1 00:00:00,240 --> 00:00:05,000 Speaker 1: This is Bloomberg Wall Street Week. Market shruggle, higher consumer prices. 2 00:00:05,040 --> 00:00:07,400 Speaker 1: The economy is in the process of rebounding. Will the 3 00:00:07,400 --> 00:00:10,479 Speaker 1: futteral reserve have its own digital currency? The financial stories 4 00:00:10,520 --> 00:00:12,879 Speaker 1: that cheap hard work. Many people think the eels are 5 00:00:12,880 --> 00:00:15,080 Speaker 1: just going to keep marching up. We have more spending 6 00:00:15,120 --> 00:00:17,160 Speaker 1: coming out of Congress. One of the big questions I 7 00:00:17,200 --> 00:00:19,880 Speaker 1: think on investor's minds inflation through the eyes of the 8 00:00:19,880 --> 00:00:23,560 Speaker 1: most influential voices. Larry Summer is the former Treasury Secretary 9 00:00:23,640 --> 00:00:26,759 Speaker 1: Bryan Wynahan back of America, Will Smart, CEO of Charlie 10 00:00:26,920 --> 00:00:31,560 Speaker 1: Sharp Bloomberg wool Street Week with David Weston from Bloomberg Radio. 11 00:00:32,200 --> 00:00:35,800 Speaker 1: Strong earnings. Trump fears that the variant will slow down 12 00:00:35,800 --> 00:00:39,400 Speaker 1: the recovery, and so we continue on our upward path. 13 00:00:40,080 --> 00:00:43,279 Speaker 1: This is Bloomberg Wall Street Week. I'm David Weston. And 14 00:00:43,400 --> 00:00:46,200 Speaker 1: that near panic attack from the first part of the week, 15 00:00:46,400 --> 00:00:50,040 Speaker 1: along with the quick midweek recovery, were reflected in equity markets, 16 00:00:50,040 --> 00:00:52,640 Speaker 1: where the SMP on Monday dropped the most in two months, 17 00:00:52,880 --> 00:00:55,040 Speaker 1: only to recover to reach for new highs ending the 18 00:00:55,080 --> 00:00:59,560 Speaker 1: week over and the NASDAK reaching towards fifteen thousand, while 19 00:00:59,560 --> 00:01:01,840 Speaker 1: the flight is safety early in the week led to 20 00:01:01,920 --> 00:01:04,959 Speaker 1: the ten year yield treasury yield dropping below one and 21 00:01:05,080 --> 00:01:07,880 Speaker 1: fifteen basis points and then climbing back to end the 22 00:01:07,880 --> 00:01:10,600 Speaker 1: week a bit higher actually than it was back on Monday. 23 00:01:10,840 --> 00:01:13,240 Speaker 1: Todays through the drama of the week, we welcome now 24 00:01:13,280 --> 00:01:17,280 Speaker 1: RuPaul bin Sally. She's Aerial Investments, chief investment officer of 25 00:01:17,319 --> 00:01:20,959 Speaker 1: International and Global Equities and author of non Conventional Investing, 26 00:01:21,200 --> 00:01:24,320 Speaker 1: Being Right when everyone Else is Wrong, and my colleague 27 00:01:24,360 --> 00:01:28,280 Speaker 1: Gina Martin Adams. She's chief equity strategist for Bloomberg Intelligence. 28 00:01:28,319 --> 00:01:30,320 Speaker 1: So welcome to both of you. Gina, let me start 29 00:01:30,360 --> 00:01:32,759 Speaker 1: with you explained to me what happened this week, because 30 00:01:32,760 --> 00:01:35,640 Speaker 1: it was pretty dramatic. It was a relatively volatile week, 31 00:01:35,680 --> 00:01:38,920 Speaker 1: particularly after you know, six months of pretty much continuous 32 00:01:38,959 --> 00:01:40,760 Speaker 1: games in the equity market. To have a little bit 33 00:01:40,760 --> 00:01:44,600 Speaker 1: of volatility felt a bit uncomfortable for many investors. That's 34 00:01:44,600 --> 00:01:47,120 Speaker 1: certainly what we did see. I think you accurately captured, 35 00:01:47,200 --> 00:01:51,240 Speaker 1: David is the market and gyrating around the delta variant, 36 00:01:51,280 --> 00:01:54,160 Speaker 1: as well as inflation expectations. Maybe a little bit of 37 00:01:54,200 --> 00:01:56,960 Speaker 1: worries carry over from last week, which was more about 38 00:01:57,320 --> 00:02:02,440 Speaker 1: global central banks earnings playing a part of the story. 39 00:02:02,520 --> 00:02:04,720 Speaker 1: But when we when we really dig into the details, 40 00:02:04,720 --> 00:02:07,720 Speaker 1: we actually find the companies that reported earnings over the 41 00:02:07,720 --> 00:02:11,079 Speaker 1: course of the last week have not received derived any 42 00:02:11,120 --> 00:02:14,800 Speaker 1: benefit from those reports. So certainly we are in the 43 00:02:14,800 --> 00:02:18,200 Speaker 1: midst of a lot of mayhem, I would say, in 44 00:02:18,200 --> 00:02:20,920 Speaker 1: the market where investors seem to have kind of lost 45 00:02:20,960 --> 00:02:23,800 Speaker 1: their footing. I think it's a continuation. Frankly, it's what's 46 00:02:23,800 --> 00:02:27,760 Speaker 1: been happening since May, when inflation expectations peaked, When we 47 00:02:27,760 --> 00:02:30,720 Speaker 1: started to price in peak growth coming over the summer, 48 00:02:31,240 --> 00:02:33,400 Speaker 1: we lost a lot of leadership on the index, and 49 00:02:33,440 --> 00:02:36,000 Speaker 1: that really took hold over the course of the last 50 00:02:36,000 --> 00:02:38,200 Speaker 1: couple of weeks with a lot of get on again, 51 00:02:38,200 --> 00:02:41,519 Speaker 1: off again trading. So, RuPaul, you wrote the book non 52 00:02:41,560 --> 00:02:45,160 Speaker 1: Conventional Investing, explain the non conventional approach to what's going 53 00:02:45,160 --> 00:02:47,400 Speaker 1: on right now, because the conventional wisdom, I think is 54 00:02:47,600 --> 00:02:49,040 Speaker 1: we thought we were all going to rush back in 55 00:02:49,080 --> 00:02:51,200 Speaker 1: a lot of fears about inflation. Now I think we're 56 00:02:51,200 --> 00:02:54,160 Speaker 1: not quite as sure. But what's the non conventional take 57 00:02:54,200 --> 00:02:56,560 Speaker 1: on what's happening? David, thank you for that, And just 58 00:02:56,639 --> 00:03:00,240 Speaker 1: to correct you, it's non consensus investing. Uh and known 59 00:03:00,280 --> 00:03:02,760 Speaker 1: to be a contrarian. So here's I think a couple 60 00:03:02,760 --> 00:03:06,760 Speaker 1: of things to note. One is that equity markets, I 61 00:03:06,800 --> 00:03:09,520 Speaker 1: think are paying more attention to the credit markets, and 62 00:03:09,639 --> 00:03:12,960 Speaker 1: rightly so, because the credit markets tend to be much 63 00:03:13,000 --> 00:03:16,960 Speaker 1: more prescient about you know, future economic outlook, which ultimately 64 00:03:17,000 --> 00:03:19,800 Speaker 1: then drives profit outlook for the equities. And the big 65 00:03:19,880 --> 00:03:23,359 Speaker 1: dichotomy that's occurred in the last couple of weeks in 66 00:03:23,400 --> 00:03:26,360 Speaker 1: the indust rate environment, where the tenure bond rate has 67 00:03:26,400 --> 00:03:31,360 Speaker 1: been correcting against all expectations and against all punditory views, 68 00:03:31,639 --> 00:03:33,600 Speaker 1: which I'm going to call, you know, all the consensus 69 00:03:33,639 --> 00:03:37,800 Speaker 1: views that industrates would rise, they actually did the opposite. 70 00:03:37,920 --> 00:03:42,800 Speaker 1: They fell, And frankly, inflation has not been higher than 71 00:03:42,840 --> 00:03:46,040 Speaker 1: the statistics have reported. CPO was over five percent. So 72 00:03:46,160 --> 00:03:50,000 Speaker 1: you have a record level of negative real rates and 73 00:03:50,040 --> 00:03:52,880 Speaker 1: that's putting a bid onto equity markets, which is why 74 00:03:52,920 --> 00:03:55,080 Speaker 1: every time you see any kind of pullback, they go 75 00:03:55,200 --> 00:03:57,440 Speaker 1: right back up. And also, I think, you know, to 76 00:03:57,560 --> 00:04:00,600 Speaker 1: Gina's point, it's also caused for rotation in the market. 77 00:04:01,400 --> 00:04:05,200 Speaker 1: People who all gung ho about value making big comeback 78 00:04:05,680 --> 00:04:09,360 Speaker 1: that was the consensus reflation trade. Well, guests, what that's 79 00:04:09,360 --> 00:04:12,840 Speaker 1: been put to pay with what the industrates are telling 80 00:04:12,920 --> 00:04:15,880 Speaker 1: us that inflation is not likely to get out of control, 81 00:04:16,279 --> 00:04:21,200 Speaker 1: and that also caused rotation into group stocks versus value stocks. 82 00:04:21,400 --> 00:04:23,640 Speaker 1: So let's come back to you on this and I 83 00:04:23,680 --> 00:04:26,159 Speaker 1: take the points non consensus. I beg your partner on 84 00:04:26,200 --> 00:04:29,640 Speaker 1: the non conventional non consensus. But but how much of 85 00:04:29,640 --> 00:04:31,880 Speaker 1: the equity valuation right now is just supported by the 86 00:04:31,920 --> 00:04:34,040 Speaker 1: interest rates being so terribly low? I mean, we a 87 00:04:34,080 --> 00:04:35,839 Speaker 1: lot of people are saying we're going towards the to 88 00:04:35,920 --> 00:04:38,680 Speaker 1: the two level on the ten year yield, and instead we, 89 00:04:38,760 --> 00:04:40,839 Speaker 1: as I said, drip that down below a hundred fifteen 90 00:04:40,839 --> 00:04:43,719 Speaker 1: basis points. I think we're about now. Well, I think 91 00:04:43,720 --> 00:04:45,960 Speaker 1: you have to think about equities relative to bonds in 92 00:04:46,000 --> 00:04:48,480 Speaker 1: a longer term scope. I mean, we got the point 93 00:04:49,040 --> 00:04:51,800 Speaker 1: back in May where the equity risk premium relative to 94 00:04:51,880 --> 00:04:55,200 Speaker 1: bonds had fallen out of its fourth quintile really for 95 00:04:55,200 --> 00:04:58,000 Speaker 1: the first time in more than a decade, which said 96 00:04:58,080 --> 00:05:00,280 Speaker 1: to a lot of investors, hey, look at but he's 97 00:05:00,320 --> 00:05:03,520 Speaker 1: relative to bonds are no longer offering us quite as 98 00:05:03,600 --> 00:05:07,240 Speaker 1: extreme value as they did. At the same time, inflation 99 00:05:07,360 --> 00:05:11,400 Speaker 1: expectations started started to turn over, and then the story 100 00:05:11,480 --> 00:05:16,320 Speaker 1: was written from there right by Monday's clothes, that equity 101 00:05:16,360 --> 00:05:19,240 Speaker 1: risk premium relative to bonds had finally reached back into 102 00:05:19,279 --> 00:05:23,520 Speaker 1: the fourth quintile, offering investors an opportunity to buy into 103 00:05:23,720 --> 00:05:25,720 Speaker 1: a dip in the equity market for the first time 104 00:05:25,720 --> 00:05:28,280 Speaker 1: in quite a while. And I think we did see that. 105 00:05:28,440 --> 00:05:30,880 Speaker 1: Now the question remains as to how much we should 106 00:05:30,880 --> 00:05:33,320 Speaker 1: be paying for equities globally, how much we should be 107 00:05:33,360 --> 00:05:36,200 Speaker 1: paying for US equities relative to rest of world equities 108 00:05:36,240 --> 00:05:39,520 Speaker 1: and the like. But I think that fundamental shift is 109 00:05:39,560 --> 00:05:42,400 Speaker 1: important to note that. You know, we've been sitting in 110 00:05:42,440 --> 00:05:44,960 Speaker 1: this fourth quintele for so long, and the relative value 111 00:05:44,960 --> 00:05:48,479 Speaker 1: of equities in comparison to bonds is has been incredibly compelling, 112 00:05:48,480 --> 00:05:50,720 Speaker 1: But we lost a little bit of that in that 113 00:05:50,839 --> 00:05:54,640 Speaker 1: really strong rip into May. Now it came back with 114 00:05:54,720 --> 00:05:57,279 Speaker 1: the sell off that we that we've seen, and investors 115 00:05:57,279 --> 00:06:00,200 Speaker 1: took advantage all. One of the things I took away 116 00:06:00,200 --> 00:06:03,680 Speaker 1: from your book, the non consensus investing book, was you 117 00:06:03,800 --> 00:06:06,760 Speaker 1: like to manage risk rather than return. You focused on 118 00:06:06,839 --> 00:06:09,000 Speaker 1: not losing money as much or more than you do 119 00:06:09,040 --> 00:06:12,080 Speaker 1: on making money. So in this world, what is the 120 00:06:12,240 --> 00:06:15,040 Speaker 1: risk we need to avoid as an investor? Spot on 121 00:06:15,160 --> 00:06:18,120 Speaker 1: David Uh. You know, to Gina's point, I think a 122 00:06:18,120 --> 00:06:20,520 Speaker 1: lot of investors are thinking about putting money to work 123 00:06:20,520 --> 00:06:25,240 Speaker 1: in equities simply based on a relative valuation trade. I 124 00:06:25,279 --> 00:06:29,320 Speaker 1: think they should look at absolute value, intrinsic value, not relative. 125 00:06:29,600 --> 00:06:32,920 Speaker 1: I think both equity and credit markets are quite overvalued, 126 00:06:33,279 --> 00:06:36,800 Speaker 1: and frankly, instead of just looking at the earnings multiples 127 00:06:36,839 --> 00:06:39,680 Speaker 1: on stocks, which is what most equity investors do, they 128 00:06:39,680 --> 00:06:42,880 Speaker 1: should actually stop being attention to the debt multiple. Thanks 129 00:06:42,880 --> 00:06:45,960 Speaker 1: to rupap and Sally of Aerial Investments and Gina Martin 130 00:06:46,000 --> 00:06:50,240 Speaker 1: Adams from Bloomberg Intelligence. Coming up, Treasury Secretary Janet Yellen 131 00:06:50,320 --> 00:06:53,560 Speaker 1: had her eye on cryptocurrencies this week, even as bitcoin 132 00:06:53,680 --> 00:06:57,599 Speaker 1: dip back below thirty dollars. We talk with economists Ken 133 00:06:57,720 --> 00:07:00,560 Speaker 1: Rogoff of Harvard about the future of crypto and what 134 00:07:00,680 --> 00:07:04,000 Speaker 1: regulators are likely to do about it. That's next on 135 00:07:04,080 --> 00:07:12,520 Speaker 1: Wall Street Week on Bloomberg. This is Bloomberg Wall Street 136 00:07:12,520 --> 00:07:17,080 Speaker 1: Week with David Weston from Bloomberg Radio. Thirty thousand dollars. 137 00:07:17,400 --> 00:07:20,160 Speaker 1: That was the level in focus for bitcoin this week. 138 00:07:20,480 --> 00:07:23,720 Speaker 1: The cryptocurrency fell along with equities early in the week 139 00:07:23,760 --> 00:07:27,520 Speaker 1: as concerns of the spread of the delta variant rattled investors. 140 00:07:27,760 --> 00:07:31,520 Speaker 1: Here's FED chair J. Powell. We see bitcoin going up 141 00:07:31,560 --> 00:07:33,600 Speaker 1: in value and down in value, so it's it's a 142 00:07:33,680 --> 00:07:36,720 Speaker 1: you know, it's a at times, it's felt like a 143 00:07:36,760 --> 00:07:40,920 Speaker 1: somewhat frothy market. Bitcoin is down about fift from the 144 00:07:41,000 --> 00:07:44,360 Speaker 1: April peak, a sign that the bubble may be deflating. 145 00:07:44,880 --> 00:07:48,720 Speaker 1: I think something in the neighborhood of fifteen thousand dollars 146 00:07:48,800 --> 00:07:51,440 Speaker 1: is where we're going to end up. And uh, you know, 147 00:07:51,560 --> 00:07:54,840 Speaker 1: given all the uncertainty and the new competition from new 148 00:07:54,880 --> 00:07:58,400 Speaker 1: coins and everything else, Uh, you know, I think that 149 00:07:58,800 --> 00:08:02,720 Speaker 1: there's more downside to go. That's Scott Minored of Guggenheim. 150 00:08:03,080 --> 00:08:07,760 Speaker 1: Crypto speculators are losing steam. Volumes for cryptocurrency spots and 151 00:08:07,760 --> 00:08:11,720 Speaker 1: derivatives have slipped to their lowest since December. Here's JP 152 00:08:11,880 --> 00:08:18,960 Speaker 1: Morgan's Mary Callaghan urdos. Digital currencies are new, and in general, 153 00:08:19,080 --> 00:08:22,240 Speaker 1: digital currencies are being debated as to whether they're an 154 00:08:22,240 --> 00:08:25,400 Speaker 1: asset class or not. But the volatility that you see 155 00:08:25,400 --> 00:08:28,680 Speaker 1: in it today it is just has to play itself 156 00:08:28,720 --> 00:08:31,760 Speaker 1: out over time. Elon Musk gave bitcoin a temporary boost 157 00:08:31,800 --> 00:08:34,560 Speaker 1: at the b Word conference hosted this week by the 158 00:08:34,600 --> 00:08:39,439 Speaker 1: Crypto Council for Innovation, saying he personally owns bitcoin, Ethereum 159 00:08:39,520 --> 00:08:44,400 Speaker 1: and dogecoin, while Tesla and SpaceX both own bitcoin. Cryptocurrencies 160 00:08:44,440 --> 00:08:48,120 Speaker 1: plunged in May after Musk said Tesla would stop accepting 161 00:08:48,120 --> 00:08:50,840 Speaker 1: bitcoin as a form of payment because of the energy 162 00:08:50,960 --> 00:08:53,720 Speaker 1: used to mine bitcoin. And we wonder a little bit 163 00:08:53,720 --> 00:08:57,679 Speaker 1: more diligence. UM, so you can quote uh, that's the 164 00:08:58,640 --> 00:09:03,000 Speaker 1: concom with deep so of renewable entine usage is most 165 00:09:03,080 --> 00:09:07,840 Speaker 1: likely UH are sort of or above designs UM, and 166 00:09:08,000 --> 00:09:11,800 Speaker 1: that there is that that that there is a friend 167 00:09:12,040 --> 00:09:15,840 Speaker 1: towards increasing that number UM and if so then tells 168 00:09:15,840 --> 00:09:19,400 Speaker 1: it we'll resume bitcoin accepting bitcoin. Bitcoin status is a 169 00:09:19,440 --> 00:09:22,199 Speaker 1: store of value is one of the things that separates 170 00:09:22,200 --> 00:09:26,080 Speaker 1: bitcoin believers from skeptics. I don't completely buy the whole thing. 171 00:09:26,600 --> 00:09:29,160 Speaker 1: You're essentially saying that we're going to create a store 172 00:09:29,160 --> 00:09:32,839 Speaker 1: of value and a medium of exchange around something that 173 00:09:32,880 --> 00:09:35,840 Speaker 1: only exists inside of a computer somewhere. It's not a 174 00:09:35,880 --> 00:09:40,280 Speaker 1: physical asset that Steve Rattner of will It Advisers. Treasury 175 00:09:40,320 --> 00:09:45,000 Speaker 1: Secretary Yelling is among those who wants more scrutiny of cryptocurrencies. 176 00:09:45,480 --> 00:09:48,559 Speaker 1: This week, she convened a meeting of regulators and policymakers 177 00:09:48,760 --> 00:09:51,760 Speaker 1: to discuss the growth of stable coins and the potential 178 00:09:51,880 --> 00:09:56,600 Speaker 1: risks to consumers. I think cryptocurrencies we don't really have 179 00:09:57,240 --> 00:10:02,559 Speaker 1: an adequate framework to deal with different issues that they 180 00:10:02,800 --> 00:10:08,600 Speaker 1: um pose from a regulatory perspective. One of those who's 181 00:10:08,640 --> 00:10:11,320 Speaker 1: raised at least some questions about the future of cryptocurrencies 182 00:10:11,320 --> 00:10:13,640 Speaker 1: and whether regulators in the long run can just let 183 00:10:13,679 --> 00:10:16,640 Speaker 1: them run is Ken Rogoff. He's professor of public policy 184 00:10:16,679 --> 00:10:19,520 Speaker 1: and of economics at Harvard University. So, professor, thank you 185 00:10:19,559 --> 00:10:21,160 Speaker 1: so much for being with us. As I say, I 186 00:10:21,200 --> 00:10:23,480 Speaker 1: don't want to put working without. You've expressed some skepticism. 187 00:10:23,520 --> 00:10:25,360 Speaker 1: But where this all is going. One of the things 188 00:10:25,360 --> 00:10:28,480 Speaker 1: we just heard there is there's just so much volatility involved. 189 00:10:28,720 --> 00:10:30,840 Speaker 1: On the other hand, there's something called stable coin. I 190 00:10:30,840 --> 00:10:34,080 Speaker 1: guess stable coin is tethered to specific fiat currencies to 191 00:10:34,120 --> 00:10:38,520 Speaker 1: try to eliminate some of that volatility. Yeah, there are 192 00:10:38,520 --> 00:10:40,440 Speaker 1: a lot of different kinds of stable points, but the 193 00:10:40,480 --> 00:10:45,000 Speaker 1: basic idea is something that you can exchange for a 194 00:10:45,080 --> 00:10:47,880 Speaker 1: dollar and fiat currency, just like you used to be 195 00:10:47,920 --> 00:10:51,400 Speaker 1: able to exchange gold. Of course, then you're not speculating 196 00:10:51,440 --> 00:10:54,079 Speaker 1: on it in the same way, but the ideas to 197 00:10:54,240 --> 00:10:57,840 Speaker 1: try to get stable coins some of the attractive pseudo 198 00:10:57,920 --> 00:11:01,960 Speaker 1: anonymous properties that bitcoin nows, which is I think a 199 00:11:01,960 --> 00:11:05,520 Speaker 1: lot of the underlying appeal at the same time. And 200 00:11:05,600 --> 00:11:08,920 Speaker 1: my understanding is theoretically stable coins says, whoever is issuing 201 00:11:08,920 --> 00:11:13,320 Speaker 1: these has those dollars or yen or whatever reserved against 202 00:11:13,360 --> 00:11:15,199 Speaker 1: those to tie to them. How do we make sure 203 00:11:15,240 --> 00:11:17,280 Speaker 1: that happens? And is that really what Janet Yell is 204 00:11:17,280 --> 00:11:20,920 Speaker 1: concerned about, is she meets with regulators. Well, I don't 205 00:11:20,920 --> 00:11:23,240 Speaker 1: think that's the only thing she's concerned about. I mean, 206 00:11:23,280 --> 00:11:26,120 Speaker 1: I think regulators are very late to the game here 207 00:11:26,240 --> 00:11:30,199 Speaker 1: in general and thinking about cryptocurrencies. They should have been 208 00:11:30,240 --> 00:11:35,120 Speaker 1: thinking about it years ago. Uh. Certainly the stable coins 209 00:11:35,120 --> 00:11:38,280 Speaker 1: are not necessarily stable. That's a long history of fixed 210 00:11:38,320 --> 00:11:41,840 Speaker 1: exchange rates. It's the same thing. Uh, you make money 211 00:11:42,360 --> 00:11:46,440 Speaker 1: by using the money that you're supposedly holding an escoro 212 00:11:46,880 --> 00:11:50,080 Speaker 1: and speculating. It doesn't always go well. It leaves you 213 00:11:50,160 --> 00:11:53,160 Speaker 1: vulnerable to attack. I actually think in the very long run, 214 00:11:53,520 --> 00:11:57,480 Speaker 1: if stable coins UH persist, and I think the central 215 00:11:57,520 --> 00:12:01,439 Speaker 1: banks are more sympathetic to them than anything else, they 216 00:12:01,440 --> 00:12:04,640 Speaker 1: probably will need access to the central banks balance sheet, 217 00:12:04,920 --> 00:12:09,439 Speaker 1: just like banks do to deal with runs. So give 218 00:12:09,520 --> 00:12:12,680 Speaker 1: us this perspective. The spectrum here from bitcoin to stable 219 00:12:12,720 --> 00:12:16,440 Speaker 1: coin to a central bank digital currency is that is 220 00:12:16,440 --> 00:12:20,400 Speaker 1: it inevitable we're heading towards central bank digital digital currency. 221 00:12:21,000 --> 00:12:24,040 Speaker 1: I think it's inevitable we're heading towards central bank digital currency. 222 00:12:24,040 --> 00:12:27,080 Speaker 1: But it's not the same thing. And I've heard Governor 223 00:12:27,640 --> 00:12:31,000 Speaker 1: Powell say, well, we want to take away, you know, 224 00:12:31,040 --> 00:12:34,839 Speaker 1: some of the appeal of bitcoin. No, you won't, um yes, 225 00:12:35,000 --> 00:12:38,880 Speaker 1: for doing certain digital transactions. It may be more convenient 226 00:12:39,320 --> 00:12:42,480 Speaker 1: than using master card or you know, other things, and 227 00:12:42,600 --> 00:12:45,480 Speaker 1: we may be headed that way. But obviously, if it's 228 00:12:45,520 --> 00:12:48,200 Speaker 1: issued by the central bank, it's very hard to have 229 00:12:48,320 --> 00:12:52,319 Speaker 1: the same kind of pseudonymity that you can get with bitcoins. 230 00:12:52,360 --> 00:12:57,400 Speaker 1: So I mean, I think they I believe they need 231 00:12:57,440 --> 00:13:02,079 Speaker 1: to sharply regulate the anonymous cryptocurrencies. I know a lot 232 00:13:02,080 --> 00:13:05,720 Speaker 1: of people in the cryptocurrency world probably hate me for 233 00:13:05,840 --> 00:13:09,160 Speaker 1: saying that, but I do think it's coming, and we're 234 00:13:09,160 --> 00:13:13,640 Speaker 1: probably headed towards some world in which, at least under duress, 235 00:13:14,200 --> 00:13:18,880 Speaker 1: the government can fairly easily find out about transactions, even 236 00:13:18,920 --> 00:13:22,160 Speaker 1: if it's not monitoring them constantly. Well, I wonder about 237 00:13:22,320 --> 00:13:24,679 Speaker 1: just the mechanics that regulation, because I think a lot 238 00:13:24,800 --> 00:13:28,120 Speaker 1: of transactions in bitcoin or another cryptocurrency are done offshore, 239 00:13:28,240 --> 00:13:31,560 Speaker 1: they're done through corporations that are not US corporations, and 240 00:13:31,600 --> 00:13:34,640 Speaker 1: they're done, as you say, pseudonymously. So how do you 241 00:13:34,679 --> 00:13:38,720 Speaker 1: regulate that? Is it possible? Well, it's a good question. 242 00:13:38,960 --> 00:13:42,360 Speaker 1: I've been thinking about it a lot for a long time. Uh. 243 00:13:42,400 --> 00:13:45,440 Speaker 1: You know, you can't totally shut it down. If North 244 00:13:45,520 --> 00:13:48,880 Speaker 1: Korea and Russia and Iran decide they're going to use it, 245 00:13:48,960 --> 00:13:51,720 Speaker 1: that provides a home for it. What you can do 246 00:13:52,280 --> 00:13:54,600 Speaker 1: is make it much harder to you, say, to buy 247 00:13:54,679 --> 00:14:00,200 Speaker 1: tesla uh in advanced countries, probably in China, that that 248 00:14:00,320 --> 00:14:03,480 Speaker 1: prevents it from having the same value. I've actually always 249 00:14:03,480 --> 00:14:06,480 Speaker 1: been careful not to say bitcoin is going to zero 250 00:14:06,760 --> 00:14:11,520 Speaker 1: like many people nor over Bini for example, has you know, emphatically, 251 00:14:11,720 --> 00:14:14,280 Speaker 1: because I don't think it's I don't think that's going 252 00:14:14,360 --> 00:14:19,760 Speaker 1: to happen. But I think as the guard rails tighten, uh, 253 00:14:19,920 --> 00:14:22,920 Speaker 1: its appeal is going to go down. Maybe its value 254 00:14:22,960 --> 00:14:25,120 Speaker 1: is going to go down. Who knows. Thanks to Ken 255 00:14:25,200 --> 00:14:28,440 Speaker 1: Rogoff of Harvard coming up, we look at the Robin Hood, 256 00:14:28,480 --> 00:14:30,760 Speaker 1: I p O with the former CEO of E Trade, 257 00:14:30,920 --> 00:14:34,800 Speaker 1: Carl Rossner. That's next on Wall Street Week on Bloomberg. 258 00:14:40,480 --> 00:14:44,440 Speaker 1: This is Bloomberg Wall Street Week with David Weston from 259 00:14:44,560 --> 00:14:48,160 Speaker 1: Bloomberg Radio. Robin Hood's Reddit Army will soon be able 260 00:14:48,160 --> 00:14:50,560 Speaker 1: to own a piece of the retail trading app, as 261 00:14:50,560 --> 00:14:52,760 Speaker 1: the company plans to list on the NASDAC under the 262 00:14:52,800 --> 00:14:56,320 Speaker 1: ticker h O O D and says it's market cap 263 00:14:56,400 --> 00:14:59,960 Speaker 1: may reach as high as thirty five billion dollars. Here 264 00:15:00,040 --> 00:15:03,240 Speaker 1: is Robin Hood, CEO of Vlad Tennis. I think you 265 00:15:03,280 --> 00:15:08,800 Speaker 1: can look at our our vision broadly and say that 266 00:15:09,400 --> 00:15:12,520 Speaker 1: right now about half of US households invests. We'd like 267 00:15:12,600 --> 00:15:17,120 Speaker 1: to get that number up to plus percent. Investing should 268 00:15:17,200 --> 00:15:20,960 Speaker 1: be as ubiquitous as shopping online. It should just be 269 00:15:21,080 --> 00:15:23,960 Speaker 1: something that people do. Robin Hood will join the ranks 270 00:15:23,960 --> 00:15:27,000 Speaker 1: of coin Base, worth about forty seven billion dollars and 271 00:15:27,080 --> 00:15:30,880 Speaker 1: Charles Schwab, which bought competitor t d Ameritrade and has 272 00:15:30,880 --> 00:15:34,840 Speaker 1: a market value of about one billion dollars. The most 273 00:15:34,840 --> 00:15:38,520 Speaker 1: important lesson is just we're seeing what technology is doing 274 00:15:38,680 --> 00:15:43,120 Speaker 1: in terms of transforming the markets. Access to information, um 275 00:15:43,160 --> 00:15:46,960 Speaker 1: the ability to trade, empowering smaller investors is something that 276 00:15:47,080 --> 00:15:51,000 Speaker 1: is very real. That's Brady Dugan of Exos Financial. Robin 277 00:15:51,040 --> 00:15:54,400 Speaker 1: Hood boom during the pandemic by providing easy access to 278 00:15:54,520 --> 00:15:58,240 Speaker 1: retail investors, playing a starring role in the meme stock 279 00:15:58,320 --> 00:16:01,840 Speaker 1: frenzy that took off in Annuary. Here's Robin and CEO 280 00:16:01,880 --> 00:16:05,800 Speaker 1: of lad Tenef being questioned by New York Congresswoman Alexandria 281 00:16:05,920 --> 00:16:10,080 Speaker 1: Akazia Cortez. Robin Hood is a for profit business. Doesn't 282 00:16:10,080 --> 00:16:12,400 Speaker 1: that mean that trading on robin Hood isn't actually free 283 00:16:12,400 --> 00:16:15,240 Speaker 1: to begin with? I think we've proven that otherwise by 284 00:16:15,280 --> 00:16:19,160 Speaker 1: making this the standard model by which brokerage is operate now. 285 00:16:19,440 --> 00:16:22,480 Speaker 1: It's monthly active users have more than doubled in the 286 00:16:22,480 --> 00:16:25,880 Speaker 1: past year, with seventeen point seven million as of the 287 00:16:25,880 --> 00:16:28,920 Speaker 1: first quarter, up from eight point six million in the 288 00:16:28,960 --> 00:16:32,040 Speaker 1: same period. In the robin Hood I p O comes 289 00:16:32,080 --> 00:16:34,920 Speaker 1: just a month after FINRA imposed a nearly seventy million 290 00:16:34,920 --> 00:16:37,800 Speaker 1: dollar fine in the company. That's a record for the watchdog. 291 00:16:38,160 --> 00:16:41,720 Speaker 1: FINRA claims the trading app mislaed its customers about margin 292 00:16:41,800 --> 00:16:45,120 Speaker 1: trading and had lapses in its oversight of technology and 293 00:16:45,200 --> 00:16:50,360 Speaker 1: approvals for options traders. Take us through the phenomenon that 294 00:16:50,560 --> 00:16:52,360 Speaker 1: is robin Hood and how it fits into the much 295 00:16:52,440 --> 00:16:55,680 Speaker 1: larger picture of retail investing. Welcome now, Karl Rossner. He's 296 00:16:55,720 --> 00:16:58,560 Speaker 1: former CEO of E Trade. So Carl, thank you so 297 00:16:58,640 --> 00:17:01,320 Speaker 1: much for being with us. Really a pre created without 298 00:17:01,360 --> 00:17:03,920 Speaker 1: regard to the specifics of robin Hood, because we don't 299 00:17:03,920 --> 00:17:05,840 Speaker 1: know what's gonna happen exactly're gonna go public, We don't 300 00:17:05,840 --> 00:17:08,480 Speaker 1: know the circumstances. Give us a sense of this robber, 301 00:17:08,600 --> 00:17:12,200 Speaker 1: this retail trade phenomenon. Is it here to stay? It's exploded? 302 00:17:12,240 --> 00:17:16,000 Speaker 1: Has it not? It has? And and thanks for having me, David. 303 00:17:16,080 --> 00:17:18,119 Speaker 1: I think the way that I look at it, I mean, 304 00:17:18,160 --> 00:17:21,080 Speaker 1: Gina just said it on the last segment. The retail household, 305 00:17:21,280 --> 00:17:24,320 Speaker 1: you know, during the pandemic and otherwise was flushed with cash. 306 00:17:24,480 --> 00:17:26,320 Speaker 1: So what what do you start to do? You say, Okay, 307 00:17:26,440 --> 00:17:28,280 Speaker 1: I'm gonna get in on some of the stock trading 308 00:17:28,320 --> 00:17:30,840 Speaker 1: and I'm gonna understand how to do it. And robin 309 00:17:30,880 --> 00:17:35,120 Speaker 1: Hood has created a phenomenal customer acquisition machine. The way 310 00:17:35,160 --> 00:17:37,119 Speaker 1: that they put the app together, how easy they make 311 00:17:37,160 --> 00:17:39,000 Speaker 1: it to trade, how easy they make it to open 312 00:17:39,040 --> 00:17:42,400 Speaker 1: an account. It's seamless, you know, it's very well done 313 00:17:42,440 --> 00:17:45,520 Speaker 1: in terms of having that beginner trader really have the 314 00:17:45,520 --> 00:17:48,879 Speaker 1: opportunity to go in and buy some shares. So you know, 315 00:17:48,920 --> 00:17:50,879 Speaker 1: there is some there are some different things that you know, 316 00:17:50,920 --> 00:17:54,119 Speaker 1: we should talk about in terms of the risks involved 317 00:17:54,119 --> 00:17:56,320 Speaker 1: to the you know, to that first time investor. But 318 00:17:56,480 --> 00:17:58,120 Speaker 1: you know, I plaud them in terms of the customer 319 00:17:58,119 --> 00:18:00,960 Speaker 1: acquisition and just the explosive growth they've demonstrated over the 320 00:18:01,000 --> 00:18:02,879 Speaker 1: past two years. So I want to talk about the 321 00:18:02,920 --> 00:18:04,320 Speaker 1: risk which just before we get to that, to pick 322 00:18:04,359 --> 00:18:05,720 Speaker 1: up on what you just said, how much of this 323 00:18:05,800 --> 00:18:07,840 Speaker 1: is because we were trapped at home and a lot 324 00:18:07,920 --> 00:18:10,480 Speaker 1: of people, particularly frankly maybe some younger people got some 325 00:18:10,560 --> 00:18:13,399 Speaker 1: checks from the government they wanted to put him somewhere. Ye. 326 00:18:13,960 --> 00:18:15,879 Speaker 1: So I think it's to be seen in terms of 327 00:18:15,920 --> 00:18:18,560 Speaker 1: how many stick around and how many continue to do 328 00:18:18,600 --> 00:18:22,400 Speaker 1: this post pandemic. But I do believe that it's here 329 00:18:22,400 --> 00:18:25,359 Speaker 1: to stay. And once you show individuals and you start 330 00:18:25,400 --> 00:18:28,600 Speaker 1: to educate them on dealing with their finances and how 331 00:18:28,640 --> 00:18:30,720 Speaker 1: simple it can be once you start with a bank 332 00:18:30,760 --> 00:18:34,360 Speaker 1: account and budgeting, and then understanding where stocks and bonds 333 00:18:34,400 --> 00:18:38,240 Speaker 1: and other asset classes can fit. As you continue to 334 00:18:38,320 --> 00:18:41,840 Speaker 1: grow and become a more savvy investor. I think places 335 00:18:41,880 --> 00:18:44,040 Speaker 1: like robin Hood have really open doors for people, so 336 00:18:44,080 --> 00:18:46,320 Speaker 1: I do expect a great deal of that to stick around. 337 00:18:46,640 --> 00:18:48,560 Speaker 1: So give us a minuteor two on the risks. And 338 00:18:48,600 --> 00:18:50,239 Speaker 1: as we talk about the risk, one thing I'd like 339 00:18:50,280 --> 00:18:52,720 Speaker 1: to focus on is it a risk to the investor, 340 00:18:52,840 --> 00:18:54,639 Speaker 1: which is serious we want to take about. Or is 341 00:18:54,680 --> 00:18:56,760 Speaker 1: there a larger risk to the system that goes beyond 342 00:18:56,760 --> 00:19:00,040 Speaker 1: the individual investor who might lose their money. So so 343 00:19:00,080 --> 00:19:02,560 Speaker 1: I think there are both actually, so just taking the 344 00:19:02,560 --> 00:19:05,600 Speaker 1: the individual investor first, which has always been, you know, 345 00:19:05,720 --> 00:19:08,359 Speaker 1: my focus, I think that first and foremost, there has 346 00:19:08,400 --> 00:19:11,520 Speaker 1: to be the education they have to understand that when 347 00:19:11,520 --> 00:19:13,879 Speaker 1: you invest in stocks, when you invest in crypto or 348 00:19:13,920 --> 00:19:17,199 Speaker 1: other asset classes, there's a complete risk of loss. Right 349 00:19:17,240 --> 00:19:19,240 Speaker 1: over the past couple of years, and and sort of 350 00:19:19,240 --> 00:19:21,720 Speaker 1: the growth that we've seen some of the meme stocks, 351 00:19:21,720 --> 00:19:23,720 Speaker 1: the amount of money that can be made on trades, 352 00:19:24,240 --> 00:19:27,879 Speaker 1: it's been rather fantastic upside for everyone involved. So you 353 00:19:27,920 --> 00:19:29,600 Speaker 1: see your friend makes some money, what are you gonna do. 354 00:19:29,720 --> 00:19:32,120 Speaker 1: You take that stimulus check, you take the extra dollars, 355 00:19:32,440 --> 00:19:34,159 Speaker 1: you open up a robin Hood account, and you get 356 00:19:34,200 --> 00:19:36,880 Speaker 1: on the train right and you continue to make money, 357 00:19:36,920 --> 00:19:39,959 Speaker 1: but there is that downside risk, and it's that downside 358 00:19:39,960 --> 00:19:41,880 Speaker 1: that I think it's incumbent upon all of us work 359 00:19:41,880 --> 00:19:45,400 Speaker 1: in financial services to really help that new retail investor 360 00:19:45,560 --> 00:19:48,800 Speaker 1: understand what it is that you're doing, Understand the options 361 00:19:48,840 --> 00:19:52,440 Speaker 1: that they have to invest to trade. Does that fit 362 00:19:52,480 --> 00:19:55,320 Speaker 1: with their overall profile? Is that part of their budget? 363 00:19:55,560 --> 00:19:58,240 Speaker 1: Can they actually afford to lose the money they just 364 00:19:58,280 --> 00:20:01,359 Speaker 1: put in the stock market? And we've all seen indications 365 00:20:01,440 --> 00:20:04,280 Speaker 1: of those dollars turning very quickly from the profit to 366 00:20:04,280 --> 00:20:07,280 Speaker 1: a serious loss, and that can be very damaging if 367 00:20:07,320 --> 00:20:08,959 Speaker 1: those are the only funds that you have in your 368 00:20:09,000 --> 00:20:12,240 Speaker 1: bank account. So so that that's sort of the individual side, 369 00:20:12,280 --> 00:20:14,240 Speaker 1: and I just hope that we continue as as a 370 00:20:14,280 --> 00:20:18,480 Speaker 1: group to focus on on education more so than gamification. 371 00:20:18,640 --> 00:20:21,760 Speaker 1: Thank you, Carl. That's former E tre CEO Carl Rossner. 372 00:20:22,160 --> 00:20:25,040 Speaker 1: Coming up. Does Netflix keep on going now that we're 373 00:20:25,080 --> 00:20:27,520 Speaker 1: able to get out of our living rooms again? We 374 00:20:27,640 --> 00:20:31,040 Speaker 1: talked with tech investor Roger mcnabie about why he is 375 00:20:31,080 --> 00:20:35,119 Speaker 1: still a believer. That's next on Wall Street Week on Bloomberg. 376 00:20:40,760 --> 00:20:44,720 Speaker 1: This is Bloomberg Wall Street Week with David Weston from 377 00:20:44,880 --> 00:20:48,080 Speaker 1: Bloomberg Radio. Netflix was out with its earnings this week, 378 00:20:48,200 --> 00:20:52,680 Speaker 1: and it under impressed investors because the growth pattern didn't 379 00:20:52,720 --> 00:20:55,360 Speaker 1: look quite as robust as it has in recent quarters, 380 00:20:55,560 --> 00:20:58,520 Speaker 1: but also raises questions about these big tech companies have 381 00:20:58,560 --> 00:21:01,399 Speaker 1: come from almost nowhere, but what their future is in 382 00:21:01,480 --> 00:21:04,440 Speaker 1: terms of growth, but also frankly in terms of government 383 00:21:04,480 --> 00:21:08,800 Speaker 1: regulation potentially. We're welcome now somebody who comes from this industry. 384 00:21:08,840 --> 00:21:11,720 Speaker 1: He is Roger mcnamei. He is a co founder of 385 00:21:11,800 --> 00:21:14,679 Speaker 1: Elevation Partners, and of course he is the author of 386 00:21:14,680 --> 00:21:17,720 Speaker 1: the famous book Is Sucked about his experience with Facebook, 387 00:21:17,760 --> 00:21:19,440 Speaker 1: and yes, I think it's fair to say some questions 388 00:21:19,480 --> 00:21:22,480 Speaker 1: he raises about Facebook. Thank you, Roger very much for 389 00:21:22,520 --> 00:21:24,520 Speaker 1: being with us. First, let's start with Netflix, and I 390 00:21:24,600 --> 00:21:27,560 Speaker 1: understand you actually own some Netflix. You like the company, 391 00:21:27,800 --> 00:21:30,240 Speaker 1: so give us your sense about where a Netflix is 392 00:21:30,320 --> 00:21:33,240 Speaker 1: and where it's going. So, David, I think the big 393 00:21:33,240 --> 00:21:37,359 Speaker 1: issue for Netflix is that they won round one of 394 00:21:37,400 --> 00:21:41,960 Speaker 1: the streaming wars, and that has forced every major media 395 00:21:42,040 --> 00:21:46,320 Speaker 1: company into the marketplace. And as I think investors, no, well, 396 00:21:46,800 --> 00:21:51,920 Speaker 1: Disney and Apple, HBO have come in with really strong offerings, 397 00:21:51,960 --> 00:21:55,480 Speaker 1: and Hulu and others are coming up as well, and 398 00:21:55,560 --> 00:21:58,480 Speaker 1: so from Netflix point of view, they've gone from having 399 00:21:58,480 --> 00:22:01,720 Speaker 1: the space to themselves to having to compete against people 400 00:22:01,800 --> 00:22:06,040 Speaker 1: who have real libraries, real content, and are generally speaking, 401 00:22:06,200 --> 00:22:11,240 Speaker 1: very well financed. And to me, the sense earlier this summer, 402 00:22:11,440 --> 00:22:14,439 Speaker 1: you know, over the last couple of months, that quarantine 403 00:22:14,520 --> 00:22:17,320 Speaker 1: was coming to an end and that the pandemic was over, 404 00:22:18,119 --> 00:22:20,840 Speaker 1: meant people were going to watch a lot less TV 405 00:22:21,040 --> 00:22:23,000 Speaker 1: than they were watching when they were quarantined at home. 406 00:22:23,160 --> 00:22:26,800 Speaker 1: So it's not surprising that this quarter showed a lot 407 00:22:26,880 --> 00:22:32,159 Speaker 1: lower growth in new subscribers. But I'm afraid that the 408 00:22:32,160 --> 00:22:37,600 Speaker 1: pandemic isn't over and that Netflix is still the strongest 409 00:22:37,640 --> 00:22:41,000 Speaker 1: player in that marketplace. So I do expect the company 410 00:22:41,000 --> 00:22:44,040 Speaker 1: to rebound from this, and I think the future is 411 00:22:44,080 --> 00:22:47,399 Speaker 1: still bright, albeit with a lot more competition than it 412 00:22:47,480 --> 00:22:49,440 Speaker 1: had in the past. Yeah, Roger, I must say it 413 00:22:49,560 --> 00:22:52,119 Speaker 1: certainly is the strongest in this space. The question is 414 00:22:52,160 --> 00:22:54,240 Speaker 1: cann't maintain that or not, because as you say, a 415 00:22:54,240 --> 00:22:56,320 Speaker 1: lot of people will come in. Warren Buffet likes to 416 00:22:56,320 --> 00:22:58,199 Speaker 1: talk about a motor around the business. Does it have 417 00:22:58,280 --> 00:23:00,480 Speaker 1: a motor around the business or is the more just 418 00:23:00,640 --> 00:23:03,480 Speaker 1: spending money hand over fist and new content can to 419 00:23:03,600 --> 00:23:07,160 Speaker 1: keep that up well. To be clear, that strategy has 420 00:23:07,160 --> 00:23:11,160 Speaker 1: worked unbelievably well, and I don't know why it would stop. 421 00:23:11,520 --> 00:23:14,359 Speaker 1: I think they have really large advantages there, you know, 422 00:23:14,520 --> 00:23:17,359 Speaker 1: relative to Disney in particular, and actually I think this 423 00:23:17,440 --> 00:23:21,159 Speaker 1: is true of HBO as well. Netflix really does have 424 00:23:21,560 --> 00:23:25,240 Speaker 1: a new programming advantage, and I think they understand their 425 00:23:25,280 --> 00:23:28,120 Speaker 1: audience better and they just have a lot more experience 426 00:23:28,160 --> 00:23:31,280 Speaker 1: of doing this now. At the same time, I think 427 00:23:31,280 --> 00:23:34,480 Speaker 1: there are other markets in which they can expand their 428 00:23:35,119 --> 00:23:38,680 Speaker 1: testing things around games. I think that, you know, conceptually, 429 00:23:38,720 --> 00:23:42,520 Speaker 1: you could imagine them eventually getting into other forms of streaming, 430 00:23:42,520 --> 00:23:46,760 Speaker 1: you know, podcasting or music or whatever. And I don't 431 00:23:46,880 --> 00:23:50,000 Speaker 1: think that they're locked into anything now. I think the 432 00:23:50,080 --> 00:23:53,560 Speaker 1: brand is really good. I think that the team there's 433 00:23:53,680 --> 00:23:57,480 Speaker 1: just demonstrated time and again that they have a much 434 00:23:57,560 --> 00:24:00,160 Speaker 1: clearer understanding of what the audience needs than any one 435 00:24:00,160 --> 00:24:02,480 Speaker 1: else does, and I think that's still true. At the 436 00:24:02,520 --> 00:24:05,520 Speaker 1: same time, we have to be cognizant of the fact 437 00:24:05,600 --> 00:24:09,240 Speaker 1: that not everybody is going to wind up with an 438 00:24:09,240 --> 00:24:15,359 Speaker 1: infinite number of streaming um streaming subscriptions, so Netflix is 439 00:24:15,400 --> 00:24:18,280 Speaker 1: going to have slower growth eventually. But I think it's 440 00:24:18,280 --> 00:24:21,959 Speaker 1: going to remain an extraordinarily high profit margin business and 441 00:24:22,000 --> 00:24:26,240 Speaker 1: I think it's position in the marketplace will remain solid 442 00:24:26,359 --> 00:24:28,800 Speaker 1: even with all the competition that's out there. Roger, you 443 00:24:28,880 --> 00:24:32,080 Speaker 1: raised the issue you mentioned gaming for example, does Netflix 444 00:24:32,119 --> 00:24:34,080 Speaker 1: have to have while i'll call a second arrow in 445 00:24:34,160 --> 00:24:36,800 Speaker 1: its quiver. I mean, certainly you talk about Disney, what 446 00:24:36,920 --> 00:24:40,160 Speaker 1: everything would strengthen Otherwise they've got several lines of business 447 00:24:40,200 --> 00:24:43,240 Speaker 1: that can really cross subsidize and really support them through 448 00:24:43,320 --> 00:24:45,840 Speaker 1: lean times. Does Netflix have to go the way perhaps 449 00:24:45,920 --> 00:24:48,720 Speaker 1: for of Uber when they said let's be Uber eats, 450 00:24:48,760 --> 00:24:51,680 Speaker 1: not just Uber Well, to be clear, I think Luber 451 00:24:51,800 --> 00:24:54,680 Speaker 1: is a terrible business, and each time they're expanding, they're 452 00:24:54,720 --> 00:24:56,960 Speaker 1: looking for a market that is going to have legs 453 00:24:57,040 --> 00:24:59,840 Speaker 1: for a long period of time. I think Uber is frankly, 454 00:25:00,240 --> 00:25:03,520 Speaker 1: you know, the triumph of unlimited capital over a terrible 455 00:25:03,600 --> 00:25:08,719 Speaker 1: business idea. The the situation Netflix is couldn't be more different. 456 00:25:08,840 --> 00:25:12,880 Speaker 1: It's a very substantial business, and I think the question 457 00:25:13,119 --> 00:25:15,359 Speaker 1: is less do they need the air on the quiver? 458 00:25:15,880 --> 00:25:18,119 Speaker 1: Rather are their errors that they could put in their 459 00:25:18,160 --> 00:25:20,080 Speaker 1: quiver if they want. And I think the answer to 460 00:25:20,080 --> 00:25:23,080 Speaker 1: that's an emphatic yes. At the same time, again, I 461 00:25:23,119 --> 00:25:28,360 Speaker 1: think investors need to be changing their expectations for these 462 00:25:28,440 --> 00:25:31,320 Speaker 1: large Czech tech companies. I don't think the kind of 463 00:25:31,359 --> 00:25:33,399 Speaker 1: growth rates we've seen in recent years are going to 464 00:25:33,480 --> 00:25:37,240 Speaker 1: be sustainable. And this isn't just about streaming. I think 465 00:25:37,280 --> 00:25:39,919 Speaker 1: that's gonna be true everywhere. Roger. We also have a 466 00:25:39,960 --> 00:25:42,879 Speaker 1: government in Washington it's paying a fair amount of attention 467 00:25:42,920 --> 00:25:47,160 Speaker 1: to big tech companies, including places like Google and Facebook 468 00:25:47,240 --> 00:25:51,680 Speaker 1: and Amazon. What kind of risk or even opportunities could 469 00:25:51,680 --> 00:25:53,960 Speaker 1: that post and let me there is one possibility with 470 00:25:54,000 --> 00:25:56,720 Speaker 1: you when it comes to Netflix. We have this executive 471 00:25:56,840 --> 00:25:59,680 Speaker 1: order out that's really from the President saying he doesn't 472 00:25:59,720 --> 00:26:02,920 Speaker 1: like rgers very much these days. But that benefit Netflix 473 00:26:02,960 --> 00:26:05,200 Speaker 1: because as the largest player, it may make it more 474 00:26:05,240 --> 00:26:07,480 Speaker 1: difficult for some of the other players to get together 475 00:26:07,560 --> 00:26:11,680 Speaker 1: to challenge it. So, David, I think that the situation 476 00:26:11,880 --> 00:26:14,439 Speaker 1: with the government is really different today than it was 477 00:26:14,520 --> 00:26:19,439 Speaker 1: even six months ago. So the Biden administration brought a 478 00:26:19,520 --> 00:26:22,920 Speaker 1: professor from Colombia named Tim Woo into the Council of 479 00:26:22,960 --> 00:26:27,400 Speaker 1: Economic Advisors. It then appointed Lena Khan, a tech reformer, 480 00:26:27,800 --> 00:26:30,000 Speaker 1: to be the head of the Federal Trade Commission and 481 00:26:30,160 --> 00:26:33,359 Speaker 1: had announced it was going to appoint Jonathan Cantor to 482 00:26:33,400 --> 00:26:35,040 Speaker 1: be the head of the Anti Trust Division of the 483 00:26:35,119 --> 00:26:41,240 Speaker 1: Justice Department. These are three extraordinary people, all serious tech reformers, 484 00:26:41,359 --> 00:26:44,760 Speaker 1: and I think what investors need to understand is that 485 00:26:45,600 --> 00:26:49,200 Speaker 1: anti trust is the most pro growth form of government 486 00:26:49,200 --> 00:26:53,280 Speaker 1: intervention on Earth. Historically, it's been fantastic for investors. It 487 00:26:53,320 --> 00:26:56,679 Speaker 1: does require changing your investment strategy, but what winds up 488 00:26:56,680 --> 00:27:00,639 Speaker 1: happening afterwards is the target companies tend to growth more slowly, 489 00:27:00,640 --> 00:27:02,800 Speaker 1: but they still grow, and then you get whole new 490 00:27:02,840 --> 00:27:04,879 Speaker 1: industries that come out of the history of that in 491 00:27:04,960 --> 00:27:08,080 Speaker 1: technology has been a hundred percent of the time, and 492 00:27:08,280 --> 00:27:10,720 Speaker 1: he trust has led to a new industry and great 493 00:27:10,760 --> 00:27:13,359 Speaker 1: new wealth opportunities for investors. So we should be embracing it, 494 00:27:13,480 --> 00:27:16,600 Speaker 1: not fighting it. The problem in tech and this is 495 00:27:16,720 --> 00:27:19,560 Speaker 1: really a huge issue for the Internet platforms, but I 496 00:27:19,600 --> 00:27:22,879 Speaker 1: think it's much broader than that effects artificial intelligence, It 497 00:27:22,920 --> 00:27:25,680 Speaker 1: affects facial recognition. A lot of the new technologies we 498 00:27:25,800 --> 00:27:29,800 Speaker 1: see out there that there are serious consumer safety issues, 499 00:27:30,240 --> 00:27:34,320 Speaker 1: and I think the industry is today where the chemicals 500 00:27:34,359 --> 00:27:38,800 Speaker 1: industry was in fifties, where the garment industry was when 501 00:27:38,800 --> 00:27:42,359 Speaker 1: it depended on child labor. You know, where the food 502 00:27:42,400 --> 00:27:45,920 Speaker 1: and drug industries were before the creation of the f DA, 503 00:27:46,040 --> 00:27:50,360 Speaker 1: when food and pharmaceuticals were unsafe, Where the railroad industry 504 00:27:50,440 --> 00:27:53,320 Speaker 1: was before the regulation of that industry. So I think 505 00:27:53,440 --> 00:27:57,160 Speaker 1: this is it's the right time. That this industry has 506 00:27:57,520 --> 00:28:02,280 Speaker 1: undermined public health by amplifying disinformation about the pandemic. It 507 00:28:02,359 --> 00:28:07,439 Speaker 1: has undermined democracy by being platforms for the creation of 508 00:28:07,840 --> 00:28:11,239 Speaker 1: things like Q and on and also the insurrection. And 509 00:28:11,480 --> 00:28:14,360 Speaker 1: these are really serious issues, and I think the thing 510 00:28:14,400 --> 00:28:18,360 Speaker 1: that investors need to do is to recognize that there 511 00:28:18,359 --> 00:28:21,280 Speaker 1: are at least three tangents that the Biden administration can 512 00:28:21,280 --> 00:28:26,320 Speaker 1: do without any kind of new legislation. There is an 513 00:28:26,359 --> 00:28:30,720 Speaker 1: antitrust case that the Attorney General of Texas has created 514 00:28:30,800 --> 00:28:35,240 Speaker 1: against Google and Facebook for price fixing in the advertising market. 515 00:28:36,080 --> 00:28:38,800 Speaker 1: That is a really serious issue. And if the federal 516 00:28:38,840 --> 00:28:42,160 Speaker 1: government takes on that case, they can pursue it as 517 00:28:42,200 --> 00:28:46,200 Speaker 1: a felony. And price fixing is the worst economic crime 518 00:28:46,240 --> 00:28:49,840 Speaker 1: you can commit, and so the standard remedy is three 519 00:28:49,960 --> 00:28:53,200 Speaker 1: plus years in prison for each count. And if I 520 00:28:53,280 --> 00:28:56,080 Speaker 1: read the Texas case properly, there are two counts they're 521 00:28:56,120 --> 00:29:01,920 Speaker 1: affecting the executives at Google and Facebook. That's a huge dealing. 522 00:29:02,120 --> 00:29:04,960 Speaker 1: Investors haven't focused on that at all. Where that's really 523 00:29:05,120 --> 00:29:07,880 Speaker 1: really good advice certain people should taken into account and 524 00:29:07,960 --> 00:29:10,560 Speaker 1: decide making their investment decsions. Thank you so much to 525 00:29:10,720 --> 00:29:15,120 Speaker 1: Roger mcnamey. He is co founder of Elevation Partners. Finally, 526 00:29:15,280 --> 00:29:18,920 Speaker 1: one more thought, when is a delicacy just a pain 527 00:29:18,960 --> 00:29:23,120 Speaker 1: in the neck. Pity the poor organizers of the Tokyo Olympics. 528 00:29:23,320 --> 00:29:27,479 Speaker 1: When Tokyo one it's bid back, there was no way 529 00:29:27,600 --> 00:29:30,200 Speaker 1: for it to know that it would be in the 530 00:29:30,240 --> 00:29:33,600 Speaker 1: middle of a once in a century pandemic. And let's 531 00:29:33,640 --> 00:29:36,080 Speaker 1: be frank, as great an honor as it may be, 532 00:29:36,360 --> 00:29:39,280 Speaker 1: it's not always been a great business proposition for those 533 00:29:39,320 --> 00:29:43,760 Speaker 1: cities holding Olympics. But then the pandemic hit and pretty 534 00:29:43,840 --> 00:29:46,720 Speaker 1: much no one wanted to travel to Tokyo a year ago, 535 00:29:46,880 --> 00:29:50,640 Speaker 1: or for that matter, anywhere else, so Tokyo had to 536 00:29:50,680 --> 00:29:54,160 Speaker 1: be postponed a year, upping the cost to over fifteen 537 00:29:54,200 --> 00:29:57,360 Speaker 1: billion dollars. And those those are the official numbers. A 538 00:29:57,440 --> 00:30:00,280 Speaker 1: government audit suggests it may be more like twenty five 539 00:30:00,320 --> 00:30:03,680 Speaker 1: billion dollars, and it's not just the expenses. COVID is 540 00:30:03,760 --> 00:30:06,720 Speaker 1: hitting the top line as well. A COVID surge in 541 00:30:06,800 --> 00:30:09,960 Speaker 1: Japan means that there won't be anyone in the stands, 542 00:30:10,040 --> 00:30:12,600 Speaker 1: leading to a loss of some eight hundred million dollars 543 00:30:12,640 --> 00:30:17,760 Speaker 1: in revenue. But despite it all, Tokyo has stayed the course, 544 00:30:18,200 --> 00:30:21,440 Speaker 1: even sticking to its brand name. Although that means that 545 00:30:21,520 --> 00:30:26,720 Speaker 1: Tokyo will actually be held in and the games have begun, 546 00:30:27,080 --> 00:30:30,640 Speaker 1: complete with all those COVID tests and quarantine and some 547 00:30:30,760 --> 00:30:34,000 Speaker 1: athletes testing positive and having to drop out. And if 548 00:30:34,040 --> 00:30:38,960 Speaker 1: all that weren't enough, now they have to contend with oysters. Yes, 549 00:30:39,160 --> 00:30:42,760 Speaker 1: I said, oysters. It turns out that the waterway where 550 00:30:42,760 --> 00:30:45,520 Speaker 1: the canoeing and rowing events will take place may be 551 00:30:45,680 --> 00:30:49,640 Speaker 1: infested with rogue oysters. According to the Washington Posts, a 552 00:30:49,760 --> 00:30:53,040 Speaker 1: trial run back in showed that the devices that they 553 00:30:53,120 --> 00:30:55,880 Speaker 1: have to have in the water that's to prevent waves 554 00:30:55,920 --> 00:30:59,160 Speaker 1: from ruining the competition, while all those devices were sinking. 555 00:30:59,640 --> 00:31:03,360 Speaker 1: When Irish went down to investigate, they found thirteen metric 556 00:31:03,480 --> 00:31:07,360 Speaker 1: tons or over thirty one thousand pounds of oysters had 557 00:31:07,400 --> 00:31:11,080 Speaker 1: attached themselves to the equipment. They've now spent about one 558 00:31:11,080 --> 00:31:14,160 Speaker 1: point three million dollars that's so far to keep the 559 00:31:14,160 --> 00:31:16,840 Speaker 1: equipment on top of the water rather than under it, 560 00:31:17,280 --> 00:31:20,240 Speaker 1: but there's no guaranteed that it's all gonna work. It's 561 00:31:20,240 --> 00:31:23,320 Speaker 1: not much of a consolation that this particular type of oyster, 562 00:31:23,560 --> 00:31:27,400 Speaker 1: the maga kei or Pacific oyster, is considered by some 563 00:31:27,480 --> 00:31:29,760 Speaker 1: to be among the best in the world to eat. 564 00:31:30,360 --> 00:31:32,080 Speaker 1: They don't want to eat them, they just want to 565 00:31:32,160 --> 00:31:35,240 Speaker 1: keep them out of the way. But then again, maybe 566 00:31:35,280 --> 00:31:38,920 Speaker 1: they shouldn't be eating them anyway. July doesn't have an 567 00:31:39,160 --> 00:31:41,440 Speaker 1: R in it, does it? That does it? For this 568 00:31:41,480 --> 00:31:44,440 Speaker 1: episode of Wall Street Week, I'm David Weston. This is Bloomberg. 569 00:31:44,800 --> 00:31:46,600 Speaker 1: See you next week.