WEBVTT - Lawmakers Take Shot At Apple, Google App Stores 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.640 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.320 at Bloomberg dot com slash podcast. Well, we've been talking 0:00:22.320 --> 0:00:25.160 about it for the last several years about what appears 0:00:25.200 --> 0:00:29.640 to be a growing regulatory oversight, a heavier hand on 0:00:29.680 --> 0:00:32.560 the part of the U S regulators and US lawmakers 0:00:32.720 --> 0:00:35.880 against big tech here. Historically they've taken a very light touch, 0:00:36.280 --> 0:00:38.920 but the scenes in recent years a little bit more 0:00:39.000 --> 0:00:42.320 heavier Handless check in on that story, Jen Ry, senior 0:00:42.440 --> 0:00:44.640 litigation annalyst for Bloomberg Intelligence, joins us here in the 0:00:44.640 --> 0:00:48.559 Bloomberg Interactive Broker Studio. So, Jen, again, it seems like, 0:00:48.600 --> 0:00:50.879 you know, there's definitely been a heavier hand here by 0:00:50.920 --> 0:00:53.600 a lot of these regulators, and right now they're looking 0:00:53.640 --> 0:00:55.400 at the apps. I'm thinking about the app store, the 0:00:55.440 --> 0:00:58.360 Google App Store, the Apple App Store. Uh, that's a 0:00:58.400 --> 0:01:01.720 big revenue source for those company. Is what's converse looking at? 0:01:02.440 --> 0:01:04.600 You know, It's funny it we have been talking about 0:01:04.640 --> 0:01:06.200 this for a couple of years, Paullen. It seemed like 0:01:06.200 --> 0:01:08.720 it was really all about Google and Facebook in the beginning, 0:01:08.760 --> 0:01:10.679 and then suddenly, you know, there was a lot of 0:01:10.680 --> 0:01:13.039 focus on Apple and Google and their app stores and 0:01:13.080 --> 0:01:15.800 their their walled gardens, so to speak, for their mobile phones. 0:01:16.280 --> 0:01:19.120 What this UM Open Apps Market Act is looking to 0:01:19.200 --> 0:01:22.360 do is take away some of the prohibitions and restrictions 0:01:22.400 --> 0:01:25.880 that Apple and Google utilizes with app developers. So, in 0:01:25.920 --> 0:01:28.360 other words, you can only a user can only download 0:01:28.440 --> 0:01:31.319 an app from the official app store of that mobile system. 0:01:31.840 --> 0:01:34.120 You have to use the payment systems. If you buy 0:01:34.160 --> 0:01:35.720 an app or you make an in app purchase, you 0:01:35.760 --> 0:01:38.120 have to use the Google or Apple payment system. And 0:01:38.160 --> 0:01:40.319 also there may be some use of the data of 0:01:40.440 --> 0:01:43.520 rivals to support or promote or develop their own products 0:01:43.600 --> 0:01:46.160 that are also within their own app stores. So what 0:01:46.200 --> 0:01:48.640 Congress is trying to do is break that down and 0:01:48.720 --> 0:01:53.160 force competition that would lower the rates which are the 0:01:53.240 --> 0:01:56.040 Google and Apple and Apple charge app developers, and seemingly 0:01:56.080 --> 0:01:58.680 that would bring the price down for users of apps. 0:01:59.600 --> 0:02:05.520 Do these kind of UM regulations also govern physical stores. 0:02:05.600 --> 0:02:08.720 For example, if I opened uh chain of drug stores 0:02:08.760 --> 0:02:12.280 across the US. Would I have to allow certain products 0:02:12.280 --> 0:02:15.560 sold in my drug store and have um the margins 0:02:15.600 --> 0:02:20.400 that I charge regulated, and need to allow certain people 0:02:20.760 --> 0:02:24.560 access to my data, etcetera. This particular regulation would not 0:02:24.720 --> 0:02:28.560 because it defines covered companies, and really it's defined so 0:02:28.600 --> 0:02:31.760 specifically that it really only means Apple and Google within 0:02:31.800 --> 0:02:33.560 this context. But you know, what you raise is a 0:02:33.600 --> 0:02:38.200 really good point because you ask why these companies, particularly 0:02:38.360 --> 0:02:41.560 when we don't regulate other industries in that in this manner, 0:02:41.880 --> 0:02:44.520 And we haven't really regulated other industries in this manner 0:02:44.560 --> 0:02:47.680 because government hasn't wanted to intrude on business models and 0:02:47.720 --> 0:02:51.360 business strategies and the way companies operate in the free market. 0:02:51.600 --> 0:02:53.800 And so I think for that reason, you know, I 0:02:53.840 --> 0:02:56.079 do think that there will be some pushback. Well, there's 0:02:56.080 --> 0:02:59.520 a lot of momentum here right to reform antitrust laws 0:02:59.520 --> 0:03:03.400 and regular gatekeeper platforms. I do think there will be 0:03:03.440 --> 0:03:06.680 some pushback, and if something gets enacted, I would see 0:03:06.680 --> 0:03:08.680 it as a water down version of what we're looking 0:03:08.720 --> 0:03:11.919 at here. When I first read about this, it seemed 0:03:11.960 --> 0:03:14.839 like a solution in search of a problem. Is there 0:03:15.240 --> 0:03:21.000 widespread pushback from consumers that apps are too expensive. You know, 0:03:21.240 --> 0:03:25.119 there really isn't but consumers just may not understand the framework, 0:03:25.160 --> 0:03:29.160 and that that's really what some of the competitors are arguing, 0:03:29.200 --> 0:03:32.240 like Spotify or Match or Epic Games that really have 0:03:32.360 --> 0:03:35.640 problems with these prohibitions of these companies. They're arguing that 0:03:35.680 --> 0:03:38.760 consumers just don't really know that they're paying more because 0:03:38.800 --> 0:03:41.480 Apple and Google charge the developers so much more and 0:03:41.520 --> 0:03:44.360 that's passed down to consumers. But it really raised such 0:03:44.400 --> 0:03:47.160 a good question because it's not really something of all 0:03:47.200 --> 0:03:50.440 the things that Congress could be doing and regulating and legislating, 0:03:50.800 --> 0:03:53.480 it isn't really something that there's been a big consumer 0:03:53.640 --> 0:03:57.120 uproar over UM. There are a lot of lawsuits and 0:03:57.400 --> 0:04:00.520 there are other bills in the House and incentive that 0:04:00.640 --> 0:04:03.080 would seek to do the same kind of thing. In particular, 0:04:03.160 --> 0:04:05.840 a lot of litigation right now against both Google and Apple, 0:04:06.080 --> 0:04:09.160 but it is mostly brought by companies and not by people. 0:04:09.480 --> 0:04:11.400 There are some I should say that there is a 0:04:11.400 --> 0:04:14.440 class action by consumers, but I think the broader push 0:04:14.480 --> 0:04:17.120 here in the litigation is by developers and also by 0:04:17.120 --> 0:04:20.039 by states. Yeah, those are three apps that I don't 0:04:20.160 --> 0:04:23.640 use UM, but I can understand also that Congress does 0:04:23.760 --> 0:04:25.960 want to try and just limit the powers of these 0:04:26.600 --> 0:04:29.880 gigantic tech companies because they're so big and have such 0:04:29.880 --> 0:04:33.760 a wide reach. Right, That's right, And I think and 0:04:33.800 --> 0:04:36.600 if you think about what the pushes, the bipartisan push here, 0:04:36.839 --> 0:04:39.279 it's why I tend to think these versions of the 0:04:39.320 --> 0:04:42.000 bills we're seeing today aren't the ones that will get enacted. 0:04:42.040 --> 0:04:45.680 If something gets enacted, because you have Democrats, particularly the 0:04:45.720 --> 0:04:48.479 progressive wing on one side, that are really about just 0:04:48.640 --> 0:04:53.320 curbing dominance and curbing monopoly power. A lot of the Republicans, 0:04:53.400 --> 0:04:55.640 not all, but a lot of the Republicans are more 0:04:55.680 --> 0:04:58.640 concerned about what they view as censorship, that the power 0:04:58.680 --> 0:05:02.080 of these companies has led to censorship of conservative viewpoints, 0:05:02.279 --> 0:05:05.480 and they're more interested in regulating to prevent that kind 0:05:05.480 --> 0:05:08.680 of conduct. And I think, because you have bipartisan interest, 0:05:08.760 --> 0:05:12.200 but coming from two different perspectives, you may see some 0:05:12.279 --> 0:05:14.440 trouble when it comes to trying to get the sixty 0:05:14.480 --> 0:05:16.560 votes you need in the Senate to enact any of this. 0:05:18.360 --> 0:05:20.200 All right, jen great having you on, and I hope 0:05:20.240 --> 0:05:22.400 we can get you back because you're very good at 0:05:22.440 --> 0:05:25.280 what you do. Jennifer E. Is a senior litigation analyst 0:05:25.680 --> 0:05:30.160 for US out of Bloomberg Intelligence, talking about the latest 0:05:30.240 --> 0:05:34.039 attempts to reduce the power of Apple and Google and 0:05:34.040 --> 0:05:36.359 really about the lawsuits they've been brought by a number 0:05:36.360 --> 0:05:40.040 of companies in one class action lawsuit UM by consumers 0:05:40.160 --> 0:05:44.760 as well to try and regulate the app stores UM 0:05:44.760 --> 0:05:51.960 and the businesses in general. Well, you know, speaking for myself, 0:05:52.400 --> 0:05:55.200 one of the silver linings of this pandemic is just 0:05:55.279 --> 0:05:58.720 to heighten my appreciation for the biotech industry, for the 0:05:58.720 --> 0:06:02.479 pharmaceutical industry. I mean, coming up with multiple vaccines in 0:06:02.600 --> 0:06:07.000 record time and getting them uh distributed as they have 0:06:07.160 --> 0:06:10.279 has just been extraordinary. So just amazing work being done 0:06:10.279 --> 0:06:13.200 in the biotech UH industry, and a lot of those 0:06:13.200 --> 0:06:15.839 investors know very well, uh kind of what's getting done. 0:06:15.920 --> 0:06:18.560 Let's check in with one of those companies, Florian Brand, 0:06:18.760 --> 0:06:22.040 CEO and co founder of biotech company at Thai based 0:06:22.360 --> 0:06:25.920 UH in Germany. The symbol NASTAC symbols A T A I. 0:06:25.920 --> 0:06:27.680 If you've got a terminal in front of you there 0:06:27.720 --> 0:06:32.360 about three percent today. They recently reported some uh some results. Floria, 0:06:32.400 --> 0:06:34.799 thanks so much for joining us here. Tell us about 0:06:34.880 --> 0:06:38.800 your company. What is a thaie focusing on right now. 0:06:41.279 --> 0:06:43.839 Sure and thanks for having us UM today. I'm sorry. 0:06:44.000 --> 0:06:47.239 Um SO it ties the clinical stage U bio pharma company, 0:06:47.360 --> 0:06:52.360 so basically a drop development company developing novative novel trements 0:06:52.360 --> 0:06:56.240 from mentality disorders. And you mentioned covid UM and experienced 0:06:56.240 --> 0:06:59.640 that during covid those numbers of people suffering from mental 0:06:59.680 --> 0:07:04.080 health in cases have unfortunately really um skyrocketed. So we're 0:07:04.360 --> 0:07:07.919 in this for developing novel innovative treatments UM and also 0:07:07.960 --> 0:07:12.120 look at previously stigmatized compounds such as psychedelic compounds to 0:07:12.200 --> 0:07:16.600 really um improve the current existing standard of care to 0:07:17.040 --> 0:07:19.800 um ya make it make patients that suffer from mental 0:07:19.800 --> 0:07:23.640 health disorders and globally that's roughly billion that make them, 0:07:23.840 --> 0:07:27.840 make them more more more effective, develop more effective options 0:07:27.880 --> 0:07:31.520 for them, UM so that they can can get better treatments. 0:07:31.680 --> 0:07:34.120 So when you talk, I mean there has been for 0:07:34.240 --> 0:07:39.080 decades talk about using psychedelics like psilocybin or LSD to 0:07:39.120 --> 0:07:45.320 treat various issues UM from mental health issues to alcoholism. 0:07:45.360 --> 0:07:50.040 What are you talking about specifically, um so, we're among 0:07:50.080 --> 0:07:54.120 others are also looking at um A psilocybin um, but 0:07:54.200 --> 0:07:57.200 more broadly also at d MT and other molecules that 0:07:57.240 --> 0:08:00.520 are considered psychedelics also at a at an the answerer 0:08:00.600 --> 0:08:03.840 of of ketamine UM. So indeed, to your point, they 0:08:03.840 --> 0:08:06.680 have been well researched over the last decades, starting as 0:08:06.720 --> 0:08:09.560 early as in the fifties and sixties UM where they 0:08:09.560 --> 0:08:15.280 actually already showed interesting and very compelling promising UM signals 0:08:15.360 --> 0:08:20.360 that they're very relevant UM drugs treating psychiatric diseases. But 0:08:20.400 --> 0:08:23.160 then mainly due to political reasons that research slowed down 0:08:23.440 --> 0:08:26.720 due to the declaration of mixings war and drug and 0:08:26.760 --> 0:08:29.920 then most recently with very promising studies out of John 0:08:29.960 --> 0:08:33.319 Hopkins in Baltimore and Imperial College in London, there's more 0:08:33.320 --> 0:08:35.520 and more kind of a spotlight in the academic world 0:08:35.640 --> 0:08:38.920 showing really the promise of those compounds. And then around 0:08:39.080 --> 0:08:43.200 around that time seen that's also when we decided to 0:08:43.200 --> 0:08:45.599 to start a time to really put more money in 0:08:45.720 --> 0:08:49.200 vigorously researching those compounds UM to really demonstrate that their 0:08:49.240 --> 0:08:53.760 safe andificacious for mental disorders are to treat mentality disorders. Yeah, floor, 0:08:53.800 --> 0:08:56.360 and it seems to me, you know, we haven't heard 0:08:56.440 --> 0:08:59.880 much about psychedelics really since arguably the sixties and maybe 0:08:59.880 --> 0:09:04.840 the seventies, So what's what has been the whole psychedelicy 0:09:04.960 --> 0:09:08.440 for yourself? Exactly right, I will. I was in college 0:09:08.440 --> 0:09:10.680 in the nineties and I heard a lot about them that. Yeah, 0:09:10.880 --> 0:09:14.240 so what has been the use case for psychedelics historically 0:09:14.280 --> 0:09:19.880 and kind of how are you perhaps repurposing that? Um 0:09:20.160 --> 0:09:22.200 so indeed, I mean some countries that have been actually 0:09:22.280 --> 0:09:25.680 legal for medical use. UM. Again, I think that the 0:09:25.679 --> 0:09:28.679 backup flash was really driven by political motives. I mean 0:09:28.679 --> 0:09:32.439 there's this anti hippie movement, uh kind of Timothy Leary 0:09:32.520 --> 0:09:36.000 going a little bit too to uh, a little bit overboard. 0:09:36.120 --> 0:09:39.480 It's kind of advocating that's kind of there and everyone 0:09:39.520 --> 0:09:41.959 should take it. We're taking a very scientific approach here 0:09:42.360 --> 0:09:44.839 and demonstrating that they're given in the right set and 0:09:44.880 --> 0:09:48.360 settings and in patient treatment supervised by a therapist, they 0:09:48.440 --> 0:09:52.720 can be truly helping people suffering from from these diseases. 0:09:52.760 --> 0:09:54.880 And I think that's important to emphasize that we really 0:09:55.320 --> 0:09:59.000 rigorously researching those in with modern samners, and that's why 0:09:59.080 --> 0:10:03.440 we're running various polinical trials at different stages UM to 0:10:03.559 --> 0:10:06.480 basically generate the data for the FDA and also later 0:10:06.520 --> 0:10:10.440 on payers to make those therapies of imbursable. Again, you're 0:10:10.600 --> 0:10:13.640 we're not in this for recreational use and overhyping this, 0:10:13.840 --> 0:10:18.200 no really developing your medical compounds. It's funny that we 0:10:18.320 --> 0:10:22.320 vilified UM psychedelics, but UM we have no problem prescribing 0:10:22.360 --> 0:10:26.120 way too much oxyconton, right, and I wonder if UM 0:10:26.200 --> 0:10:29.120 you can use these, especially to treat addiction. I think 0:10:29.120 --> 0:10:31.400 that was one of the bright spots that I remember 0:10:31.400 --> 0:10:36.960 reading a lot about absolutely so UM the opio crisis, 0:10:37.559 --> 0:10:40.200 especially especially relevant for for the US, and we see 0:10:40.440 --> 0:10:43.120 from from year to year also that the death toll 0:10:43.360 --> 0:10:48.200 of use this order rising. Unfortunately, We're developing one very 0:10:48.200 --> 0:10:51.679 interesting compound called Eyebel Game that has historically be you 0:10:52.640 --> 0:10:55.280 has been used to kind of ritualistic settings from kind 0:10:55.280 --> 0:10:58.800 of indigenous people, but also have been administed in clinical 0:10:59.240 --> 0:11:03.560 settings um UH for for patients in Latin America, and 0:11:03.600 --> 0:11:07.600 has shown then based on case studies, showing great potential. 0:11:07.720 --> 0:11:10.400 So there's a lot of anecdotal evidence and that this 0:11:10.440 --> 0:11:15.120 can be really an interesting therapy for people really suffering 0:11:15.120 --> 0:11:18.400 from addiction. All Right, Florian Brand, thank you so much 0:11:18.440 --> 0:11:20.880 for joining us. Really appreciate you taking the time of 0:11:20.920 --> 0:11:25.800 Florian Brand. He's the CEO and co founder of biopharmaceutical 0:11:25.800 --> 0:11:29.120 company a Taie symbol a t AI based in Germany. 0:11:29.160 --> 0:11:33.000 They're focusing on the psychedelic side of the market and 0:11:33.000 --> 0:11:36.240 stocks up about three percent today. Uh they went public 0:11:36.320 --> 0:11:38.480 at fifteen is trading just a little bit above fourteen 0:11:38.480 --> 0:11:40.960 dollars to share of three percent. They reported some uh 0:11:41.559 --> 0:11:44.160 our financial results just recently, so too good to get 0:11:44.200 --> 0:11:49.240 his thoughts on that market. Looking at the ten year 0:11:49.720 --> 0:11:53.840 treasury one point to three eight percent, where does a 0:11:53.880 --> 0:11:57.400 good fixed income investor go to get return? Let's go 0:11:57.440 --> 0:11:59.160 to r J. Gall and asked that question. He's a 0:11:59.200 --> 0:12:01.599 senior portfolio manager head of the Admiserable bond group it 0:12:01.640 --> 0:12:05.320 federated Hermes based in Pittsburgh. They had a couple of 0:12:05.320 --> 0:12:08.920 shekels under management. Let's call it total assets on management 0:12:09.000 --> 0:12:14.000 six billion. R J, thanks so much for joining us here. Um, 0:12:14.040 --> 0:12:18.000 you know, tax exempt or taxable? Where do I go 0:12:18.120 --> 0:12:22.079 for yield today? How much ris should I be taking? Well? 0:12:22.240 --> 0:12:25.040 The yield can be hard to come by, certainly in 0:12:25.040 --> 0:12:29.120 a historic sense, yields are are basically a record lows 0:12:29.120 --> 0:12:33.200 and muni spreads of titan massively both taxable and taxing. 0:12:33.240 --> 0:12:39.280 That markets thematically have seen low quality credit massively outperformed UH, 0:12:39.400 --> 0:12:42.720 and that UM is something that that I think a 0:12:42.800 --> 0:12:46.000 number of active managers certainly we felt was apt to 0:12:46.040 --> 0:12:50.280 happen as the UM at least the improvement in the 0:12:50.320 --> 0:12:53.559 pandemic picture, which recently has been complicated by the delta variant, 0:12:53.559 --> 0:12:58.160 but nevertheless, the economic reopening a strong tail wind to 0:12:58.240 --> 0:13:00.400 the returns to credit, whether it be intact sex after 0:13:00.520 --> 0:13:04.920 taxable bond markets. Looking forward, given the yield moves, given 0:13:04.920 --> 0:13:07.280 the spreads have compressed, UH, there seems to be a 0:13:07.320 --> 0:13:09.240 little pause in that. Over the last month or so, 0:13:09.320 --> 0:13:13.720 high yield corporates, for example, have started printing somewhat weaker returns. 0:13:14.480 --> 0:13:17.560 In the muni space, spread teams have stagnated. You still 0:13:17.559 --> 0:13:20.680 get your incremental carry your income UM, which is better, 0:13:20.720 --> 0:13:23.280 but you're you're losing out UM. You're not getting the 0:13:23.360 --> 0:13:26.240 price and appreciation that we have before. It's certainly gotten 0:13:26.240 --> 0:13:28.720 a little murkier going forward, and the delta variant is 0:13:28.760 --> 0:13:31.440 probably the main reason at this point in time. Are 0:13:31.480 --> 0:13:34.960 you getting paid for the risk? Howard marks Um told 0:13:35.040 --> 0:13:37.280 Eric Shatzker a couple of weeks ago, he thought, you know, 0:13:37.320 --> 0:13:41.360 three basis points sounds very little, but he wasn't as 0:13:41.440 --> 0:13:45.000 concerned about default risks and felt he was being paid 0:13:45.280 --> 0:13:50.439 um in line with the risk he was taking. Are 0:13:50.520 --> 0:13:54.160 high yield group is a very strong group in the company, 0:13:54.160 --> 0:13:57.120 with a lot of success in various strategies, and our 0:13:57.200 --> 0:14:00.840 our multisector total on fund we started of a sleeve approach. 0:14:00.920 --> 0:14:02.959 So when we allocate myndy to high yield, our high 0:14:03.000 --> 0:14:06.560 yield guys management and they tell me, UM, they still 0:14:06.600 --> 0:14:10.480 like the market. We still are overweight relative to our benchmarks. Uh. 0:14:10.640 --> 0:14:13.720 The prospect of return is obviously lower than what we've 0:14:13.720 --> 0:14:16.600 experienced in the last you know, six to twelve months, 0:14:16.600 --> 0:14:19.920 for sure, but the incidents of default is expected to 0:14:19.960 --> 0:14:22.960 be very very low. Corporate profits just printed a lot 0:14:23.040 --> 0:14:27.040 of favorable news across a variety of sectors. Now everybody 0:14:27.040 --> 0:14:29.920 says that's backward looking. Yeah it is, but it's the 0:14:29.920 --> 0:14:33.680 most recent momentum that we have built up economically heading 0:14:33.680 --> 0:14:36.160 into what could be a dicey late summer and fall. 0:14:36.640 --> 0:14:39.840 As the delta variant clearly a roding on sentiment. Look 0:14:39.840 --> 0:14:43.119 at the Michigan consumer sentiment numbers. UM. I think corporations 0:14:43.120 --> 0:14:46.280 are now struggling with return to office in addition to 0:14:46.560 --> 0:14:49.240 supply chain challenges and various echoes of the of the 0:14:49.280 --> 0:14:52.440 first wave of the pandemic that we're all still going through. UM, 0:14:52.480 --> 0:14:56.280 we're still optimistic that credit is an avenue towards our performance. 0:14:56.720 --> 0:15:00.080 Uh not the least of which contributing factor the that 0:15:00.280 --> 0:15:04.080 is still at zero, still buying bonds, suppressing returns on 0:15:04.160 --> 0:15:07.000 high quality fixed income, and that is helping to boost 0:15:07.000 --> 0:15:09.560 returns to low quality. We don't think of recessions in 0:15:09.600 --> 0:15:11.400 the offing. We might have a hiccup, it might be 0:15:11.400 --> 0:15:13.320 a little bit of headwind compared to what we expected 0:15:13.360 --> 0:15:15.640 because the delta variant, but we still like credit on 0:15:15.680 --> 0:15:19.440 economic momentum and corporate corporate performance. I didn't I didn't 0:15:19.840 --> 0:15:22.080 mean to get us off the Muni track. Paul is 0:15:22.120 --> 0:15:26.360 obsessed with Muni's absolutely. I I love the new Jersey Meunis. 0:15:26.400 --> 0:15:29.360 We just can't get me yields r J. How about 0:15:29.360 --> 0:15:32.240 inflation here, r J? I mean that is a concern. 0:15:32.280 --> 0:15:34.320 It isn't even more more of a concern for this market, 0:15:34.360 --> 0:15:36.640 say a month ago, and perhaps people getting more and 0:15:36.640 --> 0:15:39.120 more into that transitory camp. How do you guys think 0:15:39.120 --> 0:15:42.640 about that? UM, We've been firmly in the camp that 0:15:42.720 --> 0:15:45.520 it will be less, it won't be as transitory as 0:15:45.560 --> 0:15:50.920 Chairman Powell expects UM. I think even those at the FED, 0:15:50.960 --> 0:15:53.120 I mean, you can sense over the last eight weeks 0:15:53.160 --> 0:15:57.600 there was a softening of the transitory UM desk beating 0:15:58.120 --> 0:16:00.200 for a while there it was going to be transitory, 0:16:00.240 --> 0:16:02.240 and it was almost like they wanted to guarantee it. UM. 0:16:02.280 --> 0:16:05.080 But if you look at the f OMC speeches, if 0:16:05.080 --> 0:16:07.920 you look at the minutes or not the minute, excuse me, 0:16:08.360 --> 0:16:11.520 the summary of eaconomic projections and the risk around their 0:16:11.560 --> 0:16:15.000 inflation outlook was skewed to the upside. I think that 0:16:15.400 --> 0:16:18.320 it's pretty clear that the inflation story is still evolving 0:16:19.040 --> 0:16:21.240 in such a way that we think that the Fed 0:16:21.280 --> 0:16:25.640 will prove to have overplayed the transitory card UH, and 0:16:25.720 --> 0:16:27.920 that some of this inflation is gonna last and echo 0:16:28.040 --> 0:16:30.520 for a while. UH. It's one of the reasons why 0:16:30.560 --> 0:16:33.760 we are still short duration UM a little less so 0:16:33.880 --> 0:16:36.960 than we were, say, six day weeks ago, but we 0:16:37.000 --> 0:16:38.920 still believe that you'll should be heating someone higher to 0:16:38.960 --> 0:16:43.520 compensate for the inflation risk that is clearly higher today 0:16:43.560 --> 0:16:45.840 than then it was expected to be. I think on 0:16:45.920 --> 0:16:47.560 the part of the FED and on the part of 0:16:47.560 --> 0:16:49.760 many of the markets. Right now, the market doesn't seem 0:16:49.760 --> 0:16:52.400 to care that much about that. Uh, you know, you've 0:16:52.440 --> 0:16:54.960 had some deceleration in the month over month, Prince that 0:16:54.960 --> 0:16:57.840 that's good. The second derivative went negative. That fits the 0:16:57.920 --> 0:17:01.880 FEDS framework of transit story. But we don't believe we're 0:17:01.880 --> 0:17:05.080 gonna get reset back towards the fedced target rate of 0:17:05.080 --> 0:17:07.159 two percent. We're going to probably overshoot it more than 0:17:07.200 --> 0:17:09.920 they would like. And we think as a bond investor, 0:17:10.000 --> 0:17:12.200 you know, owning treasuries for example, we we should ask 0:17:12.200 --> 0:17:13.640 for a little bit more, ye know, than we think 0:17:13.720 --> 0:17:16.040 rates should be heading higher. The delta variant and its 0:17:16.040 --> 0:17:19.480 impact on the gross trajectory the obvious key risk. I 0:17:19.520 --> 0:17:22.720 do think the Afghanistan story is a very difficult story 0:17:22.760 --> 0:17:24.840 on many fronts, but I don't think it's an economic 0:17:24.960 --> 0:17:31.520 or a market problem. When is you know, considering the 0:17:31.520 --> 0:17:36.600 phenomenal history of the Michigan Wolverines that their performance over 0:17:36.600 --> 0:17:39.280 the past few years, over the deck last decade really 0:17:39.320 --> 0:17:42.679 has been dismal, When are they going to field a 0:17:42.760 --> 0:17:45.280 really winning team? R J. I just you know, I 0:17:45.320 --> 0:17:50.080 have to warn you. Matthew is from the state of Ohio. Uh, yeah, 0:17:51.400 --> 0:17:53.360 that you came from. Are you a Hire State fan? 0:17:53.440 --> 0:17:55.480 Is that what you're trying to tell me, sir? Yeah, Well, 0:17:55.520 --> 0:17:59.080 I mean I like winning teams. You know. Well, you 0:17:59.119 --> 0:18:02.480 know I I used to bristle at these kinds of comments. 0:18:02.800 --> 0:18:05.080 I have to say that the it's been a little 0:18:05.160 --> 0:18:09.600 humbling the Michigan football performance of late um, I would 0:18:09.600 --> 0:18:13.919 say this, I think that you basically when Harbaugh came in, 0:18:13.960 --> 0:18:15.920 there were expectations he was going to get us into 0:18:15.920 --> 0:18:18.919 the college football Championship, get into the playoff, or whatever 0:18:19.240 --> 0:18:22.680 iteration of it that we're on. I'm gonna have to 0:18:22.680 --> 0:18:28.399 cut you off. Well, here in the Bloomberg Radio studio 0:18:28.400 --> 0:18:30.760 here Bloomberg h Q in Europe, it got lots of 0:18:30.800 --> 0:18:33.440 the cable network video streams up and running at all 0:18:33.480 --> 0:18:35.600 times just to keep on top of the news and 0:18:36.000 --> 0:18:40.000 lots of images and video of chaotic chaos going on 0:18:40.160 --> 0:18:43.399 in Afghanistan, particularly at the airport in Cobble. Right now, 0:18:43.440 --> 0:18:45.919 let's get the latest from Bill Ferries, he's a national 0:18:45.960 --> 0:18:48.720 security team leader for Bloomberg News, joining us on the 0:18:48.720 --> 0:18:51.879 phone from Washington, d C. Bill, Again, this is not 0:18:51.960 --> 0:18:54.840 the way I don't think anybody wanted it to go. 0:18:55.040 --> 0:18:58.639 But perhaps this is should not be that surprising. What 0:18:58.800 --> 0:19:01.120 is the latest from your warding about what is going 0:19:01.200 --> 0:19:06.440 on in Afghanistan, particularly in Cobble Well, as you mentioned, 0:19:06.680 --> 0:19:09.160 there have been some scenes of real chaos and confusion 0:19:09.200 --> 0:19:12.879 at the airport. Is people storm the runway, some trying 0:19:12.960 --> 0:19:18.959 to grab onto US military planes as they were taxing. Um. 0:19:18.960 --> 0:19:20.960 I mean up is now reporting that there have been 0:19:21.080 --> 0:19:25.400 seven people killed at the airport so far. I think 0:19:25.680 --> 0:19:28.000 on the U s side, people were waiting to see 0:19:28.000 --> 0:19:31.040 how the President Biden uh finds a way to address 0:19:31.080 --> 0:19:35.439 the situation. The administration is pushed back a lot um 0:19:35.480 --> 0:19:37.800 in terms of saying that you know, they expected the 0:19:37.960 --> 0:19:40.320 Afghan military to put up much more of a fight 0:19:40.359 --> 0:19:43.520 against the Taliban, and even as a lot of analysts 0:19:43.560 --> 0:19:46.520 thought that the Taliban might eventually take control, I don't 0:19:46.520 --> 0:19:50.280 think there was anyone even a week ago predicting that 0:19:50.800 --> 0:19:54.520 something would happen this quickly. That said, the US has 0:19:54.560 --> 0:19:57.479 spent twenty years building up the Afghan military, So if 0:19:57.480 --> 0:19:59.960 anyone should have known how prepared they were to fight 0:20:00.080 --> 0:20:02.000 or not, you would think it would have been the 0:20:02.040 --> 0:20:04.880 US commanders in the field. Yeah, I mean, I would 0:20:04.920 --> 0:20:08.280 say from reading through the Afghan paper, Afghanistan papers and 0:20:09.200 --> 0:20:13.439 reporting across the various news organizations. UM, it looks like 0:20:13.440 --> 0:20:17.800 the Taliban started to negotiate with Afghan army and police 0:20:17.840 --> 0:20:21.080 personnel at the beginning of the year or the end 0:20:21.119 --> 0:20:25.560 of last year. So the Taliban already knew that they 0:20:25.560 --> 0:20:28.719 had these entry points. And UM, a lot of these 0:20:30.040 --> 0:20:32.680 Afghan officials weren't getting paid for the last six months 0:20:32.680 --> 0:20:35.600 of the last nine months, so clearly, UM, you could 0:20:35.600 --> 0:20:40.800 see how their loyalty would weaken. What happens now, UM 0:20:40.840 --> 0:20:43.920 in terms of getting people out, I know the president's 0:20:44.040 --> 0:20:47.119 UM team said they're gonna send what five thousand troops 0:20:47.160 --> 0:20:51.040 to the US to to the Kabul airport. Um, is 0:20:51.080 --> 0:20:53.280 that still the case? And how are they planning on 0:20:53.600 --> 0:20:56.959 who are they planning on taking out? Well, right, it's 0:20:57.000 --> 0:20:59.400 actually up to six thousand now that they said, we'll 0:20:59.400 --> 0:21:03.800 be in play by by at some point tomorrow on Tuesday. UH. 0:21:03.800 --> 0:21:06.240 And their job is to secure some sort of a 0:21:06.280 --> 0:21:10.680 perimeter around the airport. And they still have diplomats, they 0:21:10.720 --> 0:21:13.880 still have Afghan translators and other aids that they are 0:21:14.000 --> 0:21:16.680 rushing out. It's not just in the US, the UK 0:21:16.880 --> 0:21:19.919 is also running flights in and out of Kabbal the 0:21:20.000 --> 0:21:22.840 big the big question, and I think the problem that 0:21:22.920 --> 0:21:25.920 the US has here is that if you know you're 0:21:25.960 --> 0:21:28.359 someone who's trying to get out, whether you might be 0:21:28.400 --> 0:21:32.040 an Afghan translator who worked with NATO forces for years 0:21:32.080 --> 0:21:34.719 but in a more remote province, you would have to 0:21:34.760 --> 0:21:37.280 get yourself to Kabbo. At this point, there are no 0:21:37.400 --> 0:21:42.200 exit points um in Afghanistan except the airport. If you 0:21:42.359 --> 0:21:44.720 try to cross the land border, you're going through Taliban 0:21:44.800 --> 0:21:48.000 setpoint for that at that stage. So I think that's 0:21:48.000 --> 0:21:50.199 going to be the question is how well can the 0:21:50.280 --> 0:21:53.800 US and allies get their own people and their aids out, 0:21:54.280 --> 0:21:57.560 and then of course what happens to for instance, women 0:21:57.600 --> 0:22:01.359 and uh and and children's rights and country We we 0:22:01.520 --> 0:22:04.040 all remember what that was like under the Taliban, and 0:22:04.040 --> 0:22:08.119 there's already reports of human rights abuses in some of 0:22:08.160 --> 0:22:12.320 these Taliban controlled areas. UN Security Councils having an emergency 0:22:12.320 --> 0:22:15.480 session on that issue right now, um and that's going 0:22:15.520 --> 0:22:17.639 to be one of the bigger questions in the days ahead. 0:22:18.080 --> 0:22:20.720 It's so damaging to the US credibility right to have 0:22:21.600 --> 0:22:26.360 um U S forces so publicly abandoned, these people who 0:22:26.400 --> 0:22:30.639