WEBVTT - Bloomberg Businessweek Weekend - March 6th, 2020 0:00:02.520 --> 0:00:06.200 This is Bloomberg Business Week from Bloomberg Radio. Hi, I'm 0:00:06.280 --> 0:00:08.680 Jason Kelly and I'm Carol Master. Welcome to the weekend 0:00:08.840 --> 0:00:12.040 edition of Bloomberg Business Week. Jason, what a week, uh? 0:00:12.039 --> 0:00:14.920 And it really contains so much volatility on so many 0:00:14.920 --> 0:00:17.280 different fronts, whether you looked at politics, whether you look 0:00:17.360 --> 0:00:19.159 at the financial markets, and whether you looked at the 0:00:19.160 --> 0:00:21.599 global economy. And we're going to get into all of that. 0:00:21.640 --> 0:00:24.520 We're going to talk about the coronavirus continuing to spread 0:00:24.520 --> 0:00:29.240 and investors trying to size up government efforts and corporate 0:00:29.280 --> 0:00:33.600 efforts honestly to contain the outbreak. And it's economic and 0:00:33.720 --> 0:00:36.000 business impact. Right, So we tap some of our top 0:00:36.080 --> 0:00:38.120 editors of the magazine to look at the markets, look 0:00:38.159 --> 0:00:40.920 at the economy to see their assessment at this point. 0:00:41.200 --> 0:00:44.000 Also on the corporate front, Barnes and noble Man. The 0:00:44.080 --> 0:00:46.600 next chapter, the new Hero of the Chains Rags to 0:00:46.720 --> 0:00:50.000 riches tail It is a hedge fund. Didn't see that coming. 0:00:50.040 --> 0:00:52.879 Plus this week's cover story, what a timely one. It's 0:00:52.920 --> 0:00:56.120 a sit down with an EC director at Larry Cutlo. 0:00:56.200 --> 0:00:59.400 Maybe you know him from television. He's become the optimist 0:00:59.480 --> 0:01:02.640 in chief in this administration, and there's a big question 0:01:02.640 --> 0:01:05.200 about whether an optimist will make the right call when 0:01:05.200 --> 0:01:07.880 it comes to economic policies. Al Right, first, we begin 0:01:08.120 --> 0:01:10.640 with the roller coaster that was those global markets this 0:01:10.640 --> 0:01:14.280 past week and former Vice President Joe Biden's campaign continuing 0:01:14.319 --> 0:01:17.800 to rise as Super Tuesday reignited his race for the 0:01:17.800 --> 0:01:20.080 White House. That's a story in the magazine this week 0:01:20.080 --> 0:01:23.400 by Josh Green, Business Week national correspondent joining us right 0:01:23.400 --> 0:01:25.800 now from d C and Josh, what a week. Super 0:01:25.800 --> 0:01:29.000 Tuesday a bit of a surprise, and then we had 0:01:29.000 --> 0:01:32.280 several candidates dropping out. Obviously, the big news this week 0:01:32.520 --> 0:01:34.600 was that the front runner of the Democratic race went 0:01:34.640 --> 0:01:37.120 from Bernie Sanders, who looked like he might be prepared 0:01:37.120 --> 0:01:39.800 to run away with it, to Joe Biden, who looks 0:01:39.840 --> 0:01:44.320 like he might have been decisively edging out Bernie Sanders. So, uh, 0:01:44.520 --> 0:01:47.039 quite a week everything turned upside down. I think the 0:01:47.080 --> 0:01:51.440 real story is that, uh, non Sanders, moderate voters finally 0:01:51.560 --> 0:01:54.720 at the very last minute coalesced around a candidate that 0:01:54.760 --> 0:01:57.360 was Joe Biden. I think that makes him the front runner. 0:01:57.400 --> 0:01:59.240 But as I right in Business Week this week, he 0:01:59.280 --> 0:02:02.040 now faces a new and familiar problem. A lot of 0:02:02.080 --> 0:02:05.440 Democratic strategists are worried about, and that is that he's 0:02:05.480 --> 0:02:08.200 back in the role Hillary Clinton was four years ago, 0:02:08.200 --> 0:02:11.240 where you have an establishment favorite, you have Bernie Sanders 0:02:11.240 --> 0:02:15.680 as an insurgent, and it's hard to see how Democrats 0:02:15.720 --> 0:02:18.040 managed to unify the party. All right, And we also 0:02:18.120 --> 0:02:21.800 saw Elizabeth Warren and Mike Bloomberg dropping out. Mike Bloomberg, 0:02:21.800 --> 0:02:24.840 of course the founder and majority owner of Bloomberg LP. 0:02:25.120 --> 0:02:30.960 He endorsed Joe Biden. Let's look ahead to these next 0:02:31.040 --> 0:02:34.799 contests here, Josh, because there's still a lot of delegates 0:02:34.800 --> 0:02:37.000 out there and some pretty important states just over the 0:02:37.040 --> 0:02:39.799 next couple of weeks. Yeah, that's right, And I think 0:02:39.840 --> 0:02:42.160 I think the importance of Bloomberg and Warren dropping out 0:02:42.240 --> 0:02:45.000 is that we now have effectively a two man race. 0:02:45.240 --> 0:02:48.160 And as you look ahead, uh, it looks to me 0:02:48.280 --> 0:02:50.560 like the states we have coming up tend to favor 0:02:50.639 --> 0:02:52.600 Joe Biden. The one I'm going to be looking at 0:02:52.800 --> 0:02:57.880 is Michigan. Uh. Michigan was the scene of a surprise 0:02:57.960 --> 0:03:01.080 upset four years ago when Bernie Sanders came in beat 0:03:01.160 --> 0:03:04.359 Hillary Clinton. Caused a lot of excitement and belief among 0:03:04.440 --> 0:03:07.239 Sandor folks that maybe they actually could knock her off. 0:03:07.280 --> 0:03:11.120 That didn't end up happening. Since Super Tuesday, the polls 0:03:11.160 --> 0:03:14.120 that I've seen from Michigan show Biden the head. So 0:03:14.680 --> 0:03:17.200 we're really rerunning a test case that we saw four 0:03:17.240 --> 0:03:19.480 years ago. It turns out that Biden wins in Michigan, 0:03:19.600 --> 0:03:22.160 especially if he wins big, I think that might be 0:03:22.200 --> 0:03:24.880 the last blow for Bernie Sanders. Josh Green, thank you 0:03:24.919 --> 0:03:28.880 so much. Well. Super Tuesday's results and the coronavirus dominated 0:03:28.919 --> 0:03:32.480 conversations this week about financial markets and the economy. US 0:03:32.520 --> 0:03:35.920 Congress agreeing to an emergency spending bill after the FED 0:03:36.000 --> 0:03:39.040 jumped in with an emergency half a percentage point rate 0:03:39.080 --> 0:03:42.400 cut that was meant to calm investors and ease financial 0:03:42.520 --> 0:03:46.080 market conditions. Well, let's see how that went. It was 0:03:46.120 --> 0:03:47.840 a volatile week, to say the least. Let's bring in 0:03:47.880 --> 0:03:50.480 Markets editor Mike Reagan and economics enter Peter Coy to 0:03:50.520 --> 0:03:52.880 make sense of it all. So let's start with that 0:03:53.000 --> 0:03:55.760 rate cut. You know, Peter, it reminded me, you know, 0:03:56.160 --> 0:03:57.839 all the way back to the financial crisis. We haven't 0:03:57.840 --> 0:04:00.280 had an emergency rate cut by the FED since then. Right, 0:04:01.200 --> 0:04:03.920 the Fed attempted to calm the market. I mean, the 0:04:03.960 --> 0:04:06.640 problem is that the FED can do only so much. 0:04:06.720 --> 0:04:10.160 When you have something like this, it's not primarily a 0:04:10.240 --> 0:04:14.440 financial market issue. It's the issue with real bodies and 0:04:14.480 --> 0:04:19.040 real viruses, and it affects the real economy, so production, 0:04:19.600 --> 0:04:21.920 It affects the supply side of the economy, not just 0:04:21.960 --> 0:04:25.039 the demand side of the economy. When it's the demand side, 0:04:25.080 --> 0:04:28.800 you can sort of goose up people's spending by making 0:04:28.839 --> 0:04:31.919 money cheaper. But when it supplies, ie, when goods aren't 0:04:31.920 --> 0:04:35.039 being produced because people can't get to work, that's something 0:04:35.080 --> 0:04:38.480 that monetary policy is not as good at solving. And 0:04:38.520 --> 0:04:41.400 so is that why the market just sort of wasn't 0:04:41.400 --> 0:04:43.159 buying it like well? I think the one thing you 0:04:43.200 --> 0:04:45.000 have to realize when you look at a week like 0:04:45.080 --> 0:04:47.680 this in markets is that once you introduce that sort 0:04:47.680 --> 0:04:49.560 of volatility end of the market, when you have that 0:04:49.720 --> 0:04:52.560 steep of a drop over such a short time, it 0:04:52.640 --> 0:04:56.040 tends to create both up and downward volatility. In other words, 0:04:56.080 --> 0:04:57.640 a big move down one day and then a big 0:04:57.680 --> 0:05:00.320 move back up the next day, and then back down 0:05:00.680 --> 0:05:02.600 and uh. The example I I've been using a lot 0:05:02.680 --> 0:05:05.400 is the two thousand and eleven episode when the US 0:05:05.520 --> 0:05:08.560 lost its triple A credit rating. You saw these massive 0:05:08.680 --> 0:05:11.320 three four moves up one day, back down, the next day, 0:05:11.360 --> 0:05:14.440 back up, you know, and it's it goes to you know, uh, 0:05:15.120 --> 0:05:19.120 talk about how computerized the equity market has become and 0:05:19.160 --> 0:05:22.640 how traders in those sort of algorithmic programs are really 0:05:22.960 --> 0:05:26.080 reacting to signals in the market, and they're very good 0:05:26.080 --> 0:05:29.120 at pattern recognition. They know when you see a big 0:05:29.200 --> 0:05:31.440 drop like this that there's bound to be a bounce. 0:05:31.720 --> 0:05:34.600 It's not gonna last. So it all sort of creates 0:05:34.600 --> 0:05:36.760 this situation where a lot of moneys on one side 0:05:36.760 --> 0:05:38.160 of the boat one day, the other side of the 0:05:38.200 --> 0:05:39.960 boat the next day, and back and forth. And I 0:05:39.960 --> 0:05:42.479 think that given all the other news flow sort of 0:05:42.520 --> 0:05:45.039 causing uh, you know, it's to go one way or 0:05:45.040 --> 0:05:48.640 the other, that issue that really explains that the suddenness 0:05:48.640 --> 0:05:50.920 and the massiveness of the back and forth movements. Well, 0:05:50.920 --> 0:05:52.480 I think it's fair to say that folks were saying 0:05:52.480 --> 0:05:54.599 the market was overvalue the equity market. They were looking 0:05:54.640 --> 0:05:56.960 for excuse to sell. Having said that, I feel, like 0:05:57.000 --> 0:05:59.600 Peter Coyd, there were two different stories being told. The 0:05:59.640 --> 0:06:02.479 bond market was telling one story prior to like, even 0:06:02.480 --> 0:06:05.000 the concerns about the virus equity markets as they kept 0:06:05.000 --> 0:06:07.080 going higher and higher, we're telling another one. And then 0:06:07.120 --> 0:06:08.800 this week we had what the ten year go blow 0:06:08.839 --> 0:06:11.520 one percent. I mean, that's a significant move, the ten 0:06:11.600 --> 0:06:14.320 year yield going below one. We're starting to feel like 0:06:14.400 --> 0:06:18.839 Europe here. Now Europe has had negative rates nominal rates, 0:06:18.839 --> 0:06:21.839 and now the US is coming down towards the zero 0:06:21.880 --> 0:06:25.320 lower round even out to ten years. And what this 0:06:25.400 --> 0:06:28.400 means is that there's not much room left for the 0:06:28.400 --> 0:06:32.240 Fed to act. It's already spent a lot of ammunition 0:06:32.760 --> 0:06:37.120 because the Fed, unlike the ECB and the Bank of Japan, 0:06:37.480 --> 0:06:40.160 has kind of been pretty clear that it doesn't intend 0:06:40.200 --> 0:06:43.120 ever to let phenomenal rates at either the short end 0:06:43.120 --> 0:06:45.880 of the long and go below zero. That means we're 0:06:45.880 --> 0:06:48.640 close close to doing about as much as they can 0:06:48.680 --> 0:06:51.719 do on the rate itself. So that's Economics editor Peter 0:06:51.839 --> 0:07:00.320 Coy along with our Markets editor Mike Reagan, all, So, 0:07:00.920 --> 0:07:02.839 this is one of those conversations I love talking to 0:07:02.839 --> 0:07:04.800 all our guests, but this is one where you and 0:07:05.440 --> 0:07:07.719 look at the rundown. We're like, well, I can't wait 0:07:07.760 --> 0:07:10.320 for this. Chris lou Back with US senior fellow at 0:07:10.320 --> 0:07:13.400 the University of Virginia Miller Center, also former Deputy Secretary 0:07:13.400 --> 0:07:16.960 of Labor under President Obama, joins us on the phone 0:07:17.400 --> 0:07:22.240 from Ceville, Charlottesville, Virginia. Let's start with you've been through 0:07:22.280 --> 0:07:26.280 a few of these. What did you see it was 0:07:26.360 --> 0:07:29.480 new and different on Super Tuesday? Well, I will tell 0:07:29.520 --> 0:07:33.160 you that was a surprise to me as well. Um, 0:07:33.640 --> 0:07:36.520 you would have said, look, and the conventional wisdom was 0:07:36.560 --> 0:07:40.080 Bernie Sanders was, you know, clearly the front runner and 0:07:40.320 --> 0:07:43.160 the only question was is how much of a delegate 0:07:43.320 --> 0:07:45.680 lead he was able to rack up on Super Tuesday. 0:07:46.000 --> 0:07:48.080 So I think this is a pretty for those was 0:07:48.280 --> 0:07:51.480 that spent our time in politics. Um, this, this Biden 0:07:51.800 --> 0:07:55.000 comeback is just stunning, right, but it ain't over yet, 0:07:55.120 --> 0:07:58.200 right because we still have absolutely not. Yeah, so walk 0:07:58.280 --> 0:08:00.800 us through that, Like, you know, what's great about you 0:08:00.920 --> 0:08:02.840 is we were kidding you know earlier that you're someone 0:08:02.880 --> 0:08:04.680 who's been in the room when a lot of things happen, 0:08:05.120 --> 0:08:07.920 Like what are the conversations that's going on you know 0:08:08.120 --> 0:08:10.800 at these parties behind the scenes, and also what kind 0:08:10.800 --> 0:08:14.360 of pressure is coming from the Democratic Party overall because 0:08:14.680 --> 0:08:18.040 their endgame is beating President Trump. And I don't think 0:08:18.280 --> 0:08:21.720 at this point with any anyone who's still left from 0:08:21.720 --> 0:08:24.840 the race up that anyone's any party leader can tell 0:08:24.920 --> 0:08:27.480 them that they should stay in or go out. I mean, 0:08:27.600 --> 0:08:30.240 when people like to criticize the party establishment, there really 0:08:30.280 --> 0:08:33.839 is no party establishment anymore, particularly in a day and 0:08:33.880 --> 0:08:36.880 age where people can raise their own money online and 0:08:36.960 --> 0:08:40.480 raise large chunks of money. So, um, you know, this 0:08:40.559 --> 0:08:42.880 is going to go on for a while. You know. Um, 0:08:43.160 --> 0:08:45.880 obviously a lot of delegates were selected, but I always 0:08:45.920 --> 0:08:51.359 remind people, Um, April, May June, more delegates are awarded 0:08:51.559 --> 0:08:53.600 those three months, and even just in the next couple 0:08:53.679 --> 0:08:57.720 of weeks, We've got you know, Michigan, Missouri, Washington State. 0:08:57.800 --> 0:09:01.640 Next Tuesday on the seventeenth, We've got Arizona, Florida, Illinois, Ohio. 0:09:01.720 --> 0:09:04.040 So this is going to go on. We literally have 0:09:04.040 --> 0:09:06.679 a Super Tuesday, like almost every Tuesday for the next month. 0:09:07.000 --> 0:09:09.480 So I think, you know, and again with the two 0:09:09.520 --> 0:09:11.840 front runners, Biden and Sanders, I think they're just going 0:09:11.880 --> 0:09:14.360 to continue to slog it out, you know, the way 0:09:14.360 --> 0:09:17.160 that my former boss Barack Obama did with Hillary Clinton 0:09:17.400 --> 0:09:19.280 right through a good chunk of two thousand and eight. 0:09:19.679 --> 0:09:23.000 So let's talk about some some compare and contrast here, Chris, 0:09:23.120 --> 0:09:26.199 because you know, you look at that race, and obviously 0:09:26.240 --> 0:09:30.760 there were some some differences between Obama and Clinton. There 0:09:30.760 --> 0:09:35.960 were clearly some differences between Clinton and Sanders, and there 0:09:35.960 --> 0:09:39.520 are echoes of that right now in terms of establishment 0:09:39.679 --> 0:09:43.720 versus insurgent. How as someone who knows the Democratic Party 0:09:43.760 --> 0:09:46.120 as well as you do, how do you assess that 0:09:46.240 --> 0:09:48.800 you know, sort of together with the rest of the party. 0:09:49.600 --> 0:09:52.280 You know, on one hand, you know, when everyone tells me, 0:09:52.360 --> 0:09:54.760 you know, boy, this has been such an ugly race. Hey, 0:09:54.800 --> 0:09:56.520 go back and look at two thousand and eight. I mean, 0:09:56.880 --> 0:10:00.599 you know, the Obama people called Clinton a racist, She 0:10:00.679 --> 0:10:03.280 called us a sexist, she said, you know, you'll remember 0:10:03.320 --> 0:10:06.720 she said her big theme was Obama was not qualified 0:10:06.760 --> 0:10:09.160 and ran this kind of three am ad You know, 0:10:09.200 --> 0:10:10.880 who would you want to answering the phone and three 0:10:10.920 --> 0:10:13.920 am So it got really nasty. The difference, though, was 0:10:13.960 --> 0:10:17.400 that ideologically the two of them were not that far apart. 0:10:17.600 --> 0:10:21.400 You know, While you know, one was probably slightly more establishment, 0:10:21.400 --> 0:10:24.640 they were both fairly establishment people. I think here you 0:10:24.720 --> 0:10:29.959 have a greater ideological difference between Sanders and Biden. Um. 0:10:30.160 --> 0:10:32.160 But the truth of the matter is you know, even 0:10:32.200 --> 0:10:35.800 on something like healthcare, I think even Bernie Sanders would 0:10:35.800 --> 0:10:39.040 probably conceive that Medicare for all isn't happening, you know, 0:10:39.080 --> 0:10:42.080 in the next four to eight years. Uh, and that 0:10:42.440 --> 0:10:44.160 you know, we as a country have to sort of 0:10:44.200 --> 0:10:47.960 move incrementally in that direction, the public option being you know, 0:10:48.080 --> 0:10:50.480 kind of a first important first step on that. So 0:10:50.840 --> 0:10:52.920 I think you can even find ways to bridge some 0:10:52.960 --> 0:10:55.800 of these differences, but they are certainly more significant than 0:10:55.800 --> 0:10:58.760 in previous years. Chris lew Is with US, his former 0:10:58.800 --> 0:11:02.760 Deputy Secretary of Labor under the Obama administration, Senior Fellow 0:11:02.800 --> 0:11:05.640 today at the University of Virginia Miller Center, on the 0:11:05.679 --> 0:11:09.920 phone from Charlottesville, Virginia. So, Chris, um, you're probably hearing 0:11:09.920 --> 0:11:12.240 about it. I mean, lots of headlines continuing to pour 0:11:12.280 --> 0:11:15.000 out from the corporate community about how the virus is 0:11:15.040 --> 0:11:17.640 impacting them. You wrote about it, you said, the coronavirus 0:11:17.679 --> 0:11:21.480 is bad. Trump could make it worse. Crisis management does 0:11:21.559 --> 0:11:24.480 not seem to have been at its best in terms 0:11:24.480 --> 0:11:26.560 of the US and how they're handling this. Yeah, I 0:11:26.559 --> 0:11:30.480 think that's that's a fair statement. You know, for the 0:11:30.520 --> 0:11:32.599 president to get his arms around this, he's going to 0:11:32.640 --> 0:11:35.080 have to manage in a much different way than he 0:11:35.120 --> 0:11:37.160 has over this three years. He's gonna have to rely 0:11:37.240 --> 0:11:40.439 on government experts. He's gonna have to make decisions based 0:11:40.480 --> 0:11:42.840 on science and facts, and he's gonna have to be 0:11:42.880 --> 0:11:45.480 willing to hear hard news and then delivered to the 0:11:45.480 --> 0:11:48.120 American people. And unfortunately, you know, you kind of see 0:11:48.600 --> 0:11:51.120 he likes, he likes to kind of use happy talk 0:11:51.200 --> 0:11:53.640 to talk about where we are. And they're certainly aren't 0:11:53.720 --> 0:11:55.960 good things or it's not as I don't want to say, 0:11:56.160 --> 0:11:57.679 is that because I'm not sure we really know what 0:11:57.720 --> 0:12:00.199 it is. But even on a simple statement of when 0:12:00.240 --> 0:12:03.400 we're gonna have a vaccine um, he's contradicting his own 0:12:03.840 --> 0:12:06.480 um government experts on that topic. And that's just not 0:12:06.640 --> 0:12:10.480 helpful at this time. Yeah, and so well, let's dig 0:12:10.520 --> 0:12:12.760 into that a little bit because that does seem to 0:12:13.360 --> 0:12:17.200 to be part of the problem here is everybody not 0:12:17.360 --> 0:12:19.079 being on the same page. You've been in a lot 0:12:19.120 --> 0:12:21.679 of these rooms. Who does that fall to? I mean, 0:12:21.760 --> 0:12:25.280 is is that ultimately falling to the president, or is 0:12:25.320 --> 0:12:29.280 there some part of the administration sort of bureaucracy, be 0:12:29.360 --> 0:12:32.760 at the chief of staff or someone else who essentially says, look, folks, 0:12:32.960 --> 0:12:36.319 here's the script. Essentially, here are talking points. I mean, 0:12:36.360 --> 0:12:39.960 this is this is not that complicated. No, And you know, 0:12:40.120 --> 0:12:42.400 the first term of the Obama administration, I managed his 0:12:42.520 --> 0:12:44.120 cabinet and we had to deal with a bunch of 0:12:44.120 --> 0:12:47.600 these crises. We had H one and one in two 0:12:47.640 --> 0:12:51.200 thousand nine, we had obviously the Gulf Coast oil spill, 0:12:51.240 --> 0:12:54.439 in two thousand ten, Hurricane Sandy. So we had an 0:12:54.440 --> 0:12:58.000 experienced team of people with its stability, and we had 0:12:58.120 --> 0:13:00.840 practiced on this means. Unfortunately, we went through many of 0:13:00.840 --> 0:13:04.560 these incidents. And yes, obviously you want to coordinate the message. 0:13:04.600 --> 0:13:06.760 So I get that, But some of the news accounts 0:13:06.760 --> 0:13:09.719 that are coming out are troubling that military officials as 0:13:09.720 --> 0:13:12.960 well as health officials are afraid of telling the president 0:13:13.080 --> 0:13:15.760 the truth because he doesn't want to hear it um 0:13:15.840 --> 0:13:18.680 and and it's that's unfortunate, and so, you know, the 0:13:18.720 --> 0:13:21.600 president needs to hear bad news. And I think frankly, 0:13:21.720 --> 0:13:24.800 he's a little too concerned about what this might do 0:13:24.880 --> 0:13:27.439 for not even the economy, but really what it does 0:13:27.480 --> 0:13:29.480 for the stock market, which he then takes as a 0:13:29.520 --> 0:13:32.120 proxy for the economy, and then he views that as 0:13:32.120 --> 0:13:34.760 a proxy for his reelection, and if he just simply 0:13:34.800 --> 0:13:38.320 buckle down and focused on public health, ultimately that does 0:13:38.360 --> 0:13:40.559 the most to help his re election prospect. There are 0:13:40.559 --> 0:13:42.400 certain things you can plan for and then there are 0:13:42.400 --> 0:13:44.959 things you cannot, So give us kind of a smart 0:13:45.080 --> 0:13:47.880 understanding of that. The thing that's going to hit you 0:13:48.000 --> 0:13:50.960 is the unexpected thing. I don't think in April we 0:13:50.960 --> 0:13:52.920 could have anticipated there'd be an oil spill in the 0:13:52.960 --> 0:13:56.240 middle of the Gulf of Mexico. But what you have 0:13:56.320 --> 0:13:59.320 to understand is that the White House can't actually do anything. 0:13:59.720 --> 0:14:02.800 It's only agencies that can do things. Agencies have money, 0:14:03.120 --> 0:14:05.959 they have programs, they have authorities, and you first of 0:14:05.960 --> 0:14:08.720 all have to have a competent, stable group of leadership 0:14:08.960 --> 0:14:11.880 running your agencies who understand all the levers that you 0:14:11.920 --> 0:14:14.480 can push and pull. And unfortunately, this has been a 0:14:14.520 --> 0:14:17.000 cabinet that's had a huge amount of turnover, So then 0:14:17.080 --> 0:14:19.440 you need those people who know how to run the agencies. 0:14:19.560 --> 0:14:22.760 That's Chris Leu, former Deputy Secretary of Labor under the 0:14:22.800 --> 0:14:25.560 Obama administration. He's now a senior fellow at the University 0:14:25.600 --> 0:14:27.800 of Virginia Miller Center. And Jason, you and I love 0:14:27.920 --> 0:14:30.640 talking with him because, as you said earlier, he has 0:14:30.680 --> 0:14:32.560 been in the room and so much has happened, and 0:14:32.680 --> 0:14:36.000 understands the workings of insign and administration well. And as 0:14:36.000 --> 0:14:39.120 we heard from him, he was involved in crisis response 0:14:39.240 --> 0:14:42.360 in the administration. He's worked across all three branches of 0:14:42.400 --> 0:14:45.760 government and let's not forget also a super delegate, so 0:14:46.080 --> 0:14:49.720 he knows his politics as well. Activists out in full 0:14:49.760 --> 0:14:52.000 force this year, especially the hedge fund Elliott Management, which 0:14:52.040 --> 0:14:54.000 is involved in two well known companies. What are the 0:14:54.000 --> 0:14:56.360 companies making news this week? Another A Jason, of course, 0:14:56.600 --> 0:14:58.520 is a feature story in the magazine this week. Well, 0:14:58.520 --> 0:15:01.360 and the news this week scooped by Bloomberg, a scoop 0:15:01.400 --> 0:15:03.200 by the guy who's sitting with us here in New 0:15:03.280 --> 0:15:05.960 York City. Part of the team, got the stock moving, 0:15:06.000 --> 0:15:08.840 got a lot of people talking, uh, including probably I 0:15:08.840 --> 0:15:11.720 think it's safe to say Jack Dorsey Scott to vote 0:15:11.720 --> 0:15:15.400 here with us in New York. What's going on in Twitter? Well, 0:15:15.480 --> 0:15:18.280 Elliot has taken a steak obviously, and um, we broke 0:15:18.760 --> 0:15:21.520 the story on Friday night essentially that they've taken a stake, 0:15:21.600 --> 0:15:25.200 nominated for directors and now want to push Jack Dorsey 0:15:25.200 --> 0:15:29.880 out of the CEO role. Okay, so wow, Yeah, I 0:15:29.880 --> 0:15:32.440 mean that's a that's a big headline and certainly stopped 0:15:32.440 --> 0:15:36.160 a lot of people in their tracks. What's the case, Well, 0:15:36.200 --> 0:15:38.000 the case is pretty simple, and I think it's something 0:15:38.000 --> 0:15:40.160 that's been made a few times, is that Jack has 0:15:40.600 --> 0:15:43.240 he's one of the only people in the world to 0:15:43.360 --> 0:15:47.400 run two publicly traded, gigantic publicly traded companies. UH. He 0:15:47.520 --> 0:15:51.360 runs Square, he also runs Twitter UM and you know, 0:15:51.560 --> 0:15:53.800 late last year said that he also wanted to spend 0:15:54.160 --> 0:15:57.640 up to six months a year working in Africa UM and. 0:15:57.680 --> 0:16:01.240 So I think the argument is clear in that, you know, 0:16:01.320 --> 0:16:03.600 he has a lot of things going on and obviously 0:16:03.680 --> 0:16:07.840 has some divided loyalties between the two companies UM, and 0:16:07.880 --> 0:16:10.680 that Twitter is something that needs a full time CEO, 0:16:11.080 --> 0:16:13.600 particularly now we're going to major events like the U 0:16:13.680 --> 0:16:17.120 S Election, Summer Olympics, We've got the coronavirus going on. 0:16:17.480 --> 0:16:20.680 And while those are really great for you know, tweet activity, 0:16:21.120 --> 0:16:25.800 what they do also is create Twitter users and advertisers. 0:16:25.800 --> 0:16:27.760 So what does Elliott want. I mean, they've amassed what 0:16:27.760 --> 0:16:30.520 about a billion dollar position in shares of Twitter. It's 0:16:30.520 --> 0:16:32.760 a little bit more than more, yeah, than a billion years. 0:16:32.800 --> 0:16:34.600 So what do they want specifically, do they want tor 0:16:34.640 --> 0:16:36.800 see out no doubt about it? Yeah, I mean that's 0:16:36.840 --> 0:16:40.680 the that's the supplicity of this argument is that And 0:16:40.680 --> 0:16:43.600 and that's why I think it resonated with you know, 0:16:43.680 --> 0:16:47.800 so many people around it is that it's a singular argument. 0:16:48.160 --> 0:16:51.120 You need a CEO that will run this company and 0:16:51.280 --> 0:16:54.120 you know, well they think that, you know, the shares 0:16:54.160 --> 0:16:58.440 of underperformed you know, relative to Facebook and what have you. Um, 0:16:58.480 --> 0:17:00.280 they do pag a lot of that on the act 0:17:00.280 --> 0:17:03.960 that Dorsey is is, you know, divide a loyalty. But 0:17:04.040 --> 0:17:07.159 also you know, there is a Ruling Stone magazine article, 0:17:07.800 --> 0:17:10.040 you know, last year sometime where he said that he 0:17:10.160 --> 0:17:12.280 was getting eight and a half hour sleep at night, 0:17:12.480 --> 0:17:16.720 so running running to you know, one thirty five billion 0:17:16.720 --> 0:17:21.479 dollar company, one billion dollar company, uh, and getting more 0:17:21.560 --> 0:17:23.520 sleep than I do in a night right now. So 0:17:24.160 --> 0:17:26.040 I think that's the argument. But I think that's a 0:17:26.119 --> 0:17:29.440 really interesting point too, because so often an activist comes 0:17:29.480 --> 0:17:32.480 in and says, you know, the company needs to explore 0:17:32.560 --> 0:17:35.680 strategic options because costs, they need to do this, They 0:17:35.680 --> 0:17:37.560 need to explore all these different things they need to 0:17:37.600 --> 0:17:41.080 undertake this review. This is like boom, we need to 0:17:41.119 --> 0:17:42.879 bounce this guy. Yeah, and I think part of the 0:17:42.960 --> 0:17:46.879 argument is also that you know, UM, Twitter hasn't UM 0:17:47.040 --> 0:17:49.560 innovated in a way that a lot of its competitors have, 0:17:49.760 --> 0:17:52.840 so it's always stuck to its kind of core UM 0:17:53.080 --> 0:17:57.720 model and core platform UM, whereas you know, Snap or 0:17:57.800 --> 0:18:02.199 Instagram UM even to talks, seem to be more innovative 0:18:02.280 --> 0:18:07.240 and creating more consumer friendly UM products. All right, So, meanwhile, 0:18:07.680 --> 0:18:10.240 down in Union Square, not far from where we are, 0:18:11.040 --> 0:18:14.080 kind of ground zero to some extent of what's going 0:18:14.160 --> 0:18:21.359 on with Barnes and Noble also involving Elliot Man goodness gracious. Yeah. So, uh, 0:18:21.760 --> 0:18:25.680 you'll recall last year Elliott UM, through its private equity arm, 0:18:26.240 --> 0:18:30.919 acquired Barnes and Noble UM, and you know, they've they 0:18:31.240 --> 0:18:32.880 didn't do a whole bunch of change in the lead 0:18:32.920 --> 0:18:35.000 up to the holidays because they didn't want to mess 0:18:35.040 --> 0:18:37.199 with sales at all. But now that we're in the 0:18:37.240 --> 0:18:39.880 new year, are starting to implement all these changes into 0:18:39.880 --> 0:18:43.159 the Bardens and Noble chains. So that's what we're hooking 0:18:43.200 --> 0:18:45.680 this story on that's in Business Week this week. Well, 0:18:45.720 --> 0:18:47.679 you know, and let's just take a step back because 0:18:47.800 --> 0:18:49.560 before we get into kind of where Barnes and Noble 0:18:49.600 --> 0:18:52.200 maybe going in the future and who may be instrumental 0:18:52.280 --> 0:18:54.960 and determining where it goes. Tell it remind us. I mean, 0:18:55.000 --> 0:18:56.960 Barnes and Noble was the behemoth when it came to 0:18:57.000 --> 0:19:00.199 selling books before Amazon. Yeah, you've got mail, right, like 0:19:00.280 --> 0:19:03.159 that was that was the you know, that went as 0:19:03.160 --> 0:19:05.080 soon as you become famous and they make like a 0:19:05.119 --> 0:19:09.919 fictionalized version of your business like books, that's right, And 0:19:10.080 --> 0:19:13.760 so that was you know, at the peak of what 0:19:13.880 --> 0:19:16.720 Barnes and Noble was. It was you know, we say 0:19:16.720 --> 0:19:19.080 it in the story, it was like the socialization of 0:19:19.119 --> 0:19:23.159 a Starbucks with the sales tactics of a you know, 0:19:23.200 --> 0:19:27.439 a dealership of bargain basement dealership. And so when Barnes 0:19:27.480 --> 0:19:30.760 and Noble was like coming up in the nineties early 0:19:30.800 --> 0:19:33.200 two thousands, they you know, they were the big kid 0:19:33.280 --> 0:19:36.199 on the street, right, and they had you know, they 0:19:36.200 --> 0:19:38.760 were pushing all these independent stores and all of these 0:19:38.760 --> 0:19:41.399 smaller chains out of the way. And then of course 0:19:41.880 --> 0:19:45.520 we know what happened then, Uh, Amazon started selling books, 0:19:45.600 --> 0:19:48.720 right and uh and the e reader started to come 0:19:48.880 --> 0:19:53.600 and all these all these challenges um ended up beating 0:19:53.680 --> 0:19:56.159 up Barnes and Noble in the same way Barnes and 0:19:56.200 --> 0:19:58.720 Noble was beating up on everybody else. And that's Scott 0:19:58.720 --> 0:20:03.000 devote all over the activism beat here at Bloomberg, and 0:20:03.040 --> 0:20:06.000 that's really taken him into some of the biggest and 0:20:06.080 --> 0:20:09.399 best known companies, be a Twitter or in this case, 0:20:10.040 --> 0:20:13.200 in the and that's taken him inside some of the 0:20:13.200 --> 0:20:16.680 world's best known companies. Twitter obviously in the news this week, 0:20:16.840 --> 0:20:18.760 but Barnes and Noble, that's a story I didn't fully 0:20:18.800 --> 0:20:20.720 understand until I read this piece. When I think Scott 0:20:20.720 --> 0:20:22.240 makes a really good point when we sat down and 0:20:22.240 --> 0:20:24.800 talked with him, and he says, you know, Elliott has 0:20:24.800 --> 0:20:26.800