1 00:00:01,400 --> 00:00:04,120 Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 2 00:00:04,120 --> 00:00:06,200 Speaker 1: with my co host of Bonnie Quinn. Every business day 3 00:00:06,240 --> 00:00:10,400 Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts, 4 00:00:10,440 --> 00:00:13,600 Speaker 1: along with essential market moving news. Kind the Bloomberg Markets 5 00:00:13,600 --> 00:00:17,000 Speaker 1: Podcast on Apple Podcasts or wherever you listen to podcasts, 6 00:00:17,000 --> 00:00:21,520 Speaker 1: and on Bloomberg dot com. Well, another big tech I 7 00:00:21,720 --> 00:00:26,160 Speaker 1: p O is coming Palentteer Technologies, a widely anticipated IPO 8 00:00:26,520 --> 00:00:29,920 Speaker 1: is making its way through the process. Here. It's a 9 00:00:29,920 --> 00:00:34,839 Speaker 1: fascinating story, fascinating company, fascinating founders and names as well. 10 00:00:34,880 --> 00:00:36,960 Speaker 1: To help us bring us up to speed on all 11 00:00:36,960 --> 00:00:40,120 Speaker 1: things Paloteer, we welcome Max Chaffkin, Features editor for Bloomberg 12 00:00:40,120 --> 00:00:42,400 Speaker 1: Business Week. Max, thanks so much for joining us here. 13 00:00:42,440 --> 00:00:45,000 Speaker 1: I thought I saw your piece and I love the headline. 14 00:00:45,800 --> 00:00:49,680 Speaker 1: Paloteers really no friend to Silicon Valley, are they? Well, 15 00:00:49,840 --> 00:00:52,280 Speaker 1: it's kind of interesting, and I have to correct you 16 00:00:52,320 --> 00:00:54,400 Speaker 1: here that it's actually a direct list thing, which is 17 00:00:54,600 --> 00:00:56,920 Speaker 1: that's right, I mean, very similar to an I p O. 18 00:00:57,120 --> 00:00:59,920 Speaker 1: But but but they're not issuing new shares and the 19 00:01:00,800 --> 00:01:03,640 Speaker 1: shares have sold somewhat differently. Um kind of new hot 20 00:01:03,640 --> 00:01:06,679 Speaker 1: phenomena in Silicon Valley. You know, it's interesting the question 21 00:01:06,720 --> 00:01:12,360 Speaker 1: because Palentteer for years was basically the Silicon Valley defense contractor. 22 00:01:12,480 --> 00:01:15,399 Speaker 1: That was kind of a pitch. You know. Peter Thiel, uh, 23 00:01:15,520 --> 00:01:19,600 Speaker 1: the the venture capitalist entrepreneur, founder of PayPal, uh was 24 00:01:19,640 --> 00:01:22,039 Speaker 1: that you know, basically came up with the idea and 25 00:01:22,040 --> 00:01:24,440 Speaker 1: and and this company was pitching you know, the US 26 00:01:24,520 --> 00:01:26,880 Speaker 1: government for a long time as the like we're gonna 27 00:01:26,880 --> 00:01:29,959 Speaker 1: bring kind of Silicon Valley thinking, um and try to 28 00:01:30,000 --> 00:01:33,520 Speaker 1: display some of these entrenched defense contractors, you know, like 29 00:01:33,680 --> 00:01:38,000 Speaker 1: names like Raypeon. Now, um, what's happened is Palanteer is 30 00:01:38,040 --> 00:01:41,280 Speaker 1: now one of those defense contractors and we're seeing sort 31 00:01:41,319 --> 00:01:44,520 Speaker 1: of a pivot where where as Silicon Valley has sort 32 00:01:44,560 --> 00:01:47,560 Speaker 1: of uh as things have become polarizing Silicon Valley. You know, 33 00:01:47,600 --> 00:01:50,400 Speaker 1: obviously a lot of liberals, um, who are who are 34 00:01:50,480 --> 00:01:53,120 Speaker 1: very against Trump are are work at work at the 35 00:01:53,160 --> 00:01:55,880 Speaker 1: Silicon Valley companies, Palentteers kind of trying to chart a 36 00:01:55,920 --> 00:02:01,280 Speaker 1: slightly different path. Is there enough for somebody to get involved, 37 00:02:01,360 --> 00:02:05,760 Speaker 1: so private equity or one of these SPACs that's roaming 38 00:02:05,760 --> 00:02:09,120 Speaker 1: around the place. So it's talent here. I mean the 39 00:02:09,160 --> 00:02:12,160 Speaker 1: direct list thing is happening. Although they did today just 40 00:02:12,680 --> 00:02:14,359 Speaker 1: uh you know update the day it was supposed to 41 00:02:14,360 --> 00:02:16,560 Speaker 1: happen on in September twenty three. It looks like now 42 00:02:16,680 --> 00:02:19,400 Speaker 1: the stock will begin listing on the twenty nine. But 43 00:02:19,400 --> 00:02:23,760 Speaker 1: but this is happening in the next you know, this month. Um, So, 44 00:02:23,760 --> 00:02:26,400 Speaker 1: so there's definitely not a not a spack situation or 45 00:02:26,400 --> 00:02:29,440 Speaker 1: although I suppose, you know, anything could happen. I mean, 46 00:02:29,560 --> 00:02:32,480 Speaker 1: one thing that is interesting here is Talent here is 47 00:02:32,560 --> 00:02:35,720 Speaker 1: kind of typically described as a startup, but it's been 48 00:02:35,760 --> 00:02:37,240 Speaker 1: around for a really long time. It's been around for 49 00:02:37,240 --> 00:02:39,880 Speaker 1: seventeen years um, which is again another way in which 50 00:02:39,960 --> 00:02:42,760 Speaker 1: is not not exactly a conventional Pilicon Valley company. And 51 00:02:42,800 --> 00:02:45,760 Speaker 1: they've raised you know, a turn of late stage capital. 52 00:02:45,880 --> 00:02:48,720 Speaker 1: So so it's not it's it's a little bit different 53 00:02:48,720 --> 00:02:50,720 Speaker 1: than than a conventional startup. And that's actually one of 54 00:02:50,720 --> 00:02:54,800 Speaker 1: the reasons we've seen some skepticism from investors an analysts 55 00:02:54,840 --> 00:02:57,239 Speaker 1: because they've been around for a really long time um 56 00:02:57,360 --> 00:03:01,320 Speaker 1: and are still not making any money. So, Max, what's 57 00:03:01,320 --> 00:03:04,240 Speaker 1: the feeling on the street as to this company? We've 58 00:03:04,280 --> 00:03:08,880 Speaker 1: seen some really well received technology uh new issues Uh 59 00:03:09,000 --> 00:03:11,200 Speaker 1: this year, is there a sense that this is a 60 00:03:11,240 --> 00:03:15,639 Speaker 1: stock that big tech investors need to own. Well, you 61 00:03:16,000 --> 00:03:20,040 Speaker 1: have a really wide range of sort of expectations and valuations, 62 00:03:20,040 --> 00:03:24,400 Speaker 1: which is part of a feature of these direct listings. UM. 63 00:03:24,520 --> 00:03:28,600 Speaker 1: But but what what kind of what's driving the conversation? Uh, 64 00:03:28,960 --> 00:03:33,840 Speaker 1: it was basically COVID. So Palentteer in many ways COVID 65 00:03:33,960 --> 00:03:37,080 Speaker 1: is a great opportunity for this company. What what Palentteer 66 00:03:37,120 --> 00:03:40,680 Speaker 1: does is data integration. They take UM numbers from all 67 00:03:40,720 --> 00:03:44,400 Speaker 1: different parts of businesses or or governments and they make 68 00:03:44,400 --> 00:03:47,040 Speaker 1: it easy for companies, governments to make sense of them. 69 00:03:47,040 --> 00:03:49,600 Speaker 1: So if you think about, you know, the typical things 70 00:03:49,640 --> 00:03:52,080 Speaker 1: that these these large corporations are dealing with with COVID 71 00:03:52,120 --> 00:03:54,920 Speaker 1: in terms of like looking at where are the outbreaks, 72 00:03:55,240 --> 00:03:57,360 Speaker 1: what kind of PPE do I have? How do I 73 00:03:57,400 --> 00:04:00,640 Speaker 1: allocate that PP? How do I know project sale? That's 74 00:04:00,720 --> 00:04:05,080 Speaker 1: all stuff that palent here Um can do. So so 75 00:04:05,160 --> 00:04:07,080 Speaker 1: that and and so that's kind of like a new 76 00:04:07,160 --> 00:04:09,320 Speaker 1: source of demand. And as we report in our story, 77 00:04:09,640 --> 00:04:12,400 Speaker 1: you know, they've done a lot of new deals over 78 00:04:12,440 --> 00:04:15,760 Speaker 1: the last six months or so. And you know, cost 79 00:04:15,800 --> 00:04:18,520 Speaker 1: has been a huge thing for this company, where they 80 00:04:18,560 --> 00:04:21,200 Speaker 1: were spending huge amounts of money flying these um you 81 00:04:21,240 --> 00:04:23,920 Speaker 1: know sort of pseudo sales people that they call them 82 00:04:23,920 --> 00:04:27,720 Speaker 1: forward to Floyd engineers all around the world pitching the software, 83 00:04:28,040 --> 00:04:30,600 Speaker 1: you know, spending a portion basically selling this stuff. And 84 00:04:30,640 --> 00:04:32,760 Speaker 1: now they're doing that you know obviously over zoom like 85 00:04:32,760 --> 00:04:34,359 Speaker 1: like the rest of us. So that's kind of a 86 00:04:34,480 --> 00:04:37,520 Speaker 1: huge um sort of change in the business. Now it's 87 00:04:37,560 --> 00:04:41,080 Speaker 1: not totally clear how sustainable it is, how big those 88 00:04:41,120 --> 00:04:44,360 Speaker 1: deals are gonna be. And you have this big wild 89 00:04:44,360 --> 00:04:47,520 Speaker 1: card in the election. Palanteers a company that has done 90 00:04:47,640 --> 00:04:50,760 Speaker 1: very well um over the last four years with the 91 00:04:50,800 --> 00:04:54,200 Speaker 1: current administration, and you know, obviously no guarantees that that 92 00:04:54,200 --> 00:04:58,120 Speaker 1: that continues UM past November. Peter t obviously owns a 93 00:04:58,120 --> 00:05:02,080 Speaker 1: lot of it, max is they suggestion that he will 94 00:05:02,120 --> 00:05:05,320 Speaker 1: sell some of what he owns UM. I don't think 95 00:05:05,320 --> 00:05:08,440 Speaker 1: we know exactly how how that's all going to shake out. 96 00:05:08,600 --> 00:05:11,400 Speaker 1: There is an immediate lock up where where the investors 97 00:05:11,400 --> 00:05:14,200 Speaker 1: are are prevented from selling you know, most of their 98 00:05:14,520 --> 00:05:17,960 Speaker 1: stock within the first couple of months. Um. You know, 99 00:05:18,160 --> 00:05:20,400 Speaker 1: I think the nature of the direct list thing is 100 00:05:20,440 --> 00:05:25,080 Speaker 1: you would expect existing investors, especially these big investors, and 101 00:05:25,120 --> 00:05:27,800 Speaker 1: Peter Teel owns a lot of this stock as you say, uh, 102 00:05:27,839 --> 00:05:31,159 Speaker 1: to to start, you know, pering down their their holdings, 103 00:05:31,279 --> 00:05:33,719 Speaker 1: especially if we see it, you know, open up with 104 00:05:33,760 --> 00:05:37,040 Speaker 1: a big valuation because you know it'll that will suddenly 105 00:05:37,160 --> 00:05:40,040 Speaker 1: be like a lot of Peter Teel's net worth UM. 106 00:05:40,120 --> 00:05:42,680 Speaker 1: And And the other thing that's kind of interesting is 107 00:05:42,720 --> 00:05:47,440 Speaker 1: Palanteer has a very unusual structure. So it's it's it's 108 00:05:47,480 --> 00:05:51,400 Speaker 1: there's um, there's a trust, and that trust has has 109 00:05:51,640 --> 00:05:54,080 Speaker 1: three sort of main shareholders, one of whom is Peter Teal. 110 00:05:54,360 --> 00:05:57,840 Speaker 1: This group can basically control the company even if they 111 00:05:57,880 --> 00:06:02,040 Speaker 1: start paring down UM their shares. So so so there 112 00:06:02,040 --> 00:06:03,880 Speaker 1: are a lot of reasons why why you would think 113 00:06:03,920 --> 00:06:06,760 Speaker 1: that some of these large shareholders will at least start 114 00:06:06,839 --> 00:06:08,680 Speaker 1: to pair back if not, if not sell kind of 115 00:06:08,720 --> 00:06:11,280 Speaker 1: a substantial amount UM in the next year or so. 116 00:06:11,279 --> 00:06:14,200 Speaker 1: So Max, I hate to ask a nitpicky question, but 117 00:06:14,279 --> 00:06:19,320 Speaker 1: does this company make any money? No? As I said, uh, 118 00:06:19,440 --> 00:06:23,480 Speaker 1: the loss, uh, the loss that have been huge. You know, 119 00:06:23,680 --> 00:06:25,279 Speaker 1: on the top of my head, I think, you know, 120 00:06:25,640 --> 00:06:28,880 Speaker 1: something like four million dollars last year, four hundred five 121 00:06:28,920 --> 00:06:32,360 Speaker 1: hundred million dollars last year on seven eight million in 122 00:06:32,440 --> 00:06:36,480 Speaker 1: revenue UM. Uh. But the crucial thing is the losses 123 00:06:36,480 --> 00:06:38,520 Speaker 1: have gotten a lot better. If you look at it, 124 00:06:38,520 --> 00:06:42,120 Speaker 1: their their revenue went has gone way up first half 125 00:06:42,279 --> 00:06:47,559 Speaker 1: of compared to losses have gone way down. And that's 126 00:06:47,800 --> 00:06:52,040 Speaker 1: because of of partly because of COVID and partly because 127 00:06:52,880 --> 00:06:54,920 Speaker 1: other parts of their business were doing really well. They've 128 00:06:54,960 --> 00:06:57,880 Speaker 1: got this huge contract um with the army and and 129 00:06:57,920 --> 00:06:59,920 Speaker 1: that money is starting to come in. So the bet, 130 00:07:00,040 --> 00:07:02,560 Speaker 1: the long term bet for investors is that you know, 131 00:07:02,640 --> 00:07:04,880 Speaker 1: this is just the beginning and these trends are going 132 00:07:04,920 --> 00:07:07,960 Speaker 1: to continue. And of course the kind of bear case 133 00:07:08,279 --> 00:07:11,320 Speaker 1: is that, look is a quote unquote startup that's been 134 00:07:11,320 --> 00:07:13,600 Speaker 1: around for seventeen years and it's still losing huge amounts 135 00:07:13,600 --> 00:07:15,560 Speaker 1: of money. You know what makes us think that this 136 00:07:15,640 --> 00:07:17,240 Speaker 1: is gonna that this is gonna get any better in 137 00:07:17,240 --> 00:07:19,720 Speaker 1: the future. Max, It's a great read, and thanks for 138 00:07:19,760 --> 00:07:23,000 Speaker 1: coming on and explaining all about Volunteered to us. Looking 139 00:07:23,040 --> 00:07:25,760 Speaker 1: forward to hearing more from you on that score. Max Chafkin, 140 00:07:26,120 --> 00:07:28,960 Speaker 1: author of Volunteer is bad mouthing Big Tank while taking 141 00:07:28,960 --> 00:07:32,720 Speaker 1: its tech public. He's also Bloomberg business Week Features editor 142 00:07:33,240 --> 00:07:35,280 Speaker 1: and you can follow him on Twitter as well. Very 143 00:07:35,360 --> 00:07:40,720 Speaker 1: interesting guy to follow on Twitter. Well. The markets have 144 00:07:40,800 --> 00:07:44,080 Speaker 1: certainly taken their cue from the Federal Reserve. The feed 145 00:07:44,120 --> 00:07:48,680 Speaker 1: has been pumping liquidity into this marketplace, providing a backstop 146 00:07:48,720 --> 00:07:52,320 Speaker 1: for risk assets across the board, particularly the equity assets. 147 00:07:52,520 --> 00:07:54,400 Speaker 1: The question is where do we go from here? Is 148 00:07:54,720 --> 00:07:58,200 Speaker 1: fiscal stimulus needed for a next move up? How at 149 00:07:58,320 --> 00:08:01,760 Speaker 1: risk is this market? Useef A Bassi, global market strategist 150 00:08:01,800 --> 00:08:05,280 Speaker 1: for stone X Group, joins us uh. You said, thanks 151 00:08:05,320 --> 00:08:07,000 Speaker 1: so much for joining us here. I mean, there's so 152 00:08:07,040 --> 00:08:10,240 Speaker 1: many variables for investors to discount here just over the 153 00:08:10,280 --> 00:08:13,080 Speaker 1: next couple of months. We've got the elections, We've got 154 00:08:13,080 --> 00:08:16,600 Speaker 1: potential fiscal stimulus, and of course we have the path 155 00:08:16,760 --> 00:08:20,520 Speaker 1: of the pandemic and potential vaccines. How do you put 156 00:08:20,560 --> 00:08:24,440 Speaker 1: all that together into a market call? Yeah, I mean 157 00:08:24,880 --> 00:08:29,080 Speaker 1: it's it's incredibly difficult, right you. You've highlighted several factors, 158 00:08:29,120 --> 00:08:31,560 Speaker 1: and some of which you're exogenists and we're not used 159 00:08:31,600 --> 00:08:33,760 Speaker 1: to really dealing with, so it does become a little 160 00:08:33,800 --> 00:08:37,439 Speaker 1: bit challenging. Now we are fairly cautious into year end. 161 00:08:37,840 --> 00:08:40,640 Speaker 1: We understand that most of the market risks have really 162 00:08:40,640 --> 00:08:43,280 Speaker 1: been dulled by the FED and the level of stimulus 163 00:08:43,320 --> 00:08:46,960 Speaker 1: that has been conducted but at the same time, there 164 00:08:47,040 --> 00:08:49,400 Speaker 1: is a rebasing going on in the market currently, and 165 00:08:49,440 --> 00:08:51,400 Speaker 1: you have to listen to what the market is currently 166 00:08:51,400 --> 00:08:53,959 Speaker 1: telling you. The NASDAC is poised to have its worst 167 00:08:54,040 --> 00:08:57,679 Speaker 1: months since uh December two eighteen, and who can forget 168 00:08:57,720 --> 00:09:00,679 Speaker 1: that massive unwined stuff off we've experienced end, So you 169 00:09:00,760 --> 00:09:03,520 Speaker 1: have to listen to this market right now and from 170 00:09:03,559 --> 00:09:06,880 Speaker 1: where sentiment is lying, we are searching for leadership. Unfortunately 171 00:09:06,960 --> 00:09:10,120 Speaker 1: we haven't found it. So in terms of moving forward 172 00:09:10,520 --> 00:09:13,560 Speaker 1: with regards to a vaccine, with regards to a second wave, 173 00:09:14,000 --> 00:09:17,360 Speaker 1: you really don't understand exactly where they are and prognosticators 174 00:09:17,360 --> 00:09:19,800 Speaker 1: can try to predict which comes first, but the reality 175 00:09:19,920 --> 00:09:22,720 Speaker 1: is right now, the best way to play this is 176 00:09:22,760 --> 00:09:25,480 Speaker 1: to be cautious, have some cash ready on the sidelines, 177 00:09:25,520 --> 00:09:28,600 Speaker 1: and probably take a barbell approach to your investment. Right now, 178 00:09:29,120 --> 00:09:32,520 Speaker 1: what would the other side of the barbell be, So, 179 00:09:32,679 --> 00:09:35,160 Speaker 1: if you are looking at how we would want to 180 00:09:35,160 --> 00:09:37,520 Speaker 1: play this barbell, we think that you should be taking 181 00:09:37,520 --> 00:09:40,680 Speaker 1: advantage of looking at some of the very high quality 182 00:09:40,760 --> 00:09:44,360 Speaker 1: tech names that have seen pullbacks that have basically given 183 00:09:44,360 --> 00:09:47,400 Speaker 1: back almost the entire Q three move. And if you're 184 00:09:47,440 --> 00:09:49,800 Speaker 1: looking at those franchises. We think that there are interesting 185 00:09:49,840 --> 00:09:52,480 Speaker 1: opportunities to buy them on weakness and that will position 186 00:09:52,520 --> 00:09:55,200 Speaker 1: you well on the growth side. On the value side, 187 00:09:55,559 --> 00:09:58,240 Speaker 1: we think that you cannot ignore the fact the the 188 00:09:58,440 --> 00:10:01,640 Speaker 1: materials and industrials have really been the sectors that haven't 189 00:10:01,640 --> 00:10:03,960 Speaker 1: really broken trend while the rest of the market seem 190 00:10:04,000 --> 00:10:06,080 Speaker 1: to be risking, and that's in a large part due 191 00:10:06,080 --> 00:10:08,160 Speaker 1: to the fact that there is still an overwhelming demand 192 00:10:08,600 --> 00:10:11,920 Speaker 1: for hard commodities and hard assets. So gold, copper, or 193 00:10:11,960 --> 00:10:15,200 Speaker 1: silver continue to act well, and those materials names continue 194 00:10:15,200 --> 00:10:16,360 Speaker 1: to be a play we want to be in in 195 00:10:16,440 --> 00:10:19,760 Speaker 1: value also in value. We'd like to complement that by 196 00:10:19,760 --> 00:10:23,160 Speaker 1: looking at them aligned banks. The sector is unloved, under owned, 197 00:10:23,679 --> 00:10:26,000 Speaker 1: obviously going through a round two of a stress test, 198 00:10:26,440 --> 00:10:29,320 Speaker 1: but we think most financial investors understand the capital returns 199 00:10:29,320 --> 00:10:33,400 Speaker 1: aren't going to return anyway, and we think that if 200 00:10:33,440 --> 00:10:36,719 Speaker 1: we do get a vaccine, these banks will be poised 201 00:10:36,920 --> 00:10:39,680 Speaker 1: to come back to be able to maybe even unwind 202 00:10:39,720 --> 00:10:41,680 Speaker 1: some of the reserves they've built and put those back 203 00:10:41,720 --> 00:10:47,000 Speaker 1: into earnings usef we have elections coming up November three, 204 00:10:47,080 --> 00:10:49,559 Speaker 1: there's a lot of concern, I would say, some growing 205 00:10:49,600 --> 00:10:52,480 Speaker 1: concern in the marketplace that to the extent that this 206 00:10:52,559 --> 00:10:55,000 Speaker 1: is a contested election, in an election that could be 207 00:10:55,000 --> 00:10:58,880 Speaker 1: contested for a long period of time heading into next year, 208 00:10:58,920 --> 00:11:01,560 Speaker 1: that that could be a really real issue for the market. 209 00:11:01,559 --> 00:11:04,800 Speaker 1: How do you figure that into your calculus. Yeah, So 210 00:11:05,000 --> 00:11:08,600 Speaker 1: consensus thought right now is that this will be a 211 00:11:08,600 --> 00:11:12,520 Speaker 1: contested election, right, So, considering the fact that we've seen 212 00:11:12,559 --> 00:11:14,439 Speaker 1: the market kind of understand that for at least a 213 00:11:14,440 --> 00:11:18,000 Speaker 1: few weeks now and start to digest it, We've seen investors, 214 00:11:18,080 --> 00:11:20,800 Speaker 1: rather than really taking risk off dramatically in the market, 215 00:11:21,040 --> 00:11:24,959 Speaker 1: attempt to hedge by going along, you know, vix options 216 00:11:25,640 --> 00:11:28,520 Speaker 1: out of the money. Vixed calls were a popular way 217 00:11:28,559 --> 00:11:30,400 Speaker 1: to hedge. We saw sizeable trades in that over the 218 00:11:30,440 --> 00:11:32,640 Speaker 1: past two weeks. So I would say, you know, people 219 00:11:32,640 --> 00:11:36,319 Speaker 1: are thinking about a volatility move rather than taking money 220 00:11:36,320 --> 00:11:38,679 Speaker 1: off the table for equities. And I think to some 221 00:11:38,760 --> 00:11:41,160 Speaker 1: extent that speaks to the fact that people do believe 222 00:11:41,440 --> 00:11:44,360 Speaker 1: that the FED has dubed some of the impacts of 223 00:11:44,400 --> 00:11:47,040 Speaker 1: these risks. So yes, at this point, I think everyone 224 00:11:47,080 --> 00:11:48,680 Speaker 1: on the street or the majority of the street, is 225 00:11:48,679 --> 00:11:52,040 Speaker 1: expecting a contested election. I think the aftermath is certainly 226 00:11:52,040 --> 00:11:55,160 Speaker 1: going to be interesting. Smooth transition of powers, and question 227 00:11:55,559 --> 00:11:58,480 Speaker 1: potential civil unrest is in question. You can argue that 228 00:11:58,559 --> 00:12:02,560 Speaker 1: some of these could potentially be inflationary factors. So in 229 00:12:02,600 --> 00:12:05,000 Speaker 1: the calculus, this is why one of the reasons we 230 00:12:05,040 --> 00:12:07,000 Speaker 1: do want to keep that Barbell approach. We want to 231 00:12:07,080 --> 00:12:09,800 Speaker 1: keep you exposed to tech and growth in case we 232 00:12:09,880 --> 00:12:13,880 Speaker 1: see those disinflationary or deflationary factors, which should help multiples, 233 00:12:14,240 --> 00:12:16,760 Speaker 1: And we want you exposed to value because if there 234 00:12:16,840 --> 00:12:21,120 Speaker 1: is any semblance, even transitory inflation, you could see multiples 235 00:12:21,120 --> 00:12:22,840 Speaker 1: start to come in and you can see values start 236 00:12:22,840 --> 00:12:27,960 Speaker 1: to out. For one, where do you see inflation coming from? 237 00:12:27,960 --> 00:12:29,960 Speaker 1: So this is a great question, right because the FED 238 00:12:30,040 --> 00:12:34,440 Speaker 1: has been an apt at impacting inflation. So the real 239 00:12:34,480 --> 00:12:37,520 Speaker 1: potential for inflation comes from fiscal stimulus. Right, So we 240 00:12:37,600 --> 00:12:41,400 Speaker 1: do get another fiscal stimulus package that could be inflationary. Now, 241 00:12:41,440 --> 00:12:45,319 Speaker 1: the odds of one happening before an election have dwindled dramatically. 242 00:12:45,760 --> 00:12:48,440 Speaker 1: But we think about stimulus in another way, and I 243 00:12:48,480 --> 00:12:49,960 Speaker 1: think this is how people have to think about it 244 00:12:50,000 --> 00:12:53,560 Speaker 1: as well. Corporates are going to want to control their 245 00:12:53,600 --> 00:12:56,520 Speaker 1: supply chains more adequately. On the back of COVID nineteen. 246 00:12:56,840 --> 00:12:59,240 Speaker 1: We are going to see a move with regards to 247 00:12:59,280 --> 00:13:02,640 Speaker 1: re onshore, we are going to see a shift in 248 00:13:02,679 --> 00:13:05,400 Speaker 1: the economy and rein shoring is going to be one 249 00:13:05,440 --> 00:13:08,040 Speaker 1: of those places where we see more investment in the U. 250 00:13:08,120 --> 00:13:11,079 Speaker 1: S economy and we could potentially start to see inflation 251 00:13:11,360 --> 00:13:13,440 Speaker 1: from that. Now, that's not to say that we're not 252 00:13:13,480 --> 00:13:16,800 Speaker 1: already seeing inflation and hard asset prices. Right, food prices, 253 00:13:16,840 --> 00:13:19,560 Speaker 1: for example, We're already seeing signs of inflation. So it 254 00:13:19,679 --> 00:13:23,320 Speaker 1: just depends on if that inflation hits the real economy 255 00:13:23,360 --> 00:13:26,880 Speaker 1: significantly enough. What will the FED do then? Right? And 256 00:13:26,920 --> 00:13:30,880 Speaker 1: I understand average inflation targeting clearly tempers expectations and they 257 00:13:30,880 --> 00:13:34,319 Speaker 1: can point to transitory inflation, but still the impact to 258 00:13:34,360 --> 00:13:37,440 Speaker 1: asset prices might be real. All right, Well, thank you 259 00:13:37,559 --> 00:13:41,240 Speaker 1: very much, much appreciated there. From a stone X group, 260 00:13:41,400 --> 00:13:46,000 Speaker 1: we were talking to Youth of Embassy, whose global market strategist. 261 00:13:46,080 --> 00:13:48,200 Speaker 1: This on a day we're we're not seeing too much 262 00:13:48,200 --> 00:13:50,680 Speaker 1: movement in the markets, but what movement we are seeing 263 00:13:50,760 --> 00:13:53,680 Speaker 1: is lower and as Dave Wilson said earlier on really 264 00:13:53,679 --> 00:13:56,000 Speaker 1: wait till the close of trading today to see all 265 00:13:56,000 --> 00:14:01,400 Speaker 1: that action. It is time for Boomberg opinion we're joined 266 00:14:01,400 --> 00:14:05,240 Speaker 1: by Sarah Howzac Bloomberg Opinion retail columnists out with a 267 00:14:05,400 --> 00:14:10,319 Speaker 1: fascinating uh column just recently talking about or comparing Amazon 268 00:14:11,120 --> 00:14:15,280 Speaker 1: to Walmart, and these companies are increasingly looking a lot 269 00:14:15,440 --> 00:14:17,400 Speaker 1: like each other. I think back to the news where 270 00:14:17,400 --> 00:14:21,920 Speaker 1: Amazon's opening up a thousand small delivery facilities and suburbs 271 00:14:21,920 --> 00:14:24,200 Speaker 1: and cities and kind of putting out a kind of 272 00:14:24,240 --> 00:14:27,480 Speaker 1: a footprint that is replicating in some respects Amazon, and 273 00:14:27,520 --> 00:14:30,680 Speaker 1: of course Amazon getting into a Walmart, getting into a 274 00:14:30,800 --> 00:14:33,880 Speaker 1: kind of a prime like business. Sarah, thanks so much 275 00:14:33,920 --> 00:14:36,360 Speaker 1: for joining us here, talk to us about your column 276 00:14:36,440 --> 00:14:38,960 Speaker 1: here and how these two companies are starting to kind 277 00:14:38,960 --> 00:14:42,680 Speaker 1: of look like mirror images of one another exactly. So 278 00:14:42,800 --> 00:14:45,520 Speaker 1: with these many warehouses that Amazon is rolling out, they're 279 00:14:45,560 --> 00:14:49,200 Speaker 1: effectively making a concession to a premise that Walmart has 280 00:14:49,240 --> 00:14:52,240 Speaker 1: held for a long time, which is that it matters 281 00:14:52,280 --> 00:14:54,720 Speaker 1: to be close to your consumer when it comes to 282 00:14:54,840 --> 00:14:58,200 Speaker 1: delivery speed. So Walmart has four thousand stores around the 283 00:14:58,240 --> 00:15:01,280 Speaker 1: country and they've been using those in particular to deliver 284 00:15:01,520 --> 00:15:06,000 Speaker 1: groceries quickly. And they have stores the U S population 285 00:15:06,040 --> 00:15:08,520 Speaker 1: lives within ten minutes of a Walmart. You can see 286 00:15:08,560 --> 00:15:10,800 Speaker 1: the benefit of being close to the consumer right in 287 00:15:10,840 --> 00:15:12,760 Speaker 1: the towns where they live, as opposed to in some 288 00:15:12,920 --> 00:15:16,080 Speaker 1: far flung warehouse, uh far down the highway. And so 289 00:15:16,200 --> 00:15:19,640 Speaker 1: by making these mini warehouses, Amazon is kind of agreeing 290 00:15:19,680 --> 00:15:22,720 Speaker 1: with that as a business model and embracing it. How 291 00:15:22,800 --> 00:15:26,640 Speaker 1: much development of technology has Walmart been doing behind the scenes, Sarah, 292 00:15:26,640 --> 00:15:29,560 Speaker 1: because it seems to me that suddenly it's trying to 293 00:15:29,640 --> 00:15:32,520 Speaker 1: be and is being, a technology company. It also made 294 00:15:32,560 --> 00:15:35,200 Speaker 1: a bid for a part of the TikTok Us operations, 295 00:15:35,200 --> 00:15:40,600 Speaker 1: remember exactly. So digital advertising in particular has been a 296 00:15:40,600 --> 00:15:43,800 Speaker 1: big focus for Walmart recently. They believe that they have 297 00:15:43,880 --> 00:15:46,560 Speaker 1: a big trove of data on their customers both they's 298 00:15:46,560 --> 00:15:48,920 Speaker 1: done what they do in stores and online. A hundred 299 00:15:48,960 --> 00:15:51,680 Speaker 1: sixty million people trapped with Walmart every week. That's a 300 00:15:51,720 --> 00:15:55,120 Speaker 1: lot of data. And they see how Amazon has become 301 00:15:55,360 --> 00:15:58,400 Speaker 1: a really big force in the digital advertising space based 302 00:15:58,400 --> 00:16:00,960 Speaker 1: on the data and information they have with out their customers, 303 00:16:01,160 --> 00:16:04,680 Speaker 1: and so Walmart wants to replicate something similar, become a 304 00:16:04,720 --> 00:16:08,040 Speaker 1: digital advertising jugger not and in turn have this more 305 00:16:08,120 --> 00:16:11,800 Speaker 1: profitable revenue stream that helps offset some of the expense 306 00:16:11,840 --> 00:16:13,880 Speaker 1: that they're incurring. Is more and more of their business 307 00:16:13,880 --> 00:16:18,280 Speaker 1: moves online. So Walmart's business Sarah, it's it's amazing they're 308 00:16:18,320 --> 00:16:21,080 Speaker 1: digital business. I started really following closely several years ago, 309 00:16:21,120 --> 00:16:23,960 Speaker 1: and they really after some fits and starts, they've really 310 00:16:24,000 --> 00:16:28,200 Speaker 1: seem to get their uh dot com platform really ramping up, 311 00:16:28,280 --> 00:16:31,840 Speaker 1: putting up you know, solid plus kind of growth. Um 312 00:16:31,880 --> 00:16:34,200 Speaker 1: where do they think their digital business is going to 313 00:16:34,280 --> 00:16:38,640 Speaker 1: ultimately end up? They haven't offered a lot of specifics 314 00:16:38,680 --> 00:16:41,280 Speaker 1: on that, but I think that they see grocery as 315 00:16:41,320 --> 00:16:44,320 Speaker 1: the key to winning in that space. It's an area 316 00:16:44,360 --> 00:16:46,760 Speaker 1: where they really feel like they have an advantage to Amazon. 317 00:16:47,000 --> 00:16:49,840 Speaker 1: And it's also an area they really simply cannot afford 318 00:16:49,920 --> 00:16:53,800 Speaker 1: to lose on fift of Walmart US businesses grocery, so 319 00:16:53,920 --> 00:16:56,880 Speaker 1: they cannot seed market share there to Amazon. And that's 320 00:16:56,880 --> 00:16:59,280 Speaker 1: where this Walmart Plus membership that they just rolled out 321 00:16:59,320 --> 00:17:02,280 Speaker 1: comes into way. Grocery is sort of the centerpiece of it. 322 00:17:02,320 --> 00:17:05,160 Speaker 1: For ninety eight dollars a year, you get unlimited free 323 00:17:05,200 --> 00:17:09,200 Speaker 1: grocery deliveries, and that is clearly a bid to, among 324 00:17:09,240 --> 00:17:12,199 Speaker 1: other things, hang on to their grocery shopping customers and 325 00:17:12,240 --> 00:17:17,680 Speaker 1: continue to be the leader in in that space. Will 326 00:17:17,720 --> 00:17:21,480 Speaker 1: the other companies be able to stave off the Walmart advance. 327 00:17:21,680 --> 00:17:26,080 Speaker 1: And I'm talking about Amazon, I suppose mainly, I think 328 00:17:26,119 --> 00:17:29,239 Speaker 1: so look at Walmart Plus. I suspect what it's not 329 00:17:29,320 --> 00:17:31,760 Speaker 1: going to do is make a dent in Prime membership. 330 00:17:32,040 --> 00:17:34,520 Speaker 1: But one d fifty million people who already have Prime 331 00:17:34,560 --> 00:17:38,440 Speaker 1: memberships are locked into that ecosystem, and of course that 332 00:17:38,520 --> 00:17:41,040 Speaker 1: ecosystem is loaded up with all sorts of other goodies, 333 00:17:41,080 --> 00:17:43,399 Speaker 1: you know, TV programming, music, that kind of thing. So 334 00:17:43,400 --> 00:17:45,040 Speaker 1: I don't think Walmart Plus is going to have that 335 00:17:45,080 --> 00:17:48,000 Speaker 1: much sick stuss peeling away prime members I think it's 336 00:17:48,119 --> 00:17:50,879 Speaker 1: key function is going to be hanging onto the people 337 00:17:50,880 --> 00:17:53,920 Speaker 1: who already shop at Walmart and giving them a real 338 00:17:54,000 --> 00:17:56,639 Speaker 1: value play. Also, the pandemic has brought a lot of 339 00:17:56,680 --> 00:17:59,480 Speaker 1: new people to online shopping, or at least mean people 340 00:17:59,480 --> 00:18:03,040 Speaker 1: who are in frequent online shoppers into more frequent online shoppers, 341 00:18:03,200 --> 00:18:05,280 Speaker 1: and those people are just now considering some kind of 342 00:18:05,320 --> 00:18:09,359 Speaker 1: membership set up. Walmart has a good chance of getting 343 00:18:09,359 --> 00:18:12,760 Speaker 1: those shoppers business. It's interesting Walmart, you know, I see 344 00:18:12,800 --> 00:18:17,800 Speaker 1: they're kind of raising the pay for some of their employees, 345 00:18:18,080 --> 00:18:21,760 Speaker 1: and of course Walmart's a huge, huge employer in the US. 346 00:18:21,800 --> 00:18:22,960 Speaker 1: What do you make of that is that kind of 347 00:18:22,960 --> 00:18:26,119 Speaker 1: a competitive response to what's going on in the marketplace. 348 00:18:26,760 --> 00:18:29,760 Speaker 1: M I think so. I think that UH and Walmart 349 00:18:29,760 --> 00:18:31,720 Speaker 1: has found over the years. Look a number of years 350 00:18:31,720 --> 00:18:34,879 Speaker 1: ago in the economy was first starting to turn and 351 00:18:34,920 --> 00:18:38,000 Speaker 1: they made a decision to raise their minimum wage. They 352 00:18:38,119 --> 00:18:41,840 Speaker 1: clearly saw the benefits of that in terms of talent retention. 353 00:18:42,080 --> 00:18:45,359 Speaker 1: And they had this big focus at that time called clean, fast, friendly, 354 00:18:45,640 --> 00:18:49,160 Speaker 1: trying to make their stores that are stopped and trying 355 00:18:49,160 --> 00:18:52,400 Speaker 1: to make them less messy, and it really worked when 356 00:18:52,400 --> 00:18:54,880 Speaker 1: they started paying people more. They really saw the results 357 00:18:54,880 --> 00:18:56,920 Speaker 1: of that and it showed up in their comparable sales 358 00:18:56,920 --> 00:18:59,040 Speaker 1: growth numbers. And I think that lesson from a few 359 00:18:59,080 --> 00:19:01,280 Speaker 1: years ago, it's fresh in their mind. And so as 360 00:19:01,280 --> 00:19:04,080 Speaker 1: they approach this kind of unprecedented time as the pandemic 361 00:19:04,119 --> 00:19:06,520 Speaker 1: and are trying to address all this demand in their 362 00:19:06,560 --> 00:19:09,120 Speaker 1: stores and their website, they see pay as a way 363 00:19:09,920 --> 00:19:12,320 Speaker 1: to get the best out of their employees. Right. But 364 00:19:12,600 --> 00:19:14,679 Speaker 1: is it not a little bit more complicated, Sarah, in 365 00:19:14,680 --> 00:19:17,879 Speaker 1: the sense that they are taking out complete layers of 366 00:19:17,920 --> 00:19:21,000 Speaker 1: management by doing this. So they're going to have teams 367 00:19:21,040 --> 00:19:23,720 Speaker 1: and stores, you know, pods if you like, of workers 368 00:19:24,200 --> 00:19:28,560 Speaker 1: and everybody will have to do various different tasks, whereas 369 00:19:28,600 --> 00:19:31,399 Speaker 1: I'm sure before if you reach managerial level, there were 370 00:19:31,440 --> 00:19:34,320 Speaker 1: certain tasks that you wouldn't have to do. Uh, and 371 00:19:34,320 --> 00:19:38,760 Speaker 1: presumably they if there are certain fewer ranks of managers, 372 00:19:38,800 --> 00:19:44,680 Speaker 1: that's the potential right there for lower salaries across the board. Sure, 373 00:19:44,800 --> 00:19:46,360 Speaker 1: that's a good point, And I think it's also worth 374 00:19:46,400 --> 00:19:49,199 Speaker 1: pointing out that these pay increases they just announced, I 375 00:19:49,200 --> 00:19:51,560 Speaker 1: think it only affects something like a hundred thousand workers 376 00:19:51,560 --> 00:19:55,639 Speaker 1: of one and a half exactly exactly, So you know, 377 00:19:55,720 --> 00:19:58,400 Speaker 1: this is this is not we shouldn't be loby posed 378 00:19:58,400 --> 00:20:00,760 Speaker 1: in rainbows about it. Um, they're you know, clearly, it 379 00:20:00,840 --> 00:20:03,239 Speaker 1: is only affecting a small portion of the workforce. And 380 00:20:03,320 --> 00:20:06,040 Speaker 1: I think what you pointed out, and and the relatively 381 00:20:06,080 --> 00:20:08,359 Speaker 1: small pool of workers that are being effected here is 382 00:20:08,400 --> 00:20:11,840 Speaker 1: worth pointing out to Sarah. Any feedback already color on 383 00:20:11,960 --> 00:20:14,840 Speaker 1: how back to school was or is in terms of 384 00:20:14,880 --> 00:20:20,040 Speaker 1: retail sales. Yeah, so I think what we've heard anecdotally 385 00:20:20,080 --> 00:20:23,760 Speaker 1: from retailers is that it seems like it's happening later. 386 00:20:24,080 --> 00:20:25,800 Speaker 1: And that makes a lot of sense because there was 387 00:20:25,840 --> 00:20:28,159 Speaker 1: so much uncertainty right about what school was going to 388 00:20:28,240 --> 00:20:30,040 Speaker 1: look like, was your kid going to be going back 389 00:20:30,080 --> 00:20:32,160 Speaker 1: in person? Were they going to be going back digitally? 390 00:20:32,400 --> 00:20:34,720 Speaker 1: And clearly that effect whether you need to buy, say 391 00:20:34,800 --> 00:20:37,400 Speaker 1: a lunch box or a laptop um. And so the 392 00:20:37,400 --> 00:20:40,280 Speaker 1: theory is that something that spending it typically would have 393 00:20:40,280 --> 00:20:43,840 Speaker 1: happened in July or August was moving to late August 394 00:20:43,960 --> 00:20:47,919 Speaker 1: or perhaps September UM. So that was that was certainly different. 395 00:20:47,960 --> 00:20:50,760 Speaker 1: And I think now we get into this strange time 396 00:20:50,800 --> 00:20:54,639 Speaker 1: period where retailers are really trying to encourage people to 397 00:20:54,640 --> 00:20:57,520 Speaker 1: do their holiday shopping early by trying to move holiday 398 00:20:57,560 --> 00:21:00,440 Speaker 1: shopping more into October in order to able to fin 399 00:21:00,480 --> 00:21:03,080 Speaker 1: out crowds and make people feel comfortable social distancing in 400 00:21:03,080 --> 00:21:06,240 Speaker 1: their stores. And so now I feel like we're approaching 401 00:21:06,280 --> 00:21:08,040 Speaker 1: a strange time where it's going to be both the 402 00:21:08,119 --> 00:21:10,320 Speaker 1: way back to school shopping in an attempt at early 403 00:21:10,359 --> 00:21:14,680 Speaker 1: holiday shopping, which means we're a merchandizing challenge for these retailers. 404 00:21:14,680 --> 00:21:17,880 Speaker 1: And if anyone's guest held all manage it, Sarah, thank 405 00:21:17,880 --> 00:21:19,600 Speaker 1: you so much. I think it's also worth pointing out 406 00:21:19,600 --> 00:21:22,400 Speaker 1: that Walmart has been sending warnings to Washington as well, 407 00:21:22,440 --> 00:21:25,879 Speaker 1: but doesn't appear Washington is listening to Walmart, the biggest 408 00:21:25,880 --> 00:21:28,760 Speaker 1: employer in the country, on what will happen when you know, 409 00:21:28,840 --> 00:21:33,119 Speaker 1: stimulus runs out for the average American. Sarah Holzac always 410 00:21:33,160 --> 00:21:35,359 Speaker 1: keeping us up to date on the latest retail She 411 00:21:35,480 --> 00:21:39,120 Speaker 1: is Bloomberg opinion columnist and part of the Woomberg editorial 412 00:21:39,160 --> 00:21:42,440 Speaker 1: stuff as well, and we thank her very much. Paul, 413 00:21:42,640 --> 00:21:44,919 Speaker 1: do you live within how many minutes of Walmart? Did 414 00:21:44,920 --> 00:21:49,600 Speaker 1: they say? I'm pretty close to Walmart. But it's just extraordinary, 415 00:21:49,680 --> 00:21:51,960 Speaker 1: you know, they're obviously they're everywhere, and they're just massive 416 00:21:52,000 --> 00:21:56,960 Speaker 1: when you go in there. Palates of of merchandise amazing. Well, 417 00:21:57,280 --> 00:21:59,920 Speaker 1: we will continue to monitor retail obviously, it's one of 418 00:21:59,920 --> 00:22:06,720 Speaker 1: the first channels for the economic data. Well, the tech 419 00:22:06,920 --> 00:22:10,240 Speaker 1: cold war between the US and China is heating up 420 00:22:10,280 --> 00:22:14,520 Speaker 1: once again the Commerce Department. The US Commerce Department prohibiting 421 00:22:14,560 --> 00:22:18,160 Speaker 1: wheat chat and TikTok transactions. To get more color, we 422 00:22:18,160 --> 00:22:22,240 Speaker 1: welcome Nick Wadham's foreign policy reporter for Bloomberg News. He 423 00:22:22,320 --> 00:22:24,320 Speaker 1: joined us in Washington, d C. On the phone. Nick, 424 00:22:24,359 --> 00:22:26,159 Speaker 1: thanks so much for joining us here. Give us the 425 00:22:26,280 --> 00:22:30,280 Speaker 1: latest on what is going on here in terms of TikTok. 426 00:22:30,520 --> 00:22:33,920 Speaker 1: Wee Chat and all things tech. Well, it was a 427 00:22:33,960 --> 00:22:37,200 Speaker 1: business prize this morning when Commerce Department came out and 428 00:22:37,200 --> 00:22:41,399 Speaker 1: and said, listen, uh, we Chat, we're basically shutting you down. 429 00:22:41,600 --> 00:22:44,320 Speaker 1: And TikTok you're not going to be able to get 430 00:22:44,320 --> 00:22:47,560 Speaker 1: any updates on on your phone if you have that app, 431 00:22:47,600 --> 00:22:49,639 Speaker 1: you may not even be able to download it if 432 00:22:49,640 --> 00:22:53,520 Speaker 1: you're a new user. Um. But what we also learned 433 00:22:53,640 --> 00:22:56,960 Speaker 1: was that this deadline that's been talked about a lot 434 00:22:57,000 --> 00:23:00,840 Speaker 1: about the need for a sale of TikTok uh to 435 00:23:01,480 --> 00:23:05,959 Speaker 1: u S investors, which was really looming for September twentie 436 00:23:07,000 --> 00:23:08,720 Speaker 1: we now see that in some ways that was a 437 00:23:08,760 --> 00:23:11,880 Speaker 1: fiction and actually they haven't still November twelve to wrap 438 00:23:11,960 --> 00:23:16,920 Speaker 1: that up. So, uh, two contrasting forces going on. One 439 00:23:17,040 --> 00:23:19,119 Speaker 1: is it looks like we Chat in the US is 440 00:23:19,160 --> 00:23:23,720 Speaker 1: really being almost totally neutered. But the other, uh, it 441 00:23:23,760 --> 00:23:26,040 Speaker 1: looks like Oracle and the others who are looking to 442 00:23:26,600 --> 00:23:29,679 Speaker 1: make a big investment in TikTok do actually have a 443 00:23:29,720 --> 00:23:33,200 Speaker 1: couple of months to pin this thing down. How are 444 00:23:33,320 --> 00:23:38,640 Speaker 1: the two in sync? I mean, um, I don't understand 445 00:23:38,680 --> 00:23:42,119 Speaker 1: how Oracle can be given the chance to fix social media, 446 00:23:42,280 --> 00:23:44,440 Speaker 1: if you like, in the United States and we Chat 447 00:23:44,720 --> 00:23:49,760 Speaker 1: is being bound. It's a it's a great point. I mean, essentially, 448 00:23:49,760 --> 00:23:53,119 Speaker 1: what you're seeing here is action by this administration on 449 00:23:53,200 --> 00:23:56,840 Speaker 1: two fronts. One is the belief that TikTok poses a 450 00:23:56,920 --> 00:23:59,600 Speaker 1: threat to user data. There is a heavy, heavy political 451 00:23:59,640 --> 00:24:03,240 Speaker 1: element that the President was extremely upset a couple of 452 00:24:03,240 --> 00:24:07,240 Speaker 1: months ago when TikTok users basically spoofed his campaign by 453 00:24:07,280 --> 00:24:09,200 Speaker 1: pretending that they had bought a bunch of tickets to 454 00:24:09,240 --> 00:24:12,359 Speaker 1: a rally in Tulsa, Oklahoma, and it turned out not 455 00:24:12,480 --> 00:24:15,160 Speaker 1: to be the case. Uh So, so there's that whole 456 00:24:15,160 --> 00:24:18,919 Speaker 1: element the TikTok cases is very very political. And then 457 00:24:18,960 --> 00:24:21,520 Speaker 1: there's also the concern about we chat, which is UH 458 00:24:21,800 --> 00:24:26,359 Speaker 1: more specific concern about what user data, what uh financial 459 00:24:26,440 --> 00:24:30,159 Speaker 1: data UH users private information is being hoovered up by 460 00:24:30,240 --> 00:24:34,160 Speaker 1: China uh and sent back there because we chat obviously 461 00:24:34,320 --> 00:24:38,240 Speaker 1: is as a messaging app, but it's also primarily used 462 00:24:39,080 --> 00:24:41,879 Speaker 1: essentially to do every transaction you would need to do 463 00:24:41,920 --> 00:24:44,720 Speaker 1: in China, so payments and things like that. So you 464 00:24:44,720 --> 00:24:48,200 Speaker 1: you sort of see both things happening at once. Oracle 465 00:24:48,720 --> 00:24:52,000 Speaker 1: may come in with UH to buy a stake in 466 00:24:52,000 --> 00:24:55,600 Speaker 1: in Wich sorry in TikTok um, But that's something that 467 00:24:55,680 --> 00:24:57,480 Speaker 1: we now looks like, yeah, we've got We've got a 468 00:24:57,520 --> 00:25:00,720 Speaker 1: little more time, and the president has so much of 469 00:25:00,760 --> 00:25:04,119 Speaker 1: his reputation to that We've got Steven Nuchin working behind 470 00:25:04,160 --> 00:25:07,879 Speaker 1: the scenes desperately to get that deal done. So any 471 00:25:08,000 --> 00:25:14,240 Speaker 1: sense of what a response could be coming out of Beijing, Uh, 472 00:25:14,480 --> 00:25:16,600 Speaker 1: that is what we've been chasing. That is that is 473 00:25:16,600 --> 00:25:19,520 Speaker 1: the big unknown. Will China look, you know this, this 474 00:25:19,600 --> 00:25:24,160 Speaker 1: TikTok demand would have has to come do after the election. 475 00:25:24,320 --> 00:25:28,000 Speaker 1: So there's maybe a hope by Beijing that Joe Biden 476 00:25:28,040 --> 00:25:30,479 Speaker 1: would then start to signal that he's going to de escalate. 477 00:25:31,200 --> 00:25:34,960 Speaker 1: But China has always responded. In the last several months 478 00:25:34,960 --> 00:25:37,920 Speaker 1: of the US has pressed, China has pushed back. So 479 00:25:38,280 --> 00:25:40,720 Speaker 1: a lot of things can happen. What happens to Apple, 480 00:25:40,840 --> 00:25:45,080 Speaker 1: for example, huge operation gets a huge amount of its 481 00:25:45,080 --> 00:25:48,080 Speaker 1: sales and China could Could China put the squeeze on 482 00:25:48,080 --> 00:25:51,400 Speaker 1: on Apple and limited in some way, um could ad 483 00:25:51,400 --> 00:25:54,280 Speaker 1: ban the sale of TikTok? There there had been some 484 00:25:54,359 --> 00:25:56,720 Speaker 1: open this over night, we were getting signals that China 485 00:25:56,840 --> 00:26:00,159 Speaker 1: was actually much more open than we had earlier thought up. 486 00:26:00,160 --> 00:26:02,639 Speaker 1: The idea of by debts selling off a big portion 487 00:26:02,680 --> 00:26:05,680 Speaker 1: of TikTok. China could reverse itself and scuttle this whole 488 00:26:05,720 --> 00:26:08,320 Speaker 1: process and just say no, we're not going to do it. Um. 489 00:26:08,440 --> 00:26:11,479 Speaker 1: So still very much in the air, and China has 490 00:26:11,520 --> 00:26:13,800 Speaker 1: shown in the past that they're willing to hit hard, 491 00:26:14,359 --> 00:26:17,560 Speaker 1: hit the US very hard. Um So, really anything is 492 00:26:17,600 --> 00:26:21,760 Speaker 1: on the table at the nick. Why would Oracle agreed 493 00:26:21,800 --> 00:26:25,080 Speaker 1: to buy something that's banned. I mean, doesn't this change 494 00:26:25,119 --> 00:26:28,600 Speaker 1: the whole arithmetic for Oracle? Or is the Oracle deciding 495 00:26:28,640 --> 00:26:30,440 Speaker 1: that this is going to be a temporary event on 496 00:26:30,480 --> 00:26:34,040 Speaker 1: the part of President Trump ofp TikTok, Well Wilver Ross 497 00:26:34,040 --> 00:26:36,560 Speaker 1: said this morning, Listen, if the if the deal goes through, 498 00:26:36,840 --> 00:26:41,000 Speaker 1: then all our concerns about TikTok are taken off the table. 499 00:26:41,119 --> 00:26:45,119 Speaker 1: So a huge caveat there. They're they're essentially saying, here's 500 00:26:45,160 --> 00:26:48,320 Speaker 1: what will happen to TikTok if the deal doesn't doesn't 501 00:26:48,359 --> 00:26:51,560 Speaker 1: go through. So some minor inconveniences. Now, if if you 502 00:26:51,640 --> 00:26:53,720 Speaker 1: have the app, you won't be able to get updates. 503 00:26:53,920 --> 00:26:56,160 Speaker 1: All that goes away if the deals goes through. So 504 00:26:56,440 --> 00:26:59,040 Speaker 1: they're really signaling we are we are going to make 505 00:26:59,080 --> 00:27:01,360 Speaker 1: it very very difficult to you for you to use 506 00:27:01,359 --> 00:27:04,480 Speaker 1: we chat, and that's not going away. TikTok, on the 507 00:27:04,480 --> 00:27:07,000 Speaker 1: other hand, has a huge escape hatch, which is the 508 00:27:07,000 --> 00:27:12,639 Speaker 1: Oracle deal. It's it's just extraordinary what's going on here. 509 00:27:12,720 --> 00:27:15,239 Speaker 1: Nick Wadams, Bloomberg Foreign Policy Reporter, Thanks so much for 510 00:27:15,359 --> 00:27:17,080 Speaker 1: joining us, Havanni. You just think about some of these 511 00:27:17,119 --> 00:27:21,280 Speaker 1: things TikTok. You know, it's it's not quite our demo, Vanni, 512 00:27:21,400 --> 00:27:24,080 Speaker 1: but you know, for that kind of I've done a 513 00:27:24,240 --> 00:27:29,040 Speaker 1: you yeah, the fourteen demo. It is just huge and 514 00:27:29,119 --> 00:27:32,280 Speaker 1: it is a massive platform, huge growth. Um. You know, 515 00:27:32,320 --> 00:27:34,560 Speaker 1: it's there's a lot of people watching what's going on here, 516 00:27:34,560 --> 00:27:37,000 Speaker 1: and it's hard to separate the political from what really 517 00:27:37,080 --> 00:27:41,080 Speaker 1: is potentially viable national security. Well, it really is fascinating 518 00:27:41,160 --> 00:27:43,280 Speaker 1: how it became innovative. I mean, we had all of 519 00:27:43,320 --> 00:27:47,160 Speaker 1: these other social media platforms and suddenly TikTok is doing 520 00:27:47,200 --> 00:27:51,080 Speaker 1: something just that slide bit differently, and it is engaging 521 00:27:51,160 --> 00:27:55,399 Speaker 1: young users in politics, Paul, in political activity. It's pretty 522 00:27:55,760 --> 00:27:57,960 Speaker 1: it's it's just amazing with the younger demo, so be 523 00:27:58,040 --> 00:28:03,160 Speaker 1: fascinating to see how this plays out. Thanks for listening 524 00:28:03,200 --> 00:28:06,560 Speaker 1: to Bloomberg Markets podcast. You can subscribe and listen to 525 00:28:06,640 --> 00:28:10,439 Speaker 1: interviews at Apple Podcasts or whatever a podcast platform you prefer. 526 00:28:10,640 --> 00:28:13,600 Speaker 1: I'm Bonnie Quinn, I'm on Twitter at Bonnie Quinn. And 527 00:28:13,680 --> 00:28:16,280 Speaker 1: I'm Paul Sweeney. I'm on Twitter at pt Sweeney. Before 528 00:28:16,320 --> 00:28:19,160 Speaker 1: the podcast, you can always catch us worldwide at Bloomberg 529 00:28:19,240 --> 00:28:19,480 Speaker 1: Radio