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Speaker 1: Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane

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Speaker 1: jay Ley. We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course on the Bloomberg Stephen Stanley,

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Speaker 1: you're gonna push aggressively against this, Emirs Puerplant Morgan Stanley

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Speaker 1: with the global selling equities. Mike Wilson has been cautious

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Speaker 1: on equities as well. Lan Zettner has been below you

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Speaker 1: on g d P. But you just flat out in

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Speaker 1: a claridean way push against us. You think, if anything,

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Speaker 1: we could get neutrality out of chairman political Yeah, I think.

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Speaker 1: I mean I haven't. I thought all along that they

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Speaker 1: were not going to ease in July, and I still

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Speaker 1: feel that way. Um, and I think it's time. You know,

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Speaker 1: the f has been, in my view, has been very coy, uh,

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Speaker 1: particularly the leadership and kind of letting things play out

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Speaker 1: and hoping that the data would kind of push the

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Speaker 1: market away from the aggressive easing expectations. Perhaps and we've

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Speaker 1: gotten some movement, but uh, I think with three weeks

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Speaker 1: ago to the meeting, Uh, if if they are thinking

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Speaker 1: they might not move, they're gonna need to tell us that. John.

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Speaker 1: This brilliantly sets up the polarity that's out there. We've

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Speaker 1: got Steve Stanley on the edge of solid. Maybe you

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Speaker 1: diminished GDP, but not. And then what Morgan Stanley is

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Speaker 1: saying is jaw dropping. The chairman of the fete's uncomfortable

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Speaker 1: with the outlook. He's communicated that too, is Steven. I

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Speaker 1: just wonder whether the outlook and the risks around it

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Speaker 1: have diminished somewhat sufficiently enough over the last couple of

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Speaker 1: weeks to say we don't need a right cut at

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Speaker 1: the end of this month. Is that your view? That's

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Speaker 1: my view. I mean, I think the number one risk

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Speaker 1: obviously is the trade situation. And um, we were just

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Speaker 1: coming off of the Mexico thing at the at the

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Speaker 1: last FED meeting, and we were still waiting for the

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Speaker 1: G twenty, And while there was certainly no final solution

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Speaker 1: to the US China talks at the G twenty, I think, um,

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Speaker 1: you know we we we got probably the best we

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Speaker 1: can hope for. And I think since then you've also

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Speaker 1: seen some improvement in the data. Obviously, after a week

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Speaker 1: may pay all number. We got a better number in June. UM,

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Speaker 1: it seems to me that the Q two GDP expectations

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Speaker 1: are probably, if anything, a little better now than they

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Speaker 1: were in the middle of June. UM. The inflation numbers

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Speaker 1: still a little below two percent, but the latest readings

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Speaker 1: on core inflation have been a little less soft than

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Speaker 1: the numbers that we got earlier in the year. So

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Speaker 1: at the margin, it seems to me that the risks

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Speaker 1: are still there, but they're not quite as acute as

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Speaker 1: they were, uh the last time they fed met. Being

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Speaker 1: somewhat familiar with Morgan Stanley's thinking around the Federal Reserve,

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Speaker 1: I think there's a belief that because there is limited ammunition,

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Speaker 1: there is an incentive there to get ahead of a

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Speaker 1: potential down term, because if you wait for it to materialize,

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Speaker 1: you don't have the ammunition to address it. You need

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Speaker 1: to do less with more, you need to be preensitive.

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Speaker 1: So I'm just wondering whether that's a justification to go

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Speaker 1: early and go big, even if the economic dates with

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Speaker 1: the mode, but the realized states that may not warrant's

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Speaker 1: hit you thought on that argument statement, Yeah, I think

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Speaker 1: if if you believe that a downturn or even a

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Speaker 1: significant slowing is is likely. Uh. Then I think that's

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Speaker 1: exactly the FED playbook is to go hard, go early. UM.

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Speaker 1: And I think there's there's no question that the market

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Speaker 1: has kind of latched onto that way of thinking. But

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Speaker 1: at the same time, I guess what I would you

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Speaker 1: know look at is that the FED has acknowledged that

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Speaker 1: their base case is still pretty pretty positive at this point.

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Speaker 1: They see downside risks, but until unless or until they

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Speaker 1: are more confident that those risks are likely to materialize,

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Speaker 1: I just don't see them acting than this data dependency.

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Speaker 1: What is the data that matters that gets them to

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Speaker 1: some form of decision, whether it's some Morgan Stanley Barkley's

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Speaker 1: fifty beeps or something more optimistic like where Steve Stanley is.

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Speaker 1: I think most importantly at this point is growth because interesting, Yeah,

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Speaker 1: the downside risks are around the growth, Uh, implications of

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Speaker 1: trade uncertainty. I think so Q two GDP I've always

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Speaker 1: thought was going to be a really important number, which

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Speaker 1: and then within that, is it the consumption dynamic or

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Speaker 1: is it really business dynamic off of the President's trade war? Right? Well,

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Speaker 1: the risk the downside risks at this point are mainly

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Speaker 1: related to the business sector. But if the consumer holds up,

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Speaker 1: then we could probably afford to see a pause in

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Speaker 1: business investment, which is I think what we're seeing. So

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Speaker 1: it's really you know, I think that's why in some

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Speaker 1: ways the labor report last Friday was pretty important because

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Speaker 1: it tells us that the underpinnings for the consumers should

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Speaker 1: remain solid. Stephen, It's a question for you if at

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Speaker 1: the end of this month we don't get an interest

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Speaker 1: right cut, but it's priced by the market at the moment,

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Speaker 1: if they hold, will that be the equivalent of a

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Speaker 1: hike for financial conditions? Well, there's there's definitely gonna have

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Speaker 1: to be an adjustment, whether it occurs the day of

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Speaker 1: the meeting or between now and then. I think, you know,

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Speaker 1: certainly some of it could have could occur today. One

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Speaker 1: thing that that I encouraged by was so last Friday

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Speaker 1: we had a pretty significant adjustment in rates and in

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Speaker 1: FED expectations, and the start market was down, but it

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Speaker 1: really wasn't down that much. So I think what the

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Speaker 1: FED is really concerned with is a big drop in

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Speaker 1: stock prices, and you know, at least so far, it

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Speaker 1: doesn't feel like that's necessarily in the cards, sound TRUMPI

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Speaker 1: and Steve Stanley with us on the stock market and

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Speaker 1: Sherman chief investment strategist Amer's Pierpont. We are thrilled in

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Speaker 1: our studio to talk about the future of New York

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Speaker 1: Wall Street. Robert Albertson of Sandler O'Neill, his decks of

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Speaker 1: investment strategy for Sandler O'Neill our legendary. But John Farrow,

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Speaker 1: as you mentioned yesterday, it was a legendary day as

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Speaker 1: Sandler O'Neil taken out by Piper, Jeffrey and Mr Dunn

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Speaker 1: at an emotional moment, marketing back to the courage of

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Speaker 1: him and you. And there's to move forward off of

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Speaker 1: September eleventh. What did you do yesterday? Look, I wasn't there, uh.

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Speaker 1: I came after September eleventh, and I can tell you

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Speaker 1: this is a firm with probably the deepest culture I've

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Speaker 1: ever come across. UM. I always feel like an outsider. Frankly,

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Speaker 1: it is a very solid place. We didn't get taken out.

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Speaker 1: I think the better way to say this is we

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Speaker 1: recognize change has to come to and it's tough, tougher

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Speaker 1: for us, a private firm than most and very successful

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Speaker 1: at what we do. But it made a lot of sense.

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Speaker 1: You've gotta broad you gotta do two things. You gotta

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Speaker 1: broaden your base, uh, products and services and contacts, and

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Speaker 1: then you've got to make the most of them with

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Speaker 1: very strong push on productivity, not cutting costs, but but

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Speaker 1: but really finding ways to cross sell. And this Piper

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Speaker 1: is the best. It really is the best match for

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Speaker 1: those two things. And that's what you're going to see

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Speaker 1: on Wall Street in general. Uh, shrinky just reliance on trading, shrinky,

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Speaker 1: John reliance some balance sheet, Um, you've already seen it.

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Speaker 1: And and then deeper deeper into the advisory with more

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Speaker 1: balance Robert, this is a great story that came out

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Speaker 1: of yesterday that Jimmy went across to the local Brooks

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Speaker 1: Brothers store and just bought all the duck ties, all

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Speaker 1: the times with ducks that he could get his hands on.

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Speaker 1: Talk to me about his significance of doing just that yesterday. Well,

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Speaker 1: his longtime friend and head of banking, um who perished.

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Speaker 1: That was one of his favorite things, and that was

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Speaker 1: in honor of him. Uh, and very touching, and it's

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Speaker 1: an inside thing you need to know, but it tells

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Speaker 1: you how although we can be as a firm as

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Speaker 1: hard nosed anyone else on Wall Street, when it comes

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Speaker 1: to competing and doing their own thing, there's a really

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Speaker 1: soft spot based on that sad blemish that happened twenty

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Speaker 1: years ago. Let us talk about the news you and

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Speaker 1: I have seen. We showed film of Lehman Brothers earlier

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Speaker 1: and embarrassed turns, and you and I talked about cotton

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Speaker 1: in Illinois. How grave is the situation at Deutsche Bank.

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Speaker 1: I can't tell because I no longer as an analyst

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Speaker 1: follow it anymore. I'm on an analyst UM. I think

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Speaker 1: it's been there for a long time, and my simple

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Speaker 1: view is when they brought on bankers Trust, it was

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Speaker 1: a big shift in their type of product. UM they

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Speaker 1: stayed with it too long since because you look at

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Speaker 1: the trendlines. I'm gonna send you those log hurts you

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Speaker 1: go back ten fifteen years ago. Trading was the only

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Speaker 1: thing you should ever consider doing. It was the strongest,

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Speaker 1: most predictable voltile but most predictable revenue source that has

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Speaker 1: changed dramatically and everyone has to adjust. I think that's

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Speaker 1: a bigger part of their adjustment process than most UM

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Speaker 1: and I would guess that they're going to survive and

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Speaker 1: pull it off because they're finally facing the big elephant

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Speaker 1: in the room, so to speak. And some good news

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Speaker 1: for people affiliated with Deutsche Bank that the fixed in

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Speaker 1: come trides this morning, we're tell that they will be

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Speaker 1: keeping their jobs. This market has changed, Robert, I would

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Speaker 1: love you're insight on it. It is crazy what I'm

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Speaker 1: seeing in European markets right now, Emerging market Europe, so

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Speaker 1: the likes of Poland, the Eastern European nations, the runny

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Speaker 1: that we've seen in a fixed income market. Poland's note

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Speaker 1: is very close to dropping below zero on the yield.

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Speaker 1: Just think about that, we could have negative yields in

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Speaker 1: Poland on ten year pages easter. They're they're doing like fops,

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Speaker 1: just real, absolutely unreal centry bonds, some of the big

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Speaker 1: centry bonds, some of the well known issues of them.

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Speaker 1: They're returning almost through What do you make of this

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Speaker 1: massive clamoring for fixed income income wherever you can get it,

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Speaker 1: and the idea that the bond market is providing capital

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Speaker 1: returns north of what the equity market is offering. Here,

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Speaker 1: you gotta go back and look at how long we've

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Speaker 1: been in abnormal interest rates, whether you want to call

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Speaker 1: them abnormal or not, whatever, But um, there's been an obsession. Um,

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Speaker 1: it is an addiction, and therefore nobody wants to change it.

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Speaker 1: And everyone's frightened. And even the President thinks twenty the

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Speaker 1: basis points will make or break as economy. It's silly. Um,

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Speaker 1: that's not going to change whether you're an industrialized or

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Speaker 1: an emerging market for for a while, that's for sure.

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Speaker 1: Number two. The emerging market side of the world, let's

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Speaker 1: call Poland and those um more like that, not that

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Speaker 1: they're not industrialized, are much more focused on infrastructure, growth,

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Speaker 1: good things that we all remember twenty fifty years ago. Uh,

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Speaker 1: and it's gonna work. So they're a different world entirely, um,

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Speaker 1: completely decoupled. Put those all into a bunch of folks

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Speaker 1: called Europe EU. Oh my gosh, you really are setting

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Speaker 1: it up. In the third thing, you break this thing

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Speaker 1: potentially by all this nationalism hopefully dies down, but it's

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Speaker 1: a global trend. Obviously I've got any more questions, but

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Speaker 1: we don't at the time. Robert Albertson, thank you so much.

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Speaker 1: With Sandal O'Neil. Congratulations to all of Sandal O'Neill. Thank

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Speaker 1: you on their announcement yesterday with UH Piper Jeffrey Pipe,

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Speaker 1: Piper Sandler is that we're going to call it per

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Speaker 1: Sandler Companies. Very good. You have to get new business cards.

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Speaker 1: Very good coming Robert Albert, thank you so much, greatly appreciated.

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Speaker 1: Henrietta trust joins us one of our most popular guest

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Speaker 1: director of Economic Policy Research UH and and thrilled that

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Speaker 1: she could be with us. She's really got a with

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Speaker 1: Veda and she's got a real visceral knowledge here. Henrietta

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Speaker 1: I got is a great Washington watcher. How much does

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Speaker 1: Washington roll up in the summer? I mean, before air conditioning,

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Speaker 1: it was a total roll up. But like, is Washington

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Speaker 1: like half asleep in July or is it like more

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Speaker 1: bustling than it used to be? One of guys, July

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Speaker 1: tends to be pretty busy. They do start work after

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Speaker 1: the sun goes down. In a lot of cases, a

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Speaker 1: lot of this stuff happens at night. But August is

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Speaker 1: what everybody has definitely gone. So your calendars for July,

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Speaker 1: I want to say it's the last day of session,

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Speaker 1: then they'll be out. That's what John and I are

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Speaker 1: doing we're booking, so we're gonna be on holidays. Okay,

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Speaker 1: we need to get a serious update. We haven't done

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Speaker 1: this in a while, folks, with all the distractions. Let's

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Speaker 1: do it now, Henrietta, seriously, the position now of the

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Speaker 1: United States of America against the threat of Huawei, How

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Speaker 1: has it changed in the last number of days. It

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Speaker 1: has not changed meaningfully at all. I think in the

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Speaker 1: in the readout of the G twenty, there were two options.

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Speaker 1: We could either assume that President Trump had reached a

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Speaker 1: deal with President she and he was no longer serious

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Speaker 1: about extracting systemic reformat of China, he wasn't concerned about

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Speaker 1: the national security threat post by companies like Bawei and

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Speaker 1: others in the high tech space, or the read out

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Speaker 1: of the G twenty was overly optimistic to Rosie, and

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Speaker 1: in fact, nothing had substantially changed in the last ten days.

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Speaker 1: We've got a lot of evidence for the second scenario

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Speaker 1: and not very much for the first. So Secretary Rob

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Speaker 1: speaking at an export control restrictions conference, which is basically

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Speaker 1: the future of the U S. China trade war, he said, look,

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Speaker 1: we're gonna be relaxing a little bit of the restrictions

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Speaker 1: mostly steered towards US sales of semi conductor chips and

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Speaker 1: things that go into their tangible components that Huawei produces,

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Speaker 1: but nothing that is associated with the future of Huawei,

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Speaker 1: So their five gene networks, their ongoing efforts to expand

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Speaker 1: into further visual and audio UH surveillance, the cyber security component,

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Speaker 1: all that is still very much front and center um

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Speaker 1: and I think there's actually a lot more to come,

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Speaker 1: not just focused on Huawei, but on any high text

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Speaker 1: sector that has business with China, so biotech, nanobiology, synthetic biology,

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Speaker 1: um AI, anything in the future of the communications is

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Speaker 1: what we're about to roll out with these export control

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Speaker 1: restrictions and is becoming really complex are called with the

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Speaker 1: National econom accoun SO Director Larry Cudlow on Friday, various

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Speaker 1: members of the administration for quite a while said the

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Speaker 1: Huawei issue was a separate issue from the trade discussion,

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Speaker 1: and Henrietta Larry Caudlo said on Friday that it was

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Speaker 1: the same story now part of the same negotiation. What

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Speaker 1: do you think of that. I think it's very much

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Speaker 1: something we saw with the Ztevan UH this time last year, earlier,

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Speaker 1: even earlier than this last year. Um, the qu s

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Speaker 1: China negotiations are so wide ranging, and the export control

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Speaker 1: piece the future of high tech is what it's really

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Speaker 1: all about. You know, we talked about tariffs a lot,

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Speaker 1: but they're the window dressing to the underlying trade war,

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Speaker 1: which is not just limited to um you know you

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Speaker 1: don't buy enough soybeans from US, but about how you

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Speaker 1: see China forcing transfer for sing I p sfts and

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Speaker 1: to have a conversation where Huawei one of the main

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Speaker 1: instigators and one of the areas of concern. You know,

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Speaker 1: some other folks at the conference yesterday we're saying, look,

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Speaker 1: we need to be on offense against China. We need

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Speaker 1: to be proactive unless they're going to continue to steal

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Speaker 1: our I P and advanced in a global fashion that

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Speaker 1: in a way that leaves our high tech industry behind. Henry,

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Speaker 1: we just seem to be blowing the lines between the

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Speaker 1: job of the Commerce Secretary, the job of the Secretary

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Speaker 1: of State, the job of the Treasury secretary. It seems

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Speaker 1: to becoming one job. Absolutely. I'm so glad you mentioned that.

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Speaker 1: So there's the executive order if you read it closely,

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Speaker 1: that doesn't even mention Huawei but addresses the communications technology

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Speaker 1: and systems going into the future, and has all these

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Speaker 1: specific date for as you mentioned, the Department of Homeland

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Speaker 1: Security to weigh in later this month. All these agencies, CEPIST,

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Speaker 1: the SEC, the FCC, UM, you know, anybody with an

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Speaker 1: axiom they're involved in this. I want to ask, can

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Speaker 1: I ask your first or of condition? I'm the dumbest

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Speaker 1: member of Congress and I'm asking Henry the treas an

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Speaker 1: important question. What is Huawei actually done? And I'm using

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Speaker 1: this word as an amateur criminal. I mean is it

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Speaker 1: Are we worried about the future or have they actually

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Speaker 1: done something bad? Now, Well, it depends on who you

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Speaker 1: talk to. They they have sixty eight separate entities, so

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Speaker 1: they do a lot of things, so it's not like

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Speaker 1: there's just one. UM. Probably most concerning would be UM

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Speaker 1: the fact that they provide surveillance that allows China to

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Speaker 1: have its human rights abuses perpetuated, specifically with Muslim minorities

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Speaker 1: in the Nations human rights. So it's a human rights

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Speaker 1: angle on Western China, which is completely tangible. Is that

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Speaker 1: all you have? No, certainly not. And then you have

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Speaker 1: UM the fact that Huawei is trying to build out

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Speaker 1: its future of wireless and that is something that the

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Speaker 1: United States and our defense agencies have a big problem with.

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Speaker 1: If Huawei is selling its hand sets and it's UM

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Speaker 1: components not just to Iran, but to other nations, and

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Speaker 1: then they're incorporating their potentially um sort of cyber security

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Speaker 1: threat components to the general public, that becomes a major Now.

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Speaker 1: But what I'm hearing there, jump in. But what I'm

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Speaker 1: hearing their folks, is it's a future worry. It's not

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Speaker 1: like a present tense. It's a persistent worrying, a persistent

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Speaker 1: worry not just for the US government, for US as

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Speaker 1: well and Riet. So we're creeping up to the campaign

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Speaker 1: has already begun, really started a while ago, and I'm

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Speaker 1: just wondering if this a story that's just going to

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Speaker 1: drag on now with no real conclusion going into the

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Speaker 1: back end of next year. That is absolutely my thesis,

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Speaker 1: and frankly it has been since we passed the tax

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Speaker 1: bill in December of two thousand seventeen. This administration will

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Speaker 1: not be passing any other major legislation. They obviously kick

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Speaker 1: at the U S m c A through, We're going

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Speaker 1: to have a fight over the debt ceiling and the

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Speaker 1: budget in the fall. That's going to eat up the

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Speaker 1: last half of this year. The President won't get an

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Speaker 1: infrastructure bill, he won't get a healthcare reform bill. What

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Speaker 1: can he do on his own that doesn't require Congress?

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Speaker 1: Two things, immigration and trade. They go hand in hand,

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Speaker 1: and as as a president is better served to per

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Speaker 1: spetuate the trade war going into he is to resolve it. Now.

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Speaker 1: Are the people of Capitol Hill engage in the census

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Speaker 1: citizenship question? You know? I think a lot of folks are.

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Speaker 1: It's definitely not my wheelhouse, but is an area where

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Speaker 1: if you are UM focused on jerrymandering, if you are

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Speaker 1: focused on the election and who gets to vote, which

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Speaker 1: I think a lot of folks are, from President former

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Speaker 1: President Obama and Eric Holder um on down to the

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Speaker 1: rank and file members UM and particularly the newer members

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Speaker 1: of Congress in the House and the Democratic Caucus and

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Speaker 1: folks like Elizabeth Warren. This is a major issue. It's

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Speaker 1: about who gets to vote, and I think if you

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Speaker 1: have time to spend on that, you definitely do. Not

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Speaker 1: every member is super involved. It has become harshly part

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Speaker 1: of it, but it is obviously very important question. This

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Speaker 1: is great Harriet Trust, thank you for the briefing on

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Speaker 1: WAWI is with Veta Partners. There was a company in

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Speaker 1: the twenties very quiet on Fifth Avenue in New York.

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Speaker 1: It was the Allen brothers and particularly Herbert Allen Sr.

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Speaker 1: And then there wasn't now Herbert Allen Jr. And what

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Speaker 1: they have done is quietly affect transactions in communication in media.

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Speaker 1: You can go back four years to Time Warner, Charter Communications, Verizon, Senteen,

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Speaker 1: HealthNet and on and on our Paul Sweeney knows is

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Speaker 1: cold and he is with Allen and Company as Sun

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Speaker 1: Valley Paul. Instead of the media confab today, what is

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Speaker 1: accomplished by Allan here? Is it a Davos for media

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Speaker 1: or is that off the mark? No, that's absolutely right

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Speaker 1: on the mark. Tom. I think just this morning, sitting

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Speaker 1: out here by the hotel where they're having the first sessions,

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Speaker 1: John Malone, Barry Diller, Tim Armstrong, just you know, a

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Speaker 1: whole host of media, telecom and UH technology executives have

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Speaker 1: just passed biased and Uh it's really a place like

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Speaker 1: it's Barry Diller's that he comes here to be stimulated

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Speaker 1: to learn new ideas, new technology, and people speak and

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Speaker 1: all that right. Yeah, people speak and and uh you

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Speaker 1: know these I think a lot of these executives come

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Speaker 1: here to just to just learn to think about new

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Speaker 1: technologies where their businesses may be going. Um and then

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Speaker 1: of course, um, you know, to really talk about deals.

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Speaker 1: Should we be doing business with you, should we be

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Speaker 1: merging with you, should we be acquiring you? Uh so

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Speaker 1: a lot of that takes place at this point. I mean, Lisa,

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Speaker 1: if I go out there, do I need to wear

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Speaker 1: my wool rich Men's flannel over shirt John Richard Brothers,

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Speaker 1: you need to wear that tomorrow with your bow tie.

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Speaker 1: You need to. I will be tweeting that out big

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Speaker 1: Red and Black check. I cannot wait. Very it's very

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Speaker 1: Tom Keene, I love it. Please, I love Mumfords. All right,

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Speaker 1: I'm revealing too much about myself. Paul Sweeney, I do

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Speaker 1: want to talk a little bit about the urgency. Have

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Speaker 1: you ever heard a higher degree of urgency among media

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Speaker 1: executives than now? Yeah, it's a great question, because you

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Speaker 1: know what these media executives are dealing with really over

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Speaker 1: the last couple of years that they've never had to

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Speaker 1: deal with, UM, is the likes of these big technology companies,

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Speaker 1: whether it's Google or Facebook or Amazon or Apple really

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Speaker 1: taking a very hard look at the media communications that

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Speaker 1: entertainment businesses, and so you know, they've been encroaching those

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Speaker 1: technology companies have been encroaching upon you know, the businesses

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Speaker 1: that have historically been Time Warner, you know, Viacom, CBS,

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Speaker 1: and these executives here really need to figure out how

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Speaker 1: they react, how they adapt, Uh, do they partner, do

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Speaker 1: they acquire? Do they sell? Many of the media companies

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Speaker 1: like Time Warner, like twenty one century Fox, you know,

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Speaker 1: in fact, they're the last couple of years have decided

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Speaker 1: to sell their businesses instead of trying to go head

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Speaker 1: to head. So they're winners and their losers. Here. I'm

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Speaker 1: looking right now at Netflix bonds and they're up the most. Uh,

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Speaker 1: they're they're at the highest levels on record because Netflix

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Speaker 1: is a decided winner. Is it becoming clear who the losers?

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Speaker 1: Maybe who in the media landscape may not exist five

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Speaker 1: years from now? Um, well, I'm gonna utter Tom Keane's

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Speaker 1: favorite word as relates to the M and A and

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Speaker 1: not a scale. Um. You know a lot of the

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Speaker 1: smaller companies out there, whether it's the lions Gate or

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Speaker 1: uh an MGM or even a Sony Studios, you know,

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Speaker 1: one of the main studios in Hollywood. Um, they're all

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Speaker 1: thinking about their businesses and they're saying, we're just not

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Speaker 1: big enough. And when we think about it relative to

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Speaker 1: a Google or Facebook or Amazon, we're just not big enough.

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Speaker 1: And I think the big big deal here this year

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Speaker 1: is CPS and viacomp. People, are you know, really taking

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Speaker 1: a look at what Sherry Redstone wants to do with

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Speaker 1: those two companies that her family and her company control.

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Speaker 1: What's going to happen there? At the very least, investors

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Speaker 1: here believe that those two come but it's need to

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Speaker 1: get together, need to merge. Then the question becomes what

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Speaker 1: does the merged company do? So it's all about if

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Speaker 1: you don't have it. People are concerned what have they

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Speaker 1: learned in the last twelve months, particularly from the A

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Speaker 1: T and T follies. I mean what a debt build up?

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Speaker 1: I mean, are these guys talking about you know, are

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Speaker 1: they having serious discussions about being overdebted or is that

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Speaker 1: okay debt debt go go go? Yeah, go go go

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Speaker 1: is signed for the media sector right now? Um, you know,

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Speaker 1: so the bond market, the bank credit market really is

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Speaker 1: supportive of the media, communications technology sectors. So there's plenty

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Speaker 1: of capital available to these companies, and particularly these low

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Speaker 1: historic rates that we're at right now, so there's no

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Speaker 1: real concern right now for debt. But of course, if

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Speaker 1: you were to run into recession and advertising order to

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Speaker 1: take a serious blow, then company that have a lot

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Speaker 1: of that, like an A T and T, like a Comcast,

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Speaker 1: they might have What are you seeing in advertising? I

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Speaker 1: mean Hulu is cutting back. NBC has talked about cutbacks

427
00:23:58,160 --> 00:24:00,520
Speaker 1: as well. I mean, do the advertising people show up

428
00:24:00,800 --> 00:24:04,359
Speaker 1: and are they wearing the men's flannel over shirt genre

429
00:24:04,440 --> 00:24:07,960
Speaker 1: Rich Brothers sons already ordered check. I like the white check.

430
00:24:08,000 --> 00:24:11,359
Speaker 1: I think, would you think? I think it's got to

431
00:24:11,400 --> 00:24:15,080
Speaker 1: be more of a grizzly brown grizzly. How many brown

432
00:24:15,119 --> 00:24:17,040
Speaker 1: bow ties do you have? I have three of those?

433
00:24:18,480 --> 00:24:21,919
Speaker 1: I got my my. My big question right now is

434
00:24:21,920 --> 00:24:25,400
Speaker 1: definitely about the tech companies and you know how significant

435
00:24:25,400 --> 00:24:27,320
Speaker 1: their involvement will be. In other words, when we talk

436
00:24:27,359 --> 00:24:30,080
Speaker 1: about the media space, will the media space be big

437
00:24:30,160 --> 00:24:33,120
Speaker 1: tech in five years and all of the other all

438
00:24:33,119 --> 00:24:35,320
Speaker 1: of the other standalone companies will just get rolled in

439
00:24:35,359 --> 00:24:38,600
Speaker 1: with them. Yeah, you know, we haven't really seen it

440
00:24:38,640 --> 00:24:40,240
Speaker 1: to date. We've seen a lot of the tech companies

441
00:24:40,320 --> 00:24:42,960
Speaker 1: kind of dip their toe, um, you know, make um

442
00:24:43,040 --> 00:24:46,600
Speaker 1: some investments in programming, um, you know, whether it's you know,

443
00:24:46,720 --> 00:24:49,200
Speaker 1: Google with with YouTube and so on and so forth,

444
00:24:49,280 --> 00:24:52,680
Speaker 1: or Facebook may maybe you know, putting some football games

445
00:24:53,280 --> 00:24:56,440
Speaker 1: on Facebook. But we haven't seen them really jump into

446
00:24:56,440 --> 00:24:58,959
Speaker 1: the deep end of the pool and maybe acquire a

447
00:24:58,960 --> 00:25:01,240
Speaker 1: big media company to say, you know, we really want

448
00:25:01,280 --> 00:25:03,560
Speaker 1: to be in the content business. We haven't seen that

449
00:25:03,800 --> 00:25:06,320
Speaker 1: in quite frankly, this conference here at Allen Company and

450
00:25:06,359 --> 00:25:09,680
Speaker 1: stun Valley. They've been expecting that for really the last

451
00:25:09,720 --> 00:25:11,640
Speaker 1: four or five six years and they just haven't seen

452
00:25:11,680 --> 00:25:13,960
Speaker 1: it yet. So to be interesting to see whether these

453
00:25:14,200 --> 00:25:17,600
Speaker 1: tech companies really want to go and out get a

454
00:25:17,600 --> 00:25:20,320
Speaker 1: lot of capital to the contents. Sonia, thank you so

455
00:25:20,400 --> 00:25:23,160
Speaker 1: much for reporting from all and Company and his media world.

456
00:25:23,160 --> 00:25:39,280
Speaker 1: We're looking forward to his return. There's an auspicious time

457
00:25:39,320 --> 00:25:43,120
Speaker 1: to speak to David Rubinstein of the Carlisle Group. David,

458
00:25:43,160 --> 00:25:47,120
Speaker 1: I want to speak about your wonderful conversation on unicorns

459
00:25:47,240 --> 00:25:50,320
Speaker 1: with the leadership of Uber. Of course disappeared appear, but

460
00:25:50,359 --> 00:25:53,960
Speaker 1: at this moment, David, I'm honored to ask you about

461
00:25:53,960 --> 00:25:57,520
Speaker 1: the resiliency of American capitalism with the print of three

462
00:25:57,600 --> 00:26:01,920
Speaker 1: thousand on the SPX. I mean that long term trend

463
00:26:01,960 --> 00:26:06,280
Speaker 1: of American capitalism has been extraordinary, hasn't it. It's hard

464
00:26:06,320 --> 00:26:10,560
Speaker 1: to understand completely because typically we have processions every seven years.

465
00:26:10,560 --> 00:26:13,320
Speaker 1: Were now ten years into a growth cycle, and there

466
00:26:13,359 --> 00:26:15,560
Speaker 1: doesn't seem to be any evidence that we're going to

467
00:26:15,640 --> 00:26:18,199
Speaker 1: go into any recession any time in the foreseeable future.

468
00:26:18,600 --> 00:26:22,159
Speaker 1: So the economy is really defying gravity and history. But

469
00:26:22,280 --> 00:26:24,840
Speaker 1: that's good for American investors. We have had a number

470
00:26:24,840 --> 00:26:28,639
Speaker 1: of conversations that corporate officers have come to a halt

471
00:26:29,320 --> 00:26:31,960
Speaker 1: because of the president, because of trade war, because of

472
00:26:32,000 --> 00:26:37,960
Speaker 1: manufacturing uncertainty. Do you see that at Carlisle. No. I

473
00:26:37,960 --> 00:26:42,000
Speaker 1: would say that corporate investment has slowed a little bit,

474
00:26:42,560 --> 00:26:45,760
Speaker 1: but I would say generally we see pretty good growth

475
00:26:45,840 --> 00:26:48,240
Speaker 1: in the economy, not three and four percent, but two

476
00:26:48,240 --> 00:26:51,280
Speaker 1: percent or so. And I would say that I do

477
00:26:51,480 --> 00:26:53,399
Speaker 1: expect there will be a trade agreement before the end

478
00:26:53,440 --> 00:26:55,399
Speaker 1: of the year in China, and I expect the U

479
00:26:55,480 --> 00:26:58,080
Speaker 1: s m c A will in time get confirmed by

480
00:26:58,119 --> 00:27:01,840
Speaker 1: the Congress. And I expect, uh we'll have some rate

481
00:27:01,880 --> 00:27:05,360
Speaker 1: cuts sp X three thousand and four right now, where

482
00:27:05,400 --> 00:27:08,200
Speaker 1: with David Rubinstein, of course, a peer to peer conversation,

483
00:27:08,800 --> 00:27:11,280
Speaker 1: and this one is interesting. You went out and found

484
00:27:11,280 --> 00:27:16,399
Speaker 1: a unicorn. David yes Um Uber Uh, the CEO of

485
00:27:16,560 --> 00:27:20,239
Speaker 1: Uber is the person I was interviewing, and he's an

486
00:27:20,240 --> 00:27:24,359
Speaker 1: incredible person. He's an immigrant from Iran, came to work

487
00:27:24,560 --> 00:27:27,679
Speaker 1: uh in the United States at Bizarre and then ultimately

488
00:27:28,240 --> 00:27:31,560
Speaker 1: came to work for Barry Dealer, and then ultimately was

489
00:27:31,560 --> 00:27:34,959
Speaker 1: was running a company for Barry to Barry Dealer's company owns.

490
00:27:35,400 --> 00:27:38,960
Speaker 1: And Um was recruited away to run Uber after the

491
00:27:39,000 --> 00:27:42,760
Speaker 1: previous CEO stepped down. Uh. While people say the i

492
00:27:42,880 --> 00:27:45,639
Speaker 1: p O was not that successful in some respects, I

493
00:27:45,680 --> 00:27:50,679
Speaker 1: thought it was pretty successful. While there was some uh uncertainty,

494
00:27:50,720 --> 00:27:52,560
Speaker 1: But the pricing of the first day or so it

495
00:27:52,600 --> 00:27:54,720
Speaker 1: was below the I p O prisis back pretty much

496
00:27:54,720 --> 00:27:56,760
Speaker 1: to where it was at the I p O. But

497
00:27:56,920 --> 00:27:59,960
Speaker 1: this is the most important point. This company is probably

498
00:28:00,200 --> 00:28:03,280
Speaker 1: has the second highest market value of any company in

499
00:28:03,280 --> 00:28:08,240
Speaker 1: the United States that when public uh some other words, Uh,

500
00:28:08,280 --> 00:28:10,480
Speaker 1: the only company has a higher market cap. He after

501
00:28:10,520 --> 00:28:13,840
Speaker 1: when public, I'm aware of his Facebook Google, wasn't this high.

502
00:28:13,880 --> 00:28:16,760
Speaker 1: Microsoft wasn't as high, Amazon wasn't as high, So people

503
00:28:16,800 --> 00:28:19,680
Speaker 1: can say that it wasn't all as successful. If people

504
00:28:19,720 --> 00:28:22,320
Speaker 1: wanted that, they wanted a hundred higher valuation, a hundred

505
00:28:22,359 --> 00:28:24,320
Speaker 1: twenty billion or whatever it was. But still, when you

506
00:28:24,359 --> 00:28:26,600
Speaker 1: think about this company, it's not that old, and to

507
00:28:26,640 --> 00:28:29,800
Speaker 1: have this kind of valuation so soon after it was started,

508
00:28:29,840 --> 00:28:31,760
Speaker 1: and relatively so soon after the I p O, I

509
00:28:31,800 --> 00:28:34,840
Speaker 1: think it is still amazing. It's a it's a fascinating conversation.

510
00:28:34,880 --> 00:28:38,720
Speaker 1: Let's listen to a clip of Daro Kasar Shahi, he

511
00:28:38,840 --> 00:28:41,800
Speaker 1: is the chief executive of Ubert, speaking with David Rubinstein

512
00:28:42,120 --> 00:28:44,560
Speaker 1: in the episode three of the new season of The

513
00:28:44,640 --> 00:28:48,560
Speaker 1: David Ruinstein Show Peer to Peer Conversations. What's the biggest

514
00:28:48,600 --> 00:28:51,960
Speaker 1: challenge you currently see the company facing. I mean, the

515
00:28:51,960 --> 00:28:54,920
Speaker 1: biggest challenge that that we have is a is a

516
00:28:54,960 --> 00:28:57,240
Speaker 1: common challenge that you see with some of the large

517
00:28:57,240 --> 00:29:01,360
Speaker 1: technology companies out there, which is there is an increasing

518
00:29:01,440 --> 00:29:05,600
Speaker 1: regulatory burden UH that is coming on some of the

519
00:29:05,600 --> 00:29:08,520
Speaker 1: tech company some of it deserved. I don't suppose I

520
00:29:08,520 --> 00:29:10,400
Speaker 1: have some extra money and I wanted to buy into

521
00:29:10,520 --> 00:29:13,120
Speaker 1: a company like yours. Why should I buy you? I

522
00:29:13,160 --> 00:29:15,800
Speaker 1: think you have some extra money. Don't you never have enough.

523
00:29:16,960 --> 00:29:20,160
Speaker 1: There's no doubt that there's a sentiment in Washington that

524
00:29:20,400 --> 00:29:23,360
Speaker 1: there should be more regulation of some of these companies,

525
00:29:23,360 --> 00:29:25,400
Speaker 1: and some of the CEOs of these companies have said

526
00:29:25,440 --> 00:29:28,600
Speaker 1: there should be more regulation. Congress moves slowly. I wouldn't

527
00:29:28,600 --> 00:29:32,000
Speaker 1: expect any epic legislation in this area quite some time.

528
00:29:32,040 --> 00:29:34,920
Speaker 1: It's easier to get things done in the regulatory area

529
00:29:34,960 --> 00:29:37,560
Speaker 1: if you do them administratively, so I expect more likely

530
00:29:38,000 --> 00:29:43,040
Speaker 1: there will be enforcement or examinations by agencies UH of

531
00:29:43,120 --> 00:29:47,200
Speaker 1: the operations of these tech companies more than legislation. Legislation

532
00:29:47,200 --> 00:29:51,080
Speaker 1: could take many years um and when Microsoft was investigated,

533
00:29:51,120 --> 00:29:54,120
Speaker 1: for example, years ago, it was an antitrust action that

534
00:29:54,240 --> 00:29:57,840
Speaker 1: was taken against it, and I expect that there's probably

535
00:29:57,920 --> 00:30:00,400
Speaker 1: likely to be something in the future U in terms

536
00:30:00,400 --> 00:30:03,200
Speaker 1: of administrative action against these tech companies more than legislation.

537
00:30:03,520 --> 00:30:05,680
Speaker 1: You know. One thing that I find interesting is that

538
00:30:06,160 --> 00:30:09,239
Speaker 1: a lot of these companies, including Uber, relied heavily on

539
00:30:09,360 --> 00:30:13,480
Speaker 1: private markets for a very long time before going public,

540
00:30:13,680 --> 00:30:18,760
Speaker 1: and a lot of people are concerned that basically that

541
00:30:18,760 --> 00:30:22,200
Speaker 1: that the that the potential dynamism of these companies is

542
00:30:22,200 --> 00:30:24,720
Speaker 1: sort of over once they get to I p O stage.

543
00:30:24,720 --> 00:30:27,040
Speaker 1: What's your view on that. What it used to be

544
00:30:27,080 --> 00:30:30,320
Speaker 1: that people needed capital to grow their companies. Now there's

545
00:30:30,360 --> 00:30:32,440
Speaker 1: so much capital that you can stay private for a

546
00:30:32,480 --> 00:30:35,280
Speaker 1: long time, as Facebook did and as Uber did. But

547
00:30:35,360 --> 00:30:37,840
Speaker 1: in the end, most of these tech companies, with very

548
00:30:37,840 --> 00:30:41,440
Speaker 1: few exceptions, want to go public to provide greater liquidity

549
00:30:41,480 --> 00:30:45,080
Speaker 1: for the investors and the employees. I do think that

550
00:30:45,160 --> 00:30:47,600
Speaker 1: you have to recognize people aren't as interested in going public.

551
00:30:47,680 --> 00:30:51,520
Speaker 1: There were there were companies that were publicly traded the

552
00:30:51,560 --> 00:30:54,200
Speaker 1: United States. Now there about half that, So there's clearly

553
00:30:54,320 --> 00:30:57,680
Speaker 1: a bias against taking your company public or not taking

554
00:30:57,680 --> 00:31:00,000
Speaker 1: a public as rapidly as you would in the old day.

555
00:31:00,440 --> 00:31:03,880
Speaker 1: David would final question Allen and Company, of course, as

556
00:31:03,880 --> 00:31:08,040
Speaker 1: their sare in Idaho and Paul Tweeney has made clear

557
00:31:08,440 --> 00:31:14,960
Speaker 1: everything is about scale. How does David Rubinstein define scale? Well,

558
00:31:15,000 --> 00:31:18,640
Speaker 1: today you want to accompany that is global um Today,

559
00:31:18,840 --> 00:31:21,239
Speaker 1: building a nice company in the United States or in

560
00:31:21,480 --> 00:31:24,680
Speaker 1: China or in Europe doesn't mean as much unless it's

561
00:31:24,680 --> 00:31:27,720
Speaker 1: gonna scale around the world. And scale means you've got

562
00:31:27,800 --> 00:31:30,840
Speaker 1: the ability to uh invest large sums of money. So

563
00:31:30,920 --> 00:31:35,640
Speaker 1: scale means multibillion dollar UH capabilities rather than multimillion dollar

564
00:31:35,720 --> 00:31:38,520
Speaker 1: capabilities in this day and age. David, thank you so much,

565
00:31:38,560 --> 00:31:43,000
Speaker 1: greatly greatly appreciated fascinating conversation UH Tonight peer to peer

566
00:31:43,040 --> 00:31:48,560
Speaker 1: conversations David ruben Stein with the Uber team. Thanks for

567
00:31:48,680 --> 00:31:53,040
Speaker 1: listening to the Bloomberg Surveillance podcast. Subscribe and listen to

568
00:31:53,200 --> 00:31:58,960
Speaker 1: interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer.

569
00:31:59,480 --> 00:32:02,840
Speaker 1: I'm on Winter at Tom Keane before the podcast. You

570
00:32:02,880 --> 00:32:06,280
Speaker 1: can always catch us worldwide. I'm Bloomberg Radio