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Speaker 1: Welcome to the Bloomberg Penl Podcast. I'm Paul swing you

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Speaker 1: along with my co host Lisa Brahma Waits. Each day

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Speaker 1: we bring you the most noteworthy and useful interviews for

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Speaker 1: you and your money, whether at the grocery store or

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Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple

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Speaker 1: podcast or wherever you listen to podcasts, as well as

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Speaker 1: at Bloomberg dot com. The busiest week of earnings for

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Speaker 1: the second quarter reporting season. Meanwhile, we are getting the

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Speaker 1: trickle out of the big tech names. Amazon reporting after

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Speaker 1: the bell today, shares lower by three quarters of a

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Speaker 1: percent today, although a lot of people are expecting them

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Speaker 1: to deliver strong results on the heels of their one

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Speaker 1: day shipping initiative. Joining us now to discuss Dave Garritty,

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Speaker 1: chief market strategist for laid Law and Company and also

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Speaker 1: a partner at bt block. He is joining us here

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Speaker 1: in our eleven three oh studios. Dave, I want to

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Speaker 1: start with Amazon. What are you expecting in terms of

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Speaker 1: their earnings and and sort of the boost that they're

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Speaker 1: expected to get from the one day shipping initiative. I

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Speaker 1: think Amazon is going to be coming in with fairly

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Speaker 1: strong results, probably looking at revenues possible growth somewhere north

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Speaker 1: of fiftent year over year. UM. You know, clearly the

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Speaker 1: question here for Amazon isn't so much just the strength

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Speaker 1: of the volumes through the e commerce platform, but really

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Speaker 1: more what's going on with Amazon Web services and the

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Speaker 1: fact that they've continue to reap returns from their leading

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Speaker 1: return as being a cloud computing platform. So UM prime

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Speaker 1: is a wonderful thing. However, at the end of the day,

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Speaker 1: the engine for profit growth of the company is what

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Speaker 1: they're doing in terms of the ability to control data. So, David,

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Speaker 1: on the data front, you're talking before we went on

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Speaker 1: the air about Facebook. They had numbers last night, really

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Speaker 1: strong top line growth, the stocks down one and a

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Speaker 1: half percent. You're calling out some issues about their cost

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Speaker 1: of good soul. It gives a sense of what you're thinking, Yeah,

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Speaker 1: UM to UM you know it certainly as a monopoly

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Speaker 1: if you will, in terms of social media. UM, you know,

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Speaker 1: Facebook is realizing these monopoly rents. UM. The thing that's

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Speaker 1: been interesting here looking more on the regulatory front towards

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Speaker 1: not just the US government and what the Hill is saying,

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Speaker 1: but also overseas. UM. You know, clearly the fact of

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Speaker 1: the matter is looking at the business model for these

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Speaker 1: companies Facebook, Uh, you know they have they pay no

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Speaker 1: cost for the data that we provide. And there have

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Speaker 1: been estimates out there that this could be giving a

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Speaker 1: benefit to the company Facebook and other um monopolies within

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Speaker 1: social media or within tech of something in the order

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Speaker 1: about seventy five to a hundred billion dollars a year. Uh.

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Speaker 1: There are discussions taking place in the U S and

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Speaker 1: elsewhere of taxing this. I mean effectively, what would happen

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Speaker 1: if say General Motors you know, paid nothing for the

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Speaker 1: steel that they used to build their cars. The model

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Speaker 1: and the argument here is effectively the same in terms

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Speaker 1: of looking at Facebook. So the issue is costs potentially

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Speaker 1: are going to be rising as a result of this

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Speaker 1: regulatory inquiry and oversight with respect of the industry. UM,

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Speaker 1: so margins will come under pressure. Clearly, the revenue moment

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Speaker 1: him continues to grow, uh, and that can support many things.

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Speaker 1: But the fact of the matter is is that life

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Speaker 1: is going to become far more complicated, not just for Facebook,

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Speaker 1: but also potentially for Amazon and Google as a result

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Speaker 1: of the antitrust inquiry with the Department of Justice and

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Speaker 1: the Federal Trade Commission the FTC have launched. Which companies

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Speaker 1: of the big tech names do you think will get

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Speaker 1: most affected by this the d efforts. My selection here

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Speaker 1: would be Facebook. Um. You know, to the extent that

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Speaker 1: Facebook does depend upon other companies for data. Um, so

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Speaker 1: other companies I think will pass costs onto Facebook. And

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Speaker 1: I would simply say that even though Facebook on a

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Speaker 1: tactical basis has had a win with respect of this

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Speaker 1: five billion dollars settlement with the FTC because it removes

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Speaker 1: liability for the officers, the fact of the matter is

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Speaker 1: is that Mark Zuckerberg has shown himself to be brazen

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Speaker 1: in his dealings with regulatory authorities, both here in the

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Speaker 1: US and elsewhere, and I think this puts some rarely

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Speaker 1: in the crosshairs and there's a foreseeable future. There's also

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Speaker 1: a question of diversification. We were talking about Amazon, and

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Speaker 1: I thought it was striking that you said that the AWS,

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Speaker 1: the sort of cloud computing services, was really where the

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Speaker 1: focus needs to be, because on the actual bread motor

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Speaker 1: of their business is sort of market platform, it's sort

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Speaker 1: of increasingly utility. They just try to crept margins as

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Speaker 1: much as possible, or that's how they'd like to put

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Speaker 1: it out there as how crucial is it for big

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Speaker 1: tech to basically create their mainstay businesses as utilities, but

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Speaker 1: then have these peripheral businesses actually give them their money.

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Speaker 1: That's a very good point, and it's you know, and

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Speaker 1: in terms of looking at the monopoly that these companies

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Speaker 1: have within their various sectors, the argument has been put

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Speaker 1: forward that these are really more utilities, and as utilities

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Speaker 1: they should be regulated and allowed to have the returns

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Speaker 1: that utilities historically have enjoyed, Which means that these companies,

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Speaker 1: much as a T and T did some time ago,

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Speaker 1: have to think about setting up unread related businesses to

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Speaker 1: potentially drive their returns and continue to attract investor attention. Well,

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Speaker 1: that brings up the ultimate question of risk, regulatory risk

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Speaker 1: for these companies. Is there a scenario where they could

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Speaker 1: be broken up? That's certainly something that Senator Elizabeth Warren

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Speaker 1: and presidential kendidate Elizabeth Warren has suggested. Well, I mean

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Speaker 1: going towards a breakup, you know, is a possible solution

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Speaker 1: or a possible scenario, um, but one which arguably comes

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Speaker 1: after you've gone through this process of inquiry and very

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Speaker 1: likely you go past the general election. Um, you know,

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Speaker 1: with the solution you know doesn't get imposed with a

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Speaker 1: hundred and seventeen Congress when it adjourns in two thousand

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Speaker 1: twenty one. I think it may take a little longer

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Speaker 1: than that, But the fact is it's on the horizon

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Speaker 1: and investors and looking at the sector have to have

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Speaker 1: this on their radar. What's the next step for regulatory action?

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Speaker 1: From your point of view, you're expecting, um, I think

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Speaker 1: it's really more a matter of various entities, whether it's

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Speaker 1: the Department Justice, whether it's a Federal Trade Commission, whether

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Speaker 1: it's the Antitrust Subcommittee of the House Judicial Committee conducting

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Speaker 1: their hearings. And as these hearings and inquiries are conducted,

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Speaker 1: clearly there's going to be a news flow coming out

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Speaker 1: of these. Um. Clearly, the people who are going to

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Speaker 1: do well out of all this are the lobby armies

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Speaker 1: of K Street down in Washington, d C. It's going

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Speaker 1: to be a bang up year, uh for attorneys going

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Speaker 1: into and Paul, it already has been. It already has been.

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Speaker 1: It's that something has never changed. David Garretty, thank you

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Speaker 1: so much for joining us. David's a chief market strategist

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Speaker 1: at laid Long Company, also partner at bt block talking technology,

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Speaker 1: We've got tech earnings this week and uh, clearly investors

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Speaker 1: will be focusing on the operations of these companies, as

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Speaker 1: they should, but they will also be focusing, I think increasingly,

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Speaker 1: as David suggested, on the regulatory oversight that these companies

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Speaker 1: are now finding themselves under, which is a little bit

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Speaker 1: of a new issue for them. Most of these tech

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Speaker 1: companies historically have uh you know, you know, dealt with

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Speaker 1: European oversight, but not necessarily oversight coming from US regulators

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Speaker 1: US politicians. That appears to be changing. The question is

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Speaker 1: how will they deal with it and will there be

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Speaker 1: some winners and losers. The scores of ultra net worth

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Speaker 1: families haven't risen dramatically over the past few decades, and

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Speaker 1: a big question now for those investors is where do

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Speaker 1: they put their money at a time of high evaluations,

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Speaker 1: easing central banks, and some concerns growing about the momentum

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Speaker 1: in the global economy. Here to answer all of those

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Speaker 1: questions is Michael Son and Felt. He's chairman and founder

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Speaker 1: of Tiger twenty one, which is a consortium of ultra

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Speaker 1: net worth investors who get together and talk honestly about

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Speaker 1: what they're doing. If I get that correctly, Michael, um, so,

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Speaker 1: thank you for being here. What's the latest in terms

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Speaker 1: of the optimism or lack thereof among the members of

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Speaker 1: Tiger One. Thanks for having me uh over the last

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Speaker 1: six months. Sentiment is shifting slowly today. People are less

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Speaker 1: optimistic those who were very positive or less so, but

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Speaker 1: it's still smooth sailing for the moment. People have pulled

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Speaker 1: out of a little bit of real estate, brought it

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Speaker 1: down from the low thirty percent allocation to the high twenties,

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Speaker 1: taking profits where they could. Are members because they're all

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Speaker 1: former entrepreneurs, are much more comfortable in the private markets,

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Speaker 1: private equity, private real estate, so they only have about

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Speaker 1: twenty three percent allocation to the public markets. Hedge funds

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Speaker 1: have been very low, but the hedge funds that are

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Speaker 1: getting interest now are the defensive hedge funds what would

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Speaker 1: be called credit funds where you have distressed debts. So

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Speaker 1: there are a lot of distress debt funds gearing up

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Speaker 1: ready for the next downturn, and our members are looking

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Speaker 1: at that as well. So, Michael, one of the things

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Speaker 1: that we've noticed this was some of these tech companies

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Speaker 1: coming public like Uber and Lift, for example, is that

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Speaker 1: maybe the valuations in the private market have gotten maybe stretched,

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Speaker 1: so when they come to the equity public markets they

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Speaker 1: maybe even have a down evaluation. What are your members

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Speaker 1: saying about, given that they are entrepreneurs, about kind of

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Speaker 1: valuations in venture world, in the private equity world. So

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Speaker 1: the valuations are clearly high in the public markets. Um,

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Speaker 1: but long term people still believe that, for instance, technology

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Speaker 1: stocks have greater scalability. Uh So after the index funds,

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Speaker 1: which are members are increasingly interested in because they know

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Speaker 1: they can't outperform the market, tech stocks would be the

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Speaker 1: one subset. But even within tech stocks now you have

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Speaker 1: a divergence. Whereas a year ago our members thought, uh,

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Speaker 1: Amazon and Facebook were two tech stocks. With all the

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Speaker 1: challenges facing Facebook today regulatory and so forth, those are diverging.

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Speaker 1: I would say our members are a little less interested

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Speaker 1: in Facebook, although it had good earnings, it now has

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Speaker 1: a five billion dollar fine. Amazon doesn't have those problems today.

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Speaker 1: So I'm curious you said that your members were reducing

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Speaker 1: their allocation to real estate slightly. I'm wondering if you

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Speaker 1: can give me a sense or give us a sense

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Speaker 1: of where they're reducing those allocations. In other words, in

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Speaker 1: the big cities, is it and warehouses the commercial So

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Speaker 1: first of all, in real estate, you really have a

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Speaker 1: tail of two cities. You have the gateway cities where

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Speaker 1: prices are still very high, and outside of the gateway

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Speaker 1: cities you have things like the retail apocalypse where you

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Speaker 1: have streets that are just empty of retailers because of

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Speaker 1: what's going on. So retail is still real estate is

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Speaker 1: still our members largest allocation. That's an important thing. So

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Speaker 1: the fact that it came down from the high thirties

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Speaker 1: to tent, it's still their largest allocation. What they've done

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Speaker 1: is where they had an opportunit unity to take low

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Speaker 1: hanging fruit that was easily sold at a very high value,

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Speaker 1: they took those off to build cash and get ready

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Speaker 1: for the next downturn. So that's that was gonna be

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Speaker 1: my next question. What do they buy? And it sounds

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Speaker 1: like they bought nothing if they're buying it in the

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Speaker 1: real estate is more on the income producing side rather

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Speaker 1: than the speculative side. Unless because our members so many

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Speaker 1: made their money in real estate, sometimes they can see

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Speaker 1: a value that nobody else can see. An empty building

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Speaker 1: to you might be frightening, it might be an extraordinary

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Speaker 1: opportunity to one of our members. But generally there's a

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Speaker 1: lot of interest in income substitutes. So workforce housing, as

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Speaker 1: an example, is very stable, good cash flows or although

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Speaker 1: even that's gotten a little price over the last year

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Speaker 1: or two. So, Michael, where are you seeing with your

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Speaker 1: company Tiger twenty one? Where are you seeing the growth

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Speaker 1: in wealth? I mean, I'm assuming that you know, you

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Speaker 1: know there are lots of billionaires in the U s.

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Speaker 1: Where are you seeing the growth? Were you opening groups

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Speaker 1: and offices and so on? So we've identified the sixty

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Speaker 1: markets around the globe that members like Tiger members would

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Speaker 1: like to either work in, live in, invest in, or

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Speaker 1: connect to. We're already in over thirty of those markets,

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Speaker 1: so over the next five years will probably roll out

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Speaker 1: the next thirty. Our market, by the way, is not

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Speaker 1: the billionaires. Our market is from ten million to a billion.

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Speaker 1: People have created all the great meat and potato businesses,

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Speaker 1: And one way to think about it, if you're a

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Speaker 1: Major League football, baseball or basketball player, you're about one

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Speaker 1: in seventeen thousand by accomplishment. Our members are of a

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Speaker 1: similar scale of success within their field of entrepreneur minus

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Speaker 1: the all stars. We don't we don't go for the billionaires.

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Speaker 1: I'm wondering when you talk about building cash or getting

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Speaker 1: defensive or distressed debt investors trying raising capital to deploy

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Speaker 1: to take advantage of a downturn, why are they like

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Speaker 1: that's going to happen somewhat soon, given the fact that

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Speaker 1: you've got central banks that are easing and doing what

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Speaker 1: they kind of prevented. Yeah, so I think um OUR

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Speaker 1: members are looking for the all elusive, all weather portfolio,

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Speaker 1: something that will be durable. We're not traders by nature.

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Speaker 1: Are members are entrepreneurs who build businesses over ten, twenty

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Speaker 1: thirty years. So they're looking to have a portfolio that

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Speaker 1: will last through good times and bad. So they see

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Speaker 1: what happened in two thousand eight, what were the strategies

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Speaker 1: that did well? And the one thing they know is

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Speaker 1: you don't want to ever have to sell at the bottom.

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Speaker 1: You have to have enough cash to weather through the bottom,

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Speaker 1: so you're not forced to liquidate great assets at discount prices.

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Speaker 1: So that would be the that would be the main

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Speaker 1: thing is have enough cash not to be forced to

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Speaker 1: liquidate your great investments at the wrong time. Paul. This

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Speaker 1: is so fascinating to me because it's not just AlterNet

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Speaker 1: worth individuals. It's all the big firms still, the big

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Speaker 1: private equity firms, private debt firms, etcetera. And I have

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Speaker 1: to wonder if this will sort of cushion any blow

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Speaker 1: downturn because you've got just so much cash they're waiting

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Speaker 1: to pick up any bargains. Yeah, And I know, I

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Speaker 1: mean you'd like to think so maybe we saw that

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Speaker 1: in December last year, you know, And we saw that

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Speaker 1: in December. We had that sell off in December. H

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Speaker 1: And then he came running back this year, Michael Son

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Speaker 1: and felt thanks so much for joining us. Michael is

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Speaker 1: a chairman and founder of Tiger twenty one but seventy

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Speaker 1: one billion dollars under management across all of their members.

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Speaker 1: Just a unique way to aggregate wealthy individuals who have

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Speaker 1: created companies and value and entrepreneurs. Uh. And the question

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Speaker 1: is when those people liquidate their investments, what do they

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Speaker 1: do with the cash? Well, yesterday was certainly an important

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Speaker 1: day for President Trump, as former Special counsel Robert Mueller

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Speaker 1: testified in front of two congressional committees to get a

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Speaker 1: post mortem on that performance. We welcome Ken nowadays. He

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Speaker 1: is a partner at Venable l l p H. He

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Speaker 1: was also a former corruption and fraud prosecutor for the U. S.

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Speaker 1: Attorney's Office in the Southern District of New York, Kent.

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Speaker 1: Thanks much for joining US. President Trump yesterday claimed that

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Speaker 1: it was a great day for him. Do you agree?

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Speaker 1: I disagree with that, um, And the reason is, the

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Speaker 1: report is still the report. All the facts and the

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Speaker 1: report are still the facts. And one thing that Bob

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Speaker 1: Mueller did clarify and say pretty pretty strongly was that

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Speaker 1: the report did not exonerate the president. So I can't

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Speaker 1: say you can say it was a good day. So

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Speaker 1: I guess that my question is going forward, what precedent

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Speaker 1: does this set? Because the Special prosecutor came out with

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Speaker 1: a report he said he could not exonerate President Trump.

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Speaker 1: He also said that there were some very concerning things,

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Speaker 1: particularly pertaining to the Wiki League section. These are the

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Speaker 1: things that the Democrats are sort of clinging to as

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Speaker 1: justification for why they did this in the first place,

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Speaker 1: because they're getting a bunch of criticism today. My question

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Speaker 1: is moving forward, where do we go from here with

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Speaker 1: this report? I think we're in the same place we

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Speaker 1: were before, which is Bob Mueller has always made it

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Speaker 1: clear that he's the third party narrator of a great book.

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Speaker 1: But he's not going to give you the last chapter.

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Speaker 1: The last chapter has to come from somewhere else. He's

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Speaker 1: going to bear witness. He's going to tell you what

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Speaker 1: the facts are, but he's not going to be passing judgment.

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Speaker 1: So I think we're in the same place where we

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Speaker 1: always have been up until this point after the report,

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Speaker 1: which is, will there be impeachment proceedings? So let's just

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Speaker 1: you know, looking at yesterday and so that the bare

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Speaker 1: bones testimony we got yesterday from Mr Mueller plus the report,

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Speaker 1: you think that moves the needle at all as it

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Speaker 1: relates to the legal jeopardy of the president Trump will

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Speaker 1: face either while he's in office or after office. It

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Speaker 1: may maybe it moves it, uh where he's in more jeopardy.

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Speaker 1: And the reason for that is not because Bob Muller

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Speaker 1: brought anything new to the table that wasn't in the report.

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Speaker 1: It's because the public discourse, the public vetting, the public

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Speaker 1: attention on the facts in that report are still being

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Speaker 1: discussed and focused on, and frankly, the more you look

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Speaker 1: at those facts in that report, the more you talk

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Speaker 1: about them, it's kind of hard not to look away.

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Speaker 1: The more that I listened to Robert Mueller yesterday and

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Speaker 1: his comments since the publication of the report, the brief

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Speaker 1: ones that he has made, the more of the contrast

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Speaker 1: between him and some of the politicians UH, sort of

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Speaker 1: remains stark in my mind. This idea that he is

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Speaker 1: committed to process. He wants to basically say, the institution

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Speaker 1: will provide justice. I am committed to it. He has

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Speaker 1: a commensurate marine. As a recent guest UH said, I'm

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Speaker 1: just wondering whether career prosecutors and career workers UH in

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Speaker 1: the US government our our story to change their mentality

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Speaker 1: about faith in the institution if they feel like it

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Speaker 1: isn't rewarded in the sense of, you know, actually being

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Speaker 1: as meaningful as they hoped. I think with that question,

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Speaker 1: the d o j's credibility as an institution is taking

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Speaker 1: a hit with these proceedings, with what's going on with

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Speaker 1: how everything was handled, and you know, I don't know

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Speaker 1: what line d o J, A U, sas and prosecutors

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Speaker 1: are thinking but it's got to hurt and UM it's

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Speaker 1: my question is whether this is a permanent shift of

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Speaker 1: the viewpoint of d o J and federal their place

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Speaker 1: in federal prosecutions and and and seeking justice, or whether

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Speaker 1: this will revert back to the norm. So con it's

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Speaker 1: not just the Muller investigations. The President Trump also is

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Speaker 1: facing some potential liability with investigations here in New York.

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Speaker 1: I think the federal there's some federal prosecutors as well

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Speaker 1: as a Southern District of New York looking at some

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Speaker 1: of the Trump organizations, for example, can give us an

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Speaker 1: update on where you think the statusus of some of

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Speaker 1: those investigations are we well, first off, I think it

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Speaker 1: seems pretty clear that the campaign finance fraud investigation that

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Speaker 1: the Southern District of New York was looking into up

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Speaker 1: here has been closed. And I'm basing that on the

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Speaker 1: unsealing letter that was submitted to Michael Cohen's uh sentencing

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Speaker 1: court that said that part of the investigation is done.

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Speaker 1: UM I don't know where the investigation stands with respect

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Speaker 1: to the Trump organization. I know it's been publicly reported

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Speaker 1: that there are those investigations going on. UM as well

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Speaker 1: as investigations by the New York Attorney General, who I

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Speaker 1: suspect UH is going to be more aggressive because they're

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Speaker 1: not part of the federal system. I'm wondering what do

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Speaker 1: you think is most discouraging for federal prosecutors and career

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Speaker 1: prep the government with respect to the way that the

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Speaker 1: Muller investigation was handled it. I think the unfairness of

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Speaker 1: both sides in asking UH Mueller and his team to

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Speaker 1: do something that they were somewhat constrained from doing. They

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Speaker 1: were doing their job, and having your work turned into

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Speaker 1: a partisan fight, I think is what is discouraging for people.

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Speaker 1: I think also seeing it play out in public, the tension,

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Speaker 1: the obvious tension between the Attorney general Attorney General Barr

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Speaker 1: and Mueller and his team, where it's publicly displayed that

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Speaker 1: they had differing views about what conclusions Mueller could reach

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Speaker 1: or not, and Bar took it upon himself to reach

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Speaker 1: a conclusion um that Mueller didn't, and seeing that play

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Speaker 1: out in public, it really hurts. So you know, in

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Speaker 1: the legal community today, do you think the mull report

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Speaker 1: UH serves as a basis for impeachment? Is that the

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Speaker 1: belief or is the belief that there's just not enough

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Speaker 1: there I think the Mulla report is a there is

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Speaker 1: a lot of there there um, and it is incumbent

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Speaker 1: on the fact finders, and here the fact finders are

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Speaker 1: ultimately going to be Congress to decide and past judgment.

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Speaker 1: But it's a very in depth report with a lot

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Speaker 1: of juicy facts, uh, inculpatory facts in there. Cod Nowaday,

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Speaker 1: thank you so much for being with us. Your thoughts

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Speaker 1: are always insightful. Can nowadays a partner at Venable L L. P.

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Speaker 1: He is a former prosecutor at the U. S. Attorney's

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Speaker 1: Office in the Southern District of New York. He spent

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Speaker 1: nine years. They're focusing on corruption and fraud. Time to

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Speaker 1: check in with the Bloomberg Opinion. We're joined by opinion

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Speaker 1: Commas at least, Martin Uzi at least thanks so much

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Speaker 1: for joining us. We had a big day for Marrier

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Speaker 1: drage today and the e c B let's see already

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Speaker 1: had to say there is surrounding euro Area growth out

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Speaker 1: remained tilted to the downside, reflecting the prolonged presence of

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Speaker 1: uncertainty is related to geopolitical factors. The rise in threat

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Speaker 1: of protection is and vulnerabilities in emerging markets. That was

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Speaker 1: ECB President Mario Draggy speaking this morning talking about the

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Speaker 1: slowdown in growth and some of the concern there at

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Speaker 1: least Martinous Bloomberg Plenty opinion columns, thanks so much for

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Speaker 1: joining us at least it just real quickly, What was

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Speaker 1: your main takeaway from what we heard this morning from

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Speaker 1: Mr dry Well. I think you know there's going to

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Speaker 1: be you know, some some stimulus on the way. Um

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Speaker 1: he's signally this might you know, come as as soon

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Speaker 1: as September. You saw banks initially rally on the back

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Speaker 1: of expectations that there might well be someb mitigating actions

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Speaker 1: for them in the way of potentially deposit tearing. Of course,

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Speaker 1: the banks have to pay the ECB money. Um, I

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Speaker 1: have to pay the ECB two part their funds, and

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Speaker 1: that's been hurting them and and that's where we are.

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Speaker 1: And yet we saw a reversal in market. So this

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Speaker 1: I find really interesting because initially bond yields dropped to

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Speaker 1: record low, certainly in Germany, and there was a rally

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Speaker 1: all across the fixed income world in Europe that has

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Speaker 1: since shifted, especially after Mario Draggy suggested that perhaps the

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Speaker 1: decisions were not unanimous at this point. Yes, no, that's right.

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Speaker 1: It seems that some some also work remains to be done,

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Speaker 1: for example, on on how they might relieve banks in

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Speaker 1: the way of deposit tearing. It seems like the analysis

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Speaker 1: is still underway. So yes, I think that the takeaway

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Speaker 1: changed as as the press conference evolved. So at Lisa

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Speaker 1: so Mary dragging here is stepping down as President of

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Speaker 1: the European Central Bank in October, but there's still some

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Speaker 1: questions about some of his dealings in the past and

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Speaker 1: some of his actions in the pascess. It relates to

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Speaker 1: the Banka mont Apache in Italy. I know you wrote

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Speaker 1: a colment about that. What are some of the key

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Speaker 1: issues from that that you're looking at. Well, basically, you know,

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Speaker 1: the ECB is a very young banking supervisor. They only

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Speaker 1: officially became the region's chief regulator in fourteen, and the

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Speaker 1: idea was that, you know, you'd have a European wide

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Speaker 1: regulator that wouldn't be UM there wouldn't be influenced by

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Speaker 1: national politics, national inclinations which have you know, sometimes led

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Speaker 1: to regulators locally being too permissive for example, UM. But

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Speaker 1: what we've seen in the case of Montepasky which is

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Speaker 1: potentially quite an extreme case. Is that you know, based

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Speaker 1: on the you know, the information that we have had.

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Speaker 1: You know, the ECB potentially you know bent the rules

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Speaker 1: a little bit um in its latest rescue of Montepasky

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Speaker 1: two years ago, and that is raising questions as to

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Speaker 1: the workings of the east be as a banking regulator. Um,

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Speaker 1: you know, particularly now it's the early days of it's

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Speaker 1: of its of this role. It's important to understand, you know,

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Speaker 1: how does the CB work, how does it come to

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Speaker 1: its conclusions, and how was it you know, what led

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Speaker 1: to them, um, you know, taking not taking into consideration

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Speaker 1: or not giving you know, considerable consideration to the fact

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Speaker 1: that Montapasky was probably insolvent when it was bailed out.

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00:25:24,280 --> 00:25:27,960
Speaker 1: So understanding how the mechanics of that decision unfolded would

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Speaker 1: be helpful. So given the fact that Christine Legarde is

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Speaker 1: going to step in as the next ECB president, what

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Speaker 1: do you think she needs to do to show up

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Speaker 1: confidence in the mechanics of the e c B. I

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Speaker 1: think more transparency to begin with. Um, you know, this

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Speaker 1: is a very young institution, as I said, it has

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Speaker 1: many overlapping arms within it. As it's not entirely clear

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Speaker 1: sometimes her decisions are taken, and I think more transparency

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00:25:56,040 --> 00:25:58,119
Speaker 1: would be helpful in that regard. And you know, the

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Speaker 1: European Commission has also singled out the fact that there

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Speaker 1: needs to be more transparencing. So I think it's very

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Speaker 1: important because these initial UM instances are going to set

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Speaker 1: important precedents for the future. Well, Lisa, what's the what's

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Speaker 1: the sense in the European banking community as it relates

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Speaker 1: to the e c B as a regulator. Has it

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Speaker 1: been effective? I mean it is there is there uncertaintly

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Speaker 1: between local regulations and e CB wide regulations. Is that

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Speaker 1: causing some of the issues. I think, you know, the

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Speaker 1: Bloomberg News around UM sort of report card about a

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Speaker 1: year ago on how it's done as a supervisor, and

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Speaker 1: I think you know they've it's great by with a

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Speaker 1: little bit more than a pass. I think the senses

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Speaker 1: that in some eras they've been a little bit too

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Speaker 1: slow to move, for example, UM with regards to the

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Speaker 1: build up of bad loans, particularly in Southern Europe. UM.

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Speaker 1: And you know, more decisive and swifter action would be welcomed,

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Speaker 1: you know, by the market. UM. I think you know,

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Speaker 1: I don't get the sense that there is necessarily concern

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Speaker 1: as to how the institution works, but it's more how

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Speaker 1: effective it is. A Lisa Martin Newsy, thank you so

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Speaker 1: much for being with us. It's always illuminating. A Lisa

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Speaker 1: Martin Newozi is a calumnist covering finance for Bloomberg Opinion,

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Speaker 1: joining us from London. You can read more on all

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Speaker 1: of her work and other stories from Bloomberg Opinion at

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Speaker 1: Bloomberg dot com, Slash Opinion on the Terminal at O

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Speaker 1: P I n Go. Thanks for listening to the Bloomberg

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Speaker 1: pen L podcast. You can subscribe and listen to interviews

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00:27:24,960 --> 00:27:28,800
Speaker 1: at Apple Podcasts or whatever podcast platform you prefer. Paul Sweeney,

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00:27:28,840 --> 00:27:31,560
Speaker 1: I'm on Twitter at pt Sweeney. I'm Lisa Abram Woyds.

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Speaker 1: I'm on Twitter at Lisa A. Bram Woyds one. Before

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Speaker 1: the podcast, you can always catch us worldwide. I'm Bloomberg

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Speaker 1: Radio