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Boy, 10 00:00:37,120 --> 00:00:39,760 Speaker 2: what a movement in these markets over the past forty 11 00:00:39,760 --> 00:00:41,760 Speaker 2: eight hours. Big, big sell off yesterday, even a little 12 00:00:41,760 --> 00:00:43,360 Speaker 2: bit of a panic in the morning, it felt like, 13 00:00:43,760 --> 00:00:46,920 Speaker 2: but then turning it around here on Tuesday. Peter Cheer, 14 00:00:47,080 --> 00:00:49,479 Speaker 2: head of macro strategy at Academy Securities, He joins us 15 00:00:49,479 --> 00:00:52,599 Speaker 2: live here in a Bloomberg Interactive Broker studio. Peter, you've 16 00:00:52,640 --> 00:00:54,960 Speaker 2: got some experience, You've been around the block once or twice. 17 00:00:55,080 --> 00:00:56,920 Speaker 2: What do you make of kind of the last several 18 00:00:57,000 --> 00:00:57,680 Speaker 2: days of trading? 19 00:00:58,240 --> 00:00:59,720 Speaker 3: You know, I think we're starting to see a little 20 00:00:59,720 --> 00:01:01,520 Speaker 3: bit of a we saw a little bit of fear. 21 00:01:01,880 --> 00:01:03,480 Speaker 3: I think whether it's the carry trade or not, it 22 00:01:03,560 --> 00:01:05,160 Speaker 3: kind of pushed us in. There's a lot of leverage 23 00:01:05,160 --> 00:01:07,480 Speaker 3: in the system. A lot of people have been selling volatility, 24 00:01:07,640 --> 00:01:09,760 Speaker 3: a lot of people bought you know, full in on 25 00:01:09,800 --> 00:01:11,840 Speaker 3: the AI story. I think those are fading a little bit. 26 00:01:11,920 --> 00:01:13,480 Speaker 3: And yeah, we're getting a little bounce today. I think 27 00:01:13,480 --> 00:01:14,600 Speaker 3: we're gonna see more. 28 00:01:14,480 --> 00:01:18,000 Speaker 4: Selling though exactly that that was what I was worried about, Like. 29 00:01:18,520 --> 00:01:20,480 Speaker 2: It bounced, which I was shocked. We had to explain 30 00:01:20,520 --> 00:01:21,080 Speaker 2: that to somebody. 31 00:01:21,120 --> 00:01:24,000 Speaker 5: But anyway, whatever, why why. 32 00:01:23,920 --> 00:01:25,160 Speaker 4: Do you think it is to be more selling? Because 33 00:01:25,160 --> 00:01:27,240 Speaker 4: that was looking at the systemic funds and worried they're 34 00:01:27,440 --> 00:01:30,240 Speaker 4: the gamma hedging, the carried trade not being done. What 35 00:01:30,280 --> 00:01:31,680 Speaker 4: do you see that tells you more selling? 36 00:01:31,840 --> 00:01:33,240 Speaker 3: Yeah, I think a lot of those And even on 37 00:01:33,319 --> 00:01:35,640 Speaker 3: a simple level, you just look at QQQ it took 38 00:01:35,680 --> 00:01:39,480 Speaker 3: in inflows, SPY took in inflows, and even more esoteric TQQQ, 39 00:01:39,600 --> 00:01:42,040 Speaker 3: which is a leverage act took in inflows yesterday. 40 00:01:42,040 --> 00:01:44,360 Speaker 2: And that's my leveraged s and P five hundred. 41 00:01:44,319 --> 00:01:48,240 Speaker 3: Leverage okay, and then my favorite one I think is MVDL, 42 00:01:48,280 --> 00:01:51,240 Speaker 3: which is a leverage in VideA ETF and that had 43 00:01:51,240 --> 00:01:53,880 Speaker 3: inflows yesterday, So I would like to see outflows there 44 00:01:53,920 --> 00:01:55,680 Speaker 3: to really believe we've had some capitulation. 45 00:01:56,200 --> 00:01:57,880 Speaker 4: So what did that tell you? Though? It just tells 46 00:01:57,920 --> 00:02:00,000 Speaker 4: you that it's still a by the dep mentality inside. 47 00:02:00,400 --> 00:02:02,800 Speaker 3: I think it's still a by them mentality. But I think, 48 00:02:02,920 --> 00:02:05,120 Speaker 3: you know, yesterday everyone was so calm, Hey, don't worry 49 00:02:05,160 --> 00:02:08,359 Speaker 3: about this, It's all fine. People reacted. I think there's 50 00:02:08,400 --> 00:02:12,280 Speaker 3: more going on, the economy slowing, we have stretched valuations. 51 00:02:12,560 --> 00:02:14,880 Speaker 3: The FED is not going to be super supportive of markets. 52 00:02:14,919 --> 00:02:16,720 Speaker 3: They've got their own agenda, which is to kind of 53 00:02:17,080 --> 00:02:20,079 Speaker 3: make sure we don't get inflation again. So I think 54 00:02:20,120 --> 00:02:23,000 Speaker 3: we're very ripe for selling on any sort of earnings 55 00:02:23,040 --> 00:02:24,760 Speaker 3: weakness or economic data weakness. 56 00:02:25,280 --> 00:02:27,320 Speaker 2: What have you thought about the earnings? Let's get back 57 00:02:27,320 --> 00:02:29,520 Speaker 2: to something that presumably still matters in the markets. What 58 00:02:29,520 --> 00:02:31,000 Speaker 2: are you making of earnings. 59 00:02:31,120 --> 00:02:33,720 Speaker 3: That we finally have a higher standard for what's going 60 00:02:33,760 --> 00:02:36,720 Speaker 3: on with AI? You know, six months ago, certainly if 61 00:02:36,720 --> 00:02:38,320 Speaker 3: you just raised your hand and said we have an 62 00:02:38,360 --> 00:02:41,880 Speaker 3: AI strategy, you were rewarded. The chip companies were all 63 00:02:41,919 --> 00:02:44,440 Speaker 3: rewarded almost no matter what. And it feels like people 64 00:02:44,440 --> 00:02:46,079 Speaker 3: are putting a little bit of scrutiny on this saying 65 00:02:46,120 --> 00:02:49,280 Speaker 3: where valuations are, and unfortunately, I think so many of 66 00:02:49,320 --> 00:02:52,280 Speaker 3: these stocks got heavily piled into that they're a little 67 00:02:52,280 --> 00:02:54,560 Speaker 3: bit overbought. And the other part that we've been talking 68 00:02:54,560 --> 00:02:57,720 Speaker 3: a lot more about is the concept of passive right passive. 69 00:02:57,800 --> 00:02:59,359 Speaker 3: So whether you put your money into the S and 70 00:02:59,400 --> 00:03:02,760 Speaker 3: P five hundred or Nasdaq one hundred, about fifty cents 71 00:03:02,760 --> 00:03:05,320 Speaker 3: in the dollar are going to just a handful of stocks. 72 00:03:05,560 --> 00:03:07,400 Speaker 3: So that fed the momentum on the way up, and 73 00:03:07,440 --> 00:03:09,280 Speaker 3: I think it's going to fuel the momentum unfortunately on 74 00:03:09,320 --> 00:03:09,760 Speaker 3: the way down. 75 00:03:10,040 --> 00:03:12,000 Speaker 4: Right, So it can go up in a straight line 76 00:03:12,040 --> 00:03:13,440 Speaker 4: and then it can also go down in a straight line, 77 00:03:13,440 --> 00:03:16,720 Speaker 4: doesn't have to go down differently. Do you think the 78 00:03:16,720 --> 00:03:20,160 Speaker 4: Fed should cut fifty bases points in September? 79 00:03:20,360 --> 00:03:22,359 Speaker 3: I don't think so yet. I think, well one, I 80 00:03:22,400 --> 00:03:23,880 Speaker 3: think they should have actually cut in July, and I 81 00:03:23,880 --> 00:03:25,560 Speaker 3: would have done fifty in July just to get this 82 00:03:25,560 --> 00:03:26,040 Speaker 3: out of the way. 83 00:03:26,120 --> 00:03:28,240 Speaker 4: You done fifty in July, Why fifty in July. 84 00:03:28,720 --> 00:03:31,840 Speaker 3: You've seen a nice slowdown and everything on the inflation front. 85 00:03:31,880 --> 00:03:34,440 Speaker 3: The only thing that's holding up CPI is the owner's 86 00:03:34,480 --> 00:03:37,160 Speaker 3: equivalent rent and Gosh only knows why we still use 87 00:03:37,200 --> 00:03:40,800 Speaker 3: something like that, anything that's you know, a contemporaneous measure 88 00:03:40,840 --> 00:03:43,720 Speaker 3: of inflation or sorry rent, whether it's Zillo is showing 89 00:03:43,800 --> 00:03:46,400 Speaker 3: rents of decline. The other thing that's kept CPI up 90 00:03:46,480 --> 00:03:48,600 Speaker 3: was auto insurance. We're not seeing that come through, so 91 00:03:48,640 --> 00:03:50,200 Speaker 3: I think they could react to that. I think the 92 00:03:50,280 --> 00:03:52,920 Speaker 3: job number have been overstated. I don't like what's going 93 00:03:52,960 --> 00:03:55,320 Speaker 3: on in the private The Jewelts even had a big 94 00:03:55,360 --> 00:03:58,480 Speaker 3: reduction in private jobs available. Get ahead of this. Plus, 95 00:03:58,920 --> 00:04:01,800 Speaker 3: I really am scared of fifty BIPs cut in September, 96 00:04:01,920 --> 00:04:03,960 Speaker 3: right in the heat of the election. I think it's 97 00:04:04,040 --> 00:04:06,600 Speaker 3: just going to become a political nightmare and people are 98 00:04:06,600 --> 00:04:08,520 Speaker 3: going to be screaming at the Fed. It's going to 99 00:04:08,520 --> 00:04:10,760 Speaker 3: detract from the Fed's mission, I think, which I think 100 00:04:10,760 --> 00:04:12,440 Speaker 3: they are very good at. I would have cut now, 101 00:04:12,600 --> 00:04:13,840 Speaker 3: see where it goes, and let. 102 00:04:13,800 --> 00:04:14,280 Speaker 1: It play out. 103 00:04:14,880 --> 00:04:17,600 Speaker 2: Once the FED does begin cutting, it's been such a 104 00:04:17,680 --> 00:04:20,400 Speaker 2: long time for at least in my mind, how do 105 00:04:20,480 --> 00:04:23,120 Speaker 2: they do it? Did they kind of go twenty five 106 00:04:23,160 --> 00:04:25,440 Speaker 2: basis points every meeting? Did they skip meetings? How did 107 00:04:25,440 --> 00:04:25,840 Speaker 2: they do it? 108 00:04:26,000 --> 00:04:28,200 Speaker 3: You know, that's kind of what my view would I 109 00:04:28,240 --> 00:04:29,720 Speaker 3: would have liked to see a fifty on the first 110 00:04:29,760 --> 00:04:31,920 Speaker 3: one and then wait two or three months. I think 111 00:04:31,960 --> 00:04:34,880 Speaker 3: in September, unless the data comes in so weak, they 112 00:04:34,880 --> 00:04:36,920 Speaker 3: do twenty five and then push the next one off 113 00:04:36,960 --> 00:04:38,960 Speaker 3: to la after the election. I think a fifty in 114 00:04:39,040 --> 00:04:41,520 Speaker 3: September if it really sparks a big equity rally or 115 00:04:41,520 --> 00:04:45,160 Speaker 3: something will be troublesome. They want to not reignite inflation, 116 00:04:45,520 --> 00:04:47,800 Speaker 3: so to me, we get twenty five and then they 117 00:04:47,800 --> 00:04:50,440 Speaker 3: wait a month or two, and it's really going to 118 00:04:50,440 --> 00:04:51,840 Speaker 3: be dependent on the data. I think the data is 119 00:04:51,839 --> 00:04:53,839 Speaker 3: going to turn out weak and justify more cuts, but 120 00:04:53,920 --> 00:04:54,320 Speaker 3: it might not. 121 00:04:55,000 --> 00:04:56,760 Speaker 4: What do you think of the corporate credit market. I 122 00:04:56,800 --> 00:04:59,839 Speaker 4: was looking at at high yield spreads yesterday and I 123 00:04:59,880 --> 00:05:02,320 Speaker 4: know that they rose, and I get that, but compared 124 00:05:02,360 --> 00:05:05,080 Speaker 4: to other events, it's still so calm. 125 00:05:05,520 --> 00:05:08,800 Speaker 3: Yeah, I think, you know, credit really isn't the valuation story, 126 00:05:08,839 --> 00:05:12,680 Speaker 3: particular investment grade credit. Right The companies are great across 127 00:05:12,680 --> 00:05:14,880 Speaker 3: the board, there's still cashual, the economy is still growing 128 00:05:15,160 --> 00:05:17,320 Speaker 3: to some degree, so it makes sense to me that spread. 129 00:05:17,320 --> 00:05:19,800 Speaker 3: It's widened a little bit in sympathy. I am starting 130 00:05:19,800 --> 00:05:21,760 Speaker 3: to watch though, if the Russell two thousand rolls over, 131 00:05:21,800 --> 00:05:23,480 Speaker 3: because that, to me is a good proxy for what's 132 00:05:23,520 --> 00:05:26,080 Speaker 3: going on in high yield. What really did encourage me 133 00:05:26,160 --> 00:05:28,680 Speaker 3: yesterday we had some selling pressure on high yield, but 134 00:05:28,720 --> 00:05:31,240 Speaker 3: the ETFs behaved very well. What I don't like is 135 00:05:31,279 --> 00:05:34,039 Speaker 3: when you see the ETFs start trading at a big 136 00:05:34,080 --> 00:05:36,680 Speaker 3: discount to NAV. That to me tells me there's an 137 00:05:36,680 --> 00:05:39,680 Speaker 3: overwhelming amount of selling pressure. We didn't see that yesterday. 138 00:05:39,680 --> 00:05:41,400 Speaker 3: Clearly're not seeing it today as the market does well. 139 00:05:41,600 --> 00:05:44,160 Speaker 3: That's my one trigger to watch is how the ets 140 00:05:44,320 --> 00:05:47,479 Speaker 3: behave relative to NAV. And if they do well, that's 141 00:05:47,480 --> 00:05:49,839 Speaker 3: healthy and we will get a small correction credit spreads. 142 00:05:49,880 --> 00:05:51,920 Speaker 3: You have to with equities down here, but there is 143 00:05:51,920 --> 00:05:53,400 Speaker 3: no credit problem this time around. 144 00:05:53,960 --> 00:05:56,800 Speaker 2: What are you seeing ETF flows? Let's get your attention. 145 00:05:56,560 --> 00:05:59,840 Speaker 3: These days again, just this continued buying into the kind 146 00:05:59,880 --> 00:06:02,640 Speaker 3: of riskier end of equities. You know, no one's giving 147 00:06:02,720 --> 00:06:04,240 Speaker 3: up on the tech trade, no one's really giving up 148 00:06:04,279 --> 00:06:06,880 Speaker 3: on the AI trade. And so every time I look 149 00:06:06,920 --> 00:06:09,680 Speaker 3: and we see these selloffs, I'm thinking, Okay, maybe we 150 00:06:09,760 --> 00:06:11,680 Speaker 3: got de risking. And what I think we've been doing 151 00:06:11,760 --> 00:06:14,280 Speaker 3: is getting degrossing, which to me is people taking off 152 00:06:14,320 --> 00:06:16,640 Speaker 3: longs and shorts so that sometimes shows up as rotation, 153 00:06:17,120 --> 00:06:18,600 Speaker 3: and I think people are taking off some of these 154 00:06:18,600 --> 00:06:21,159 Speaker 3: more lever trades, the selling of options, et cetera. But 155 00:06:21,200 --> 00:06:23,240 Speaker 3: we really haven't seen anyone say I want out of 156 00:06:23,240 --> 00:06:25,400 Speaker 3: this market. There's this real belief I've got to hang in, 157 00:06:25,800 --> 00:06:27,839 Speaker 3: and that's what I'm waiting for. Something that changes there. 158 00:06:27,960 --> 00:06:29,919 Speaker 3: The only thing that I thought was neat. I'm starting 159 00:06:29,920 --> 00:06:32,240 Speaker 3: to watch the Chinese stock market again. I actually kind 160 00:06:32,240 --> 00:06:34,000 Speaker 3: of like FXI for the first time in a while. 161 00:06:34,080 --> 00:06:37,840 Speaker 4: In the ETF front, Well, what's your level of confidence 162 00:06:37,839 --> 00:06:42,360 Speaker 4: that we get that kind of event, that capitulation, I 163 00:06:42,440 --> 00:06:43,080 Speaker 4: mean event. 164 00:06:43,480 --> 00:06:46,400 Speaker 3: I think it's reasonably high. It's you know, and part 165 00:06:46,400 --> 00:06:48,320 Speaker 3: of it like last Wednesday, right, we were up five 166 00:06:48,400 --> 00:06:51,240 Speaker 3: hundred on the Nasdaq last Wednesday as the FED was speaking, 167 00:06:51,240 --> 00:06:53,480 Speaker 3: I didn't see what justified that, So there was very 168 00:06:53,520 --> 00:06:56,000 Speaker 3: little liquidity that sucked people in. I think it helped 169 00:06:56,040 --> 00:06:59,680 Speaker 3: set up for the Thursday, Friday, Monday trade. And here 170 00:06:59,720 --> 00:07:02,160 Speaker 3: again and we're kind of rallying. Everyone seems too excited. 171 00:07:02,400 --> 00:07:05,840 Speaker 3: There's no real fear, and the odds are again. I 172 00:07:05,880 --> 00:07:08,800 Speaker 3: think people are much more cautious on the earnings front, right, 173 00:07:08,880 --> 00:07:11,120 Speaker 3: and people aren't getting the free pass that something comes 174 00:07:11,160 --> 00:07:13,560 Speaker 3: on that and I really am very nervous that we've 175 00:07:13,560 --> 00:07:15,920 Speaker 3: been overstating the economic growth and we're going to see 176 00:07:15,960 --> 00:07:17,680 Speaker 3: some weak data. So that's I guess my bed is 177 00:07:17,680 --> 00:07:20,240 Speaker 3: we get a data and earning sprint that triggers another 178 00:07:20,320 --> 00:07:22,560 Speaker 3: round of selling pressure and people are too long ones Again. 179 00:07:22,800 --> 00:07:25,080 Speaker 2: I said, you're looking at China. How about the nie 180 00:07:25,120 --> 00:07:28,120 Speaker 2: K index? Our friends in JAPANO crazy couple of days? 181 00:07:28,800 --> 00:07:31,440 Speaker 3: Yeah, man, yeah, And I do think that's when. One 182 00:07:31,440 --> 00:07:34,680 Speaker 3: problem we've been talking about for ages is this full liquidity. 183 00:07:34,720 --> 00:07:37,960 Speaker 3: I've been trying to term it, and these markets seem 184 00:07:38,040 --> 00:07:39,920 Speaker 3: liquid because the screens are all priced, but it's all 185 00:07:40,000 --> 00:07:43,400 Speaker 3: very algo driven. There's no real support at any given time, 186 00:07:43,440 --> 00:07:45,240 Speaker 3: and you can have these big moves. It's you know 187 00:07:45,560 --> 00:07:47,280 Speaker 3: now that summer, if you go snork me or something, 188 00:07:47,320 --> 00:07:48,600 Speaker 3: you see a school of fish and you put your 189 00:07:48,600 --> 00:07:52,000 Speaker 3: hand near the fish, they disappear. They immediately recongregate. And 190 00:07:52,040 --> 00:07:53,880 Speaker 3: this reminds me of the sort of pattern that we 191 00:07:53,920 --> 00:07:56,600 Speaker 3: saw in around the financial crisis, these air pockets where 192 00:07:56,760 --> 00:08:00,000 Speaker 3: something's trading normally moves five percent, that starts trading normally 193 00:08:00,360 --> 00:08:02,600 Speaker 3: like WHOA, what happened to move five percent, and that 194 00:08:02,640 --> 00:08:05,040 Speaker 3: to me shapes us up more for a downside than 195 00:08:05,040 --> 00:08:06,320 Speaker 3: an upside. 196 00:08:06,480 --> 00:08:09,920 Speaker 4: So for the carry trade. So speaking of is that 197 00:08:10,000 --> 00:08:12,720 Speaker 4: how that winds up playing out, Like eventually there's even 198 00:08:12,800 --> 00:08:15,440 Speaker 4: more upside pressure on the end and then it just 199 00:08:15,480 --> 00:08:16,840 Speaker 4: blows out other positions. 200 00:08:17,320 --> 00:08:21,520 Speaker 3: Yeah, so you know, the carry trade defined the carry trade. 201 00:08:21,920 --> 00:08:24,800 Speaker 3: So in theory, I think people say you borrow in yen, 202 00:08:24,840 --> 00:08:26,840 Speaker 3: you keep it in yen, and you buy us. 203 00:08:26,560 --> 00:08:27,320 Speaker 2: Assets a catch. 204 00:08:27,680 --> 00:08:30,160 Speaker 3: I think to me, it's just more there was leverage 205 00:08:30,160 --> 00:08:32,480 Speaker 3: in the system, right, the carry trade. More traditionally you 206 00:08:32,480 --> 00:08:35,920 Speaker 3: would buy you fund yourself in yen and buy US treasuries. 207 00:08:36,120 --> 00:08:38,320 Speaker 3: Treasuries rally yesterday. I think there's a little bit of 208 00:08:38,320 --> 00:08:41,000 Speaker 3: a boogeyman sort of you know thing going on where 209 00:08:41,480 --> 00:08:43,200 Speaker 3: the carry trade is just a small part of this. 210 00:08:43,280 --> 00:08:45,440 Speaker 3: I think what it really is is people got over levered. 211 00:08:45,480 --> 00:08:48,280 Speaker 3: They went to full positions, they went aggressive end of stocks, 212 00:08:48,400 --> 00:08:51,680 Speaker 3: they bought leverage gtfs, they did all these ball selling strategies. 213 00:08:51,920 --> 00:08:54,600 Speaker 3: So I think it's leverage in the system, not a 214 00:08:54,760 --> 00:08:56,080 Speaker 3: specific yen carry trade. 215 00:08:56,120 --> 00:08:57,640 Speaker 4: So it's not like I just borrowed an end to 216 00:08:57,679 --> 00:08:58,480 Speaker 4: bind Nvidia. 217 00:08:58,960 --> 00:09:01,600 Speaker 3: No, and you know there's the thing. What's the six 218 00:09:01,640 --> 00:09:02,560 Speaker 3: degrees of Kevin Bacon? 219 00:09:02,640 --> 00:09:02,720 Speaker 6: You? 220 00:09:04,120 --> 00:09:06,480 Speaker 3: So, I don't know about you, right, but I know 221 00:09:06,520 --> 00:09:08,640 Speaker 3: all sorts of people in this market. I can't find 222 00:09:08,679 --> 00:09:11,360 Speaker 3: anyone who admits to having the carry trade on before 223 00:09:11,400 --> 00:09:14,120 Speaker 3: this all started. So I think some of that's overstated. 224 00:09:14,160 --> 00:09:16,800 Speaker 3: I think this is really just good old fashioned leverage 225 00:09:16,920 --> 00:09:20,120 Speaker 3: and people borrowing and putting too much risk into the market. 226 00:09:20,280 --> 00:09:22,839 Speaker 2: All right, Peter, great stuff. Really appreciate you coming in. 227 00:09:22,960 --> 00:09:26,840 Speaker 2: Peter Cheer, head of macro strategy at Academy Securities, joining 228 00:09:26,920 --> 00:09:30,520 Speaker 2: us live here in our Bloomberg Interactive Broker's studio. 229 00:09:31,559 --> 00:09:35,440 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 230 00:09:35,520 --> 00:09:39,040 Speaker 1: weekdays at ten am Eastern on applecard Play and Android 231 00:09:39,080 --> 00:09:41,839 Speaker 1: Auto with the Bloomberg Business App. You can also listen 232 00:09:41,960 --> 00:09:45,079 Speaker 1: live on Amazon Alexa from our flagship New York station, 233 00:09:45,440 --> 00:09:49,199 Speaker 1: Just say Alexa Play Bloomberg eleven thirty. 234 00:09:49,760 --> 00:09:53,520 Speaker 2: If we had some political news today, Vice President Harris 235 00:09:53,600 --> 00:09:58,360 Speaker 2: taps Minnesota Governor mister Walls to be her vice presidential 236 00:09:58,360 --> 00:10:02,600 Speaker 2: candidate on that ticket. Lord Davison joined this Bloomberg Politics editor. So, Laura, 237 00:10:02,600 --> 00:10:06,880 Speaker 2: what's the feeling within DC about the selection by VP Harris. 238 00:10:08,080 --> 00:10:10,160 Speaker 6: This is a little bit of a surprise pick. You know, 239 00:10:10,200 --> 00:10:12,400 Speaker 6: we've heard Wall's name come up, you know, as these 240 00:10:12,440 --> 00:10:14,679 Speaker 6: discussions had gone on over the past couple of weeks. 241 00:10:14,960 --> 00:10:18,080 Speaker 6: But Walls is someone who was relatively unknown just prior 242 00:10:18,120 --> 00:10:22,160 Speaker 6: to really Harris emerging as the Democratic standard bearer following 243 00:10:22,160 --> 00:10:25,000 Speaker 6: Biden's departure from the race. So, you know, he's a 244 00:10:25,160 --> 00:10:28,240 Speaker 6: very popular governor, you know in Minnesota, but not someone 245 00:10:28,280 --> 00:10:31,160 Speaker 6: who's been on the national stage as much. But he 246 00:10:31,240 --> 00:10:34,240 Speaker 6: really emerged because he was sort of able to capture 247 00:10:34,280 --> 00:10:37,240 Speaker 6: on the zeitgeist to the moment he you know, kind 248 00:10:37,280 --> 00:10:41,080 Speaker 6: of coined the phrase weird now that that to sort 249 00:10:41,120 --> 00:10:43,320 Speaker 6: of as an insult to Republicans and their policies that 250 00:10:43,840 --> 00:10:45,880 Speaker 6: Harris and others have started using. And so he was 251 00:10:45,920 --> 00:10:48,120 Speaker 6: sort of able to be seen as someone who could 252 00:10:48,160 --> 00:10:50,320 Speaker 6: go on the attack but also you know, sort of 253 00:10:50,320 --> 00:10:52,800 Speaker 6: be relatable and likable to blue collar workers. 254 00:10:53,200 --> 00:10:55,600 Speaker 4: What does that mean then about how Kamala Harris feels 255 00:10:55,600 --> 00:10:57,800 Speaker 4: about Pennsylvania. 256 00:10:57,960 --> 00:11:01,960 Speaker 6: So it's clear from this from this decision, you know, 257 00:11:01,960 --> 00:11:03,560 Speaker 6: sort of the main other person she was looking at 258 00:11:03,640 --> 00:11:06,960 Speaker 6: was Pennsylvania Governor Josh Shapiro. He's also very popular in 259 00:11:07,000 --> 00:11:08,760 Speaker 6: his state and would have been sort of the best 260 00:11:09,360 --> 00:11:11,800 Speaker 6: choice if she wants to make sure she wins Pennsylvania. 261 00:11:11,840 --> 00:11:13,240 Speaker 6: So either, you know, the kind of a couple of 262 00:11:13,320 --> 00:11:17,800 Speaker 6: takeaways here, she feels confident about her chances outside of Pennsylvania, 263 00:11:17,840 --> 00:11:20,120 Speaker 6: that there's you know, multiple ways to win the win 264 00:11:20,160 --> 00:11:23,200 Speaker 6: the race. But also Shapiro had some negatives. You know, 265 00:11:23,240 --> 00:11:26,600 Speaker 6: he was very staunchly pro Israel, something that you know 266 00:11:26,960 --> 00:11:30,720 Speaker 6: is a divisive issue among Democrats and one of the 267 00:11:30,760 --> 00:11:32,840 Speaker 6: things that sort of her allies pointed out, you know, 268 00:11:32,840 --> 00:11:35,160 Speaker 6: after this decision was made that it was Walls she 269 00:11:35,240 --> 00:11:37,800 Speaker 6: had more of a personal rapport with, so that was 270 00:11:37,800 --> 00:11:40,000 Speaker 6: something that she was looking at very closely. Plus he 271 00:11:40,000 --> 00:11:43,880 Speaker 6: also had a record in Minnesota that had more middle 272 00:11:43,880 --> 00:11:47,840 Speaker 6: class wins, so things like free lunches for school children, 273 00:11:48,280 --> 00:11:52,360 Speaker 6: expanding paid leave. Shapiro has less experience as a governor, 274 00:11:52,400 --> 00:11:54,800 Speaker 6: he's only been in office for two years, has a 275 00:11:54,840 --> 00:11:56,959 Speaker 6: little bit more of a mixed record, you know, for 276 00:11:56,960 --> 00:11:59,640 Speaker 6: for Democrats. For Walls here kind of helps her shore 277 00:11:59,679 --> 00:12:00,600 Speaker 6: up the agressive base. 278 00:12:02,320 --> 00:12:06,760 Speaker 2: Does this pick say anything about how Kamala Harris wants 279 00:12:06,800 --> 00:12:10,080 Speaker 2: to run this campaign in terms of being more of 280 00:12:10,120 --> 00:12:13,040 Speaker 2: a centrist versus appealing maybe more to the liberal part 281 00:12:13,080 --> 00:12:16,760 Speaker 2: of the Democratic Party. What do you think, Yeah, so. 282 00:12:17,320 --> 00:12:20,800 Speaker 6: Walls is someone who does appeal on a policy level 283 00:12:20,840 --> 00:12:23,079 Speaker 6: two progressives. You know, he has, you know, someone who 284 00:12:23,120 --> 00:12:25,800 Speaker 6: comes from rural Minnesota. You know, the district that he 285 00:12:26,360 --> 00:12:28,679 Speaker 6: represented when he was in the House is now representative 286 00:12:28,800 --> 00:12:31,720 Speaker 6: represented by a Republican. But his values and sort of 287 00:12:31,720 --> 00:12:34,560 Speaker 6: the issues that he champions are much more sort of 288 00:12:34,600 --> 00:12:38,360 Speaker 6: the progressive wing, you know, things like paid family leave 289 00:12:38,600 --> 00:12:41,960 Speaker 6: and uh you know, you know, expanding you know, uh, 290 00:12:42,000 --> 00:12:46,760 Speaker 6: student loans and student loan forgiveness. Rather, Shapiro is much 291 00:12:46,800 --> 00:12:49,480 Speaker 6: more moderate, much more business friendly. Uh so this is 292 00:12:49,520 --> 00:12:51,640 Speaker 6: sort of you know, an interesting uh you know mix here. 293 00:12:51,679 --> 00:12:54,240 Speaker 6: But because he does have those Midwestern roots, he is 294 00:12:54,280 --> 00:12:56,360 Speaker 6: from a rural area. He is a someone who you know, 295 00:12:56,400 --> 00:12:59,240 Speaker 6: has been a gun owner that has become much more 296 00:12:59,480 --> 00:13:02,840 Speaker 6: a vocal about you know, gun control in recent years. 297 00:13:03,000 --> 00:13:04,640 Speaker 6: He has the sort of mix of he's able to 298 00:13:04,720 --> 00:13:07,719 Speaker 6: you know, not alien enate either the moderate side or 299 00:13:07,760 --> 00:13:08,920 Speaker 6: the progressive side of the party. 300 00:13:10,120 --> 00:13:14,360 Speaker 4: Terry Haynes a Pangaea said this was Harris's first negative. 301 00:13:14,600 --> 00:13:17,520 Speaker 4: He didn't like it. He was basically saying like this 302 00:13:17,600 --> 00:13:20,240 Speaker 4: was a safe pick. It showed that she's really worried 303 00:13:20,400 --> 00:13:23,680 Speaker 4: about the campaign. Is anyone in the in the zeitgeis 304 00:13:23,720 --> 00:13:27,800 Speaker 4: that you're talking to sort of saying that, yes. 305 00:13:27,640 --> 00:13:30,520 Speaker 6: I mean there is sort of a different schools of 306 00:13:30,520 --> 00:13:32,600 Speaker 6: thought here, but that you know that Walls was someone 307 00:13:32,640 --> 00:13:35,560 Speaker 6: that wasn't going to offend anybody, and so therefore he's safe. 308 00:13:36,000 --> 00:13:38,320 Speaker 6: But he may also not have the same upside potential 309 00:13:38,360 --> 00:13:40,400 Speaker 6: that you know, someone like Shapiro. Had you know, Shapiro 310 00:13:40,440 --> 00:13:43,440 Speaker 6: on the ticket, the chances of winning Pennsylvania and therefore 311 00:13:43,480 --> 00:13:46,120 Speaker 6: potentially the whole race went up, But he also has 312 00:13:46,160 --> 00:13:47,920 Speaker 6: more negatives here. So this is she was sort of 313 00:13:47,920 --> 00:13:50,960 Speaker 6: taking the path of these resistance on this pick versus 314 00:13:50,960 --> 00:13:54,120 Speaker 6: someone you know like Shapiro or even Mark Kelly, who 315 00:13:54,440 --> 00:13:56,760 Speaker 6: you know had some clashes with labor unions in the past, 316 00:13:56,800 --> 00:13:59,280 Speaker 6: so that it was sort of another issue why his 317 00:13:59,360 --> 00:14:00,199 Speaker 6: name didn't write. 318 00:14:00,920 --> 00:14:03,559 Speaker 4: All right, well, thank you so much, we appreciate it. 319 00:14:03,559 --> 00:14:06,760 Speaker 4: It's definitely a crazy time. And also, you know, you 320 00:14:06,800 --> 00:14:08,840 Speaker 4: have such a short amount of time with that Lord 321 00:14:08,880 --> 00:14:12,040 Speaker 4: Davison Bloomberg Politics editor joining us, but you know, so 322 00:14:12,280 --> 00:14:13,439 Speaker 4: truncated and. 323 00:14:13,360 --> 00:14:15,079 Speaker 2: Now they hit the road like immediately, I mean, I 324 00:14:15,080 --> 00:14:18,360 Speaker 2: think seven swing states in five days or something along 325 00:14:18,360 --> 00:14:19,720 Speaker 2: the line. So they're gonna be hitting the road. And 326 00:14:20,000 --> 00:14:23,160 Speaker 2: obviously former President Trump and Jadie Vans are out there 327 00:14:23,200 --> 00:14:25,840 Speaker 2: as well, so it's be relatively short period of time 328 00:14:25,840 --> 00:14:27,960 Speaker 2: till we get to election day. 329 00:14:28,160 --> 00:14:32,040 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 330 00:14:32,120 --> 00:14:34,760 Speaker 1: weekdays at ten am Eastern on Apple car Playing and 331 00:14:34,960 --> 00:14:37,840 Speaker 1: Broud Auto with the Bloomberg Business app. Listen on demand 332 00:14:37,880 --> 00:14:42,200 Speaker 1: wherever you get your podcasts, or watch us live on YouTube. 333 00:14:42,760 --> 00:14:46,000 Speaker 4: It's Bloomberg Intelligence Radio. We are broadcasting to you live 334 00:14:46,000 --> 00:14:49,360 Speaker 4: from Interactive Broker Studio right here in Midtown Manhattan. You 335 00:14:49,400 --> 00:14:52,840 Speaker 4: can also check us on YouTube. Don't miss us there. 336 00:14:53,120 --> 00:14:55,360 Speaker 4: So to get a big perspective on the market, if 337 00:14:55,360 --> 00:14:57,880 Speaker 4: you're a long term investor, what do you do over 338 00:14:57,920 --> 00:14:59,920 Speaker 4: the last you know, forty eight hours in the market. 339 00:15:00,080 --> 00:15:02,200 Speaker 4: This is when I get like my financial guy sending 340 00:15:02,240 --> 00:15:04,560 Speaker 4: me the email of like, just so you know, this 341 00:15:04,600 --> 00:15:07,000 Speaker 4: is what happened, this is what we can expect. So 342 00:15:07,040 --> 00:15:08,920 Speaker 4: how do you do that? Well. Margie Patetel is senior 343 00:15:08,960 --> 00:15:11,840 Speaker 4: portfolio manager at all Spring's Global Investments and she joins 344 00:15:11,880 --> 00:15:16,240 Speaker 4: us now on Zoom from Boston. Massachusetts. Margie, what do 345 00:15:16,280 --> 00:15:18,080 Speaker 4: you make of the last twenty four hours? Is this 346 00:15:18,160 --> 00:15:21,080 Speaker 4: our forty eight? Is this a regime shift, a real 347 00:15:21,200 --> 00:15:24,880 Speaker 4: paradigm shift, or is it still stay on message, stay 348 00:15:24,880 --> 00:15:25,400 Speaker 4: on trend. 349 00:15:26,840 --> 00:15:28,480 Speaker 5: I think it's still the saying things. 350 00:15:28,960 --> 00:15:31,080 Speaker 7: Large cap stocks are still going to be the place 351 00:15:31,120 --> 00:15:32,360 Speaker 7: to be for the best to be here. 352 00:15:32,720 --> 00:15:34,400 Speaker 5: I think what happened is after. 353 00:15:34,200 --> 00:15:37,160 Speaker 7: A few quarters where the meg seven or the dozen 354 00:15:37,280 --> 00:15:40,760 Speaker 7: largest stocks reported better than expected, earning a second the 355 00:15:40,800 --> 00:15:43,800 Speaker 7: market of real boosting confidence, and this time we had 356 00:15:43,800 --> 00:15:46,200 Speaker 7: really sort of mixed results where some of the companies 357 00:15:46,240 --> 00:15:49,360 Speaker 7: reported results that were frankly disappointing, and that took away 358 00:15:49,440 --> 00:15:52,200 Speaker 7: market conference. At a time when you have stock prices 359 00:15:52,240 --> 00:15:54,280 Speaker 7: at their peak, you have concerned about what the FED 360 00:15:54,400 --> 00:15:57,160 Speaker 7: is going to do. Data says the economy slowing down. 361 00:15:57,200 --> 00:15:58,600 Speaker 7: So I think that's what we had. It's just a 362 00:15:58,680 --> 00:16:02,960 Speaker 7: real short term stay down s andp down nine percentage, 363 00:16:03,080 --> 00:16:06,840 Speaker 7: nastack down twelve thirteen ish, and really just a short 364 00:16:06,920 --> 00:16:09,560 Speaker 7: term correction that's almost played out. We'll probably have a 365 00:16:09,600 --> 00:16:11,800 Speaker 7: little bit more and I think we'll go up for 366 00:16:11,840 --> 00:16:12,600 Speaker 7: the rest of the year. 367 00:16:13,400 --> 00:16:15,560 Speaker 2: So Margie, to the extent that we do go up 368 00:16:15,560 --> 00:16:17,840 Speaker 2: for the rest of the year. Is tech going to 369 00:16:17,880 --> 00:16:20,880 Speaker 2: continue to lead this market or if we've seen some 370 00:16:20,960 --> 00:16:24,080 Speaker 2: kind of rotation that is of note. 371 00:16:24,480 --> 00:16:26,920 Speaker 7: I don't think we'll see much of our rotation because 372 00:16:27,160 --> 00:16:30,400 Speaker 7: when you look at the economic growth level, what you 373 00:16:30,440 --> 00:16:32,920 Speaker 7: think the econome will grow at for the next few quarters, 374 00:16:32,960 --> 00:16:35,280 Speaker 7: I think it'll be rather low, you know, a percent 375 00:16:35,800 --> 00:16:38,280 Speaker 7: and a half something like that. So that says you 376 00:16:38,360 --> 00:16:40,560 Speaker 7: still have to stick with those sectors and have above 377 00:16:40,600 --> 00:16:44,240 Speaker 7: average growth, which again would be check in particular some 378 00:16:44,360 --> 00:16:47,240 Speaker 7: other sectors, but primarily check. Especially when a lot of 379 00:16:47,280 --> 00:16:49,960 Speaker 7: these stalks have had such a big correction, they're really 380 00:16:50,040 --> 00:16:52,560 Speaker 7: priced more or less in the middle of their value range. 381 00:16:52,600 --> 00:16:54,960 Speaker 5: So if the armies go up, we think that these 382 00:16:55,000 --> 00:16:56,080 Speaker 5: stalks can go up too. 383 00:16:56,840 --> 00:16:59,120 Speaker 4: So I guess this is a by the dip kind 384 00:16:59,120 --> 00:17:02,760 Speaker 4: of setup for you, Yes. 385 00:17:02,560 --> 00:17:05,800 Speaker 7: Sort of, especially some of those names have had big corrections. 386 00:17:06,080 --> 00:17:09,560 Speaker 7: But it's interesting when you although people talk about the correction, 387 00:17:10,080 --> 00:17:13,440 Speaker 7: when you look at the indexes standard for his nasdak 388 00:17:13,840 --> 00:17:18,080 Speaker 7: Dal Jones, those indexes are all still up very attractively 389 00:17:18,160 --> 00:17:21,280 Speaker 7: year to date, mid to high single digit for a 390 00:17:21,320 --> 00:17:23,800 Speaker 7: little and halfway through the year, So that says that's 391 00:17:23,880 --> 00:17:26,640 Speaker 7: really on track to be an above average long term 392 00:17:26,720 --> 00:17:28,280 Speaker 7: rate of return for stocks. 393 00:17:28,320 --> 00:17:29,520 Speaker 5: Certainly not a disaster. 394 00:17:30,040 --> 00:17:32,000 Speaker 7: And even if you look at something like in Nvidio, 395 00:17:32,040 --> 00:17:34,560 Speaker 7: which I think is down forty percent of its peak, 396 00:17:35,040 --> 00:17:38,359 Speaker 7: it's still one hundred percent year to date, So it 397 00:17:38,440 --> 00:17:41,679 Speaker 7: isn't as if we're having a real unwinding, you know, 398 00:17:41,760 --> 00:17:46,520 Speaker 7: two thousand type Internet bubble meltdown, a permanent impairmid I 399 00:17:46,520 --> 00:17:49,480 Speaker 7: think this is just a short term correction typical in summer, 400 00:17:49,520 --> 00:17:52,000 Speaker 7: and then we'll see the market move ahead and the 401 00:17:52,000 --> 00:17:52,680 Speaker 7: rest of the year. 402 00:17:53,320 --> 00:17:55,920 Speaker 2: Okay, marg How about the fixed income market. I'm looking 403 00:17:55,920 --> 00:17:59,359 Speaker 2: here my in go function, the Bloomberg Index browsers of 404 00:17:59,400 --> 00:18:01,800 Speaker 2: course US fixed income. I'm seeing, you know, three four 405 00:18:01,840 --> 00:18:04,000 Speaker 2: percent type total returns. That's about as good as I've 406 00:18:04,000 --> 00:18:06,160 Speaker 2: seen in a long time. What do you think about 407 00:18:06,240 --> 00:18:07,720 Speaker 2: opportunities in the fixing come space? 408 00:18:08,800 --> 00:18:12,680 Speaker 7: Yes, it is because actually many sectors of fixed and 409 00:18:12,800 --> 00:18:14,520 Speaker 7: coome market have been negative. 410 00:18:14,680 --> 00:18:17,199 Speaker 5: As the rates have gone up. Prices are sensitive to 411 00:18:17,200 --> 00:18:17,520 Speaker 5: that and. 412 00:18:17,440 --> 00:18:20,320 Speaker 7: They've gone down, and really high yield has been about 413 00:18:20,320 --> 00:18:25,520 Speaker 7: the best performing sector. But it's still you're looking at 414 00:18:25,760 --> 00:18:29,320 Speaker 7: three four percent your to date returns really pretty modest. 415 00:18:29,680 --> 00:18:31,919 Speaker 5: But I think what you're seeing, though, is the yield 416 00:18:31,920 --> 00:18:32,680 Speaker 5: spreads still. 417 00:18:32,880 --> 00:18:35,720 Speaker 7: To me, you're telegraphing that the economy is okay, the 418 00:18:35,760 --> 00:18:39,360 Speaker 7: fixed income market is okay. You've had spreads widen out 419 00:18:40,400 --> 00:18:43,160 Speaker 7: the say forty to fifty basis points for most high 420 00:18:43,200 --> 00:18:46,679 Speaker 7: yield bonds. However, most of that spread widening has been 421 00:18:46,720 --> 00:18:50,360 Speaker 7: because treasury yields have dropped so much from say their 422 00:18:50,400 --> 00:18:54,040 Speaker 7: peak peak yield in April, where the ten year was 423 00:18:54,080 --> 00:18:56,600 Speaker 7: around the four sixty to say in three eighty. Now 424 00:18:56,800 --> 00:19:00,440 Speaker 7: that's an eighty basis point correction, and high has not 425 00:19:00,560 --> 00:19:02,359 Speaker 7: caught up for that. So I think it's not shown 426 00:19:02,400 --> 00:19:05,600 Speaker 7: any distress and high yield that spreads of widen down 427 00:19:05,600 --> 00:19:07,520 Speaker 7: a little bit. I think it's just as huge movie 428 00:19:07,600 --> 00:19:11,280 Speaker 7: Crasieries has changed that relationship. But the fundamentals are still there, 429 00:19:11,480 --> 00:19:13,720 Speaker 7: still pretty good for fixed income. 430 00:19:14,000 --> 00:19:16,199 Speaker 4: Yeah, when I looked at the spreads yesterday, I was like, 431 00:19:16,200 --> 00:19:18,679 Speaker 4: oh my god, they're still so low. Like I understand 432 00:19:18,720 --> 00:19:21,159 Speaker 4: they went on. But so I guess my question, MARKIE, 433 00:19:21,200 --> 00:19:25,240 Speaker 4: is what would a regime change or regime shift really 434 00:19:25,280 --> 00:19:25,720 Speaker 4: look like? 435 00:19:25,840 --> 00:19:30,760 Speaker 5: Then Well, frankly, I really can't see it. 436 00:19:30,800 --> 00:19:33,560 Speaker 7: I think we had a kind of a little play 437 00:19:33,600 --> 00:19:36,520 Speaker 7: in value stocks that's sort of petered out. We've had 438 00:19:36,560 --> 00:19:39,320 Speaker 7: a play in small cap stocks, which looks as if 439 00:19:39,320 --> 00:19:41,600 Speaker 7: it's petered out, and so I think we're still back 440 00:19:41,640 --> 00:19:43,399 Speaker 7: to the same themes is where do you want to 441 00:19:43,440 --> 00:19:47,199 Speaker 7: invest in a slow gross economy, which is what I 442 00:19:47,200 --> 00:19:49,800 Speaker 7: think we're really looking at over the next certainly in 443 00:19:49,800 --> 00:19:52,200 Speaker 7: the next few quarters, no matter what the FED does. 444 00:19:52,400 --> 00:19:54,560 Speaker 7: We're hoping, of course that the FED will see the 445 00:19:54,640 --> 00:19:57,920 Speaker 7: light like the market and start to cut rates. But 446 00:19:58,560 --> 00:20:00,480 Speaker 7: I think the economy is just going to trouble all 447 00:20:00,600 --> 00:20:04,680 Speaker 7: it modest one percentage type growth. So where you investor 448 00:20:04,720 --> 00:20:07,440 Speaker 7: that you look good companies that are in the highest sectors. Again, 449 00:20:07,880 --> 00:20:12,719 Speaker 7: check certain parts of industrials, a certain very few selected healthcare, 450 00:20:13,320 --> 00:20:16,040 Speaker 7: maybe some materials. But in other words, it's still a 451 00:20:16,200 --> 00:20:19,120 Speaker 7: very selective market. So we don't look for broadening out either, 452 00:20:19,560 --> 00:20:21,000 Speaker 7: as much as we all like to see it, but 453 00:20:21,040 --> 00:20:21,960 Speaker 7: we just don't see. 454 00:20:21,760 --> 00:20:25,719 Speaker 2: That happening, Margy, For better or worse, this is an 455 00:20:25,720 --> 00:20:29,400 Speaker 2: election year, Margy, how does that factor into your calculus 456 00:20:29,600 --> 00:20:31,480 Speaker 2: if at all? 457 00:20:31,600 --> 00:20:35,320 Speaker 7: Well, historically, and there aren't many historic things you can 458 00:20:35,359 --> 00:20:38,600 Speaker 7: rely on, it always seems that in an election year, 459 00:20:38,640 --> 00:20:41,160 Speaker 7: no matter who gets elected, that we have a pretty 460 00:20:41,160 --> 00:20:43,200 Speaker 7: good rally after the election. 461 00:20:42,960 --> 00:20:43,920 Speaker 5: Into the end of the year. 462 00:20:44,359 --> 00:20:47,160 Speaker 7: So I'm thinking we willful around here because of varyings 463 00:20:47,200 --> 00:20:50,400 Speaker 7: and uncertainty of the election, no matter who is elected, 464 00:20:50,440 --> 00:20:53,159 Speaker 7: we have certainty, and I always expect the market to 465 00:20:53,200 --> 00:20:55,399 Speaker 7: have a strong finish in any case, and by that 466 00:20:55,520 --> 00:20:57,960 Speaker 7: I mean a strong I'm modest finish. I'm not looking 467 00:20:58,040 --> 00:21:00,959 Speaker 7: for a state of doubling another eight to ten percent 468 00:21:00,960 --> 00:21:02,760 Speaker 7: over the rest of the year, but you know, three 469 00:21:02,920 --> 00:21:05,920 Speaker 7: five percent something like that to finish off the year. 470 00:21:06,640 --> 00:21:10,119 Speaker 4: Marguie, do you still you mentioned slow growth, but we 471 00:21:10,200 --> 00:21:12,640 Speaker 4: do have an election where it looks like both parties 472 00:21:12,680 --> 00:21:15,639 Speaker 4: are going to be spending boatloads of money. The hyperscalers 473 00:21:15,640 --> 00:21:18,760 Speaker 4: are spending boat loads of money. When do you think 474 00:21:18,800 --> 00:21:21,240 Speaker 4: that that really filters through and sort of helps stabilize 475 00:21:21,240 --> 00:21:21,800 Speaker 4: that growth. 476 00:21:23,600 --> 00:21:25,840 Speaker 7: Well, it's true you have a lot of capital investment 477 00:21:25,920 --> 00:21:30,240 Speaker 7: going into certain sectors. Again, mainly the technology sector is 478 00:21:30,240 --> 00:21:33,840 Speaker 7: the biggest spender and the biggest beneficiary, and so we 479 00:21:33,880 --> 00:21:36,360 Speaker 7: think that trend is going to stay. And as far 480 00:21:36,400 --> 00:21:39,960 Speaker 7: as fiscal spending, we already sort of blew the doors 481 00:21:40,000 --> 00:21:44,040 Speaker 7: off for the last few years, either with COVID expenditures 482 00:21:44,480 --> 00:21:49,760 Speaker 7: or inflation or infrastructure expenditures. So really it's really difficult 483 00:21:49,760 --> 00:21:54,080 Speaker 7: to see another big blast of fiscal expenditures. 484 00:21:54,080 --> 00:21:58,280 Speaker 5: Helping to push up the market of economy. 485 00:21:57,720 --> 00:22:02,199 Speaker 2: Short term market. Bettel, thank you so much. We appreciate that, 486 00:22:02,320 --> 00:22:05,800 Speaker 2: as always appreciate the perspective market Bettel, Senior portfolio manager, 487 00:22:05,840 --> 00:22:09,600 Speaker 2: all Spring Global Investments. Joining us from Boston, mass via zoom. 488 00:22:10,840 --> 00:22:14,720 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 489 00:22:14,800 --> 00:22:18,320 Speaker 1: weekdays at ten am Eastern on applecar Play and Android 490 00:22:18,359 --> 00:22:21,119 Speaker 1: Otto with the Bloomberg Business Act. You can also listen 491 00:22:21,240 --> 00:22:24,320 Speaker 1: live on Amazon Alexa from our flagship New York station 492 00:22:24,720 --> 00:22:28,200 Speaker 1: Just Say Alexa playing Bloomberg eleven thirty. 493 00:22:29,000 --> 00:22:31,639 Speaker 2: Speaking of Uber, let's go to man Deep sing Stuet. 494 00:22:32,040 --> 00:22:33,640 Speaker 2: He knows what's going on with these companies Man Deep 495 00:22:33,640 --> 00:22:37,400 Speaker 2: seing technology channels for Bloomberg Intelligence. He's all over these 496 00:22:37,480 --> 00:22:42,240 Speaker 2: ride sharing companies, you know Uber. I think Man deeps 497 00:22:42,240 --> 00:22:44,320 Speaker 2: can be joined us in studio. I mean we just 498 00:22:44,400 --> 00:22:47,800 Speaker 2: picked them. On is literally running in our studio. So 499 00:22:47,880 --> 00:22:51,240 Speaker 2: he covers all these ride sharing things. And I don't know, 500 00:22:52,200 --> 00:22:53,840 Speaker 2: he's the one that got pitched me on this whole 501 00:22:53,920 --> 00:22:56,280 Speaker 2: Uber thing and I'm on it. I'm on it. 502 00:22:56,320 --> 00:22:57,080 Speaker 4: I think he was right. 503 00:22:57,119 --> 00:22:59,159 Speaker 2: It's the greatest thing in the world. Uber talk to 504 00:22:59,200 --> 00:22:59,840 Speaker 2: us about the quarter. 505 00:23:00,240 --> 00:23:04,280 Speaker 8: What did you see, good print, solid top line growth. 506 00:23:04,680 --> 00:23:07,680 Speaker 8: I think the fact that we're talking about a business 507 00:23:07,720 --> 00:23:10,720 Speaker 8: that's generating forty billion dollar run rate in a year. 508 00:23:11,280 --> 00:23:13,840 Speaker 8: I mean, clearly they have the scale. The question for 509 00:23:13,960 --> 00:23:17,679 Speaker 8: me when it comes to Uber five years down the line, 510 00:23:17,800 --> 00:23:21,560 Speaker 8: you know, long term play, how disrupted their business model 511 00:23:21,640 --> 00:23:24,720 Speaker 8: is going to be from the rollout of autonomous vehicles 512 00:23:24,720 --> 00:23:29,520 Speaker 8: and robo taxis. And I know, you know it's not 513 00:23:29,560 --> 00:23:32,240 Speaker 8: the right time to talk about it, but when you 514 00:23:32,320 --> 00:23:35,280 Speaker 8: look at Wemo and how successful they've been in the 515 00:23:35,359 --> 00:23:38,880 Speaker 8: three cities that they have launched. I mean, the part 516 00:23:38,880 --> 00:23:42,240 Speaker 8: of the call was about how Uber is integrating Wemo 517 00:23:42,920 --> 00:23:49,120 Speaker 8: inside their app. Wemo is Google's autonomous driving unit. I mean, 518 00:23:49,119 --> 00:23:53,000 Speaker 8: they have about three hundred cars in San Francisco, similarly 519 00:23:53,160 --> 00:23:56,119 Speaker 8: in a couple of other cities Arizona, and what they 520 00:23:56,119 --> 00:23:59,480 Speaker 8: have shown is their technology is ready for prime time. 521 00:23:59,800 --> 00:24:02,720 Speaker 8: They have to get regulatory approvals to do it at scale, 522 00:24:03,000 --> 00:24:06,399 Speaker 8: but that changes the unit economics completely. Right now, we 523 00:24:06,440 --> 00:24:09,399 Speaker 8: are talking about a business model where cost per mile 524 00:24:09,600 --> 00:24:14,280 Speaker 8: is like five to seven dollars. Vemo can at scale, 525 00:24:14,440 --> 00:24:16,840 Speaker 8: they can do it three or four times cheaper. So 526 00:24:16,880 --> 00:24:20,920 Speaker 8: suddenly the take rate model gets disrupted. Now again it's 527 00:24:20,960 --> 00:24:23,760 Speaker 8: not hit primetime, but that's what Tesla is striving for, 528 00:24:24,280 --> 00:24:26,440 Speaker 8: and the risk for Uber and Lyft is they will 529 00:24:26,480 --> 00:24:27,680 Speaker 8: get disintermediated. 530 00:24:29,359 --> 00:24:32,120 Speaker 4: So okay, So it's not the fact that Uber would 531 00:24:32,160 --> 00:24:34,600 Speaker 4: just go get a bunch of robotaxis and use them 532 00:24:34,720 --> 00:24:37,880 Speaker 4: and eventually the payoff over time because they're not paying drivers. 533 00:24:37,920 --> 00:24:38,920 Speaker 4: It's not that scenario. 534 00:24:39,240 --> 00:24:43,000 Speaker 8: It's not that scenario because both these companies want to 535 00:24:43,119 --> 00:24:46,520 Speaker 8: roll out the robotaxis themselves as opposed to using an 536 00:24:46,600 --> 00:24:50,400 Speaker 8: Uber and even if Uber was to get involved, their 537 00:24:50,440 --> 00:24:53,240 Speaker 8: take rates would be way lower than thirty percent. Right now, 538 00:24:53,280 --> 00:24:56,560 Speaker 8: they are getting thirty percent of every ride. Let's say 539 00:24:56,560 --> 00:24:59,679 Speaker 8: it's a fifty dollars ride. Uber makes at least thirty percent. 540 00:25:00,119 --> 00:25:03,080 Speaker 8: That's a pretty healthy take rate with the you know, 541 00:25:03,119 --> 00:25:06,959 Speaker 8: autonomous driving equation. First, Tesla wants to go solo. They 542 00:25:06,960 --> 00:25:09,399 Speaker 8: don't want to partner with any of the right sharing guys. 543 00:25:09,680 --> 00:25:13,920 Speaker 8: That's one risk Vemo is on Uber. But my senses, 544 00:25:14,080 --> 00:25:17,160 Speaker 8: they also want to kind of broaden out their reach 545 00:25:17,200 --> 00:25:20,520 Speaker 8: and they will deploy their technology themselves. And in fact, 546 00:25:20,520 --> 00:25:24,600 Speaker 8: Alphabet allocated five billion dollars in capex this quarter on 547 00:25:24,720 --> 00:25:25,680 Speaker 8: Vemo's rollout. 548 00:25:25,720 --> 00:25:27,960 Speaker 2: So all right, I mean, all right, it's bad enough 549 00:25:28,000 --> 00:25:29,680 Speaker 2: that I get in the car with somebody I've never 550 00:25:29,760 --> 00:25:32,800 Speaker 2: met a total stranger. That's crazy enough to think about. 551 00:25:33,080 --> 00:25:35,960 Speaker 2: Am I getting in a car that's a robo taxi? 552 00:25:36,480 --> 00:25:37,600 Speaker 2: Is that really going to be a thing? 553 00:25:37,600 --> 00:25:40,840 Speaker 8: And so when I mean, these vehicles are monitored. 554 00:25:40,880 --> 00:25:42,399 Speaker 2: So by the way, I have a vest with scooter 555 00:25:42,440 --> 00:25:44,320 Speaker 2: by the way, so I don't necessarily need them for 556 00:25:44,320 --> 00:25:44,640 Speaker 2: the shore. 557 00:25:44,760 --> 00:25:47,160 Speaker 8: But go ahead, but just go to San Francisco right now. 558 00:25:47,240 --> 00:25:50,560 Speaker 8: You can order a Veimo ride. You can, you can 559 00:25:51,000 --> 00:25:55,040 Speaker 8: and just get that experience. I think every consumer who 560 00:25:55,080 --> 00:25:58,520 Speaker 8: has taken a Vemo ride loves that experience. Uber talked 561 00:25:58,520 --> 00:26:01,879 Speaker 8: about they acknowledged there on their call. But they also 562 00:26:01,960 --> 00:26:04,400 Speaker 8: think the rollout will be slow, and they are positioning 563 00:26:04,440 --> 00:26:08,560 Speaker 8: themselves by seeking all these partnerships they're partnering with byd 564 00:26:09,200 --> 00:26:12,040 Speaker 8: FO one hundred thousand vehicles, that was big news last week. 565 00:26:12,320 --> 00:26:15,000 Speaker 4: Well, then why would it be exclusionary, Like if Tesla 566 00:26:15,080 --> 00:26:17,520 Speaker 4: rolls it out themselves, why is it that it just 567 00:26:17,560 --> 00:26:21,320 Speaker 4: means more competition, It doesn't mean it's exclusionary like with Lyft. 568 00:26:21,400 --> 00:26:23,879 Speaker 4: Like you guys price compare with Lift, there's room for 569 00:26:23,960 --> 00:26:24,800 Speaker 4: more than just one. 570 00:26:25,040 --> 00:26:27,320 Speaker 8: There is, but then it goes back to being the 571 00:26:27,440 --> 00:26:31,080 Speaker 8: scale player and having that thirty percent take rates. The 572 00:26:31,119 --> 00:26:34,639 Speaker 8: reason why Uber has done much better than Lyft is 573 00:26:34,680 --> 00:26:37,440 Speaker 8: because it's a scale player and it can charge that 574 00:26:37,480 --> 00:26:40,240 Speaker 8: thirty percent take rate because it has the liquidity in 575 00:26:40,320 --> 00:26:44,239 Speaker 8: its marketplace, the supply demand matching, the best ETAs the 576 00:26:44,280 --> 00:26:47,240 Speaker 8: most options that it can offer to its riders. So 577 00:26:48,320 --> 00:26:51,120 Speaker 8: like marketplaces are all about scale, the moment you have 578 00:26:51,240 --> 00:26:54,960 Speaker 8: more than three or four competitors right now, it's a duopoly. 579 00:26:55,040 --> 00:26:57,520 Speaker 8: And still we see how badly Lyft is doing relative 580 00:26:57,520 --> 00:27:00,360 Speaker 8: to Uber. If you have more competition, that's not news. 581 00:27:00,400 --> 00:27:02,880 Speaker 8: But again this is for the route. This quarter was solid. 582 00:27:03,400 --> 00:27:08,600 Speaker 8: Nothing goes wrong for Uber until this robotaxi rollout plays out. 583 00:27:08,640 --> 00:27:10,760 Speaker 8: So we're talking a few quarters out scenario. 584 00:27:11,000 --> 00:27:12,840 Speaker 2: Market cap for Uber one hundred and thirty two billion, 585 00:27:12,960 --> 00:27:14,760 Speaker 2: market cap for Lyft four billion. 586 00:27:15,119 --> 00:27:19,320 Speaker 8: What happened well, I mean Uber clearly has the scale 587 00:27:19,359 --> 00:27:22,520 Speaker 8: and door Nash has done similarly very well on their 588 00:27:22,720 --> 00:27:25,920 Speaker 8: food delivery side. So You've got two scale players when 589 00:27:25,960 --> 00:27:29,359 Speaker 8: it comes to ride sharing and food delivery, and they 590 00:27:29,440 --> 00:27:33,119 Speaker 8: have the most supply. I mean, one challenge with this 591 00:27:33,240 --> 00:27:36,440 Speaker 8: business model is gross margins can never be as attractive 592 00:27:36,480 --> 00:27:39,119 Speaker 8: as your software companies. And that's what we keep finding 593 00:27:39,160 --> 00:27:42,000 Speaker 8: with Uber. It's like, there's still a forty percent gross 594 00:27:42,000 --> 00:27:45,280 Speaker 8: margin business at an aggregate level. So what where do 595 00:27:45,320 --> 00:27:46,119 Speaker 8: you for him? 596 00:27:46,200 --> 00:27:48,879 Speaker 2: That's terrible. I mean for most of the world, I'm like, 597 00:27:50,720 --> 00:27:53,080 Speaker 2: but for Mandy, if he doesn't see like eighty percent 598 00:27:53,359 --> 00:27:55,480 Speaker 2: gross margin, he doesn't pay attention to it. Man deep Sinc. 599 00:27:55,640 --> 00:27:57,199 Speaker 2: Thank you so much, Men deep Sink. He leads her 600 00:27:57,240 --> 00:28:00,679 Speaker 2: tech Covers. Along with that fellow on Oragrana lead our 601 00:28:00,720 --> 00:28:04,240 Speaker 2: global team Technology Research, one of the best on the street. 602 00:28:05,720 --> 00:28:09,600 Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live 603 00:28:09,680 --> 00:28:13,240 Speaker 1: weekdays at ten am Eastern on applecar Play and Android 604 00:28:13,240 --> 00:28:16,000 Speaker 1: Auto with a Bloomberg Business Act. You can also listen 605 00:28:16,119 --> 00:28:19,240 Speaker 1: live on Amazon Alexa from our flagship New York station 606 00:28:19,600 --> 00:28:22,280 Speaker 1: Just Say Alexa Play, Bloomberg eleven. 607 00:28:22,080 --> 00:28:27,119 Speaker 4: Thirty, Malex Steel alongside Paul Sweeney, This and Bloomberg Intelligence Radio, 608 00:28:27,359 --> 00:28:29,919 Speaker 4: we bring you all the top news and business economics 609 00:28:29,920 --> 00:28:32,520 Speaker 4: and finance through our lens of our Bloomberg Intelligence folks. 610 00:28:32,560 --> 00:28:35,040 Speaker 4: They cover two thousand companies and one hundred and thirty 611 00:28:35,080 --> 00:28:38,720 Speaker 4: industries all around the world. And one of our favorites 612 00:28:39,240 --> 00:28:42,560 Speaker 4: is Jennifer Ree. She is Boomberg Intelligence senior litigation analyst. 613 00:28:42,600 --> 00:28:45,640 Speaker 4: There's literally no one better internally or externally at Bloomberg 614 00:28:46,040 --> 00:28:48,960 Speaker 4: who knows this antitrust world better than she does. 615 00:28:49,200 --> 00:28:51,400 Speaker 2: Like I wouldn't call a Paul weiss Er scatting or 616 00:28:51,400 --> 00:28:52,920 Speaker 2: any of those firms. I just call go to this 617 00:28:53,240 --> 00:28:55,040 Speaker 2: four floor Bloomberg, talk. 618 00:28:54,880 --> 00:28:59,719 Speaker 4: To genred percent and this this headline crossed yesterday right 619 00:28:59,760 --> 00:29:02,240 Speaker 4: was out going to go on TV at around three 620 00:29:02,400 --> 00:29:06,040 Speaker 4: that a judge rulled Monday that Google illegally monopolized the 621 00:29:06,120 --> 00:29:10,160 Speaker 4: search market through exclusive deals, so it basically pays to 622 00:29:10,200 --> 00:29:13,320 Speaker 4: get their search function on your phone. I'm just gonna 623 00:29:13,360 --> 00:29:16,000 Speaker 4: done that down for a second. This could be huge, 624 00:29:16,080 --> 00:29:19,080 Speaker 4: not only for Google, but it could also be huge 625 00:29:19,120 --> 00:29:21,800 Speaker 4: in terms of like Apple, they could lose billions potentially 626 00:29:22,240 --> 00:29:24,080 Speaker 4: in revenue from this. So we wanted to bring in 627 00:29:24,160 --> 00:29:26,880 Speaker 4: Jen to break it down. Jen, can you just explain 628 00:29:26,960 --> 00:29:29,640 Speaker 4: to me in more detail kind of what the accusation 629 00:29:29,760 --> 00:29:30,080 Speaker 4: is here? 630 00:29:31,480 --> 00:29:33,920 Speaker 9: Sure? Of course, and thanks for all of your comments. 631 00:29:34,560 --> 00:29:37,080 Speaker 9: So Google basically was found to be a monopolist in 632 00:29:37,120 --> 00:29:40,080 Speaker 9: general search services, and I think that's probably no surprise, 633 00:29:40,200 --> 00:29:43,320 Speaker 9: right we all use Google. I think they have eighty 634 00:29:43,400 --> 00:29:47,600 Speaker 9: or ninety percent of the search querieson market share. But specifically, 635 00:29:48,120 --> 00:29:52,000 Speaker 9: what was found to be illegal was Google paying many 636 00:29:52,000 --> 00:29:57,120 Speaker 9: other third parties including Apple, Mozilla, Samsung, other OEMs to 637 00:29:57,200 --> 00:30:00,320 Speaker 9: set Google Search as the default search engine had all 638 00:30:00,320 --> 00:30:02,520 Speaker 9: the access points that you know, where you need to 639 00:30:02,520 --> 00:30:05,560 Speaker 9: access the Internet, so for instance, behind a browser, behind 640 00:30:05,560 --> 00:30:09,200 Speaker 9: Mozilla Firefox, or behind Apple Safari. And so what the 641 00:30:09,280 --> 00:30:12,040 Speaker 9: judge said is well, by placing Google as the default, 642 00:30:12,360 --> 00:30:15,240 Speaker 9: this really blocks out all the other competitors, the search 643 00:30:15,240 --> 00:30:19,280 Speaker 9: engine competitors. And at the end of the day, they 644 00:30:19,320 --> 00:30:22,320 Speaker 9: can't get better if they can't get to customers, because 645 00:30:22,360 --> 00:30:25,360 Speaker 9: search engines get better based on the number of searches done, 646 00:30:25,440 --> 00:30:28,200 Speaker 9: and Google's got all those searches locked up. And that 647 00:30:28,360 --> 00:30:32,720 Speaker 9: was anti competitive because it was exclusionary and probably hindered innovation, 648 00:30:32,920 --> 00:30:36,920 Speaker 9: might have hindered choice and you know, possibly hindered equality. 649 00:30:38,320 --> 00:30:42,160 Speaker 2: However, the stock is unchanged on the news here today, 650 00:30:42,720 --> 00:30:46,040 Speaker 2: so suggesting that the market doesn't really care. Should the 651 00:30:46,080 --> 00:30:47,080 Speaker 2: market care care? 652 00:30:47,120 --> 00:30:47,280 Speaker 4: Here? 653 00:30:47,320 --> 00:30:51,600 Speaker 2: Are there some remedies that might be really owners on Google? 654 00:30:52,560 --> 00:30:52,760 Speaker 8: You know? 655 00:30:52,840 --> 00:30:54,560 Speaker 9: I think there could be. I think part of the 656 00:30:54,600 --> 00:30:57,160 Speaker 9: reason the market's not really reacting is because this was 657 00:30:57,320 --> 00:31:00,160 Speaker 9: just a liability phase. So the remedies have yet to 658 00:31:00,160 --> 00:31:02,480 Speaker 9: be hashed out, and you know, that process could take 659 00:31:02,520 --> 00:31:05,320 Speaker 9: six months, It could take even another year before we 660 00:31:05,400 --> 00:31:08,000 Speaker 9: know what they are, and then Google will likely appeal 661 00:31:08,040 --> 00:31:10,640 Speaker 9: and can seek to stay any remedy pending the appeal. 662 00:31:10,920 --> 00:31:13,480 Speaker 9: And if that happens, you're looking at several years before 663 00:31:13,520 --> 00:31:15,960 Speaker 9: there's any impact at all. But at the end of 664 00:31:15,960 --> 00:31:19,320 Speaker 9: the day, the remedies could be onerous. First of all, 665 00:31:19,480 --> 00:31:22,840 Speaker 9: the DOJ will seek structural change. I don't think they 666 00:31:22,840 --> 00:31:25,320 Speaker 9: could win it here, but one of the requests they 667 00:31:25,360 --> 00:31:27,920 Speaker 9: might have of the judge is to break apart parts 668 00:31:27,920 --> 00:31:30,920 Speaker 9: of Google's business. Again, I think that's a long shot here. 669 00:31:31,000 --> 00:31:33,480 Speaker 9: I don't think it'll happen. I think it's more likely 670 00:31:33,520 --> 00:31:35,520 Speaker 9: that what the judge will say is Google, you can't 671 00:31:35,520 --> 00:31:39,160 Speaker 9: pay anymore to have that default position. And maybe the 672 00:31:39,240 --> 00:31:41,120 Speaker 9: judge will say, Google, you have to share some of 673 00:31:41,160 --> 00:31:43,680 Speaker 9: your data with some of these other search engines or 674 00:31:43,720 --> 00:31:46,240 Speaker 9: maybe some other new nascent search engine that comes into 675 00:31:46,240 --> 00:31:48,520 Speaker 9: being after this remedy phase is finished. 676 00:31:49,080 --> 00:31:51,400 Speaker 4: Okay, So if that's the case, I wonder does this 677 00:31:51,640 --> 00:31:55,080 Speaker 4: change if President Trump wins the White House or is 678 00:31:55,120 --> 00:31:56,240 Speaker 4: this kind of like locked in? 679 00:31:57,240 --> 00:31:59,920 Speaker 9: You know, it's such an interesting issue right now, Alex, 680 00:32:00,120 --> 00:32:04,360 Speaker 9: because one might have said if an administration changes from 681 00:32:04,400 --> 00:32:07,640 Speaker 9: Democratic to Republican, it could change and there might be 682 00:32:07,640 --> 00:32:09,160 Speaker 9: more of a likelihood of a settlement. 683 00:32:09,400 --> 00:32:10,320 Speaker 4: But you have JD. 684 00:32:10,480 --> 00:32:14,280 Speaker 9: Vance as president former President Trump's vice presidential pick, and 685 00:32:14,360 --> 00:32:18,400 Speaker 9: he actually is is aligned with the idea of breaking 686 00:32:18,480 --> 00:32:21,400 Speaker 9: up Google. He's pretty anti big tech. I don't know 687 00:32:21,440 --> 00:32:24,680 Speaker 9: how much he would influence the policy decisions of a 688 00:32:24,760 --> 00:32:29,200 Speaker 9: Trump DOJ or FTC, but if he did, he would 689 00:32:29,240 --> 00:32:32,000 Speaker 9: be all in on continuing to go after Google. So 690 00:32:32,360 --> 00:32:35,440 Speaker 9: I think that possibility of some kind of a settlement 691 00:32:35,680 --> 00:32:38,680 Speaker 9: that's easier on Google happening down the road is low. 692 00:32:39,560 --> 00:32:39,760 Speaker 4: Jen. 693 00:32:39,840 --> 00:32:41,520 Speaker 2: I think if you stopped any person on the street, 694 00:32:41,520 --> 00:32:43,920 Speaker 2: they would say, I got no problem with Google. They're actually, 695 00:32:43,920 --> 00:32:47,960 Speaker 2: it's great, It's changed my life for the better. Is 696 00:32:48,000 --> 00:32:50,280 Speaker 2: this one of those issues where there it's a solution 697 00:32:50,360 --> 00:32:53,320 Speaker 2: in search of a problem here, and does that factor 698 00:32:53,360 --> 00:32:54,560 Speaker 2: into remedies? 699 00:32:55,480 --> 00:32:58,320 Speaker 9: You know, it's exactly you're thinking like a lawyer now 700 00:32:58,360 --> 00:33:03,160 Speaker 9: because that hurts. There's a lot of commentary when this 701 00:33:03,200 --> 00:33:05,480 Speaker 9: case was brought that the DOJ brought the case but 702 00:33:05,560 --> 00:33:07,959 Speaker 9: they really don't have a solution, and they brought it 703 00:33:08,000 --> 00:33:10,440 Speaker 9: before they knew what the solution would be. We're going 704 00:33:10,480 --> 00:33:12,479 Speaker 9: to get into what they're going to suggest the solution. 705 00:33:12,640 --> 00:33:16,000 Speaker 9: But Paul, exactly why you said, you know, people love Google, 706 00:33:16,240 --> 00:33:18,479 Speaker 9: and this is exactly why I think the judge wouldn't 707 00:33:18,520 --> 00:33:20,560 Speaker 9: do something structural because he's not going to want to 708 00:33:20,560 --> 00:33:24,160 Speaker 9: mess that up. People like Google. Google's essentially a free product, 709 00:33:24,200 --> 00:33:27,960 Speaker 9: at least for people, not for advertisers, and it functions 710 00:33:28,040 --> 00:33:31,160 Speaker 9: very well. And despite having a monopoly position, the judge 711 00:33:31,160 --> 00:33:34,960 Speaker 9: did acknowledge that Google continues to innovate in the search area. 712 00:33:35,040 --> 00:33:38,720 Speaker 9: So I think because of the desirability for consumers of 713 00:33:38,800 --> 00:33:41,719 Speaker 9: the Google Search engine, we're not going to see something structural. 714 00:33:42,360 --> 00:33:44,680 Speaker 9: But I do think obviously the judge is going to 715 00:33:44,720 --> 00:33:46,640 Speaker 9: have to impose some remedy because he found that the 716 00:33:46,640 --> 00:33:48,280 Speaker 9: company's acting anti competitively. 717 00:33:48,600 --> 00:33:51,880 Speaker 4: This is a weirdly unfair question to ask you, is 718 00:33:51,920 --> 00:33:54,840 Speaker 4: big tech too big? Like do we have a big 719 00:33:54,840 --> 00:33:56,480 Speaker 4: tech problem? 720 00:33:56,640 --> 00:33:59,400 Speaker 9: Well, I think that's what the current administration thinks. Yes, 721 00:34:00,160 --> 00:34:03,080 Speaker 9: But you know, there's a disalignment here with our Supreme Court, 722 00:34:03,360 --> 00:34:06,080 Speaker 9: because our Supreme Court has ruled over and over that 723 00:34:06,120 --> 00:34:09,160 Speaker 9: it's not illegal in the United States to have a monopoly, 724 00:34:09,320 --> 00:34:11,440 Speaker 9: and in fact, that's what we want all companies to 725 00:34:11,480 --> 00:34:13,880 Speaker 9: work toward, because that's what will cause them to innovate 726 00:34:14,120 --> 00:34:16,680 Speaker 9: and try to gain market share by lowering their prices. 727 00:34:17,080 --> 00:34:19,360 Speaker 9: So at the end of the day, just being big, 728 00:34:19,400 --> 00:34:23,520 Speaker 9: at least today isn't illegal. The problem is the conduct 729 00:34:23,520 --> 00:34:25,759 Speaker 9: of a company that's really big, and that's really what 730 00:34:25,840 --> 00:34:28,160 Speaker 9: the DOJ and FTC are going after right now. 731 00:34:28,800 --> 00:34:32,440 Speaker 2: How about other tech companies, what does this mean for them? 732 00:34:32,560 --> 00:34:36,360 Speaker 9: You know, I think it's atmospherics because there are different facts, 733 00:34:36,360 --> 00:34:39,680 Speaker 9: different issues, different markets, and different market positions. You know, 734 00:34:39,680 --> 00:34:43,680 Speaker 9: the case against Amazon against Meta, they're more case against Apple, 735 00:34:43,920 --> 00:34:46,720 Speaker 9: they're quite different, and these cases rest on the facts 736 00:34:46,760 --> 00:34:49,520 Speaker 9: and the specifics. But what this does do, at least 737 00:34:49,520 --> 00:34:51,640 Speaker 9: for Google, we have one more case coming up, a 738 00:34:51,680 --> 00:34:54,880 Speaker 9: big one against its ad tech stack that's going to 739 00:34:54,880 --> 00:34:57,799 Speaker 9: trial this September. And now Google's been found to have 740 00:34:57,840 --> 00:35:01,040 Speaker 9: monopolized two different parts of its business, play Store, and 741 00:35:01,080 --> 00:35:05,640 Speaker 9: now search, so psychologically, you know, it could influence a 742 00:35:05,719 --> 00:35:08,240 Speaker 9: judge to think, well, they've been found to engage anti 743 00:35:08,280 --> 00:35:10,880 Speaker 9: competitively in two areas, why not in a third as well? 744 00:35:11,280 --> 00:35:13,000 Speaker 4: You know, Paul, this goes to your era too. I 745 00:35:13,040 --> 00:35:16,000 Speaker 4: was reading a piece today that big tech's AI problem 746 00:35:16,200 --> 00:35:18,319 Speaker 4: is just going to buy smaller to companies and getting 747 00:35:18,320 --> 00:35:20,719 Speaker 4: their talent right, and I wonder if that has to 748 00:35:20,800 --> 00:35:22,960 Speaker 4: kind of go away now, because if you have this 749 00:35:23,040 --> 00:35:24,080 Speaker 4: kind of DOJ. 750 00:35:24,320 --> 00:35:27,200 Speaker 2: Yeah, it's interesting. I mean, I think what I understand 751 00:35:27,239 --> 00:35:29,080 Speaker 2: from people like Jen is that some of these big 752 00:35:29,120 --> 00:35:31,239 Speaker 2: tech companies that their hands are really tied in terms 753 00:35:31,239 --> 00:35:32,040 Speaker 2: of big deals at least. 754 00:35:32,120 --> 00:35:35,000 Speaker 9: Yeah, Jen, do you think, oh, absolutely, their hands have 755 00:35:35,080 --> 00:35:37,640 Speaker 9: been tied for the last three years. Things could change 756 00:35:37,640 --> 00:35:40,120 Speaker 9: a little bit with the new administration. I think there 757 00:35:40,160 --> 00:35:42,799 Speaker 9: is no doubt no matter who's elected, there will be 758 00:35:42,880 --> 00:35:46,400 Speaker 9: some change in the leadership positions the decision makers at 759 00:35:46,400 --> 00:35:49,080 Speaker 9: the Department of Justice and Federal Trade Commission, and that 760 00:35:49,160 --> 00:35:51,840 Speaker 9: could change things. But I do think big tech is 761 00:35:51,840 --> 00:35:53,840 Speaker 9: still going to have a lot of trouble going forward 762 00:35:53,920 --> 00:35:55,439 Speaker 9: trying to do any kind of a big deal. 763 00:35:56,000 --> 00:35:58,800 Speaker 4: All right, Jim, thanks a lot. We really appreciate it awesome, 764 00:35:58,880 --> 00:36:00,600 Speaker 4: one of the best in the business. It's the best, 765 00:36:00,640 --> 00:36:04,560 Speaker 4: if not. Jennifer Rea Bloomberg Intelligence, a senior litigation analyst, 766 00:36:04,680 --> 00:36:08,880 Speaker 4: joining us on Google being accused of monopolizing search and 767 00:36:08,920 --> 00:36:11,799 Speaker 4: sort of the ramifications of that as well. It is 768 00:36:11,840 --> 00:36:14,680 Speaker 4: interesting though that markets are super taking this and stride. 769 00:36:14,719 --> 00:36:16,719 Speaker 4: Like yesterday when the news broke, the stock was down 770 00:36:16,840 --> 00:36:18,600 Speaker 4: like a couple percent and didn't really move at all 771 00:36:18,640 --> 00:36:18,920 Speaker 4: from that. 772 00:36:19,080 --> 00:36:22,200 Speaker 2: I mean second, investors have been used to this from 773 00:36:22,239 --> 00:36:24,960 Speaker 2: the Microsoft days back in the eighties, nineties and two thousands, 774 00:36:25,360 --> 00:36:28,080 Speaker 2: and even they looked to Big Tobacco and they say, 775 00:36:28,400 --> 00:36:30,520 Speaker 2: look at and Big Tobaccos is powered break through all 776 00:36:30,520 --> 00:36:33,360 Speaker 2: that litigation risk here. So you get to these companies 777 00:36:33,400 --> 00:36:36,120 Speaker 2: to get to such a size and such a strength 778 00:36:36,160 --> 00:36:38,719 Speaker 2: that it really doesn't matter. The horse is kind of 779 00:36:38,719 --> 00:36:40,799 Speaker 2: out of the barn here, so we'll keep an eye 780 00:36:40,920 --> 00:36:41,160 Speaker 2: on that. 781 00:36:41,600 --> 00:36:46,120 Speaker 1: This is the Bloomberg Intelligence podcast, available on Apples, Spotify, 782 00:36:46,320 --> 00:36:49,240 Speaker 1: and anywhere else you will get your podcasts. Listen live 783 00:36:49,320 --> 00:36:52,920 Speaker 1: each weekday ten am to noon Eastern on Bloomberg dot Com, 784 00:36:53,040 --> 00:36:56,439 Speaker 1: Thehart Radio app, tune In, and the Bloomberg Business app. 785 00:36:56,560 --> 00:36:59,680 Speaker 1: You can also watch us live every weekday on YouTube, 786 00:37:00,120 --> 00:37:01,520 Speaker 1: Always on the Bloomberg Tune