WEBVTT - Mark Zuckerberg Always Knew What He Was Doing: Joe Nocera 0:00:01.400 --> 0:00:04.120 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along 0:00:04.120 --> 0:00:06.200 with my co host of Bonnie Quinn. Every business day 0:00:06.240 --> 0:00:10.400 we bring you interviews from CEOs, market pros, and Bloomberg experts, 0:00:10.400 --> 0:00:13.560 along with essential market moving news. Kind the Bloomberg Markets 0:00:13.600 --> 0:00:17.000 Podcast on Apple podcast or wherever you listen to podcasts, 0:00:17.000 --> 0:00:21.760 and on Bloomberg dot com. Mark Zuckerberg always knew. This 0:00:21.800 --> 0:00:24.640 is how jon Oh Sarah starts his column on Facebook, 0:00:24.880 --> 0:00:27.360 which she says only has itself to blame for a 0:00:27.440 --> 0:00:29.600 drastic remedy which might be in the works on the 0:00:29.600 --> 0:00:31.600 part of a g s all around the country. Let's 0:00:31.600 --> 0:00:34.760 bring in Jono Sara now for our Bloomberg Opinion piece 0:00:34.840 --> 0:00:38.560 of the day. Joe obviously a Bloomberg Opinion columnists covering business. 0:00:39.040 --> 0:00:43.880 So Joe, what did Mark Zuckerberg always know? Hi, Banni. 0:00:43.960 --> 0:00:48.160 He always knew that these companies that he was buying 0:00:48.560 --> 0:00:51.720 and telling the government it was just a little, a 0:00:51.760 --> 0:00:55.320 little purchase. We're in fact, companies that he could see 0:00:56.400 --> 0:01:00.120 might one day proved to be a serious competitor, and 0:01:00.200 --> 0:01:03.920 he was cutting off competition with these purchases, even though 0:01:04.280 --> 0:01:07.000 it was two thousand twelves in the case of Instagram 0:01:07.000 --> 0:01:09.360 and two thousand fourteen in the case of what's happened, 0:01:10.400 --> 0:01:13.319 if it was going to become such a problem, you 0:01:13.360 --> 0:01:16.119 know that a g s around the country want something 0:01:16.160 --> 0:01:19.120 done about it, Why didn't regulators stop those purchases at 0:01:19.120 --> 0:01:23.880 the time. Well, to be honest, I don't think regulators. 0:01:23.920 --> 0:01:26.200 I think I think Markael Zuckerberg was a lot more 0:01:26.280 --> 0:01:30.080 foresighted about this sort of thing then the regulators were. 0:01:30.240 --> 0:01:33.440 So for instance, you know, one of the reasons they 0:01:33.520 --> 0:01:36.640 let Instagram go through was because Instagram had no revenue. 0:01:37.400 --> 0:01:40.000 So the thought was, well, if Instagram has no revenue, 0:01:40.000 --> 0:01:42.800 then they're really not expanding markets uh their market share 0:01:43.440 --> 0:01:46.920 by buying Instagram. Um. You know. The other thing is 0:01:46.959 --> 0:01:49.760 that at the time there were other photo apps, so 0:01:49.880 --> 0:01:52.720 the idea was, well, you buy Instagram. You know, there's 0:01:52.720 --> 0:01:56.280 still companies like uh Camera I think it was called 0:01:56.320 --> 0:02:01.240 Camera Anywhere or something like that. Camera also, yes, Camera Awesome, 0:02:01.240 --> 0:02:04.800 which no longer exists of course. So um, so I 0:02:04.840 --> 0:02:07.960 think the regulators were you know, honestly, I don't think 0:02:08.160 --> 0:02:11.320 Mark Zuckerberg and Facebook were completely straight with the regulators 0:02:11.320 --> 0:02:14.080 about their rationalpha buying these companies. And second of all, 0:02:14.120 --> 0:02:16.840 I don't think the regulators were foresighted enough to see 0:02:16.880 --> 0:02:21.400 the potential harm down the road. So what's your outlook 0:02:21.440 --> 0:02:24.079 for what happens with the FTC and these forty eight 0:02:24.080 --> 0:02:28.760 attorneys general dual antitrust suits now to undo both the 0:02:28.800 --> 0:02:31.760 merger of Facebook and Instagram as well as the takeover 0:02:31.840 --> 0:02:36.280 of What'sapp. Does the succeed eventually? It's really hard to 0:02:36.280 --> 0:02:40.720 know because, um, you know, if this goes to court, 0:02:41.400 --> 0:02:43.240 you know, it's gonna be a couple of years before 0:02:43.240 --> 0:02:46.320 there's a trial. That's That's that's point number one. Um, 0:02:46.480 --> 0:02:49.760 And who knows, you know how you know, Facebook, no 0:02:49.840 --> 0:02:52.400 doubt try to settle in some way that does not 0:02:53.360 --> 0:02:57.520 uh force them to give up Instagram and What's App. Um. 0:02:57.600 --> 0:03:00.239 And you know, like if you take the Microsoft case 0:03:00.440 --> 0:03:03.560 as an example, Yes, the district court judge in that 0:03:03.639 --> 0:03:07.200 case ordered that Microsoft be broken up into two parts, 0:03:07.240 --> 0:03:12.120 but that was eventually overruled by the by the appeals court. 0:03:12.240 --> 0:03:15.440 And and although Microsoft wound up being sanctioned, they wound 0:03:15.480 --> 0:03:19.000 up remaining the same company that they once were. So 0:03:19.800 --> 0:03:23.320 it's it's way too early to think that it's either 0:03:23.400 --> 0:03:25.160 going to be broken up or it's not going to 0:03:25.240 --> 0:03:27.680 be broken up. It's just there's no there's just no 0:03:27.720 --> 0:03:34.320 way to know. Is it bad for corporate America that Facebook, Instagram, 0:03:34.320 --> 0:03:40.000 and What'sapp or all one big company? Now? I certainly 0:03:40.000 --> 0:03:44.800 think it's it's bad for consumers, um. I mean, the 0:03:45.320 --> 0:03:48.840 the main issue is that there's no competition in the 0:03:48.920 --> 0:03:52.160 social media space. They're just none. So if you don't 0:03:52.240 --> 0:03:55.640 like Facebook's privacy policy, where are you going to go? 0:03:56.320 --> 0:03:59.280 You go to Instagram, you're still in Facebook. If you 0:03:59.320 --> 0:04:01.560 go to What'sapp, you're still on Facebook. Where you close 0:04:01.600 --> 0:04:05.240 your browser and open a book, well you could, you could, 0:04:05.440 --> 0:04:07.640 you could, but who does that in this world that 0:04:07.680 --> 0:04:10.680 we live in? I mean, but that's sort of the problem, 0:04:10.880 --> 0:04:14.640 isn't it? Isn't it a joe? People have really embraced 0:04:14.680 --> 0:04:18.520 social media as a way of connecting, and it's it's 0:04:18.520 --> 0:04:21.560 almost like they can't do without it. All of these 0:04:21.600 --> 0:04:24.280 studies on addiction and so on, they really sort of 0:04:24.360 --> 0:04:27.360 hit the point. People have now got so used to 0:04:27.880 --> 0:04:32.080 messenger and you know, posting updates on Facebook that it's 0:04:32.120 --> 0:04:36.479 almost like the phone was. It's become a utility. Well, 0:04:36.520 --> 0:04:40.240 I agree with you. I agree with you about that. Um, 0:04:40.279 --> 0:04:43.799 but I would say, uh, turning Facebook into a utility 0:04:44.000 --> 0:04:47.159 is is even is more than even the Justice Department 0:04:47.360 --> 0:04:50.080 you can hit the FTC can handle at this point. 0:04:50.360 --> 0:04:53.920 But but look, if you had I need to, if 0:04:53.960 --> 0:04:59.040 you had um, Instagram and What's App as separate entities 0:04:59.040 --> 0:05:03.440 from Facebook, they could compete on the basis of privacy. 0:05:03.560 --> 0:05:06.600 They could compete on the basis of how are you 0:05:06.640 --> 0:05:08.760 going to use your data? They could compete on the 0:05:08.800 --> 0:05:10.960 basis of what kind of ads will we put in 0:05:11.000 --> 0:05:13.760 front of you or what kind of disinformation? Will we 0:05:13.800 --> 0:05:16.480 have this information or will we not have you know, 0:05:16.560 --> 0:05:19.679 you can have that kind of competition. UM and and 0:05:19.680 --> 0:05:22.640 and I think that's really what the g S and 0:05:22.680 --> 0:05:28.839 the and the and the FTC are are trying to accomplish. 0:05:29.040 --> 0:05:31.840 Is there time, I mean, is it too late, I 0:05:31.880 --> 0:05:35.120 should say, for this to succeed in the sense that 0:05:35.520 --> 0:05:39.320 you know, even What's Up founder left because of how 0:05:39.640 --> 0:05:43.680 you know, the what'sapp was turning into under the Facebook banner. 0:05:45.200 --> 0:05:48.120 Is the train gone so long from the station that 0:05:48.160 --> 0:05:51.200 it's going to be hard to bring it back? Um? Well, 0:05:51.960 --> 0:05:57.800 you know Facebook has not really integrated those two apps, uh, 0:05:57.960 --> 0:06:01.520 you know, um intertwined it is Facebook, so they you know, 0:06:01.600 --> 0:06:05.479 breaking it up would actually be in those terms relatively simple. 0:06:06.520 --> 0:06:09.880 The question is who would run those companies? And you know, 0:06:09.920 --> 0:06:12.359 we're getting way ahead of ourselves. But my, my, my 0:06:12.480 --> 0:06:16.560 strong guess is that the government would not allow some 0:06:16.760 --> 0:06:21.559 Facebook executive to to go over to Instagram and they 0:06:21.760 --> 0:06:25.560 have to undoubtedly find new leadership. UM. And so I 0:06:25.600 --> 0:06:27.880 don't think it's it's I really don't think it's too 0:06:27.960 --> 0:06:30.159 late in that sense. In a in a legal sense, 0:06:30.240 --> 0:06:33.800 that's a different question. And the problem there is that 0:06:33.880 --> 0:06:37.240 the courts over the last two or three decades has 0:06:37.279 --> 0:06:40.880 become very tolerant of mergers and has used a very 0:06:41.080 --> 0:06:44.240 standard called the consumer welfare standard to decide, uh, if 0:06:44.240 --> 0:06:48.440 a merger is okay or not. That really UM makes 0:06:48.440 --> 0:06:52.680 it almost impossible to put a glove on the big 0:06:52.720 --> 0:06:57.080 tech companies. So that has to change over their course 0:06:57.080 --> 0:06:59.279 of the next few years in order for Facebook to 0:06:59.279 --> 0:07:01.960 be broken up. Will it hope, Joe? Will it hope? 0:07:01.960 --> 0:07:04.600 These A G S and the FTC that you know, 0:07:04.800 --> 0:07:08.000 many many early workers in Silicon Valley that totally believed 0:07:08.040 --> 0:07:11.040 in in the projects, let's say, of connecting the world 0:07:11.120 --> 0:07:14.760 have now turned against Silicon Valley for the reason you 0:07:14.760 --> 0:07:19.320 know that it did become the monster that everybody got 0:07:19.320 --> 0:07:22.120 eaten up by Will it hope that that so many 0:07:22.160 --> 0:07:27.760 of those employees have now turned against Facebook absolutely, because 0:07:28.040 --> 0:07:30.280 let's face it, those people are the ones who wouldn't 0:07:30.280 --> 0:07:34.720 want on the witness stand um. Also, more importantly, almost 0:07:35.120 --> 0:07:38.080 as just as importantly, is the fact that both Republicans 0:07:38.120 --> 0:07:44.240 and Democrats in Congress really are become anti big tech, 0:07:44.400 --> 0:07:49.880 so anti Facebook, anti Amazon, anti anti Google, and so uh, 0:07:49.920 --> 0:07:53.480 there's a decent possibility that legislation of some sort will 0:07:53.520 --> 0:07:57.040 pass anti Truss legislation will pass in the next Congress, 0:07:57.040 --> 0:07:59.400 not this one, but in the next Congress that could 0:07:59.440 --> 0:08:03.080 well um put strictures on these companies and make it 0:08:03.120 --> 0:08:07.120 easier to break them up. Joe, we will watch this 0:08:07.200 --> 0:08:11.040 with absolute interest, but it's going to be years, as 0:08:11.080 --> 0:08:13.320 we heard earlier from Dave Wilson, So Joe, we expect 0:08:13.400 --> 0:08:15.000 that you'll be following it as well and keeping us 0:08:15.040 --> 0:08:18.440 up to date with your Bloomberg opinion columns out really 0:08:18.440 --> 0:08:21.680 all week on the Bloomberg and please do follow Jonah 0:08:21.680 --> 0:08:24.880 Sarah for all of his wonderful columns. That's Jonah Sarah, 0:08:24.920 --> 0:08:28.960 Bloomberg opinion columnist joining us and his latest column. Facebook 0:08:28.960 --> 0:08:35.560 has only itself to blame for drastic remedy, and our 0:08:35.640 --> 0:08:38.720 thanks to Emily Chang for bringing us that wonderful interview 0:08:38.840 --> 0:08:43.920 with newly minted billionaire Brian Chesky his golden retriever, Sir 0:08:44.040 --> 0:08:47.760 Richard Parker. I'm sure we'll also benefit from this I 0:08:47.880 --> 0:08:50.440 p O. As we said, we are waiting for the 0:08:50.520 --> 0:08:54.200 first trade. Emily brought the news of where it was 0:08:54.240 --> 0:08:56.839 being priced to Brian, and I can tell you because 0:08:56.880 --> 0:09:00.320 I saw the screen his eyebrows raised when she said 0:09:00.320 --> 0:09:02.640 one thirty nine. That's of course now moved up even 0:09:02.720 --> 0:09:04.880 higher to one fifty And we haven't even had a 0:09:04.880 --> 0:09:07.360 first trade yet, so it's not done yet. We're off 0:09:07.360 --> 0:09:10.160 to the races. Let's bring in Mundy Singh for a 0:09:10.200 --> 0:09:15.400 little bit of intelligence here. Mundy senior tech industry analyst 0:09:15.400 --> 0:09:18.800 for Bloomberg Intelligence and has been listening to that interview 0:09:18.840 --> 0:09:20.920 as well. A b n B. The I p O 0:09:21.000 --> 0:09:23.520 priced at sixty eight dollars. We're looking at more than 0:09:23.600 --> 0:09:26.920 double that now, and Emily put that to Brian Chesky 0:09:27.000 --> 0:09:30.400 and he was extremely surprised. Are there dangers here, Maundy 0:09:30.600 --> 0:09:35.680 that it's going to be overpriced? I think so, especially 0:09:35.800 --> 0:09:39.439 you know when you look at evaluation of about fifteen 0:09:39.480 --> 0:09:42.640 to twenty times sales for a new I p O 0:09:42.840 --> 0:09:46.240 and a mature company like Airbnb. Airbnb is not a 0:09:46.360 --> 0:09:49.880 startup or you know, an early stage company like Snowflake was, 0:09:49.960 --> 0:09:52.200 you know, a couple of months back. So this is 0:09:52.200 --> 0:09:55.760 a company that will likely have five billion dollars in 0:09:55.840 --> 0:10:00.000 revenue next year. And for any you know, high growth company, 0:10:00.080 --> 0:10:04.280 the most important thing investors care about is growth. So 0:10:04.880 --> 0:10:07.680 you know, we are still coming out of the pandemic, 0:10:07.840 --> 0:10:11.160 and yes, there will be a vaccine driven recovery next year, 0:10:11.640 --> 0:10:15.679 but beyond that, I'm not so sure Airbnb can keep 0:10:15.720 --> 0:10:19.320 growing at thirt top line every year. And that's the risk. 0:10:19.400 --> 0:10:22.880 When the market values at fifteen to twenty times sales, 0:10:23.520 --> 0:10:27.160 the valuations can be cut into half the moment you 0:10:27.200 --> 0:10:29.760 know there is a doubt that the growth is going 0:10:29.800 --> 0:10:32.920 to decelerate. Mandyp He came out and said that in April, 0:10:32.960 --> 0:10:35.400 when they got debt financing, the price they got then 0:10:35.440 --> 0:10:38.480 would have priced them at thirty books a share. In 0:10:38.679 --> 0:10:41.360 April was obviously a very different time. We were just 0:10:41.640 --> 0:10:44.000 into the pandemic and it was the worst of the pandemic. 0:10:44.520 --> 0:10:48.080 But that's a huge difference thirty dollars a share. It 0:10:48.080 --> 0:10:52.600 shows you how just a sentiment can change absolutely, and 0:10:52.679 --> 0:10:54.880 you know they have to go to Silver Lake and 0:10:55.040 --> 0:10:58.280 six Streets. Really, these guys are the veterans, you know 0:10:58.320 --> 0:11:02.080 when it comes to the private equity investments. So at 0:11:02.160 --> 0:11:05.120 that point of time, Airbnb was going through a cash 0:11:05.200 --> 0:11:09.280 burn issue. He mentioned about cancelations. Cancelations were at its 0:11:09.440 --> 0:11:12.280 peak at that time and they really had to raise cash. 0:11:12.360 --> 0:11:17.079 So the market sentiment has shifted completely since then. And look, 0:11:17.400 --> 0:11:20.280 other sectors in tech have also done well. We have 0:11:20.360 --> 0:11:22.880 seen a lot of software I p s do really well. 0:11:23.480 --> 0:11:27.079 The biggest concern I have with Airbnb is online travel 0:11:27.400 --> 0:11:30.760 is a saturated or somewhat of you know, a highly 0:11:30.840 --> 0:11:34.599 penetrated market when it comes to shift to online. You 0:11:34.640 --> 0:11:37.000 look at food delivery. Food delivery is still in the 0:11:37.200 --> 0:11:40.840 very early stages of you know, shifting to online. But 0:11:41.080 --> 0:11:45.280 in case of Airbnb, it's a consolidated market. You've got 0:11:45.320 --> 0:11:49.599 three big players Booking, Expedia, Airbnb. I think what Airbnb 0:11:49.760 --> 0:11:53.920 has to show is really good execution, probably take share 0:11:53.960 --> 0:11:57.840 from Expedia for it to keep justifying this kind of evaluation. 0:11:58.160 --> 0:12:02.040 And he did mention that there how brought back Airbnb experiences, 0:12:02.120 --> 0:12:06.240 and they are looking at opportunities in other sort of dimensions. 0:12:06.240 --> 0:12:09.360 Certain opportunities are perishable, was the word to use. Certain 0:12:09.440 --> 0:12:11.520 are not, and we'll look at those down the road. 0:12:11.600 --> 0:12:17.280 So presumably experiences is not a perishable opportunity for them, 0:12:17.280 --> 0:12:19.560 and so they brought that back, but they had to 0:12:19.559 --> 0:12:22.240 to let some of that go now. He also mentioned 0:12:22.280 --> 0:12:24.920 that they took two d and fifty million dollars from 0:12:24.960 --> 0:12:27.080 the balance sheet to give it to their hosts at 0:12:27.120 --> 0:12:29.000 the beginning of the pandemic. It was a very very 0:12:29.000 --> 0:12:31.640 difficult time. There is danger here that they're going to 0:12:31.679 --> 0:12:33.800 have to keep tapping that balance sheet every time there's 0:12:33.840 --> 0:12:38.400 a hiccup, right, bundyep Well, so Airbnb again is a 0:12:38.400 --> 0:12:42.400 gig economy company, and with the gig economy companies, you know, 0:12:42.440 --> 0:12:46.200 when you don't have all these people who are kind 0:12:46.200 --> 0:12:49.080 of working for you but they are not employees, you 0:12:49.120 --> 0:12:52.480 have to keep, you know, using incentives. It's the same 0:12:52.480 --> 0:12:55.800 with Uber having to use driver incentives. It's the same 0:12:55.800 --> 0:12:58.480 with door Dash having to use incentives for the careers. 0:12:58.559 --> 0:13:01.520 And Airbnb has to keep doing things, which is why 0:13:01.960 --> 0:13:04.400 we think the cost of doing business for the gig 0:13:04.440 --> 0:13:08.040 economy companies is higher than the traditional you know, ok 0:13:08.320 --> 0:13:11.520 is like booking an Expedia, So that will weigh on 0:13:11.520 --> 0:13:13.959 on the cost side for the near to medium term. 0:13:14.840 --> 0:13:17.760 The people want things to be intimate and private. Now, 0:13:18.200 --> 0:13:21.120 he was explaining why he thinks the Airbnb has a 0:13:21.200 --> 0:13:23.960 leg up on just the general hotel room. He also 0:13:24.000 --> 0:13:26.240 said that for business travel, you know, people don't need 0:13:26.280 --> 0:13:28.120 to check in at an airport at midnight to have 0:13:28.160 --> 0:13:30.560 an eight am meeting anymore anything, so that that will 0:13:30.920 --> 0:13:36.040 also help airbnbs business. I mean, there are reasonable expectations, 0:13:36.080 --> 0:13:41.040 but are they scientific. Well, so, look, the last time 0:13:41.080 --> 0:13:44.800 we had a crisis, financial crisis, Airbnb started back then. 0:13:45.160 --> 0:13:48.439 Now we had sort of you know, a six month crisis. 0:13:49.360 --> 0:13:52.560 Things will change, I'm sure you know, coming out of 0:13:52.559 --> 0:13:58.600 this pandemic. Consumer behavior will change. Now Airbnb will be 0:13:58.760 --> 0:14:01.840 able to you know, benefit from that change, but chances 0:14:01.840 --> 0:14:05.679 are there will be another startup somewhere who's also trying to, 0:14:05.880 --> 0:14:09.880 you know, do things to leverage the change in habits 0:14:09.960 --> 0:14:13.400 and and so I think I treat Airbnb as a 0:14:13.400 --> 0:14:19.560 mature company. And granted they have created this category alternative accommodations, 0:14:19.600 --> 0:14:23.680 but it's not said that they can keep you know, 0:14:23.800 --> 0:14:26.480 growing their top line, they have to find new categories 0:14:26.520 --> 0:14:30.920 for growth, and there's a still a lot to execute upon. Alright, 0:14:31.000 --> 0:14:33.240 man Deep, thank you, Mandy. People will get back now 0:14:33.280 --> 0:14:36.280 to his Bloomberg to what's that a b NB taker 0:14:36.320 --> 0:14:38.880 to see when the first trade trades. Mandeep Sing is 0:14:38.920 --> 0:14:42.280 senior tech industry analysts for Bloomberg Intelligence and of course 0:14:43.320 --> 0:14:46.800 giving us some context there around that. Brian Chesky interview 0:14:47.200 --> 0:14:51.120 Brian very adept At giving us his personal story, which 0:14:51.160 --> 0:14:55.000 of course always goes down well with investors, particularly when 0:14:55.000 --> 0:14:56.840 you talk about your mom and dad being so social 0:14:56.880 --> 0:14:59.840 workers and how you're going to celebrate with your golden retriever. 0:15:01.480 --> 0:15:04.680 Let's bring in now somebody who has been watching with 0:15:04.760 --> 0:15:08.520 great interest the Scotus hearings and Funny and Freddy. We're 0:15:08.520 --> 0:15:11.000 not going to get a decision from Scotus obviously until 0:15:11.200 --> 0:15:13.120 the middle of next year, but Chris Whale and German 0:15:13.160 --> 0:15:15.840 of Whale and Global Advisors has lots of thoughts on 0:15:16.080 --> 0:15:19.520 what should happen and what will happen. Chris welcome, Oh, 0:15:19.520 --> 0:15:22.560 thank you, Vannie. I hope you're well great, Thank you. 0:15:22.600 --> 0:15:24.120 So talk to us a little bit about what we 0:15:24.280 --> 0:15:27.040 heard yesterday at the Supreme Court. It was happening as 0:15:27.080 --> 0:15:28.920 we were live on air, so we didn't get a 0:15:29.000 --> 0:15:31.360 chance to actually listen in on the oral arguments. But 0:15:32.320 --> 0:15:34.680 if you heard them, what were the orient arguments made 0:15:34.760 --> 0:15:38.000 and if you didn't, what would have been made? Well, No, 0:15:38.120 --> 0:15:40.240 I I read the summaries. I didn't get a chance 0:15:40.280 --> 0:15:43.360 to actually listen to it. I probably will later. But essentially, 0:15:43.360 --> 0:15:47.160 the shareholders of Fannie and Freddie Mac, the r sets 0:15:47.640 --> 0:15:52.080 private shareholders are arguing that the money's taken by the 0:15:52.480 --> 0:15:56.680 Treasury after the failure of these two entities should be returned. 0:15:57.440 --> 0:16:00.040 And they're basically saying, well, these are private comp and 0:16:00.160 --> 0:16:04.040 ease the received or the excum of the conservatorship was 0:16:04.120 --> 0:16:08.040 wrongly imposed upon us, and and you know we should 0:16:08.080 --> 0:16:12.480 basically get the companies back for nothing. Um. I take 0:16:12.480 --> 0:16:14.880 a different view, which is that the companies did in 0:16:14.920 --> 0:16:18.800 fact fail. Congress provided a framework for dealing with this, 0:16:19.360 --> 0:16:22.800 and the Treasury required them when they were taken over, 0:16:22.920 --> 0:16:27.560 to pay the taxpayer for the rap for the securities 0:16:27.600 --> 0:16:30.800 at the issue. In other words, Fannie Freddy Mac mortgage 0:16:30.840 --> 0:16:34.120 bonds are triple A rated because the government of the 0:16:34.200 --> 0:16:37.600 United States stands behind them. The government of the United 0:16:37.600 --> 0:16:42.400 States also stands behind the two corporate entities. The companies 0:16:42.440 --> 0:16:46.480 at the plaintiffs and the Supreme Court action are trying 0:16:46.520 --> 0:16:49.680 to get control of again. And as you know, during 0:16:49.720 --> 0:16:51.920 the Bush administration, there was a lot of talk and 0:16:51.960 --> 0:16:54.680 a lot of acts about getting Fannie and Freddy out 0:16:54.680 --> 0:16:58.720 of government control. So here we are, and essentially the 0:16:58.720 --> 0:17:02.560 plaintiffs are asking the Supreme Court to step in between 0:17:03.040 --> 0:17:09.480 Congress and the executive branch and essentially overturned the decisions 0:17:09.480 --> 0:17:13.399 made by Treasury with the authority of Congress and return 0:17:13.440 --> 0:17:16.919 the moneies to private shareholders. I don't think that's going 0:17:17.000 --> 0:17:19.800 to happen so and I've I've felt that way since 0:17:19.880 --> 0:17:23.639 day one. Judge Lamberth many years ago came out with 0:17:23.640 --> 0:17:27.760 a decision. It basically said, Vanni, I'm sorry, I can't 0:17:27.800 --> 0:17:30.800 do anything for you. Go up to Capitol Hill and 0:17:30.880 --> 0:17:33.440 he said, this is a political problem. And he's right, 0:17:33.880 --> 0:17:37.639 because when Congress creates something, they created Fannie Mae and 0:17:37.680 --> 0:17:42.879 Freddie Mack, and then they subsequently sold shares to the public. Okay, 0:17:43.080 --> 0:17:46.440 you end up with this hybrid. It's neither public nor private. 0:17:47.040 --> 0:17:50.120 But the one thing that you can very clearly see 0:17:50.240 --> 0:17:54.480 is that these are not independent entities. They're federally chartered 0:17:54.720 --> 0:17:57.480 and all of the india of control that you would use, 0:17:57.600 --> 0:18:00.639 say in a bank, uh situation or in company if 0:18:00.640 --> 0:18:03.720 you're trying to decide who's in control. The government is 0:18:03.720 --> 0:18:06.920 still in control. They regulate them, the appoint the officers 0:18:07.040 --> 0:18:10.160 or review you know, the appointment of officers and directors. 0:18:10.400 --> 0:18:15.680 They have a lot of public policy control over them. Yeah, exactly. 0:18:15.680 --> 0:18:18.119 And that is then the powers, which is back to 0:18:18.119 --> 0:18:20.639 Mark Calabria. In some ways, he's the f h F 0:18:20.680 --> 0:18:24.160 A head. Will he keep his job through the next 0:18:24.200 --> 0:18:28.160 administration and what will he do? That's when clear we 0:18:28.200 --> 0:18:30.440 have to find out. And again this is in front 0:18:30.440 --> 0:18:34.040 of the courts if the president has the power to 0:18:34.160 --> 0:18:38.000 remove him for any reason. Remember they litigated over this, 0:18:38.600 --> 0:18:42.080 and they also litigated over the Consumer Finance Protection Bureau 0:18:42.560 --> 0:18:46.639 because it was a unit terry, single director kind of 0:18:46.680 --> 0:18:49.879 a design for the agency. And so what happened was 0:18:49.960 --> 0:18:53.920 the courts ultimately said, now the president can remove at 0:18:53.920 --> 0:18:58.000 the time, this was Richard Cordrey anytime he wants because 0:18:58.080 --> 0:19:01.159 to prevent the president from extra sizing that authority they 0:19:01.240 --> 0:19:06.119 judged to be unconstitutional. So my guess is is that 0:19:06.280 --> 0:19:09.560 the Biden administration is going to find some way, one 0:19:09.560 --> 0:19:12.520 way or another once the courts have ruled to remove 0:19:12.640 --> 0:19:15.439 Mr Callabria because he is so far out of step 0:19:15.520 --> 0:19:18.639 with both the industry and with what we need today, 0:19:19.480 --> 0:19:22.399 I think he's going to have a fairly short half life. 0:19:22.800 --> 0:19:24.679 What does it mean for the mortgage industry in the 0:19:24.760 --> 0:19:28.320 United States? Chris? Where do you see it headed? Oh? 0:19:28.440 --> 0:19:31.200 Next year is going to be another boom year. Profit 0:19:31.240 --> 0:19:35.520 margins will be less because competition for those loans is intensifying. 0:19:36.080 --> 0:19:37.840 But you know, I'm in the process of buying a 0:19:37.880 --> 0:19:41.040 house right now. I got pre approved in a day. Well, 0:19:41.119 --> 0:19:43.760 you're though you're special, Chris. No, I'm not special. I'm 0:19:43.760 --> 0:19:45.359 telling you that. And this was a non bank. I 0:19:45.440 --> 0:19:47.479 won't mention their name, But the non banks are so 0:19:47.560 --> 0:19:50.119 much more efficient than the commercial banks. It's frightening. I 0:19:50.119 --> 0:19:53.520 got an appointment with Bank America a week later, and 0:19:53.560 --> 0:19:56.399 I got pre approved by a non bank next day, 0:19:56.400 --> 0:20:01.000 had two. So are there any dangers in the system left? Yes, 0:20:01.160 --> 0:20:05.840 if volumes slowed down, then uh. The forbearance that Congress 0:20:05.880 --> 0:20:08.920 gave borrowers is going to become a problem because Congress 0:20:08.960 --> 0:20:12.840 didn't pay for cleaning up the mass. They left it 0:20:12.880 --> 0:20:16.480 with the private sector, and that's unfair. The Congress is 0:20:16.520 --> 0:20:19.879 going to have to go back pretty quickly in January 0:20:19.880 --> 0:20:24.000 February and provide some kind of support for the industry 0:20:24.040 --> 0:20:27.080 to clean up all of the forgiveness and the forbearance 0:20:27.640 --> 0:20:29.920 that was provided for and the Cares Act. And it 0:20:30.200 --> 0:20:33.840 wasn't just consumer residential mortgage loans, Fotnie, this was business 0:20:33.880 --> 0:20:37.520 loans too. You had a lot of states imposed moratoria 0:20:38.200 --> 0:20:41.240 on private lending, auto loans, all of these things. Well, 0:20:41.240 --> 0:20:44.600 who's paying for that? The note holders and the investors 0:20:44.640 --> 0:20:48.160 and the companies that issue these uh these loans. So 0:20:48.520 --> 0:20:51.320 we have a kind of a troubling situation because if 0:20:51.359 --> 0:20:54.439 we mess up the private bond market, this economy has 0:20:54.440 --> 0:20:58.160 got big problems. The reason the US recovered so well 0:20:58.280 --> 0:21:01.080 during this mess with COVID is because we still have 0:21:01.200 --> 0:21:05.680 a private marketplace. Chris, it's always just fascinating to speak 0:21:05.720 --> 0:21:07.679 with you, Chris Whale, And of course author are several 0:21:07.720 --> 0:21:10.679 books as well, most recently Ford men. Do look them 0:21:10.760 --> 0:21:14.320 up on Amazon dot Com or your nearest bookstore dealer. 0:21:14.960 --> 0:21:17.800 Talking to Chris, they're about Fanny Freddie. Of course we're 0:21:18.040 --> 0:21:20.320 not going to get any resolution on that anytime soon, 0:21:20.359 --> 0:21:24.720 that's for sure. All Right, it's time not to talk 0:21:24.760 --> 0:21:29.080 packaged foods. When is it not time to talk packaged foods. 0:21:29.160 --> 0:21:31.280 Let's bring in Xavier uncle Vic who is CEO of 0:21:31.320 --> 0:21:34.960 Amy's Kitchen. Savir first, give us, you know, the the 0:21:35.040 --> 0:21:37.879 overview of what happened to you from the beginning of 0:21:37.920 --> 0:21:41.040 the pandemic to now. Did you see a surge or 0:21:41.080 --> 0:21:43.760 did people just stay away completely from stores and you 0:21:43.760 --> 0:21:49.679 know there therefore hurting your sales? Good morning, good afternoon. 0:21:49.720 --> 0:21:53.119 Thank you for welcoming me. Yes, definitely, we've seen a 0:21:53.200 --> 0:21:57.119 significant surge and we were as a company delighted to 0:21:57.200 --> 0:22:02.680 help those consumers needs. But the pandemic peak has been 0:22:02.720 --> 0:22:08.359 significant for our business. For me, growth in sales or 0:22:08.800 --> 0:22:13.600 frozen minimum of fifty for frozen foods to a maximum 0:22:13.640 --> 0:22:16.439 of a hundred sixty percent growth in sales during the 0:22:16.480 --> 0:22:19.320 peak of the pandemic for our soups, you know, um, 0:22:20.320 --> 0:22:24.560 and we were, we were, you know, definitely challenged to 0:22:24.720 --> 0:22:28.600 those orders by our customers and consumers. They're happy also 0:22:28.720 --> 0:22:32.800 to mobilize to help the consumers to feel better, eating 0:22:32.840 --> 0:22:36.679 better and healthier as well. Yeah, and you know, we 0:22:36.720 --> 0:22:39.520 all know the Amy's Kitchen packaged foods from our local 0:22:39.600 --> 0:22:42.679 drain reader CPS or what have you. You're really everywhere 0:22:42.720 --> 0:22:45.920 and there are two hundred and fifty varieties of your 0:22:46.040 --> 0:22:49.159 packaged foods, and you're also in thirty countries. I have 0:22:49.280 --> 0:22:55.360 to ask, are the spacks circling listen? We were probably independent, 0:22:55.480 --> 0:22:58.679 family owned business. Sure, I think this is this is 0:22:58.720 --> 0:23:01.800 something that we're super delighted to be when it comes 0:23:01.800 --> 0:23:05.119 to the nature of our company. And at the moment 0:23:05.160 --> 0:23:09.160 of time, Yes, our family founders have been massively contacted 0:23:09.440 --> 0:23:12.639 in the past today where they're very much willing to 0:23:12.720 --> 0:23:16.840 stay remain independent and family owned as a business. And 0:23:16.880 --> 0:23:19.240 there's there's a value to this because it allows us 0:23:19.240 --> 0:23:21.680 to think and act long term and do the right 0:23:21.720 --> 0:23:25.280 thing according to our purpose and our values. And and 0:23:25.280 --> 0:23:27.879 we're allotted today to be in a position where we 0:23:27.920 --> 0:23:32.600 can we can grow and develop from within and uh 0:23:32.840 --> 0:23:36.880 and having a great team and great employees at Amy's 0:23:36.920 --> 0:23:40.440