need to put their money to work. And you know,
Speaker 1: who wouldn't want to loan money to a school like
Speaker 1: Princeton And so literally, as you lay out in your story,
Speaker 1: they just started calling, like literally tell us about that. Yes, Um,
Speaker 1: a couple of schools said they decided to take this
Speaker 1: call and it turned out to be a pretty good
Speaker 1: deal for them. Um, the University of Richmond said, yet
Speaker 1: it was the result of a cold call and they
Speaker 1: liked doing this deal because it was quicker. Um. You know,
Speaker 1: the question is am I going to lose out on
Speaker 1: the interest rate that I want? And you know with
Speaker 1: public deals it typically takes longer. So the question is,
Speaker 1: you know, could they have gotten a better deal? In
Speaker 1: the public markets if they waited. But they like the
Speaker 1: ease of it. There's also a lot less disclosures, potentially
Speaker 1: less fees. So you know, they seem to like it.
Speaker 1: So what are the what's the downside to all of this? Well,
Speaker 1: it could be a higher interest rate if you you know,
Speaker 1: if you didn't wait. Um, but they you know, they
Speaker 1: seem to like it. And are these WhoSay the colleges
Speaker 1: and as life insurance companies, they've got to put their
Speaker 1: money to work somewhere. And are these big insurance companies
Speaker 1: that we're talking about. Are these sort of mid tier
Speaker 1: life john hand And so why haven't they done this before? Um,
Speaker 1: you know, it's interesting. They decided that this could be
Speaker 1: a good new market for them and they started pursuing it.
Speaker 1: Priston did its first deal in two thousand and twelve. Now,
Speaker 1: keep in mind, they're not going to go to every
Speaker 1: college because you know, the schools that we mentioned in
Speaker 1: this in the story are some of the richest colleges
Speaker 1: out there. Right, Well, it's risk, right, you want you
Speaker 1: don't want to take on too much risk your insurance
Speaker 1: company especially absolutely, and they're looking to match their liabilities. Now,
Speaker 1: we didn't really find these in in public schools. And
Speaker 1: you know, probably the reason is they have a different
Speaker 1: sort of competitive, competitive bidding structure, and you know, the
Speaker 1: private schools could just do these deals. Is this not
Speaker 1: you know, Jason, I think about how much time we
Speaker 1: spend at least salmoys to show you know, about private markets, right,
Speaker 1: and I do money undercover, money money undercover, But I
Speaker 1: do think about it. Is this just another example of
Speaker 1: being able to rather than kind of in some way
Speaker 1: tap the public markets go into the private markets. Absolutely
Speaker 1: financing need or financial need. Absolutely, And you know, the
Speaker 1: public market deals are all very public and they're all
Speaker 1: disclosures and the schools have to put out a lot
Speaker 1: more information. But is that good transparency? Well, um, that's
Speaker 1: a very good question. You know, the colleges don't have
Speaker 1: to disclose things um as, but they do have their
Speaker 1: public debt, so it is out there what their enrollment
Speaker 1: numbers are. But if you're saying a struggling small college,
Speaker 1: you know, chances are these life insurance companies wouldn't want
Speaker 1: to lend you anyway. But there is less transparency. What
Speaker 1: does the student deduce the returns for the for the
Speaker 1: insurance companies? Right? Because they're thinking about I mean, they
Speaker 1: need a certain amount of return, right absolutely, And again
Speaker 1: these are not you know, risky colleges that are going
Speaker 1: to go under, the little tiny colleges in the Northeast
Speaker 1: that you know are struggling for students. And so how
Speaker 1: does this fit in last question, how does this fit
Speaker 1: into sort of the broader themes that you're seeing in
Speaker 1: terms of how colleges uh rich and poor sort of
Speaker 1: pay for what they need. Well, again, you're seeing a
Speaker 1: dichotomy between the very rich and the very poor because
Speaker 1: they can they can take advantage of these kinds of deals. Um,
Speaker 1: and if you're again you're smaller, you're less wealthy, potentially
Speaker 1: a bigger risk you're not going to be given these
Speaker 1: types of opportunities. All right, Janet Lauren, thank you so
Speaker 1: much and down supporter for Bloomberg are expert on all
Speaker 1: things higher education and a really interesting story Princeton Vanderbilt
Speaker 1: wooed by life insurance companies literally calling up me like, hey, bro,
Speaker 1: you need to borrow some money. It's a twist in
Speaker 1: turns though also I feel like of financial companies, insurance
Speaker 1: companies totally, like I do wonder about exposure and transparency.
Speaker 1: I don't know like the risks, but as Janet mentioned,
Speaker 1: you know they're going after certainly well known, well financed
Speaker 1: UM and deep endowment UH colleges and universities. So fascinating
Speaker 1: to see. This is Bloomberg Business Week with Carol Messer
Speaker 1: and Jason Kelly on Bloomberg Radio. Well, a couple of
Speaker 1: stories in the magazine this week that you've really got
Speaker 1: to know about, both timely and in the news. Once
Speaker 1: about an abortion rights case coming before the Supreme Court.
Speaker 1: We're gonna talk with Bloomberg US healthcare reporters Cynthia Coons
Speaker 1: about that. She's on the phone in New York. The
Speaker 1: other story, also in the headlines, is of course about
Speaker 1: the Democratic race for president Super Tuesday, and Josh Green
Speaker 1: does national correspondent at Bloomberg Business Week. He's joining us
Speaker 1: on the phone from Washington to see both stories. As
Speaker 1: I said in the magazine, hitting newsstands later this week
Speaker 1: in at Bloomberg Dot comment on the terminal, Cynthia, we
Speaker 1: do want to start with you tell us about this case.
Speaker 1: Thanks thanks for having me so. The Supreme Court today
Speaker 1: hold an abortions piece that involves the law that's around
Speaker 1: requiring hospital admitting from which is for abortion providers. It's
Speaker 1: an identical law, nearly identical law to one that day
Speaker 1: for about four years ago out of Texas. This time
Speaker 1: it's out of Louisiana. But the reason this case is
Speaker 1: really critical is that the court has agreed to hear
Speaker 1: in Louisiana's argument that doctors shouldn't be able to bring
Speaker 1: challenges to these laws in the first place. Um. If
Speaker 1: Louisiana successful with that argument, not only would this law
Speaker 1: Abyan say did, but it would flow the play offs
Speaker 1: all the other litigation going on around the country to
Speaker 1: challenge laws that are specifically targeted out abortion providers. UM, Cynthia.
Speaker 1: One of the things that you know you've been working
Speaker 1: on is actually kind of a series of articles are
Speaker 1: on this. The first was sort of one that we
Speaker 1: did also recently about abortion tax and sort of the
Speaker 1: the business implications that that abortion providers are facing and
Speaker 1: that's actually even driving them, um a lot of them
Speaker 1: to close. And so this is obviously it looks like
Speaker 1: almost like a two pronged attack on on abortion rights.
Speaker 1: And so what what is the likelihood that this Louisiana
Speaker 1: case becomes I mean, it almost supersedes the abortion tax,
Speaker 1: because if the Supreme Court wigs into this, what could happen. Well,
Speaker 1: that's an excell one point. These go hand in hand.
Speaker 1: So the first attack is the legislative one. The statehouses
Speaker 1: around the country have been passing laws that make it
Speaker 1: harder for abortion providers to operate. It started since about
Speaker 1: two thousand and ten when Republicans took over more and
Speaker 1: more state houses throughout the country. But that's also led
Speaker 1: to what's known as the abortion tax, and that's where
Speaker 1: businesses or vendors that might work with abortion providers become
Speaker 1: reluctant to do so, or cancel contracts or back out
Speaker 1: or won't shore them, specifically over concerns that they're riskier
Speaker 1: than they may actually be in real life. So running
Speaker 1: an abortion clinic is particularly hard right now from both
Speaker 1: a business and legal perspective. But the one avenue that
Speaker 1: abortion providers have had has have been the courts, and
Speaker 1: they've been able to challenge these laws that go after
Speaker 1: their businesses. Specifically, these are laws that say an abortion
Speaker 1: doctor may need hospital many privileges, but wouldn't necessarily assign
Speaker 1: a comparable regulation to another provider that provides some sort
Speaker 1: of comparable care outpatient care. So these laws are called
Speaker 1: by the abortion movement, they're called abortion rights movement. They're
Speaker 1: called trap laws because they're perceived to target these providers
Speaker 1: specifically and back them into a corner. And so the
Speaker 1: challenge here is if abortion doctors are not a out
Speaker 1: to be the ones to represent their patients in these cases,
Speaker 1: then there really isn't any mechanism for these laws to
Speaker 1: be knocked down. It would come down to whether or
Speaker 1: not you could find a woman seeking an abortion willing
Speaker 1: to carry out a case. And that's a really challenging prospect.
Speaker 1: So hearings today, when do we have resolution? Likely by June.
Speaker 1: We're gonna leave it there. Cynthia Coons, thank you so much.
Speaker 1: US healthcare reporter from Bloomberg joining us on the phone
Speaker 1: from New York City. Let's heading down to our ninety
Speaker 1: and nine went studio in d C. Josh Green Is
Speaker 1: they're recovering from Super Tuesday. All right, we've had a
Speaker 1: lot happen over the last I blacked out, Josh, what happens?
Speaker 1: Let the heck happen? Where are we now? Where do
Speaker 1: we go from here? John? I woke up this morning
Speaker 1: and had to pause from me and think if I
Speaker 1: dreamed all that right, it actually just happened. Um, but
Speaker 1: but it actually did happen. The race has been completely upended.
Speaker 1: We've gone from a world where Bernie Sanders was the
Speaker 1: front runner, looked like he would amass a majority, uh,
Speaker 1: if not a plurality of delegates going into the Milwaukee
Speaker 1: convention in July, to all of a sudden, Joe Biden
Speaker 1: comes storming back, wins ten states, has the delegate lead,
Speaker 1: and is now the clear favorite to emerge as the
Speaker 1: Democratic nominee to challenge Trump in the fall. Who would
Speaker 1: have thought that a couple of weeks ago. All right,
Speaker 1: so yeah, I think now it's okay, who potentially will
Speaker 1: be the first the individual who goes up against President Trump?
Speaker 1: How do you see it between Bernie? I mean, the
Speaker 1: race isn't over yet in terms of the race and
Speaker 1: over and there's a long way to go. In the
Speaker 1: piece I did in Business Week this week points out
Speaker 1: that there is an eerie parallel that a lot of
Speaker 1: Democrats are worried about with where you have an establishment
Speaker 1: favorite who has a delegate lead, uh, and yet isn't
Speaker 1: going to wrap this thing up for months and months
Speaker 1: and months, and is running against an insurgent in Bernie Sanders,
Speaker 1: whose supporters have already been jilted once. We're very unhappy
Speaker 1: about it. In now they face the same thing this
Speaker 1: time around. And Joe Biden's job, should he emerge as
Speaker 1: the nominee, is going to be to try and un
Speaker 1: by a party that is going to have to stick
Speaker 1: together if they're gonna have any chance of defeating Trump
Speaker 1: in the fall. Well, the other thing that you point
Speaker 1: out so well in the article, Josh, is this existential
Speaker 1: moment for the for the Democrats where one candidate sort
Speaker 1: of looks like the future and one maybe speaks to
Speaker 1: its past. Yeah. I mean the remarkable thing about the
Speaker 1: way that the race has narrowed since last night, this
Speaker 1: this is functionally a two man affair right now between
Speaker 1: Joe Biden, uh in Bernie Sanders. And if you look
Speaker 1: at Biden's coalition who supported him last night, it was
Speaker 1: essentially a throwback to the Obama coalition where Biden one
Speaker 1: senior voters, he won African Americans, and he won white
Speaker 1: collar professionals in the suburbs who supported Obama and helped
Speaker 1: drive Democrats mid term games two years ago whereas Sanders,
Speaker 1: despite the fact that he's seventy eight years old, really
Speaker 1: represents the young, rising generation of Democrats, not just young people,
Speaker 1: but working class Latino. We saw that coalition in Nevada,
Speaker 1: which is a good proxy for what the future of
Speaker 1: America's going to look like. The problem for Biden is
Speaker 1: that the one part of the Obama coalition he hasn't
Speaker 1: managed to draw is young people. They are still loyal
Speaker 1: to Bernie. So what we're gonna have to look for
Speaker 1: over the next two three months is can he find
Speaker 1: a way to bring them into his coalition, unify the party,
Speaker 1: and have a fighting chance against And he was dismissive.
Speaker 1: If I remember one of an interviews where somebody asked
Speaker 1: him about the young population. He said something to the
Speaker 1: effect that, well, they don't vote anyway, so yeah, yeah,
Speaker 1: Well you know that's always the politicians move. Why doesn't
Speaker 1: so and so support you? Oh, that's not important. But
Speaker 1: inside inside Biden's campaign, I promise you they are acutely
Speaker 1: aware of the fact that they have a real challenge
Speaker 1: in attracting younger voters and exciting younger voters. Hillary Clinton
Speaker 1: was unable to do so in lost the race, so
Speaker 1: Biden is well aware that he's going to have to
Speaker 1: do better. All right, So Michigan, Uh, that is front
Speaker 1: and center. It feels like next Tuesday. What else are
Speaker 1: you watching their Josh Well, I think Michigan is your point.
Speaker 1: I was gonna be fascinating because four years ago Bernie
Speaker 1: Sanders unexpectedly one Chigan. Now uh you have it looks
Speaker 1: like Biden has pulled ahead and polls. I think that's
Speaker 1: gonna be a good proxy for whether or not Biden
Speaker 1: has a chance to walk away with this race if
Speaker 1: he wins, or can Bernie MoU to comeback, you know
Speaker 1: as delegate as vote totals rolling from California, which can
Speaker 1: take weeks, Bernie's delegate totally is going to climb should
Speaker 1: he repeat his win in Michigan. I think then we
Speaker 1: go through a whole news cycle of is Bernie coming back? Clearly,
Speaker 1: Bernie is sacrificing nothing. He just came out and gave
Speaker 1: a very peevish press conference in which he attacked the
Speaker 1: establishment in the press and everybody else. So there is
Speaker 1: no sign whatsoever of the party coming together. I think
Speaker 1: Michigan will be the first real indicator of which way
Speaker 1: things are headed. In the post Super Tuesday World. Alright, well,
Speaker 1: great reporting, as I always Josh, thank you so much. Well,
Speaker 1: they appreciate and check out Josh's story along with Cynthia
Speaker 1: Coon's story. They'll be in the magazine later on this week,
Speaker 1: of course. Josh Green, who follows politics for us here
Speaker 1: at Bloomberg Business and our thanks to Joel Weber as well,
Speaker 1: writing along with us across those two stories. It's really uh,
Speaker 1: we get a snink peak. It's a great issue. So
Speaker 1: as the race for the Democratic presidential nomination narrows, industries
Speaker 1: and companies and those of us who report on them
Speaker 1: are thinking about where the candidates stand on issues, and
Speaker 1: a big one is where they stand when it comes
Speaker 1: to technology. Writing about that Today's Joshua breustein Tech Writer
Speaker 1: here Eppelenberg Business Week in our Interactive Broker Studio. So
Speaker 1: looking at Bernie Sanders, looking at Joe Biden, and where
Speaker 1: they stand when it comes to technology, So break it
Speaker 1: down for us. So, I think the easiest way to
Speaker 1: look at it is that Bernie Sanders is someone who
Speaker 1: inspires very strong emotions. He's taken basically the anti tech
Speaker 1: industry stands on any number of um issues he has
Speaker 1: said he would absolutely look into breaking the big tech
Speaker 1: companies up UM. He wants to ban facial recognition law enforcement.
Speaker 1: UM wants much stronger lay laws UM in ways that
Speaker 1: would impact the tech industry. And Joe Biden has sort
Speaker 1: of criticized the tech companies but hasn't been very hard
Speaker 1: on them one way or the other. And honestly, I
Speaker 1: don't think people were thinking about him all that much
Speaker 1: until frankly last night. Yeah, until now when they really
Speaker 1: are UM. And part of that is he's got some
Speaker 1: ties there and has raised some money from the tech world,
Speaker 1: right sure, he's He's done some fundraisers from the large
Speaker 1: tech companies. He hasn't raised a whole lot of money
Speaker 1: in comparison to some of the other candidates, and he
Speaker 1: certainly hasn't done as well in raising from tech employees.
Speaker 1: But he has been a more conventional Democratic candidate. He
Speaker 1: goes to the big bit, he goes to big businesses
Speaker 1: and has asked for some money. I know he did
Speaker 1: an Amazon UM fundraiser late last year, for instance. Well,
Speaker 1: and I do wanted to you know, UM, because we
Speaker 1: are at a juncture where I do feel like there's
Speaker 1: some really big issues when it comes to technology, whether
Speaker 1: it's privacy issue is whether or not there needs to
Speaker 1: be more regulatory oversight over social media companies. But I mean,
Speaker 1: how much I guess Joshua is can the president do versus?
Speaker 1: Does it need a Congress on its side to pass
Speaker 1: rules and you know, a regulatory framework. I think that
Speaker 1: that is a very good point. There's there's been a desire,
Speaker 1: a state of desire to have some new privacy rules
Speaker 1: for the better part of two years now. But the
Speaker 1: fact is Congress isn't passing much of anything, and there
Speaker 1: are very different ideas about how those rules would be
Speaker 1: approached from the Democrats and the Republicans, and a new
Speaker 1: president isn't going to come into a very different situation.
Speaker 1: Um So, I think it's interesting to look at kind
Speaker 1: of the rhetorical positioning of the president's presidential candidates that
Speaker 1: can have a big difference. But yeah, as you said,
Speaker 1: they're not necessarily going to come and get to do
Speaker 1: whatever they want. And fair to say, what's would I
Speaker 1: do here? The relationship greatness coming President Trump the tech industry,
Speaker 1: It's complicated. It is complicated. Um. Trump has been quite
Speaker 1: critical of the tech companies. Uh, he is loudly proclaiming
Speaker 1: that companies like Facebook and Google have an anti conservative bias.
Speaker 1: On the other hand, he has um used them very
Speaker 1: effectively as a megaphone. UM. His he's proven to be
Speaker 1: a very effective communicator, um based on using the specific
Speaker 1: kind of tech communications that happened there. Um. He's also
Speaker 1: you know, his d J is going after anti trust issues.
Speaker 1: So you see, um, you're seeing it from all sides
Speaker 1: with him, right. Well, and it's interesting. You know, there's
Speaker 1: been a lot written and talked about recently about Brad Parscale,
Speaker 1: the campaign manager for the president's re election campaign. And
Speaker 1: I mean, this is a guy who came up through
Speaker 1: the digital world and so effectively used social media Facebook
Speaker 1: specifically to get the president elected. Right Absolutely, the defining
Speaker 1: characteristic of the Trump campaign was a much more aggressive
Speaker 1: digital strategy, or I should say one of the defining
Speaker 1: characters I think, I think you could say define it.
Speaker 1: I mean, especially if you sort of synthesize the the
Speaker 1: now president on Twitter, you think about the Facebook strategy,
Speaker 1: you think about all the different elements and also some
Speaker 1: of the relationships that the president has managed to cultivate,
Speaker 1: be it Peter til Um. You know, we and others
Speaker 1: have reported that he met with Mark Zuckerberg at the
Speaker 1: White House not too long ago, I believe when Zuckerberg
Speaker 1: was in d C to testify on Kevin, you know,
Speaker 1: and again it is a it's a tortured relationship. Maybe
Speaker 1: it's the other way to I don't think that's an
Speaker 1: option on Yeah, no, right, um Joshua. I I am
Speaker 1: also curious, you know, is big tech getting smarter in
Speaker 1: terms of reading the writing on the wall and just saying, Okay,
Speaker 1: let's figure out how to police ourselves so that we
Speaker 1: can kind of take it away from UM d C.
Speaker 1: I think that that's what they would like to do. UM.
Speaker 1: To be fair, they have seen a lot of public pushback,
Speaker 1: they haven't faced any real tangible consequences. Yeah, we'll see
Speaker 1: what happens with these antitrust investigations. I think that those
Speaker 1: are a significant threat. But in terms of Congress coming
Speaker 1: up with some way to put rules on them, you know,
Speaker 1: I privately a lot of people within the tech industry
Speaker 1: say that they're not quite as concerned about that as
Speaker 1: maybe it seems like they would be. One last question,
Speaker 1: us versus Europe. Yeah, I think Europe is a completely
Speaker 1: different situation. The you really see a much more aggressive
Speaker 1: stance from policymakers over there. All right, Joshua Brustine, thank
Speaker 1: you so much. Always good to catch up. Tootling right, Well,
Speaker 1: he's going to back. If you don't know what we mean,
Speaker 1: you have to go back to our Twitter and you're
Speaker 1: just gonna have to listen to what we did last week. Yeah, exactly,
Speaker 1: just listen to the you and if you don't know
Speaker 1: that joke, you need to lock in. Yeah, that's just
Speaker 1: sad for you. Yeah, totally. Joshua Brustine, one of the
Speaker 1: most read writers here. This is a great story because
Speaker 1: now there are two and for all intents and purposes,
Speaker 1: as Elizabeth and how they feel about a different a
Speaker 1: matter for whether their's healthcare, whether it's big tech. I mean,
Speaker 1: these are things that Americans should want to know about,
Speaker 1: right and so entrenched in our daily lives as we know.
Speaker 1: I'm broc journal now. But you let me drive. No, no, no, no,
Speaker 1: he's going to drive home. Please, I'll do the right drivel.
Speaker 1: I want to drive, Just drive, baby, question trying. This
Speaker 1: is the drive to the globe. Give me thanks, We'll
Speaker 1: drying us down on Bloomberg Radio. It is time for
Speaker 1: the drive to the clothes on this Wednesdays. You just
Speaker 1: heard from Charlie Equities. We definitely have a rally underway.
Speaker 1: We're just topping off and coming a little bit lower,
Speaker 1: but we're still pretty much near our highs of the session.
Speaker 1: All Lance is back with us research director at lants
Speaker 1: Global dot Com President Alan beat Lance and associates, and
Speaker 1: he's joining us on the phone once again from Toledo, Ohio. Allen,
Speaker 1: nice to be here with you again. Uh. Interesting week, Jason,
Speaker 1: I have been kidding. I feel like since Monday, we
Speaker 1: keep thinking, all right, wait, tomorrow's Friday. Right now, it's
Speaker 1: still just Wednesday. So tell me a little bit about
Speaker 1: the market activity that you've seen. We've had folks say,
Speaker 1: you know what, it was overdone. It's a buying opportunity.
Speaker 1: Folks are overdoing it. Other folks who said, you know what,
Speaker 1: we need to be a little bit more cautious here.
Speaker 1: How do you see it? Well, as you know, Carol,
Speaker 1: we we were raising cash as far as uh into
Speaker 1: the new highs just two weeks ago. And the way
Speaker 1: I see it is is that you're gonna have this
Speaker 1: volatility for for a while, you know, I would be
Speaker 1: buying and accumulating with limit orders below the market on
Speaker 1: those um you know, multiple successive down you know, thousand
Speaker 1: point days and and um you know, if you're overexposed
Speaker 1: inequities or especially in check or from the high liers,
Speaker 1: I would be using the strength that we've had, you
Speaker 1: know as far as today and and Monday to to
Speaker 1: to lighten up. I think you're gonna have this volatility
Speaker 1: in both directions. Uh uh. It's a battle of the
Speaker 1: uncertainty of the coronavirus, you know versus uh incredible amount
Speaker 1: of cash on the sidelines and interest rates so low
Speaker 1: that uh. I think if you're a long term investor,
Speaker 1: which we are buying high quality, income producing um equities
Speaker 1: here into weakness and panic selling makes a lot of sense.
Speaker 1: And so what are specific names that seemed to be
Speaker 1: standing out to you amid all of this salon. Well,
Speaker 1: there's a wide variety of cvs uh as far as
Speaker 1: in the healthcare area, under under sixty dollars, the yield
Speaker 1: is three point three uh So, so you know you
Speaker 1: can have that opportunity uh uh from acid managers. You
Speaker 1: can buy an invest go under fourteen dollars. It's a
Speaker 1: nine percent increasing of it in UM again. Uh. You know,
Speaker 1: I don't know where the bottom is, but I think
Speaker 1: if you're buying at those levels and just hold it
Speaker 1: long term, it's going to be you know, like ten
Speaker 1: years ago when we were buying Apple and it became
Speaker 1: an income play UM, and you're gonna have not only
Speaker 1: followed incomes compared to one percent on the tenure treasury,
Speaker 1: but you're also going to have some appreciation. Uh, as
Speaker 1: long as you're looking at it from you know, to
Speaker 1: to to three year time frame. Allen. One thing I
Speaker 1: do want to ask you. I mean, healthcare is our
Speaker 1: best performing group here in the SNP five hundred among
Speaker 1: the major industry group, it's up about five point seven.
Speaker 1: And that is on the big Biden win. Uh. In
Speaker 1: Super Tuesday. Of course, Bernie Sanders seen as you know,
Speaker 1: offering you know, medicare you know for all, health care
Speaker 1: for all. But there is the question and doing a
Speaker 1: way with private insurance. So you know, the health care
Speaker 1: sector has been weighed down as Bernie Sanders has you know,
Speaker 1: moved up in the polls. That seemed to change as
Speaker 1: a result of last night's voting. So I do wonder
Speaker 1: is healthcare play do you see opportunities in that right
Speaker 1: now or is it too suit it now? We like it,
Speaker 1: I mean, we we like buying high quality, you know,
Speaker 1: income producing healthcare. We also like uh, you know, I
Speaker 1: think the next step is financials. Uh that they've just
Speaker 1: been hammered from a standpoint of lower interest rates squeezing
Speaker 1: their margins and and I think there's some opportunity there
Speaker 1: and and that's been overdone. So so whenever you have
Speaker 1: these extremes, Carol, I think it's it's a situation where
Speaker 1: you want to be on the other side. Pick up
Speaker 1: quality names that you know you wouldn't get at these
Speaker 1: prices otherwise, and uh, and be patient with them. What
Speaker 1: are you avoiding right now? Allen? You know I would
Speaker 1: not chase the high flyers. I mean, you know, we
Speaker 1: we talked about that last time. You know, Apple. I
Speaker 1: love the company and we've owned it for for decades,
Speaker 1: but uh, you know, over three hundred you know, I
Speaker 1: wouldn't be buying it. And and if you own too much,
Speaker 1: I would sell it as as it as it moves up. Again,
Speaker 1: not the whole position, but there's just so many people
Speaker 1: buying the same uh stocks with with the passive investing
Speaker 1: and and and that was part of this dramatic sell
Speaker 1: off we had last week, was just everybody's you know,
Speaker 1: getting out of the door at the same time. And
Speaker 1: and uh, I don't I don't think that's over. I
Speaker 1: think you're gonna see volatility in both directions. So so
Speaker 1: you know, I wouldn't be chasing these companies that uh,
Speaker 1: you know everybody loves. Uh and and again we might miss,
Speaker 1: you know, some of the latter half of the move,
Speaker 1: but I think the easy money has been made on
Speaker 1: Apple and and uh, you know, it's it's it's gonna
Speaker 1: be an average performer almost like what errture halfway. I mean,
Speaker 1: he had such great performance and the last ten years
Speaker 1: he's really you know, underperformed. And I think you're going
Speaker 1: to see that in some of these companies that are
Speaker 1: just uh, you know, almost iconic from evaluation standpoint. Is
Speaker 1: this a market to load up on shorts with the
Speaker 1: expectations that we're going to head down again? Yeah, you know,
Speaker 1: I'd be very careful with the shorts because you're going
Speaker 1: to see this volatility, you know, uh, continue at least
Speaker 1: for for a few months, four months, until we get
Speaker 1: some some bass building. But you know, we we really
Speaker 1: haven't taken advantage of the shorts like we should. Our
Speaker 1: first step was to build cash, and we did that
Speaker 1: and now we're redeploying that those those profits. But you know,
Speaker 1: I would be careful on the short side just because
Speaker 1: of this incredible amount of cash on the sidelines. Uh.
Speaker 1: But you know, if markets go back to the new
Speaker 1: highs and and and they're not taking an account as
Speaker 1: far as the economic slowdown with with this coronavirus, then
Speaker 1: then yeah, I would look at re establishing some short positions,
Speaker 1: but but not yet. All Right, Allen Lands, always good
Speaker 1: to catch up with you, Director of research at LANTS
Speaker 1: Global dot com, President of Allan by Lands and Associates,
Speaker 1: joining us on the phone from Toledo, Ohio. Thanks for
Speaker 1: listening to Bloomberg Business Week. You can subscribe to the
Speaker 1: podcast on iTunes, SoundCloud, or Bloomberg dot com. You can
Speaker 1: also listen to our radio show every weekday at two
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