1 00:00:09,880 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jai Ley. 2 00:00:13,960 --> 00:00:17,560 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:27,800 Speaker 1: Bloomberg dot Com and of course on the Bloomberg. Let's 5 00:00:27,800 --> 00:00:30,600 Speaker 1: bringing the end to note fix shall example data founder 6 00:00:30,800 --> 00:00:33,280 Speaker 1: and see good morning to YenS, Good morning. What's the 7 00:00:33,320 --> 00:00:35,440 Speaker 1: message for clients on the last couple of weeks we've 8 00:00:35,440 --> 00:00:38,160 Speaker 1: had What are you telling them? We have to track 9 00:00:38,200 --> 00:00:40,120 Speaker 1: what's going on with this virus. We have to see 10 00:00:40,120 --> 00:00:44,279 Speaker 1: if it's spreading and importantly whether it's spreading outside the 11 00:00:44,280 --> 00:00:47,400 Speaker 1: Whan area, whether it's like is it an international issue 12 00:00:47,520 --> 00:00:50,960 Speaker 1: or is it a regional issue? And the data swings 13 00:00:50,960 --> 00:00:54,000 Speaker 1: from day to day, and the data has distortions in 14 00:00:54,000 --> 00:00:55,960 Speaker 1: it as well, so like they forget to report for 15 00:00:56,000 --> 00:00:57,960 Speaker 1: a couple of days and then it's spikes because they 16 00:00:58,040 --> 00:01:00,400 Speaker 1: catch up for a couple of days. So we really 17 00:01:00,400 --> 00:01:02,680 Speaker 1: have to weed out those things. And then we have 18 00:01:02,720 --> 00:01:05,000 Speaker 1: to look at what is the stimulus that's being put 19 00:01:05,000 --> 00:01:08,839 Speaker 1: in place to counter the effect. So like Chinese interest 20 00:01:08,959 --> 00:01:11,039 Speaker 1: rates didn't move at all last year, and now there's 21 00:01:11,080 --> 00:01:13,880 Speaker 1: suddenly shifting down a gear because the stimulant is expected 22 00:01:13,920 --> 00:01:15,959 Speaker 1: to be very significant, right, so we have to weigh 23 00:01:16,360 --> 00:01:19,480 Speaker 1: those stimulus effects into the equation too. There's just a 24 00:01:19,520 --> 00:01:21,360 Speaker 1: belief ends i think, helped by a lot of people, 25 00:01:21,360 --> 00:01:23,680 Speaker 1: that any risk as a social stability in China is 26 00:01:23,720 --> 00:01:25,959 Speaker 1: viewed as some kind of existential risk to the whole 27 00:01:25,959 --> 00:01:29,240 Speaker 1: system the leadership. The message coming from the leadership urging 28 00:01:29,280 --> 00:01:32,720 Speaker 1: officials Monday to quote achieve the targets of economic and 29 00:01:32,760 --> 00:01:37,480 Speaker 1: social development this year, promote stable consumer spending? Is that 30 00:01:37,560 --> 00:01:40,640 Speaker 1: a cue for this market? The more stimulus is coming, 31 00:01:41,000 --> 00:01:43,080 Speaker 1: and do you think it can be effective in the 32 00:01:43,160 --> 00:01:46,760 Speaker 1: environment with a situation like we have right now? Well, 33 00:01:47,040 --> 00:01:49,280 Speaker 1: I think there's no doubt that Stimilus is coming. So 34 00:01:49,440 --> 00:01:52,240 Speaker 1: we have liquidity injections, we have interest rates cuts. I'm 35 00:01:52,280 --> 00:01:54,360 Speaker 1: sure there'll be all kinds of fiscal steps to make 36 00:01:54,400 --> 00:01:59,200 Speaker 1: sure that whatever discontent is generated by this is counted 37 00:01:59,320 --> 00:02:02,800 Speaker 1: by money in some forms. So there's no doubt that 38 00:02:02,880 --> 00:02:04,800 Speaker 1: this is happening. But on the other hand, we have 39 00:02:05,080 --> 00:02:09,200 Speaker 1: major cities in China in total shutdown, Like, how's that 40 00:02:09,200 --> 00:02:11,040 Speaker 1: gonna last? It's gonna be a couple of days. You're 41 00:02:11,040 --> 00:02:12,600 Speaker 1: gonna be a couple of weeks, a couple of months. 42 00:02:12,960 --> 00:02:14,960 Speaker 1: That I think is the key parameter, right, because if 43 00:02:15,000 --> 00:02:17,959 Speaker 1: we project into global growth, a couple of days is 44 00:02:18,000 --> 00:02:19,840 Speaker 1: clearly not gonna matter. But it's a couple of months 45 00:02:19,919 --> 00:02:22,760 Speaker 1: from major regions, it's a big deal. You have some 46 00:02:22,880 --> 00:02:25,360 Speaker 1: great math in your research note this morning. It was folks, 47 00:02:25,400 --> 00:02:27,200 Speaker 1: literally half a page where you just go to the 48 00:02:27,200 --> 00:02:31,280 Speaker 1: first derivative of the various virus ratios and at least 49 00:02:31,280 --> 00:02:32,960 Speaker 1: we can say they seem to be moving in a 50 00:02:33,000 --> 00:02:36,920 Speaker 1: constructive direction. Yeah. I think the key thing we're looking 51 00:02:36,960 --> 00:02:40,040 Speaker 1: at is how is it's spreading outside the Wuhan area 52 00:02:40,160 --> 00:02:43,160 Speaker 1: right and there the growth rates have been coming down, 53 00:02:43,280 --> 00:02:46,280 Speaker 1: So if we get confirmation that that's the trend, that's 54 00:02:46,280 --> 00:02:48,560 Speaker 1: the important signal. I think it's too early to say 55 00:02:48,600 --> 00:02:51,160 Speaker 1: that they've come down to a level where we can 56 00:02:51,200 --> 00:02:53,040 Speaker 1: be more comfortable. I think if you look at the 57 00:02:53,040 --> 00:02:57,000 Speaker 1: literature from the health specialist, twelve percent is what they 58 00:02:57,040 --> 00:02:59,240 Speaker 1: sort of expect is the natural progression of this thing. 59 00:02:59,280 --> 00:03:02,000 Speaker 1: We get below that, that will show that the polishing 60 00:03:02,080 --> 00:03:05,920 Speaker 1: measures have worked. And we're close to close to that point, 61 00:03:05,960 --> 00:03:07,799 Speaker 1: but not quite there yet. And let's get to the 62 00:03:07,919 --> 00:03:10,280 Speaker 1: nuts and bolts of what you do every single day. 63 00:03:10,320 --> 00:03:13,680 Speaker 1: You how clients understand where positioning is at the moment, 64 00:03:13,720 --> 00:03:17,120 Speaker 1: where the flows are going. You've got together with ep 65 00:03:17,240 --> 00:03:20,760 Speaker 1: F R EPFR data. Talk to me about that partnership 66 00:03:20,800 --> 00:03:22,600 Speaker 1: and what you're seeing together with them at the moment, 67 00:03:22,639 --> 00:03:24,080 Speaker 1: just in terms of the flows, in terms of the 68 00:03:24,080 --> 00:03:26,720 Speaker 1: positioning at the moment. Yes, So we we build as 69 00:03:26,760 --> 00:03:29,560 Speaker 1: new data set together with ep FIRE up in Boston, 70 00:03:29,840 --> 00:03:32,560 Speaker 1: and the idea is that we want to know what 71 00:03:32,680 --> 00:03:35,920 Speaker 1: the real money community, which is really the biggest player 72 00:03:35,920 --> 00:03:38,680 Speaker 1: in the currency market, is up to. So we go 73 00:03:38,720 --> 00:03:42,840 Speaker 1: and measure in a very precise way what their positions are, 74 00:03:43,000 --> 00:03:47,080 Speaker 1: including their derivatives, and that can give a sense of okay, 75 00:03:47,080 --> 00:03:50,520 Speaker 1: where the crowded positions and where are are there some 76 00:03:50,800 --> 00:03:53,839 Speaker 1: unloved places in the market that could potentially have some 77 00:03:54,200 --> 00:03:57,160 Speaker 1: medium term bullish trends. So those are things we look at. 78 00:03:57,880 --> 00:04:01,840 Speaker 1: So this is talking about the price action in security 79 00:04:01,880 --> 00:04:03,360 Speaker 1: is a lot of people are looking at the fundamental 80 00:04:03,360 --> 00:04:06,840 Speaker 1: effect that the shutdowns from the coronavirus will have on 81 00:04:06,880 --> 00:04:09,320 Speaker 1: the economy. I was looking at a number of reports, 82 00:04:09,320 --> 00:04:13,120 Speaker 1: Barclays coming out downgrading their first quarter estimate for China's 83 00:04:13,280 --> 00:04:17,119 Speaker 1: growth by two point two percentage points, and this coming 84 00:04:17,120 --> 00:04:19,760 Speaker 1: out that China's car sales are likely to slump the 85 00:04:19,800 --> 00:04:22,360 Speaker 1: most on record in the first two months, with sales 86 00:04:22,360 --> 00:04:26,480 Speaker 1: set to fall by twenty five tot in the January 87 00:04:26,560 --> 00:04:31,480 Speaker 1: to February period. Is this being priced in? So we 88 00:04:31,760 --> 00:04:34,560 Speaker 1: had one day that looked nasty in the equity market 89 00:04:34,680 --> 00:04:40,279 Speaker 1: last week, and now we're recovering very dramatically today. So 90 00:04:40,480 --> 00:04:42,920 Speaker 1: I think a lot of people are assuming that this 91 00:04:42,960 --> 00:04:47,039 Speaker 1: shock is over, which I think is premature. But the 92 00:04:47,520 --> 00:04:49,480 Speaker 1: for example, I think that the effect that we've been 93 00:04:49,480 --> 00:04:52,600 Speaker 1: the most focused on is tourism. Like Chinese tourists around 94 00:04:52,600 --> 00:04:55,640 Speaker 1: the world play a huge role in many different markets, 95 00:04:55,720 --> 00:04:59,400 Speaker 1: especially in Thailand and so forth. If they don't come 96 00:05:00,520 --> 00:05:03,800 Speaker 1: for several months, it's gonna be major, major hits to 97 00:05:03,839 --> 00:05:09,479 Speaker 1: those economies, like several percentages of of of GDP, And this, 98 00:05:09,640 --> 00:05:12,479 Speaker 1: I think is an effect where even if the factories 99 00:05:12,560 --> 00:05:15,080 Speaker 1: up and up and running quite quickly, people are going 100 00:05:15,120 --> 00:05:18,320 Speaker 1: to be afraid, there's gonna be essentially quarantines and so forth. 101 00:05:18,360 --> 00:05:20,120 Speaker 1: So I think these effects are going to be multi 102 00:05:20,160 --> 00:05:22,080 Speaker 1: month effects, and I don't think they approbably. Let's put 103 00:05:22,120 --> 00:05:24,400 Speaker 1: some of these issues together. Then you talked about identifying 104 00:05:24,480 --> 00:05:26,479 Speaker 1: the positions that were crowded at the moment. Where do 105 00:05:26,520 --> 00:05:28,680 Speaker 1: you see the crowded positioning, what do you think is 106 00:05:28,760 --> 00:05:31,680 Speaker 1: vulnerable like? So, one thing we've seen in this data 107 00:05:31,760 --> 00:05:35,360 Speaker 1: set is that at the end of last year there 108 00:05:35,600 --> 00:05:39,360 Speaker 1: was more optimism about global growth. You saw equity investors 109 00:05:39,440 --> 00:05:41,880 Speaker 1: actually trying to put on bets of a sort of 110 00:05:41,880 --> 00:05:44,760 Speaker 1: global recovery, and they did that bet in Europe as well. 111 00:05:45,120 --> 00:05:47,120 Speaker 1: And we can see that the equity investors were some 112 00:05:47,160 --> 00:05:49,360 Speaker 1: of the ones that actually put on long Euro bets. 113 00:05:49,720 --> 00:05:51,640 Speaker 1: And I think one of the reasons why the Euro 114 00:05:51,680 --> 00:05:54,840 Speaker 1: has traded so poorly this year was that we came 115 00:05:55,160 --> 00:05:57,920 Speaker 1: into the year with that overhang of long Euro positions 116 00:05:57,960 --> 00:06:00,240 Speaker 1: and then we've had all the negative shock come out 117 00:06:00,440 --> 00:06:02,839 Speaker 1: and they've had to take that risk down. So these 118 00:06:02,880 --> 00:06:05,440 Speaker 1: are the sort of tools we use to identify crowd 119 00:06:05,440 --> 00:06:07,360 Speaker 1: of decisions. Take that one step further than are you're 120 00:06:07,360 --> 00:06:11,360 Speaker 1: looking for more downside and euro dollar So I think 121 00:06:11,480 --> 00:06:14,479 Speaker 1: everything is driven by the global growth sentiment. It comes 122 00:06:14,520 --> 00:06:17,600 Speaker 1: back to Lesa's question, Okay, is this shock really fully priced? 123 00:06:17,680 --> 00:06:21,400 Speaker 1: So I will be much more comfortable saying okay, we're 124 00:06:21,440 --> 00:06:24,080 Speaker 1: about to have recovered if we had a proper correction 125 00:06:24,080 --> 00:06:25,919 Speaker 1: the equity market. But we just never got a proper 126 00:06:25,960 --> 00:06:28,000 Speaker 1: correction right because we had one day down and now 127 00:06:28,000 --> 00:06:30,920 Speaker 1: we're sort of recovering already. So we're in a very 128 00:06:30,960 --> 00:06:33,919 Speaker 1: gray song here where risk acids have have really not 129 00:06:34,000 --> 00:06:36,560 Speaker 1: priced very much. There's some very very intimate side and 130 00:06:36,960 --> 00:06:39,960 Speaker 1: improvement fundamentally, but they're not convincing yet. Give me a 131 00:06:40,040 --> 00:06:43,560 Speaker 1: currency pair, because I've been short Tesla and that's worked out. 132 00:06:44,320 --> 00:06:47,240 Speaker 1: Give me, give me a pair Noel with its opportunistic 133 00:06:47,320 --> 00:06:51,120 Speaker 1: over the next ninety days. So I'm very worried about 134 00:06:51,240 --> 00:06:56,320 Speaker 1: Thailand because they have the biggest tourist sector and and 135 00:06:56,320 --> 00:06:59,279 Speaker 1: and em space. I think Mexico is still the most 136 00:06:59,279 --> 00:07:02,960 Speaker 1: constructive story or that I see out there. So that's 137 00:07:02,960 --> 00:07:10,160 Speaker 1: a very we're gonna do that chart. You're going to 138 00:07:10,240 --> 00:07:15,000 Speaker 1: have a triple leverage cash fund with an overlay. I 139 00:07:15,040 --> 00:07:29,120 Speaker 1: don't know. Leslie Vinja Murray John Shadow Mouse, She's expert 140 00:07:29,480 --> 00:07:33,120 Speaker 1: on American politics out of her shop in London. Leslie 141 00:07:33,120 --> 00:07:36,840 Speaker 1: absolutely extraordinary. The major message from Kevin Surilli and Des 142 00:07:36,840 --> 00:07:42,679 Speaker 1: Moines was people are genuinely shocked over this mess. In Iowa, 143 00:07:42,960 --> 00:07:47,600 Speaker 1: summarize it from the distant climbs of London. Well, you know, 144 00:07:47,680 --> 00:07:49,720 Speaker 1: waking up here in London, I think we were all 145 00:07:49,760 --> 00:07:52,400 Speaker 1: shocked because we expected to see, you know, what has 146 00:07:52,400 --> 00:07:55,880 Speaker 1: been a very tight race among with multiple candidates sort 147 00:07:55,880 --> 00:07:57,360 Speaker 1: of coming out at the top, whether it would be 148 00:07:57,360 --> 00:08:00,720 Speaker 1: Biden or Sanders, but it was, you know, unclear, it 149 00:08:00,760 --> 00:08:03,120 Speaker 1: could have been Bude. And we woke up, of course 150 00:08:03,160 --> 00:08:04,880 Speaker 1: to the news that there is no result. We still 151 00:08:04,920 --> 00:08:07,559 Speaker 1: didn't have a result, and and all of this down 152 00:08:07,680 --> 00:08:11,280 Speaker 1: to difficulties you know, with the local with the local 153 00:08:11,320 --> 00:08:14,160 Speaker 1: caucuses and they the Democratic Party, So I think very 154 00:08:14,280 --> 00:08:17,480 Speaker 1: distressing for many people. And of course then there's also 155 00:08:17,520 --> 00:08:20,360 Speaker 1: the news that multiple people seem to have been declaring 156 00:08:20,720 --> 00:08:24,240 Speaker 1: their success, multiple candidates, which is humorous for a lot 157 00:08:24,240 --> 00:08:26,840 Speaker 1: of people, Leslie, because they're declaring success without any results. 158 00:08:26,880 --> 00:08:29,080 Speaker 1: Ready to go on, Leslie. I'm just wondering, once we 159 00:08:29,120 --> 00:08:31,360 Speaker 1: get the results, how much value will there be in 160 00:08:31,360 --> 00:08:36,520 Speaker 1: those results. Well, you know, I think there's there's inevitably 161 00:08:37,000 --> 00:08:40,080 Speaker 1: the narrative surrounding this will be of a botched and 162 00:08:40,080 --> 00:08:43,160 Speaker 1: and and somewhat scale caucus. So regardless of the result, 163 00:08:43,200 --> 00:08:45,560 Speaker 1: I think it's going to cast a bit of a 164 00:08:45,600 --> 00:08:49,400 Speaker 1: shadow over those results, and the delay is very significant. 165 00:08:49,400 --> 00:08:51,360 Speaker 1: People are moving off and going into the State of 166 00:08:51,440 --> 00:08:55,160 Speaker 1: the Union address and New Hampshire is you know, is 167 00:08:55,280 --> 00:09:01,400 Speaker 1: very soon. Lisa Homeland Security offered to test Iowa caucus 168 00:09:01,440 --> 00:09:04,320 Speaker 1: app that was in an interview on Fox moments ago. 169 00:09:04,480 --> 00:09:07,120 Speaker 1: This is actually key. They made a point to come 170 00:09:07,120 --> 00:09:09,360 Speaker 1: out and say that there was no interference, has had 171 00:09:09,400 --> 00:09:13,320 Speaker 1: nothing to do with any sort of major glitch, that 172 00:09:13,360 --> 00:09:16,120 Speaker 1: this didn't have to actually affect anything having to do 173 00:09:16,160 --> 00:09:18,520 Speaker 1: with the underlying vote count. Talking about all of that, 174 00:09:18,800 --> 00:09:23,400 Speaker 1: but still raising questions about the lack of technological sufficiency 175 00:09:23,520 --> 00:09:27,800 Speaker 1: heading into the elections. How concerned are you about that 176 00:09:27,880 --> 00:09:31,400 Speaker 1: at this point given what we saw in the questions 177 00:09:31,400 --> 00:09:36,840 Speaker 1: still surrounding that. Yeah, I mean there's there's clearly you know, 178 00:09:36,880 --> 00:09:38,719 Speaker 1: there are a couple of things here. One is that 179 00:09:38,800 --> 00:09:42,880 Speaker 1: even though that disappears to have a very distinct reason 180 00:09:43,120 --> 00:09:47,600 Speaker 1: behind the behind the debacle, it nonetheless sort of comes 181 00:09:47,640 --> 00:09:51,880 Speaker 1: together with with previous elections where there's been interference or 182 00:09:51,880 --> 00:09:55,400 Speaker 1: where things haven't come come together smoothly, and at a 183 00:09:55,480 --> 00:09:59,959 Speaker 1: time when there's just tremendous uncertainties surrounding the Democratic Party 184 00:10:00,000 --> 00:10:03,199 Speaker 1: of the candidates and and a lot of instability. I 185 00:10:03,200 --> 00:10:05,800 Speaker 1: would say politically in the country. Let's lee, you're in 186 00:10:05,800 --> 00:10:07,560 Speaker 1: the UK right now, and I'm just drawing on my 187 00:10:07,559 --> 00:10:11,080 Speaker 1: experience of the British election this past December. If we 188 00:10:11,120 --> 00:10:13,720 Speaker 1: get a progressive candidate that comes out of the caucuses 189 00:10:13,800 --> 00:10:16,800 Speaker 1: the primaries over the next several months, can they win 190 00:10:17,480 --> 00:10:20,360 Speaker 1: on a national basis and the same way Jeremy Corbyn 191 00:10:20,360 --> 00:10:23,160 Speaker 1: struggled with a national electorate but was really worth supported 192 00:10:23,160 --> 00:10:25,480 Speaker 1: by the party. Do you see any parallels here whatsoever? 193 00:10:26,880 --> 00:10:29,360 Speaker 1: I mean, you know, a very different set of politics. 194 00:10:29,400 --> 00:10:32,679 Speaker 1: People love to draw the U s UK comparison. Sometimes 195 00:10:32,679 --> 00:10:35,120 Speaker 1: that shed some light, but I think the big question 196 00:10:35,320 --> 00:10:37,640 Speaker 1: that un it often doesn't. The big question for the 197 00:10:37,720 --> 00:10:40,960 Speaker 1: US is whether or not those that part of the 198 00:10:40,960 --> 00:10:43,280 Speaker 1: party that doesn't get the candidate they want, if it's 199 00:10:43,280 --> 00:10:46,000 Speaker 1: a progressive candidate, do the moderates turn up, do they 200 00:10:46,120 --> 00:10:50,679 Speaker 1: unite behind that candidate? Do they support the Democratic candidate 201 00:10:51,440 --> 00:10:55,000 Speaker 1: as a mechanism of of moving away from the person 202 00:10:55,040 --> 00:10:56,920 Speaker 1: that they don't want in the office, which is which 203 00:10:56,960 --> 00:10:58,840 Speaker 1: is President Trump? And this is you know, this is 204 00:10:58,880 --> 00:11:01,200 Speaker 1: something we simply can't know. Some of the stories coming 205 00:11:01,200 --> 00:11:04,640 Speaker 1: out of Iowa were interesting though, right that people who 206 00:11:04,679 --> 00:11:08,079 Speaker 1: didn't um with their candidate and didn't make the initial 207 00:11:08,120 --> 00:11:10,480 Speaker 1: bar a few people just went home, you know. Not 208 00:11:10,600 --> 00:11:13,360 Speaker 1: a good sign, very hard to read broader results off that, 209 00:11:13,440 --> 00:11:15,240 Speaker 1: but not a good sign that you wouldn't then turn 210 00:11:15,480 --> 00:11:17,640 Speaker 1: to turn over your vote to another candidate. So I 211 00:11:17,640 --> 00:11:19,839 Speaker 1: think this is, you know, this is the big question. 212 00:11:19,880 --> 00:11:22,280 Speaker 1: Will there be unity around a candidate when when one 213 00:11:22,360 --> 00:11:26,160 Speaker 1: is finally selected. There's also a question of what trade 214 00:11:26,360 --> 00:11:30,240 Speaker 1: uh policies will result from the different Democratic candidates. When 215 00:11:30,240 --> 00:11:33,160 Speaker 1: it comes to China, certainly people have this feeling that 216 00:11:33,200 --> 00:11:36,120 Speaker 1: it really won't be necessarily better for China with a 217 00:11:36,200 --> 00:11:39,679 Speaker 1: Democratic candidate, whoever he or she may be. There's a 218 00:11:39,760 --> 00:11:42,160 Speaker 1: question with Europe now that that's the front center with 219 00:11:42,280 --> 00:11:46,560 Speaker 1: some of the trade discussions, of which democratic candidate seems 220 00:11:46,559 --> 00:11:48,280 Speaker 1: to be the best one to deal with Do you 221 00:11:48,280 --> 00:11:52,640 Speaker 1: have a sense of that? Well, I think there is 222 00:11:52,640 --> 00:11:55,600 Speaker 1: a concern not only in Europe but certainly in China 223 00:11:55,679 --> 00:11:58,600 Speaker 1: that a Democratic candidate could take a much stronger line 224 00:11:58,600 --> 00:12:03,960 Speaker 1: on China actually call for those deeper reforms that President 225 00:12:04,000 --> 00:12:06,640 Speaker 1: Trump has has paid lip service too, but really hasn't 226 00:12:06,679 --> 00:12:10,400 Speaker 1: moved the needle substantially on So a progressive candidate, I 227 00:12:10,440 --> 00:12:15,240 Speaker 1: think uh is more likely to take a much harder line. Uh, 228 00:12:15,559 --> 00:12:18,000 Speaker 1: you know, it's sort of anti free trade position is 229 00:12:18,080 --> 00:12:20,760 Speaker 1: one that has deeper roots in the progressive part of 230 00:12:20,800 --> 00:12:24,200 Speaker 1: the Democratic Party certainly than the Republican Party prior to 231 00:12:24,240 --> 00:12:28,960 Speaker 1: this president. So those are very real, very legitimate concerns. 232 00:12:28,960 --> 00:12:31,040 Speaker 1: But at the same time, you know, we're not seeing 233 00:12:31,280 --> 00:12:35,880 Speaker 1: a very serious articulation of what the strategy would be 234 00:12:36,480 --> 00:12:38,640 Speaker 1: um on China coming out of coming out of the 235 00:12:38,640 --> 00:12:42,439 Speaker 1: progressive I just translate from the English that progressive is 236 00:12:42,480 --> 00:12:45,040 Speaker 1: another word for liberals. We've just changed it a couple 237 00:12:45,080 --> 00:12:47,200 Speaker 1: of years ago. Well, I think it's aggressively liberal when 238 00:12:47,240 --> 00:12:49,480 Speaker 1: you're looking at the likes of Bernie Sanders, and let's 239 00:12:49,480 --> 00:12:51,360 Speaker 1: talk about let's talk about the elephant in the room, 240 00:12:51,360 --> 00:12:54,240 Speaker 1: showy Leslie, Let's talk about Bernie Sanders. Can he unify 241 00:12:54,280 --> 00:12:58,240 Speaker 1: his own party? Never mind the country? You know, it 242 00:12:58,600 --> 00:13:01,200 Speaker 1: is another one of those one million dollar questions that 243 00:13:01,240 --> 00:13:04,000 Speaker 1: nobody actually which is where test is going to be 244 00:13:05,000 --> 00:13:08,760 Speaker 1: a lot of skepticism, you know, I when when we 245 00:13:08,880 --> 00:13:13,200 Speaker 1: moved forward towards Super Tuesday, we'll have a lot, We'll 246 00:13:13,200 --> 00:13:14,880 Speaker 1: have a lot more answer them. But I guess I am. 247 00:13:15,160 --> 00:13:18,680 Speaker 1: I am let us know when you get eye words results. 248 00:13:18,760 --> 00:13:21,200 Speaker 1: Let's say, Benjaburi, thank you so much with Chadow Mouse 249 00:13:32,480 --> 00:13:35,960 Speaker 1: children with us for an incredibly important discussion now on 250 00:13:36,040 --> 00:13:38,520 Speaker 1: the state of what we do all day, which is 251 00:13:38,559 --> 00:13:43,320 Speaker 1: the media we're plugged into. Michael Nathanson is with MafA Nathanson. Michael, 252 00:13:43,320 --> 00:13:45,600 Speaker 1: I've got to go first year colleague, Craig manfat on 253 00:13:45,679 --> 00:13:49,600 Speaker 1: Comcast hugely interesting this morning. You go to a buy 254 00:13:49,679 --> 00:13:52,600 Speaker 1: on Comcast, and am I right to say that the 255 00:13:52,720 --> 00:13:56,679 Speaker 1: part of Comcast that's Nathanson like, which is the valuation 256 00:13:57,320 --> 00:14:01,880 Speaker 1: of their news and entertainment assets, is worth zero? Is 257 00:14:02,040 --> 00:14:08,000 Speaker 1: NBCUniversal barely valued within the valuation of Comcast? Right, good 258 00:14:08,040 --> 00:14:11,440 Speaker 1: morning time. That that's our call. Craig has been rightly 259 00:14:11,480 --> 00:14:16,480 Speaker 1: negative on the media side of NBC Comcast, but at 260 00:14:16,520 --> 00:14:20,400 Speaker 1: some point you just got ridiculous and at this level rethink. 261 00:14:20,600 --> 00:14:24,360 Speaker 1: Given the value of cable cable assets, the entertainment assets 262 00:14:24,360 --> 00:14:28,160 Speaker 1: are literally trading for free. So we switched, We switched 263 00:14:28,160 --> 00:14:31,320 Speaker 1: courses and upgraded it to a buy. After a couple 264 00:14:31,360 --> 00:14:34,640 Speaker 1: of years of really being negative on them posts, you know, 265 00:14:34,680 --> 00:14:36,680 Speaker 1: post a bunch of deals that we didn't like forty 266 00:14:36,720 --> 00:14:39,520 Speaker 1: two dollars a share, forty three dollars a share on Comcast. 267 00:14:39,560 --> 00:14:42,280 Speaker 1: I'm sure you'll lift the stock. What's the value of 268 00:14:42,360 --> 00:14:47,120 Speaker 1: NBC Universal and the all in price target? Moffett Nathan Snaz, Well, 269 00:14:47,240 --> 00:14:49,800 Speaker 1: you know, if you look at where you know, it's 270 00:14:49,840 --> 00:14:53,280 Speaker 1: not Disney, because Disney Disney, we'll talk about fit has 271 00:14:53,320 --> 00:14:57,000 Speaker 1: really changed their narrative. But if you said, you know, seven, eight, 272 00:14:57,080 --> 00:14:59,520 Speaker 1: nine times eba doll you probably have another, you know, 273 00:14:59,560 --> 00:15:02,840 Speaker 1: ten a box of value at Comcast just by getting 274 00:15:03,200 --> 00:15:05,600 Speaker 1: NBCU at a fair value. So it's if you look 275 00:15:05,600 --> 00:15:07,600 Speaker 1: at where Charters traded two, which is a pretty good 276 00:15:07,600 --> 00:15:09,880 Speaker 1: proxy for cable, you do you have a free pass 277 00:15:09,920 --> 00:15:12,960 Speaker 1: for NBC And it's a very I think it's very straightforward, 278 00:15:13,000 --> 00:15:15,320 Speaker 1: makes a ton of sense. And people are looking for 279 00:15:15,320 --> 00:15:17,600 Speaker 1: things to buy, as you all know, and this is 280 00:15:17,640 --> 00:15:20,040 Speaker 1: a pretty good name for Michael. We talk about price 281 00:15:20,120 --> 00:15:22,560 Speaker 1: just quickly at an email from Hulu a couple of 282 00:15:22,600 --> 00:15:25,600 Speaker 1: months back, hike in the price of my monthly Hulu power. 283 00:15:25,640 --> 00:15:28,480 Speaker 1: Here we go quite aggressively. Always got to make it 284 00:15:28,520 --> 00:15:34,360 Speaker 1: about Megan early and at what point, at what point 285 00:15:34,360 --> 00:15:36,560 Speaker 1: do we meet meet an inflection point where I just 286 00:15:36,600 --> 00:15:38,360 Speaker 1: sit there and think, you know what, I'm just going 287 00:15:38,360 --> 00:15:41,640 Speaker 1: back to cable. What's this about? Yeah, John, you know 288 00:15:41,720 --> 00:15:45,760 Speaker 1: what that this past year, that inflection point has come. 289 00:15:45,880 --> 00:15:48,080 Speaker 1: I always said, you and Tom had asked me this 290 00:15:48,160 --> 00:15:51,000 Speaker 1: for years. What's the what's the tudor of court cutting? 291 00:15:51,040 --> 00:15:53,200 Speaker 1: We'd say it's a drip drip drip, negative one of 292 00:15:53,240 --> 00:15:56,000 Speaker 1: two percent court cutting rates. This year it's going to 293 00:15:56,080 --> 00:15:59,760 Speaker 1: negative four, negative five because people are now seeing their 294 00:15:59,760 --> 00:16:02,880 Speaker 1: bill rise and on the margin, they're either kind of 295 00:16:02,960 --> 00:16:06,800 Speaker 1: chord or they're they're going back to their traditional ways 296 00:16:06,800 --> 00:16:09,280 Speaker 1: to watch the TV. But the mistake the industry is 297 00:16:09,320 --> 00:16:12,280 Speaker 1: made is that they've just taken pricing up on bundles 298 00:16:12,360 --> 00:16:16,080 Speaker 1: to the level that's just too high. So, you know, 299 00:16:16,400 --> 00:16:20,040 Speaker 1: we're saying that you're we're worried play out, We're brawled 300 00:16:20,040 --> 00:16:24,640 Speaker 1: across the ecosystem. With court cunning really accelerating into twenty Michael, 301 00:16:24,640 --> 00:16:27,120 Speaker 1: there's then a question sort of implicit in that is 302 00:16:27,160 --> 00:16:30,200 Speaker 1: the model going to continue to be purely on subscription 303 00:16:30,280 --> 00:16:33,239 Speaker 1: fees or will there be a shift to an advertising 304 00:16:33,240 --> 00:16:36,000 Speaker 1: supported model. And I'm thinking on the heels of the 305 00:16:36,000 --> 00:16:39,160 Speaker 1: Super Bowl with a record five point six million dollars 306 00:16:39,200 --> 00:16:42,040 Speaker 1: commanded for a thirty second spot. At what point will 307 00:16:42,080 --> 00:16:46,480 Speaker 1: streaming command similar types of prices uh to sort of 308 00:16:46,520 --> 00:16:51,000 Speaker 1: support these Okay, so so there's a ton in that 309 00:16:51,080 --> 00:16:52,840 Speaker 1: answer you. So what I would say to you to 310 00:16:53,040 --> 00:16:56,600 Speaker 1: John's first question, We're gonna have a lot a lot 311 00:16:56,600 --> 00:16:59,920 Speaker 1: of your people subscribing to pay TV. The PayTV core 312 00:17:00,120 --> 00:17:02,040 Speaker 1: user is going to be a sports and news fan 313 00:17:02,640 --> 00:17:05,520 Speaker 1: who you know, will be a bit indifferent to pricing. 314 00:17:05,960 --> 00:17:07,560 Speaker 1: Then there's going to be a layer of people who 315 00:17:07,640 --> 00:17:10,800 Speaker 1: buy things on demand. And that's your question about advertising 316 00:17:10,800 --> 00:17:14,160 Speaker 1: support video. That's a growing field. It's called a VOD 317 00:17:14,320 --> 00:17:18,840 Speaker 1: and seeing more companies pushing advertising video on demand supported 318 00:17:18,880 --> 00:17:22,760 Speaker 1: business model. You won't for many years. There's no way 319 00:17:22,800 --> 00:17:24,800 Speaker 1: you'll ever built the reach that you have in TV, 320 00:17:25,160 --> 00:17:28,439 Speaker 1: but it's a way to a buying consumers to add 321 00:17:28,440 --> 00:17:31,080 Speaker 1: back that that decline of line your viewing in a 322 00:17:31,119 --> 00:17:35,040 Speaker 1: new model called a VOD. Where's your value, Michael Nathanson 323 00:17:35,240 --> 00:17:37,520 Speaker 1: Right now? I mean Disney has had the IGOR run 324 00:17:37,560 --> 00:17:40,719 Speaker 1: off their streaming pricing and Disney Plus, But which is 325 00:17:40,720 --> 00:17:44,000 Speaker 1: the security that's an uncommon value now other than off 326 00:17:44,040 --> 00:17:47,200 Speaker 1: it's Comcast call today. Well, you know Tom. I mean 327 00:17:47,480 --> 00:17:50,760 Speaker 1: it's last week I spoke to John about that. Facebook. 328 00:17:50,760 --> 00:17:52,720 Speaker 1: I'll say the same with Google. I think those fang 329 00:17:52,760 --> 00:17:55,600 Speaker 1: stocks have reached level. It's really hard to have a 330 00:17:55,680 --> 00:17:58,920 Speaker 1: table on the fang stocks. You know, we have Disney 331 00:17:58,960 --> 00:18:02,280 Speaker 1: with another fifteen fifteen bucks or so, and so you'd 332 00:18:02,280 --> 00:18:05,679 Speaker 1: say you're running out a room there. The problem we 333 00:18:05,720 --> 00:18:07,560 Speaker 1: have when we look at my sector is that there's 334 00:18:07,680 --> 00:18:10,360 Speaker 1: there's a lot of value means b M, CBS, which 335 00:18:10,359 --> 00:18:14,160 Speaker 1: you pull up the chart has been decimated, Discovery UM. 336 00:18:14,400 --> 00:18:17,000 Speaker 1: But the problem we see is that those businesses are 337 00:18:17,040 --> 00:18:20,399 Speaker 1: under so much structural pressure that feels like a value trap. 338 00:18:20,560 --> 00:18:24,119 Speaker 1: So we're having a really hard time finding great value 339 00:18:24,119 --> 00:18:27,200 Speaker 1: in businesses that we think are sustainable. That's why Comcast 340 00:18:27,280 --> 00:18:30,440 Speaker 1: makes so much sense for investors. There's so so few 341 00:18:30,440 --> 00:18:34,160 Speaker 1: places you can point to the sustainable growth and evaluation 342 00:18:34,280 --> 00:18:36,800 Speaker 1: and evaluation that's attractive. Michael, just to turn to the 343 00:18:36,800 --> 00:18:38,879 Speaker 1: issue at the moment, just to wrap this conversation up quickly. 344 00:18:38,880 --> 00:18:41,520 Speaker 1: If I made the Walt Disney Company the theme park 345 00:18:41,880 --> 00:18:44,399 Speaker 1: in China, what is happening right now and how material 346 00:18:44,480 --> 00:18:47,480 Speaker 1: is it for the company. It's not fair material. You know, 347 00:18:47,600 --> 00:18:50,479 Speaker 1: they already warned on Hong Kong when the year started 348 00:18:50,520 --> 00:18:53,680 Speaker 1: because of the rioting. You know, Shanghai as a new 349 00:18:53,720 --> 00:18:57,680 Speaker 1: park is not it's not a meaningful contributor to the company. Um, 350 00:18:57,720 --> 00:18:59,840 Speaker 1: it's it's it's not a major issue. If they had 351 00:18:59,840 --> 00:19:02,920 Speaker 1: a better box office late this year, you'd be concerned 352 00:19:02,960 --> 00:19:07,640 Speaker 1: about their inability to have people attend Chinese cinema. At 353 00:19:07,680 --> 00:19:09,800 Speaker 1: this point, this is not a major issue because the 354 00:19:09,840 --> 00:19:13,720 Speaker 1: parks are so small. The broader question though, is US 355 00:19:13,840 --> 00:19:15,960 Speaker 1: parks and will there'll be a slowdown to US parks 356 00:19:16,440 --> 00:19:19,000 Speaker 1: so we're spending Yeah, that's that's something that we we 357 00:19:19,040 --> 00:19:21,280 Speaker 1: haven't put into our molley yet. But that doesn't concerned 358 00:19:21,320 --> 00:19:23,720 Speaker 1: with Disney. Is just the cycle and how many more 359 00:19:23,760 --> 00:19:27,600 Speaker 1: dollars will people spending us theme parks. Michael Nathanson this morning, 360 00:19:27,680 --> 00:19:30,639 Speaker 1: is he and Craig Moffatt put a buy on Comcast 361 00:19:31,200 --> 00:19:34,360 Speaker 1: on some of the parts, uh model, get that researcher 362 00:19:34,359 --> 00:19:46,920 Speaker 1: of course from Moffatt Nathanson. We now try to drive 363 00:19:46,960 --> 00:19:51,240 Speaker 1: forward an intelligent conversation on this virus with Dr Faucci. 364 00:19:51,280 --> 00:19:54,000 Speaker 1: Anthony Fauci is out of Brooklyn. He's out of the 365 00:19:54,000 --> 00:19:57,040 Speaker 1: College of the Holy Cross in Worcester and Cornell, and 366 00:19:57,080 --> 00:20:01,720 Speaker 1: he is definitive on immunology and definitive on how the 367 00:20:01,840 --> 00:20:06,240 Speaker 1: body reacts to these bad things called viruses. Were thrilled 368 00:20:06,480 --> 00:20:09,040 Speaker 1: he could join us right now, Dr Frauci, What is 369 00:20:09,080 --> 00:20:15,080 Speaker 1: your knowledge of how people get sick from this terrible virus? 370 00:20:15,160 --> 00:20:19,760 Speaker 1: What does it actually do to people? Well, it's a 371 00:20:19,800 --> 00:20:23,639 Speaker 1: respiratory born virus, you know, in some respects similar to 372 00:20:23,760 --> 00:20:27,880 Speaker 1: other respiratory born viruses, but it's of a different broad family. 373 00:20:27,920 --> 00:20:30,600 Speaker 1: It's called a coronavirus. And what it does it has 374 00:20:30,640 --> 00:20:35,719 Speaker 1: the capability of binding to a receptor on cells that 375 00:20:35,800 --> 00:20:39,680 Speaker 1: are in your lung and your lower airway. And that's 376 00:20:39,720 --> 00:20:43,679 Speaker 1: the reason why the disease is primarily a disease of pneumonia. 377 00:20:44,440 --> 00:20:47,240 Speaker 1: So the people that you're hearing about who are getting 378 00:20:47,600 --> 00:20:52,120 Speaker 1: seriously ill in China fundamentally a people who are winding 379 00:20:52,200 --> 00:20:56,280 Speaker 1: up with pneumonia, very very serious. Yes, so that's the mechanism. 380 00:20:56,440 --> 00:21:01,040 Speaker 1: Do you do you have any optimism? Dr Fauci's antibiotics 381 00:21:01,119 --> 00:21:06,800 Speaker 1: against the bacterium pneumonia can help staunch the deaths. Are 382 00:21:06,840 --> 00:21:10,920 Speaker 1: we fighting just virology? Are we fighting also the bacteriology 383 00:21:10,920 --> 00:21:14,320 Speaker 1: that follows on from it? That's a good question, and 384 00:21:14,800 --> 00:21:18,280 Speaker 1: talking to our Chinese colleagues and seeing the case reports, 385 00:21:18,880 --> 00:21:22,960 Speaker 1: it looks like this is primary viral pneumonia. I'm sure 386 00:21:23,040 --> 00:21:25,080 Speaker 1: that every once in a while you're gonna see people 387 00:21:25,080 --> 00:21:28,040 Speaker 1: who are seriously ill in the hospital who get a 388 00:21:28,080 --> 00:21:32,840 Speaker 1: secondary complicating bacterial pneumonia. But the driving force of this 389 00:21:33,000 --> 00:21:37,520 Speaker 1: outbreak is virus and viral pneumonia and not bacterial pneumonia. 390 00:21:37,640 --> 00:21:40,600 Speaker 1: The CDC came out yesterday awarding saying that they were 391 00:21:40,640 --> 00:21:43,680 Speaker 1: preparing for a pandemic. It's not there yet, but saying 392 00:21:43,680 --> 00:21:46,720 Speaker 1: as if it will come to the United States, what's 393 00:21:46,760 --> 00:21:49,919 Speaker 1: the tipping point in terms of people, in terms of 394 00:21:49,960 --> 00:21:53,480 Speaker 1: countries that qualifies it as pandemic. Yeah. One of the 395 00:21:53,520 --> 00:21:55,879 Speaker 1: things that I think it's the easiest to understand is 396 00:21:55,920 --> 00:22:02,280 Speaker 1: what we call persistent or sustained transmilty, transmissibility from one 397 00:22:02,320 --> 00:22:05,320 Speaker 1: person to another to another. Like, for example, in the 398 00:22:05,400 --> 00:22:09,720 Speaker 1: United States, we have eleven total cases, nine of which 399 00:22:10,160 --> 00:22:13,960 Speaker 1: are travel related coming in from Muhan, but two were 400 00:22:14,000 --> 00:22:18,880 Speaker 1: individuals who were close contacts of these individuals who came in. 401 00:22:19,320 --> 00:22:22,480 Speaker 1: But it isn't sustained. In other words, it went from 402 00:22:22,480 --> 00:22:25,520 Speaker 1: a person who was infected to another, but didn't go 403 00:22:25,600 --> 00:22:29,200 Speaker 1: beyond that. In the second, third, and fourth generation, we're 404 00:22:29,240 --> 00:22:33,160 Speaker 1: seeing that in China. So China clearly has an epidemic, 405 00:22:33,480 --> 00:22:38,679 Speaker 1: but the countries to which have received people from China 406 00:22:38,880 --> 00:22:44,160 Speaker 1: with travel related cases, we don't yet have widespread multi 407 00:22:44,240 --> 00:22:49,000 Speaker 1: country sustained transmission. When that occurs, then you're going to 408 00:22:49,080 --> 00:22:52,880 Speaker 1: see the official declaration of this being a pandemic, since 409 00:22:52,920 --> 00:22:54,600 Speaker 1: we don't have that yet, Doctor, I just wandered to 410 00:22:54,640 --> 00:22:57,280 Speaker 1: what degree travel curbs and the kind of travel bands 411 00:22:57,280 --> 00:22:59,240 Speaker 1: that we're seeing coming from various countries at the moment 412 00:22:59,280 --> 00:23:01,560 Speaker 1: can be effect What do you think of them? You know, 413 00:23:01,680 --> 00:23:05,720 Speaker 1: it's really controversial. In the past, it has been clear 414 00:23:05,840 --> 00:23:08,199 Speaker 1: that if you do those kinds of things, there is 415 00:23:08,240 --> 00:23:15,120 Speaker 1: the possibility that there may be deleterious, unintended consequences. However, 416 00:23:15,200 --> 00:23:19,119 Speaker 1: this is such an unprecedented situation that it really is 417 00:23:19,160 --> 00:23:21,199 Speaker 1: too early to call. But I can tell you that 418 00:23:21,240 --> 00:23:24,040 Speaker 1: if you have a conversation with health officials, there'll be 419 00:23:24,080 --> 00:23:27,520 Speaker 1: people on either side of that. Dr Fraucci, When you 420 00:23:27,640 --> 00:23:32,240 Speaker 1: joined nig nineteen, uh, I guess in the eighties, I 421 00:23:32,280 --> 00:23:35,920 Speaker 1: want to see, okay, so that was the time of 422 00:23:36,000 --> 00:23:38,040 Speaker 1: the home I forgot how aged you are. You're well 423 00:23:38,040 --> 00:23:41,680 Speaker 1: preserved for your age, Dr Faucci. When you go back 424 00:23:41,720 --> 00:23:44,680 Speaker 1: to the Hong Kong flu of nineteen sixty eight, are 425 00:23:44,720 --> 00:23:49,680 Speaker 1: we reacting to this influenza this virus because of our 426 00:23:49,800 --> 00:23:55,960 Speaker 1: modern newsflow communication transfer of information totally different than we 427 00:23:56,000 --> 00:23:58,720 Speaker 1: did in nineteen sixty eight when it was a quieter 428 00:23:58,880 --> 00:24:02,720 Speaker 1: news time. You know, there is some validity to that 429 00:24:03,119 --> 00:24:07,080 Speaker 1: uh statement that you made, but it isn't completely explained 430 00:24:07,119 --> 00:24:10,240 Speaker 1: by that. I think it's better to explain to the 431 00:24:10,359 --> 00:24:15,119 Speaker 1: listeners that when you're dealing with influenza, influenza is something 432 00:24:15,160 --> 00:24:19,080 Speaker 1: we have some familiarity with, whether it's a severe influenza year, 433 00:24:19,200 --> 00:24:22,160 Speaker 1: a light year, or what have you. But when you're 434 00:24:22,160 --> 00:24:25,240 Speaker 1: dealing with the virus to which you have absolutely no 435 00:24:25,480 --> 00:24:30,480 Speaker 1: precedent to figure out what this coronavirus might do, then 436 00:24:30,640 --> 00:24:34,360 Speaker 1: you have the added uh, you know, fear and anxiety 437 00:24:34,440 --> 00:24:36,880 Speaker 1: of the unknown. I mean, a question that I get 438 00:24:36,920 --> 00:24:41,920 Speaker 1: asked more often than the nineteen pandemic, which you're right, 439 00:24:42,040 --> 00:24:45,000 Speaker 1: was truly a pandemic, and there was clearly much less 440 00:24:45,560 --> 00:24:49,679 Speaker 1: of the kind of global concern that's expressed in the media. 441 00:24:49,720 --> 00:24:52,040 Speaker 1: I mean, there was concern on the part of public 442 00:24:52,080 --> 00:24:55,280 Speaker 1: health officials. But it wasn't the kind of daily twenty 443 00:24:55,280 --> 00:24:58,320 Speaker 1: four hour news cycle that we saw. But people ask, 444 00:24:58,400 --> 00:24:59,919 Speaker 1: you know, we're in the middle of a flu season 445 00:25:00,080 --> 00:25:02,879 Speaker 1: right now. They're about ten thousand people who have died 446 00:25:02,960 --> 00:25:05,360 Speaker 1: this year from flu, which was a plain old flu, 447 00:25:05,920 --> 00:25:09,080 Speaker 1: about a hundred thousand hospitalization. So why are we paying 448 00:25:09,160 --> 00:25:12,399 Speaker 1: so much attention to this coronavirus? And the reason is 449 00:25:12,960 --> 00:25:16,399 Speaker 1: most people have a greater fear of the unknown. And 450 00:25:16,480 --> 00:25:19,680 Speaker 1: the fact is we know that in March and April 451 00:25:19,720 --> 00:25:23,439 Speaker 1: of this year the flu will go down dramatically and 452 00:25:23,480 --> 00:25:27,240 Speaker 1: there'll be very few cases. We don't have any guarantee 453 00:25:28,040 --> 00:25:30,640 Speaker 1: of where this coronavirus is going to go, and that's 454 00:25:30,680 --> 00:25:35,200 Speaker 1: the thing that's frightening people, the unknown. Here's valuable Anthony Focci, 455 00:25:35,200 --> 00:25:37,280 Speaker 1: thank you so much. That FACCI, of course, with the 456 00:25:37,359 --> 00:25:52,119 Speaker 1: National Institute of Allergy and Infectious Diseases fall Scoeny came 457 00:25:52,160 --> 00:25:55,080 Speaker 1: in and threw me the gene Monster research report. He said, Tom, 458 00:25:55,119 --> 00:25:57,439 Speaker 1: read this one sentence, So I'm going to read this 459 00:25:57,520 --> 00:26:01,560 Speaker 1: with full punctuation to get everybody going. We see the 460 00:26:01,680 --> 00:26:06,760 Speaker 1: logical tech comp is apple. We believe there's merit to 461 00:26:06,920 --> 00:26:12,159 Speaker 1: that view. And the company's valuation should be viewed in 462 00:26:12,320 --> 00:26:19,800 Speaker 1: that context. Period Apple period. Why is Tesla like Apple, 463 00:26:20,000 --> 00:26:23,200 Speaker 1: O Wise one Gene Munster with Loop ventures with us Gene. 464 00:26:23,200 --> 00:26:27,800 Speaker 1: Why is it the next Apple? Because it's a combination 465 00:26:27,800 --> 00:26:30,760 Speaker 1: of hardware, software, and services. If you think about the 466 00:26:30,840 --> 00:26:33,880 Speaker 1: large tech companies, Apple is the only one that offers 467 00:26:33,920 --> 00:26:36,960 Speaker 1: those three long time for the last decade has been 468 00:26:37,080 --> 00:26:40,680 Speaker 1: largely penalized for that hardware piece, and the last year 469 00:26:40,720 --> 00:26:43,800 Speaker 1: Apples multiple has moved up as investors have gotten more 470 00:26:43,880 --> 00:26:48,520 Speaker 1: confident that doing those three pieces hardware, software and services 471 00:26:48,560 --> 00:26:52,360 Speaker 1: together creates a sustainability and that Tesla it's the same 472 00:26:52,400 --> 00:26:54,920 Speaker 1: business model. It's not just building cars, it's a computer 473 00:26:55,000 --> 00:26:57,800 Speaker 1: on wheels. That's the hardware piece. Then of course that 474 00:26:57,880 --> 00:27:02,119 Speaker 1: there is the there's the the software piece around for 475 00:27:02,200 --> 00:27:06,280 Speaker 1: example of full self driving and just advanced autopilots that 476 00:27:06,320 --> 00:27:09,280 Speaker 1: you pay seven thousand dollars for. And then there's a 477 00:27:09,359 --> 00:27:12,720 Speaker 1: services element that they're building into anything from insurance to 478 00:27:12,760 --> 00:27:16,040 Speaker 1: their charging network. And so I think that there is 479 00:27:16,400 --> 00:27:18,639 Speaker 1: a similar piece to it, and I think what it 480 00:27:18,680 --> 00:27:21,960 Speaker 1: really represents that view is a shift. And you know, 481 00:27:21,960 --> 00:27:23,760 Speaker 1: we can talk about what's happened with the stock and 482 00:27:23,760 --> 00:27:26,720 Speaker 1: where it's going. But this general shift of thinking about 483 00:27:26,760 --> 00:27:29,000 Speaker 1: this is a car company and using comps of Ford 484 00:27:29,040 --> 00:27:33,199 Speaker 1: and GM to a complex apple. So, Gene, let's go 485 00:27:33,320 --> 00:27:34,960 Speaker 1: to spend a minute or two just on kind of 486 00:27:35,000 --> 00:27:37,920 Speaker 1: the recent price action. Stocks up, you know, almost double 487 00:27:38,080 --> 00:27:42,520 Speaker 1: just in the month of January yesterday indicating another strong 488 00:27:42,560 --> 00:27:44,280 Speaker 1: surge this morning. How much of this do you think 489 00:27:44,359 --> 00:27:48,680 Speaker 1: is kind of technical short interest covering versus people just 490 00:27:48,760 --> 00:27:50,639 Speaker 1: kind of opening their eyes and saying, this is a 491 00:27:50,680 --> 00:27:54,960 Speaker 1: tech company. I think it's seventy of the ladder of 492 00:27:55,040 --> 00:27:59,840 Speaker 1: this is a tech company and short short covering. There 493 00:28:00,119 --> 00:28:03,600 Speaker 1: is uh still about fourteen percent of the float that's 494 00:28:03,800 --> 00:28:08,840 Speaker 1: short that those numbers actually understate the percentage slightly. It's 495 00:28:08,880 --> 00:28:12,480 Speaker 1: probably like sevent because Ellen owens of the company and 496 00:28:12,520 --> 00:28:16,640 Speaker 1: he doesn't offer those shares for borrow. So uh it's 497 00:28:16,640 --> 00:28:19,280 Speaker 1: but that short interest really hasn't gone down much over 498 00:28:19,320 --> 00:28:22,000 Speaker 1: the past few months, and so I think it's more 499 00:28:22,040 --> 00:28:24,640 Speaker 1: about the fundamental piece. I would think about this when 500 00:28:24,640 --> 00:28:27,880 Speaker 1: you look at uh, this view that the fundamental pieces 501 00:28:28,080 --> 00:28:31,159 Speaker 1: the biggest driver of the stock is in some ways 502 00:28:31,600 --> 00:28:34,679 Speaker 1: this is historical what's happened with the stock in the 503 00:28:34,760 --> 00:28:37,800 Speaker 1: last few months. Um, I've been doing this for a 504 00:28:37,800 --> 00:28:40,840 Speaker 1: while and I can't remember a story like it. In 505 00:28:40,880 --> 00:28:44,360 Speaker 1: other ways, the presence the lead up to this over 506 00:28:44,360 --> 00:28:47,520 Speaker 1: the last few years was also historical, the the amount 507 00:28:47,600 --> 00:28:53,160 Speaker 1: of um of batter banter between the bulls and the bears. 508 00:28:53,200 --> 00:28:56,960 Speaker 1: I think there was a lot of positive advancement that 509 00:28:57,040 --> 00:29:00,120 Speaker 1: Tesla had made that was really not being reflected in 510 00:29:00,160 --> 00:29:02,520 Speaker 1: the stock. And so in some ways, the move that 511 00:29:02,560 --> 00:29:05,120 Speaker 1: we've had up to where it is going to open today, 512 00:29:05,400 --> 00:29:07,600 Speaker 1: this is just kind of catching up for I think 513 00:29:07,880 --> 00:29:10,360 Speaker 1: probably what should have happened over the past few years, 514 00:29:10,600 --> 00:29:13,120 Speaker 1: and then there's a question where do we go from here. 515 00:29:13,120 --> 00:29:18,360 Speaker 1: But in some ways this parabolic move is somewhat understandable. Hey, Geane, 516 00:29:18,360 --> 00:29:20,240 Speaker 1: I'm looking at the a n R function on the 517 00:29:20,240 --> 00:29:24,680 Speaker 1: Bloomberg terminal that tracks analyst recommendations eight buys eleven holds 518 00:29:24,960 --> 00:29:29,040 Speaker 1: eighteen cells. Is this a case where the tech analysts 519 00:29:29,040 --> 00:29:31,680 Speaker 1: are on board with the story, but the auto analysts 520 00:29:31,680 --> 00:29:35,280 Speaker 1: just can't get couple of evaluation. I think it's the 521 00:29:35,320 --> 00:29:38,400 Speaker 1: auto analysts that are opening up to this view that 522 00:29:38,440 --> 00:29:41,520 Speaker 1: it's a tech company. I think it's still largely covered 523 00:29:41,560 --> 00:29:45,680 Speaker 1: by auto analysts. You don't see Apple analysts for example, Well, 524 00:29:45,760 --> 00:29:47,480 Speaker 1: there's a few of them, but for the most parts 525 00:29:47,520 --> 00:29:51,120 Speaker 1: aren't covering Tesla. But I think that that I think 526 00:29:51,120 --> 00:29:54,160 Speaker 1: that the traditional analysts that cover it will have to 527 00:29:54,160 --> 00:29:56,360 Speaker 1: make a decision here whether they want to continue to 528 00:29:56,400 --> 00:30:02,320 Speaker 1: cover it or generally think about this as a tech company. Jane, Okay, 529 00:30:02,400 --> 00:30:04,840 Speaker 1: you're selling me on a tech company. But the fact 530 00:30:04,920 --> 00:30:08,400 Speaker 1: is it's automobiles driving down the road on a ninety 531 00:30:08,800 --> 00:30:12,840 Speaker 1: day conference called Basis. Is a number of units sold 532 00:30:13,040 --> 00:30:20,000 Speaker 1: of their cars still the demonstrable statistic. Yes, that's critical, 533 00:30:20,160 --> 00:30:23,600 Speaker 1: that would be the critical piece. But uh, you have 534 00:30:23,680 --> 00:30:25,560 Speaker 1: to look at it not just in the context of 535 00:30:25,600 --> 00:30:28,600 Speaker 1: a quarter. I'm not trying to build some uh some 536 00:30:28,640 --> 00:30:31,120 Speaker 1: cushion for them in any given quarter. But you need 537 00:30:31,200 --> 00:30:34,320 Speaker 1: to think about these trends. Uh. There, these are massive trends. 538 00:30:34,360 --> 00:30:37,960 Speaker 1: We're talking about the car. The automotive industry really hasn't 539 00:30:38,040 --> 00:30:40,600 Speaker 1: changed largely for the last hundred years, and we're talking 540 00:30:40,640 --> 00:30:44,600 Speaker 1: about a total shift out to autonomous vehicles. Is where 541 00:30:44,600 --> 00:30:47,240 Speaker 1: we're ultimately going, but that it takes time to get there. 542 00:30:47,640 --> 00:30:49,719 Speaker 1: Do you have a model of what unit sales are 543 00:30:49,720 --> 00:30:52,120 Speaker 1: going to be in the next eight days or if 544 00:30:52,120 --> 00:30:57,400 Speaker 1: you don't what happens if they stumble, Well, if they stumble, Uh, 545 00:30:57,640 --> 00:31:00,680 Speaker 1: let's maybe just focusing on the March quarter. A as 546 00:31:00,720 --> 00:31:03,600 Speaker 1: far as the model for the full year, they've talked 547 00:31:03,640 --> 00:31:07,480 Speaker 1: about doing greater than five hundred thousand. Previously they had 548 00:31:07,520 --> 00:31:10,320 Speaker 1: said greater than four hundred sixties five thousand, So they 549 00:31:10,360 --> 00:31:12,440 Speaker 1: had kind of inched that target up when they reported 550 00:31:12,440 --> 00:31:15,480 Speaker 1: their quarter last week, but the they didn't give a 551 00:31:15,480 --> 00:31:18,360 Speaker 1: ton of context to how to think about this quarter 552 00:31:18,400 --> 00:31:21,960 Speaker 1: to quarter, and so, uh, the analysts could be ahead 553 00:31:21,960 --> 00:31:24,320 Speaker 1: of themselves. The numbers are still kind of figuring themselves 554 00:31:24,320 --> 00:31:27,760 Speaker 1: out shaking out for the March quarter. But let's take 555 00:31:27,840 --> 00:31:32,120 Speaker 1: the case where the company misses the March quarter and 556 00:31:32,120 --> 00:31:35,920 Speaker 1: then talks about still confidence in that five hundred thousand number. 557 00:31:36,320 --> 00:31:38,520 Speaker 1: That miss would be a negative. The stock even what 558 00:31:38,560 --> 00:31:42,160 Speaker 1: it's done, would be down. But conversely, if you they 559 00:31:42,240 --> 00:31:43,920 Speaker 1: you come back to the June quarter and then they 560 00:31:43,960 --> 00:31:47,360 Speaker 1: beat on that number, uh, then the stock would would 561 00:31:47,440 --> 00:31:51,200 Speaker 1: regain that So I think what we're we're getting into is, uh, 562 00:31:51,240 --> 00:31:53,080 Speaker 1: it's still going to be a controversial story, and I 563 00:31:53,080 --> 00:31:56,440 Speaker 1: would I think that a miss would still be viewed negative, 564 00:31:56,480 --> 00:31:58,720 Speaker 1: but I think it misses the bigger ark of what's 565 00:31:58,720 --> 00:32:02,360 Speaker 1: going on. So Gene, just real quickly, what's the competitive 566 00:32:02,400 --> 00:32:05,040 Speaker 1: landscape for them? Is that Apple or is it General Motors? 567 00:32:06,960 --> 00:32:10,960 Speaker 1: On neither probably probably more Apple than General Motors. Unclear 568 00:32:10,960 --> 00:32:15,200 Speaker 1: what Apple's ambitions are in cars, and just for a 569 00:32:15,240 --> 00:32:17,480 Speaker 1: long time prophesied that Apple would do a TV that 570 00:32:17,560 --> 00:32:20,480 Speaker 1: never happened. I want to be careful about what they're 571 00:32:20,480 --> 00:32:21,960 Speaker 1: going to do in automotive. I think they will have 572 00:32:22,000 --> 00:32:26,600 Speaker 1: some playing automotive, but General Motors is structurally uh in 573 00:32:26,640 --> 00:32:28,600 Speaker 1: a in a tight spot. And another thing I would 574 00:32:28,600 --> 00:32:30,280 Speaker 1: add is I think if you think of the automotive 575 00:32:30,280 --> 00:32:32,680 Speaker 1: industry over the next ten twenty years, there are large 576 00:32:32,720 --> 00:32:34,880 Speaker 1: companies that have been around for a long time that 577 00:32:34,960 --> 00:32:38,760 Speaker 1: will be on their way on a clear path to 578 00:32:38,920 --> 00:32:41,840 Speaker 1: not being around, if even around at all. Hey, Gene, 579 00:32:41,880 --> 00:32:44,320 Speaker 1: thanks so much for joining us. We really appreciate your thoughts. 580 00:32:44,360 --> 00:32:47,720 Speaker 1: Jean Munster Luke Ventures managing partner analyst giving us his 581 00:32:48,200 --> 00:32:53,480 Speaker 1: very informed thoughts. Thanks for listening to the Bloomberg Surveillance podcast. 582 00:32:53,840 --> 00:32:58,880 Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or 583 00:32:58,920 --> 00:33:02,920 Speaker 1: whichever pod cast platform you prefer. I'm on Twitter at 584 00:33:02,960 --> 00:33:07,200 Speaker 1: Tom Keene before the podcast. You can always catch us worldwide. 585 00:33:07,680 --> 00:33:08,760 Speaker 1: I'm Bloomberg Radio.