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Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Tom Keene along

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Speaker 1: with Paul Sweeney. Join us each day for insight from

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Speaker 1: the best in economics, finance, investment, and international relations. You

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Speaker 1: can also watch the show live on YouTube. Visit the

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Speaker 1: Bloomberg Podcast channel on YouTube to see the show weekday

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Speaker 1: mornings from seven to ten am Eastern from our global

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Speaker 1: headquarters in New York City. Subscribe to the podcast on Apple, Spotify,

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Speaker 1: or anywhere else you listen, and always i Bloomberg Radio,

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Speaker 1: the Bloomberg Terminal, and the Bloomberg Business App.

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Speaker 2: We need more.

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Speaker 1: Cameron Dawson joining us now our futures at negative three

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Speaker 1: is Cameron Dawson unbelievably pression about losing the cliches go

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Speaker 1: to cash.

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Speaker 2: She's not there.

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Speaker 1: She's in the market, in the game, and of course

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Speaker 1: it's seen a bull market from October. Let's go there

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Speaker 1: first of about six album before Paul Sweeney jumps in

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Speaker 1: with real market talk. And the answer here is we

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Speaker 1: did all this technology investment in the pandemic and now

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Speaker 1: it's in place, and I think there's a complete underestimation

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Speaker 1: of margin strength forward because they're going to apply I'm not.

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Speaker 3: Talking about Microsoft, I'm talking about DuPont.

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Speaker 4: Yeah, I mean, never bet against the great American might

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Speaker 4: of expanding margins. We've been talking about peak margins year

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Speaker 4: after year after year, and yet we've continued to press

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Speaker 4: to new all time highs. I think a good question

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Speaker 4: of that is how much is that technology related versus globalization,

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Speaker 4: which of course was a big driver of better margins

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Speaker 4: through before the pandemic. But we have to also appreciate

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Speaker 4: during the pandemic one of the key sources of margin

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Speaker 4: upside was revenue growth. It was incremental margins falling, falling

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Speaker 4: down to the bottom line. When you grow revenues a

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Speaker 4: lot a lot more of that falls down, and that

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Speaker 4: came from pricing power. So the question for twenty twenty

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Speaker 4: four and twenty twenty five, with a market that's pricing

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Speaker 4: in peak margins or a new all time high margins,

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Speaker 4: is can you get those all time high margins without

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Speaker 4: pricing power and revenue growth given inflation has abated.

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Speaker 5: So I get I'm just looking at the earnings forecast

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Speaker 5: kind of bottoms up for the S and P five hundred,

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Speaker 5: kind of high single digit, low double digit.

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Speaker 1: I don't know.

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Speaker 5: I'm not sure how much confidence we should have in

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Speaker 5: those numbers. I know I've got my FED going to

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Speaker 5: help us by being rates down, But do I still

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Speaker 5: have earnings risk in the marketplace.

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Speaker 4: I think that we have to keep our heat on

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Speaker 4: a swivel for that, because what's underlying those ten and

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Speaker 4: eleven percent earnings growth is an acceleration and top line

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Speaker 4: not just in twenty four but also in twenty twenty

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Speaker 4: five as well as those new record margins. Now we

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Speaker 4: have a lot of levers to pull, things like possibly

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Speaker 4: going back to M and A, which could help with

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Speaker 4: deal activity, utilizing the balance sheet possibly a little bit

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Speaker 4: more as people feel better. But I think that the

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Speaker 4: other very important point is that earning sestiments have been

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Speaker 4: eroding over the last four months, and so as we've

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Speaker 4: seen the market rally, you've seen learning systems actually come in,

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Speaker 4: meaning that this is all multiple expansion.

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Speaker 5: So how do you think about valuation in this marketplace?

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Speaker 5: I mean, it used to be when I was a kid,

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Speaker 5: fifteen times was the market. Now it's eighteen, nineteen, twenty

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Speaker 5: times for the market. How do you feel about valuation here?

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Speaker 3: Yeah, I am.

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Speaker 4: I'm open to the idea that the backdrop of the

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Speaker 4: market sector kind of dispersion does support a higher multiple

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Speaker 4: over the long run. However, if you're looking at twenty

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Speaker 4: point one times forward earnings, there are only two times

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Speaker 4: in the last forty years. We traded above that level

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Speaker 4: during the tech bubble in the two thousands and during

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Speaker 4: the pandemic policy bubble. And I call it that because

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Speaker 4: you saw valuations expand when money supplied grow thirty percent,

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Speaker 4: the Fed balance sheet increased by five trillion dollars in

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Speaker 4: real interest rates for negative one percent.

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Speaker 1: Not to go Steve Ross on you from MIT, but

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Speaker 1: does factor investment here forward matter?

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Speaker 2: And in that if we assume in any.

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Speaker 1: Bull markets seventy percent of the stocks underperform, thirty percent

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Speaker 1: drive the boat? Or obviously that's not a cliche, let's

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Speaker 1: call that a tutology. Okay, great, but de factor choices

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Speaker 1: matter forward? Or is it earnings analysis, securities and analysis

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Speaker 1: that really drives the ship.

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Speaker 4: For us, it's the factors that are related to earnings,

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Speaker 4: such yes, such as looking at free cash flow generation.

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Speaker 4: Free cash flow is such an important driver of being

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Speaker 4: able to reinvest in your business because that gives you

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Speaker 4: that effective flywheel effect. We don't want to be investing

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Speaker 4: in companies mostly at this point in the cycle that

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Speaker 4: cannot self fund themselves. We want companies that are agnostic

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Speaker 4: to wear interest rates.

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Speaker 2: Are so how many companies are this?

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Speaker 1: There's like four you know, I mean, I mean, there's Bloomberg, LP,

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Speaker 1: there's Apple. You know.

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Speaker 2: Okay, how many companies?

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Speaker 1: I love what you just said, except this weekend I'm

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Speaker 1: going to you know, nobody's going to do.

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Speaker 2: They're not going to do like a Monte Carlos.

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Speaker 3: Survey or whatever that SMB five hundred.

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Speaker 1: How many stocks out there meet the Cameron Dawson analysis.

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Speaker 4: Well, to put a number on it. When we think

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Speaker 4: about our equity strategies, whether it's growth, value or international,

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Speaker 4: each have about thirty five stocks in them. So to

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Speaker 4: get to the cream of the crop. It's a pretty

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Speaker 4: type filter.

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Speaker 3: Nothing else matters today.

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Speaker 2: You and I can go home right now.

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Speaker 6: Yep.

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Speaker 1: What Cameron Dawson said there, folks, is gospel. She's looking

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Speaker 1: at thirty five stocks. Let's double it, seventy stocks. The

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Speaker 1: streets out there looking at three thousand stocks because it's

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Speaker 1: a marketing employ to keep us busy.

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Speaker 2: There's like seventy stocks.

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Speaker 3: You can actually put My lecture's over continue.

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Speaker 5: What sectors do you guys like right now at Cameron,

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Speaker 5: I mean, I'm wondering, do I is tech still going

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Speaker 5: to lead this market going forward?

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Speaker 4: For example, I'm so torn. It's definitely a head and

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Speaker 4: a heart kind of moment because what I see with

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Speaker 4: tech is that you see a lot of concentration positioning

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Speaker 4: becoming very crowded. It's saw huge inflows, forty billion dollars

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Speaker 4: of inflows. It's also very expensive. It's trading at its

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Speaker 4: twenty one peak valuation, so COVID policy era pat valuation. However,

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Speaker 4: Tech and communications are the only sectors in the S

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Speaker 4: and P five hundred that have seen positive earnings revisions

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Speaker 4: in the last six months. So until you see earnings

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Speaker 4: revisions for value type sectors turn positive, I don't think

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Speaker 4: that value can outperform.

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Speaker 2: Okay, Pharaoh's not here. I mean, I gotta do soccer

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Speaker 2: talk with you. Only I'm gonna get through the day.

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Speaker 3: Boy, I got to wake up from the surveillance nap.

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Speaker 1: I got Tottenham Manchester City today in the FA Cup.

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Speaker 1: Do you think the Tots can do it?

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Speaker 4: I've never been more nervous to answer a questions.

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Speaker 2: John Pharaoh. That's all there is. Turn around it's like

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Speaker 2: it's there.

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Speaker 1: It's like it's like it's like, you know, all I

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Speaker 1: can say, folks, this is a ginormous.

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Speaker 3: Game three pm, Paul, this afternoon.

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Speaker 2: Really and it's Tom Now.

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Speaker 1: Adele's going to be there, Emma's going to be there,

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Speaker 1: coming back from Australia.

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Speaker 7: Wow.

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Speaker 2: They called me up, they say they'd be there. You know,

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Speaker 2: bring John Yep. It's like a huge game at Manchester.

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Speaker 2: He should win. All right, we'll tune in, we'll see.

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Speaker 2: Thanks for the soccer talk.

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Speaker 8: That is great.

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Speaker 2: Okay, you did not off.

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Speaker 4: There, very good entertaining.

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Speaker 6: Please, you'd kill him.

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Speaker 5: Conviction to be in the market, as you often say,

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Speaker 5: Bob do all cross Mark Global Investments. He's the CEO

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Speaker 5: and CIO over there, but he's been on the street

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Speaker 5: folks for many, many years. I first started following his

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Speaker 5: work when he was a Chief investment Officer Maryland's Investment

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Speaker 5: Management down there, and that's sprawling Princeton campus back in

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Speaker 5: the day. Bob, thanks so much for joining us here.

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Speaker 5: I mean, you know, I think if we just look

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Speaker 5: back a little bit, Bob, that November December last year

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Speaker 5: caught a lot of people by surprise with the big

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Speaker 5: rip up in markets, and then we kind of start

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Speaker 5: twenty four still still looking pretty solid here. How do

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Speaker 5: you think about these markets after that big, big finish

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Speaker 5: to twenty twenty three.

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Speaker 9: First of all, happy Friday, guys. Yes, it was an

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Speaker 9: unbelievable rally in November December stocks truck mid teens.

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Speaker 2: Yep.

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Speaker 9: That's like a year and a half's work in two

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Speaker 9: months over the long term, and that's a big number.

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Speaker 9: And of course it all came because the Fed said,

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Speaker 9: not explicitly, we're gonna pivot, We're done raising rates, and

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Speaker 9: you know, it's happy, happy land again, and bonds took off,

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Speaker 9: and stocks took off, took off, and credit spreads narrowed.

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Speaker 9: We came into the year, we had a little bit

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Speaker 9: of a hangover. I'm not convinced we aren't gonna get

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Speaker 9: some more of that. On the average stock having done

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Speaker 9: well with those small stocks catching up in November December,

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Speaker 9: has lagged or down year to date, while the broad

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Speaker 9: averages you guys point out are up a bit. So

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Speaker 9: I'm all concerned, And my biggest concern is earnings, which

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Speaker 9: we can talk about if you like.

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Speaker 5: Absolutely that's where I wanted to go. Bob, I kind

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Speaker 5: of felt like, just looking at that performance at the

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Speaker 5: end of last year, it was, as you mentioned on

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Speaker 5: that fed pivot. So I'm wondering, now, now what's the driver?

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Speaker 5: And I kind of feel like, as a former equity

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Speaker 5: analyst who still thinks earnings matter, I think earnings need

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Speaker 5: to really come through here. I'm not sure we're gonna

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Speaker 5: get it here. How do you think about the earnings

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Speaker 5: risk here in this market?

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Speaker 9: I think the risk exists, especially with PE ratios over twenty.

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Speaker 9: You know, if the PE were fifteen or sixteen, maybe

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Speaker 9: we could relax on earnings. But not true fourth quarter

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Speaker 9: earnings they're coming through fast and furious. On October first,

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Speaker 9: when that quarter started, analysts expected earnings to be up

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Speaker 9: for the quarter seven percent. That number is now plus one.

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Speaker 9: From plus seven to plus one. That's a much bigger

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Speaker 9: decline than usual. Of course, they set up so there

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Speaker 9: are beats, and the beats last I saw are running

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Speaker 9: in the low sixty percents, which is the lowest we've

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Speaker 9: seen in quite some time. And analysts have not done

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Speaker 9: a whole lot yet to their twenty twenty four numbers.

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Speaker 9: Is the fourth quarter is disappointing them a bit. They're

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Speaker 9: waiting for the conference calls to figure out how to

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Speaker 9: take how much to take twenty twenty four down, those

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Speaker 9: numbers will come down some more.

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Speaker 3: In my view, Bloomberg surveillance.

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Speaker 1: Retirement planning, We're never retiring, so we'll talk about it

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Speaker 1: for you, Bob Dahl, let's talk about retirement planning.

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Speaker 3: Rebalancing is all out there.

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Speaker 1: If I had to rebail whatever the timeline is, quarterly,

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Speaker 1: semi annual, yearly, every five years, whatever I would have

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Speaker 1: sold Microsoft six years ago, or at least lightened up.

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Speaker 1: You need to explain to me the marketing racket of

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Speaker 1: target date funds. You fought against that your entire career.

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Speaker 1: What's the problem with over rebalancing.

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Speaker 9: So the first problem of those target day funds is

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Speaker 9: I think they're too conservative. You know, if we retired

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Speaker 9: at sixty five and died at sixty six, different story.

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Speaker 9: But life expectancy continues to get longer. So the mixes

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Speaker 9: are and my view, too conservative. And then when you rebalance,

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Speaker 9: you constantly rebellance out of things that are working into

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Speaker 9: things that are not. There's some merit to that on

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Speaker 9: a long term basis, But if you're already starting too conservative,

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Speaker 9: you can really rip into your retirement savings.

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Speaker 1: Well, Sweeney, you nailed this with your first question of

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Speaker 1: the morning, saying what about holding your winners in that

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Speaker 1: The guy that lectured me on this was a gentleman

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Speaker 1: from Saint Louis. I've never forgiven him for not buying

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Speaker 1: the cardinals from the Bush family.

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Speaker 3: Benjamin S. Edwards, a third of a G.

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Speaker 7: Edwards.

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Speaker 3: Ben Edwards would scream at me, do not sell your winners,

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Speaker 3: Bob Dahl one.

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Speaker 5: Oh one, Hey, Bob, twenty twenty four, whether way like

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Speaker 5: it or not, is an election year. You've been through

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Speaker 5: so many cycles, Bob, does this factor into your outlook?

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Speaker 5: What do you tell your clients here in what could

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Speaker 5: be a volatile, you know, electoral cycle.

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Speaker 9: Hell yeah, I think have patients. Don't look for stock

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Speaker 9: where you think the valuation's going to go up, the earnings,

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Speaker 9: the cash flow. Just be very cautious in terms of

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Speaker 9: the kinds of things you're buying. That's advice all the time,

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Speaker 9: but in periods of uncertainty, in periods when the PE's

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Speaker 9: over twenty, you've got to pay attention to that. The

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Speaker 9: election is going to create some uncertainty. Of course, the

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Speaker 9: nominees are just about wrapped up about the earliest ever.

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Speaker 9: So this general election campaign's going to seem like years.

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Speaker 7: So yeah, exactly just what we all need.

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Speaker 5: Maybe the TV stations with all the advertising dollars, maybe

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Speaker 5: they'll benefit here, So, Bob, you know, I'm also wondering,

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Speaker 5: as I talked to a lot of investors, did the

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Speaker 5: move we saw in the markets again in November December

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Speaker 5: was I kind of buy the rumor and now sell

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Speaker 5: the news because what can the Fed do? The expectations

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Speaker 5: already kind of in the market, it seems like.

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Speaker 9: Their expectations, and then summer in the market, as you know,

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Speaker 9: we got at one point the expectation that Fed fund

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Speaker 9: futures were saying seven cuts by the this year. That's

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Speaker 9: backed off the six. I think it's gonna be more

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Speaker 9: like three or four. I think inflation remain sticky, especially

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Speaker 9: wage rate inflation, and it's gonna be tough for the

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Speaker 9: FED to do as much as the future's curve is suggesting.

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Speaker 9: So yes, we've bought the rumor. I think there'll be

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Speaker 9: some disappointing news to come if we can't get six cuts.

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Speaker 1: Bob, do I want to finish up here just with

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Speaker 1: the oddity of the moment, which is cash at five percent,

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Speaker 1: What actually happens if rates come down? I mean, pria

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Speaker 1: miser over JP Morgan is saying the ten year real

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Speaker 1: rate's gonna come down to here one percent.

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Speaker 2: I'll believe it when I see it.

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Speaker 1: But if we get lower yields on money market funds,

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Speaker 1: how does that change our retirement investing?

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Speaker 9: Look, I think, and that's probably I hope inevitable we

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Speaker 9: get that at some point Tom. The problem it will

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Speaker 9: probably be because the economy is disappointing, and that's why

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Speaker 9: those rates will come down. That means earnings will disappoint

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Speaker 9: even more that we're discussing here, which I think creates

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Speaker 9: some sell off in stock. So the best beneficiary of

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Speaker 9: here to down one hundred basis points and short rates

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Speaker 9: is probably bonds out the curve.

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Speaker 2: We'll have to see.

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Speaker 1: Bob Dol, thank you so much, greatly appreciate with grossmark

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Speaker 1: this one of your This is an important interview, and

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Speaker 1: this is what's great about this. When you go to

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Speaker 1: Trinity and Dublin. The answer is you develop internal humility.

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Speaker 1: And David Kelly owns a high ground. I'm being humble

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Speaker 1: in his certitude. He's with JP Morgan, they're chief global strategist.

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Speaker 1: David Kelly, you had one of the great insights hedged

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Speaker 1: this year, which is, at some point non farm payrolls.

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Speaker 2: Are gonna go negative. There's gonna be a.

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Speaker 3: Vector of a lower growth than non farm payrolls.

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Speaker 2: Well, okay, it didn't happen. I get it.

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Speaker 1: You know, it's very good employment here. How do you

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Speaker 1: adjust your trend? There a non farm payrolls going from

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Speaker 1: say one hundred and seventy thousand down to zero. What's

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Speaker 1: that timeline rule?

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Speaker 10: Growth was a little bit stronger than we thought in

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Speaker 10: the second half of the year. I still think that

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Speaker 10: there's enough volatility in those payroll numbers and in the

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Speaker 10: seasonals that at some stage over the next few months

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Speaker 10: you might get that negative payroll number. But you know,

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Speaker 10: the headline is what we've seen in the second half

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Speaker 10: of the last year is US economy can grow faster

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Speaker 10: without growing hotter.

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Speaker 7: So the inflation rate is right on.

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Speaker 10: Where the Fed thought it was going to be in

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Speaker 10: their December forecasts. But growth is a good deal stronger

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Speaker 10: three point one percent a year over year growth in

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Speaker 10: the fourth quarter, which is very good news. This is

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Speaker 10: actually a very healthy economy, good productivity growth, and inflation

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Speaker 10: is still coming down.

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Speaker 5: So David, I kind of agree with you. The numbers

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Speaker 5: seem pretty solid. Yet the sentiment out there and just

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Speaker 5: the general reportings, people don't feel like the economy is

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Speaker 5: doing that well. And then University of Michigan last week

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Speaker 5: put a big, big, consumer you know, positive number out

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Speaker 5: there in terms of expectations, and I know, as a

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Speaker 5: Michigan State man, you don't like to quote the universe

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Speaker 5: in Michigan consumer survey, but it's pretty big out there.

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Speaker 2: Talk to us about.

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Speaker 5: Sentiment out there in the marketplace. What are you feeling

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Speaker 5: here as you kind of do work.

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Speaker 10: Yeah, you know, even when I was working in Michigan State,

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Speaker 10: we had a close relationship with the University of Michigan

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Speaker 10: and their Consumer Sentiment project, which is a very old project.

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Speaker 10: But what I think we're seeing a little bit of

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Speaker 10: a break in the ice here because we were in

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Speaker 10: an extraordinary situation even as recently as two or three

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Speaker 10: months ago, where you had, you know, by the number

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Speaker 10: is a top quintile economy. I mean, it was a

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Speaker 10: really good economy in terms of inflation coming down and

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Speaker 10: unemployed really low for a long time, and yet you

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Speaker 10: had a bottom quintile attitude. People felt just awful about it.

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Speaker 10: And if you have good number after good number after

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Speaker 10: good number of the economy, eventually confidence bounces.

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Speaker 7: And that is what we've seen.

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Speaker 10: And I think that's important because once confidence begins to balance,

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Speaker 10: it begins to gather on itself, and people, you know,

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Speaker 10: start reporting in a good economy and saying, you know, well, though,

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Speaker 10: there is opportunity here. So I think I think confidence

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Speaker 10: will get better. It's still lower and will I think

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Speaker 10: continue to be lower than the numbers would justify. But

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Speaker 10: we are seeing some improvement of confidence here.

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Speaker 5: You know, I'm just speaking for the average consumer out there.

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Speaker 5: I look at gasoline prices and that just filled up

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Speaker 5: the new car two dollars and ninety seven cents a gallon.

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Speaker 7: That was awesome.

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Speaker 5: Down at the Jersey Shore, everything's better down at the shore,

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Speaker 5: of course. But then even mortgage rates are coming down,

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Speaker 5: so the couple of things that really hit people's pocketbook

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Speaker 5: are coming down. And maybe that's kind of coming through

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Speaker 5: some of the official data.

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Speaker 10: Well, yeah, I think lower gasoline prices are really important.

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Speaker 10: But what also happened though, in the last few years,

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Speaker 10: we had a big increase in food prices yep. And

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Speaker 10: the problem is that people remember what the food used

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Speaker 10: to cost and then what it costs now, and that

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Speaker 10: jars on them a little bit. So I think that's

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Speaker 10: part of the story. But you know, lower gasing prices

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Speaker 10: will will help. And then the one other thing I

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Speaker 10: think is very important is high rents. I mean, there

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Speaker 10: are a lot of people in America who rent, and

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Speaker 10: rent is still very high relative disposable income, and so

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Speaker 10: it's still a struggle and I think people that's what

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Speaker 10: all reflecting the confidence numbers. But over time it is

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Speaker 10: a good economy. He's generating strong real wage growth. But

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Speaker 10: right now, you know, wages are growing fastization.

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Speaker 7: I think the mood should continue to improve.

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Speaker 1: David, You've got such a great background here from University

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Speaker 1: College London over Intos. Paul mentioned Michigan State, Lansing, Michigan

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Speaker 1: and East Lancing, and I got a lot of emails

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Speaker 1: this week criticizing me because basically it's a fancy people

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Speaker 1: on the east coast, West coast, and there's flyover America,

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Speaker 1: and I would take it even further to say Wisconsin,

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Speaker 1: there's Madison, and then there's basically you know, there's these

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Speaker 1: academic center holes where things are good, maybe Ames Iowa.

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Speaker 1: You know, I'm saying that, But David, how partitioned is America?

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Speaker 1: From where you sit, We're saying it's a boom economy,

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Speaker 1: and I'm getting a lot of emails says, who, I mean,

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Speaker 1: how partitioned are we? Well?

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Speaker 7: I think we are politically very partitioned.

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Speaker 10: I feel very fortunate that when I arrived in America,

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Speaker 10: I headed straight for the middle of the country Lansing, Michigan,

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Speaker 10: and even heard about But you do get a sense

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Speaker 10: of how people in the middle of the country feel.

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Speaker 10: But there is a big political divide here. There's also

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Speaker 10: an income divide. If you're in the top ten percent

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Speaker 10: or top twenty percent of households, you're probably doing fine.

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Speaker 7: If in the bottom eighty.

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Speaker 10: Percent, you had that inflation, you had some some wage increases.

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Speaker 10: But you know, there are services which are that sixty

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Speaker 10: percent of families live paycheck to paycheck, and that's pretty grim,

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Speaker 10: you know, year after year after year, particularly when you

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Speaker 10: go through the pandemic and all this sort of social

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Speaker 10: isolation that caused from particularly given the social media feed

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Speaker 10: the cable media feeds. So there's a lot of negative

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Speaker 10: news being inflicted upon people who are just scraping by,

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Speaker 10: and I think that that leads to this mood, even

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Speaker 10: though when we look at the numbers, the economy is

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Speaker 10: very good by historical standards and getting better.

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Speaker 5: David, you are the chief global strategist at what I

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Speaker 5: think is the most global investment bank financial services company

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Speaker 5: in the world, JP Morgan. Can the US economy continue

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Speaker 5: to do well performed when we've got Europe slower than

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Speaker 5: expected growth, slower than they would like to see, China

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Speaker 5: really not doing well. Can the US continue to outperform?

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Speaker 10: I'm just back from Stockholm yesterday and I'm heading off

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Speaker 10: to Tokyo next week, so that this is a good time.

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Speaker 7: To ask me that.

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Speaker 10: But I think I think the answer is yes. And

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Speaker 10: the big difference I think between the US and other

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Speaker 10: nations such as China, Japan, or Europe is that US

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Speaker 10: consumers are just that much more exuberant. I mean, we

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Speaker 10: spend money we don't have on stuff we don't know, willing,

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Speaker 10: we're willing to do it, whereas in Europe they're all

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Speaker 10: busy saving this they haven't spent their pandemic savings, and

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Speaker 10: they won't spend their fiscal money that they all awarded

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Speaker 10: themselves to try and you know, to the pandemic, and

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Speaker 10: equally in China and Japan, the savings are just very,

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Speaker 10: very cautious. And you know, we spend beyond our means,

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Speaker 10: but by spending beyond our creation spend. And that's really

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Speaker 10: the difference really the American economy and the European and

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Speaker 10: Asian economies.

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Speaker 1: Right now, Missus King's favorite guest, Missus King's favorite guest, David.

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Speaker 2: Kelly go away. He's a JP Morgan there.

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Speaker 1: It's like a Davos conversation, except it's actually going to

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Speaker 1: be more focused, tighter, and it affects every single one

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Speaker 1: of us in our addiction to all this technology. And

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Speaker 1: of course, what Paul and I believe is the study

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Speaker 1: of what in God's name is this doing to our children?

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Speaker 1: And we'll get to the Dodgers. Frank McCourt joins.

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Speaker 7: Us right now.

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Speaker 1: He's legendary. The family is definitive in Boston business history.

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Speaker 1: They've husband that over generations, culminating in the ownership of Marseille,

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Speaker 1: the French football team in a wandering I mean, he's

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Speaker 1: sort of made the modern Dodgers, So I mean We'll

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Speaker 1: talk to him about that in a minute, but let's

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00:22:03,119 --> 00:22:07,520
Speaker 1: get to the important business at hand right now. Frank McCourt,

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00:22:07,640 --> 00:22:12,879
Speaker 1: I love Project Liberty. It's basically saying we got some

441
00:22:12,960 --> 00:22:15,960
Speaker 1: things to worry about here. Let's talk about how it

442
00:22:16,000 --> 00:22:21,200
Speaker 1: came together. How did you put together Project Liberty involving

443
00:22:21,359 --> 00:22:24,520
Speaker 1: academics looking at technology.

444
00:22:25,320 --> 00:22:27,840
Speaker 11: Yeah, well, a good morning, guys. It's nice to be

445
00:22:27,920 --> 00:22:29,960
Speaker 11: with you. Yeah, it's a look. I come from a

446
00:22:29,960 --> 00:22:32,960
Speaker 11: family of that you alluded to, a builders for over

447
00:22:33,000 --> 00:22:36,000
Speaker 11: one hundred and thirty years, we've been focused on building

448
00:22:36,080 --> 00:22:40,000
Speaker 11: things and fixing problems and so forth. And what's going

449
00:22:40,040 --> 00:22:43,560
Speaker 11: on with the Internet right now? It's an engineering problem.

450
00:22:43,560 --> 00:22:47,080
Speaker 11: I mean, we have a flawed design, an internet that's ubiquitous,

451
00:22:47,119 --> 00:22:49,359
Speaker 11: that was never designed to do the things that's doing.

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00:22:49,880 --> 00:22:53,760
Speaker 11: And so we see the harms and in those harms

453
00:22:53,760 --> 00:22:57,800
Speaker 11: are as you mentioned to children. You know, we now

454
00:22:57,880 --> 00:23:01,480
Speaker 11: the research is in then we're seeing that that social

455
00:23:01,520 --> 00:23:05,240
Speaker 11: media in particular is highly addictive and really really high kids.

456
00:23:05,560 --> 00:23:08,640
Speaker 11: It's also it's also undermining democracy and our ability to govern.

457
00:23:08,800 --> 00:23:12,600
Speaker 8: So it's not just limited to children.

458
00:23:12,720 --> 00:23:15,080
Speaker 11: So what we thought we might do is set out

459
00:23:15,520 --> 00:23:18,119
Speaker 11: and put forward a solution rather than just recycling around

460
00:23:18,119 --> 00:23:18,600
Speaker 11: the problem.

461
00:23:18,840 --> 00:23:20,240
Speaker 2: And Frank, what's so important here?

462
00:23:20,320 --> 00:23:22,560
Speaker 1: And I think a large body of our audience, whatever

463
00:23:22,560 --> 00:23:25,680
Speaker 1: their political persuasion, would say, whatever we do, we don't

464
00:23:25,720 --> 00:23:28,240
Speaker 1: need a government policy because it's probably not going to

465
00:23:28,320 --> 00:23:30,800
Speaker 1: work and it's going to take you know, longer. It's

466
00:23:30,800 --> 00:23:32,960
Speaker 1: going to take longer, Paul, for the government policy to

467
00:23:33,000 --> 00:23:35,600
Speaker 1: click in to when the red sox get above five hundred.

468
00:23:36,040 --> 00:23:39,760
Speaker 2: But Frank McCourt, what's so important to me is you

469
00:23:39,920 --> 00:23:44,359
Speaker 2: have to speak to our tech leaders and basically say

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00:23:44,520 --> 00:23:47,680
Speaker 2: do something. When you do that, how do they respond?

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00:23:49,200 --> 00:23:50,080
Speaker 8: Well, it's interesting.

472
00:23:50,400 --> 00:23:51,879
Speaker 11: First of all, I think you're right that we need

473
00:23:51,920 --> 00:23:54,280
Speaker 11: to innovate our way forward here, not regulate our way.

474
00:23:54,320 --> 00:23:55,320
Speaker 2: Thank you.

475
00:23:55,560 --> 00:23:59,440
Speaker 11: This country is full of creative people, of innovators, and

476
00:24:00,080 --> 00:24:04,480
Speaker 11: we can solve this problem fixing the the the engineering problem,

477
00:24:04,520 --> 00:24:07,320
Speaker 11: as I say, fix fixing how the internet works so

478
00:24:07,359 --> 00:24:10,600
Speaker 11: that individuals have ownership and control of their data and

479
00:24:10,600 --> 00:24:13,919
Speaker 11: we return agency to individuals and they have a voice

480
00:24:13,920 --> 00:24:17,360
Speaker 11: in how these platforms work, rather than these black boxes

481
00:24:17,400 --> 00:24:19,560
Speaker 11: that we all sit and wonder like what's going on?

482
00:24:20,040 --> 00:24:22,719
Speaker 11: And also, by the way, we individuals who are creating

483
00:24:22,720 --> 00:24:26,639
Speaker 11: the data share in the economic benefits. So let's let's

484
00:24:26,640 --> 00:24:30,600
Speaker 11: focus on that and and we can we can innovate

485
00:24:30,640 --> 00:24:32,919
Speaker 11: our way forward. The challenge, of course, is going to

486
00:24:32,960 --> 00:24:36,360
Speaker 11: be getting people to migrate to this new world because

487
00:24:37,280 --> 00:24:41,119
Speaker 11: as we said earlier, these existing platforms are highly addictive

488
00:24:41,760 --> 00:24:45,679
Speaker 11: by design, uh and and doing a great deal of damage.

489
00:24:45,840 --> 00:24:49,640
Speaker 11: So we need to really really take a step back

490
00:24:50,040 --> 00:24:53,879
Speaker 11: and before we make this this technology more powerful, you know,

491
00:24:53,920 --> 00:24:56,440
Speaker 11: with generative AI and so forth. And make no mistake,

492
00:24:56,960 --> 00:24:59,399
Speaker 11: generative AI is just a more powerful version of the

493
00:24:59,440 --> 00:25:03,360
Speaker 11: same thing we have now, which is obviously causing massive,

494
00:25:03,520 --> 00:25:08,920
Speaker 11: massive harms and problems. Let's fix the tech and then

495
00:25:09,720 --> 00:25:12,719
Speaker 11: and then enjoy the innovation and the creativity and the

496
00:25:12,720 --> 00:25:16,760
Speaker 11: power of AI. As far as tech leaders and so forth,

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00:25:16,800 --> 00:25:18,840
Speaker 11: I think big tech is just watching right now. They

498
00:25:19,320 --> 00:25:24,280
Speaker 11: I don't imagine they're going to give up their model easily,

499
00:25:24,320 --> 00:25:28,879
Speaker 11: which is essentially surveilling us and scraping our data, aggregating

500
00:25:28,920 --> 00:25:31,639
Speaker 11: it and then applying, you know, algorithms that work for

501
00:25:31,680 --> 00:25:33,680
Speaker 11: them and not work for us. And so we need

502
00:25:33,680 --> 00:25:38,520
Speaker 11: to reprioritize now and put people at the forefront, not platforms.

503
00:25:38,880 --> 00:25:40,840
Speaker 5: So, Frank, when I was kind of reading through your

504
00:25:40,840 --> 00:25:43,240
Speaker 5: notes here, and reading about Project Liberty.

505
00:25:43,800 --> 00:25:44,320
Speaker 7: Well you could.

506
00:25:44,880 --> 00:25:47,359
Speaker 5: I'm sure you have a tremendous amount of support out

507
00:25:47,359 --> 00:25:49,880
Speaker 5: there if you pull just the average person out there

508
00:25:49,920 --> 00:25:53,600
Speaker 5: about the aims of Project Liberty. However, I kind of

509
00:25:53,600 --> 00:25:56,320
Speaker 5: feel like it's too little, too late. That the industry's

510
00:25:56,400 --> 00:25:59,639
Speaker 5: already evolved, and the business models have been developed, and

511
00:25:59,680 --> 00:26:03,240
Speaker 5: the ecosystem is so entrenched. Is there a concern that

512
00:26:03,920 --> 00:26:05,880
Speaker 5: the industry it just might be too late.

513
00:26:05,960 --> 00:26:10,240
Speaker 8: Maybe I don't believe so at all.

514
00:26:09,760 --> 00:26:12,480
Speaker 11: I do believe if we sit back and do nothing,

515
00:26:13,119 --> 00:26:16,120
Speaker 11: then we can pretty much predict the outcome here, right,

516
00:26:16,200 --> 00:26:18,800
Speaker 11: I mean, people know, and you're right. I just came

517
00:26:18,840 --> 00:26:21,840
Speaker 11: back from Davos and the number one issue there in

518
00:26:21,880 --> 00:26:26,240
Speaker 11: people's minds was missing disinformation and how that is destroying

519
00:26:27,160 --> 00:26:30,800
Speaker 11: not only democracy, but someday we'll destroy capitalism. Because remember,

520
00:26:31,280 --> 00:26:34,840
Speaker 11: both our capitalist system and our democratic system are both

521
00:26:34,840 --> 00:26:39,200
Speaker 11: built on one simple but important concept, and that is trust.

522
00:26:39,840 --> 00:26:43,840
Speaker 11: And when you destroy trust, both of those systems, both

523
00:26:43,840 --> 00:26:47,800
Speaker 11: democracy and capitalism will fail over time. So we need

524
00:26:47,840 --> 00:26:50,199
Speaker 11: to restore trust. So we need to fix this. It

525
00:26:50,280 --> 00:26:54,439
Speaker 11: may be a challenge, and there's no question about it.

526
00:26:54,480 --> 00:26:56,760
Speaker 11: This is not going to be simple or easy. Although

527
00:26:56,880 --> 00:26:59,960
Speaker 11: The tech part of it is actually quite straightforward because

528
00:27:00,080 --> 00:27:03,159
Speaker 11: we now have over five hundred and fifty thousand people

529
00:27:03,640 --> 00:27:08,960
Speaker 11: who have joined this new Internet by using a web

530
00:27:09,000 --> 00:27:10,960
Speaker 11: two app by the name of me We and those

531
00:27:11,040 --> 00:27:14,800
Speaker 11: they're twenty million users are migrating over to DSMP, which

532
00:27:14,840 --> 00:27:15,800
Speaker 11: is this new protocol.

533
00:27:15,880 --> 00:27:18,240
Speaker 8: So it's happening, and I just think we need.

534
00:27:18,160 --> 00:27:21,400
Speaker 11: To socialize this and our choices do nothing and see

535
00:27:21,400 --> 00:27:24,800
Speaker 11: further harms or do something, And Frank.

536
00:27:24,600 --> 00:27:25,919
Speaker 2: I want to talk about do nothing.

537
00:27:26,280 --> 00:27:29,840
Speaker 1: When I was a tiny lad my grandfather took me

538
00:27:29,920 --> 00:27:32,600
Speaker 1: up a dirt hill in LA and said, this is

539
00:27:32,640 --> 00:27:33,960
Speaker 1: where the Dodgers are going to play.

540
00:27:33,960 --> 00:27:35,040
Speaker 2: And of course this is all.

541
00:27:34,880 --> 00:27:38,320
Speaker 1: The emotion of the move from New York City, from

542
00:27:38,359 --> 00:27:43,360
Speaker 1: Brooklyn out to LA along the way News Corp happened

543
00:27:43,400 --> 00:27:44,280
Speaker 1: along and.

544
00:27:44,280 --> 00:27:45,600
Speaker 2: It wasn't pretty.

545
00:27:45,720 --> 00:27:48,639
Speaker 1: You were a pinata out in LA with your ownership

546
00:27:48,640 --> 00:27:51,199
Speaker 1: of the Dodgers. But the fact is you were the

547
00:27:51,200 --> 00:27:54,600
Speaker 1: first one to make the Dodgers start winning. That was

548
00:27:54,760 --> 00:27:57,439
Speaker 1: let's call it ten fifteen years ago. How do you

549
00:27:57,560 --> 00:28:01,800
Speaker 1: perceive what you wrought and what they took forward? When

550
00:28:01,800 --> 00:28:05,679
Speaker 1: we look now at the Pacific Rim Dodgers is arguably

551
00:28:05,800 --> 00:28:09,119
Speaker 1: the team of Asia. What are the new Los Angeles

552
00:28:09,160 --> 00:28:12,280
Speaker 1: Dodgers to Frank McCord, Yeah, I.

553
00:28:12,280 --> 00:28:13,080
Speaker 8: Mean I think they're there.

554
00:28:13,160 --> 00:28:15,600
Speaker 11: You know, look, they've always been an epic franchise, one

555
00:28:15,640 --> 00:28:18,240
Speaker 11: of the great brands in all of sports. You know

556
00:28:18,240 --> 00:28:20,959
Speaker 11: when I when I bought them from from Rupert Murdoch,

557
00:28:21,240 --> 00:28:24,080
Speaker 11: they were they kind of got off the track. The

558
00:28:24,480 --> 00:28:27,840
Speaker 11: team hadn't won a postseason game in sixteen years, if

559
00:28:27,840 --> 00:28:31,320
Speaker 11: you can imagine that, and and you know, things were

560
00:28:31,359 --> 00:28:34,800
Speaker 11: kind of run down, and the brand had lost a

561
00:28:34,800 --> 00:28:37,400
Speaker 11: bit of its luster. And we were able over time

562
00:28:37,440 --> 00:28:40,640
Speaker 11: to restore that and and restore the prominence of the

563
00:28:40,680 --> 00:28:43,720
Speaker 11: team and get into back to back, you know, National

564
00:28:43,800 --> 00:28:46,560
Speaker 11: League Championship Series and eight No. Nine for the first time,

565
00:28:46,640 --> 00:28:50,000
Speaker 11: and you know, thirty five years and it was we

566
00:28:50,080 --> 00:28:51,880
Speaker 11: got them back and brought.

567
00:28:51,680 --> 00:28:53,120
Speaker 8: In some great young talent.

568
00:28:53,280 --> 00:28:55,520
Speaker 11: You know. Clayton Kershar was one of the folks that

569
00:28:55,600 --> 00:28:58,880
Speaker 11: really led the way with our you know, in terms

570
00:28:58,880 --> 00:29:02,400
Speaker 11: of our scouting and player development, and built a new

571
00:29:02,400 --> 00:29:07,959
Speaker 11: training facility in Phoenix, Camelback Ranch and closer to our fans,

572
00:29:08,360 --> 00:29:10,960
Speaker 11: and by the way, took the team to China to

573
00:29:11,000 --> 00:29:15,480
Speaker 11: play the first and only major baseball games that have

574
00:29:15,520 --> 00:29:17,800
Speaker 11: ever been played there in two thousand and eight and

575
00:29:19,080 --> 00:29:24,320
Speaker 11: reconnected with the past. Remember, the Dodgers had a relationship

576
00:29:24,360 --> 00:29:26,840
Speaker 11: in Asia. It just needed to get them be refreshed.

577
00:29:26,840 --> 00:29:31,040
Speaker 11: And now you've seen the recent players that the current

578
00:29:31,080 --> 00:29:31,840
Speaker 11: managhip as signed.

579
00:29:31,840 --> 00:29:33,520
Speaker 8: It pretty awesome, right, Frank.

580
00:29:33,440 --> 00:29:35,680
Speaker 1: We're out of time. I could go on forever about this.

581
00:29:35,800 --> 00:29:38,400
Speaker 1: I'm genuinely excited about. I can't believe him saying this.

582
00:29:38,520 --> 00:29:40,120
Speaker 1: The evil Los Angeles Dodgers.

583
00:29:40,440 --> 00:29:41,239
Speaker 6: They're gonna kill it.

584
00:29:41,280 --> 00:29:45,040
Speaker 1: Frank McCord of Boston and always the guy that helped

585
00:29:45,120 --> 00:29:49,640
Speaker 1: resurrect one of the great story franchises of America. This

586
00:29:49,680 --> 00:29:54,840
Speaker 1: is a Bloomberg Surveillance podcast, bringing you the best in economics, finance, investment,

587
00:29:55,040 --> 00:29:58,640
Speaker 1: and international relations. You can also watch the show live

588
00:29:58,880 --> 00:30:03,040
Speaker 1: on YouTube. Is it the Bloomberg Podcast channel on YouTube

589
00:30:03,120 --> 00:30:06,400
Speaker 1: To see the show weekday mornings from seven to ten

590
00:30:06,440 --> 00:30:09,880
Speaker 1: am Eastern from our global headquarters in New York City.

591
00:30:10,240 --> 00:30:14,040
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592
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593
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