1 00:00:00,080 --> 00:00:13,040 Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 2 00:00:13,480 --> 00:00:17,560 Speaker 1: Jay Lee. 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 --> 00:00:33,800 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg Do 5 00:00:33,880 --> 00:00:35,360 Speaker 1: you want to bring in the gentleman? Do you know 6 00:00:35,360 --> 00:00:38,880 Speaker 1: what he said? He badmouth the avocados and Whole Foods television, 7 00:00:39,640 --> 00:00:42,040 Speaker 1: So they're possibly not as good as they were before. 8 00:00:42,440 --> 00:00:47,959 Speaker 1: Whole Foods almost because Amazon took Charles Cancer Newberger Berman. Sure, Amazon, 9 00:00:48,120 --> 00:00:53,640 Speaker 1: apparently just the avocados. The avocado is another stock. Hey, Charles, 10 00:00:53,720 --> 00:00:55,920 Speaker 1: is great to catch up with you. Let's talk about 11 00:00:55,920 --> 00:00:58,760 Speaker 1: the Federal Reserve that to me looks like a complete 12 00:00:58,760 --> 00:01:02,400 Speaker 1: retreat from where we us six weeks ago. What's behind it? 13 00:01:03,840 --> 00:01:07,479 Speaker 1: According to Chairman pal that puts firmly in place. And 14 00:01:07,560 --> 00:01:11,959 Speaker 1: according to him, it's it's it's data dependent um, which 15 00:01:12,080 --> 00:01:14,880 Speaker 1: you didn't get six six weeks ago. And and and 16 00:01:14,920 --> 00:01:16,920 Speaker 1: as it's gone the Fed so has gone. The market 17 00:01:17,440 --> 00:01:22,000 Speaker 1: up fifteen since since since Christmas Day. UM good really 18 00:01:22,000 --> 00:01:27,200 Speaker 1: good for long duration assets, none longer than than equities. UM. 19 00:01:27,280 --> 00:01:30,120 Speaker 1: And I think the market back in December was worried 20 00:01:30,319 --> 00:01:33,399 Speaker 1: around the idea that does does does power in the 21 00:01:33,440 --> 00:01:38,000 Speaker 1: FED understand the impact that volatility creates to financial assets. 22 00:01:38,200 --> 00:01:41,000 Speaker 1: I think the real story, though, is is in the 23 00:01:41,080 --> 00:01:43,320 Speaker 1: data they look at UM, there's just not a lot 24 00:01:43,360 --> 00:01:47,319 Speaker 1: of inflation out there. And and my explanation would be 25 00:01:47,319 --> 00:01:52,440 Speaker 1: because technology and globalization brings lower prices and lots of 26 00:01:52,440 --> 00:01:56,240 Speaker 1: productivity that that some of the traditional measures don't capture. So, Charlenge, 27 00:01:56,240 --> 00:01:58,480 Speaker 1: you've touched on something really important. I mean, yesterday was 28 00:01:58,520 --> 00:02:00,640 Speaker 1: about as positive as it could get for risk assets. 29 00:02:00,640 --> 00:02:02,960 Speaker 1: You've got a Federal Reserve that is very accommodative now 30 00:02:02,960 --> 00:02:06,160 Speaker 1: on policy and still really constructive on the outlook for growth. Now, 31 00:02:06,160 --> 00:02:10,040 Speaker 1: if this doesn't refuel inflation expectations, I'm not sure what will. 32 00:02:10,120 --> 00:02:14,360 Speaker 1: From the Fed's perspective. I think we kindly started this 33 00:02:14,400 --> 00:02:17,560 Speaker 1: idea that there we live in a globally interconnected economy, 34 00:02:17,760 --> 00:02:22,040 Speaker 1: and and there's no doubt that China US trade spat 35 00:02:22,880 --> 00:02:27,600 Speaker 1: has caused uncertainty UM in both consumers and in and 36 00:02:27,600 --> 00:02:30,280 Speaker 1: and and in businesses. And I think that the FED 37 00:02:30,400 --> 00:02:33,919 Speaker 1: understands that that the next couple of quarters will will 38 00:02:33,919 --> 00:02:39,520 Speaker 1: look slower than they would otherwise want um um and 39 00:02:39,520 --> 00:02:43,040 Speaker 1: and and that's what I suppose they're reacting to. Is 40 00:02:43,040 --> 00:02:46,079 Speaker 1: this a green light to buy emerging markets? Because overnight 41 00:02:46,120 --> 00:02:47,880 Speaker 1: we also got some data. I think it's far too 42 00:02:47,880 --> 00:02:50,040 Speaker 1: premature to draw any conclusions from this data, but the 43 00:02:50,120 --> 00:02:53,400 Speaker 1: Chinese factory data did just start to show a little 44 00:02:53,440 --> 00:02:55,799 Speaker 1: sign of stabilization there. Charles, do you think it's too 45 00:02:55,800 --> 00:03:00,120 Speaker 1: premature to make that cool? I think it may not be, 46 00:03:00,320 --> 00:03:02,560 Speaker 1: although no one's speaking about it. I mean we I've 47 00:03:02,600 --> 00:03:05,080 Speaker 1: lived in an environment here in the US market for 48 00:03:05,080 --> 00:03:07,400 Speaker 1: the last six or seven months where it's been completely 49 00:03:07,480 --> 00:03:10,840 Speaker 1: gloss half empty, um and and the data out of 50 00:03:10,919 --> 00:03:14,080 Speaker 1: China looking backwards has been weak. One of my favorite 51 00:03:14,080 --> 00:03:16,360 Speaker 1: expressions for twenty nineteen is you've got to You've gotta 52 00:03:16,400 --> 00:03:19,760 Speaker 1: face forward, um and. It's possible that with all the 53 00:03:19,840 --> 00:03:23,560 Speaker 1: liquidity that the Chinese are injecting into the economy, if 54 00:03:23,600 --> 00:03:26,080 Speaker 1: you get some type of certainty around the rules of 55 00:03:26,120 --> 00:03:29,360 Speaker 1: the game of engagement between the US and China, you 56 00:03:29,440 --> 00:03:32,440 Speaker 1: may you have a shot to see a pickup in 57 00:03:32,440 --> 00:03:35,600 Speaker 1: in Chinese economic activity in the third and the fourth quarter. 58 00:03:35,840 --> 00:03:40,400 Speaker 1: If that happens, um risk assets movement immediately higher. I 59 00:03:40,440 --> 00:03:43,480 Speaker 1: mean to your optimism, and I go to Ben Ladler 60 00:03:43,560 --> 00:03:46,920 Speaker 1: of HSBC, who has been screaming double digit up in 61 00:03:47,000 --> 00:03:49,960 Speaker 1: the gloom of December. Right now, Ben Laylor looks like 62 00:03:50,000 --> 00:03:53,760 Speaker 1: the strategist of the year. That's fine, But what's really 63 00:03:53,800 --> 00:03:56,480 Speaker 1: fine is do I buy the things beaten up or 64 00:03:56,560 --> 00:04:01,800 Speaker 1: do I buy the things that were down fractionally so far? Um. 65 00:04:02,000 --> 00:04:04,480 Speaker 1: The one distinction between I would say the tone in 66 00:04:04,520 --> 00:04:07,480 Speaker 1: the market this year versus last year was the most 67 00:04:07,480 --> 00:04:12,040 Speaker 1: cyclical stocks traded poorly all year, in the sense that 68 00:04:12,080 --> 00:04:15,480 Speaker 1: those stocks were pricing in a recession just around the corner. 69 00:04:15,760 --> 00:04:19,960 Speaker 1: This year, the cyclical stocks have performed very well UM, 70 00:04:20,000 --> 00:04:23,240 Speaker 1: and so those most beaten up have rallied rallied the 71 00:04:23,279 --> 00:04:26,279 Speaker 1: most UM. But the central question for those that have 72 00:04:26,480 --> 00:04:29,719 Speaker 1: very short time horizons is the degree that you believe 73 00:04:29,760 --> 00:04:32,400 Speaker 1: that there's a recession around the corner, to the degree 74 00:04:32,440 --> 00:04:35,359 Speaker 1: you believe that, which which I find really hard to 75 00:04:35,400 --> 00:04:39,240 Speaker 1: analytically put my mind around. Because of how strong the 76 00:04:39,360 --> 00:04:44,360 Speaker 1: U S consumers. People forget it. Our economy and when 77 00:04:45,600 --> 00:04:48,000 Speaker 1: and when I last looked, unemployment is as low as 78 00:04:48,080 --> 00:04:51,479 Speaker 1: it's been in fifty years UM, and so consumer confidences 79 00:04:51,560 --> 00:04:55,080 Speaker 1: up UM, which which makes the call on a recession 80 00:04:55,120 --> 00:04:58,440 Speaker 1: in the next twelve to eighteen months, in my mind, 81 00:04:58,640 --> 00:05:01,000 Speaker 1: incredibly difficult. So let's talk about how you want to 82 00:05:01,000 --> 00:05:03,680 Speaker 1: deploy capital in the security market right now, Charles, what 83 00:05:03,720 --> 00:05:07,520 Speaker 1: are you doing? Look, our approach doesn't change UM. We 84 00:05:07,520 --> 00:05:10,360 Speaker 1: we long term investors. We want to buy really good 85 00:05:10,360 --> 00:05:14,360 Speaker 1: companies UM at attractive values. And because of what took 86 00:05:14,400 --> 00:05:18,000 Speaker 1: place last year, the companies have remained attractive and the 87 00:05:18,080 --> 00:05:23,520 Speaker 1: valuations have got meaningfully better. Fundamentally, because last year, while 88 00:05:23,520 --> 00:05:29,120 Speaker 1: earnings across the board were up twenty returns for for 89 00:05:29,240 --> 00:05:32,080 Speaker 1: risk assets were down six percent for the SMP ten 90 00:05:32,160 --> 00:05:36,200 Speaker 1: to twelve percent for MIDDEN and small sized companies, which 91 00:05:36,279 --> 00:05:38,880 Speaker 1: meant them, which means the margin of safety and equities 92 00:05:38,880 --> 00:05:43,000 Speaker 1: have has got meaningfully better. So the multiple contraction you 93 00:05:43,040 --> 00:05:47,480 Speaker 1: saw last year means they're set up into into UM 94 00:05:48,080 --> 00:05:50,920 Speaker 1: is super attractive because you've got a bigger mattress in earnings. 95 00:05:51,160 --> 00:05:54,560 Speaker 1: You've got lower valuations because of the compression I suggested. 96 00:05:54,839 --> 00:05:57,760 Speaker 1: And guess what this time last year, you're worried about 97 00:05:58,160 --> 00:06:00,839 Speaker 1: ten year yields being four percent because the economy was 98 00:06:00,920 --> 00:06:03,560 Speaker 1: running too hot. Now you've got ten year yields at 99 00:06:03,600 --> 00:06:06,440 Speaker 1: two point six percent, and when I last look the equity, 100 00:06:06,600 --> 00:06:09,760 Speaker 1: the dividend yield on the SMP hadn't changed. John. This 101 00:06:09,800 --> 00:06:12,719 Speaker 1: is absolutely critical with the movie yesterday in dovetailing it 102 00:06:13,040 --> 00:06:17,359 Speaker 1: in the Mr Candraw's option, in the Mr Candra's optimism. 103 00:06:17,400 --> 00:06:22,359 Speaker 1: If Steve Major is chronically correct, if you extend out 104 00:06:22,400 --> 00:06:27,200 Speaker 1: these low yields farther than people think, it's a regime 105 00:06:27,279 --> 00:06:30,120 Speaker 1: shift in belief. But we have to understand why we've 106 00:06:30,120 --> 00:06:33,040 Speaker 1: got long term yields as low as they are, and 107 00:06:33,080 --> 00:06:36,599 Speaker 1: they've been pricing our growth, they've been repricing inflation expectations. 108 00:06:37,000 --> 00:06:41,480 Speaker 1: That's not necessarily positive for this environment right now. I 109 00:06:41,520 --> 00:06:44,560 Speaker 1: think we've got to be careful how we think about 110 00:06:45,279 --> 00:06:49,560 Speaker 1: long term yields and what it's suggesting. Um. I think 111 00:06:49,640 --> 00:06:52,720 Speaker 1: if you take the view that inflation is really low, 112 00:06:53,440 --> 00:06:56,719 Speaker 1: then the real return in the in the in the 113 00:06:56,760 --> 00:07:00,800 Speaker 1: treasury reield is still over two um um. If you 114 00:07:00,839 --> 00:07:03,080 Speaker 1: believe that there's a lot of inflation out there, then 115 00:07:03,200 --> 00:07:06,120 Speaker 1: then there's no real growth priced into the treasury market. 116 00:07:06,440 --> 00:07:10,200 Speaker 1: We remain in this world where where where where where 117 00:07:10,240 --> 00:07:13,760 Speaker 1: long term growth is lower than we would otherwise wish for, 118 00:07:14,960 --> 00:07:19,000 Speaker 1: but productivity gains have been immense um, and so I'll 119 00:07:19,040 --> 00:07:21,880 Speaker 1: just be careful on on on on on how you 120 00:07:21,920 --> 00:07:25,480 Speaker 1: interpret that. I think for now, like the FED, the 121 00:07:25,520 --> 00:07:32,400 Speaker 1: bond market is cautious on growth um, on growth expectations, 122 00:07:32,400 --> 00:07:35,600 Speaker 1: probably pricing in one and a half to two growth. 123 00:07:35,880 --> 00:07:39,720 Speaker 1: But but stocks can be amazing in that environment. Stocks 124 00:07:39,720 --> 00:07:58,000 Speaker 1: can be amazing as long as inflation is joining us 125 00:07:58,240 --> 00:08:01,480 Speaker 1: from one below zero. Syracuse is very lovely of the 126 00:08:01,480 --> 00:08:05,520 Speaker 1: Peterson Institute and of course at Syracuse University. Mary, hope 127 00:08:05,560 --> 00:08:10,480 Speaker 1: you are toasting warm today. The trade talks are heating up, 128 00:08:10,480 --> 00:08:13,920 Speaker 1: there's no question about that. What is the likelihood that 129 00:08:14,120 --> 00:08:20,480 Speaker 1: China US trade talks become derailed? Become derailed? Good morning town, Mary, John. 130 00:08:20,960 --> 00:08:24,120 Speaker 1: It's um, it's it's called here, But we hope it's 131 00:08:24,120 --> 00:08:26,360 Speaker 1: a little bit warmer in Washington where the talks are 132 00:08:26,400 --> 00:08:29,280 Speaker 1: taking place. There is a chance they'll be derailed. But 133 00:08:29,360 --> 00:08:32,600 Speaker 1: I like to look on the on the good news. Um, 134 00:08:32,640 --> 00:08:35,640 Speaker 1: perhaps for Anthony, but there is a chance that we'll 135 00:08:35,640 --> 00:08:38,679 Speaker 1: get a deal here that well at least lead us 136 00:08:38,720 --> 00:08:43,040 Speaker 1: towards something a little bit better for business transactions between 137 00:08:43,040 --> 00:08:46,800 Speaker 1: the two countries. And I think we're we're hoping today 138 00:08:46,800 --> 00:08:49,360 Speaker 1: to see some some good signs of that, perhaps with 139 00:08:49,480 --> 00:08:55,640 Speaker 1: a meeting between the Chinese high ranking representative Leah and 140 00:08:56,000 --> 00:08:58,360 Speaker 1: the President Trump. Okay, that's all great, and it's all 141 00:08:58,360 --> 00:09:01,640 Speaker 1: sounds like Peterson Institute and that, but you know, you 142 00:09:01,679 --> 00:09:04,319 Speaker 1: know again the Anthony uh and I were talking yesterday 143 00:09:04,320 --> 00:09:06,360 Speaker 1: about this, and you've got to bring waway into this. 144 00:09:06,720 --> 00:09:10,199 Speaker 1: Can you actually do very lovely and discreet Peterson Institute 145 00:09:10,520 --> 00:09:17,760 Speaker 1: China US discussion or is there this massive distraction in Vancouver, Canada. Well, 146 00:09:18,000 --> 00:09:21,360 Speaker 1: it is certainly there, and it's on its you can 147 00:09:21,400 --> 00:09:23,520 Speaker 1: think is it on the periphery or is in the center? 148 00:09:23,960 --> 00:09:26,560 Speaker 1: I think the US negotiators will be able to keep 149 00:09:26,559 --> 00:09:30,480 Speaker 1: it on on the side of the negotiations. We saw 150 00:09:30,520 --> 00:09:32,880 Speaker 1: this a little bit in U s m c A, 151 00:09:33,480 --> 00:09:37,839 Speaker 1: where the Canadians and the Mexicans really wanted they want 152 00:09:37,880 --> 00:09:42,920 Speaker 1: those stealing alonium tariffs gone, and yet still the US 153 00:09:43,000 --> 00:09:45,720 Speaker 1: negotiators were able to reach the agreement without agreement on 154 00:09:45,760 --> 00:09:48,480 Speaker 1: those that very important issues. We are as fortunate to 155 00:09:48,520 --> 00:09:50,640 Speaker 1: have very lovely in with the Peterson Institute, and we 156 00:09:50,679 --> 00:09:53,760 Speaker 1: can do with professor Lovely. The headlines from the President 157 00:09:53,840 --> 00:09:56,480 Speaker 1: of the United States, he says, quote he will meet 158 00:09:56,559 --> 00:10:00,080 Speaker 1: President g in the near future and very importantly, and 159 00:10:00,120 --> 00:10:03,280 Speaker 1: he goes on to say China doesn't want an increase 160 00:10:03,320 --> 00:10:06,960 Speaker 1: in tariffs. He says, China trade meeting going well. I 161 00:10:06,960 --> 00:10:09,640 Speaker 1: saw one other headline. Help me here, John, Uh, no 162 00:10:09,840 --> 00:10:12,400 Speaker 1: final deal with China until meeting. With a bit of 163 00:10:12,400 --> 00:10:14,720 Speaker 1: context around these headlines, it's a series of tweets from 164 00:10:14,720 --> 00:10:18,040 Speaker 1: the President this morning which essentially says, no final deal 165 00:10:18,080 --> 00:10:19,960 Speaker 1: will be made until my friend President she and I 166 00:10:20,000 --> 00:10:22,080 Speaker 1: meet in the near future to scott to discuss an 167 00:10:22,080 --> 00:10:26,760 Speaker 1: agree on some of the longstanding and more difficult points. So, Mary, 168 00:10:26,960 --> 00:10:31,120 Speaker 1: that begs the question, what is this wake about. Well, 169 00:10:31,120 --> 00:10:35,960 Speaker 1: it's clearly about trying to really put some meat on 170 00:10:36,000 --> 00:10:39,200 Speaker 1: the bones of the US complaint and of Chinese offers. 171 00:10:39,840 --> 00:10:41,840 Speaker 1: We already know that the Chinese have been willing to 172 00:10:41,840 --> 00:10:47,079 Speaker 1: make a deal for a long time. Purchases of US energy, agriculture, 173 00:10:47,559 --> 00:10:51,280 Speaker 1: perhaps things like you know, aircraft, those are always been 174 00:10:51,360 --> 00:10:54,040 Speaker 1: on the table. The issue is how far will they 175 00:10:54,080 --> 00:10:58,319 Speaker 1: go in revisions, particularly to their investment laws and their 176 00:10:58,360 --> 00:11:02,240 Speaker 1: treatment of intellectual property. Uh. In the last you know, 177 00:11:02,360 --> 00:11:04,800 Speaker 1: over the last couple of months, China has moved forward 178 00:11:04,920 --> 00:11:07,160 Speaker 1: very quickly to put in a new foreign investment law, 179 00:11:07,559 --> 00:11:10,840 Speaker 1: which will make it illegal to steal intellectual property. They 180 00:11:10,880 --> 00:11:13,320 Speaker 1: say that thesefts were not happening, but even if they are, 181 00:11:13,360 --> 00:11:16,920 Speaker 1: they're putting into these draconian laws. Uh. And they're beginning 182 00:11:17,000 --> 00:11:22,080 Speaker 1: to move remove restrictions on foreign investment. Now, um, that 183 00:11:22,120 --> 00:11:26,680 Speaker 1: would mean particularly US companies having to have Chinese partners 184 00:11:26,679 --> 00:11:31,040 Speaker 1: to enter into certain business activities. That's all important. This 185 00:11:31,120 --> 00:11:34,600 Speaker 1: law is going ahead very quickly changes to the i 186 00:11:34,800 --> 00:11:37,319 Speaker 1: P laws. But I think the Americans are going to 187 00:11:37,400 --> 00:11:39,720 Speaker 1: be saying, well, that's all nice on paper, what are 188 00:11:39,760 --> 00:11:41,960 Speaker 1: you going to really be doing down the road. What 189 00:11:42,080 --> 00:11:44,920 Speaker 1: kind of assurances will be getting? And frankly, we don't 190 00:11:44,960 --> 00:11:47,840 Speaker 1: know what what what exactly the US is demanding and 191 00:11:47,840 --> 00:11:50,440 Speaker 1: what Chinese might be willing to offer. But the fact 192 00:11:50,520 --> 00:11:53,600 Speaker 1: that they've been moving this bill forward. It will be 193 00:11:54,040 --> 00:11:58,120 Speaker 1: ratified by their People's Congress in February, according to all observers. 194 00:11:58,160 --> 00:12:00,199 Speaker 1: So you know, something that would take a year, they've 195 00:12:00,240 --> 00:12:02,120 Speaker 1: done in three months. So the will is there to 196 00:12:02,160 --> 00:12:05,560 Speaker 1: get a deal done in China, and it increasingly looks 197 00:12:05,559 --> 00:12:07,520 Speaker 1: like there's a will. The will is here to get 198 00:12:07,559 --> 00:12:09,920 Speaker 1: something done, and I think there is a lot of 199 00:12:10,200 --> 00:12:13,240 Speaker 1: room in which we could see some progress in this relationship. Mary, 200 00:12:13,240 --> 00:12:15,240 Speaker 1: You've gone through a series of the issues. If you 201 00:12:15,320 --> 00:12:17,360 Speaker 1: had an issue at the top, the number one sticking 202 00:12:17,360 --> 00:12:19,120 Speaker 1: point that you think is going to make it difficult 203 00:12:19,120 --> 00:12:21,200 Speaker 1: to break for a deal, what do you think it is? 204 00:12:22,559 --> 00:12:26,480 Speaker 1: I think it's on assurances that U S technology will 205 00:12:26,520 --> 00:12:31,240 Speaker 1: be protected UH. Ambassador Lightheiser has said in the past 206 00:12:31,720 --> 00:12:34,440 Speaker 1: that he really doesn't believe things the Chinese say. He 207 00:12:34,520 --> 00:12:38,360 Speaker 1: wants to see action. But how how is that going 208 00:12:38,440 --> 00:12:41,920 Speaker 1: to be actually implemented? Are how are we going to 209 00:12:42,000 --> 00:12:44,360 Speaker 1: monitor what the Chinese do? What recourse will we have 210 00:12:44,400 --> 00:12:47,679 Speaker 1: if we believe that promises they've made have not been kept. 211 00:12:48,400 --> 00:12:50,560 Speaker 1: There is a limit to how much one country can 212 00:12:50,600 --> 00:12:53,640 Speaker 1: reach behind the border of another. Chinese simply won't allow 213 00:12:53,679 --> 00:12:56,280 Speaker 1: certain types of things to happen. So how do we 214 00:12:56,280 --> 00:12:58,040 Speaker 1: reach an agreement where we think they're going to be 215 00:12:58,080 --> 00:13:01,680 Speaker 1: accountable and fulfill the promises that they may and yet 216 00:13:01,720 --> 00:13:05,480 Speaker 1: China still sees that is respectful of its sovereignty? Mary, 217 00:13:05,559 --> 00:13:08,760 Speaker 1: what would Nicholas Lardie say? I mean, if you span 218 00:13:08,920 --> 00:13:11,600 Speaker 1: back from very lovely back to the China watchers of 219 00:13:12,960 --> 00:13:16,600 Speaker 1: and forty years ago, is there a shift in our 220 00:13:16,640 --> 00:13:21,200 Speaker 1: relationship with China with this new and different leader, or 221 00:13:21,280 --> 00:13:25,000 Speaker 1: is it pretty much the same world back and forth? No, 222 00:13:25,280 --> 00:13:27,760 Speaker 1: you know, Nick's Nick's new book The Day Strikes Back 223 00:13:27,840 --> 00:13:30,880 Speaker 1: clearly shows that there's been a change under sheet and 224 00:13:31,000 --> 00:13:37,200 Speaker 1: ping return to UM preferences for state owned enterprises, kind 225 00:13:37,240 --> 00:13:42,520 Speaker 1: of a you know, a shifting inconsistent approach to privatization 226 00:13:42,760 --> 00:13:46,760 Speaker 1: even to industrial policy. So yeah, we have there has 227 00:13:46,800 --> 00:13:51,120 Speaker 1: been a shift towards centralization UM. But how you know 228 00:13:51,320 --> 00:13:54,439 Speaker 1: what exactly she is trying to do, even after five years, 229 00:13:54,480 --> 00:13:58,320 Speaker 1: is still unclear because he continually gives lift theres to 230 00:13:58,400 --> 00:14:01,960 Speaker 1: opening and reform. He has made some changes particularly to 231 00:14:02,400 --> 00:14:07,000 Speaker 1: UH to investment policy that have been liberalizing, and so 232 00:14:07,080 --> 00:14:08,800 Speaker 1: I think that China watchers still have a lot of 233 00:14:08,800 --> 00:14:11,040 Speaker 1: work to do. But yes, clearly there have been changes 234 00:14:11,800 --> 00:14:14,839 Speaker 1: to how China operates and that has concerned I think 235 00:14:14,880 --> 00:14:17,280 Speaker 1: many observers who would like to see them moving on 236 00:14:17,320 --> 00:14:22,760 Speaker 1: a more straight path towards opening, reform and reducing the 237 00:14:22,760 --> 00:14:25,120 Speaker 1: power of the state of enterprises. Very lovely, Thank you 238 00:14:25,200 --> 00:14:27,640 Speaker 1: so much from a cold Syracuse this morning Wisdom on 239 00:14:28,320 --> 00:14:45,600 Speaker 1: Trade Peterson Institute as well. Joining us on the phone 240 00:14:45,640 --> 00:14:49,360 Speaker 1: is Rich Greenfield, our own friend from bt I Technology. 241 00:14:50,120 --> 00:14:53,200 Speaker 1: Rich is one of the longest, uh standing and one 242 00:14:53,200 --> 00:14:55,240 Speaker 1: of the best, I think top analysts on the street 243 00:14:55,280 --> 00:14:58,240 Speaker 1: covering all things media, particularly with a tech vibe. He's 244 00:14:58,240 --> 00:15:00,520 Speaker 1: got a by rating on Facebook with I Believe It 245 00:15:00,560 --> 00:15:04,280 Speaker 1: two price target. So Rich, thanks so much for joining 246 00:15:04,320 --> 00:15:07,520 Speaker 1: Tom and myself here today. What did you see and 247 00:15:07,600 --> 00:15:10,320 Speaker 1: maybe what did the market here last night from the 248 00:15:10,400 --> 00:15:13,480 Speaker 1: results and from the management called that would pop the 249 00:15:13,480 --> 00:15:18,080 Speaker 1: stock eleven percent here in the morning. Um, Look, I 250 00:15:18,120 --> 00:15:22,160 Speaker 1: think that there has been widespread fear um. You know, 251 00:15:22,200 --> 00:15:25,760 Speaker 1: if you kind of listen to a lot of investors, 252 00:15:25,760 --> 00:15:28,440 Speaker 1: there's been fear that all of the kind of headlines 253 00:15:28,480 --> 00:15:32,600 Speaker 1: coming out of d C, privacy, security, health of the network. 254 00:15:33,160 --> 00:15:37,240 Speaker 1: There's just been NonStop attacks of Facebook um over the 255 00:15:37,280 --> 00:15:39,200 Speaker 1: course of the last six to nine months. And I 256 00:15:39,240 --> 00:15:41,920 Speaker 1: think there was real fear on Wall Street that that 257 00:15:42,000 --> 00:15:45,240 Speaker 1: was leading to abandonment by users, that you were going 258 00:15:45,280 --> 00:15:49,040 Speaker 1: to see users start to drop, revenue growth dramatically slow, 259 00:15:49,120 --> 00:15:52,520 Speaker 1: And what you actually saw was users in every single 260 00:15:52,560 --> 00:15:56,720 Speaker 1: geography US, Europe, Asia, rest of world, all of them 261 00:15:56,800 --> 00:16:01,160 Speaker 1: growing on a sequential basis. Users the US actually up 262 00:16:01,200 --> 00:16:05,000 Speaker 1: one percent year every year and revenue growth up thirty 263 00:16:05,600 --> 00:16:07,360 Speaker 1: and so you know, I think when you put it 264 00:16:07,400 --> 00:16:10,680 Speaker 1: all together, it's like this story that kind of Facebook 265 00:16:10,760 --> 00:16:14,040 Speaker 1: is dying has been you know, it's not just greatly exaggerated, 266 00:16:14,080 --> 00:16:16,240 Speaker 1: it's just flat out wrong. And when you look at 267 00:16:16,240 --> 00:16:19,760 Speaker 1: a stock that's trading at twenty times trailing earnings with 268 00:16:20,200 --> 00:16:24,840 Speaker 1: you know, um incredible free cash flow coming out on 269 00:16:24,840 --> 00:16:27,440 Speaker 1: a quarterly basis, I think forty billion of cash sitting 270 00:16:27,440 --> 00:16:31,280 Speaker 1: on the balance sheet. This is still a juggernaut UM 271 00:16:31,320 --> 00:16:35,200 Speaker 1: that investors have UM given up on a little too soon. 272 00:16:36,080 --> 00:16:39,120 Speaker 1: So Rich Mark Zuckerberg CEO on the call last night 273 00:16:39,160 --> 00:16:41,640 Speaker 1: seemed to suggest that the company has quote unquote turned 274 00:16:41,680 --> 00:16:44,080 Speaker 1: the corner. I think he was referring in part to 275 00:16:45,000 --> 00:16:47,200 Speaker 1: some of the regulatory overhang that you were mentioning. Do 276 00:16:47,240 --> 00:16:49,280 Speaker 1: you think that is in fact the case that the 277 00:16:49,360 --> 00:16:52,280 Speaker 1: company has kind of weathered the storm, and at least 278 00:16:52,280 --> 00:16:56,840 Speaker 1: from our regulatory perspective. You know, honestly, I have no 279 00:16:56,960 --> 00:17:00,160 Speaker 1: idea in terms of, you know, when this cloud lifts. Mean, 280 00:17:00,160 --> 00:17:05,240 Speaker 1: it seems like every major UM publication is out to 281 00:17:05,320 --> 00:17:11,200 Speaker 1: kill Facebook UM with kind of an endless series of reports. UM. 282 00:17:11,320 --> 00:17:13,119 Speaker 1: All I know is I look at what consumers do, 283 00:17:13,840 --> 00:17:15,760 Speaker 1: and you know, if you look over your shoulder when 284 00:17:15,760 --> 00:17:17,919 Speaker 1: you're on a subway or when you're walking down the street. 285 00:17:18,440 --> 00:17:22,560 Speaker 1: I continue to see people using Facebook using Instagram every 286 00:17:22,600 --> 00:17:25,000 Speaker 1: single day, and I see people that love it. You know, 287 00:17:25,040 --> 00:17:27,200 Speaker 1: it's not like people you know, it's like, do people 288 00:17:27,240 --> 00:17:29,919 Speaker 1: care about privacy? Sure? I think people. Do you care 289 00:17:29,960 --> 00:17:33,000 Speaker 1: about your privacy? They do, but they also love using 290 00:17:33,040 --> 00:17:36,399 Speaker 1: Facebook and Instagram. It's Rich Greenfield. It's a terrible business. 291 00:17:36,480 --> 00:17:40,920 Speaker 1: Up revenue growth, gross profit eighties something. It's like, it's 292 00:17:40,960 --> 00:17:46,159 Speaker 1: you know, what's the equivalent the worst case it's a 293 00:17:46,280 --> 00:17:50,280 Speaker 1: terrible business. Is Instagram have the same numbers? I mean, 294 00:17:50,520 --> 00:17:54,919 Speaker 1: can you make a statement that Instagram generates income statement 295 00:17:55,040 --> 00:18:01,400 Speaker 1: operating income the same way Facebook does. Look, the reality 296 00:18:01,480 --> 00:18:04,960 Speaker 1: is they don't break out the details of Instagram. Yeah, 297 00:18:04,960 --> 00:18:07,399 Speaker 1: but they do for you. So what's the answer now 298 00:18:07,560 --> 00:18:09,800 Speaker 1: they don't. I mean, look, we know that from a 299 00:18:09,880 --> 00:18:13,159 Speaker 1: user basis, Instagram has over a billion users versus the 300 00:18:13,200 --> 00:18:16,639 Speaker 1: over two billion using Facebook. Obviously, when you look at 301 00:18:16,640 --> 00:18:19,920 Speaker 1: that revenue growth, I think it's fair to say Tom 302 00:18:19,960 --> 00:18:23,879 Speaker 1: that Instagram is driving that growth and that you're seeing 303 00:18:23,960 --> 00:18:28,240 Speaker 1: dramatically fast growth than thirty out of Welcome Rich Rich 304 00:18:28,359 --> 00:18:32,400 Speaker 1: at my House. It's Instagram eight Facebook, and the rest 305 00:18:32,480 --> 00:18:36,960 Speaker 1: is on Twitter. They're glued to Instagram. Can that generate 306 00:18:37,000 --> 00:18:40,080 Speaker 1: the profit vector that stock price move you're talking about 307 00:18:40,080 --> 00:18:44,120 Speaker 1: it to, Can Instagram do that? I think Instagram will 308 00:18:44,160 --> 00:18:47,280 Speaker 1: be a bigger business than Facebook in totality long term. 309 00:18:47,320 --> 00:18:50,280 Speaker 1: And I think what's amazing about Instagram tom is, to me, 310 00:18:50,320 --> 00:18:53,600 Speaker 1: it's the first business I've ever seen where consumers don't 311 00:18:53,600 --> 00:18:56,000 Speaker 1: care about the ad load. They like the ads. The 312 00:18:56,040 --> 00:18:58,600 Speaker 1: ads are content. It's like walking through the mall. Like 313 00:18:58,680 --> 00:19:00,639 Speaker 1: you used to walk through a mall buy things and 314 00:19:00,720 --> 00:19:04,199 Speaker 1: windows shop. Now you windows shop on Instagram and you 315 00:19:04,240 --> 00:19:07,040 Speaker 1: actually want to buy what they advertise and market to you. 316 00:19:07,080 --> 00:19:09,280 Speaker 1: And so that closing the loop, you know, the holy 317 00:19:09,320 --> 00:19:13,359 Speaker 1: grail of advertising is closing the loop between advertising and 318 00:19:13,440 --> 00:19:17,119 Speaker 1: actual transaction. And Facebook has actually figured that out. And 319 00:19:17,160 --> 00:19:19,639 Speaker 1: I think ultimately, as they turn themselves more into a 320 00:19:19,720 --> 00:19:23,240 Speaker 1: mall on Instagram where you actually buy directly, the upside 321 00:19:23,520 --> 00:19:27,040 Speaker 1: to revenues is really significant and they're just scratching the 322 00:19:27,119 --> 00:19:31,480 Speaker 1: surface of that today. So rich even during the you know, 323 00:19:31,520 --> 00:19:33,840 Speaker 1: the dark days of the past twelve months, you know, 324 00:19:33,920 --> 00:19:37,480 Speaker 1: and uh, Mr Zuckerberg was brought before Congress and so 325 00:19:37,520 --> 00:19:41,280 Speaker 1: on Facebook bulls. I think, you know, really, I think 326 00:19:41,359 --> 00:19:42,720 Speaker 1: hung their hat on the fact that there are so 327 00:19:42,760 --> 00:19:46,680 Speaker 1: many revenue drivers, that so many levers that Facebook and 328 00:19:46,720 --> 00:19:48,600 Speaker 1: pull in terms of driving the revenue growth, even if 329 00:19:48,600 --> 00:19:51,400 Speaker 1: the core Facebook business may be slowing in certain markets. 330 00:19:51,760 --> 00:19:54,400 Speaker 1: Messenger and WhatsApp are are two of those levers. How 331 00:19:54,400 --> 00:19:57,440 Speaker 1: do you think the company over time will try to 332 00:19:57,440 --> 00:20:02,280 Speaker 1: demonetize those big and growingusinesses. Well, you know, if you 333 00:20:02,400 --> 00:20:05,840 Speaker 1: go into a Messenger today, you now have stories that 334 00:20:05,880 --> 00:20:08,879 Speaker 1: are showing up and um, you know, the reality is 335 00:20:09,000 --> 00:20:13,040 Speaker 1: advertisers are able to buy across all of these platforms 336 00:20:13,040 --> 00:20:15,200 Speaker 1: with the click of a button. It's literally a checkbox 337 00:20:15,240 --> 00:20:19,240 Speaker 1: as you're buying ads on Facebook or Instagram or Instagram stories. 338 00:20:19,280 --> 00:20:22,879 Speaker 1: You now can buy stories literally inside of Messenger. And 339 00:20:23,000 --> 00:20:26,560 Speaker 1: so all of this is beginning to get integrated across 340 00:20:26,680 --> 00:20:28,440 Speaker 1: all of their products. And I look, I don't want 341 00:20:28,440 --> 00:20:31,800 Speaker 1: to jump ahead. The reality is monetizing. What's that monetizing? 342 00:20:31,840 --> 00:20:35,440 Speaker 1: Messenger are really early days, but if you think about 343 00:20:35,480 --> 00:20:39,480 Speaker 1: over the next five years, there is tremendous potential to 344 00:20:39,680 --> 00:20:43,320 Speaker 1: leverage these communications platforms. Especially there's been news out over 345 00:20:43,359 --> 00:20:45,760 Speaker 1: the last few days that Facebook is trying to tie 346 00:20:46,320 --> 00:20:49,239 Speaker 1: all of these products closer together, so that if I 347 00:20:49,320 --> 00:20:53,000 Speaker 1: know Tom on WhatsApp, I'll be able to message him 348 00:20:53,040 --> 00:20:55,960 Speaker 1: from my messenger even if we're not friends on Messenger. 349 00:20:56,040 --> 00:20:59,439 Speaker 1: Basically just putting the consumer first, making it easier to 350 00:20:59,480 --> 00:21:02,720 Speaker 1: connect these products. But that's great for advertisers because it's 351 00:21:02,720 --> 00:21:04,960 Speaker 1: gonna be easier to reach people. Got another one hour 352 00:21:05,040 --> 00:21:08,040 Speaker 1: here with Rich Greenfield, which is great. Rich Disney Update, 353 00:21:08,160 --> 00:21:13,760 Speaker 1: Content King streaming Disney by themselves. They hate Netflix Greenfield 354 00:21:13,920 --> 00:21:18,160 Speaker 1: Disney Update. Look, it's been a little over three years 355 00:21:18,160 --> 00:21:20,040 Speaker 1: since we put a cell on Disney at a hundred 356 00:21:20,040 --> 00:21:22,400 Speaker 1: and eleven and a half. The stock is still down, 357 00:21:22,480 --> 00:21:25,280 Speaker 1: the markets up a lot. And the kind of the 358 00:21:26,280 --> 00:21:29,120 Speaker 1: headwinds that Disney is facing is that more and more 359 00:21:29,119 --> 00:21:31,359 Speaker 1: consumers are cutting the cord, which is putting pressure on 360 00:21:31,400 --> 00:21:35,080 Speaker 1: their core business ESPN, etcetera. And they're trying to you know, 361 00:21:35,119 --> 00:21:38,080 Speaker 1: they have Netflix envy, Tom real Netflix envy not just 362 00:21:38,160 --> 00:21:41,040 Speaker 1: of the business but of the valuation, and they're now 363 00:21:41,119 --> 00:21:44,280 Speaker 1: going to shift their entire good chunk of their their 364 00:21:44,280 --> 00:21:48,560 Speaker 1: company towards chasing Netflix. The problem is Netflix, by the 365 00:21:48,560 --> 00:21:51,879 Speaker 1: time Disney launches Disney Plus will have over a hundred 366 00:21:51,920 --> 00:21:55,879 Speaker 1: and seventy five million subscribers worldwide and Disney starting at zero, 367 00:21:55,920 --> 00:21:58,240 Speaker 1: And so the cost to do this is going to 368 00:21:58,320 --> 00:22:01,959 Speaker 1: be very, very high, and I think investors are increasingly 369 00:22:02,040 --> 00:22:05,080 Speaker 1: concerned with the cost at how hard this is going 370 00:22:05,119 --> 00:22:07,879 Speaker 1: to be and how committed Disney is, and it's going 371 00:22:07,920 --> 00:22:10,160 Speaker 1: to weigh on results. And so you know, you're looking 372 00:22:10,200 --> 00:22:14,359 Speaker 1: at more years going forward of no growth at Disney's earnings, 373 00:22:14,359 --> 00:22:16,040 Speaker 1: and it's like, what multiple do you want to pay? 374 00:22:16,520 --> 00:22:20,080 Speaker 1: I can buy Facebook, you know, at twenty times trailing earnings, 375 00:22:20,119 --> 00:22:22,560 Speaker 1: not twenty times you know at some point out in 376 00:22:22,600 --> 00:22:25,399 Speaker 1: the future earnings with no growth, Like, why would you 377 00:22:25,440 --> 00:22:27,880 Speaker 1: buy Disney when you can go buy Facebook? I mean 378 00:22:27,880 --> 00:22:31,560 Speaker 1: it's not even close from from a relative standpoint. And 379 00:22:31,640 --> 00:22:34,280 Speaker 1: so I think the head winds for Disney as they 380 00:22:34,520 --> 00:22:38,040 Speaker 1: really try to chase Netflix, which feels like a mistake. Um, 381 00:22:38,400 --> 00:22:40,840 Speaker 1: Disney is going to continue to be under pressure. So 382 00:22:41,200 --> 00:22:42,959 Speaker 1: you know, Rich just real quickly is you look at 383 00:22:42,960 --> 00:22:46,080 Speaker 1: the streaming business Netflix dominates obviously, who lose out there? 384 00:22:46,840 --> 00:22:49,159 Speaker 1: How many players do you think the global streaming business 385 00:22:49,359 --> 00:22:53,120 Speaker 1: or can really support? Do you have any sense to that? Look, 386 00:22:53,400 --> 00:22:55,520 Speaker 1: the reality is when you're spending I mean comcasts or 387 00:22:55,560 --> 00:22:57,800 Speaker 1: Charter Let's stay. Charter Charters reported this morning there are 388 00:22:57,840 --> 00:23:00,159 Speaker 1: poos nine a month. I mean, as you go from 389 00:23:00,240 --> 00:23:02,760 Speaker 1: Charter at ninety and you drop down to YouTube TV 390 00:23:02,880 --> 00:23:06,000 Speaker 1: at forty or even cut the chord completely, there's a 391 00:23:06,000 --> 00:23:09,000 Speaker 1: lot of dollars being freed up. So I think you 392 00:23:09,040 --> 00:23:10,920 Speaker 1: can have a lot of these services. Remember you don't 393 00:23:10,920 --> 00:23:13,040 Speaker 1: have to be a subscriber for the full year. If 394 00:23:13,040 --> 00:23:14,880 Speaker 1: you want to sign up for Disney Plus to watch 395 00:23:14,880 --> 00:23:17,360 Speaker 1: Star Wars for a weekend and then cancel, you certainly 396 00:23:17,400 --> 00:23:20,639 Speaker 1: could when it launches. There's no friction. These are easy on, 397 00:23:20,800 --> 00:23:23,400 Speaker 1: easy off. The reason Netflix has a show every single 398 00:23:23,480 --> 00:23:25,760 Speaker 1: day is so you don't cancel. That's gonna be the 399 00:23:25,800 --> 00:23:28,080 Speaker 1: real challenge for the Disneys and others to come into 400 00:23:28,080 --> 00:23:30,480 Speaker 1: this space is that if you don't feed me every 401 00:23:30,560 --> 00:23:33,480 Speaker 1: single day, it takes the pink of a button to cancel. 402 00:23:33,760 --> 00:23:36,280 Speaker 1: Remember in the old world charter com you have to 403 00:23:36,280 --> 00:23:39,600 Speaker 1: stay home from work to cancel Charters from home, come 404 00:23:39,640 --> 00:23:42,200 Speaker 1: to your house, or you'd have to drop your heart. 405 00:23:42,280 --> 00:23:44,600 Speaker 1: Rich we gotta go. We have to go to commercial break. 406 00:23:44,680 --> 00:23:48,280 Speaker 1: Richard's called Richard's called doing commercials, which is how we 407 00:23:48,320 --> 00:23:50,800 Speaker 1: pay for the heat here in the ice cold. Next 408 00:23:50,800 --> 00:23:54,119 Speaker 1: time Rich Greenfield with water pise. That'll be wonderful. T 409 00:23:54,359 --> 00:24:10,120 Speaker 1: I G. This is a joy. We do it not 410 00:24:10,359 --> 00:24:13,320 Speaker 1: every year, but about every eighteen months. He darkens the 411 00:24:13,359 --> 00:24:15,199 Speaker 1: door and we try to do a two hour interview 412 00:24:15,240 --> 00:24:18,280 Speaker 1: and squeeze that into nine minutes. Here right now he 413 00:24:18,320 --> 00:24:21,320 Speaker 1: has Chuck Leval. He's a modest piano player of another 414 00:24:21,359 --> 00:24:23,840 Speaker 1: time and place, and he has done the charm that 415 00:24:24,080 --> 00:24:28,040 Speaker 1: you can do. He's kept the act going, he joins us. 416 00:24:28,160 --> 00:24:31,399 Speaker 1: Right now, we're gonna go Stones the new project, and 417 00:24:31,440 --> 00:24:33,760 Speaker 1: then talk about a little bit of the past as well. 418 00:24:33,800 --> 00:24:36,840 Speaker 1: Of course, for years iconic with the Almand brothers is well, 419 00:24:37,000 --> 00:24:40,280 Speaker 1: guys like you were retired. They're living on the farm. 420 00:24:40,400 --> 00:24:43,680 Speaker 1: They're in Hawaii for a week, then Tahiti. They got 421 00:24:43,680 --> 00:24:46,320 Speaker 1: the eighty foot boat, and you're in a studio with 422 00:24:46,400 --> 00:24:49,760 Speaker 1: the Stones. He's ready for seventeen days. You bet Tom, 423 00:24:49,800 --> 00:24:52,240 Speaker 1: you bet man, Hey, you know we're it's such a blessing. 424 00:24:52,240 --> 00:24:54,080 Speaker 1: Are you kidding me? That we get to still do 425 00:24:54,160 --> 00:24:56,159 Speaker 1: this and people want to come see us? What is this? 426 00:24:56,480 --> 00:24:58,800 Speaker 1: What does the Stones do to do another tour? To 427 00:24:58,880 --> 00:25:00,960 Speaker 1: make it fresh? I mean Elton John's out now doing 428 00:25:01,000 --> 00:25:03,440 Speaker 1: the Goodbye tour and all that. I don't see Mick 429 00:25:03,480 --> 00:25:07,200 Speaker 1: Jagger doing a goodbye tour. What's the theme? Well, the 430 00:25:07,600 --> 00:25:09,520 Speaker 1: name of the tour is No Filter and that's a 431 00:25:09,560 --> 00:25:12,280 Speaker 1: continuation of what we started two years ago in Europe 432 00:25:12,440 --> 00:25:15,520 Speaker 1: and that we did in the UK last year. So 433 00:25:15,560 --> 00:25:17,720 Speaker 1: we're gonna bring it to the States. And you're right, 434 00:25:18,119 --> 00:25:21,320 Speaker 1: the Stones have never said this is the last. They've 435 00:25:21,320 --> 00:25:23,680 Speaker 1: never done that, you know, I mean Frank Sinatra retired 436 00:25:23,720 --> 00:25:26,840 Speaker 1: fourteen times exactly something like that. What we look for there, 437 00:25:26,880 --> 00:25:28,480 Speaker 1: we'll give us some of the dates. Is this your 438 00:25:28,560 --> 00:25:32,280 Speaker 1: North American Yeah, we'll be starting in Miami April, and 439 00:25:32,280 --> 00:25:35,600 Speaker 1: then we're playing in Jacksonville, We're playing Houston, We're playing 440 00:25:35,800 --> 00:25:41,280 Speaker 1: uh Rutherford East Rutherford. Here, we're playing Foxborough and nobody 441 00:25:41,280 --> 00:25:44,240 Speaker 1: will show up. I get out is a bigger than 442 00:25:44,280 --> 00:25:46,320 Speaker 1: the Super Bowl. Okay, let's talk about the new project 443 00:25:46,440 --> 00:25:49,840 Speaker 1: Chuck Laval Chuck gets Big And what's so amazing about this, folks, 444 00:25:50,359 --> 00:25:52,639 Speaker 1: is I mean, I know you use pro tools on 445 00:25:52,680 --> 00:25:55,119 Speaker 1: this session, and there was a little bit of digital stuff, 446 00:25:55,359 --> 00:25:58,840 Speaker 1: but this is the Chuck Leval primal scream against modern 447 00:25:58,880 --> 00:26:01,880 Speaker 1: digital record said, how many people were in the studio 448 00:26:01,920 --> 00:26:05,280 Speaker 1: at once. Uh. This believe it or not was a 449 00:26:05,320 --> 00:26:08,280 Speaker 1: live concert. Tom I was invited to come play with 450 00:26:08,320 --> 00:26:12,560 Speaker 1: the Frankfurt radio Big Band. I sent twelve MP three's 451 00:26:12,560 --> 00:26:14,760 Speaker 1: of songs I wanted them to do arrangements of. They 452 00:26:14,760 --> 00:26:18,680 Speaker 1: had three arrangers do arrangements for these twelve songs. They 453 00:26:18,720 --> 00:26:21,080 Speaker 1: had one rehearsal without me. I walked in the room 454 00:26:21,119 --> 00:26:23,760 Speaker 1: the next day and I was absolutely blown away. I mean, 455 00:26:23,800 --> 00:26:26,360 Speaker 1: these guys were so crisp. They were just on top 456 00:26:26,359 --> 00:26:29,199 Speaker 1: of their game. They were amazing. The arrangements were fabulous. 457 00:26:29,520 --> 00:26:32,080 Speaker 1: So I said, hey, you better step your game up here, 458 00:26:32,160 --> 00:26:35,240 Speaker 1: Chuck and Uh. We did a concert the next day. 459 00:26:35,720 --> 00:26:39,640 Speaker 1: It was fully recorded, sat on the tapes for a while, uh, 460 00:26:39,680 --> 00:26:41,680 Speaker 1: and then went back and listened to them and I said, 461 00:26:41,680 --> 00:26:43,399 Speaker 1: you know, it's time to put this out. And we 462 00:26:43,480 --> 00:26:45,480 Speaker 1: took the audience out of it. So it makes like 463 00:26:45,520 --> 00:26:48,320 Speaker 1: a studio record. Well like a studio record. I'm gonna 464 00:26:48,359 --> 00:26:50,120 Speaker 1: pick one song. We're at sixty six, and I'm gonna 465 00:26:50,119 --> 00:26:53,000 Speaker 1: go back to Glenn Fry, who tragically died a number 466 00:26:53,000 --> 00:26:54,920 Speaker 1: of years ago. He did Rode sixty six on his 467 00:26:55,040 --> 00:26:58,159 Speaker 1: last album, and it's a whole Elliott Snyder l a 468 00:26:58,480 --> 00:27:02,280 Speaker 1: smooth kind of thing. How did you approach Roots sixty six? 469 00:27:02,440 --> 00:27:04,879 Speaker 1: It's like big band rock and roll. That's that was 470 00:27:04,920 --> 00:27:07,600 Speaker 1: the approach. You know the Stones. That song, as you 471 00:27:07,600 --> 00:27:10,080 Speaker 1: will know, has been recorded so many times. Bobby Troupe 472 00:27:10,119 --> 00:27:11,880 Speaker 1: was the great writer on it. I think Nat King 473 00:27:11,920 --> 00:27:15,200 Speaker 1: Cole was the first person give him credit. Yeah, and 474 00:27:15,560 --> 00:27:17,399 Speaker 1: through the years it's been done by a lot of folks, 475 00:27:17,480 --> 00:27:19,560 Speaker 1: including the Stone. So I kind of took the Stones 476 00:27:19,720 --> 00:27:21,520 Speaker 1: version and put the big band in it. Now you're 477 00:27:21,520 --> 00:27:23,919 Speaker 1: cutting chiseled and look forty eight. But the fact is 478 00:27:23,960 --> 00:27:26,439 Speaker 1: there's a lot of look back right now. I was 479 00:27:26,480 --> 00:27:28,800 Speaker 1: just in Davos, Switzerland, and my theme was Steroid, a 480 00:27:28,880 --> 00:27:32,639 Speaker 1: Davos led Zeppelin fifty years back. Fifty years ago, you 481 00:27:32,680 --> 00:27:35,000 Speaker 1: were a self taught slug in the South. He got 482 00:27:35,080 --> 00:27:37,080 Speaker 1: lucky and got to go to Macon and then you 483 00:27:37,200 --> 00:27:39,399 Speaker 1: ended up with a guy named Dr John. What was 484 00:27:39,440 --> 00:27:42,919 Speaker 1: it like? How bad were the laval knees shaking? The 485 00:27:43,000 --> 00:27:45,879 Speaker 1: first day you had to deal with Dr John? You know, Uh, 486 00:27:46,560 --> 00:27:49,000 Speaker 1: we had to audition for mac and as you know, 487 00:27:49,200 --> 00:27:52,639 Speaker 1: mac Rebanac as Dr John's real name, and uh, you 488 00:27:52,680 --> 00:27:55,399 Speaker 1: know he the first day did not go well, and 489 00:27:55,480 --> 00:27:58,680 Speaker 1: Mac was he was telling us, man, you ain't got 490 00:27:58,720 --> 00:28:01,200 Speaker 1: that second line thing on. You know, y'all got to 491 00:28:01,240 --> 00:28:03,840 Speaker 1: get on the game. Yeah, you know. So we had 492 00:28:03,880 --> 00:28:05,520 Speaker 1: to step it up and we did and we got 493 00:28:05,520 --> 00:28:07,840 Speaker 1: the games. It's like Leon Russell, these guys can really play. 494 00:28:07,920 --> 00:28:11,159 Speaker 1: All of a sudden, You're like, let's go right, okay. 495 00:28:11,200 --> 00:28:13,720 Speaker 1: I want to go back to and and I see 496 00:28:13,720 --> 00:28:15,800 Speaker 1: this with the kids today. It's you know, I get 497 00:28:15,800 --> 00:28:18,280 Speaker 1: it as Spotify and it's all mid tracked and everybody 498 00:28:18,320 --> 00:28:20,720 Speaker 1: sounds perfect, and you know, auto tune and the rest 499 00:28:20,760 --> 00:28:23,399 Speaker 1: of it. Everything sounds perfect today. I want you to 500 00:28:23,440 --> 00:28:26,120 Speaker 1: go back and help our listeners, those of a vintage 501 00:28:26,320 --> 00:28:28,320 Speaker 1: and those younger and people are emailing me and played 502 00:28:28,359 --> 00:28:30,480 Speaker 1: this song, play that song, forget about it. I want 503 00:28:30,480 --> 00:28:34,080 Speaker 1: to take Jessica, which is the band is shattered, all 504 00:28:34,080 --> 00:28:37,159 Speaker 1: my brothers band is shattered, and you did what so 505 00:28:37,280 --> 00:28:40,040 Speaker 1: few bands and maybe def Leppard can come close. You 506 00:28:40,160 --> 00:28:43,520 Speaker 1: picked up the pieces with that fourth album and when 507 00:28:43,560 --> 00:28:46,160 Speaker 1: you did Jessica, Dickey Betts came in and did it. 508 00:28:46,640 --> 00:28:49,480 Speaker 1: And then what what always has upset me is the 509 00:28:49,600 --> 00:28:53,800 Speaker 1: sophistication of that song. What's remarkable. Did you help do 510 00:28:53,920 --> 00:28:56,760 Speaker 1: that in the studio, the shift from A major up 511 00:28:56,760 --> 00:29:00,360 Speaker 1: the D major. So, I mean, this is a deal. 512 00:29:00,520 --> 00:29:03,080 Speaker 1: If everybody thinks it's a bar house song, you know 513 00:29:03,120 --> 00:29:05,760 Speaker 1: you're drunk in the fourth set you play Jessica, but 514 00:29:05,880 --> 00:29:09,360 Speaker 1: it's really it's a classical motif. Am well, I appreciate that, 515 00:29:09,440 --> 00:29:11,120 Speaker 1: and uh yeah, I had a little something to do 516 00:29:11,200 --> 00:29:13,320 Speaker 1: with the arrangement. Of course, Dickie wrote the song. It's 517 00:29:13,320 --> 00:29:16,000 Speaker 1: a beautiful piece. And uh, by the way, he was 518 00:29:16,040 --> 00:29:20,040 Speaker 1: listening to Django Roundheart records and watching his daughter at play, 519 00:29:20,080 --> 00:29:22,440 Speaker 1: who was a toddler at the time, and of course 520 00:29:22,480 --> 00:29:25,320 Speaker 1: her name was Jessica, and that's the way it came about. 521 00:29:25,360 --> 00:29:27,719 Speaker 1: But he brought it to the band. Uh. You know, 522 00:29:27,880 --> 00:29:30,240 Speaker 1: we went through it. I had a couple of goes 523 00:29:30,320 --> 00:29:31,880 Speaker 1: at it, and we had to kind of say, well, 524 00:29:31,920 --> 00:29:33,480 Speaker 1: how do we get from point A to point B? 525 00:29:33,600 --> 00:29:34,959 Speaker 1: And I think I had a little something to do 526 00:29:35,000 --> 00:29:37,400 Speaker 1: with with some of those issues. I mean, the reason 527 00:29:37,480 --> 00:29:39,480 Speaker 1: I bring this up, folks, it's so important. If you 528 00:29:39,560 --> 00:29:44,040 Speaker 1: look at all the different bands of of of your 529 00:29:44,760 --> 00:29:47,360 Speaker 1: it was like it was easy to do and my 530 00:29:47,560 --> 00:29:49,520 Speaker 1: you know, my amateur knowledge of said led Zepplin. Are 531 00:29:49,600 --> 00:29:52,000 Speaker 1: the Stones for that matter. The amount of work in 532 00:29:52,080 --> 00:29:56,520 Speaker 1: the studio was profound doing Brothers and Sisters, changing the band, 533 00:29:56,560 --> 00:29:59,640 Speaker 1: the huge success the album. What was the tension in 534 00:29:59,720 --> 00:30:02,400 Speaker 1: the studio that led to that artistic success? Well, you know, 535 00:30:02,520 --> 00:30:04,680 Speaker 1: you mentioned that it was a tough time for the band. 536 00:30:04,760 --> 00:30:07,400 Speaker 1: Dwayne Allman had passed away in seventy one. They went 537 00:30:07,480 --> 00:30:10,720 Speaker 1: out as a five piece band. They came back exhausted mentally, 538 00:30:10,920 --> 00:30:15,720 Speaker 1: physically exhausted. Uh I came into the picture, and you know, 539 00:30:15,800 --> 00:30:18,120 Speaker 1: I would like to think that maybe I brought something 540 00:30:18,200 --> 00:30:22,080 Speaker 1: fresh to the table and um maybe helped, you know, 541 00:30:22,320 --> 00:30:24,600 Speaker 1: enliven things a little bit. It was certainly a great 542 00:30:24,640 --> 00:30:26,959 Speaker 1: opportunity from me, Tom. I was twenty years old when 543 00:30:27,000 --> 00:30:28,920 Speaker 1: I got that gig. So were you twenty years old 544 00:30:28,960 --> 00:30:33,640 Speaker 1: doing Brothers and Sisters. And what's what's amazing that the 545 00:30:33,680 --> 00:30:36,960 Speaker 1: way you kept it going versus so many is is 546 00:30:37,200 --> 00:30:40,600 Speaker 1: you went from project to project. There was never My 547 00:30:40,680 --> 00:30:43,800 Speaker 1: basic take beside your environmental work in the South as 548 00:30:43,840 --> 00:30:47,320 Speaker 1: you've never stopped working as well, explained to our audience, 549 00:30:47,360 --> 00:30:49,920 Speaker 1: who they got kids at home with all the distractions 550 00:30:49,960 --> 00:30:53,560 Speaker 1: today and how do you get that discipline that Chuck 551 00:30:53,680 --> 00:30:56,840 Speaker 1: Laval had to just keep going. Where did that discipline 552 00:30:56,840 --> 00:30:58,600 Speaker 1: come from? Well, you know, I think it's the passion 553 00:30:58,720 --> 00:31:01,720 Speaker 1: of the job. You know, I love playing, I love 554 00:31:01,840 --> 00:31:04,760 Speaker 1: being in the studio, I love being out live on stage. 555 00:31:05,560 --> 00:31:08,840 Speaker 1: My career has been a blessing inasmuch as that I've 556 00:31:08,840 --> 00:31:10,960 Speaker 1: played with so many different artists, you know, with Eric 557 00:31:11,000 --> 00:31:13,160 Speaker 1: Clapton for a couple of years, did a tour with 558 00:31:13,280 --> 00:31:16,320 Speaker 1: David Gilmour since I saw you last that was in 559 00:31:17,360 --> 00:31:20,040 Speaker 1: That was amazing, and of course the Stones now for 560 00:31:20,160 --> 00:31:22,960 Speaker 1: thirty seven years, and along the way, George Harris and 561 00:31:23,120 --> 00:31:25,800 Speaker 1: John Mayer and some others. So you know, for me, 562 00:31:25,920 --> 00:31:29,040 Speaker 1: it's diversity being able to work with these different artists 563 00:31:29,080 --> 00:31:32,080 Speaker 1: and being able to assimilate yourself into this situation. I 564 00:31:32,160 --> 00:31:34,680 Speaker 1: want to go back to Chuck le Vall, Leon Russell 565 00:31:34,880 --> 00:31:39,480 Speaker 1: and others about the sense of an acoustic piano and 566 00:31:39,760 --> 00:31:43,680 Speaker 1: kids today their parents going by some big, fancy digital piano. 567 00:31:43,800 --> 00:31:46,760 Speaker 1: Can they get the same feel as you when you're 568 00:31:46,800 --> 00:31:49,880 Speaker 1: on some garbage piano that your parents had, and there's 569 00:31:49,920 --> 00:31:52,480 Speaker 1: that first time you played a Baldwin or Steinway. I 570 00:31:52,840 --> 00:31:56,160 Speaker 1: don't think so, you know, I I think it's so important, 571 00:31:56,880 --> 00:32:00,400 Speaker 1: you know, the the acoustic piano was such an iconic instrument. 572 00:32:00,480 --> 00:32:03,040 Speaker 1: You can have all the technology in the world, and 573 00:32:03,360 --> 00:32:06,479 Speaker 1: you can have software programs that sound like a piano, 574 00:32:06,560 --> 00:32:10,120 Speaker 1: and that's great, but until you sit behind those eight 575 00:32:10,200 --> 00:32:14,200 Speaker 1: keys with the hammers and the mechanical action striking those strings, 576 00:32:14,360 --> 00:32:16,240 Speaker 1: and there's just nothing like it. Let's go back to 577 00:32:16,320 --> 00:32:18,640 Speaker 1: the project right now, Chuck Gets Big. We talked about 578 00:32:18,920 --> 00:32:20,960 Speaker 1: sixty six. Will play that here in a moment, gets 579 00:32:21,080 --> 00:32:24,040 Speaker 1: one little vignette into that album, one little moment that 580 00:32:24,120 --> 00:32:27,400 Speaker 1: you love best. Well, I think you know. One of 581 00:32:27,480 --> 00:32:29,760 Speaker 1: the songs we did was Georgia on my Mind, one 582 00:32:29,800 --> 00:32:32,480 Speaker 1: of my favorite songs in the world. And when we 583 00:32:32,560 --> 00:32:36,800 Speaker 1: did the rehearsal, the conductor said, we want you to 584 00:32:36,920 --> 00:32:41,040 Speaker 1: do it solo all the way up until the after 585 00:32:41,120 --> 00:32:43,760 Speaker 1: the bridge, and then the band will come in. And 586 00:32:44,720 --> 00:32:48,000 Speaker 1: when that band hit the note, it was like, whoa, 587 00:32:48,960 --> 00:32:52,920 Speaker 1: that's it's called live music. People's studio. Chuck laval out 588 00:32:52,960 --> 00:32:56,520 Speaker 1: with Chuck gets Big. It is the most extraordinary album. 589 00:32:56,720 --> 00:33:04,560 Speaker 1: Let us listen to Root sixty yea twa called us 590 00:33:04,600 --> 00:33:12,280 Speaker 1: a Highway past Abyss get you kids the road. Six 591 00:33:22,400 --> 00:33:43,640 Speaker 1: well to do. Thanks for listening to the Bloomberg surveillance podcast. 592 00:33:44,040 --> 00:33:48,960 Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or 593 00:33:49,160 --> 00:33:53,400 Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom 594 00:33:53,560 --> 00:33:57,400 Speaker 1: Keane before the podcast. You can always catch us worldwide. 595 00:33:57,880 --> 00:34:02,000 Speaker 1: I'm Bloomberg Radio, a