WEBVTT - Looking Forward For Verizon Business, What Comes Next 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 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:21.759 at Bloomberg dot com slash podcast. Now, I want to 0:00:21.760 --> 0:00:24.280 get over to Massimo Poselli. He joins us right now. 0:00:24.280 --> 0:00:29.040 He's a senior vice president of Global Enterprise for Verizon Business. 0:00:29.080 --> 0:00:32.440 And I guess mass your focus here is on five G. 0:00:33.880 --> 0:00:36.159 To me, it's so fascinating, not just because all the 0:00:36.200 --> 0:00:40.200 protesters around here are concerned that, you know, Bill Gates 0:00:40.280 --> 0:00:43.920 is using the vaccines to inject us with five G chips, 0:00:43.960 --> 0:00:47.240 but because it's gonna make I think business a lot 0:00:47.520 --> 0:00:52.560 more exciting and our personal lives also a little bit easier. Um, 0:00:52.600 --> 0:00:57.240 how do you think the most important UH leaps ahead 0:00:57.320 --> 0:01:00.000 will be will be met by the five G technology 0:01:00.200 --> 0:01:05.400 that you're that you're spreading around. Good morning, Paul, and that, 0:01:05.600 --> 0:01:08.440 first of all, thank you for having me today. UM. 0:01:08.880 --> 0:01:13.400 Fight G UH will change the way we live as 0:01:13.520 --> 0:01:18.120 as as normal people and as employees. UH. And it's 0:01:18.200 --> 0:01:23.319 probably the first generation of wireless services that will be 0:01:23.600 --> 0:01:26.640 more focused or well bring more value to the enterprise, 0:01:26.800 --> 0:01:30.600 to the end consumers. UH. Fight G combined with edge 0:01:30.600 --> 0:01:34.920 computing will allow to define the business processes and the 0:01:34.959 --> 0:01:40.880 engagement model with the consumer. Just think of the smart store, 0:01:41.240 --> 0:01:45.240 I think of a smart manufacturing, Think of telehealth, Think 0:01:45.280 --> 0:01:48.800 of the education. How can use the RBR to be 0:01:49.120 --> 0:01:53.720 more effective in the way you educate the people? UH. 0:01:53.760 --> 0:01:56.800 But the the art of the possible with five G 0:01:57.880 --> 0:02:01.400 is infinite. And actually what we're doing is to explore 0:02:01.880 --> 0:02:06.200 use cases on five G with our partners and with 0:02:06.280 --> 0:02:10.120 our customers in almost every industry. All right, mass, we'll 0:02:10.120 --> 0:02:13.120 give us a sense of timing. Here I see ads 0:02:13.280 --> 0:02:16.800 from UH. You guys may tinteen your other competitors saying 0:02:16.800 --> 0:02:19.480 five gus here. I don't think it's here. Where are 0:02:19.520 --> 0:02:21.000 we in the rollout? Give us a sense of the 0:02:21.000 --> 0:02:28.200 timetable UH on the different flavors or five G five 0:02:28.240 --> 0:02:31.280 G at the C band, f G at the ultra 0:02:31.400 --> 0:02:36.440 white band. UH. Five G is here now in seventy 0:02:36.520 --> 0:02:39.919 one cities for the horizon, and we have the six 0:02:39.960 --> 0:02:44.160 while access in twenty three cities. Uh, what will we 0:02:44.200 --> 0:02:47.600 say is by five GM is now because really finding 0:02:47.919 --> 0:02:51.480 the business processes for enterprise will take time. You will 0:02:51.639 --> 0:02:55.119 change the way they work. So that's why even if 0:02:55.200 --> 0:02:58.360 some use cases will be something you guys will be 0:02:58.400 --> 0:03:02.080 available in in in a few months, some will take 0:03:02.760 --> 0:03:06.320 a few quarters. But the time is now to work 0:03:06.360 --> 0:03:10.320 and define what technology could do and how technology could 0:03:10.360 --> 0:03:15.119 change at the way corporate works. What about the safety 0:03:15.200 --> 0:03:17.799 of this? I mean, you know, I was joking a 0:03:17.840 --> 0:03:21.280 little bit at the top, but you've got um Robert Kennedy, 0:03:21.320 --> 0:03:24.480 whom the Globe and Mail called a super spreader of 0:03:24.600 --> 0:03:30.560 medical misinformation, who nonetheless is a big name and has 0:03:31.000 --> 0:03:34.600 warned about safety concerns around five G. Is there any 0:03:34.639 --> 0:03:39.800 that we should take seriously? Listen, we had a discussion 0:03:39.800 --> 0:03:43.320 about the safety every time we launched a new generation 0:03:43.600 --> 0:03:46.160 of wireless services. So we heard the same one TREG. 0:03:46.320 --> 0:03:48.640 We heard the same offer G, and we heard we 0:03:48.640 --> 0:03:50.560 were here in the same offer G, and we will 0:03:50.600 --> 0:03:53.560 hear the same on six G. So listen, this the 0:03:53.760 --> 0:03:56.720 security is part of mount for us, and and you 0:03:56.760 --> 0:04:01.360 know wireless that will just bring the technology and value 0:04:01.840 --> 0:04:05.440 to the um beings. So no concern about security past 0:04:05.840 --> 0:04:07.840 when will I have to go out and buy a 0:04:07.960 --> 0:04:12.840 five G phone? When should I do that? Well, you 0:04:12.880 --> 0:04:16.520 should do that now has set on five phone or 0:04:16.520 --> 0:04:20.440 five G are available today in the market and and 0:04:20.839 --> 0:04:24.479 will bring value. Think of the health for example, the 0:04:24.520 --> 0:04:29.080 ability to capture your your health data and your personal 0:04:29.160 --> 0:04:34.719 data in the in the middlesecond and to share uh 0:04:34.839 --> 0:04:38.599 this with with your position and with the expert. But 0:04:38.680 --> 0:04:43.360 also think of the ability to consume media content. We 0:04:43.440 --> 0:04:47.040 had a view for the last Super Bowl where you 0:04:47.080 --> 0:04:50.560 could have a three D view, multiple view on the 0:04:50.600 --> 0:04:53.560 same screen using five G. So if you want to 0:04:53.640 --> 0:04:58.560 start having an experience in sports event but also have 0:04:58.720 --> 0:05:02.760 the ability to uh you know, be in the forefront 0:05:03.360 --> 0:05:07.080 on the use of technology for your personal house, than 0:05:07.160 --> 0:05:09.840 it's right time now to buy f I G. Front. 0:05:10.400 --> 0:05:12.680 Are you working on six G already? You mentioned it? 0:05:12.720 --> 0:05:17.080 Is it already in the cards? Mainly so I think 0:05:17.120 --> 0:05:20.279 the art of the possible four five G is infinite 0:05:20.320 --> 0:05:23.520 that we think you will probably take several years so 0:05:23.680 --> 0:05:26.640 before you full exploit of the value of I G 0:05:26.800 --> 0:05:31.080 and what I G could bring to people and to enterprises. So, uh, 0:05:31.680 --> 0:05:34.000 we had in the forefront thinking the next technology, but 0:05:34.040 --> 0:05:37.160 we're not totally focused on the point i G and 0:05:37.200 --> 0:05:41.120 then bringing the value of i G to everyone. Masimo 0:05:41.240 --> 0:05:43.799 takes so much for joining us. We appreciate it getting 0:05:43.839 --> 0:05:46.560 the update on all things on the telecom front with 0:05:46.600 --> 0:05:50.400 five G in particular. Massimo Passelli, Senior vice president of 0:05:50.839 --> 0:05:54.760 Global Enterprise for Verizon Business five G. The It's funny 0:05:54.800 --> 0:05:58.440 the telecom companies, they've spent billions of dollars on the spectrum. 0:05:58.720 --> 0:06:03.800 They will spend billions of dollars more on developing more 0:06:03.800 --> 0:06:07.160 of the infrastructure and the technology to support that spectrum. 0:06:07.160 --> 0:06:10.640 And then uh, presumably as they rollout services and so on, 0:06:10.720 --> 0:06:12.640 we will be incentive to go out and buy new 0:06:12.680 --> 0:06:14.600 five G phones in one not so we'll see how 0:06:14.600 --> 0:06:19.960 that plays out over the next several months and years. Now, 0:06:19.960 --> 0:06:23.720 I want to get into the impact of the pandemic 0:06:23.839 --> 0:06:28.839 and while the reopening on travel and e commerce. Adobe 0:06:28.880 --> 0:06:33.160 does that with its Adobe Adobe Digital Economy Index. And 0:06:33.200 --> 0:06:36.160 here to talk about that is the director of Adobe 0:06:36.200 --> 0:06:39.559 Digital Insides, Taylor Shriner Um. Taylor, what kind of action 0:06:39.560 --> 0:06:41.920 are are you seeing right now? Are we looking at it? Uh? 0:06:42.480 --> 0:06:47.600 A lift off so to speak in terms of the airlines. Well, 0:06:47.640 --> 0:06:51.599 broadly speaking, Matt we're seeing a turnaround across the board, 0:06:51.720 --> 0:06:55.239 but we're not out of the words yet. So, for instance, 0:06:55.279 --> 0:06:58.040 we are seeing that bookings are really double what they 0:06:58.040 --> 0:07:00.320 were before. People were starting to get back to needed 0:07:00.680 --> 0:07:03.560 People are showing a strong interest in travel, but if 0:07:03.600 --> 0:07:06.440 you compare today's bookings to what we were seeing in 0:07:06.480 --> 0:07:10.360 March of twenty nineteen, we're still down. So while people 0:07:10.400 --> 0:07:13.440 are eager to travel and they have increasing competence in travel, 0:07:13.920 --> 0:07:17.400 we're not even back to twenty nineteen levels quite yet. Taylor, 0:07:17.440 --> 0:07:20.840 talk to us about some of the regional UH differences 0:07:20.880 --> 0:07:22.680 you may be seeing in your data. You know, Matt 0:07:22.720 --> 0:07:25.920 and I earlier we're talking about how successful it seems that, 0:07:26.360 --> 0:07:28.600 you know, big states like Texas and Florida have been 0:07:28.640 --> 0:07:30.960 reopening ahead of other parts of the region. Are you 0:07:30.960 --> 0:07:36.280 seeing regional differences in terms of travel. We've seen a 0:07:36.360 --> 0:07:39.920 really strong UH bias for its southern and Midwestern states 0:07:39.960 --> 0:07:42.880 being willing to travel today. But on the other hand, 0:07:42.920 --> 0:07:45.720 if you look at the Northeast, where there's been a 0:07:45.800 --> 0:07:47.840 lot of reluctance to travel and they have sort of 0:07:47.920 --> 0:07:51.400 less travel than you would expect on average for the US, 0:07:52.240 --> 0:07:55.200 they have a greater responsiveness to vaccines. So the more 0:07:55.280 --> 0:07:57.600 vaccines are all out, the faster folks in the Northeast 0:07:57.600 --> 0:08:00.600 are willing to travel, either because data themselves are vaccinated 0:08:00.760 --> 0:08:04.600 or because they have greater faith in travel with more 0:08:04.600 --> 0:08:08.920 people vaccinated. So if that's the case, UM, I would 0:08:08.960 --> 0:08:11.960 expect when more people go out, when more people eat 0:08:12.000 --> 0:08:14.360 at restaurants, from, more people take flights, from more people 0:08:14.960 --> 0:08:17.800 hit the shops. Um, fewer people are sitting at home 0:08:17.840 --> 0:08:21.920 still using Amazon and other e commerce sites to get 0:08:21.960 --> 0:08:26.920 their goods. Am I mistaken. Uh, it's a fair assumption. 0:08:26.960 --> 0:08:30.360 But actually we have seen fifty growth year over year 0:08:30.480 --> 0:08:33.800 this last March, So people are really still used to 0:08:34.000 --> 0:08:36.880 making their purchases online and they're not telling us that 0:08:36.960 --> 0:08:39.880 they are showing any signs of going back to a 0:08:39.960 --> 0:08:43.239 pure in person retail world. They're absolutely going to restaurants. 0:08:43.320 --> 0:08:48.080 You can see travel increasing, but we simultaneously see continued 0:08:48.120 --> 0:08:52.360 growth and basic things like grocery shopping online. Uh and well, 0:08:52.480 --> 0:08:56.480 uh we expect that to continue. Frankly, broadly speaking through 0:08:56.520 --> 0:09:00.439 the year. About outside the US tailor, you know when 0:09:00.440 --> 0:09:02.880 we go look at the UK or and mats based 0:09:02.920 --> 0:09:05.640 in Germany, are we seeing similar trends as it relates 0:09:05.679 --> 0:09:10.200 to e commerce. Well, this is the first year that 0:09:10.240 --> 0:09:14.400 Adobe has released our insights on the whole global digital economy, 0:09:14.440 --> 0:09:17.400 or this is the first report rather, and frankly, there's 0:09:17.400 --> 0:09:20.040 some really big numbers out there. Last year, we saw 0:09:20.080 --> 0:09:24.040 about three point five trillion dollars in online commerce, and 0:09:24.080 --> 0:09:26.960 we're seeing that grow over the first quarter at thirty 0:09:27.000 --> 0:09:31.440 eight percent. So we see incredibly strong global e commerce growth. 0:09:32.000 --> 0:09:35.640 And fact, we're predicting four point two trillion dollars UH 0:09:35.720 --> 0:09:38.559 in e commerce over the course of the year, which is, 0:09:38.600 --> 0:09:41.040 you know, bigger than than some major economies you'll see 0:09:41.040 --> 0:09:45.600 in in Europe. Yeah, way bigger, um. But I wonder 0:09:45.600 --> 0:09:48.360 how they compare to the US, I mean e commerce 0:09:48.400 --> 0:09:50.720 in the US versus a e commerce and the EU. 0:09:50.880 --> 0:09:54.960 Are they similar sizes or is the US far ahead 0:09:55.000 --> 0:09:59.080 of what we see here in old Europe? Well, you know, 0:09:59.120 --> 0:10:02.640 e commerce global is really dominated by the United States 0:10:02.920 --> 0:10:06.080 and China in terms of where the overall dollars are 0:10:06.080 --> 0:10:08.800 getting expensed, where the overall money is getting expensed. But 0:10:09.360 --> 0:10:12.360 to your point, we really see UH strong growth in Europe. 0:10:12.600 --> 0:10:16.199 The UK, for instance, saw sixty growth in the first quarter, 0:10:16.600 --> 0:10:21.240 so just stunning frankly, levels of e commerce growth that 0:10:21.320 --> 0:10:23.920 are continuing in Europe, and it's going to be different 0:10:23.920 --> 0:10:27.679 country by country with the varying payment systems and cultural differences. 0:10:27.720 --> 0:10:31.560 But globally we see incredibly strong growth and the US 0:10:31.760 --> 0:10:34.520 is at the moment on par with growth global growth, 0:10:35.040 --> 0:10:36.720 but there are a lot of countries that are going 0:10:36.760 --> 0:10:38.959 to get into this space and start to grow rapidly. 0:10:39.679 --> 0:10:41.400 All right, So, teller, you're based in the Bay Area 0:10:41.400 --> 0:10:45.199 of San Francisco, right, Lucky, that's correct. All right, give 0:10:45.240 --> 0:10:48.199 us a sense of how how that area is kind 0:10:48.200 --> 0:10:51.000 of reopening here. What's the feeling there Again, we think 0:10:51.000 --> 0:10:53.640 about the northeast maybe being a little bit more conservative. 0:10:53.720 --> 0:10:56.760 Texas and Florida very aggressive in the reopening. What's it 0:10:56.840 --> 0:11:01.079 like where you are in California? Uh, well, I can 0:11:01.120 --> 0:11:02.920 just speak for my area. You know, you still see 0:11:02.920 --> 0:11:04.760 a lot of masks, You still see uh, you know, 0:11:05.240 --> 0:11:08.280 a dearth of public transit, but people are out. I 0:11:08.320 --> 0:11:11.600 went to my first museum, uh this last weekend and 0:11:11.679 --> 0:11:14.599 you know, went over to see friends. So the the 0:11:14.840 --> 0:11:19.200 street level commerce is definitely growing and people are think 0:11:19.240 --> 0:11:21.720 you of traveling, looking to travel. Um, you know, one 0:11:21.720 --> 0:11:23.280 of the things we saw in the travel stats is 0:11:23.320 --> 0:11:28.720 that people are booking Thanksgiving and Christmas. Now, uh, that's 0:11:28.720 --> 0:11:31.560 the one area where bookings are above twenty nineteen levels 0:11:31.600 --> 0:11:35.000 and you know, grademic totally in my area. That's that's 0:11:35.040 --> 0:11:37.240 what we see is that people are eager to travel 0:11:37.320 --> 0:11:39.760 and see friends and they're they're confident that by the 0:11:39.800 --> 0:11:43.040 fall that will be possible. Interesting, I'd like to get 0:11:43.040 --> 0:11:46.160 out there. Yeah, it's beautiful out there. West Coast is 0:11:46.160 --> 0:11:51.120 where it's at. Man's all right, Taylor, thanks so much 0:11:51.120 --> 0:11:54.400 for joining us. Taylor Shriner, he's a director of Adobe 0:11:54.520 --> 0:11:58.679 Digital Insights. Uh, there out there Digital Economy Index showing 0:11:58.720 --> 0:12:01.440 some good growth Matt from you know, kind of the 0:12:01.480 --> 0:12:05.200 pre vaccine time frame in this pandemic. But still you 0:12:05.200 --> 0:12:09.160 know below you know, you're looking at airline flights and 0:12:09.360 --> 0:12:14.640 hotels still below from levels. But but in e commerce, um, 0:12:14.760 --> 0:12:17.440 they point out that the e commerce in March of 0:12:17.520 --> 0:12:21.719 this year broke records, adding almost another Black Friday in 0:12:21.840 --> 0:12:24.840 online spending. So it's been huge. Yeah, it's been huge, 0:12:24.840 --> 0:12:26.520 and you know, you talk to the retail folks and 0:12:26.880 --> 0:12:28.920 they don't see that going back the market share that 0:12:29.000 --> 0:12:35.240 e commerce has, it's here to stay. Busy week this 0:12:35.280 --> 0:12:38.320 week for earnings. Also a busy week for economic data. 0:12:38.480 --> 0:12:42.480 Just today we had really strong consumer sentiment numbers come out, 0:12:42.520 --> 0:12:45.560 and that's good news. Tomorrow we have the Fed minutes 0:12:45.600 --> 0:12:48.360 and the press conference. Thursday, we get a GDP report 0:12:48.440 --> 0:12:51.440 for the first quarter. Lots to dig into. Uh, We're 0:12:51.480 --> 0:12:55.000 fortunate to have Marcus Schomer, chief economists at pine Bridge 0:12:55.040 --> 0:12:57.600 Investments joining us. Marcus, I love to start with that 0:12:57.720 --> 0:13:01.080 GDP print that we're going to see. Third, stay, what 0:13:01.160 --> 0:13:03.480 do you expect to see? It should be a phenomenal number. 0:13:03.480 --> 0:13:05.920 And then also for the next quarter as well, how 0:13:05.960 --> 0:13:09.480 are you thinking about that? Oh? Yeah, the numbers look 0:13:09.559 --> 0:13:13.400 really good. For the for the entire summer, the GDP 0:13:13.600 --> 0:13:18.680 number will be somewhere north of six percent probably. Um, 0:13:18.760 --> 0:13:20.599 we still don't know some of the some of the 0:13:20.640 --> 0:13:23.559 more variable parts like trade and inventories could be a 0:13:23.600 --> 0:13:26.880 little bit more negative. But we know that consumer spending, 0:13:26.920 --> 0:13:30.680 for example, is on track for a ninth percent quarter. 0:13:30.880 --> 0:13:34.240 I mean, that's the phenomenal number, and it's likely with 0:13:34.280 --> 0:13:37.520 the with the check stop fully distributed in the first quarter, 0:13:37.559 --> 0:13:39.679 that some of that is spilling into Q two as well, 0:13:39.720 --> 0:13:41.600 and the numbers are probably going to stay like that 0:13:41.960 --> 0:13:45.840 through the summer, so we get consumer spending, well, get 0:13:45.840 --> 0:13:50.959 personal spending in UH income on Friday as well. Right, Um, 0:13:51.000 --> 0:13:52.360 and a lot of people have been talking about the 0:13:52.400 --> 0:13:55.240 savings rate was so strong and there's been so much 0:13:55.360 --> 0:13:57.959 extra at least at the top cash to throw out 0:13:57.960 --> 0:14:00.240 into the system. Is that going to happen? Then? Do 0:14:00.280 --> 0:14:03.440 you expect a you know, um, a damn break in 0:14:03.520 --> 0:14:08.600 terms of spending. Um, well, we've we've seen it already. Right. 0:14:08.679 --> 0:14:12.319 We had a super strong retail sales number in January, 0:14:12.360 --> 0:14:15.280 and the only reason Q one is actually not better 0:14:15.360 --> 0:14:18.280 is because we had this really miserably cold February which 0:14:18.320 --> 0:14:20.600 depressed everything and people couldn't go out and spend it. 0:14:20.640 --> 0:14:23.280 And in parts they came back and with another check 0:14:23.320 --> 0:14:25.960 in that pocket went out on a spending spree again. 0:14:26.000 --> 0:14:29.080 And I assume that, um, the April and May retail 0:14:29.120 --> 0:14:32.200 sales numbers will look really good as well, because you're right, 0:14:32.200 --> 0:14:34.560 it's not just the check itself, but it's also the 0:14:34.600 --> 0:14:38.040 money that's been accumulating over the last literally the last 0:14:38.080 --> 0:14:41.280 twelve months, as people couldn't go on vacation, couldn't couldn't 0:14:41.280 --> 0:14:43.880 go into the stores, and that has built up the 0:14:43.880 --> 0:14:46.520 savings rate. It's not really that people were saving, they 0:14:46.560 --> 0:14:50.000 just couldn't spend. That's a slightly different different way of 0:14:50.040 --> 0:14:53.440 thinking about it. But some of that money will seep 0:14:53.480 --> 0:14:55.840 into the economy over the next couple of months, and 0:14:55.880 --> 0:14:58.240 I think that's why GDP goes will remain strong in 0:14:58.320 --> 0:15:00.840 Q two and probably spending it to you three as well. 0:15:01.160 --> 0:15:04.400 Question is what happens after that? Yeah, that's kind of 0:15:04.400 --> 0:15:06.560 where I wanted to go here. I mean, we're seeing 0:15:06.560 --> 0:15:10.680 a kind of a wide range of GDP forecasts out 0:15:10.680 --> 0:15:14.160 there on the street. For one, what's your call for 0:15:14.280 --> 0:15:17.000 the year of one, and then maybe also for next 0:15:17.040 --> 0:15:21.480 year as well. Um, for this year we're we're around 0:15:21.480 --> 0:15:24.320 six percent, and next year we see a slowdown back 0:15:24.360 --> 0:15:26.600 to something around three and a half percent, a little 0:15:26.640 --> 0:15:29.280 bit of low consensus next year. I think the near 0:15:29.360 --> 0:15:34.120 term story is fairly clear, and the stimulus push is 0:15:34.160 --> 0:15:36.640 so strong that there's probably not a lot of disagreement 0:15:36.640 --> 0:15:39.600 where we where we are right now. But the disagreements 0:15:39.600 --> 0:15:41.520 the more interesting where we will be a year from now, 0:15:41.560 --> 0:15:45.640 because we're seeing more risks arising sort of on the horizon. 0:15:45.720 --> 0:15:48.600 The pandemic is not over yet in the world. We 0:15:48.640 --> 0:15:52.400 won't see really a resumption of global growth for a while, 0:15:53.280 --> 0:15:55.400 the FETE is given up on the bond market and 0:15:55.440 --> 0:15:58.080 allowing bond to rise, and that takes away from the 0:15:58.120 --> 0:16:01.960 stimulus phisical policy is not talking about top fights and 0:16:02.040 --> 0:16:05.280 not just spending increases all the time. And then we 0:16:05.320 --> 0:16:08.200 have some political risks coming with the midterms next year. 0:16:09.240 --> 0:16:13.720 We have maybe another spending package coming soon from the 0:16:13.720 --> 0:16:22.160 Biden administration. How important is it? Do we need it? No? No, 0:16:22.880 --> 0:16:25.040 we didn't even need the last one. I mean, we're 0:16:25.640 --> 0:16:29.160 way about what was necessarily close to the output gap 0:16:29.200 --> 0:16:32.840 and were so we're so in in such undiscovered country 0:16:32.960 --> 0:16:34.920 right now that we have we have no idea what 0:16:34.960 --> 0:16:37.520 the side effects of all this will be. For example, 0:16:37.840 --> 0:16:40.200 at some stage when there will be you know next year, 0:16:40.200 --> 0:16:42.400 well there won't be those spending packages. There will be 0:16:42.760 --> 0:16:47.200 a huge decline in the way fiscal policy is boosting 0:16:47.240 --> 0:16:50.280 GDP growth, which could which could actually lead to much 0:16:50.360 --> 0:16:52.840 much lower goals that everybody is expecting, not because the 0:16:52.840 --> 0:16:56.760 economy is weak, but because the comparison from the stibulous 0:16:56.840 --> 0:17:02.760 fuel to the maybe less stimulus fuel. Two And certainly, 0:17:03.160 --> 0:17:05.480 if the Republicans win the mid terms, there will be 0:17:05.480 --> 0:17:09.359 no stimus in twenty three, that that change from twenty 0:17:09.480 --> 0:17:13.520 to twenty three could be rather abrupt and could cause 0:17:13.600 --> 0:17:17.520 a lot of micro volatility and also some confusion. Some 0:17:17.560 --> 0:17:20.480 people may fear the economy is already two week recession 0:17:20.520 --> 0:17:24.919 talk may start again. All this, all this access that 0:17:24.960 --> 0:17:27.920 we're seeing right now is creating a lot of volatility 0:17:28.080 --> 0:17:31.200 in the micro numbers, but also people will create volatility 0:17:31.200 --> 0:17:35.359 in the expectations for the future. Okay, Marcus, I'd love 0:17:35.400 --> 0:17:37.280 to just switch gears a little bit and talk about Europe. 0:17:37.720 --> 0:17:41.600 You know, where Matt is based in Germany, much tougher 0:17:41.880 --> 0:17:46.760 vaccine metrics. They're much you know, perhaps not the um 0:17:47.119 --> 0:17:49.359 the stimulus having the same impact as having here in 0:17:49.400 --> 0:17:52.280 the US. What's your view of Europe and the economic 0:17:52.320 --> 0:17:58.520 recovery there. Well, I mean, right, the current situation that 0:17:58.680 --> 0:18:00.320 does not look good. And you know, if look at 0:18:00.320 --> 0:18:03.479 the p M I in disease that the beautifully tracked 0:18:03.480 --> 0:18:06.800 the difference in the US where services are surging now 0:18:07.440 --> 0:18:10.640 in Europe where services are stalled. UK s in the middle. 0:18:10.680 --> 0:18:14.160 You can see once you start vaccinating enough of your population, 0:18:14.600 --> 0:18:16.960 you can start to reopen and services come back in 0:18:16.960 --> 0:18:19.840 the same way as they're already back here in the US. 0:18:20.440 --> 0:18:23.360 You know, the vaccinations are taking up in Europe as well. 0:18:23.400 --> 0:18:26.960 They're exploding right now. The supply is exploding. So given 0:18:27.000 --> 0:18:30.359 give them another months, given another six weeks, and they 0:18:30.359 --> 0:18:32.040 will be on the same track that we are on. 0:18:32.119 --> 0:18:34.480 So it's just a bit of a delay. The issue 0:18:34.480 --> 0:18:37.560 in Europe, in my mind, is more um, there's a 0:18:37.640 --> 0:18:42.560 there's a very different way of policy stimulus. They don't 0:18:42.600 --> 0:18:46.359 have the checks, they don't have the big packages, and 0:18:47.200 --> 0:18:49.040 they have a lot of political groups coming up. In 0:18:49.080 --> 0:18:52.640 the next couple of months, we have elections in Germany 0:18:52.640 --> 0:18:55.359 and September, and the outcome of that is very unclear. 0:18:55.560 --> 0:18:58.320 And then something I've been worried about four years is 0:18:58.359 --> 0:19:00.679 in April of next year, twelve months from now, we 0:19:00.680 --> 0:19:04.360 have elections in France and that could be that could 0:19:04.400 --> 0:19:08.760 be a real nail binder if if the right wing 0:19:09.000 --> 0:19:12.960 candidate could give current president markrom you know, run for 0:19:13.119 --> 0:19:20.080 his money. Marcus, where is oys Kirschen West? Casan is 0:19:20.520 --> 0:19:24.760 very close to Cologne, so um, very much in the 0:19:24.840 --> 0:19:27.679 western part of Germany. I'm just stalking Marcus here on 0:19:27.680 --> 0:19:30.560 the Bloomberg he was born. I'm sitting in Berlin and 0:19:30.600 --> 0:19:33.760 I'm a big germanophile. But I'd say that has hurt 0:19:33.920 --> 0:19:37.000 that the lack of vaccines here has hurt me. And 0:19:37.760 --> 0:19:40.200 I will be interested to see if there's any scarring 0:19:40.280 --> 0:19:44.280 from that economically and also um to see what happens 0:19:44.320 --> 0:19:48.399 if the Greens actually take the cake in September, because 0:19:48.880 --> 0:19:51.760 they've really run up in the polls, even ahead of 0:19:51.800 --> 0:19:53.520 the C d U, C s U and our latest 0:19:53.560 --> 0:19:56.560 aggregate poll, which is totally shocking. We gotta get you 0:19:56.560 --> 0:19:58.359 back on, Marcus. It was a pleasure talking to you. 0:19:58.400 --> 0:20:00.200 Thanks for spending some time with us. Marcus show Er, 0:20:00.560 --> 0:20:04.560 his chief economist at pine Bridge Investments. UM, and it 0:20:04.600 --> 0:20:07.159 was great to hear from someone who isn't just you know, 0:20:07.480 --> 0:20:10.240 your typical red blooded Americans, someone who has a little 0:20:10.240 --> 0:20:13.360 bit more interest in what's going on here in Germany. 0:20:13.400 --> 0:20:21.000 This is Bloomberg Time check in with Bloomberg Opinion were 0:20:21.040 --> 0:20:25.119 joined by opinion columnist Mark Gilbert, who's talking about the 0:20:25.160 --> 0:20:28.639 many reasons bankers love hedge funds, and Mark, I guess 0:20:28.640 --> 0:20:32.040 the main reason is the main reasons are you know, 0:20:32.280 --> 0:20:36.960 millions or billions of dollars and fees. Right, money, It's 0:20:37.000 --> 0:20:39.800 all about money, It's all about the green backs, and 0:20:39.880 --> 0:20:43.879 hedge funds need the services that the investment banks can provide. 0:20:43.960 --> 0:20:46.120 They need them to lend the money into so they 0:20:46.119 --> 0:20:49.439 can leverage their bets. They need to borrow stocks often 0:20:49.480 --> 0:20:51.840 when they go short in the market. There's a lot 0:20:51.880 --> 0:20:54.680 of specialist prime services that the investment banks provide to 0:20:54.720 --> 0:20:57.080 the hedge punk community, and they had a lot of 0:20:57.119 --> 0:21:01.240 money for it, all right, Mark, I u a full disclosure. 0:21:01.240 --> 0:21:02.880 I used to work at Credit Swiss back on those 0:21:02.880 --> 0:21:06.119 Credit Swiss First Boston, and I know what a huge 0:21:06.200 --> 0:21:08.760 business their prime brokerage businesses for them, as it is 0:21:08.800 --> 0:21:11.280 for other leading Wall Street firms. So I was interested 0:21:11.280 --> 0:21:13.960 to see the Credit Swiss is trimming it's prime broker's 0:21:14.040 --> 0:21:18.240 exposure here post Arcticos. To me, this just feels like 0:21:18.520 --> 0:21:20.359 a knee jerk reaction and they're going to be back 0:21:20.800 --> 0:21:22.760 at some point, not in that arcti distant future. What 0:21:22.800 --> 0:21:23.800 do you what do you make of what's going on 0:21:23.840 --> 0:21:26.680 in Credit Swiss. Well, they've said that they're going to 0:21:26.760 --> 0:21:29.879 trim by thirty five billion dollars, which is about a third, 0:21:29.920 --> 0:21:32.800 So that shows you they've got a hundred billion dollars 0:21:32.800 --> 0:21:35.320 out there. To the hedge fund community. There are there 0:21:35.320 --> 0:21:40.240 are top five prime brokerage firm um. But you're probably right. 0:21:40.280 --> 0:21:42.560 You know, once once they get over the shock of 0:21:42.720 --> 0:21:46.240 losing this SMAs money to Arcas, they'll probably be back 0:21:46.280 --> 0:21:49.200 into that business because it's so lucrative. There's so much 0:21:49.240 --> 0:21:51.200 money to be made in it. You know, last year 0:21:51.280 --> 0:21:54.320 the revenue you could make from providing new services to 0:21:54.359 --> 0:21:57.840 hedge funds and family officers was more than thirty billion dollars. 0:21:57.880 --> 0:22:01.240 It's grown at an average rate about eight percent years. 0:22:02.240 --> 0:22:04.639 And given how hard it is to generate out for 0:22:04.680 --> 0:22:07.200 given how hard it is for headge funds to generate 0:22:07.240 --> 0:22:10.200 the returns they promised to investors in the current environments, 0:22:10.359 --> 0:22:13.680 their demand for leverage is only going to increase, and 0:22:13.760 --> 0:22:16.280 so the money you can make from providing those services 0:22:16.320 --> 0:22:19.479 as an investment bank is only going to head off. Yes, 0:22:19.560 --> 0:22:23.000 so Arcades and Greensville, right, they had a double whammy. 0:22:23.119 --> 0:22:26.359 And I'm wondering if hedge funds out there, you know, 0:22:26.520 --> 0:22:30.440 if you're a woman or or a dude who has 0:22:30.480 --> 0:22:33.920 a big, risky trade and you need a prime brokerage services, 0:22:34.480 --> 0:22:36.879 you might not pick up the phone and call Credit Sweet, right, 0:22:37.400 --> 0:22:41.120 they might find it difficult to get that business back well. 0:22:41.200 --> 0:22:43.600 To be honest, half of the market is dominated by 0:22:43.640 --> 0:22:47.439 three firms Golden Sacks, Morgan Stanley and JP Morgan Um. 0:22:47.560 --> 0:22:50.280 And if you're a hedge fund, even especially if you're 0:22:50.280 --> 0:22:53.240 a bigger hedge funds, you probably have between three and 0:22:53.400 --> 0:22:56.399 five prime brokers who you use for your business. You 0:22:56.400 --> 0:22:59.360 want to spread the risks around yourself as a hedge fund, 0:22:59.680 --> 0:23:02.600 so risks are not just one way. Plus you need 0:23:02.640 --> 0:23:04.680