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Speaker 1: Welcome to the Bloomberg Penl Podcast. I'm Paul swing you,

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Speaker 1: along with my co host Lisa Brahma wits each day

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Speaker 1: we bring you the most noteworthy and useful interviews for

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Speaker 1: you and your money. Whether at the grocery store or

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Speaker 1: the trading floor, find a Bloomberg Penl podcast on Apple

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Speaker 1: podcast or wherever you listen to podcasts, as well as

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Speaker 1: at Bloomberg dot com. Mayor Bill de Blasio, as well

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Speaker 1: as Governor Cuomo of New York and President Trump alike

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Speaker 1: all pointed to extremist elements that infiltrated a number of

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Speaker 1: the protests around the country is instigating much of the violence.

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Speaker 1: It went so far as President Trump recommending that Antifa,

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Speaker 1: one of the groups that has been pinpointed designated a

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Speaker 1: terrorist organization, joining us now to discuss this as well

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Speaker 1: as next steps when it comes to the social unrest

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Speaker 1: that we're seeing across the nation. As Clint Watt's a

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Speaker 1: Distinguished Research Fellow at Foreign Policy Research Institute, also Senior

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Speaker 1: Fellow at the Center for Cyber and Homeland Security at

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Speaker 1: George Washington University, and a former FBI agent in the

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Speaker 1: Counter Terrorism Units, clan so glad to be able to

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Speaker 1: speak with you today. What do you make of these

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Speaker 1: allegations that there were rogue anarchist factions infiltrated the protests.

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Speaker 1: Does that seem to hold truth to you based on

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Speaker 1: what you know? Yeah, thanks for having me. You know

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Speaker 1: it increased this very fuzzy and convenient narrative. I think

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Speaker 1: for a lot of leaders to just blame outsiders or

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Speaker 1: extremists without getting into any specifics, and that can get

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Speaker 1: really dangerous. It's not unheard of for any protest movement

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Speaker 1: to have, regardless of the political orientation, some sort of

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Speaker 1: extremist element within it that's conducting violence. Are trying to

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Speaker 1: mobilize people to violence, and we've seen this over many decades.

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Speaker 1: But the way it's been kind of cart blanche labeled

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Speaker 1: as extremists or people from not here becoming the agitators

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Speaker 1: really overplays I think to a degree that a lot

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Speaker 1: of this is a protest movement, you know, that is

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Speaker 1: based on something that we've seen over many years um

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Speaker 1: and that yeah, sure they're going to people mobilizing towards violence,

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Speaker 1: but I don't know what that group is, And so

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Speaker 1: Antifa gets thrown in as a sort of label. But

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Speaker 1: have you worked on this for a good while now

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Speaker 1: and searching out information on ANTIFA. It is not the

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Speaker 1: organized terrorist or extremist organization the way we tend to

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Speaker 1: think of other groups in the past, and there's no

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Speaker 1: real leader or specific organization. It's really just a collective

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Speaker 1: name thrown onto a movement. So if your law enforcement

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Speaker 1: and you're trying to deal with this, I don't think

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Speaker 1: it really helps anything. And it's also not an official

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Speaker 1: organization of any any real substantial size. Clint, how much

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Speaker 1: staying power do you think some of these protests have.

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Speaker 1: We've seen this in the past, unfortunately, um when you

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Speaker 1: know other African American men have been subjected to you know,

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Speaker 1: police brutality or other issues along those lines. We've seen

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Speaker 1: this in the past. How much staying power do you

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Speaker 1: think this particular movement has. I think in this case

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Speaker 1: there are a lot of other drivers that are keeping

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Speaker 1: it going that we haven't seen before. One, a lot

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Speaker 1: of people are out of work and have been for

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Speaker 1: quite some time, and hostilities and political partisanship have really

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Speaker 1: divided the country over the last two to three months.

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Speaker 1: I think the second thing is you've got extreme economic

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Speaker 1: inequality right now. You know you have markets at are

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Speaker 1: very high level at a time when unemployment is at

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Speaker 1: an all time high, you know, at least in my lifetime.

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Speaker 1: And then you add on to that it's an election year.

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Speaker 1: You've got a powder keg like I've not seen in

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Speaker 1: any time and since I've been born, which will potentially

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Speaker 1: power these movements. You've also seen a very uh, militarized

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Speaker 1: and aggressive response to the protest in certain cities. You've

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Speaker 1: seen journalists being targeted or tax potentially, and you've seen

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Speaker 1: this also take off in social media at a time

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Speaker 1: when our foreign adversaries are trying to amplify and show

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Speaker 1: discord inside the United States, and there's plenty of available

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Speaker 1: content to do that. So I think this could go

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Speaker 1: on for quite some time just looking at how many

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Speaker 1: factors are compounding at the same time. So what could

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Speaker 1: actually be done to stop it? Usually the solution for

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Speaker 1: this is cool heads and leadership, And sadly, we're not

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Speaker 1: at a point in our country right now where that's

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Speaker 1: coming to fold. You're seeing, actually you're seeing politicians calling

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Speaker 1: for use of extreme force on protesters, not sort of

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Speaker 1: let's have some calm and come together. On several occasions

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Speaker 1: yesterday you did see law enforcement leaders, sheriff's, you know, chiefs,

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Speaker 1: trying to walk with the protesters, trying to mobilize. You've

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Speaker 1: also seen protesters turning on the more extremist elements are

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Speaker 1: you know, doing property damage or trying to inside violence.

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Speaker 1: And so you're seeing some pushback that gets less coverage

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Speaker 1: in the news, and it gets less social media shares,

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Speaker 1: but it is out there. So what I'm hoping is

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Speaker 1: that the political leaders won't use this divisiveness for their

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Speaker 1: own political gain and realize that we're really at a

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Speaker 1: turning point in the country where there's such distrust between

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Speaker 1: law enforcement in the public, between institutions, the elected leaders

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Speaker 1: in the public, that we're really at a dangerous point.

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Speaker 1: Where my biggest concern right now is, you know, it's

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Speaker 1: been twenty plus years since we had an Oklahoma City bombing, UM,

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Speaker 1: but the conditions for this from many different directions are

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Speaker 1: very high right now in terms of the outbreak of

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Speaker 1: large lots of violence or very specific attacks on institutions, officials,

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Speaker 1: law enforcement, or the public. UM. So I'm worried right

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Speaker 1: now in ways I've never been worried before. Glenn, I

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Speaker 1: gotta say, I think we all are worried, and I

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Speaker 1: will just say, Paul, in full disclosure, there was a

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Speaker 1: pretty serious altercation outside my apartment building that I was watching,

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Speaker 1: and there were just as many individuals on the protests

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Speaker 1: side who were carrying away fellow protesters to de escalate

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Speaker 1: the situation, and you saw police officers also showing the

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Speaker 1: strat I mean, there were a lot of responsible actors too.

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Speaker 1: And I think that it is true, Paul, that we

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Speaker 1: often do not cover that as much because it's not

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Speaker 1: the thing that stands out from the whole scenario, but

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Speaker 1: definitely is something that exists. Yeah, Clint, just one final

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Speaker 1: thing here. I mean, much like the pandemic, the response

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Speaker 1: to the pandemic, we're not seeing much leadership at the

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Speaker 1: federal level here as it relates to these uh civil issues.

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Speaker 1: It's kind of left to governors and really to the mayors,

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Speaker 1: the frontline mayors. Is that problematic in and of itself?

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Speaker 1: I think it is at this point because these are cities, towns, mayors,

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Speaker 1: governors that have been under intense stress for three months

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Speaker 1: and the resources have already been absolutely you know, plundered

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Speaker 1: responding to COVID nineteen, and so if you look at

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Speaker 1: New York City. This is three straight months of intense

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Speaker 1: stress on the public system. UH law enforcement and emergency

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Speaker 1: and responders are fighting a twin battle. You know, We've

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Speaker 1: got the pandemic on one side, and you've got this

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Speaker 1: sort of protest movements and spikes to violence on the other.

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Speaker 1: And they're exhausted and worn out. And you look at

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Speaker 1: healthcare workers, they've been fighting the battle for the country

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Speaker 1: over the last three months. If you look at law

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Speaker 1: enforcement first responders, they've been tied up in this. And

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Speaker 1: so I think nerves are are afraid and intentions are

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Speaker 1: going to remain high because we've asked a lot of

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Speaker 1: these public servants and at the same point, the public

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Speaker 1: UH needs our help and you can see that with

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Speaker 1: the protests that are out there. We've had a serious

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Speaker 1: problem about UH African Americans dying, you know, over many years,

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Speaker 1: and it's really come to ahead. I think at this point,

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Speaker 1: I think right. Clint Watts, thank you so much for

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Speaker 1: jo me as Clint Watts is a Distinguished Research Fellow

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Speaker 1: for the Foreign Policy Research Institute, also Senior Fellows the

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Speaker 1: Center for Cyber and Homegown Security at George Washington University.

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Speaker 1: Is also the author of the book Messing with the Enemy,

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Speaker 1: giving us some much needed perspective on this rising civil

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Speaker 1: unrest that is once again gripped this country and sweeping

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Speaker 1: across the country. And will keep up to date on

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Speaker 1: that news. You're listening to Bloomberg Markets with Lisa Abrama,

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Speaker 1: Eds and Paul Sweeney on Bloomberg Radio. Well, there are

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Speaker 1: so many cross currents for investors to discount these days.

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Speaker 1: It's just been an extraordinary time in the markets. Of course,

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Speaker 1: the pandemic and the economic fallout from the pandemic we've

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Speaker 1: now had over the weekend. Uh, you know, rising levels

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Speaker 1: of civil unrest that we've not seen in this country

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Speaker 1: for decades. And and now even with the US China

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Speaker 1: trade deal, we have that Phase one deal, but it

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Speaker 1: looks like that could be facing some rough water. So

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Speaker 1: really some major major cross currents for markets to digest.

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Speaker 1: To get a sense of what's happening in the currency markets,

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Speaker 1: most liquid markets, we welcome Dr Win Thin, Global head

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Speaker 1: Currency Strategy at Brown Brothers Harriman, uh when thanks so

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Speaker 1: much for joining us here give us a sense of

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Speaker 1: how the currency markets have been digesting all of these

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Speaker 1: cross currents of news. Just really over the last several

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Speaker 1: days as we take a look at some of the

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Speaker 1: major currencies. Of course, well, first of all, thanks again

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Speaker 1: for for having me on UM. It's always a pleasure. Uh,

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Speaker 1: you know, Like like other markets, I think, as you mentioned,

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Speaker 1: there's just so many things that just um, you know,

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Speaker 1: I think we've had these bounds of risk on, risk off,

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Speaker 1: mostly tied to the US China tensions. And I think

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Speaker 1: last late last week, it looked like in President Trump

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Speaker 1: is gonna hold the press comments on Friday's announced some

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Speaker 1: very significant measures. Markets got very nervous, equity spell dollar strengthened,

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Speaker 1: But it turns to be much ado about nothing um.

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Speaker 1: And I think what the signals to us to the

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Speaker 1: FX markets is that despite all this tough talk, Mr

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Speaker 1: Trump is I think unwilling to risk going down that

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Speaker 1: road of trade war again. You know, we saw how

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Speaker 1: how harmful it was for the markets last year, and

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Speaker 1: going into the elections in November. I think it's uh,

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Speaker 1: you know, I think it's a very risky strategy and

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Speaker 1: to be something he stepped back that said. I think

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Speaker 1: what I think it was interesting because China basically gave

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Speaker 1: him a reminder that he's playing very We can just

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Speaker 1: overnight China. It was reportedly Chinese authorities UM instructed their

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Speaker 1: importers not to UH to pause their purchase of soybeans

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Speaker 1: and perhaps pork from the US. So there's still risks

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Speaker 1: the head UM, but it appears that the US China

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Speaker 1: attentions may not be as bad as as previously thought.

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Speaker 1: That's negative to dollar. That's that's positive for emerging markets

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Speaker 1: and and and sort of the growth sensitive currencies such

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Speaker 1: as the dollar block and scandies. So we're seeing now

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Speaker 1: the dollar the week is to versus the basket of

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Speaker 1: its pure currencies since early March. I'm struggling to understand.

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Speaker 1: Is this just a risk on trade or is this

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Speaker 1: some sort of comment on the US deficit and policy. Well,

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Speaker 1: it's hard to separate the two. UM. I think the

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Speaker 1: main drivers for the currency markets is the is the

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Speaker 1: relative UH stance of the central banks, and really the

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Speaker 1: dollars been on his back foot ever since. The FIT

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Speaker 1: took very aggressive actions since March UH to basically have

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Speaker 1: unlimited kwi UM zero rates, direct lendings, corporate sector. All

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Speaker 1: that is is I think positive for the US economy

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Speaker 1: long term, but near term negative for the dollar. Now,

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Speaker 1: why do I say near term, well, I think other

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Speaker 1: central banks are going to go down that road. The

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Speaker 1: e CV meets Thursday, they're why they expected to increase

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Speaker 1: their qui UM by five billion euros. Other central banks

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Speaker 1: have really gone down the similar road um. But you know,

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Speaker 1: for now the dollars we're being punished the most we

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Speaker 1: saw that back during the financial crisis. I think there'll

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Speaker 1: be some catch up. But to your point, there are

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Speaker 1: other negatives now that are sort of looming ahead. One

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Speaker 1: is that, for sure, the fiscal deficit of the US.

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Speaker 1: These tensions, I'm not quite sure how to play them,

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Speaker 1: and I don't think the market quite knows how to

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Speaker 1: play them. We know there's gonna be social cost, economic costs,

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Speaker 1: little cost, but they're not quite clear at this point.

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Speaker 1: So Dr Thinn, I mean, I'm looking at the yuan

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Speaker 1: right now at UH seven point one two seven. How

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Speaker 1: much of a deal big deal should we make out

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Speaker 1: of the wand being above what is historically it's as

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Speaker 1: seven level in terms of pegging, Well, I think all

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Speaker 1: eyes were on on that pair last week when it

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Speaker 1: was threatening to breach the seventh twenty level. You know,

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Speaker 1: these are levels we haven't seen since last September when

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Speaker 1: you know, really at the height of the trade war.

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Speaker 1: So we're still elevated. Um, you know, we're off that high.

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Speaker 1: But you know, to me, it tells me that, okay,

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Speaker 1: Marcus aren't quite quite on board with the Okay, the

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Speaker 1: tensions are off the off the table. Um, it's something

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Speaker 1: to keep an eye on. Um. But if you look elsewhere,

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Speaker 1: the emerging market currents are saying, okay, you know, full

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Speaker 1: speed ahead. Well, you know, things are looking good. You know.

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Speaker 1: To me, the thing you know, I'm always you know,

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Speaker 1: sort of always look like the sort of contrarian viewpoints

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Speaker 1: to me is, look, things tensions are okay. But you know,

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Speaker 1: in China's data is stabilizing. But we had data out

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Speaker 1: of Korea overnight exports and inputs are both contracting over

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Speaker 1: twenty year over year still in May, despite what seems

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Speaker 1: to be stabilizing in China. So my only warning to

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Speaker 1: everyone who's piling onto this risk trade is that you know,

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Speaker 1: we're far, far far from you know, actual growth. You know,

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Speaker 1: we have still the risk of a second wave, but

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Speaker 1: even without that, the globe economy still has a big

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Speaker 1: hold a dig out of And I'm not so optimistic

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Speaker 1: at some of these markets are saying, so what's your

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Speaker 1: highest conviction call right now? My highest conviction call um

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Speaker 1: I would at this point, UH be lightning up e M.

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Speaker 1: I don't think this is where e M should be

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Speaker 1: given these risks. I decided, so I think this over

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Speaker 1: This rallying emerging market currencies is overdone. Uh, Brazilian Real,

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Speaker 1: Turkish Lyre, South African rand, these are all very risky

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Speaker 1: currencies that you really have no business being at levels

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Speaker 1: they are right now. So you know, the worst maybe

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Speaker 1: behind us, but again you know it's it's happy days

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Speaker 1: are are still very far away from us. Uh. When

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Speaker 1: how do you think about some of the European currencies here?

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Speaker 1: Looking at the pound and the euro uh putting some

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Speaker 1: strength today. Yeah, that's I mean, that's another that that

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Speaker 1: I probably my second highest conviction cause. And that's that's

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Speaker 1: Sterling is overdone. Uh. Look that we have the next

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Speaker 1: round of Brexit deal breakfit talks begin this week virtually

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Speaker 1: between the EU and the UK. They're very very far

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Speaker 1: apart on the deal they made the last meeting them

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Speaker 1: back in May. If if anything, took a step backwards,

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Speaker 1: because hard feelings things are very hurt coming out of

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Speaker 1: that and that's not a way to go forward. So

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Speaker 1: I think markets are underestimating the cause the risk of

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Speaker 1: a hard Brexit. The transition period ends into Sember thirty one.

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Speaker 1: If they can't come up with some quart of some

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Speaker 1: sort of deal before then UK goes crashing out, it's

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Speaker 1: gonna be very disruptive. Um. You know, I think the

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Speaker 1: pound tells me that the current I would say that

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Speaker 1: some sort of deal or extensions being priced in um.

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Speaker 1: But given how know that the UK is already dealing

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Speaker 1: with the pandemic and the you too, and to think

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Speaker 1: that they can get some sort of complicated trades you'll

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Speaker 1: done by the end of the year is to me

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Speaker 1: it's very very optimistic and I think misguided. And then

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Speaker 1: thank you so much for being with US Global head

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Speaker 1: of Currency Strategy at Brown Brothers Harriman. I gotta say

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Speaker 1: hearing Brexit actually fills me with nostalgia and it's ridiculous,

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Speaker 1: but I actually want to be talking about Brexit right

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Speaker 1: now given some of the other issues that had really

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Speaker 1: interesting though to hear Dr Thinn's ideas on emerging market

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Speaker 1: currencies right now, because that trade does seem to be

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Speaker 1: gaining steam a lot of people saying that the declines

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Speaker 1: and the currencies have been overdone, and yet here we

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Speaker 1: are facing a lot of unknowns at a time when

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Speaker 1: people are are moving out of the dollar into these

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Speaker 1: riskier assets. This is Bloomberg Markets with Lisa Ronald DS

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Speaker 1: and Paul's Wheeney on Bloomberg Radio. We don't talk enough

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Speaker 1: about reachs, but that has certainly been an area where

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Speaker 1: investors have consistently looked for dividend returns yield returns to

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Speaker 1: get a sense of what's going on in that market.

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Speaker 1: Given all the uncertainty we are seeing across asset classes,

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Speaker 1: We're welcome to have uh Emon Breven Loup, lead portfolio

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Speaker 1: manager of high income Equities and Global Rates at tc

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Speaker 1: W t c W maynow is a huge firm out

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Speaker 1: on the West Coast, two and twelve billion in assets firm.

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Speaker 1: Why uh, and and thanks so much for joining us here.

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Speaker 1: Give us a sense of how reads as a group

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Speaker 1: have performed over the last several months when we've seen

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Speaker 1: just unprecedented volatility. Sure well, thank you very much for

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Speaker 1: having me. Um. As you said, the sector has been

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Speaker 1: extremely volatile. The sector as a whole is down about

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Speaker 1: here to date, lagging d S and t by about

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Speaker 1: so it's definitely underperformed by a very meaningful amount. Well,

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Speaker 1: let's talk about the bifurcation within the reach segment. We have,

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Speaker 1: for example, commercial real estate, major cities under pressure as

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Speaker 1: people work from home and amid a host of other

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Speaker 1: issues raising questions about the centers of cities, and then

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Speaker 1: you have more suburban areas. Where do you see the

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Speaker 1: value right now? Well, that's a great question, and thank

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Speaker 1: you for asking that. You know, bafrication is definitely correct.

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Speaker 1: You know, people think of recent real estate perhaps as

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Speaker 1: uniform group and they're anything but so within the space data,

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Speaker 1: centers and towers have actually are performed very meaningfully. They're

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Speaker 1: up about um well as you would imagine, you know,

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Speaker 1: those sectors that are closer to the epicenter of the

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Speaker 1: of the pandemic, things like regional malls or hotels, you know,

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Speaker 1: down fifty year to date. Um. You know, our viewpoint

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Speaker 1: is that the pandemic is really accelerated certain secular trends

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Speaker 1: that were in the midst of being played out, and

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Speaker 1: you know, we envisioned that the same dynamics are going

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Speaker 1: to essentially prevail over the at least medium to long

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Speaker 1: term here. Um, so you know, we can continue to

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Speaker 1: see the towers, the data centers, the industrial space as

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Speaker 1: as benefiting from substantial tail winds, while you know, retail

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Speaker 1: really in all forms being really challenged. So let's talk

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Speaker 1: about office space. You know, this pandemic has changed the

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Speaker 1: way many work a lot more working from home here,

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Speaker 1: you're thinking about the office space segment. Is that a

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Speaker 1: net winner or net loser as we come out of

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Speaker 1: this pandemic? You think, yeah, you know, so that's a

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Speaker 1: that's a big question out there in the in the

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Speaker 1: you know, in the sector. You know, my personal belief

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Speaker 1: is that they're going to be net losers. And I

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Speaker 1: think by and large the success of work from home

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Speaker 1: models as as really surprised people. Um. You know, I

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Speaker 1: envisioned that, you know, going forward, that there's going to

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Speaker 1: be less demand for CBD you know, central business district

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Speaker 1: office space, and I think that's going to really put

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Speaker 1: pressure on pricing and rents for for those landlords. What

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Speaker 1: about multi family homes department buildings. Yes, so so similarly,

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Speaker 1: the SAIDs think the uh, you know, the demands there

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Speaker 1: from a secular standpoint is likely to be strong. But

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Speaker 1: I believe that the central business district versus perifer perif

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Speaker 1: free mix might be impacted. Um. I mean you know

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Speaker 1: you're seeing you know, the protests of course on TV,

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Speaker 1: you know, pretty graphic videos being shared. The first order

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Speaker 1: effects are are are are pretty clear, you know, with

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Speaker 1: regards to retail and the damage that that's going to

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Speaker 1: cause their um you know, increased concessions on behalf of

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Speaker 1: tenants from landlords. Um. I think the secondary impact there

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Speaker 1: is going to be, you know, certainly used the protest

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Speaker 1: persist perhaps the tilting of the premium you know, central

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Speaker 1: business district over perif free, that premium may not be

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Speaker 1: as pronounced on a go forward basis. So about some

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Speaker 1: of the we've heard stories about businesses not being able

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Speaker 1: to pay their rent and you know, ultimately, you know,

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Speaker 1: as we head into the third month here, ultimately that

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Speaker 1: impacts uh some reads. Where are you seeing signs of

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Speaker 1: stress in the read market right now? Wow? Yes? So

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Speaker 1: it's really all over, you know, except for those areas

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Speaker 1: that do benefit from you know, work from home models,

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Speaker 1: so you know, except for um towers, data centers and industrials.

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Speaker 1: Industrials you can think of these as as warehouses owners

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Speaker 1: to you know, things like Amazon distribution center and so

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Speaker 1: so forth. It's really been everywhere, Paul. So the office space,

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Speaker 1: you know, is in the midst of being redefined. Um.

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Speaker 1: The retails, you know, as we mentioned, is in the epicenter.

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Speaker 1: Hotels and lodging for sure. You know, all leisure activities

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Speaker 1: essentially ceased. So I think these are questions that are

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Speaker 1: going to be answered over you know, over kind of

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Speaker 1: a near to medium term time frame. You know, how

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Speaker 1: much demand instruction is there. Thanks for listening to the podcast,

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00:20:48,400 --> 00:20:50,639
Speaker 1: and you can subscribe and listen to interviews that Apple

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00:20:50,680 --> 00:20:55,960
Speaker 1: podcast or whatever podcast platform you prefer on Twitter. Finally,

378
00:20:56,280 --> 00:20:59,399
Speaker 1: brown Woids, I'm on Twitter at least one for the

379
00:20:59,400 --> 00:21:03,280
Speaker 1: podcast can always catch us worldwide and revert back to

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Speaker 1: those long term secular drivers than everybody's driven the space.

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Speaker 1: You know, things like big data and ability. You know,

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Speaker 1: these are big tuns impacting the broader markets e commerce,

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Speaker 1: also certain nascent as teams such as artificial intelligence, you know, astronomy,

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Speaker 1: striving technology. Um, you know, those are really the things

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Speaker 1: that I think, over a long term, have the potential

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Speaker 1: to shape you know, the dynamics with den real estate.

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Speaker 1: We have to get you back on a lot more

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Speaker 1: to talk about, including low interest rates and how that

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Speaker 1: may also affect the picture in demand for a variety

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Speaker 1: of different real estate Iman Brive and Lou thank you

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Speaker 1: so much for being with us, lead portfolio manager of

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Speaker 1: tc W High Income Equities and TCW Global Reads. Definitely

393
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Speaker 1: a a multifaceted area, the real estate Investment trust area,

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Speaker 1: as not all real estate is even I will say

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Speaker 1: it has been notably positive outside of cities in terms

396
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Speaker 1: of demand for housing, in terms of p while not

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Speaker 1: wanting to sell their homes and a lot of people

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Speaker 1: wanting to buy them. It'll be interesting to see whether

399
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Speaker 1: that continues as the downturn makes its way forward. A

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Speaker 1: lot of unknowns right now, Paul, Yeah, a lot of

401
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Speaker 1: people fleeing cities, Lisa going for the suburbs, whether it's

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Speaker 1: you know, short term rentals or long term buys. A

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Speaker 1: little bit of demand they're coming out of the pandemic. Yeah,

404
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Speaker 1: although we've seen this movie before, don't count New York

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Speaker 1: City or all of big cities out just yet. This

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Speaker 1: is Bloomberg Markets with Lisa Bramowitz and Paul Sweeney on

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Speaker 1: Bloomberg Radio. Well, the COVID pandemic has acted as an

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Speaker 1: accelerant on a lot of trends that were in effect

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Speaker 1: ahead of this apocle or crisis, however you want to

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Speaker 1: put it. And there is a question about the advertising sector,

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Speaker 1: and particularly online, what it has done in that space.

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Speaker 1: Joining us now as Scott Kessler, Global Sector lead for Technology,

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Speaker 1: Media and Telecommunications at Third Bridge in New York, Scott,

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Speaker 1: thank you so much for being with us. I want

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Speaker 1: to start there, and you've talked a little bit about

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Speaker 1: how we're seeing that acceleration in a sea change amid

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Speaker 1: online advertising. Can you talk a little bit about what

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Speaker 1: you're seeing. Yeah, thanks all. At least though, so you know,

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Speaker 1: a Third Bridge, what we do is we talk with

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Speaker 1: sea level executives and industry experts to get a sense

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Speaker 1: of what's going on in the world and try to

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Speaker 1: understand what's going to happen next. And based on the

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Speaker 1: conversations that we have, it's pretty obvious that in March

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Speaker 1: we saw lockdowns across the country that caused a lot

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Speaker 1: of advertisers to retrench and retrench very significantly, and so

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Speaker 1: we saw demand for advertising and related pricing um really

427
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Speaker 1: declining precipitously and bottoming out um to a large extent

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Speaker 1: in March, we've seen um continuing improvement, it seems um

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Speaker 1: through the last week or two UM. And the question

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00:23:56,920 --> 00:24:03,520
Speaker 1: really now is how long will the rebound be. People

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00:24:03,560 --> 00:24:06,560
Speaker 1: were talking to indicate that it might take a while

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00:24:07,080 --> 00:24:13,119
Speaker 1: next year back until we see a stronger um resurgence

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00:24:13,720 --> 00:24:18,919
Speaker 1: in demand for even digital and social media advertising. So, Scott,

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00:24:18,960 --> 00:24:22,120
Speaker 1: you've been covering the media and TMT space for decades.

435
00:24:22,800 --> 00:24:25,359
Speaker 1: Is your sense here that this pandemic and the change

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00:24:25,359 --> 00:24:29,520
Speaker 1: in consumer behavior is is it really going to accelerate

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00:24:29,560 --> 00:24:33,720
Speaker 1: the death of more traditional media as a dollars shift

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00:24:33,800 --> 00:24:37,040
Speaker 1: from you know kind of on you know, from uh,

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00:24:37,119 --> 00:24:41,320
Speaker 1: analog to online. Yeah. So, Paul, the way I think

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00:24:41,359 --> 00:24:45,240
Speaker 1: that it makes sense to think about is, you know,

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00:24:45,400 --> 00:24:47,560
Speaker 1: we're talking to a lot of people, and I think

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00:24:47,960 --> 00:24:50,040
Speaker 1: all of them are in agreement on a couple of things.

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00:24:50,440 --> 00:24:54,960
Speaker 1: One is that what's happening now is causing advertisers to

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00:24:55,080 --> 00:24:59,639
Speaker 1: re examine how they allocate capital for advertising purposes, and

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00:24:59,640 --> 00:25:06,639
Speaker 1: it's caused and acceleration to shift from traditional media to

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00:25:07,640 --> 00:25:11,560
Speaker 1: digital media. And then in addition to that, it seems

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00:25:11,600 --> 00:25:17,280
Speaker 1: like folks are gravitating towards you know, those large, very

448
00:25:17,400 --> 00:25:23,119
Speaker 1: strong and very impactful platforms like Google and like Facebook,

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00:25:23,160 --> 00:25:26,360
Speaker 1: and perhaps not as much so with ones that are

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00:25:26,400 --> 00:25:33,400
Speaker 1: more experimental in nature like a snapchat or Twitter, for example, Scott,

451
00:25:33,600 --> 00:25:36,439
Speaker 1: as we speak or speaking against a backdrop of growing

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00:25:36,480 --> 00:25:39,560
Speaker 1: tension and a host of different issues in this transforming world,

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00:25:39,920 --> 00:25:43,080
Speaker 1: including a lot of social tension, and we're seeing a

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00:25:43,080 --> 00:25:47,719
Speaker 1: lot of these online companies, these platforms come really at

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00:25:47,760 --> 00:25:50,680
Speaker 1: the crosshairs of it. I'm thinking of Twitter, for example,

456
00:25:50,760 --> 00:25:54,480
Speaker 1: putting on a warning to one of President Trump's Twitter posts.

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00:25:54,920 --> 00:25:59,399
Speaker 1: What is the responsibility of these social media platforms in

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00:25:59,520 --> 00:26:04,119
Speaker 1: terms of siding which advertisements they allow onto their site.

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00:26:04,400 --> 00:26:08,200
Speaker 1: Do they have an obligation on any level or frankly

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00:26:08,560 --> 00:26:11,720
Speaker 1: the right to say we want this ad, we don't

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00:26:11,720 --> 00:26:15,879
Speaker 1: want that ad. Yeah, you know, at least it's the

462
00:26:16,480 --> 00:26:20,240
Speaker 1: tough topic of our time at this point, among others,

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00:26:20,760 --> 00:26:25,040
Speaker 1: um And I would say is that it seems like

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00:26:25,160 --> 00:26:27,199
Speaker 1: this is going to be a discussion that's going to

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00:26:27,240 --> 00:26:30,040
Speaker 1: take place, you know, not for days or weeks, but

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00:26:30,200 --> 00:26:33,359
Speaker 1: probably for months and months. I think it's fair to say, though,

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00:26:33,440 --> 00:26:36,600
Speaker 1: that this is something that people need to think about,

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00:26:36,680 --> 00:26:40,000
Speaker 1: and I don't have you have to be honest, if

469
00:26:40,040 --> 00:26:44,160
Speaker 1: it makes sense for letting consumers, so to speak, decide,

470
00:26:44,640 --> 00:26:48,879
Speaker 1: or if the platforms have to become more involved in

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00:26:49,000 --> 00:26:53,119
Speaker 1: determining something is truthful and whether something needs to be

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00:26:53,200 --> 00:26:57,679
Speaker 1: fact checked comprehensively. Scott, thanks so much for joining us.

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00:26:57,720 --> 00:27:02,080
Speaker 1: We appreciate your input as we. Scott Kessler, global Sector

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00:27:02,160 --> 00:27:06,000
Speaker 1: lead for Technology, Media and Telecommunications at Third Bridge, spent

475
00:27:06,080 --> 00:27:09,959
Speaker 1: decades at SMP as an analyst covering TMT knows what

476
00:27:10,040 --> 00:27:12,520
Speaker 1: he's talking about. LESA. I think you raised a really

477
00:27:12,520 --> 00:27:15,520
Speaker 1: important point, and it's something you know. Scott suggested that

478
00:27:15,560 --> 00:27:18,240
Speaker 1: this industry needs to get ahead of very quickly because

479
00:27:18,240 --> 00:27:21,320
Speaker 1: before the pandemic there was growing uh you know, I

480
00:27:21,320 --> 00:27:25,639
Speaker 1: think uh momentum for the social media industry and technology

481
00:27:25,680 --> 00:27:28,800
Speaker 1: broader uh to come under some regulatory scrutiny that maybe

482
00:27:28,880 --> 00:27:31,359
Speaker 1: had had escaped in the past, um and to the

483
00:27:31,400 --> 00:27:34,600
Speaker 1: extent that they don't get their house in order that

484
00:27:34,640 --> 00:27:39,200
Speaker 1: they definitely faced uh, some risk of greater federal um,

485
00:27:39,280 --> 00:27:41,679
Speaker 1: you know, I think oversight. Yeah, although I want to

486
00:27:41,680 --> 00:27:43,719
Speaker 1: say that the message from markets has not been that.

487
00:27:43,800 --> 00:27:46,120
Speaker 1: The rest of message from markets has been the more

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00:27:46,200 --> 00:27:49,080
Speaker 1: that they are a free market platform and allow whatever

489
00:27:49,320 --> 00:27:53,199
Speaker 1: however on their website, the better their platform rather the better, right.

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00:27:53,240 --> 00:27:55,399
Speaker 1: I mean, we saw this on Facebook versus Twitter, with

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00:27:55,520 --> 00:27:59,159
Speaker 1: response to how they addressed some of the more provocative

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00:27:59,160 --> 00:28:02,840
Speaker 1: statements from different leaders. That's that's honestly. In markets, the

493
00:28:02,880 --> 00:28:05,080
Speaker 1: answer was Facebook did it right, Twitter did it wrong.

494
00:28:05,320 --> 00:28:07,640
Speaker 1: The social obligation piece, whatever that may be, and it's

495
00:28:07,760 --> 00:28:10,960
Speaker 1: very controversial, would have to come from a regulatory stance,

496
00:28:11,000 --> 00:28:13,160
Speaker 1: and that's very difficult to see happening in short order,

497
00:28:13,240 --> 00:28:16,520
Speaker 1: certainly heading into an election year, certainly amid the backdrop

498
00:28:16,680 --> 00:28:18,480
Speaker 1: of a recession. So I think that that's sort of

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00:28:18,480 --> 00:28:21,440
Speaker 1: the calculus that we're seeing playing out in markets right now. Yeah,

500
00:28:21,440 --> 00:28:24,359
Speaker 1: exactly right. Again, heading heading into the pandemic, there was

501
00:28:24,440 --> 00:28:27,960
Speaker 1: some uh building momentum for some regulation that obviously, because

502
00:28:27,960 --> 00:28:29,640
Speaker 1: of all the other things going on, Lisa has taken

503
00:28:30,400 --> 00:28:34,640
Speaker 1: a back burner stance. So again technology continues to royal.

504
00:28:34,640 --> 00:28:36,159
Speaker 1: But again, it's gonna be interesting to see how some

505
00:28:36,160 --> 00:28:40,880
Speaker 1: of these social networking platforms handle the upcoming election, because

506
00:28:40,880 --> 00:28:44,400
Speaker 1: clearly focus is going to be on them their behavior

507
00:28:44,880 --> 00:28:48,360
Speaker 1: and to the extent that they are impacted or allow

508
00:28:48,560 --> 00:28:51,840
Speaker 1: their platforms to impact the upcoming election, that will be

509
00:28:51,920 --> 00:28:56,320
Speaker 1: a clear issue for Washington. Thanks for listening. To the

510
00:28:56,360 --> 00:28:58,960
Speaker 1: Bloomberg P and L podcast. You can subscribe and listen

511
00:28:58,960 --> 00:29:02,360
Speaker 1: to interviews at Apple Podcast or whatever podcast platform you prefer.

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00:29:02,720 --> 00:29:05,480
Speaker 1: Paul Sweeney, I'm on Twitter at pt Sweeney. I'm Lisa

513
00:29:05,520 --> 00:29:08,160
Speaker 1: Abram Wohit's I'm on Twitter at Lisa Abram whits one.

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00:29:08,360 --> 00:29:11,000
Speaker 1: Before the podcast, you can always catch us worldwide. I'm

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00:29:11,000 --> 00:29:11,840
Speaker 1: Bloomberg Radio