Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox.
Speaker 1: Along with my co host Lisa A. Bramowitz. Each day
Speaker 1: we bring you the most important, noteworthy, and useful interviews
Speaker 1: for you and your money, whether you're at the grocery
Speaker 1: store or the trading floor. Find the Bloomberg p m
Speaker 1: L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com.
Speaker 1: Before we do anything, we consult with Ira Jersey, are
Speaker 1: interest rate strategist for Bloomberg Intelligence, and he joins us. Now. Ira,
Speaker 1: in one of the most recent pieces I have read
Speaker 1: that there's a variety of different type their variety of
Speaker 1: flattening types when it comes to the yield curve, and
Speaker 1: I'm wondering, what's that there. I thought, you know, I
Speaker 1: thought flat is flat, but apparently not. Yeah. So, so
Speaker 1: there's basically two ways that the curve can can change,
Speaker 1: and one way is during market selloffs, and the other
Speaker 1: way is during market rallies and um and and what
Speaker 1: what what? When you look at the history of interest
Speaker 1: rates and what the curves none versus the economy, what
Speaker 1: you find is that it's really when you get bare flattening,
Speaker 1: and that's the type of flattening that we've had now
Speaker 1: that's preceded economic slowdowns. But when you get UM, when
Speaker 1: you get both flattening, so flattening for example, like we
Speaker 1: had inn when the Fed was buying long end bonds
Speaker 1: and you wound up getting a very flat yield curve
Speaker 1: as well, that tended that type of flattening actually tends
Speaker 1: to be good for the economy. So it's basically that
Speaker 1: you have low interest rates, people are um. People are
Speaker 1: trying to stimulate the economy by um by taking advantage
Speaker 1: of those low interest rates. But when the curve flattens
Speaker 1: while the front end is selling off, it's it's not
Speaker 1: so good. So you know, there is a reason for
Speaker 1: kind of a little bit of concern with the the
Speaker 1: yield curve being as flat as it is. And quite frankly,
Speaker 1: just from a technical perspective, we're sitting right on top
Speaker 1: of a very important technical level four UM for the
Speaker 1: two year versus ten year treasury curve. Okay, So in
Speaker 1: other words, for all of the enthusiasm we hear about stocks,
Speaker 1: all the optimism, the yield curve to you is sending
Speaker 1: an ominous message that traders need to pay attention to.
Speaker 1: That is saying that the U. S economy is slowing
Speaker 1: down and is heading towards some kind of downturn. Well,
Speaker 1: so it takes a long there's long leads here. So
Speaker 1: when the yield curve gets to zero gets to flat,
Speaker 1: what you've experienced over the last forty years or so
Speaker 1: was sometime within the next two to four years. So
Speaker 1: again long long leg there. Within two to four years,
Speaker 1: you tend to get an economic slowdown. But you know,
Speaker 1: it's not the curve itself that's causing that. It's you know,
Speaker 1: the reason why we get this bare flattening is because
Speaker 1: front and interest rates are being increased by the Federal Reserve.
Speaker 1: So um, so it's really the policy error. So it's
Speaker 1: really the actions of the central bank that is causing
Speaker 1: the curve to flatten, and that's where, um you wind
Speaker 1: up getting the slow down in the economy. Get you know,
Speaker 1: one of the impacts and effects of that, and kind
Speaker 1: of the canary in the coal mine might be the
Speaker 1: flattening curve. But it's um But like I mentioned, the
Speaker 1: curb being flat in and of itself isn't necessarily bad.
Speaker 1: It's the way that it flattens and why, and that's
Speaker 1: that's the policy are part of this, all right, so
Speaker 1: policy error from the Fed, of course, UH, FED Chair
Speaker 1: jin Yellen is going to step down as soon as
Speaker 1: the appointed next FED Chair, Jerome Powell, is confirmed and
Speaker 1: sworn in early next year. I'm wondering, given the fact
Speaker 1: that Chair Yellen is going to be departing, and given
Speaker 1: the vacancies already a mug among the FED governors, can
Speaker 1: we really even have visibility into the path of the
Speaker 1: Fed's rate hikes next year? I mean, presumably that the
Speaker 1: sort of policy error here is that they're hiking too fast. Yeah,
Speaker 1: that that's exactly right. And I know that the market
Speaker 1: thinks that they're hiking too fast or that they'll hike
Speaker 1: too much, one or the other. But either way it
Speaker 1: would be that would be a policy error, and it
Speaker 1: you know, it's hard to judge what the future Fed's
Speaker 1: going to be. We're going to get a whole lot
Speaker 1: of new governors. We already have a number of new
Speaker 1: members of the f O m C in in the
Speaker 1: form of of several presidents who have been appointed recently. UM,
Speaker 1: and you're gonna get a new a new vice chair
Speaker 1: of the Federal Open Market Committee when UM, when new
Speaker 1: York Fed President Dudley retires at the end of next
Speaker 1: year resigns um sometime next year, so so we really
Speaker 1: don't know exactly what future monetary policy will bring. So
Speaker 1: that's one reason why listening to the confirmation hearings of
Speaker 1: Jerome Powell and uh you know who the who the
Speaker 1: President picks as the next vice chair, those two seats
Speaker 1: in particular will probably be very important for um for
Speaker 1: what the future monetary policy is. What will they be
Speaker 1: more dubbish, will they be more hawkers, or will they
Speaker 1: stay the course like it's you know, we can all
Speaker 1: make speculations, but in reality, I don't think anyone quite
Speaker 1: knows at this point. I just want to go back
Speaker 1: to something you talked about having to do with this
Speaker 1: flattening of the yield curve and your analysis at last
Speaker 1: time that this offered itself. We saw a lot of
Speaker 1: bond buying by the Federal Reserve, by the Central Bank,
Speaker 1: and that's not taking place now. Now, that's right, And
Speaker 1: in fact, you know, the Federal Reserve is um already
Speaker 1: starting to allow its portfolio to run off, and starting
Speaker 1: in price February or March next year, the Treasury Department
Speaker 1: is going to have to start issuing more bonds, partially
Speaker 1: due to um to this extra supply that the Fed's
Speaker 1: not going to be buying every every month when they
Speaker 1: have maturities, but also because there's going to be higher
Speaker 1: deficits starting next year, um just because Medicare and sort
Speaker 1: of security payments are going to go up, and and
Speaker 1: the potential for additional deficits based on on the budget
Speaker 1: that Congress passed recently, which could add another hundred and
Speaker 1: fifty billion dollars of potential supply into the market. So
Speaker 1: so there is going to be this, uh, this supply.
Speaker 1: I don't want to call it fear, but there is
Speaker 1: going to be certainly a supply push which is going
Speaker 1: to have to be absorbed, and that could certainly affect prices,
Speaker 1: and where and how it affects those prices will be
Speaker 1: determined by what bonds the Treasury Department decides the issue.
Speaker 1: So will this be a good empirical test that if
Speaker 1: stock prices continue to move higher or are higher. Let's
Speaker 1: say in that the argument that stock prices moved because
Speaker 1: of this extra liquidity from central banks, that theory would
Speaker 1: be tossed out the window if we saw prices accelerate. Well,
Speaker 1: I think you know, liquidity is is a strange is
Speaker 1: a strange thing. I think one of the things is
Speaker 1: that you've you've seen now more recently, the fact that
Speaker 1: you don't need all the liquidity from the FED reserve
Speaker 1: for the economy to run. I mean, basically, what the
Speaker 1: Fed did when they did all the bond buying, did
Speaker 1: all the quantitative easing, was to try and jump start
Speaker 1: the economy. It was kind of like you know, putting
Speaker 1: a doctor putting on the the you know, the A
Speaker 1: D and and trying to you know, kick start your heart.
Speaker 1: That's basically what queue is. But now you know, the
Speaker 1: economy is pumping on its own and it doesn't necessarily
Speaker 1: need all the accommodation that it's had. Now. The problem
Speaker 1: is is that if you pull that accommodation out too quickly,
Speaker 1: you have a detrimental effect. And that's I think the worry,
Speaker 1: and that's that's that's really going to be Powell's um.
Speaker 1: The challenge for the power Powell set is not removing
Speaker 1: accommodation too fast that you really stifled the economy and
Speaker 1: you wind up hurting things like corporate profits and the
Speaker 1: like were real quick, which yield curve Do you look
Speaker 1: at so so you know the one that has the
Speaker 1: best um, the best correlation to the economy is the
Speaker 1: two year versus tenure treasury yield curve. UM. No, that
Speaker 1: that's the main one. All right, Ira, Jersie, thank you
Speaker 1: so much for joining us. As always, well, the U
Speaker 1: S is suing to stop a T and T S
Speaker 1: takeover of time Warner. There are all sorts of suspicions
Speaker 1: and rumors that the Department of Justice is doing this,
Speaker 1: uh due to CNN and President Trump's contentious relationship with that.
Speaker 1: These have not been proven, and in fact, some are
Speaker 1: saying that this lawsuit by the d o J resembles
Speaker 1: classic antitrust cases that are pretty much routine. Here to
Speaker 1: talk about it and put it into perspective is Jennifer Ree,
Speaker 1: senior litigation analyst for Bloomberg Intelligence. She joins us in
Speaker 1: our eleven three oh studios. Jennifer, is this a routine
Speaker 1: antitrust case? You know? No, I would not call it
Speaker 1: a routine antitrust case. I would call it a routine
Speaker 1: theory of harm. And I think the big difference there
Speaker 1: is that theories of harm from a vertical deal are
Speaker 1: talked about in discussed. Um. Sometimes they come up and
Speaker 1: they get resolved in mergers with behavioral remedies. But the
Speaker 1: reason I say it's not necessarily a routine case is
Speaker 1: because we haven't seen actual litigation to try to block
Speaker 1: this kind of deal in a very very long time time.
Speaker 1: And it's really kind of a departure from you know,
Speaker 1: D O J precedent in history, and so it is.
Speaker 1: It is surprising, and I think that's why these political
Speaker 1: ideas are kind of haunting this. Okay, so the political
Speaker 1: ideas are haunting this, uh potential combination. I have to
Speaker 1: assume that somebody in the Council's office at a T
Speaker 1: and T sat down with Mr Stevenson, the CEO, even
Speaker 1: before they decided to make this attempt public, to go
Speaker 1: over some of these issues. Do you think that this
Speaker 1: was something that was discussed and then said, oh no,
Speaker 1: we'll get over it or what do you how does
Speaker 1: how does that work? And you're talking about in advising
Speaker 1: the companies as whether they face risk, you know, I mean,
Speaker 1: that's what's really tough here. My guess is that the
Speaker 1: outside lawyers said, look, there there always can be some
Speaker 1: harms that come from vertical deals. But look for fifty years,
Speaker 1: they've been treated in one way. So you will likely
Speaker 1: be able to close this deal, but you'll likely have
Speaker 1: to agree to a consent order, a settlement where you
Speaker 1: moderate your conduct, where you agree that after you emerged
Speaker 1: you will behave in a certain way. You're probably going
Speaker 1: to have to make those agreements. But with that, we
Speaker 1: think you'll be able to close. That's likely the legal
Speaker 1: opinion that they got. Yeah, so then they went with
Speaker 1: that and the Department of Justice kind of turned things
Speaker 1: on their head. I want to talk about the precedent
Speaker 1: this sets. You know, if this is a departure from
Speaker 1: the norm, what does this mean about a deal, uh, say,
Speaker 1: like the Tribune at Sinclair Broadcasting merger. I mean that
Speaker 1: combination would give the company access to seventy two percent
Speaker 1: of the American television audience. Are you expecting this deal
Speaker 1: to get the same kind of scrutiny from the Department
Speaker 1: of Justice? You know, I think that's a great question
Speaker 1: because it will be so interesting to see how that's treated.
Speaker 1: It gives some clue as to whether politics have weighed
Speaker 1: in on the A T and T Time Warner deal
Speaker 1: because Sinclair theoretically we we assume as a friend to
Speaker 1: this administration or the administrations of friend to Sinclair. And
Speaker 1: if you look at the way past similar deals have
Speaker 1: been treated, I would expect that they'd have to divest
Speaker 1: sell off at least ten stations, ten stations in ten
Speaker 1: different markets, but possibly even a few more, but at
Speaker 1: least divest in ten markets. If we this would follow
Speaker 1: the precedent that's been set in similar deals to the
Speaker 1: Sinclair Tribune deal. If we don't see that, then it
Speaker 1: makes this all look more political. I'm struggling here also,
Speaker 1: because typically Republican administrations have been more allowing of big deals.
Speaker 1: That's sort of the assumption that mergers have an easier
Speaker 1: time getting through under Republican administrations. Is that an inaccurate impression?
Speaker 1: And if it's not, how does this square with that?
Speaker 1: You know, that's a very accurate impression. And I think
Speaker 1: there are a lot out there that had that impression,
Speaker 1: because if you remember, just about a month ago or so,
Speaker 1: Senator Elizabeth Warren was asking for this new head of
Speaker 1: antitrust at the d o J to recuse himself from
Speaker 1: this deal, and she is against this deal. She has,
Speaker 1: you know, vocalized her her opinion about it, So obviously
Speaker 1: what she was thinking is that he would also just
Speaker 1: sign on the dotted line to get let this go
Speaker 1: forward as well. I think most of the antitrust community
Speaker 1: is very surprised by this for that reason, and and
Speaker 1: and that is why you hear people talking about politics
Speaker 1: and politics weighing in, because this just seems so out
Speaker 1: of the ordinary, well out of the ordinary or not.
Speaker 1: CNN and Time Warner, they are all content providers, right,
Speaker 1: they don't actually own any of the distribution assets. That
Speaker 1: is where a T and T comes in. That's right.
Speaker 1: So what is the anti true? What is the argument,
Speaker 1: if you can make it, what's the antitrust argument that says, no,
Speaker 1: you're a distribution company, We don't want you owning the
Speaker 1: content that would then be distributed on your pathways as
Speaker 1: well as those of your competitors. The argument that's been
Speaker 1: made here is an economic argument, and it is that
Speaker 1: by they get added leverage by owning the content, it
Speaker 1: will give them the freedom to raise the price survival
Speaker 1: distributors because either they make more money by raising the price,
Speaker 1: or if these distributors refuse to pay that and they
Speaker 1: have a blackout of their of their television stations. Then
Speaker 1: some of those subscribers will be lost to that distributor
Speaker 1: and we'll come over to a T and T. So
Speaker 1: in the long run they'll benefit from it. Does that
Speaker 1: mean that the next step would be to go after
Speaker 1: a company like Comcast to divest the or split the
Speaker 1: content producing division from the distribution division. Now, I don't
Speaker 1: think that that that the anti drest agencies would do
Speaker 1: that at this point unless there is some evidence or
Speaker 1: some reason that they want to investigate the company for
Speaker 1: potential anti competitive conduct at this point. All right, thanks
Speaker 1: very much for being with us sharing the updates. This
Speaker 1: is a story that's going to keep on giving. Indeed,
Speaker 1: thank you very much. Jennifer resurstigation analyst for Bloomberg Intelligence,
Speaker 1: speaking about a T and T S attempt to acquire
Speaker 1: Time Warner and push back from the US Justice Department.
Speaker 1: Uh Denver is going to get a hyperloop or rather
Speaker 1: hyperloop inspired system, and the person who is going to
Speaker 1: build it is Brogan. Ben Brogan, founder and chief executive
Speaker 1: officer of Rivo based in Los Angeles, California, and he
Speaker 1: joins US now. Brogan is an early Space X engineer
Speaker 1: and is working on making it quicker for people to
Speaker 1: get from one major hub to another. Brogan, thank you
Speaker 1: so much for joining us. Can you give us a
Speaker 1: sense of what exactly it is that you are working
Speaker 1: on in Denver? Absolutely? Thank you in the good morning. Um, yeah,
Speaker 1: so it is century. So I figured let's get some
Speaker 1: more century technology into transportation. So what we're designing is
Speaker 1: an integrated vehicle system that works in enclosed environment. Um.
Speaker 1: So it is kind of like a hyper loop, and
Speaker 1: that we have a dedicated roadway or guideway that we
Speaker 1: move our vehicles, but we do not operate in a vacuum.
Speaker 1: And we're focused more on kind of regional and super
Speaker 1: regional travel of kind of unlocking traffic and cities. Is
Speaker 1: what we want to do with this new technology. Can
Speaker 1: you give us some idea of the cost of this
Speaker 1: new technology, because there's been some estimates that well, I know,
Speaker 1: for example, Elon Musk when he first put forth the
Speaker 1: hyper loop concept that was back in I think the
Speaker 1: cost was estimated at around eleven and a half million
Speaker 1: dollars per mile of hyper loop. How have you costed
Speaker 1: this out? Uh, well, we think we're gonna be far
Speaker 1: cheaper than than other forms of the hyper loop. You know,
Speaker 1: one of the things by eliminating the vacuum, of course,
Speaker 1: it eliminates the the operating cost, eliminates some of the
Speaker 1: capital costs. It doesn't eliminate the and cost. It brings
Speaker 1: them down. It brings down the capital costs and of
Speaker 1: course makes it much more safer. So we have a
Speaker 1: partner in Denver. Region four seventy is a toll road
Speaker 1: that moves a lot of people around the region. Already.
Speaker 1: With our system, we can move more people on a
Speaker 1: given lane of road. Uh, and I'll talk a little
Speaker 1: bit about more about that in a second, but uh,
Speaker 1: we're gonna be operating our system at the same cost
Speaker 1: or lower as the current toll road, so it should
Speaker 1: be very very low cost and everyone will be able
Speaker 1: to use it. Can you help me picture in my
Speaker 1: head what this looks like. So it's an enclosed space
Speaker 1: and you go in your own car, or you go
Speaker 1: in a car that is sort of resting on some
Speaker 1: kind of magnetic track, and it goes to a certain
Speaker 1: place and goes two hundred miles per hour? Am I butchering?
Speaker 1: This is that? Basically? No, it's it's also so okay,
Speaker 1: if you've seen um, maybe some of the images of
Speaker 1: classic hyper LUPSI above grade or in tunnels. We can
Speaker 1: do both of those. But a EVA was also designed
Speaker 1: to work on an existing lane of freeway. So what
Speaker 1: we can do is we can put our own technology
Speaker 1: right down on the roadway. We do put an encapsulation
Speaker 1: over it so it keeps the weather off, it keeps
Speaker 1: tree branches, soda bottles. Basically allows us to short circuit
Speaker 1: ourselves to level five autonomy. So inside the system, uh,
Speaker 1: you can drive your own vehicle onto a sleigh. That way,
Speaker 1: you can take your own stuff on the bother of
Speaker 1: a fourteen month old so I can assure you we
Speaker 1: have a lot of stuff in our car. I don't
Speaker 1: always want to take a lift, so you can do that.
Speaker 1: You can put your surfboard or your skis in it
Speaker 1: um and you can zip you know, in our infrastructure
Speaker 1: and then drive your own car in the last mile.
Speaker 1: There's we have multiple products. We also have what we
Speaker 1: call super Metro, sort of like a metro style product
Speaker 1: that carries groups of people that can have beyond bicycles
Speaker 1: or pedestrians. We also have a palette zipper UM and
Speaker 1: so wherever we have our infrastructure, there's gonna be some
Speaker 1: dedicated places where you you load and get on it
Speaker 1: and then yeah, you you end up moving fully autonomously
Speaker 1: and two winter miles an hour. Um, you know to
Speaker 1: the portals closest to your final destination. Is it? Is
Speaker 1: it magnetic? Is it is it wind? Are you just
Speaker 1: being sucked as quickly as possible to the other side?
Speaker 1: I mean, what what is this? No? No, no, there's uh,
Speaker 1: there's no giant sucking sound. Um, it is magnetic levitation
Speaker 1: and propulsion. So linear electric motors are used in roller
Speaker 1: coasters today they're using aircraft launch systems. So we're just
Speaker 1: optimizing it for our application on the roadway. UM, we
Speaker 1: do levitated high speeds that both enables the high speed itself.
Speaker 1: What also means it's a super smooth ride because we
Speaker 1: can actively control that, so it would literally be as
Speaker 1: smooth as sitting in the chair. Um. So you know,
Speaker 1: we're just taking some of these twenty century technologies and
Speaker 1: really focusing. You know, as populations urbanized, more people are
Speaker 1: moving to cities. Traffic is a major problem. So what
Speaker 1: we want to do is do more with less. So
Speaker 1: our focus is on getting more vehicles on a given
Speaker 1: lane of infrastructure. That's the key. Just to put a
Speaker 1: quick number to that, given freeway, depending on which standard
Speaker 1: you use, can move about two thousand to thirty hundred
Speaker 1: vehicles per lane per hour. The Rebo system to move
Speaker 1: twenty thousand vehicles per lane per hours. This idea that
Speaker 1: you can enable regional mobility with less infrastructure. I hate
Speaker 1: to keep harping on the on the money, but I'm
Speaker 1: but I'm wondering how much money have you have you
Speaker 1: raised so far to do this or how much money
Speaker 1: has the Colorado Department of Transportation put into this partnership.
Speaker 1: So yeah, So the the study that we've announced, we
Speaker 1: formed a public private partnership. Uh see dot put in
Speaker 1: about Colorade Department Transportation put in about two hundred thousand
Speaker 1: dollars for the first phase of this study. Uh And
Speaker 1: and if we're successful, then then we like to to
Speaker 1: to go a little further with that. M Our Companies
Speaker 1: privately funded. We're gonna be dealing our series A uh
Speaker 1: coming up, and I'd be happy to come back on
Speaker 1: the show and announce that. But we do have a
Speaker 1: team of of over forty people, mostly engineers, really world
Speaker 1: class talent from from all the most you know, technically
Speaker 1: impressive companies and universities around the world. Amazing team. Where
Speaker 1: is this being tested? Is there a place where someone
Speaker 1: could go and actually see something that was built? Because
Speaker 1: I know that the hyper loop that Elon Musk has
Speaker 1: put together, I believe that there's a test center in Nevada.
Speaker 1: What you want to built a test hyper loop in Hawthorne, California,
Speaker 1: and there's a private company that built a test system
Speaker 1: in Nevada. We are going to be doing that, so
Speaker 1: you know in Los Angeles where our engineering headquarters is,
Speaker 1: we're doing competent level work. Mind you were only you know,
Speaker 1: nine months old as a company, and we did announced
Speaker 1: also a test site in Denver, So we will be
Speaker 1: doing system level testing and we're gonna have shovels in
Speaker 1: the ground for our own test site in Q one
Speaker 1: of next year. You have been you're only around for
Speaker 1: nine months and you've got a fourteen month old. You
Speaker 1: must have had a crazy year. It's crazy good but yes,
Speaker 1: crazy um real quick? In your company? Are the actual
Speaker 1: builders part of the company or are you going to
Speaker 1: contract out that work? And is there enough uh, those
Speaker 1: types of workers to actually construct something like this? Oh? Um?
Speaker 1: So you know our company is really a technology company.
Speaker 1: As we move into projects, we're all about the partner ecosystem.
Speaker 1: We've partnered with a Coom, the world's number one design
Speaker 1: construction firm, on this never project. We have other partners
Speaker 1: in different places around the world. Um, so we'll be
Speaker 1: building out a workforce in Denver that's going to be
Speaker 1: a Revo employees, but it will also be a workforce
Speaker 1: in Denver that will be supporting the project. So the
Speaker 1: project will be separate from our balance sheet. All right, Well,
Speaker 1: we look forward to learning more about it and perhaps
Speaker 1: even getting a ride on it when it is built.
Speaker 1: Thank you very much for being with us. A. Brogan
Speaker 1: Van Brogan is the founder and the chief executive of
Speaker 1: the Los Angeles based a Revo hyper Loops. How about
Speaker 1: that when we talked about Uber Technologies agree meant to
Speaker 1: buy twenty four thousand Volvo cars, including some that are autonomous,
Speaker 1: The focus was on the fact that drivers are becoming obsolete.
Speaker 1: But Sherry O. Day, who is a Bloomberg Gadfly columnist
Speaker 1: here covering tech, points out another very important aspect of
Speaker 1: this deal, which is Uber is going to own cars
Speaker 1: and this is a change for them Shara joins us. Now, Shia,
Speaker 1: can you just talk a little bit about what your
Speaker 1: biggest takeaway was from this announcement. Yeah, I was actually
Speaker 1: very surprised with the Uber Volvo announcement yesterday for the
Speaker 1: reason you said right that this is a company. Part
Speaker 1: of the beauty of the business model at Uber is
Speaker 1: it doesn't own anything. It doesn't employ people, or doesn't
Speaker 1: employ drivers. At least, the beauty of the business model
Speaker 1: was it connected people who wanted rides with drivers who
Speaker 1: are willing to take them places, and it took a
Speaker 1: cut of the fairs, and it didn't have to deal
Speaker 1: with owning cars or other messy and expensive assets. But
Speaker 1: as you said, Uber is now saying it's going to
Speaker 1: buy cars from Volvo and retrofit them to so they're driverless,
Speaker 1: and in doing so, it is owning assets for the
Speaker 1: first time, expensive depreciating assets, and I wonder what that
Speaker 1: does to its business model. Does it also mean that
Speaker 1: Uber is going to have to learn how to service
Speaker 1: the vehicles. Well, they weren't very specific about the servicing
Speaker 1: aspect of it, but you're right, no matter whether cars
Speaker 1: have drivers or not, they still need to be serviced
Speaker 1: and maintained like any car, you need to change the oil,
Speaker 1: you need to recharge it with electricity. With all this
Speaker 1: autonomous driving that is being touted, how is it going
Speaker 1: to be fueled? Uh? Nobody has really addressed publicly all
Speaker 1: of these questions about driverless cars. We have seen companies
Speaker 1: including Lift and and Waymo, which is the driverless car
Speaker 1: business within Google's parent company. Those companies have adopted a
Speaker 1: different model that they don't seem to be willing necessarily
Speaker 1: to own cars, but are rather contracting with fleet ownership
Speaker 1: companies including the car rental companies were familiar with to
Speaker 1: kind of own and service cars in a future driverless
Speaker 1: car world. And Uber is obviously taking a different approach,
Speaker 1: although it's still early, and I suspect they're going to
Speaker 1: do a mix of owning cars and kind of um
Speaker 1: leaning on service company to own and service cars, you know,
Speaker 1: talking about Lift in Waibo. I mean another way that
Speaker 1: you can look at this is that this change in
Speaker 1: Uber's business model is brilliant because now a they're especially
Speaker 1: given the sort of controversy over Uber in Europe, now
Speaker 1: they're actually going to be a buyer of European goods, right,
Speaker 1: So that gives them more political cloud. But then also
Speaker 1: it distinguishes them from way more or lift and all
Speaker 1: of a sudden they actually do have assets which could
Speaker 1: be considered, you know, potentially a benefit. Now, I mean,
Speaker 1: I think you're right on both points that um Uber
Speaker 1: basically said yesterday that they want to have a little
Speaker 1: bit more control over their future, over this kind of
Speaker 1: driverless car future, and they believe that actually owning physical
Speaker 1: the physical cars themselves gives them that control. So that
Speaker 1: will be an interesting thing to see. The other point
Speaker 1: about you know, the business model changes is yeah, yeah,
Speaker 1: it could be that um in the future Uber's business
Speaker 1: model looks you know, perky and bright when you kind
Speaker 1: of take the drivers out of the equation, which is
Speaker 1: one of obviously the biggest costs and complications and Uber's business.
Speaker 1: But I think the key to meet for me is
Speaker 1: that we don't really know what a future Uber is
Speaker 1: going to look like. If we assume the driverless cars
Speaker 1: are going to be ubiquitous, how is the company going
Speaker 1: to make money? What do these sort of financial dynamics
Speaker 1: look like? And is valued at something like seventy billion
Speaker 1: dollars and you know that assumes that the company has
Speaker 1: a lot of its kind of business model questions figured out,
Speaker 1: and part of my point is it doesn't have those
Speaker 1: questions figured out. Sure, in all of your conversations with
Speaker 1: experts in the technology world, is there anybody that points
Speaker 1: to Uber as being the potential straw that breaks the
Speaker 1: markets back that if something were to happen with this valuation,
Speaker 1: or there were to be some question about its ongoing viability,
Speaker 1: would that cause a route in technology? It's an interesting question.
Speaker 1: I don't know that I've heard anybody. I mean, certainly
Speaker 1: there are questions about what Uber is really worth um
Speaker 1: right now, especially because you know, soft Bank, the Japanese conglomerate,
Speaker 1: is negotiating to buy stock from Uber shareholders at a
Speaker 1: significant discount to where the company is currently valued on paper. UM.
Speaker 1: But I don't know that there would be kind of
Speaker 1: contagion effect if Uber's valuation were to create if the
Speaker 1: company had significant business problems um and certainly not in
Speaker 1: public markets, I would think, although it might have a
Speaker 1: cast of Paul on other private tech companies. Well done.
Speaker 1: All right, Well we're gonna leave it there, thank you
Speaker 1: very much. Shira Oviday are technology columnist and Bloomberg gadfly
Speaker 1: when it comes to all things technological. And you can
Speaker 1: follow Shira on Twitter at Shira ov Day And of
Speaker 1: course we look forward to more of your reports on Blouberg.
Speaker 1: Thanks for listening to the Bloomberg P and L podcast.
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Speaker 1: or whatever podcast platform you prefer. I'm pim Fox. I'm
Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa Abramo.
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