1 00:00:02,640 --> 00:00:05,320 Speaker 1: Welcome to the Bloomberg Penel Podcast. I'm Paul swing you. 2 00:00:05,360 --> 00:00:07,680 Speaker 1: Along with my co host Lisa Brahma Waits. Each day 3 00:00:07,720 --> 00:00:10,240 Speaker 1: we bring you the most noteworthy and useful interviews for 4 00:00:10,280 --> 00:00:12,520 Speaker 1: you and your money. Whether at the grocery store or 5 00:00:12,560 --> 00:00:15,480 Speaker 1: the trading floor, find a Bloomberg Penl podcast on Apple 6 00:00:15,520 --> 00:00:17,959 Speaker 1: Podcast or wherever you listen to podcasts, as well as 7 00:00:17,960 --> 00:00:23,239 Speaker 1: at Bloomberg dot com. Oil markets these days have been 8 00:00:23,400 --> 00:00:26,079 Speaker 1: a story of push and pull. We have on one 9 00:00:26,120 --> 00:00:29,640 Speaker 1: side the possible supply disruptions coming from the Iranian us 10 00:00:30,040 --> 00:00:34,000 Speaker 1: UH disputed over the nuclear development. You have the situation 11 00:00:34,000 --> 00:00:37,120 Speaker 1: in Libya. On the other side, you have the prospect 12 00:00:37,159 --> 00:00:40,479 Speaker 1: for even slower global growth in the face of rising 13 00:00:40,520 --> 00:00:43,960 Speaker 1: trade tensions. Here to help us understand why it is 14 00:00:44,000 --> 00:00:46,639 Speaker 1: that the slowing global growth is what's winning out right now, 15 00:00:46,640 --> 00:00:49,800 Speaker 1: with prices now at their lowest since early March, is 16 00:00:49,880 --> 00:00:54,000 Speaker 1: Dr Ellen Walled, President of Transversal Consulting, a nonresident Senior 17 00:00:54,040 --> 00:00:57,560 Speaker 1: Fellow at the Atlantic Council's Global Energy Center, as well 18 00:00:57,600 --> 00:01:00,360 Speaker 1: as a contributor to Bloomberg Opinion, and she is in 19 00:01:00,520 --> 00:01:03,920 Speaker 1: studio today in our Bloomberg Atta Active Broker Studios. So 20 00:01:03,960 --> 00:01:05,880 Speaker 1: thank you so much for being here. So let's start 21 00:01:05,880 --> 00:01:09,399 Speaker 1: with that. Why is it that the global slowdown is 22 00:01:09,440 --> 00:01:12,680 Speaker 1: the story that's taking pre eminence over this other, very 23 00:01:12,680 --> 00:01:15,400 Speaker 1: real idea of a supply disruption. I think the big 24 00:01:15,440 --> 00:01:19,160 Speaker 1: reason here is that a lot of the news and 25 00:01:19,240 --> 00:01:22,240 Speaker 1: the headlines are really all about the global slowdown. They're 26 00:01:22,280 --> 00:01:25,120 Speaker 1: all about every every other day we get a new 27 00:01:25,360 --> 00:01:29,720 Speaker 1: headline of another economic indicator showing that global growth is 28 00:01:29,760 --> 00:01:33,040 Speaker 1: slowing down. Economic growth is slowing down, trade tensions are 29 00:01:33,400 --> 00:01:36,600 Speaker 1: making everything worse. And then meanwhile, on the other side, 30 00:01:36,640 --> 00:01:42,759 Speaker 1: we're hearing that Iranian exports are significantly lower, Thanezuela isn't 31 00:01:42,760 --> 00:01:46,000 Speaker 1: exporting anywhere old to the United States. We've got problems 32 00:01:46,040 --> 00:01:49,200 Speaker 1: in Russia, I mean real serious issues with this pipeline 33 00:01:49,200 --> 00:01:53,720 Speaker 1: that have really dampened down Russian oil production. And yet 34 00:01:53,760 --> 00:01:56,920 Speaker 1: at the same time, everything is just it's all the 35 00:01:56,960 --> 00:02:01,040 Speaker 1: demand story. So we've got definitely a supply crunch, and 36 00:02:01,120 --> 00:02:04,800 Speaker 1: yet we're seeing markets they're only paying attention to demand. 37 00:02:05,200 --> 00:02:07,919 Speaker 1: Where will if where will we see it in the data? 38 00:02:08,080 --> 00:02:11,000 Speaker 1: The supply issue that you're talking about, well, we're seeing 39 00:02:11,000 --> 00:02:13,680 Speaker 1: it right now. First of all, looking at what's happening 40 00:02:13,680 --> 00:02:16,880 Speaker 1: in Iran is keeping a really close eye on this 41 00:02:17,280 --> 00:02:21,440 Speaker 1: because exports really seem to cut off right at the 42 00:02:21,480 --> 00:02:24,360 Speaker 1: beginning of May. But now we're actually seeing some tankers 43 00:02:24,360 --> 00:02:28,280 Speaker 1: coming up into Iranian ports filling with oil, keeping a 44 00:02:28,440 --> 00:02:30,639 Speaker 1: very close eye on them. We do know that Iran 45 00:02:30,720 --> 00:02:34,480 Speaker 1: has exported about three million barrels of oil to Syria, 46 00:02:34,639 --> 00:02:36,959 Speaker 1: believe it or not, and that data comes from Tanker 47 00:02:37,000 --> 00:02:40,600 Speaker 1: Trackers dot Com. And it seems like they're basically using 48 00:02:40,600 --> 00:02:43,440 Speaker 1: Syria as a holding ground for their oil because they 49 00:02:43,560 --> 00:02:45,840 Speaker 1: filled up all their other storage containers and that oil 50 00:02:45,880 --> 00:02:49,359 Speaker 1: has to go somewhere. Uh, And so we needed we're 51 00:02:49,400 --> 00:02:51,720 Speaker 1: waiting basically on data to show is this oil going 52 00:02:51,760 --> 00:02:54,799 Speaker 1: to go to China and is it going to enhance 53 00:02:54,960 --> 00:02:58,160 Speaker 1: and really inflate the tensions that are already going on 54 00:02:58,240 --> 00:03:01,120 Speaker 1: in that region. That's really interest saying actually and raises 55 00:03:01,160 --> 00:03:03,680 Speaker 1: a whole other spectrum of conflict that I hadn't worried about, 56 00:03:03,720 --> 00:03:05,840 Speaker 1: but I will start to worry about now. I guess 57 00:03:05,840 --> 00:03:07,480 Speaker 1: that one question I have is do you think that 58 00:03:07,560 --> 00:03:10,519 Speaker 1: markets are wrong, that they're paying attention to the wrong thing, 59 00:03:10,680 --> 00:03:14,200 Speaker 1: and that the potential supply disruptions really are perhaps the 60 00:03:14,240 --> 00:03:17,880 Speaker 1: most dominant of these two factors, I think if we 61 00:03:17,880 --> 00:03:22,000 Speaker 1: weren't seeing these constant headlines and fears about demand, we 62 00:03:22,120 --> 00:03:26,640 Speaker 1: definitely see oil prices going up now because of of 63 00:03:26,680 --> 00:03:29,400 Speaker 1: what we're seeing in terms of these supply issues. We're 64 00:03:29,440 --> 00:03:31,640 Speaker 1: also it's not sure. I mean, it does look like 65 00:03:31,680 --> 00:03:35,119 Speaker 1: OPEC wants to rule over its supply reduction agreement. It's 66 00:03:35,120 --> 00:03:37,920 Speaker 1: not sure, but it does. It does look like that, 67 00:03:37,960 --> 00:03:41,200 Speaker 1: and that would normally send send prices up. So I 68 00:03:41,240 --> 00:03:44,000 Speaker 1: do think that that we are seeing some some issues there, 69 00:03:44,400 --> 00:03:48,680 Speaker 1: and um, this obsession with demand and with economic flu 70 00:03:48,760 --> 00:03:51,840 Speaker 1: down is really just keeping prices down. So you mentioned 71 00:03:51,920 --> 00:03:54,040 Speaker 1: Russia talk to us about that. I understood there was 72 00:03:54,080 --> 00:03:56,840 Speaker 1: they had some issues with their pipelines, some contaminated oil. 73 00:03:57,200 --> 00:03:59,560 Speaker 1: How severe is it and how quickly can they fix 74 00:03:59,600 --> 00:04:01,720 Speaker 1: it and get a ramped back up. Well, it's actually 75 00:04:01,760 --> 00:04:04,520 Speaker 1: a lot more severe than we were led to believe initially. 76 00:04:05,000 --> 00:04:07,480 Speaker 1: When we first heard about this, it was in April. 77 00:04:07,840 --> 00:04:11,640 Speaker 1: There were some refineries in Eastern Europe that were reporting 78 00:04:11,880 --> 00:04:15,119 Speaker 1: that they were receiving contaminated oil and uh, they really 79 00:04:15,160 --> 00:04:18,080 Speaker 1: it's very very bad to put this in their refinery equipment, 80 00:04:18,120 --> 00:04:21,760 Speaker 1: so they really can't process that oil and they said, oh, 81 00:04:21,800 --> 00:04:24,200 Speaker 1: two weeks, it'll be fixed. Well, it turns out that, 82 00:04:24,440 --> 00:04:27,120 Speaker 1: you know, now we're looking at well into June before 83 00:04:27,160 --> 00:04:30,040 Speaker 1: they completely fixed this problem because they have to basically 84 00:04:30,040 --> 00:04:33,880 Speaker 1: clean out the entire pipeline. Meanwhile, Russia has actually cut 85 00:04:33,920 --> 00:04:36,680 Speaker 1: back on its production. Believe it or not, in Russia 86 00:04:36,760 --> 00:04:40,200 Speaker 1: was the one of the few countries in this Opeque 87 00:04:40,320 --> 00:04:44,800 Speaker 1: agreement that hadn't cut to its promised amounts. Now they're 88 00:04:44,839 --> 00:04:48,520 Speaker 1: actually below the quota that they've agreed upon just because 89 00:04:48,600 --> 00:04:51,400 Speaker 1: of this contamination issue, and so we're definitely going to 90 00:04:51,480 --> 00:04:54,200 Speaker 1: see it go on into June. It's possible, could it 91 00:04:54,240 --> 00:04:59,560 Speaker 1: could effect supplies even after June. What are you expecting 92 00:04:59,560 --> 00:05:02,680 Speaker 1: about the PECK meetings? People have speculated that they will 93 00:05:02,720 --> 00:05:06,120 Speaker 1: continue with the output cuts that have been planned, despite 94 00:05:06,240 --> 00:05:09,599 Speaker 1: the potential disruptions to supply. Is that you're expecting, I'm 95 00:05:09,640 --> 00:05:12,479 Speaker 1: that's that's the expectation, is that they will roll over 96 00:05:12,720 --> 00:05:15,159 Speaker 1: basically the the agreement as is. Although today we did 97 00:05:15,160 --> 00:05:19,520 Speaker 1: hear news that Russia is looking for increased flexibility. It's 98 00:05:19,520 --> 00:05:21,960 Speaker 1: not not entirely clear what that means, but that could 99 00:05:21,960 --> 00:05:24,680 Speaker 1: definitely throw a wrench in their plans. Combined with the 100 00:05:24,680 --> 00:05:27,000 Speaker 1: fact that Russia is also looking for flexibility in terms 101 00:05:27,040 --> 00:05:29,880 Speaker 1: of scheduling. They want to move the date of the 102 00:05:29,920 --> 00:05:31,800 Speaker 1: OPAQU meeting, which is now for the end of June. 103 00:05:31,839 --> 00:05:34,600 Speaker 1: They want to move it to July because the Russian 104 00:05:34,600 --> 00:05:37,400 Speaker 1: Oil minister can't make it in June. And this is 105 00:05:37,440 --> 00:05:41,599 Speaker 1: causing a big consternation amongst the opaque countries because they 106 00:05:41,640 --> 00:05:44,320 Speaker 1: they see it as this is their OPEC meeting. Russia 107 00:05:44,360 --> 00:05:46,520 Speaker 1: is not even a member. Why should they move the 108 00:05:46,600 --> 00:05:48,960 Speaker 1: date of their meeting for this country that's not even 109 00:05:49,240 --> 00:05:51,240 Speaker 1: part of OPEC. And I think it's exposing some of 110 00:05:51,279 --> 00:05:54,360 Speaker 1: the larger cracks in OPEC that have to do with 111 00:05:54,560 --> 00:05:56,720 Speaker 1: the fact that they've basically kind of sold their soul 112 00:05:56,800 --> 00:05:58,960 Speaker 1: to the Russians. He can't make it, what's he gonna 113 00:05:58,960 --> 00:06:04,440 Speaker 1: be doing? Going on the case? I has the energy guy, 114 00:06:04,800 --> 00:06:08,440 Speaker 1: what's what? What's more pressing? What's I learned that he 115 00:06:08,760 --> 00:06:10,440 Speaker 1: can't make the meeting, But then we also learned that 116 00:06:10,480 --> 00:06:13,680 Speaker 1: they're storing oil in Syria. So Dr ellen Wall, thank 117 00:06:13,720 --> 00:06:15,479 Speaker 1: you so much. You always have great information on the 118 00:06:15,480 --> 00:06:18,560 Speaker 1: global oil markets. We appreciate you coming in. Dr Walden's 119 00:06:18,600 --> 00:06:22,320 Speaker 1: president of Transversal Consulting also nonresident Senior Fellow at the 120 00:06:22,320 --> 00:06:25,760 Speaker 1: Atlantic Council's Global Energy Center, and of course a Bloomber 121 00:06:25,960 --> 00:06:42,800 Speaker 1: opinion contributor. Well amid rising trade tensions, the equity markets 122 00:06:42,839 --> 00:06:45,360 Speaker 1: are off approximately five percent from recent highs. So the 123 00:06:45,440 --> 00:06:48,039 Speaker 1: question many investors are asking is whether whether this is 124 00:06:48,080 --> 00:06:50,920 Speaker 1: a healthy dip or something more. To help us to 125 00:06:50,920 --> 00:06:53,080 Speaker 1: answer that question, we welcome our next guest, David Diets, 126 00:06:53,279 --> 00:06:56,760 Speaker 1: David's founder, president and chief investment strategists of Point View 127 00:06:56,839 --> 00:07:01,320 Speaker 1: Wealth Management, located in the happening metropolis of a New Jersey. David, 128 00:07:01,360 --> 00:07:04,160 Speaker 1: thanks so much for joining us. So again, let's just 129 00:07:04,160 --> 00:07:07,040 Speaker 1: start real basic here. Is this a healthy pullback in 130 00:07:07,080 --> 00:07:09,359 Speaker 1: the market or is it something more fundamental than investors 131 00:07:09,360 --> 00:07:11,600 Speaker 1: need to be concerned about. Well, truth be told, no 132 00:07:11,640 --> 00:07:14,080 Speaker 1: one knows for sure, but certainly this is the type 133 00:07:14,080 --> 00:07:18,160 Speaker 1: of pullback which we see every single year, often multiple times. 134 00:07:18,200 --> 00:07:20,640 Speaker 1: I mean to put this into context, We're up about 135 00:07:20,680 --> 00:07:24,000 Speaker 1: thirteen pcent year to date. We're down five percent this month, 136 00:07:24,000 --> 00:07:27,679 Speaker 1: but that's five percent off all time highs. So although 137 00:07:28,200 --> 00:07:31,720 Speaker 1: everything bears watching, this is not a crisis by by 138 00:07:31,720 --> 00:07:34,160 Speaker 1: a long shot. Let's take a listen to what Morgan 139 00:07:34,200 --> 00:07:36,160 Speaker 1: Stanley is James Gorman had to say about it. He 140 00:07:36,200 --> 00:07:39,880 Speaker 1: was speaking with Blueberg's Tom mackenzie, and honestly, he was 141 00:07:39,920 --> 00:07:43,800 Speaker 1: talking about how the risk is is the equity markets 142 00:07:43,840 --> 00:07:48,240 Speaker 1: have more downside than upside, but that the magnitude is 143 00:07:48,280 --> 00:07:53,080 Speaker 1: not so big. Would you agree, well, um, you know, certainly, 144 00:07:53,320 --> 00:07:56,800 Speaker 1: I do think that further risk to the downside, of course, 145 00:07:56,960 --> 00:07:59,480 Speaker 1: but you know, let's put into context here. I think 146 00:08:00,080 --> 00:08:02,560 Speaker 1: three key things are driving this market right now. One 147 00:08:02,680 --> 00:08:05,560 Speaker 1: is a very strong economy. We just got an affirmation 148 00:08:05,640 --> 00:08:08,880 Speaker 1: basically of a three print on US GDP for the 149 00:08:08,880 --> 00:08:11,840 Speaker 1: first quarter. We've got the lowest unemployment since the Vietnam 150 00:08:11,880 --> 00:08:14,720 Speaker 1: War era. We've got super low interest rates, which makes 151 00:08:14,720 --> 00:08:17,960 Speaker 1: affordability for house building capital expenisher is great. What's the 152 00:08:17,960 --> 00:08:20,800 Speaker 1: big problem, of course, is the trade talks with China. 153 00:08:21,280 --> 00:08:23,880 Speaker 1: We don't know. Since that tweet and May five, everything 154 00:08:23,920 --> 00:08:26,320 Speaker 1: starts to unravel. But if one tweet can undo it, 155 00:08:26,400 --> 00:08:30,480 Speaker 1: quite frankly, another queek could put this um put this 156 00:08:30,600 --> 00:08:34,280 Speaker 1: back together again. So you know, we think one should 157 00:08:34,320 --> 00:08:37,480 Speaker 1: be selectively still buying in this market. What are we 158 00:08:37,600 --> 00:08:40,559 Speaker 1: buying selectively in this market? Then? You know, I would 159 00:08:40,559 --> 00:08:44,240 Speaker 1: say two sectors. One is generally tech stocks, because I 160 00:08:44,320 --> 00:08:48,440 Speaker 1: do think that there are secular, not just cyclical tail 161 00:08:48,480 --> 00:08:52,400 Speaker 1: winds behind this sector where it's almost imperative for banks 162 00:08:52,520 --> 00:08:55,480 Speaker 1: everyone in this economy to get the latest and greatest 163 00:08:55,520 --> 00:08:58,880 Speaker 1: to keep up with productivity and be competitive. Second, of course, 164 00:08:58,920 --> 00:09:02,280 Speaker 1: I think with the before you move on from tech, 165 00:09:02,400 --> 00:09:04,480 Speaker 1: because everybody wants to be a tech company right now, 166 00:09:04,520 --> 00:09:07,160 Speaker 1: and everybody calls themselves a tech company and their tech 167 00:09:07,200 --> 00:09:11,080 Speaker 1: areas that are doing well in tech areas uber that aren't. 168 00:09:11,360 --> 00:09:13,480 Speaker 1: So I'm just wondering, what are you talking about when 169 00:09:13,520 --> 00:09:17,880 Speaker 1: you're talking about buying tech. Well, certainly you want selectivity. Um, 170 00:09:18,160 --> 00:09:22,080 Speaker 1: there are many many tech names which are short on earnings, 171 00:09:22,280 --> 00:09:25,640 Speaker 1: high evaluation, and we would we would be steering clearer 172 00:09:25,720 --> 00:09:29,079 Speaker 1: that the one we'd be setting today would be Intel. Um. 173 00:09:29,840 --> 00:09:34,520 Speaker 1: Why Intel? Because Intel is like the world's largest microprocessor manufacturer. 174 00:09:34,800 --> 00:09:37,160 Speaker 1: And now that we have artificial intelligence, now that we 175 00:09:37,160 --> 00:09:38,960 Speaker 1: have the Internet of Things, now that we're soon going 176 00:09:39,000 --> 00:09:42,720 Speaker 1: to have autonomous driving, microprocessors are going everywhere. They're the 177 00:09:42,760 --> 00:09:46,120 Speaker 1: company that's best position to handle all that. Meanwhile, you 178 00:09:46,120 --> 00:09:48,880 Speaker 1: have evaluation that you can stomach. Is trading at about 179 00:09:48,880 --> 00:09:52,600 Speaker 1: ten times earnings, it's about forty five. That's down from sixties, 180 00:09:52,640 --> 00:09:56,360 Speaker 1: so you have almost pull back. This is a great 181 00:09:56,520 --> 00:09:58,960 Speaker 1: entry point for these long term trends. So one of 182 00:09:58,960 --> 00:10:01,280 Speaker 1: the names that and now you've mentioned in the past 183 00:10:01,880 --> 00:10:05,160 Speaker 1: is Wells Fargo, and it's in a sector that, uh, 184 00:10:05,240 --> 00:10:07,600 Speaker 1: you know, I think investors are very uncertain about number 185 00:10:07,600 --> 00:10:09,360 Speaker 1: one in terms of the big global financials, and then 186 00:10:09,440 --> 00:10:13,760 Speaker 1: number two it's got some companies specific issues, reputational issues, 187 00:10:13,800 --> 00:10:18,400 Speaker 1: management issues. What makes you uh bullish on Wells Fargo. Well, 188 00:10:18,520 --> 00:10:23,160 Speaker 1: let's let's start with the macro's. Financials are the sector 189 00:10:23,320 --> 00:10:27,080 Speaker 1: that is always poised to do better and never seems to. 190 00:10:27,440 --> 00:10:29,320 Speaker 1: And I think one of the big culprits right now 191 00:10:29,480 --> 00:10:32,800 Speaker 1: is very low interest rates. Now, um, of course we're 192 00:10:32,840 --> 00:10:35,440 Speaker 1: seeing the interest rates at the lowest points since fall 193 00:10:35,520 --> 00:10:39,040 Speaker 1: of two thousand and seventeen. My guess is, with just 194 00:10:39,120 --> 00:10:41,760 Speaker 1: a little bit of constructive progress on China, those interest 195 00:10:41,840 --> 00:10:43,520 Speaker 1: rates are going to move back up. We're seeing some 196 00:10:43,720 --> 00:10:45,959 Speaker 1: movement in the right direction today and that's going to 197 00:10:46,080 --> 00:10:49,679 Speaker 1: improve net interest margins. So financials very cheap. Now, if 198 00:10:49,720 --> 00:10:52,120 Speaker 1: we get just a little bit more of a net 199 00:10:52,160 --> 00:10:54,680 Speaker 1: interest margin, I think banks are gonna do well. Now, 200 00:10:54,679 --> 00:10:57,320 Speaker 1: why Wells Fargo? So there's a bad news and a 201 00:10:57,360 --> 00:11:00,960 Speaker 1: good news. The good news is that is probably the 202 00:11:01,000 --> 00:11:05,320 Speaker 1: best franchise in my view in America today. It's coast 203 00:11:05,360 --> 00:11:09,080 Speaker 1: to coast. It's focusing on that middle market. Uh Lending 204 00:11:09,320 --> 00:11:12,560 Speaker 1: is focusing on retail banking. It had one of the 205 00:11:12,679 --> 00:11:16,480 Speaker 1: largest share of those sticky f d I c ensured 206 00:11:16,600 --> 00:11:19,800 Speaker 1: low cost deposits that do not move, and they've steered 207 00:11:19,840 --> 00:11:22,600 Speaker 1: clear the more volatile capital markets. So that's the good news. 208 00:11:22,600 --> 00:11:25,320 Speaker 1: The bad news, of course, is they are basically without 209 00:11:25,320 --> 00:11:28,080 Speaker 1: a leader. They have an interim uh corporate lawyer as 210 00:11:28,120 --> 00:11:31,280 Speaker 1: a leader. Um Jamie Diamond had some very negative comments 211 00:11:31,400 --> 00:11:33,440 Speaker 1: about that just a couple of days ago. He happens 212 00:11:33,480 --> 00:11:36,120 Speaker 1: to be a competitor, and uh so, I would I 213 00:11:36,120 --> 00:11:39,880 Speaker 1: wouldn't expect anything less. Um So, I think if you 214 00:11:39,960 --> 00:11:44,360 Speaker 1: get a well known, prestigious someone from the outside coming 215 00:11:44,400 --> 00:11:46,640 Speaker 1: in who sets the right tone, I think you can 216 00:11:46,640 --> 00:11:49,840 Speaker 1: get a significant pop in that stock. And again, while 217 00:11:49,840 --> 00:11:52,079 Speaker 1: you're waiting, have a close to four percent dividend on 218 00:11:52,120 --> 00:11:56,400 Speaker 1: a stock that wasn't January of last year six now 219 00:11:56,440 --> 00:11:59,839 Speaker 1: it's below fifties too. About another stock, Pecks see the 220 00:12:00,160 --> 00:12:05,640 Speaker 1: shares down forty one percent going back since the end 221 00:12:05,679 --> 00:12:09,840 Speaker 1: of what are you seeing here? I wish our prescription 222 00:12:09,880 --> 00:12:13,959 Speaker 1: drug prices were down um, But here's here's what I see. 223 00:12:14,040 --> 00:12:17,640 Speaker 1: First of all, you've got the macro situation here where 224 00:12:18,040 --> 00:12:21,199 Speaker 1: politicians of both sides of the aisle are beating on healthcare. 225 00:12:21,360 --> 00:12:24,040 Speaker 1: They want prices to be lower. Now that we're entering 226 00:12:24,040 --> 00:12:27,400 Speaker 1: the political season, there's some radical calls for single pair 227 00:12:27,760 --> 00:12:32,240 Speaker 1: um healthcare system. All of that would be potential uncertainty, 228 00:12:32,240 --> 00:12:35,679 Speaker 1: if not a negative, and all healthcare stocks are down. CVS, 229 00:12:35,760 --> 00:12:38,280 Speaker 1: I think is a sure survivor not more than a survivor. 230 00:12:38,280 --> 00:12:41,640 Speaker 1: A winner is really three companies and one. You've got 231 00:12:41,679 --> 00:12:44,880 Speaker 1: a coast to coast pharmacy operation close to ten thousand 232 00:12:44,920 --> 00:12:49,360 Speaker 1: stores making about one point four billion prescriptions a year. Then, 233 00:12:49,400 --> 00:12:53,040 Speaker 1: of course they've got a great uh pharmacy benefits management 234 00:12:53,080 --> 00:12:56,839 Speaker 1: the form of care Mark. But now they vertically integrated 235 00:12:56,880 --> 00:13:00,120 Speaker 1: with the acquisition of Aquis of Etna, which gives them 236 00:13:00,120 --> 00:13:03,720 Speaker 1: twenty million insurance customers. So one of the problems right 237 00:13:03,720 --> 00:13:05,839 Speaker 1: now is, believe it or not, that merger has not 238 00:13:06,040 --> 00:13:09,800 Speaker 1: been finally approved. Even though government authorities signed off on it, 239 00:13:09,800 --> 00:13:11,720 Speaker 1: still hasn't be signed off by a judge who wants 240 00:13:11,760 --> 00:13:13,760 Speaker 1: to take a second look. Now, if all the parties 241 00:13:13,760 --> 00:13:15,840 Speaker 1: to say go ahead, I think once that judge makes 242 00:13:15,880 --> 00:13:18,120 Speaker 1: the right decision, that stock moves higher. But isn't there 243 00:13:18,200 --> 00:13:21,480 Speaker 1: just just for healthcare, there's just always this overhang of gee, 244 00:13:21,520 --> 00:13:24,360 Speaker 1: what are the politicians gonna be saying? What are the government? Regulation? 245 00:13:24,440 --> 00:13:26,560 Speaker 1: Just seems like it's always in the crosshairs and there's 246 00:13:26,600 --> 00:13:29,680 Speaker 1: so much overhang just from news about regulation. Yeah, you know, 247 00:13:29,720 --> 00:13:32,200 Speaker 1: it's a great point. Certainly we have seen that before 248 00:13:32,320 --> 00:13:35,360 Speaker 1: with proposal for Hillary Care, with proposals in the first 249 00:13:35,400 --> 00:13:38,760 Speaker 1: couple of years the Obama administration. But what happens is ultimately, 250 00:13:39,080 --> 00:13:41,400 Speaker 1: and I believe it's a case now prices now we 251 00:13:41,480 --> 00:13:45,480 Speaker 1: reflect that kind of dismal outlook where it can't catch 252 00:13:45,480 --> 00:13:48,440 Speaker 1: a break and the politicians are being at the end 253 00:13:48,440 --> 00:13:51,559 Speaker 1: of the day, we want the best healthcare possible. The 254 00:13:51,679 --> 00:13:56,080 Speaker 1: UM population is growing worldwide, there's there's demand, and I 255 00:13:56,160 --> 00:13:59,520 Speaker 1: think ultimately UM it will become business as usual and 256 00:13:59,520 --> 00:14:02,120 Speaker 1: stock since we'll move higher. David Dits, thank you so 257 00:14:02,200 --> 00:14:04,760 Speaker 1: much for being with us here. David Diets is founder, 258 00:14:04,840 --> 00:14:08,439 Speaker 1: president and chief investment strategist at Point View Wealth Management. 259 00:14:08,679 --> 00:14:25,920 Speaker 1: In Summit, New Jersey, Paul, we talk a lot about 260 00:14:25,960 --> 00:14:29,680 Speaker 1: the data that a lot of websites collect and the 261 00:14:29,760 --> 00:14:31,720 Speaker 1: question is what can you do with it? And yelp 262 00:14:31,760 --> 00:14:35,000 Speaker 1: has taken away to use it to try to indicate 263 00:14:35,240 --> 00:14:37,840 Speaker 1: what the economy, how which shape the economy is in 264 00:14:38,000 --> 00:14:42,360 Speaker 1: Joining us now is Carl Bolic, data Science editor at YELP. Carl, 265 00:14:42,600 --> 00:14:44,720 Speaker 1: so happy to have you here in our Bloomberg Interactive 266 00:14:44,760 --> 00:14:47,360 Speaker 1: broker studios. Full disclosure. Carl and I went to high 267 00:14:47,360 --> 00:14:49,640 Speaker 1: school together and worked on the school paper together. I'm 268 00:14:49,720 --> 00:14:53,920 Speaker 1: so glad to see you breaking stories. Yeah, exactly, um, 269 00:14:54,000 --> 00:14:59,000 Speaker 1: lots of them. So, Carl, what exactly is yelps economic average. 270 00:14:59,760 --> 00:15:04,680 Speaker 1: It's a benchmark of the local economy and it brings 271 00:15:04,680 --> 00:15:09,120 Speaker 1: together thirty different really important but also really specific sectors 272 00:15:09,160 --> 00:15:14,160 Speaker 1: in yelp across our most important really areas of the economy, 273 00:15:14,200 --> 00:15:18,480 Speaker 1: which are restaurants and food, nightlife, shopping and services, which 274 00:15:18,480 --> 00:15:20,760 Speaker 1: are really to us, the backbone of the local economy. 275 00:15:20,880 --> 00:15:23,920 Speaker 1: So we've chosen thirty. I'm sure you and your listeners 276 00:15:23,920 --> 00:15:26,480 Speaker 1: could recognize that number is like maybe a crucial number 277 00:15:26,560 --> 00:15:30,560 Speaker 1: for benchmarks of of economic health and market strength. And 278 00:15:30,840 --> 00:15:33,360 Speaker 1: you know it has it has a long history, and 279 00:15:33,400 --> 00:15:35,720 Speaker 1: it allows us to really cover the breadth of these 280 00:15:35,800 --> 00:15:39,760 Speaker 1: kinds of businesses. So what makes your indicator unique? Do 281 00:15:39,800 --> 00:15:42,880 Speaker 1: you think relter to what's out there in the market. Yeah, 282 00:15:42,920 --> 00:15:45,480 Speaker 1: so there there's lots of economic indo cares out there. 283 00:15:45,560 --> 00:15:50,120 Speaker 1: We really saw an opportunity to look at something close 284 00:15:50,160 --> 00:15:54,120 Speaker 1: to real time, very specific, very granular from a business 285 00:15:54,160 --> 00:15:58,080 Speaker 1: type level, and then also very granular from a geographical level. 286 00:15:58,480 --> 00:16:01,920 Speaker 1: So you know, we are aggreg aiding anonymized you know, 287 00:16:01,960 --> 00:16:07,000 Speaker 1: consumer behavior and business activity down to you know, like 288 00:16:07,160 --> 00:16:09,720 Speaker 1: not just this is a restaurant, not just this is 289 00:16:09,760 --> 00:16:12,280 Speaker 1: a Chinese restaurant, but this is a sexualan restaurant. So 290 00:16:12,480 --> 00:16:15,520 Speaker 1: really being able to dig deep into what is happening 291 00:16:15,640 --> 00:16:18,920 Speaker 1: on a very specific level with enough volume because of 292 00:16:18,920 --> 00:16:21,040 Speaker 1: our tens of millions of users every month on the 293 00:16:21,080 --> 00:16:23,520 Speaker 1: app and tens of millions on desktop, to be able 294 00:16:23,520 --> 00:16:25,360 Speaker 1: to really say something about a lot of different parts 295 00:16:25,360 --> 00:16:27,560 Speaker 1: of the local economy. I love this, by the way, 296 00:16:27,560 --> 00:16:29,800 Speaker 1: because we do talk a lot about what people are 297 00:16:29,800 --> 00:16:31,960 Speaker 1: going to do with data. And just for a little background, 298 00:16:31,960 --> 00:16:34,320 Speaker 1: so carlbi Alec, probably you've read him as the numbers 299 00:16:34,320 --> 00:16:35,920 Speaker 1: guy on the Wall Street Journal back in the day, 300 00:16:35,960 --> 00:16:38,200 Speaker 1: and then you worked at five thirty eight UM and 301 00:16:38,480 --> 00:16:41,320 Speaker 1: you've done a lot of work with numbers, and I'm 302 00:16:41,360 --> 00:16:45,880 Speaker 1: wondering whether you're seeing anything with these economic indicators that 303 00:16:46,280 --> 00:16:49,080 Speaker 1: are somewhat at odds at the main story that we 304 00:16:49,200 --> 00:16:52,520 Speaker 1: keep hearing, which is steady growth, strong consumer. What are 305 00:16:52,520 --> 00:16:56,360 Speaker 1: you seeing right now? Yeah, we're seeing a mixed picture. 306 00:16:56,400 --> 00:16:59,880 Speaker 1: So we we introduced the up economic average looking back 307 00:17:00,240 --> 00:17:05,280 Speaker 1: at the fourth quarter and saw a decline, so so 308 00:17:05,480 --> 00:17:07,520 Speaker 1: it looked like a slump or the start of a slump. 309 00:17:08,119 --> 00:17:12,399 Speaker 1: And then for the last quarter, we saw you know, 310 00:17:12,400 --> 00:17:17,240 Speaker 1: a slight rally, pretty moderate, mostly flat, and some weakness 311 00:17:17,240 --> 00:17:19,800 Speaker 1: in a few key categories. So I think we we've 312 00:17:19,800 --> 00:17:23,000 Speaker 1: been deviating a bit from the overall story, which I 313 00:17:23,040 --> 00:17:26,159 Speaker 1: think has to do a lot with the sort of 314 00:17:26,160 --> 00:17:27,959 Speaker 1: the real time nature of our data, but also like 315 00:17:28,000 --> 00:17:31,160 Speaker 1: our our really laser focus on the kinds of local 316 00:17:31,240 --> 00:17:34,600 Speaker 1: economic experiences that you have in person with with the 317 00:17:34,640 --> 00:17:37,280 Speaker 1: service provider in a store. So which areas you're seeing 318 00:17:37,280 --> 00:17:39,960 Speaker 1: a slow down? Yeah, so in this past quarter, in particular, 319 00:17:40,040 --> 00:17:43,959 Speaker 1: autos we're weak and uh, you know, it's something that 320 00:17:43,960 --> 00:17:46,199 Speaker 1: we've been tracking for a while. We've been interested in 321 00:17:46,640 --> 00:17:49,080 Speaker 1: sort of what the effect is of the shift from 322 00:17:49,080 --> 00:17:53,600 Speaker 1: owning cars to too renting cars to you know, renting 323 00:17:53,600 --> 00:17:56,000 Speaker 1: a driver in a car for twenty minutes for a 324 00:17:56,080 --> 00:17:57,919 Speaker 1: ride around town. Like what that might be doing to 325 00:17:57,960 --> 00:18:00,520 Speaker 1: some of these core sectors that rely on people owning 326 00:18:00,520 --> 00:18:03,240 Speaker 1: and using their cars a lot, needing various services, needing 327 00:18:03,240 --> 00:18:06,399 Speaker 1: to buy new cars or used cars. And it looks 328 00:18:06,400 --> 00:18:08,800 Speaker 1: like across a lot of different categories we're seeing a 329 00:18:08,880 --> 00:18:12,040 Speaker 1: slump there. And then in retail, which again is the 330 00:18:12,119 --> 00:18:15,080 Speaker 1: part of retail that is that in person experience going 331 00:18:15,119 --> 00:18:18,560 Speaker 1: into the store, we're seeing weakness, especially in sort of 332 00:18:18,600 --> 00:18:20,600 Speaker 1: tech retail, where I think a lot of the activity 333 00:18:20,640 --> 00:18:24,080 Speaker 1: is moving online. So Carl, how about regionality. Are you 334 00:18:24,119 --> 00:18:28,840 Speaker 1: seeing differences regionally from some of your data coming in, Yeah, 335 00:18:28,880 --> 00:18:34,760 Speaker 1: it's it's a great question. It really depends on the sector. Like, overall, 336 00:18:35,119 --> 00:18:37,760 Speaker 1: the regions are moving roughly in line with each other, 337 00:18:37,840 --> 00:18:41,040 Speaker 1: but in some areas, certain kinds of restaurants are stronger. 338 00:18:41,600 --> 00:18:44,960 Speaker 1: You know, there's different demands for home services depending on 339 00:18:44,960 --> 00:18:47,000 Speaker 1: what part of the country you're in. So we are 340 00:18:47,000 --> 00:18:50,919 Speaker 1: seeing those kinds of differences, but generally the regional pictures 341 00:18:51,000 --> 00:18:52,760 Speaker 1: tracking the national one to a way that I didn't 342 00:18:52,840 --> 00:18:54,960 Speaker 1: expect going into this. I thought we would see more 343 00:18:55,040 --> 00:18:57,879 Speaker 1: regional differences. We do see bigger differences at the city 344 00:18:57,960 --> 00:19:00,520 Speaker 1: level and the metro area level. I want to talk 345 00:19:00,560 --> 00:19:04,200 Speaker 1: about how you use the data that Yelp collects, because 346 00:19:04,240 --> 00:19:08,560 Speaker 1: there's sort of the activity in terms of ordering through 347 00:19:08,720 --> 00:19:11,639 Speaker 1: Yelp or you know, reviewing through Yelp. What do you 348 00:19:11,760 --> 00:19:15,360 Speaker 1: what do you pull for the economic average? Yeah, so 349 00:19:15,560 --> 00:19:18,679 Speaker 1: we basically looked at everything. We looked at the full gamut. 350 00:19:18,720 --> 00:19:20,760 Speaker 1: I mean there, as you say, there's so many different 351 00:19:20,760 --> 00:19:24,240 Speaker 1: ways that people interact with businesses, and they all show 352 00:19:24,359 --> 00:19:26,879 Speaker 1: some kind of consumer interest. Some of them are very 353 00:19:26,880 --> 00:19:29,600 Speaker 1: specific to one sector, like the restaurant space in the 354 00:19:29,640 --> 00:19:33,119 Speaker 1: case of ordering food. So we looked at like, what 355 00:19:33,320 --> 00:19:36,520 Speaker 1: is the combination of these that best matches what we 356 00:19:36,600 --> 00:19:40,800 Speaker 1: think is, you know, the overall consumer activity on the platform. 357 00:19:41,000 --> 00:19:43,520 Speaker 1: And so we went with that measure. Well, but I 358 00:19:43,520 --> 00:19:45,479 Speaker 1: guess one question that I have is how do you 359 00:19:45,520 --> 00:19:49,840 Speaker 1: measure something that's qualitative, that's subjective like reviews. I mean, 360 00:19:49,840 --> 00:19:52,720 Speaker 1: do you do you take that into That's a great question, right, 361 00:19:52,760 --> 00:19:56,520 Speaker 1: Like is a higher rating an indicator? Yeah? For this measure, 362 00:19:56,640 --> 00:19:59,320 Speaker 1: we were really just looking at at interest So if 363 00:19:59,359 --> 00:20:03,360 Speaker 1: you went to a business page on yell to leave 364 00:20:03,400 --> 00:20:05,399 Speaker 1: a two star review because you had an experience that 365 00:20:05,440 --> 00:20:08,600 Speaker 1: disappointed you, that would still count as go as consumer 366 00:20:08,640 --> 00:20:10,800 Speaker 1: activity from the point from a purely economic point of 367 00:20:10,840 --> 00:20:14,880 Speaker 1: view of you likely transacted with that business. For other studies, 368 00:20:14,920 --> 00:20:17,600 Speaker 1: we do. We do think a lot about ratings and 369 00:20:18,040 --> 00:20:20,439 Speaker 1: when ratings are going up, is that indicating an overall 370 00:20:20,480 --> 00:20:23,320 Speaker 1: increase in quality or is that a change in you know, 371 00:20:23,359 --> 00:20:27,480 Speaker 1: consumer psychology and their propensity to leave negative reviews. So 372 00:20:27,600 --> 00:20:30,399 Speaker 1: it's it's definitely something that we consider. And if we 373 00:20:30,480 --> 00:20:32,040 Speaker 1: if we do see a rise in ratings that we 374 00:20:32,080 --> 00:20:35,360 Speaker 1: think reflects uh an increase in sort of the quality 375 00:20:35,400 --> 00:20:38,520 Speaker 1: of the consumer experience, then we think that's an important 376 00:20:38,560 --> 00:20:41,879 Speaker 1: thing to capture, but is not normally capture in economic indicators. 377 00:20:42,000 --> 00:20:44,919 Speaker 1: So you capture I'm thinking good jillions of pieces of 378 00:20:45,000 --> 00:20:47,080 Speaker 1: data from all the users of a Yelp and they're 379 00:20:47,080 --> 00:20:49,639 Speaker 1: coming at you all time, unstructured. How often do you 380 00:20:49,840 --> 00:20:53,639 Speaker 1: release your number, your index number, your output? Is this 381 00:20:53,800 --> 00:20:56,240 Speaker 1: a daily thing a quarterly thing? So right now it's 382 00:20:56,280 --> 00:20:59,440 Speaker 1: quarterly and we release it within typically within the month 383 00:20:59,480 --> 00:21:03,520 Speaker 1: after after the quarter. We do want to become more 384 00:21:03,560 --> 00:21:05,960 Speaker 1: frequent and faster, and we're working on that. You know, 385 00:21:05,960 --> 00:21:09,399 Speaker 1: we're being very careful as well, because we want to 386 00:21:09,440 --> 00:21:13,920 Speaker 1: release something that reflects, you know, the real underlying consumer behavior, 387 00:21:14,000 --> 00:21:17,560 Speaker 1: and there are quarterly trends that we want to kind 388 00:21:17,560 --> 00:21:20,080 Speaker 1: of remove, and it's easier to adjust on a quarterly 389 00:21:20,160 --> 00:21:22,920 Speaker 1: level than a monthly level. So we're thinking about how 390 00:21:22,960 --> 00:21:24,959 Speaker 1: we're going to do this more frequently, but we certainly 391 00:21:24,960 --> 00:21:28,359 Speaker 1: have the data to do it, and it's in our roadmap. Cool, 392 00:21:28,440 --> 00:21:30,119 Speaker 1: Carl Bi Aleck, thank you so much for joining us, 393 00:21:30,119 --> 00:21:34,119 Speaker 1: car back data science editor, former newspaperman in high school 394 00:21:34,560 --> 00:21:40,800 Speaker 1: for Yellow with the Economic Average, So very cool. Exactly, 395 00:21:57,119 --> 00:21:59,760 Speaker 1: I want to turn our attention to a story that 396 00:22:00,119 --> 00:22:03,400 Speaker 1: has left me and Paul if I dare speak for you, 397 00:22:03,440 --> 00:22:07,640 Speaker 1: scratching our heads. So basically, a top Justice Department official 398 00:22:07,760 --> 00:22:11,080 Speaker 1: or several of them, are hoping for T Mobile and 399 00:22:11,240 --> 00:22:15,360 Speaker 1: Sprint to lay the groundwork for a new wireless carrier 400 00:22:15,720 --> 00:22:18,439 Speaker 1: in order to go through with their merger, which is 401 00:22:18,600 --> 00:22:21,280 Speaker 1: very hard to understand. What would that mean to creating 402 00:22:21,280 --> 00:22:24,800 Speaker 1: a competitor? Joining us now to help us perhaps understand 403 00:22:25,119 --> 00:22:29,119 Speaker 1: A re senior litigation analyst with Bloomberg Intelligence, So what 404 00:22:29,119 --> 00:22:32,040 Speaker 1: what gives I know, it sounds really strange, and in 405 00:22:32,040 --> 00:22:34,399 Speaker 1: particular in relation to this deal. I mean, these companies 406 00:22:34,440 --> 00:22:37,160 Speaker 1: are telecon companies. What you see in other deals where 407 00:22:37,200 --> 00:22:39,600 Speaker 1: businesses are involved in a lot of different things. They 408 00:22:39,640 --> 00:22:42,160 Speaker 1: sell one piece, but what they're gaining is still much 409 00:22:42,160 --> 00:22:44,840 Speaker 1: bigger than what they're selling. But here let me explain 410 00:22:44,920 --> 00:22:47,400 Speaker 1: what the Department of Justice as guidelines say is once 411 00:22:47,400 --> 00:22:50,600 Speaker 1: they've identified a competitive problem, the remedy has to fully 412 00:22:50,640 --> 00:22:53,360 Speaker 1: fix that problem. That has to replace the competition that's 413 00:22:53,400 --> 00:22:55,919 Speaker 1: been lost within that area where there's a problem. So 414 00:22:56,000 --> 00:22:58,240 Speaker 1: the two things I'd say about this deal is one, 415 00:22:58,760 --> 00:23:00,800 Speaker 1: do we know if they have a problem in both 416 00:23:00,800 --> 00:23:03,560 Speaker 1: the prepaid side and the post paid side. If they do, 417 00:23:03,960 --> 00:23:07,760 Speaker 1: then it's truly, you know, fully creating a new competitor. 418 00:23:08,080 --> 00:23:10,680 Speaker 1: If they only have found a competitive problem on one side, 419 00:23:10,720 --> 00:23:12,520 Speaker 1: it would be creating a new network and a new 420 00:23:12,520 --> 00:23:15,640 Speaker 1: competitor just for that kind of consumer. But but if 421 00:23:15,680 --> 00:23:18,720 Speaker 1: you think about this um, it's still possible that what 422 00:23:18,800 --> 00:23:21,439 Speaker 1: a combined T Mobile Sprint get is better than what 423 00:23:21,640 --> 00:23:23,960 Speaker 1: would happen if they had to create a new competitor, 424 00:23:24,000 --> 00:23:27,080 Speaker 1: because they'll get a blend of spectrum that Sprint doesn't 425 00:23:27,080 --> 00:23:29,440 Speaker 1: have today. And the idea here with the remedy is 426 00:23:29,480 --> 00:23:31,960 Speaker 1: you're absorbing Sprint, you need we need to replace the 427 00:23:31,960 --> 00:23:34,960 Speaker 1: competitive intensity that's lost, So you really need to create 428 00:23:35,080 --> 00:23:38,720 Speaker 1: kind of what Sprint is today, not then necessarily the 429 00:23:38,760 --> 00:23:41,520 Speaker 1: blend of spectrum, this mix that the combined Tea Mobile 430 00:23:41,560 --> 00:23:44,359 Speaker 1: Sprint is going to get. So it's still possible they 431 00:23:44,359 --> 00:23:48,359 Speaker 1: could create this new competitor but still gain as a 432 00:23:48,400 --> 00:23:51,040 Speaker 1: merger coming out of this, as odd as that sounds. Okay, 433 00:23:51,080 --> 00:23:53,320 Speaker 1: that that sounds odd, and I'm a little bit smarter 434 00:23:53,400 --> 00:23:56,120 Speaker 1: than that I was before. So let's just play this forwar. 435 00:23:56,160 --> 00:24:00,359 Speaker 1: Let's say, okay, we'll effectively will will the Sprint mobile 436 00:24:00,480 --> 00:24:04,280 Speaker 1: entity least some spectrum to whatever third party is out there, 437 00:24:04,320 --> 00:24:06,879 Speaker 1: and that third party will then operate a wireless network. 438 00:24:07,000 --> 00:24:08,840 Speaker 1: Is that kind of the thought process? Well, you see 439 00:24:08,840 --> 00:24:10,679 Speaker 1: the devils in the details. And this is now going 440 00:24:10,680 --> 00:24:13,480 Speaker 1: to be a pretty intense negotiation because obviously Springtan T 441 00:24:13,600 --> 00:24:15,560 Speaker 1: Mobile will try to give up as little as they 442 00:24:15,600 --> 00:24:19,920 Speaker 1: can in terms of actual structural assets. Right, They probably 443 00:24:19,920 --> 00:24:23,880 Speaker 1: prefer sell brands and least infrastructure and not sell spectrum. 444 00:24:23,920 --> 00:24:26,360 Speaker 1: And the Department of Justice is likely to want them 445 00:24:26,400 --> 00:24:29,560 Speaker 1: to put some spectrum in um and and and possibly 446 00:24:29,640 --> 00:24:33,760 Speaker 1: even more even incentivize employees to go over and and 447 00:24:33,840 --> 00:24:36,320 Speaker 1: possibly more structural type assets. So this is going to 448 00:24:36,400 --> 00:24:39,040 Speaker 1: be a difficult negotiation for them to come out with 449 00:24:39,119 --> 00:24:42,960 Speaker 1: something that works for both if I'm trading on the 450 00:24:43,040 --> 00:24:45,040 Speaker 1: rumors of a tie up or not, and then the 451 00:24:45,080 --> 00:24:47,119 Speaker 1: success of the d J and signing off on this. 452 00:24:47,960 --> 00:24:51,479 Speaker 1: Is this development positive or negative in terms of at 453 00:24:51,560 --> 00:24:55,280 Speaker 1: least the d o J is engaging and has concrete 454 00:24:55,280 --> 00:24:57,840 Speaker 1: proposals for how this deal can continue to go through. 455 00:24:58,640 --> 00:25:01,159 Speaker 1: That's right, that's the positive side, But I would say 456 00:25:01,240 --> 00:25:04,120 Speaker 1: it's probably leans a little bit more negative because we're 457 00:25:04,119 --> 00:25:06,080 Speaker 1: going to get to this point a pain point for 458 00:25:06,160 --> 00:25:08,639 Speaker 1: these companies where it's too much for them and they 459 00:25:09,119 --> 00:25:11,439 Speaker 1: have to then decide do we walk away or do 460 00:25:11,480 --> 00:25:13,119 Speaker 1: we try to do or do we challenge this in 461 00:25:13,200 --> 00:25:15,600 Speaker 1: court to try to see if we can convince a judge. 462 00:25:15,920 --> 00:25:19,240 Speaker 1: We know generally where the pain point sort of starts 463 00:25:19,560 --> 00:25:22,280 Speaker 1: for these companies because in their merger agreement, they agreed 464 00:25:22,320 --> 00:25:25,600 Speaker 1: to divest, but they agreed that they wouldn't have to 465 00:25:25,640 --> 00:25:28,720 Speaker 1: go past any loss of seven billion or more. So 466 00:25:28,760 --> 00:25:31,600 Speaker 1: we have generally understand that they don't want to give 467 00:25:31,680 --> 00:25:34,680 Speaker 1: up um assets that would cause a loss of seven 468 00:25:34,680 --> 00:25:37,000 Speaker 1: billion or more. Now they can waive that term. Other 469 00:25:37,080 --> 00:25:39,719 Speaker 1: companies often do that when they have to find they 470 00:25:39,720 --> 00:25:41,840 Speaker 1: have to divest more than they expected to get a 471 00:25:41,880 --> 00:25:44,520 Speaker 1: deal through. But you know it's gonna be a difficult 472 00:25:44,560 --> 00:25:46,520 Speaker 1: decision for them, both of these stucks. Just for what 473 00:25:46,880 --> 00:25:49,440 Speaker 1: trading off bad a little over one percent today. So obviously, 474 00:25:49,520 --> 00:25:51,840 Speaker 1: as you suggested, Gen, the market isn't doesn't see this 475 00:25:51,880 --> 00:25:53,840 Speaker 1: as a positive viewpoint. Just give us a sense. This 476 00:25:53,880 --> 00:25:55,720 Speaker 1: thing has been you know, more than a year here. 477 00:25:55,920 --> 00:25:58,199 Speaker 1: It sounds like the negotiations here as you suggest, it 478 00:25:58,200 --> 00:26:00,760 Speaker 1: will be very difficult. Any sense of timing when the 479 00:26:00,880 --> 00:26:04,199 Speaker 1: d o J will wrap up its investigation here or 480 00:26:04,280 --> 00:26:06,719 Speaker 1: to review you know, so many people would like to 481 00:26:06,720 --> 00:26:09,600 Speaker 1: know that. But this is a closely guarded the arbitrage 482 00:26:09,640 --> 00:26:12,520 Speaker 1: trade listening on the line. It is a closely guarded 483 00:26:12,560 --> 00:26:15,520 Speaker 1: secret with between the companies and the Department of Justice. 484 00:26:15,560 --> 00:26:18,600 Speaker 1: The d J has clearly passed its statutory time limit, 485 00:26:18,840 --> 00:26:21,439 Speaker 1: that is thirty days after these companies comply with the 486 00:26:21,440 --> 00:26:24,000 Speaker 1: second request, which has to have happened nine months ago. 487 00:26:24,400 --> 00:26:26,280 Speaker 1: But what this means is that Sprint and T Mobile 488 00:26:26,280 --> 00:26:28,040 Speaker 1: ev entered to timing agreement with the d o J. 489 00:26:28,200 --> 00:26:31,480 Speaker 1: It is confidential and the companies have not disclosed its terms, 490 00:26:31,520 --> 00:26:33,680 Speaker 1: so we don't know when the timing expires. For the 491 00:26:33,760 --> 00:26:37,280 Speaker 1: d J, Jennifery, thank you so much for helping us 492 00:26:37,359 --> 00:26:42,119 Speaker 1: understand that I actually good. It helps a lot. Jennifer Ree, 493 00:26:42,359 --> 00:26:46,280 Speaker 1: Senior litigation analyst for Bloomberg Intelligence. Thanks for listening to 494 00:26:46,280 --> 00:26:48,720 Speaker 1: the Bloomberg P and L podcast. You can subscribe and 495 00:26:48,760 --> 00:26:51,880 Speaker 1: listen to interviews at Apple Podcasts or whatever podcast platform 496 00:26:51,920 --> 00:26:55,040 Speaker 1: you prefer. Paul Sweeney, I'm on Twitter at pt Sweeney 497 00:26:55,080 --> 00:26:57,760 Speaker 1: and Lisa abram Woyd's I'm on Twitter at Lisa A. Bramwoy. 498 00:26:57,760 --> 00:27:00,199 Speaker 1: It's one before the podcast. You can always catch us 499 00:27:00,280 --> 00:27:05,639 Speaker 1: worldwide on Bloomberg Radio. H