Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanibek. We're here every day bringing
Speaker 1: you the latest news from the world of business and finance,
Speaker 1: plus technology, politics, economics, all partnising the power of Business
Speaker 1: Week reporters and editors, not to mention our journalists and
Speaker 1: analyst in more than one and twenty countries. You can
Speaker 1: download Bloomberg Business Week on iTunes, SoundCloud, or Bloomberg dot com.
Speaker 1: You can also listen to our radio show at two
Speaker 1: pm Eastern Time on Bloomberg Radio or watch us on
Speaker 1: YouTube search Bloomberg Global News. There is a new top
Speaker 1: lieutenant in town at MET I don't know if you've noticed. Uh.
Speaker 1: We got to find out who it is and what
Speaker 1: it means for the company. This is a story by
Speaker 1: Bloomberg News Technology Report of Kurt Wagner writing about it
Speaker 1: for Bloomberg Business Week, which is online oft Bloomberg dot
Speaker 1: com slash business Week also on the Bloomberg terminal. So
Speaker 1: let's get the story from Bloomberg News Big Tech team
Speaker 1: leader Sarah Fryar. She joins us on the phone in
Speaker 1: San Francisco. Sarah, by the way, author of No Filter,
Speaker 1: the inside story of Instagram. It's a great story for
Speaker 1: a summer read. All right, Sarah, So, who is the
Speaker 1: snow top lieutenant that we need to know about? He
Speaker 1: is the most important person at Facebook. You've never heard
Speaker 1: of um if you've heard of him at all. Actually,
Speaker 1: it might be from the documents that came out of
Speaker 1: congressional investigations or perhaps the Data league by Francis Hougan,
Speaker 1: the whistleblower, the Facebook whistle blower. And that's because HEAVIERA Levan.
Speaker 1: He's He's been involved in everything, every every big strategic move.
Speaker 1: He was the head of growth, so all of the
Speaker 1: big acquisition UM that mattered, the What's App acquisition, for
Speaker 1: the Onavo acquisition, which is another very important acquisition that
Speaker 1: UM allowed Facebook to track how competitors apps were being
Speaker 1: used by people on their mobile phones, like a really
Speaker 1: good tool for crushing the competition. All of that has
Speaker 1: come to light in the antitrust hearings. How do your
Speaker 1: early wanted? Essentially Mark Zuckerberg's favorite fixer of big problems,
Speaker 1: and the biggest problem that always seems to matter to
Speaker 1: Zuckerberg's the most is growth and UM. So now he
Speaker 1: needs to come on as as Kurtwright and fix the
Speaker 1: business as poo, the role vacated by Cheryl famber So
Speaker 1: as Mark Zuckerberg's favorite fixer. What do you think is
Speaker 1: number one in his priority list to fix right now?
Speaker 1: It's it's really about the business model. Looks. Meta had
Speaker 1: its first quarter of revenue decline ever as a public
Speaker 1: company in this most recent quarter, and they have to
Speaker 1: figure out how to get the advertising business back on
Speaker 1: track UM. But they also have to figure out how
Speaker 1: to make money off of this this pie in the
Speaker 1: sky vision for the metaverse UM, which may or may
Speaker 1: not happen, But it's where Zuckerberg pointing a lot of
Speaker 1: the talent at Facebook, a lot of investment a Facebook,
Speaker 1: he really needs the metaverse to work because that's the future,
Speaker 1: the platform that um Mr Olivan works so hard to
Speaker 1: build too incredible prominence around the world. Now it has
Speaker 1: more than the world more than half of the world's
Speaker 1: Internet connection population. There's really just not that much further
Speaker 1: to grow. And it's not like Facebook can buy it's
Speaker 1: way to more growth because of all the antitrust pressure.
Speaker 1: So that's why they have to build out the metaverse,
Speaker 1: and they have not figured out how they're going to
Speaker 1: make money off of it. They haven't figured out how
Speaker 1: they're going to get people to want to use it,
Speaker 1: So there's there's a lot of big questions looming for Meta. Meanwhile,
Speaker 1: the stock has has lost more than half its value
Speaker 1: UM and it's a it's just a critical time for
Speaker 1: the company. So, Sarah, can we equate him to someone
Speaker 1: else at either part over either at Microsoft or at Google,
Speaker 1: like you know, or even Apple. I feel like we
Speaker 1: didn't really know a ton about Tim Cook, you know,
Speaker 1: for a long and all of a sudden, you know,
Speaker 1: he's obviously been very key to what's been going on
Speaker 1: in the company as the CEO. Now, but I mean,
Speaker 1: is there somebody else's to look on valid that we
Speaker 1: can liken this This guy too, I think maybe maybe
Speaker 1: the most similar to and I say that only because
Speaker 1: he's very much a data guy. He grew up in
Speaker 1: in Facebook's engineering culture, and a lot of the decisions
Speaker 1: that he has UM that he has put into motion
Speaker 1: have come from understanding how UM people are using Facebook
Speaker 1: products and using competitors products, and how they should adjust
Speaker 1: their behavior UM to to fit to that. And another
Speaker 1: reason that I'd compare him to soundar is just because
Speaker 1: of his international background UM as a person from from Spain,
Speaker 1: he who speaks many languages, by the way, not just Spanish. UM.
Speaker 1: He has a sense of how people use Facebook products
Speaker 1: or don't use them for that matter, around the rest
Speaker 1: of the world. And he's really been key at pushing
Speaker 1: the company into UM broader thinking about about how to
Speaker 1: build UM you know, in places with load data UM
Speaker 1: where people have to to purchase their their data unlike
Speaker 1: in the US UM by by the minute or by
Speaker 1: the bid. So so I think that he UM he
Speaker 1: has pushed things like what's that in part because of
Speaker 1: his personal experience talking to family internationally, understanding how people
Speaker 1: UM you know live in non Facebook centric worlds and sir,
Speaker 1: like you already said, we don't know much, we don't
Speaker 1: We don't see him a lot Olivan and in the
Speaker 1: story uh Kurt writes that Olivan rarely speaks publicly or
Speaker 1: post to Facebook or Instagram, but he's had a hand
Speaker 1: in all of Facebook's major competitive battles and acquisitions. What
Speaker 1: has been his biggest stamp on the company thus far?
Speaker 1: People always ask me, like, you know, they don't think
Speaker 1: that facebooks are very innovative company, Like, what is Facebook
Speaker 1: actually built? Like they they bought Instagram, they bought WhatsApp,
Speaker 1: they copy snatch at the copy TikTok, TikTok. What are
Speaker 1: they actually built? And my answer is their growth strategy.
Speaker 1: That is the thing that has been innovative about Facebook,
Speaker 1: this grow at all cost strategy. That that really Javier
Speaker 1: Levan is the is the brainchild behind like he's He's
Speaker 1: the person who pushed a lot of this UM aggressive
Speaker 1: UM methods for making sure that people join Facebook UM
Speaker 1: and and joined Facebook is an alternative to competitors and
Speaker 1: make sure that if anything's ever broken in the app
Speaker 1: that prevents people from staying there or spending more time there,
Speaker 1: that they fix it quickly. UM and all of that
Speaker 1: mechanisms of push notifications and UM getting people to to
Speaker 1: really become so attached to these products. All those little
Speaker 1: moves add up and they all come from this growth
Speaker 1: team that he led for so long. But on his
Speaker 1: agenda is growth, Right, he doesn't have to deal with
Speaker 1: maybe the Washington stuff, the policy stuff. It's all about
Speaker 1: making sure this company grows. Just got about twenty five
Speaker 1: seconds left, right, and that's been the problem too. Right.
Speaker 1: He has built this company to the to the point
Speaker 1: where it has these incredible blind spots because of its
Speaker 1: size and maybe didn't think about those things while growing. Yeah,
Speaker 1: it's a really it's a really good point. Hey, Sarah,
Speaker 1: thank you so much. Sarah Fryer, she's big tech team
Speaker 1: leader at Bloomberg News. Check out our book No Filter,
Speaker 1: The inside story of Instagram. This story written by Bloomberg
Speaker 1: News technology reporter Kurt Wagner from Bloomberg Business Week, which
Speaker 1: you can find online on the Bloomberg terminal, so be
Speaker 1: sure to check it out. You're listening to Bloomberg Business
Speaker 1: Week with Carol Masher and Bloomberg Quick Takes Tim Stinovic
Speaker 1: on Bloomberg Radio. Well on the Bloomberg Today is a
Speaker 1: story about how Ether is surgery and anticipation of a
Speaker 1: groundbreaking software upgrade to its blockchain. This is something you've
Speaker 1: been following, right, like all that's going on? Yeah, yeah,
Speaker 1: it's interesting. So Ether, Uh, it's the Ethereum blockchain is
Speaker 1: the second most popular blockchain, second of course to Bitcoin,
Speaker 1: and the token attached to the etherium blockchain. Ether has
Speaker 1: absolutely been on fire since about mid June because everyone's
Speaker 1: waiting for the merge. The long awaited merge basically moving
Speaker 1: from proof of work mining, which is very, very energy intensive.
Speaker 1: You've heard a lot of that criticism centered around Bitcoin
Speaker 1: moving from proof of work to a proof of steak,
Speaker 1: which would require a lot less energy. Okay, so this
Speaker 1: is a big deal. Bottom. It's a big deal to
Speaker 1: Katie because she understands this stuff all right. So in
Speaker 1: our weekly crypto segment, Natalie Brunel is a journalist, podcaster,
Speaker 1: adjunct Professor of Advanced Communication and Visual Storytelling at the
Speaker 1: University of Southern California Annenburg School for Communication in Journalism.
Speaker 1: She joins Katie and myself on the phone from San Diego.
Speaker 1: Is also host of Hard Money. So Natalie, good to
Speaker 1: have you here with Katie and myself. UM, talk to
Speaker 1: us a little bit about you know, Katie was talking
Speaker 1: about ether and Ethereum. We follow the crypto markets on
Speaker 1: a regular basis. Um, what's top of mind for you? Hi? Well,
Speaker 1: thank you so much for having me. Top of mind
Speaker 1: always for me is a bitcoin and making sure I
Speaker 1: can educate as many people as I can about the
Speaker 1: power of this rising computer network and and the savings
Speaker 1: technology potential in a world where you can look at
Speaker 1: you know, consumer spending and saving. Spending is in an
Speaker 1: all time high when it comes to credit and saving
Speaker 1: is at an all time low. And we really need
Speaker 1: a form of money that can't be manipulated, It can't
Speaker 1: be inflated the way that our current monetary system works.
Speaker 1: And so I'm very passionate about bitcoin, and so i've
Speaker 1: been I've been happy about the recent rally, you know,
Speaker 1: it's shot up about in July, but I still think
Speaker 1: that there's going to be more choppinus volatility and pain
Speaker 1: ahead as the said tries to aggressively, you know, hike,
Speaker 1: race and fight and inflation. So I I don't see
Speaker 1: if reaching our all time highs any anytime soon, but
Speaker 1: I do think it's the best long term bet that
Speaker 1: we have out there. Why do you think that? Because,
Speaker 1: I mean, I really enjoy following the crypto markets. I
Speaker 1: speak to a lot of people within the crypto industry,
Speaker 1: but I feel like bitcoin is kind of lost its
Speaker 1: narrative in terms of it being of inflation, hedge being
Speaker 1: a store of value. I'm wondering what you see is
Speaker 1: very exciting about this moment. Yeah, So two things I'll
Speaker 1: say about that, As far as the inflation hedge, you
Speaker 1: really have to step back and think about the time
Speaker 1: frame you're examining bitcoin from, because over the last ten
Speaker 1: years is outperformed every stock index with outperformed precious metals gold,
Speaker 1: um and so and and really outperformed real estate as well.
Speaker 1: So it's pretty much been the best performing asset as
Speaker 1: it grows in adoption and awareness. So in the short
Speaker 1: time frame when when everything's falling, we have major stocks falling, industries, falling,
Speaker 1: real estate. Now finally to drawing, all right, I've got
Speaker 1: to jump in because stocks have actually bounced back. And
Speaker 1: I think many would say, including a lot of people
Speaker 1: you know, within the crypto industry, that we are so
Speaker 1: early in on this that it's like the very very
Speaker 1: early days of the Internet. So I feel like Internet,
Speaker 1: excuse me. So I feel like, well, we talk about,
Speaker 1: you know, investors getting involved in this, we have to
Speaker 1: be cautious. That's why we recommend something called dollar cost averaging, Right,
Speaker 1: we don't want people to sit there and risk their
Speaker 1: entire life savings on something that they're not familiar with.
Speaker 1: Bitcoin requires a lot of study and it's difficult to
Speaker 1: explain it in a sound bite, but what it's trying
Speaker 1: to ultimately fix is what is broken in the monetary system,
Speaker 1: this manipulation of money that leads to capital being allocated
Speaker 1: really to the people at the top at the expense
Speaker 1: of everybody else. The money printing, that the fact that
Speaker 1: we are so far in debt and we have nothing,
Speaker 1: We have no alternative other than bitcoin that can solve
Speaker 1: a lot of these issues. So if you think that
Speaker 1: there's even a one to five percent chance that bitcoin could,
Speaker 1: um you know, become an asset that overtakes, say a
Speaker 1: potentillion dollar market cap like gold or even more, then
Speaker 1: it's something that you might think about allocating one to
Speaker 1: five percent of your portfolio to. Um you know that
Speaker 1: this isn't something would like to like that, Natalie, we
Speaker 1: don't have much time left. So I want to jump
Speaker 1: in and ask why bitcoin, Because if we further this
Speaker 1: internet sort of tech boom of the early two thousand's metaphor,
Speaker 1: there was Amazon and there was pets dot com. So
Speaker 1: why bitcoin when you look across the entire landscape of
Speaker 1: all the different coins and tokens out there. Sure so
Speaker 1: bitcoin is the decentralized, secure and scalable blockchain, whereas things
Speaker 1: that you mentioned Amazon, tech dot com ultimately those are
Speaker 1: centralized forces. Bitcoin is like the Internet. It's a protocol.
Speaker 1: It's in the same way. I believe it's going to
Speaker 1: be as revolutionary in terms of freedom and the ability
Speaker 1: to gain prosperity as the Internet was. Um you can
Speaker 1: send value from one part of the world to another,
Speaker 1: it settles almost instantly with no third party, and it
Speaker 1: gives access to eight billion people to have a form
Speaker 1: of digital property wha for example. Well, so there are
Speaker 1: a lot of questions that remain as far as the
Speaker 1: long term consensus model in terms of how how are
Speaker 1: these tokens going to be released, what is going to
Speaker 1: be the supply, what are the rules surrounding that? There
Speaker 1: are so many unanswered questions. Whereas Bitcoin has been proven
Speaker 1: for the last thirteen years to be a decentralized and
Speaker 1: secure network that is secured by energy um the difficulty
Speaker 1: adjustment that the brilliancy of the programming that's to Toshi invented.
Speaker 1: It has never been hacked, and it is the one
Speaker 1: form of I would say, you know, hard money that
Speaker 1: comes in a digital format that people can start to
Speaker 1: allocate their savings to and watch it grow over time. Right, Well,
Speaker 1: I feel like this is a conversation will continue to have,
Speaker 1: certainly for a long time. Natalie Brunell, thank you so much.
Speaker 1: A Jack professor over at University of Southern California, host
Speaker 1: of Hard Money. I'm rolling journal. Yeah, but you let
Speaker 1: me drive? No, no, all right, please, I'll do gravels.
Speaker 1: I want to try. It's the question drive in the
Speaker 1: ride to the Clobell on Bluebird Radio. All right, everybody,
Speaker 1: just about ten and a half minutes left in today's
Speaker 1: trading session. We are getting ready to wrap up the
Speaker 1: trading day and the trading week. A lot of news
Speaker 1: coming out of certainly Washington. Conton continue to track the
Speaker 1: unceiling or it looks like the release of that warrant
Speaker 1: that led to the search, the FBI search of former
Speaker 1: President Donald Trump's home, so we'll continue to track that.
Speaker 1: In the meantime, the markets, we've really seen a risk
Speaker 1: trade on. So great to have back with us once again.
Speaker 1: Doug ram mc chief investment officer of the Luther Group.
Speaker 1: His core investment found up about four percent in the
Speaker 1: past month, nearly six percent on average annually over the
Speaker 1: past five years. He's based in Minneapolis, and he joins
Speaker 1: us on the phone from there. Doug good to have
Speaker 1: you here with us. I do want to talk markets,
Speaker 1: that's your world. But I gotta ask you all this
Speaker 1: news um regarding the FBI search former President Donald's home
Speaker 1: in Florida, Uh, the investigations. How how does political news
Speaker 1: are the upcoming midterms factor into your thinking about investment
Speaker 1: strategy if at all? Uh? Well, from time to time, UH,
Speaker 1: political developments can influence our analysis. And I think, uh
Speaker 1: to use the president in question, I mean the Trump
Speaker 1: bump back in the fall of upon his election was incredible. Uh.
Speaker 1: Just I mean the bounce in business confidence associated with
Speaker 1: I think more so UH pro business rhetoric maybe in
Speaker 1: some cases than policy. It was enormous. As I recall,
Speaker 1: the Russell two thousand was up about two in a
Speaker 1: month following that election, and it really did usher in
Speaker 1: sort of a new uh phase of you know, what
Speaker 1: had been a pretty slow economic expansion. So that's you know,
Speaker 1: one very clear example in my career that I can
Speaker 1: think of. But something like this is just a little
Speaker 1: bit more noisy now in terms of uh, the mid
Speaker 1: term year, there there is a very strong historical tendency
Speaker 1: for mid term years to be difficult, and this year
Speaker 1: has been no exception, and especially like the middle the
Speaker 1: middle six months of a mid term year have been
Speaker 1: host to just I mean a statistically out of line
Speaker 1: number of major market lows. UM. Now the good news
Speaker 1: is and again, and this is a pattern I've seen
Speaker 1: throughout my career, began right around that mid term election
Speaker 1: time in early November. You flip from a very negative
Speaker 1: historical pattern to a very positive one. So who knows,
Speaker 1: you know, maybe markets get smarter over time, and maybe
Speaker 1: they're anticipating that strong seasonal pattern that's due to arrive
Speaker 1: later this year. We'll tell us a little bit about
Speaker 1: that strong seasonal pattern because as you know, probably better
Speaker 1: than most, it's been a pretty rocky vaultl year so
Speaker 1: far for the SP five and most financial asset classes. Uh,
Speaker 1: it has been and I think, uh, you know, the
Speaker 1: Fed policy turn along with maybe the fiscal policy turn
Speaker 1: that's been unappreciated, uh, to swing from I think, you
Speaker 1: know what, the extreme and we had a deficit that
Speaker 1: was close to g d P and uh it's now
Speaker 1: down to a little over four percent. So the dull
Speaker 1: to not just in monetary policy, but in fiscal policy
Speaker 1: this year is enormous. And you know, I am impressed
Speaker 1: with the way that you know, after sliding through the
Speaker 1: first five months of the year, Uh, we've had this
Speaker 1: impressive bounce back. Now that being said, I mean, if
Speaker 1: we close where we are, well, it's only five minutes,
Speaker 1: so I bet pretty uh heavily on that we'll be
Speaker 1: up about sixteen and a half percent. Here the average
Speaker 1: bear market rally of any bear market that's had one,
Speaker 1: not all bear markets even have a bear market rally,
Speaker 1: but the average bear market rally more than ten percent
Speaker 1: has been fifteen and a half percent unfolding in forty
Speaker 1: trading days. Well, this one is about sixteen and a
Speaker 1: half percent in thirty nine trade days, so you're right
Speaker 1: on the average. So so well, I don't know, this
Speaker 1: one's been very impressive, and you know, we are certainly
Speaker 1: one to look at what the charts are doing, and
Speaker 1: I think, uh, today's close. You know, it'll go while
Speaker 1: to get these numbers, but I think we look at
Speaker 1: uh two or three, Well, let's surrounded up to three
Speaker 1: breadthrust measures that we've done a lot of work on
Speaker 1: and have come to trust. I think at least one
Speaker 1: of those is going to trigger with today's action, which
Speaker 1: is provocative because um, these signals are almost never seen,
Speaker 1: uh during an ongoing bear market. So in terms of magnitude, um,
Speaker 1: you know, we've seen these bear market rallies of this
Speaker 1: size and length before, but in terms of its internal strength, um,
Speaker 1: this one is is standing out. So bear market rally,
Speaker 1: no new boat market or or continuation with the pandemic
Speaker 1: being a major blip. Well, we are Look, we've I mean,
Speaker 1: because we run longs and shorts in our tactical fund
Speaker 1: um we have I mean our net equity exposure. We've
Speaker 1: let it right up alongside uh, this rally. I mean
Speaker 1: that being said, we're still pretty defensive at net equity exposure,
Speaker 1: but it's been powerful enough that we've decided just to
Speaker 1: let it ride. And I'm still not inclined, even though
Speaker 1: I do think ultimately this is a cyclical bear market
Speaker 1: that's got further room to run. Um. You know, maybe
Speaker 1: we'll hold off on trimming in equity exposure yet for
Speaker 1: a few more weeks, just given the power of this thing.
Speaker 1: And it really gets back to the likelihood that policy
Speaker 1: remains tight even with inflation very likely to have peaked. Well, Doug,
Speaker 1: take this a little bit cross asset for us and
Speaker 1: wrap in the yield curve, which, of course the twos
Speaker 1: tends yield curve deeply inverted. At this point we only
Speaker 1: have about forty seconds. But what is the signal there? Uh,
Speaker 1: it's an early pre recession signal. What we've found in
Speaker 1: terms of economic forecast team is that using a shorter
Speaker 1: term yield uh, like the three months rather than the
Speaker 1: two year, and comparing that to the tenure that spread
Speaker 1: the tenure minus three months is a much better economic forecaster.
Speaker 1: So we haven't seen that invert yet. It's gotten close,
Speaker 1: but to us that's really when the recession countdown would begin.
Speaker 1: Um and then there's usually a lag time between that
Speaker 1: inversion in the ten versus three months and the actual recession.
Speaker 1: So this could be an opportunity for someone who's very
Speaker 1: fleet footed and uh maybe has more risk tolerance than
Speaker 1: we do on our core fund to chase this world
Speaker 1: for a while. But again that's not my recommendations. All right,
Speaker 1: we gotta run. Hey listen, Doug, have a great weekend.
Speaker 1: Doug Ramsey, chief investment Officer of the Loophole Group. Thanks
Speaker 1: for listening to Bloomberg Business Week. Download the podcast on iTunes,
Speaker 1: SoundCloud or Bloomberg Dot com and you can also listen
Speaker 1: to our radio show at two pm Eastern on Bloomberg Radio,
Speaker 1: or watch us on YouTube search Bloomberg Global News m