Speaker 1: Ye, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane
Speaker 1: jay Ley. We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg Stephen Stanley,
Speaker 1: you're gonna push aggressively against this, Emirs Puerplant Morgan Stanley
Speaker 1: with the global selling equities. Mike Wilson has been cautious
Speaker 1: on equities as well. Lan Zettner has been below you
Speaker 1: on g d P. But you just flat out in
Speaker 1: a claridean way push against us. You think, if anything,
Speaker 1: we could get neutrality out of chairman political Yeah, I think.
Speaker 1: I mean I haven't. I thought all along that they
Speaker 1: were not going to ease in July, and I still
Speaker 1: feel that way. Um, and I think it's time. You know,
Speaker 1: the f has been, in my view, has been very coy, uh,
Speaker 1: particularly the leadership and kind of letting things play out
Speaker 1: and hoping that the data would kind of push the
Speaker 1: market away from the aggressive easing expectations. Perhaps and we've
Speaker 1: gotten some movement, but uh, I think with three weeks
Speaker 1: ago to the meeting, Uh, if if they are thinking
Speaker 1: they might not move, they're gonna need to tell us that. John.
Speaker 1: This brilliantly sets up the polarity that's out there. We've
Speaker 1: got Steve Stanley on the edge of solid. Maybe you
Speaker 1: diminished GDP, but not. And then what Morgan Stanley is
Speaker 1: saying is jaw dropping. The chairman of the fete's uncomfortable
Speaker 1: with the outlook. He's communicated that too, is Steven. I
Speaker 1: just wonder whether the outlook and the risks around it
Speaker 1: have diminished somewhat sufficiently enough over the last couple of
Speaker 1: weeks to say we don't need a right cut at
Speaker 1: the end of this month. Is that your view? That's
Speaker 1: my view. I mean, I think the number one risk
Speaker 1: obviously is the trade situation. And um, we were just
Speaker 1: coming off of the Mexico thing at the at the
Speaker 1: last FED meeting, and we were still waiting for the
Speaker 1: G twenty, And while there was certainly no final solution
Speaker 1: to the US China talks at the G twenty, I think, um,
Speaker 1: you know we we we got probably the best we
Speaker 1: can hope for. And I think since then you've also
Speaker 1: seen some improvement in the data. Obviously, after a week
Speaker 1: may pay all number. We got a better number in June. UM,
Speaker 1: it seems to me that the Q two GDP expectations
Speaker 1: are probably, if anything, a little better now than they
Speaker 1: were in the middle of June. UM. The inflation numbers
Speaker 1: still a little below two percent, but the latest readings
Speaker 1: on core inflation have been a little less soft than
Speaker 1: the numbers that we got earlier in the year. So
Speaker 1: at the margin, it seems to me that the risks
Speaker 1: are still there, but they're not quite as acute as
Speaker 1: they were, uh the last time they fed met. Being
Speaker 1: somewhat familiar with Morgan Stanley's thinking around the Federal Reserve,
Speaker 1: I think there's a belief that because there is limited ammunition,
Speaker 1: there is an incentive there to get ahead of a
Speaker 1: potential down term, because if you wait for it to materialize,
Speaker 1: you don't have the ammunition to address it. You need
Speaker 1: to do less with more, you need to be preensitive.
Speaker 1: So I'm just wondering whether that's a justification to go
Speaker 1: early and go big, even if the economic dates with
Speaker 1: the mode, but the realized states that may not warrant's
Speaker 1: hit you thought on that argument statement, Yeah, I think
Speaker 1: if if you believe that a downturn or even a
Speaker 1: significant slowing is is likely. Uh. Then I think that's
Speaker 1: exactly the FED playbook is to go hard, go early. UM.
Speaker 1: And I think there's there's no question that the market
Speaker 1: has kind of latched onto that way of thinking. But
Speaker 1: at the same time, I guess what I would you
Speaker 1: know look at is that the FED has acknowledged that
Speaker 1: their base case is still pretty pretty positive at this point.
Speaker 1: They see downside risks, but until unless or until they
Speaker 1: are more confident that those risks are likely to materialize,
Speaker 1: I just don't see them acting than this data dependency.
Speaker 1: What is the data that matters that gets them to
Speaker 1: some form of decision, whether it's some Morgan Stanley Barkley's
Speaker 1: fifty beeps or something more optimistic like where Steve Stanley is.
Speaker 1: I think most importantly at this point is growth because interesting, Yeah,
Speaker 1: the downside risks are around the growth, Uh, implications of
Speaker 1: trade uncertainty. I think so Q two GDP I've always
Speaker 1: thought was going to be a really important number, which
Speaker 1: and then within that, is it the consumption dynamic or
Speaker 1: is it really business dynamic off of the President's trade war? Right? Well,
Speaker 1: the risk the downside risks at this point are mainly
Speaker 1: related to the business sector. But if the consumer holds up,
Speaker 1: then we could probably afford to see a pause in
Speaker 1: business investment, which is I think what we're seeing. So
Speaker 1: it's really you know, I think that's why in some
Speaker 1: ways the labor report last Friday was pretty important because
Speaker 1: it tells us that the underpinnings for the consumers should
Speaker 1: remain solid. Stephen, It's a question for you if at
Speaker 1: the end of this month we don't get an interest
Speaker 1: right cut, but it's priced by the market at the moment,
Speaker 1: if they hold, will that be the equivalent of a
Speaker 1: hike for financial conditions? Well, there's there's definitely gonna have
Speaker 1: to be an adjustment, whether it occurs the day of
Speaker 1: the meeting or between now and then. I think, you know,
Speaker 1: certainly some of it could have could occur today. One
Speaker 1: thing that that I encouraged by was so last Friday
Speaker 1: we had a pretty significant adjustment in rates and in
Speaker 1: FED expectations, and the start market was down, but it
Speaker 1: really wasn't down that much. So I think what the
Speaker 1: FED is really concerned with is a big drop in
Speaker 1: stock prices, and you know, at least so far, it
Speaker 1: doesn't feel like that's necessarily in the cards, sound TRUMPI
Speaker 1: and Steve Stanley with us on the stock market and
Speaker 1: Sherman chief investment strategist Amer's Pierpont. We are thrilled in
Speaker 1: our studio to talk about the future of New York
Speaker 1: Wall Street. Robert Albertson of Sandler O'Neill, his decks of
Speaker 1: investment strategy for Sandler O'Neill our legendary. But John Farrow,
Speaker 1: as you mentioned yesterday, it was a legendary day as
Speaker 1: Sandler O'Neil taken out by Piper, Jeffrey and Mr Dunn
Speaker 1: at an emotional moment, marketing back to the courage of
Speaker 1: him and you. And there's to move forward off of
Speaker 1: September eleventh. What did you do yesterday? Look, I wasn't there, uh.
Speaker 1: I came after September eleventh, and I can tell you
Speaker 1: this is a firm with probably the deepest culture I've
Speaker 1: ever come across. UM. I always feel like an outsider. Frankly,
Speaker 1: it is a very solid place. We didn't get taken out.
Speaker 1: I think the better way to say this is we
Speaker 1: recognize change has to come to and it's tough, tougher
Speaker 1: for us, a private firm than most and very successful
Speaker 1: at what we do. But it made a lot of sense.
Speaker 1: You've gotta broad you gotta do two things. You gotta
Speaker 1: broaden your base, uh, products and services and contacts, and
Speaker 1: then you've got to make the most of them with
Speaker 1: very strong push on productivity, not cutting costs, but but
Speaker 1: but really finding ways to cross sell. And this Piper
Speaker 1: is the best. It really is the best match for
Speaker 1: those two things. And that's what you're going to see
Speaker 1: on Wall Street in general. Uh, shrinky just reliance on trading, shrinky,
Speaker 1: John reliance some balance sheet, Um, you've already seen it.
Speaker 1: And and then deeper deeper into the advisory with more
Speaker 1: balance Robert, this is a great story that came out
Speaker 1: of yesterday that Jimmy went across to the local Brooks
Speaker 1: Brothers store and just bought all the duck ties, all
Speaker 1: the times with ducks that he could get his hands on.
Speaker 1: Talk to me about his significance of doing just that yesterday. Well,
Speaker 1: his longtime friend and head of banking, um who perished.
Speaker 1: That was one of his favorite things, and that was
Speaker 1: in honor of him. Uh, and very touching, and it's
Speaker 1: an inside thing you need to know, but it tells
Speaker 1: you how although we can be as a firm as
Speaker 1: hard nosed anyone else on Wall Street, when it comes
Speaker 1: to competing and doing their own thing, there's a really
Speaker 1: soft spot based on that sad blemish that happened twenty
Speaker 1: years ago. Let us talk about the news you and
Speaker 1: I have seen. We showed film of Lehman Brothers earlier
Speaker 1: and embarrassed turns, and you and I talked about cotton
Speaker 1: in Illinois. How grave is the situation at Deutsche Bank.
Speaker 1: I can't tell because I no longer as an analyst
Speaker 1: follow it anymore. I'm on an analyst UM. I think
Speaker 1: it's been there for a long time, and my simple
Speaker 1: view is when they brought on bankers Trust, it was
Speaker 1: a big shift in their type of product. UM they
Speaker 1: stayed with it too long since because you look at
Speaker 1: the trendlines. I'm gonna send you those log hurts you
Speaker 1: go back ten fifteen years ago. Trading was the only
Speaker 1: thing you should ever consider doing. It was the strongest,
Speaker 1: most predictable voltile but most predictable revenue source that has
Speaker 1: changed dramatically and everyone has to adjust. I think that's
Speaker 1: a bigger part of their adjustment process than most UM
Speaker 1: and I would guess that they're going to survive and
Speaker 1: pull it off because they're finally facing the big elephant
Speaker 1: in the room, so to speak. And some good news
Speaker 1: for people affiliated with Deutsche Bank that the fixed in
Speaker 1: come trides this morning, we're tell that they will be
Speaker 1: keeping their jobs. This market has changed, Robert, I would
Speaker 1: love you're insight on it. It is crazy what I'm
Speaker 1: seeing in European markets right now, Emerging market Europe, so
Speaker 1: the likes of Poland, the Eastern European nations, the runny
Speaker 1: that we've seen in a fixed income market. Poland's note
Speaker 1: is very close to dropping below zero on the yield.
Speaker 1: Just think about that, we could have negative yields in
Speaker 1: Poland on ten year pages easter. They're they're doing like fops,
Speaker 1: just real, absolutely unreal centry bonds, some of the big
Speaker 1: centry bonds, some of the well known issues of them.
Speaker 1: They're returning almost through What do you make of this
Speaker 1: massive clamoring for fixed income income wherever you can get it,
Speaker 1: and the idea that the bond market is providing capital
Speaker 1: returns north of what the equity market is offering. Here,
Speaker 1: you gotta go back and look at how long we've
Speaker 1: been in abnormal interest rates, whether you want to call
Speaker 1: them abnormal or not, whatever, But um, there's been an obsession. Um,
Speaker 1: it is an addiction, and therefore nobody wants to change it.
Speaker 1: And everyone's frightened. And even the President thinks twenty the
Speaker 1: basis points will make or break as economy. It's silly. Um,
Speaker 1: that's not going to change whether you're an industrialized or
Speaker 1: an emerging market for for a while, that's for sure.
Speaker 1: Number two. The emerging market side of the world, let's
Speaker 1: call Poland and those um more like that, not that
Speaker 1: they're not industrialized, are much more focused on infrastructure, growth,
Speaker 1: good things that we all remember twenty fifty years ago. Uh,
Speaker 1: and it's gonna work. So they're a different world entirely, um,
Speaker 1: completely decoupled. Put those all into a bunch of folks
Speaker 1: called Europe EU. Oh my gosh, you really are setting
Speaker 1: it up. In the third thing, you break this thing
Speaker 1: potentially by all this nationalism hopefully dies down, but it's
Speaker 1: a global trend. Obviously I've got any more questions, but
Speaker 1: we don't at the time. Robert Albertson, thank you so much.
Speaker 1: With Sandal O'Neil. Congratulations to all of Sandal O'Neill. Thank
Speaker 1: you on their announcement yesterday with UH Piper Jeffrey Pipe,
Speaker 1: Piper Sandler is that we're going to call it per
Speaker 1: Sandler Companies. Very good. You have to get new business cards.
Speaker 1: Very good coming Robert Albert, thank you so much, greatly appreciated.
Speaker 1: Henrietta trust joins us one of our most popular guest
Speaker 1: director of Economic Policy Research UH and and thrilled that
Speaker 1: she could be with us. She's really got a with
Speaker 1: Veda and she's got a real visceral knowledge here. Henrietta
Speaker 1: I got is a great Washington watcher. How much does
Speaker 1: Washington roll up in the summer? I mean, before air conditioning,
Speaker 1: it was a total roll up. But like, is Washington
Speaker 1: like half asleep in July or is it like more
Speaker 1: bustling than it used to be? One of guys, July
Speaker 1: tends to be pretty busy. They do start work after
Speaker 1: the sun goes down. In a lot of cases, a
Speaker 1: lot of this stuff happens at night. But August is
Speaker 1: what everybody has definitely gone. So your calendars for July,
Speaker 1: I want to say it's the last day of session,
Speaker 1: then they'll be out. That's what John and I are
Speaker 1: doing we're booking, so we're gonna be on holidays. Okay,
Speaker 1: we need to get a serious update. We haven't done
Speaker 1: this in a while, folks, with all the distractions. Let's
Speaker 1: do it now, Henrietta, seriously, the position now of the
Speaker 1: United States of America against the threat of Huawei, How
Speaker 1: has it changed in the last number of days. It
Speaker 1: has not changed meaningfully at all. I think in the
Speaker 1: in the readout of the G twenty, there were two options.
Speaker 1: We could either assume that President Trump had reached a
Speaker 1: deal with President she and he was no longer serious
Speaker 1: about extracting systemic reformat of China, he wasn't concerned about
Speaker 1: the national security threat post by companies like Bawei and
Speaker 1: others in the high tech space, or the read out
Speaker 1: of the G twenty was overly optimistic to Rosie, and
Speaker 1: in fact, nothing had substantially changed in the last ten days.
Speaker 1: We've got a lot of evidence for the second scenario
Speaker 1: and not very much for the first. So Secretary Rob
Speaker 1: speaking at an export control restrictions conference, which is basically
Speaker 1: the future of the U S. China trade war, he said, look,
Speaker 1: we're gonna be relaxing a little bit of the restrictions
Speaker 1: mostly steered towards US sales of semi conductor chips and
Speaker 1: things that go into their tangible components that Huawei produces,
Speaker 1: but nothing that is associated with the future of Huawei,
Speaker 1: So their five gene networks, their ongoing efforts to expand
Speaker 1: into further visual and audio UH surveillance, the cyber security component,
Speaker 1: all that is still very much front and center um
Speaker 1: and I think there's actually a lot more to come,
Speaker 1: not just focused on Huawei, but on any high text
Speaker 1: sector that has business with China, so biotech, nanobiology, synthetic biology,
Speaker 1: um AI, anything in the future of the communications is
Speaker 1: what we're about to roll out with these export control
Speaker 1: restrictions and is becoming really complex are called with the
Speaker 1: National econom accoun SO Director Larry Cudlow on Friday, various
Speaker 1: members of the administration for quite a while said the
Speaker 1: Huawei issue was a separate issue from the trade discussion,
Speaker 1: and Henrietta Larry Caudlo said on Friday that it was
Speaker 1: the same story now part of the same negotiation. What
Speaker 1: do you think of that. I think it's very much
Speaker 1: something we saw with the Ztevan UH this time last year, earlier,
Speaker 1: even earlier than this last year. Um, the qu s
Speaker 1: China negotiations are so wide ranging, and the export control
Speaker 1: piece the future of high tech is what it's really
Speaker 1: all about. You know, we talked about tariffs a lot,
Speaker 1: but they're the window dressing to the underlying trade war,
Speaker 1: which is not just limited to um you know you
Speaker 1: don't buy enough soybeans from US, but about how you
Speaker 1: see China forcing transfer for sing I p sfts and
Speaker 1: to have a conversation where Huawei one of the main
Speaker 1: instigators and one of the areas of concern. You know,
Speaker 1: some other folks at the conference yesterday we're saying, look,
Speaker 1: we need to be on offense against China. We need
Speaker 1: to be proactive unless they're going to continue to steal
Speaker 1: our I P and advanced in a global fashion that
Speaker 1: in a way that leaves our high tech industry behind. Henry,
Speaker 1: we just seem to be blowing the lines between the
Speaker 1: job of the Commerce Secretary, the job of the Secretary
Speaker 1: of State, the job of the Treasury secretary. It seems
Speaker 1: to becoming one job. Absolutely. I'm so glad you mentioned that.
Speaker 1: So there's the executive order if you read it closely,
Speaker 1: that doesn't even mention Huawei but addresses the communications technology
Speaker 1: and systems going into the future, and has all these
Speaker 1: specific date for as you mentioned, the Department of Homeland
Speaker 1: Security to weigh in later this month. All these agencies, CEPIST,
Speaker 1: the SEC, the FCC, UM, you know, anybody with an
Speaker 1: axiom they're involved in this. I want to ask, can
Speaker 1: I ask your first or of condition? I'm the dumbest
Speaker 1: member of Congress and I'm asking Henry the treas an
Speaker 1: important question. What is Huawei actually done? And I'm using
Speaker 1: this word as an amateur criminal. I mean is it
Speaker 1: Are we worried about the future or have they actually
Speaker 1: done something bad? Now, Well, it depends on who you
Speaker 1: talk to. They they have sixty eight separate entities, so
Speaker 1: they do a lot of things, so it's not like
Speaker 1: there's just one. UM. Probably most concerning would be UM
Speaker 1: the fact that they provide surveillance that allows China to
Speaker 1: have its human rights abuses perpetuated, specifically with Muslim minorities
Speaker 1: in the Nations human rights. So it's a human rights
Speaker 1: angle on Western China, which is completely tangible. Is that
Speaker 1: all you have? No, certainly not. And then you have
Speaker 1: UM the fact that Huawei is trying to build out
Speaker 1: its future of wireless and that is something that the
Speaker 1: United States and our defense agencies have a big problem with.
Speaker 1: If Huawei is selling its hand sets and it's UM
Speaker 1: components not just to Iran, but to other nations, and
Speaker 1: then they're incorporating their potentially um sort of cyber security
Speaker 1: threat components to the general public, that becomes a major Now.
Speaker 1: But what I'm hearing there, jump in. But what I'm
Speaker 1: hearing their folks, is it's a future worry. It's not
Speaker 1: like a present tense. It's a persistent worrying, a persistent
Speaker 1: worry not just for the US government, for US as
Speaker 1: well and Riet. So we're creeping up to the campaign
Speaker 1: has already begun, really started a while ago, and I'm
Speaker 1: just wondering if this a story that's just going to
Speaker 1: drag on now with no real conclusion going into the
Speaker 1: back end of next year. That is absolutely my thesis,
Speaker 1: and frankly it has been since we passed the tax
Speaker 1: bill in December of two thousand seventeen. This administration will
Speaker 1: not be passing any other major legislation. They obviously kick
Speaker 1: at the U S m c A through, We're going
Speaker 1: to have a fight over the debt ceiling and the
Speaker 1: budget in the fall. That's going to eat up the
Speaker 1: last half of this year. The President won't get an
Speaker 1: infrastructure bill, he won't get a healthcare reform bill. What
Speaker 1: can he do on his own that doesn't require Congress?
Speaker 1: Two things, immigration and trade. They go hand in hand,
Speaker 1: and as as a president is better served to per
Speaker 1: spetuate the trade war going into he is to resolve it. Now.
Speaker 1: Are the people of Capitol Hill engage in the census
Speaker 1: citizenship question? You know? I think a lot of folks are.
Speaker 1: It's definitely not my wheelhouse, but is an area where
Speaker 1: if you are UM focused on jerrymandering, if you are
Speaker 1: focused on the election and who gets to vote, which
Speaker 1: I think a lot of folks are, from President former
Speaker 1: President Obama and Eric Holder um on down to the
Speaker 1: rank and file members UM and particularly the newer members
Speaker 1: of Congress in the House and the Democratic Caucus and
Speaker 1: folks like Elizabeth Warren. This is a major issue. It's
Speaker 1: about who gets to vote, and I think if you
Speaker 1: have time to spend on that, you definitely do. Not
Speaker 1: every member is super involved. It has become harshly part
Speaker 1: of it, but it is obviously very important question. This
Speaker 1: is great Harriet Trust, thank you for the briefing on
Speaker 1: WAWI is with Veta Partners. There was a company in
Speaker 1: the twenties very quiet on Fifth Avenue in New York.
Speaker 1: It was the Allen brothers and particularly Herbert Allen Sr.
Speaker 1: And then there wasn't now Herbert Allen Jr. And what
Speaker 1: they have done is quietly affect transactions in communication in media.
Speaker 1: You can go back four years to Time Warner, Charter Communications, Verizon, Senteen,
Speaker 1: HealthNet and on and on our Paul Sweeney knows is
Speaker 1: cold and he is with Allen and Company as Sun
Speaker 1: Valley Paul. Instead of the media confab today, what is
Speaker 1: accomplished by Allan here? Is it a Davos for media
Speaker 1: or is that off the mark? No, that's absolutely right
Speaker 1: on the mark. Tom. I think just this morning, sitting
Speaker 1: out here by the hotel where they're having the first sessions,
Speaker 1: John Malone, Barry Diller, Tim Armstrong, just you know, a
Speaker 1: whole host of media, telecom and UH technology executives have
Speaker 1: just passed biased and Uh it's really a place like
Speaker 1: it's Barry Diller's that he comes here to be stimulated
Speaker 1: to learn new ideas, new technology, and people speak and
Speaker 1: all that right. Yeah, people speak and and uh you
Speaker 1: know these I think a lot of these executives come
Speaker 1: here to just to just learn to think about new
Speaker 1: technologies where their businesses may be going. Um and then
Speaker 1: of course, um, you know, to really talk about deals.
Speaker 1: Should we be doing business with you, should we be
Speaker 1: merging with you, should we be acquiring you? Uh so
Speaker 1: a lot of that takes place at this point. I mean, Lisa,
Speaker 1: if I go out there, do I need to wear
Speaker 1: my wool rich Men's flannel over shirt John Richard Brothers,
Speaker 1: you need to wear that tomorrow with your bow tie.
Speaker 1: You need to. I will be tweeting that out big
Speaker 1: Red and Black check. I cannot wait. Very it's very
Speaker 1: Tom Keene, I love it. Please, I love Mumfords. All right,
Speaker 1: I'm revealing too much about myself. Paul Sweeney, I do
Speaker 1: want to talk a little bit about the urgency. Have
Speaker 1: you ever heard a higher degree of urgency among media
Speaker 1: executives than now? Yeah, it's a great question, because you
Speaker 1: know what these media executives are dealing with really over
Speaker 1: the last couple of years that they've never had to
Speaker 1: deal with, UM, is the likes of these big technology companies,
Speaker 1: whether it's Google or Facebook or Amazon or Apple really
Speaker 1: taking a very hard look at the media communications that
Speaker 1: entertainment businesses, and so you know, they've been encroaching those
Speaker 1: technology companies have been encroaching upon you know, the businesses
Speaker 1: that have historically been Time Warner, you know, Viacom, CBS,
Speaker 1: and these executives here really need to figure out how
Speaker 1: they react, how they adapt, Uh, do they partner, do
Speaker 1: they acquire? Do they sell? Many of the media companies
Speaker 1: like Time Warner, like twenty one century Fox, you know,
Speaker 1: in fact, they're the last couple of years have decided
Speaker 1: to sell their businesses instead of trying to go head
Speaker 1: to head. So they're winners and their losers. Here. I'm
Speaker 1: looking right now at Netflix bonds and they're up the most. Uh,
Speaker 1: they're they're at the highest levels on record because Netflix
Speaker 1: is a decided winner. Is it becoming clear who the losers?
Speaker 1: Maybe who in the media landscape may not exist five
Speaker 1: years from now? Um, well, I'm gonna utter Tom Keane's
Speaker 1: favorite word as relates to the M and A and
Speaker 1: not a scale. Um. You know a lot of the
Speaker 1: smaller companies out there, whether it's the lions Gate or
Speaker 1: uh an MGM or even a Sony Studios, you know,
Speaker 1: one of the main studios in Hollywood. Um, they're all
Speaker 1: thinking about their businesses and they're saying, we're just not
Speaker 1: big enough. And when we think about it relative to
Speaker 1: a Google or Facebook or Amazon, we're just not big enough.
Speaker 1: And I think the big big deal here this year
Speaker 1: is CPS and viacomp. People, are you know, really taking
Speaker 1: a look at what Sherry Redstone wants to do with
Speaker 1: those two companies that her family and her company control.
Speaker 1: What's going to happen there? At the very least, investors
Speaker 1: here believe that those two come but it's need to
Speaker 1: get together, need to merge. Then the question becomes what
Speaker 1: does the merged company do? So it's all about if
Speaker 1: you don't have it. People are concerned what have they
Speaker 1: learned in the last twelve months, particularly from the A
Speaker 1: T and T follies. I mean what a debt build up?
Speaker 1: I mean, are these guys talking about you know, are
Speaker 1: they having serious discussions about being overdebted or is that
Speaker 1: okay debt debt go go go? Yeah, go go go
Speaker 1: is signed for the media sector right now? Um, you know,
Speaker 1: so the bond market, the bank credit market really is
Speaker 1: supportive of the media, communications technology sectors. So there's plenty
Speaker 1: of capital available to these companies, and particularly these low
Speaker 1: historic rates that we're at right now, so there's no
Speaker 1: real concern right now for debt. But of course, if
Speaker 1: you were to run into recession and advertising order to
Speaker 1: take a serious blow, then company that have a lot
Speaker 1: of that, like an A T and T, like a Comcast,
Speaker 1: they might have What are you seeing in advertising? I
Speaker 1: mean Hulu is cutting back. NBC has talked about cutbacks
Speaker 1: as well. I mean, do the advertising people show up
Speaker 1: and are they wearing the men's flannel over shirt genre
Speaker 1: Rich Brothers sons already ordered check. I like the white check.
Speaker 1: I think, would you think? I think it's got to
Speaker 1: be more of a grizzly brown grizzly. How many brown
Speaker 1: bow ties do you have? I have three of those?
Speaker 1: I got my my. My big question right now is
Speaker 1: definitely about the tech companies and you know how significant
Speaker 1: their involvement will be. In other words, when we talk
Speaker 1: about the media space, will the media space be big
Speaker 1: tech in five years and all of the other all
Speaker 1: of the other standalone companies will just get rolled in
Speaker 1: with them. Yeah, you know, we haven't really seen it
Speaker 1: to date. We've seen a lot of the tech companies
Speaker 1: kind of dip their toe, um, you know, make um
Speaker 1: some investments in programming, um, you know, whether it's you know,
Speaker 1: Google with with YouTube and so on and so forth,
Speaker 1: or Facebook may maybe you know, putting some football games
Speaker 1: on Facebook. But we haven't seen them really jump into
Speaker 1: the deep end of the pool and maybe acquire a
Speaker 1: big media company to say, you know, we really want
Speaker 1: to be in the content business. We haven't seen that
Speaker 1: in quite frankly, this conference here at Allen Company and
Speaker 1: stun Valley. They've been expecting that for really the last
Speaker 1: four or five six years and they just haven't seen
Speaker 1: it yet. So to be interesting to see whether these
Speaker 1: tech companies really want to go and out get a
Speaker 1: lot of capital to the contents. Sonia, thank you so
Speaker 1: much for reporting from all and Company and his media world.
Speaker 1: We're looking forward to his return. There's an auspicious time
Speaker 1: to speak to David Rubinstein of the Carlisle Group. David,
Speaker 1: I want to speak about your wonderful conversation on unicorns
Speaker 1: with the leadership of Uber. Of course disappeared appear, but
Speaker 1: at this moment, David, I'm honored to ask you about
Speaker 1: the resiliency of American capitalism with the print of three
Speaker 1: thousand on the SPX. I mean that long term trend
Speaker 1: of American capitalism has been extraordinary, hasn't it. It's hard
Speaker 1: to understand completely because typically we have processions every seven years.
Speaker 1: Were now ten years into a growth cycle, and there
Speaker 1: doesn't seem to be any evidence that we're going to
Speaker 1: go into any recession any time in the foreseeable future.
Speaker 1: So the economy is really defying gravity and history. But
Speaker 1: that's good for American investors. We have had a number
Speaker 1: of conversations that corporate officers have come to a halt
Speaker 1: because of the president, because of trade war, because of
Speaker 1: manufacturing uncertainty. Do you see that at Carlisle. No. I
Speaker 1: would say that corporate investment has slowed a little bit,
Speaker 1: but I would say generally we see pretty good growth
Speaker 1: in the economy, not three and four percent, but two
Speaker 1: percent or so. And I would say that I do
Speaker 1: expect there will be a trade agreement before the end
Speaker 1: of the year in China, and I expect the U
Speaker 1: s m c A will in time get confirmed by
Speaker 1: the Congress. And I expect, uh we'll have some rate
Speaker 1: cuts sp X three thousand and four right now, where
Speaker 1: with David Rubinstein, of course, a peer to peer conversation,
Speaker 1: and this one is interesting. You went out and found
Speaker 1: a unicorn. David yes Um Uber Uh, the CEO of
Speaker 1: Uber is the person I was interviewing, and he's an
Speaker 1: incredible person. He's an immigrant from Iran, came to work
Speaker 1: uh in the United States at Bizarre and then ultimately
Speaker 1: came to work for Barry Dealer, and then ultimately was
Speaker 1: was running a company for Barry to Barry Dealer's company owns.
Speaker 1: And Um was recruited away to run Uber after the
Speaker 1: previous CEO stepped down. Uh. While people say the i
Speaker 1: p O was not that successful in some respects, I
Speaker 1: thought it was pretty successful. While there was some uh uncertainty,
Speaker 1: But the pricing of the first day or so it
Speaker 1: was below the I p O prisis back pretty much
Speaker 1: to where it was at the I p O. But
Speaker 1: this is the most important point. This company is probably
Speaker 1: has the second highest market value of any company in
Speaker 1: the United States that when public uh some other words, Uh,
Speaker 1: the only company has a higher market cap. He after
Speaker 1: when public, I'm aware of his Facebook Google, wasn't this high.
Speaker 1: Microsoft wasn't as high, Amazon wasn't as high, So people
Speaker 1: can say that it wasn't all as successful. If people
Speaker 1: wanted that, they wanted a hundred higher valuation, a hundred
Speaker 1: twenty billion or whatever it was. But still, when you
Speaker 1: think about this company, it's not that old, and to
Speaker 1: have this kind of valuation so soon after it was started,
Speaker 1: and relatively so soon after the I p O, I
Speaker 1: think it is still amazing. It's a it's a fascinating conversation.
Speaker 1: Let's listen to a clip of Daro Kasar Shahi, he
Speaker 1: is the chief executive of Ubert, speaking with David Rubinstein
Speaker 1: in the episode three of the new season of The
Speaker 1: David Ruinstein Show Peer to Peer Conversations. What's the biggest
Speaker 1: challenge you currently see the company facing. I mean, the
Speaker 1: biggest challenge that that we have is a is a
Speaker 1: common challenge that you see with some of the large
Speaker 1: technology companies out there, which is there is an increasing
Speaker 1: regulatory burden UH that is coming on some of the
Speaker 1: tech company some of it deserved. I don't suppose I
Speaker 1: have some extra money and I wanted to buy into
Speaker 1: a company like yours. Why should I buy you? I
Speaker 1: think you have some extra money. Don't you never have enough.
Speaker 1: There's no doubt that there's a sentiment in Washington that
Speaker 1: there should be more regulation of some of these companies,
Speaker 1: and some of the CEOs of these companies have said
Speaker 1: there should be more regulation. Congress moves slowly. I wouldn't
Speaker 1: expect any epic legislation in this area quite some time.
Speaker 1: It's easier to get things done in the regulatory area
Speaker 1: if you do them administratively, so I expect more likely
Speaker 1: there will be enforcement or examinations by agencies UH of
Speaker 1: the operations of these tech companies more than legislation. Legislation
Speaker 1: could take many years um and when Microsoft was investigated,
Speaker 1: for example, years ago, it was an antitrust action that
Speaker 1: was taken against it, and I expect that there's probably
Speaker 1: likely to be something in the future U in terms
Speaker 1: of administrative action against these tech companies more than legislation.
Speaker 1: You know. One thing that I find interesting is that
Speaker 1: a lot of these companies, including Uber, relied heavily on
Speaker 1: private markets for a very long time before going public,
Speaker 1: and a lot of people are concerned that basically that
Speaker 1: that the that the potential dynamism of these companies is
Speaker 1: sort of over once they get to I p O stage.
Speaker 1: What's your view on that. What it used to be
Speaker 1: that people needed capital to grow their companies. Now there's
Speaker 1: so much capital that you can stay private for a
Speaker 1: long time, as Facebook did and as Uber did. But
Speaker 1: in the end, most of these tech companies, with very
Speaker 1: few exceptions, want to go public to provide greater liquidity
Speaker 1: for the investors and the employees. I do think that
Speaker 1: you have to recognize people aren't as interested in going public.
Speaker 1: There were there were companies that were publicly traded the
Speaker 1: United States. Now there about half that, So there's clearly
Speaker 1: a bias against taking your company public or not taking
Speaker 1: a public as rapidly as you would in the old day.
Speaker 1: David would final question Allen and Company, of course, as
Speaker 1: their sare in Idaho and Paul Tweeney has made clear
Speaker 1: everything is about scale. How does David Rubinstein define scale? Well,
Speaker 1: today you want to accompany that is global um Today,
Speaker 1: building a nice company in the United States or in
Speaker 1: China or in Europe doesn't mean as much unless it's
Speaker 1: gonna scale around the world. And scale means you've got
Speaker 1: the ability to uh invest large sums of money. So
Speaker 1: scale means multibillion dollar UH capabilities rather than multimillion dollar
Speaker 1: capabilities in this day and age. David, thank you so much,
Speaker 1: greatly greatly appreciated fascinating conversation UH Tonight peer to peer
Speaker 1: conversations David ruben Stein with the Uber team. Thanks for
Speaker 1: listening to the Bloomberg Surveillance podcast. Subscribe and listen to
Speaker 1: interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer.
Speaker 1: I'm on Winter at Tom Keane before the podcast. You
Speaker 1: can always catch us worldwide. I'm Bloomberg Radio