1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm pim Fox. 2 00:00:08,760 --> 00:00:11,520 Speaker 1: Along with my co host Lisa Bramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg P M L 6 00:00:20,840 --> 00:00:33,599 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Well, 7 00:00:33,640 --> 00:00:38,479 Speaker 1: the Amazon effect is somewhat toxic today for big healthcare 8 00:00:38,520 --> 00:00:41,160 Speaker 1: and pharmaceutical companies. Joining us now is the dream team 9 00:00:41,159 --> 00:00:44,320 Speaker 1: Max Nisson, biotech pharma and healthcare calumnists and share O 10 00:00:44,360 --> 00:00:47,639 Speaker 1: VDA technology columnists, both of them with Bloomberg Opinion, both 11 00:00:47,640 --> 00:00:51,640 Speaker 1: of them joining us here in our eleven three oh studios. So, Max, 12 00:00:51,760 --> 00:00:55,280 Speaker 1: let's start with you pill Pack. What is it and 13 00:00:55,480 --> 00:00:58,520 Speaker 1: what does it say about Amazon's approach to getting into 14 00:00:58,520 --> 00:01:03,639 Speaker 1: the healthcare business. Absolutely? So, it's a mail order focused pharmacy. UM. 15 00:01:03,640 --> 00:01:07,440 Speaker 1: What they do is basically divide prescriptions into day by 16 00:01:07,520 --> 00:01:10,720 Speaker 1: day doses, UM, using a lot of technology and software 17 00:01:10,760 --> 00:01:12,960 Speaker 1: to kind of make that process as efficient as possible. 18 00:01:13,319 --> 00:01:15,720 Speaker 1: And the real benefit for Amazon here is that there 19 00:01:15,760 --> 00:01:18,759 Speaker 1: there licensed across the country. UM, it gets a lot 20 00:01:18,760 --> 00:01:22,320 Speaker 1: of the regulatory and and logistical work of getting into 21 00:01:22,360 --> 00:01:25,199 Speaker 1: the pharmacy business just out of the way right away, 22 00:01:25,240 --> 00:01:28,319 Speaker 1: so they can kind of immediately, um, start scaling that 23 00:01:28,440 --> 00:01:31,600 Speaker 1: that thing's up, you know, reaching out to their enormous 24 00:01:31,600 --> 00:01:35,120 Speaker 1: network of customers you know, Prime and otherwise, and start 25 00:01:35,319 --> 00:01:37,160 Speaker 1: trying to sign them up for for a new way 26 00:01:37,160 --> 00:01:41,319 Speaker 1: of getting their medicines. Sure, there your thoughts. I mean, look, 27 00:01:41,400 --> 00:01:44,920 Speaker 1: this is what everyone in the health care industry has 28 00:01:44,959 --> 00:01:49,400 Speaker 1: been worried about or anticipating for more than a year. 29 00:01:49,440 --> 00:01:53,560 Speaker 1: That Amazon had shown interest in becoming kind of a 30 00:01:53,920 --> 00:01:58,160 Speaker 1: prescription drug retailer, and more recently it looked like they 31 00:01:58,200 --> 00:02:00,400 Speaker 1: weren't going to do that right away, that they had 32 00:02:00,440 --> 00:02:03,680 Speaker 1: some pharmacy licenses in a handful of states they let 33 00:02:03,680 --> 00:02:07,280 Speaker 1: them laps. Amazon had talked more recently about kind of 34 00:02:07,360 --> 00:02:10,519 Speaker 1: nibbling around the edges of healthcare by selling medical supplies 35 00:02:10,520 --> 00:02:12,840 Speaker 1: to hospitals and things like that. So I think that 36 00:02:12,919 --> 00:02:17,400 Speaker 1: the fear of Amazon becoming a you know, pharmacy um 37 00:02:18,120 --> 00:02:20,240 Speaker 1: had started to add a little bit. And today we 38 00:02:20,400 --> 00:02:23,240 Speaker 1: learned that they should have been very, very afraid, because 39 00:02:23,440 --> 00:02:25,880 Speaker 1: in one fell swoop, Amazon has become a force to 40 00:02:25,880 --> 00:02:29,440 Speaker 1: reckon with in in the pharmacy world by announcing this 41 00:02:29,639 --> 00:02:33,760 Speaker 1: purchase of hill Pack, Um, Max, come on in here. 42 00:02:33,880 --> 00:02:38,080 Speaker 1: Because it's one thing to be a distributor of pharmaceuticals, 43 00:02:38,080 --> 00:02:43,320 Speaker 1: it's another thing to move further into the healthcare industry. 44 00:02:43,480 --> 00:02:46,720 Speaker 1: Is there any sign, uh, that that could be the 45 00:02:46,800 --> 00:02:50,600 Speaker 1: ultimate ambition of Amazon or is this just an extension 46 00:02:51,080 --> 00:02:54,079 Speaker 1: of their you know, sort of retail um. I think 47 00:02:54,120 --> 00:02:58,000 Speaker 1: it definitely points directionally, um that that way, just because 48 00:02:58,440 --> 00:03:00,960 Speaker 1: you know, selling drugs, you know, as as easy as 49 00:03:01,000 --> 00:03:04,040 Speaker 1: it sounds, it's it's actually incredibly complicated, um, just from 50 00:03:04,040 --> 00:03:07,720 Speaker 1: a regulatory standpoint, and in terms of the sort of 51 00:03:08,280 --> 00:03:10,480 Speaker 1: risks um. You know, if you get things wrong, it 52 00:03:10,880 --> 00:03:13,760 Speaker 1: can go very badly. Indeed, So it's just to move 53 00:03:13,840 --> 00:03:16,639 Speaker 1: the sign that they're willing to move into a more 54 00:03:16,720 --> 00:03:20,160 Speaker 1: complex environment with with you know, dealing with with payers 55 00:03:20,160 --> 00:03:23,480 Speaker 1: insurance companies PBMs, as opposed to like, like she said, 56 00:03:23,560 --> 00:03:25,600 Speaker 1: nibbling around the edges. This is kind of the heart 57 00:03:25,639 --> 00:03:28,519 Speaker 1: of healthcare, and I think a sign that they're potentially 58 00:03:28,520 --> 00:03:31,280 Speaker 1: willing to take on harder challenges in their kind of 59 00:03:31,400 --> 00:03:35,200 Speaker 1: ongoing effort to to kind of be everywhere. Yeah, well, Max, 60 00:03:35,240 --> 00:03:37,120 Speaker 1: I'm glad you said harder challenges and shure, this is 61 00:03:37,120 --> 00:03:39,800 Speaker 1: where I want you to come in. We've talked extensively 62 00:03:39,800 --> 00:03:41,920 Speaker 1: about how some of the businesses that they've been trying 63 00:03:41,960 --> 00:03:45,080 Speaker 1: to get into are very different from brick and mortar retailers, 64 00:03:45,120 --> 00:03:48,600 Speaker 1: such as the whole foods purchase, and how the grocery 65 00:03:48,880 --> 00:03:52,120 Speaker 1: sort of conundrum has been a difficult one for Amazon 66 00:03:52,200 --> 00:03:55,680 Speaker 1: to crack with respect to delivery. I'm just wondering, you know, 67 00:03:56,280 --> 00:03:59,320 Speaker 1: what the success rate is with something like this, and 68 00:03:59,360 --> 00:04:02,640 Speaker 1: whether you know, perhaps people are extrapolating a little too 69 00:04:02,680 --> 00:04:05,200 Speaker 1: far the Amazon which just hit another home run. Yeah, 70 00:04:05,200 --> 00:04:07,880 Speaker 1: and I think that's a very a very good point 71 00:04:08,160 --> 00:04:11,680 Speaker 1: that there is now this belief that Amazon maybe can 72 00:04:11,760 --> 00:04:15,120 Speaker 1: do anything and might do anything, which which could be true. Look, 73 00:04:15,400 --> 00:04:17,680 Speaker 1: I wouldn't be surprised in five years of Amazon is 74 00:04:18,000 --> 00:04:20,240 Speaker 1: you know, a giant seller of groceries in a way 75 00:04:20,240 --> 00:04:24,120 Speaker 1: that they really aren't today, or in financial services or 76 00:04:24,160 --> 00:04:28,960 Speaker 1: other areas of of commerce. But it is worth pointing 77 00:04:28,960 --> 00:04:31,880 Speaker 1: out that Amazon is not successful and everything it does. 78 00:04:32,080 --> 00:04:34,960 Speaker 1: It actually owned part of drug store dot com um 79 00:04:35,000 --> 00:04:37,680 Speaker 1: beginning in the late ninety nineties. That was a way 80 00:04:37,680 --> 00:04:40,839 Speaker 1: that they wanted to kind of explore getting into for 81 00:04:41,160 --> 00:04:45,120 Speaker 1: prescription drug sales didn't really work out the way they intended. Obviously, 82 00:04:45,120 --> 00:04:48,760 Speaker 1: those were different times, both for drug sales and for Amazon. 83 00:04:49,040 --> 00:04:51,960 Speaker 1: It was a much younger company. Amazon has failed at 84 00:04:52,000 --> 00:04:54,520 Speaker 1: online traveled, It had a service that it shut down, 85 00:04:54,960 --> 00:04:57,920 Speaker 1: It has um you know, it is not successful that 86 00:04:58,000 --> 00:05:02,400 Speaker 1: everything it does. So m a heart Walgreens and CBS investors, 87 00:05:03,480 --> 00:05:09,719 Speaker 1: Alexa Shira over Day is skeptical Alexa Max Neeson. Are 88 00:05:09,760 --> 00:05:11,800 Speaker 1: you in the same camp. Do you believe that they're 89 00:05:11,800 --> 00:05:13,760 Speaker 1: going to have a big challenge to try to roll 90 00:05:13,839 --> 00:05:17,640 Speaker 1: this out under the Amazon umbrella. I mean, because as 91 00:05:17,640 --> 00:05:22,080 Speaker 1: I just kind of kidding, but Alexa refill my prescription. 92 00:05:22,120 --> 00:05:25,080 Speaker 1: Oh my god, you are absolutely terrorizing anyone who's listening 93 00:05:25,120 --> 00:05:30,560 Speaker 1: to this on a smart advice I mean everybody. But 94 00:05:30,640 --> 00:05:33,440 Speaker 1: that's the point. If Alexa is in the background, it's listening, 95 00:05:33,560 --> 00:05:35,760 Speaker 1: and it is in many you know, we you know, 96 00:05:35,800 --> 00:05:37,720 Speaker 1: I'm old, right. I mean, so that the idea of 97 00:05:38,320 --> 00:05:41,119 Speaker 1: having something that is interactive like that in your house 98 00:05:41,160 --> 00:05:43,839 Speaker 1: can be kind of a little off putting. But you know, 99 00:05:43,920 --> 00:05:47,360 Speaker 1: any person under the age of whatever, they have no 100 00:05:47,480 --> 00:05:51,839 Speaker 1: problem with this kind of technology. Yeah, so so I think, um, 101 00:05:51,880 --> 00:05:55,800 Speaker 1: you know, actually, the the volume of drug prescriptions ordered 102 00:05:55,839 --> 00:05:58,440 Speaker 1: through the mail has actually gonne down, which as much 103 00:05:58,440 --> 00:06:00,600 Speaker 1: as anything, is a function of that. They're just more 104 00:06:00,720 --> 00:06:04,960 Speaker 1: expensive drugs, like the actual money is has gone up. 105 00:06:05,000 --> 00:06:07,040 Speaker 1: But um, you know, if there's any one that can 106 00:06:07,160 --> 00:06:11,840 Speaker 1: make people more comfortable with or make this process easier, cheaper, better, um, 107 00:06:12,000 --> 00:06:14,599 Speaker 1: you think it might be Amazon, and especially that they're 108 00:06:14,640 --> 00:06:17,480 Speaker 1: going in with pill Pack, that's already kind of doing 109 00:06:17,520 --> 00:06:20,560 Speaker 1: something interesting with the model and trying to make a 110 00:06:20,560 --> 00:06:23,640 Speaker 1: consumer friendly and easier to do it with the dosage. 111 00:06:23,720 --> 00:06:25,599 Speaker 1: I mean, this is something that I always found was 112 00:06:25,640 --> 00:06:28,080 Speaker 1: revolutionary with pill pack because you know, you go to 113 00:06:28,120 --> 00:06:30,159 Speaker 1: the pharmacy, you get something in the mail and it 114 00:06:30,240 --> 00:06:33,080 Speaker 1: sends you a bottle with the child proof cap and 115 00:06:33,120 --> 00:06:34,880 Speaker 1: so on, and then you kind of take your pill 116 00:06:34,960 --> 00:06:38,520 Speaker 1: whatever it is. But with pill pack, all the pills 117 00:06:38,520 --> 00:06:41,800 Speaker 1: that you are prescribed for that particular day come in 118 00:06:41,920 --> 00:06:45,360 Speaker 1: its own pack. It's seal, it tells you what time 119 00:06:45,400 --> 00:06:47,480 Speaker 1: to take it, with day to take it. There's no more, 120 00:06:47,600 --> 00:06:50,440 Speaker 1: you know, it just it's a it's almost an it's 121 00:06:50,440 --> 00:06:54,280 Speaker 1: an intellectual advance, I would say, yeah, and it's one 122 00:06:54,320 --> 00:06:58,120 Speaker 1: that's pretty clearly aimed at you know, America's aging population. Um, 123 00:06:58,440 --> 00:07:01,279 Speaker 1: you do this instead of having you know, a nurse 124 00:07:01,400 --> 00:07:03,880 Speaker 1: or or a family member come over and sort out 125 00:07:03,960 --> 00:07:06,480 Speaker 1: your your pills, which is um. You know, if anyone 126 00:07:06,480 --> 00:07:09,440 Speaker 1: who's ever done that knows that it's a incredibly long 127 00:07:09,480 --> 00:07:12,200 Speaker 1: and difficult process. So UM, you know, it's a It's 128 00:07:12,240 --> 00:07:14,800 Speaker 1: a consumer move as well, and one that Amazon is 129 00:07:14,880 --> 00:07:18,560 Speaker 1: uniquely poised to to take advantage of. Just real quick here, Shira, 130 00:07:18,760 --> 00:07:21,240 Speaker 1: who are the hires that we should be looking out 131 00:07:21,360 --> 00:07:23,960 Speaker 1: for from Amazon to get a sense of how serious 132 00:07:24,000 --> 00:07:26,000 Speaker 1: and how broad their pushes? I mean, are they going 133 00:07:26,040 --> 00:07:28,840 Speaker 1: to try to beef up it all from the inside. Well, look, 134 00:07:28,880 --> 00:07:31,400 Speaker 1: they have already in the last year or so hired 135 00:07:31,440 --> 00:07:34,880 Speaker 1: people who have experience in pharmaceutical and healthcare, so it's 136 00:07:34,880 --> 00:07:36,920 Speaker 1: clear that it has been clear that this is an 137 00:07:36,960 --> 00:07:39,720 Speaker 1: area that they're interested in. UM. I would be curious 138 00:07:39,760 --> 00:07:43,360 Speaker 1: to see whether they put pill Pack in this Amazon 139 00:07:43,360 --> 00:07:45,880 Speaker 1: puts pill Pack under the leadership of people who are 140 00:07:45,880 --> 00:07:49,000 Speaker 1: doing prime Do they put it into under the whole 141 00:07:49,040 --> 00:07:53,560 Speaker 1: foods bucket? Where exactly do they slot in? Um? The 142 00:07:53,640 --> 00:07:57,880 Speaker 1: leadership of pill Pack Alexa, thanks you, We thank you 143 00:07:58,000 --> 00:08:00,840 Speaker 1: that very much. As Shira over they are technology columnist 144 00:08:01,160 --> 00:08:04,120 Speaker 1: for Bloomberg Opinion, Max Niese and our healthcare columnist for 145 00:08:04,720 --> 00:08:07,600 Speaker 1: Bloomberg Opinion. On this day in which we know that 146 00:08:07,720 --> 00:08:11,600 Speaker 1: Amazon is purchasing pill pack and giving a lot of 147 00:08:11,600 --> 00:08:32,080 Speaker 1: competition to CVS and Walgreen's boots alliance. It's been a 148 00:08:32,240 --> 00:08:36,360 Speaker 1: terrible stretch for financial stocks in the US and frankly globally, 149 00:08:36,840 --> 00:08:39,760 Speaker 1: with European bank shares taking a hit, and a big 150 00:08:39,880 --> 00:08:43,520 Speaker 1: question has been why here to answer that? As Chris Whalen, 151 00:08:43,679 --> 00:08:46,880 Speaker 1: Chairman of Whalen Global Advisors, Chris, thank you so much 152 00:08:46,920 --> 00:08:49,920 Speaker 1: for joining us. So what's your take on the recent 153 00:08:50,080 --> 00:08:53,959 Speaker 1: route in financial stocks given the fact that nothing really 154 00:08:54,040 --> 00:08:58,679 Speaker 1: that bad has happened in the economy. Well, both financials 155 00:08:58,960 --> 00:09:02,840 Speaker 1: had a tremendous year in two thousand and seventeen, largely 156 00:09:02,840 --> 00:09:06,720 Speaker 1: an anticipation of two tax cuts and deregulation, all the 157 00:09:06,720 --> 00:09:10,080 Speaker 1: rest of it. You guys reported on it extensively, and 158 00:09:10,120 --> 00:09:14,400 Speaker 1: so now at a fairly full valuation one point six 159 00:09:14,520 --> 00:09:19,160 Speaker 1: one point seven times book values, say, for JP Morgan um, 160 00:09:19,320 --> 00:09:22,000 Speaker 1: the markets are looking at a flattening wheel curve. They're 161 00:09:22,000 --> 00:09:25,560 Speaker 1: looking at the prospect for an economic slowdown. Um. They're 162 00:09:25,600 --> 00:09:28,280 Speaker 1: also taking notice to the fact that loan growth for 163 00:09:28,400 --> 00:09:32,160 Speaker 1: banks is dropping off dramatically. Uh. And you put all 164 00:09:32,160 --> 00:09:35,839 Speaker 1: that together and it really, I think argues for taking 165 00:09:35,840 --> 00:09:38,040 Speaker 1: money off the table. And that's kind of how I 166 00:09:38,120 --> 00:09:41,800 Speaker 1: view this. Financials are big so that when people want 167 00:09:41,800 --> 00:09:44,079 Speaker 1: to take a short position in the market, they're one 168 00:09:44,080 --> 00:09:46,800 Speaker 1: of the first sectors you go to. So I think 169 00:09:46,840 --> 00:09:49,840 Speaker 1: all of that is really what what explains the weakness 170 00:09:49,920 --> 00:09:52,760 Speaker 1: in the last couple of months. Chris Whalen or banks 171 00:09:52,800 --> 00:09:56,760 Speaker 1: going to be able to increase their dividends to shareholders, Oh, 172 00:09:56,760 --> 00:09:59,680 Speaker 1: they have him. I mean the portion of bank income 173 00:09:59,760 --> 00:10:02,800 Speaker 1: that's going to shareholders is up that they're going to 174 00:10:02,840 --> 00:10:06,120 Speaker 1: actually pay out more than they make this year um, 175 00:10:06,160 --> 00:10:10,320 Speaker 1: which is an indication of how over capitalized the industry is. 176 00:10:10,880 --> 00:10:13,760 Speaker 1: And I think there's there's a lack of demand for loans. 177 00:10:14,160 --> 00:10:16,280 Speaker 1: This is something people don't focus on. You know, we 178 00:10:16,320 --> 00:10:19,920 Speaker 1: talk about the recovery and the strong economy, but really 179 00:10:19,960 --> 00:10:23,120 Speaker 1: when you look at loan growth, it's pretty pedestrian. And 180 00:10:23,160 --> 00:10:26,679 Speaker 1: the reason is is that there's a combination of regulatory factors. 181 00:10:27,160 --> 00:10:30,840 Speaker 1: They don't want thanks to take risk, higher capital levels, 182 00:10:31,080 --> 00:10:33,520 Speaker 1: and also there's just a lack of demand. Even things 183 00:10:33,559 --> 00:10:36,920 Speaker 1: like autos to slowed down after a very torrid growth 184 00:10:37,760 --> 00:10:40,920 Speaker 1: period after the crisis. You know, auto loane doubled as 185 00:10:40,960 --> 00:10:45,240 Speaker 1: an asset class. Think about that. Leasa's unbelievable quick, Chris. 186 00:10:45,240 --> 00:10:47,720 Speaker 1: I guess that that one question is can we look 187 00:10:47,840 --> 00:10:50,560 Speaker 1: at the weakness in bank stocks as sort of a 188 00:10:50,640 --> 00:10:52,720 Speaker 1: canary in that sense? I mean, if people really are 189 00:10:52,760 --> 00:10:55,200 Speaker 1: expressing that they think that the economy is going to slow, 190 00:10:55,600 --> 00:10:57,959 Speaker 1: we're not seeing that elsewhere. And frankly, when we talk 191 00:10:58,040 --> 00:11:00,840 Speaker 1: to people UH, they say that every thing looks pretty good. 192 00:11:00,840 --> 00:11:05,320 Speaker 1: Fundamentals look solid in the US, well, fundamentals look solid. 193 00:11:05,360 --> 00:11:08,160 Speaker 1: But I will tell you that credit is very very 194 00:11:08,200 --> 00:11:12,760 Speaker 1: stretched right now in terms of quality, both leverage loans, 195 00:11:13,040 --> 00:11:17,320 Speaker 1: high yield debt, all of these sectors have really pushed 196 00:11:17,320 --> 00:11:22,959 Speaker 1: the limit in terms of eroding investor protections, pricing, UH 197 00:11:23,000 --> 00:11:26,000 Speaker 1: spreads are still very tight. Even though the FED has 198 00:11:26,040 --> 00:11:29,360 Speaker 1: been raising rates now for months, you haven't seen any 199 00:11:29,400 --> 00:11:32,680 Speaker 1: reaction in the higheld market. They've been rallying. In fact, 200 00:11:32,679 --> 00:11:35,600 Speaker 1: the tenure is rallying now too. So you have a 201 00:11:35,600 --> 00:11:40,720 Speaker 1: lot of contradictory indicators. And I think investors look at 202 00:11:40,760 --> 00:11:44,160 Speaker 1: that flattening wheel curve and they worry about banks because 203 00:11:44,200 --> 00:11:47,920 Speaker 1: obviously banks make money on leverage. They borrowsh uh, you know, 204 00:11:48,360 --> 00:11:51,280 Speaker 1: they raise money short and they lend it long. And 205 00:11:51,320 --> 00:11:55,040 Speaker 1: if the curve is flattening and there's no reaction in 206 00:11:55,120 --> 00:11:59,600 Speaker 1: credit spreads, that's a very confusing set of indicators. Lisa, 207 00:12:00,000 --> 00:12:05,920 Speaker 1: it really is Chris Fannie, Mae, Freddie Mac what happens 208 00:12:06,679 --> 00:12:09,440 Speaker 1: and what happens to the preferred shareholders that have been 209 00:12:09,480 --> 00:12:14,280 Speaker 1: holding on for so long. Well, they just the Trump 210 00:12:14,320 --> 00:12:18,959 Speaker 1: administration just put out some thoughts on on privatizing Fannie 211 00:12:18,960 --> 00:12:21,719 Speaker 1: and Freddy, which I think is is, you know, a 212 00:12:21,720 --> 00:12:26,360 Speaker 1: fanciful proposal. Without the support of the federal government, Fannie 213 00:12:26,400 --> 00:12:29,240 Speaker 1: and Freddie could not function. You know, they can't just 214 00:12:29,280 --> 00:12:32,320 Speaker 1: turn them into big non banks like a Redwood trust 215 00:12:32,440 --> 00:12:36,720 Speaker 1: Ride or Pennymack. That would not work. Um, the preferred 216 00:12:36,720 --> 00:12:40,000 Speaker 1: shareholders have been hanging on, you know, in a moral sense, 217 00:12:40,040 --> 00:12:42,840 Speaker 1: they are owed something. But I will tell you that 218 00:12:42,880 --> 00:12:45,280 Speaker 1: I think the lid against the hedge funds and everybody 219 00:12:45,280 --> 00:12:48,360 Speaker 1: who went in the court to fight over this had 220 00:12:49,600 --> 00:12:52,640 Speaker 1: a very bad strategy. They should have argued that they 221 00:12:52,640 --> 00:12:56,360 Speaker 1: were the creditors instead of shareholders, and that they were 222 00:12:56,400 --> 00:12:59,880 Speaker 1: defrauded they or owed their money back with six in 223 00:13:00,040 --> 00:13:03,679 Speaker 1: for per year. That didn't happen. I don't think politically 224 00:13:03,720 --> 00:13:07,480 Speaker 1: there's any catalyst to really push a proposal forward right now. 225 00:13:07,800 --> 00:13:11,480 Speaker 1: There's no interest in it. Maybe after the after the 226 00:13:12,000 --> 00:13:14,760 Speaker 1: mid term elections, we can have a discussion about this, 227 00:13:15,200 --> 00:13:17,640 Speaker 1: but there's no urgency. You know, a lot of the 228 00:13:17,640 --> 00:13:21,720 Speaker 1: proponents of reform of paying the preferred shareholders say the 229 00:13:21,800 --> 00:13:26,760 Speaker 1: current situation is not sustainable. Well, that's clearly not true. Um, 230 00:13:26,920 --> 00:13:30,760 Speaker 1: Fannie and Freddie are functioning fine. UM. I would tell 231 00:13:30,760 --> 00:13:33,720 Speaker 1: you that I think the next big inflection point with 232 00:13:33,800 --> 00:13:35,400 Speaker 1: the g s c S is going to be when 233 00:13:35,480 --> 00:13:39,520 Speaker 1: mel Wott leaves the regulator next year and the Republicans 234 00:13:39,600 --> 00:13:42,559 Speaker 1: put someone in place. I think that they are gonna 235 00:13:42,720 --> 00:13:46,319 Speaker 1: make changes to Fannie and Freddy administratively. They're going to 236 00:13:46,480 --> 00:13:51,880 Speaker 1: downsize them. They're gonna probably reduce the maximum loan amount 237 00:13:51,920 --> 00:13:57,160 Speaker 1: that they're allowed to guarantee. They'll probably end of second homes. 238 00:13:57,280 --> 00:13:59,400 Speaker 1: You won't be able to get a Fannie and Freddy 239 00:13:59,520 --> 00:14:03,359 Speaker 1: loan or a vacation home, for example. So the Republicans 240 00:14:03,360 --> 00:14:08,280 Speaker 1: have an agenda to really use administrative tools to downsize 241 00:14:08,320 --> 00:14:10,600 Speaker 1: both of these entities. But I don't know that they'll 242 00:14:10,640 --> 00:14:14,640 Speaker 1: actually pass legislation to take them out of conservatorship, because 243 00:14:14,679 --> 00:14:16,880 Speaker 1: that's what you need. You've got to get Congress in 244 00:14:16,920 --> 00:14:20,880 Speaker 1: the game. Otherwise nothing happens. Thanks very much, Chris Whalen, 245 00:14:21,040 --> 00:14:26,160 Speaker 1: Chairman of Whalen Global Advisers, on banks and Fannie May 246 00:14:26,360 --> 00:14:29,720 Speaker 1: and Freddie Mack and the potential for some kind of 247 00:14:29,760 --> 00:14:49,960 Speaker 1: reform of those government sponsored entities. Leland, thanks very much 248 00:14:50,000 --> 00:14:53,720 Speaker 1: for coming into our studio dispel some of the current 249 00:14:55,120 --> 00:15:00,480 Speaker 1: opinions and analysis of the Chinese economy for us. Well, 250 00:15:00,520 --> 00:15:04,200 Speaker 1: most China watchers view the economy not through data because 251 00:15:04,200 --> 00:15:06,960 Speaker 1: they don't trust official data, but through anecdotes. And right 252 00:15:06,960 --> 00:15:09,000 Speaker 1: now there's a few anecdotes that say China is in 253 00:15:09,320 --> 00:15:12,760 Speaker 1: real trouble, that that the tides are turned, and uh, 254 00:15:13,000 --> 00:15:15,640 Speaker 1: and you're you're starting to see, uh, you know, the 255 00:15:15,680 --> 00:15:19,600 Speaker 1: beginnings of a troubled scenario or collapse are hard landing. 256 00:15:19,640 --> 00:15:21,000 Speaker 1: And uh, you know, we don't buy it. And we 257 00:15:21,040 --> 00:15:22,880 Speaker 1: don't buy it because we look at our own data 258 00:15:22,920 --> 00:15:25,280 Speaker 1: and which just came out, and we see a much 259 00:15:25,320 --> 00:15:28,680 Speaker 1: more solid picture than what's being reflected official data. And 260 00:15:28,760 --> 00:15:32,880 Speaker 1: I acknowledge that the May official data look pretty bad, 261 00:15:33,480 --> 00:15:35,840 Speaker 1: but but it's lagging compared to what we're looking at, 262 00:15:35,880 --> 00:15:38,520 Speaker 1: and it's the prettier picture right now. Old one second, 263 00:15:38,600 --> 00:15:40,320 Speaker 1: let's just set the stage a little bit, because we're 264 00:15:40,360 --> 00:15:43,720 Speaker 1: seeing a huge decline in the UN and the Chinese 265 00:15:43,760 --> 00:15:46,920 Speaker 1: currency versus the dollar at the lowest levels in more 266 00:15:46,960 --> 00:15:49,360 Speaker 1: than a year. We're seeing a massive sell off in 267 00:15:49,600 --> 00:15:52,640 Speaker 1: the stock market, which began UH several weeks ago but 268 00:15:52,720 --> 00:15:55,120 Speaker 1: has deepened. So you see that the concern is being 269 00:15:55,160 --> 00:15:58,080 Speaker 1: expressed in a number of different ways. It's not just 270 00:15:58,200 --> 00:16:00,560 Speaker 1: that we're getting new data that people are funding too. 271 00:16:00,760 --> 00:16:04,400 Speaker 1: So why do you think the narrative has shifted so 272 00:16:04,480 --> 00:16:07,200 Speaker 1: quickly to all of a sudden people saying, look, this 273 00:16:07,240 --> 00:16:10,280 Speaker 1: could be the beginning of a hard landing. Well, first 274 00:16:10,320 --> 00:16:13,080 Speaker 1: of all, the Party Congress honeymoon is over, and and 275 00:16:13,640 --> 00:16:16,040 Speaker 1: so people realize that there's there's not as much government 276 00:16:16,040 --> 00:16:19,040 Speaker 1: potentially not as much government backstop. You have the Trump 277 00:16:19,120 --> 00:16:21,520 Speaker 1: trade war hovering over the economy, so people think that 278 00:16:21,600 --> 00:16:23,880 Speaker 1: China could be vulnerable to that. Uh. And then you 279 00:16:23,920 --> 00:16:26,440 Speaker 1: also have this fear that deleveraging is really catching on 280 00:16:26,480 --> 00:16:29,240 Speaker 1: and about to light the economy on fire through starvation 281 00:16:29,240 --> 00:16:32,040 Speaker 1: of credit and what's interesting about deleveraging is there are 282 00:16:32,120 --> 00:16:34,520 Speaker 1: aspects of the economy that are deleveraging. If you look 283 00:16:34,520 --> 00:16:38,480 Speaker 1: inside the financial sector, there is financial sector deleveraging. Shadow 284 00:16:38,560 --> 00:16:43,600 Speaker 1: products are being uh capped there, They're they're really going hard. 285 00:16:43,680 --> 00:16:48,080 Speaker 1: There's a shadow finance crackdown, no question. But what's happening 286 00:16:48,120 --> 00:16:50,560 Speaker 1: there is they're shutting down these off balance sheet vehicles 287 00:16:50,560 --> 00:16:52,560 Speaker 1: and these shadow products and they're shoving them into the 288 00:16:52,600 --> 00:16:55,720 Speaker 1: formal banking system. So in our data, what we actually 289 00:16:55,720 --> 00:16:59,960 Speaker 1: saw corporates borrowing more this quarter than last quarter, borrowing 290 00:17:00,080 --> 00:17:01,880 Speaker 1: more this quarter than a year ago, and at the 291 00:17:01,960 --> 00:17:03,480 Speaker 1: levels that were close to the run up to the 292 00:17:03,520 --> 00:17:07,280 Speaker 1: Party congress and the recovery. So firms are not being 293 00:17:07,280 --> 00:17:09,240 Speaker 1: started to credit. There's plenty of it. It's just they're 294 00:17:09,280 --> 00:17:12,679 Speaker 1: just shifting the spicket from from one place to another. 295 00:17:12,760 --> 00:17:14,760 Speaker 1: So basically you're saying that the de leveraging so far 296 00:17:15,119 --> 00:17:17,720 Speaker 1: is something of a fiction in terms of actually reducing 297 00:17:18,040 --> 00:17:21,960 Speaker 1: the leverage from this system. That said, today or overnight, 298 00:17:22,240 --> 00:17:25,760 Speaker 1: the Chinese government started to crack down more aggressively on 299 00:17:26,000 --> 00:17:30,280 Speaker 1: short term dollar funding of in particular developers property developers, 300 00:17:30,280 --> 00:17:31,960 Speaker 1: and seems to be trying to strip out some of 301 00:17:32,000 --> 00:17:34,640 Speaker 1: the froth in the housing market, and I'm just wondering, 302 00:17:34,680 --> 00:17:37,760 Speaker 1: i mean, do you view that as a real potential 303 00:17:37,800 --> 00:17:40,480 Speaker 1: deleveraging or is this just the shifting that you're saying 304 00:17:40,920 --> 00:17:43,040 Speaker 1: is going on there. Well, it's it's it's a tug 305 00:17:43,040 --> 00:17:45,920 Speaker 1: a war that constantly happens when the Chinese think that 306 00:17:45,960 --> 00:17:48,200 Speaker 1: the housing sector is is too frothy. And r Q 307 00:17:48,359 --> 00:17:51,840 Speaker 1: two data show property with sizzling again despite the fact 308 00:17:51,880 --> 00:17:54,440 Speaker 1: that Chinese don't want it sizzling, So there is something 309 00:17:54,440 --> 00:17:56,359 Speaker 1: to that. The second thing is they're trying to crack 310 00:17:56,400 --> 00:17:58,320 Speaker 1: down on short term instruments and trying to extend the 311 00:17:58,320 --> 00:18:01,120 Speaker 1: dead out farther. So there's a major problem this year 312 00:18:01,400 --> 00:18:05,680 Speaker 1: with debt coming DOE and potential liquidity concerns over being 313 00:18:05,680 --> 00:18:08,800 Speaker 1: able to roll over that debt. So they are focused 314 00:18:08,840 --> 00:18:11,480 Speaker 1: on short term debt, They're focused on short term debt instruments, 315 00:18:11,480 --> 00:18:14,000 Speaker 1: and because they're cracking down the shadow sector, they're they're 316 00:18:14,000 --> 00:18:17,520 Speaker 1: they're hitting wealth management products, they're hitting negotiable certificates of deposit. 317 00:18:17,760 --> 00:18:20,480 Speaker 1: So there is a crunch there. The crunch is not fake. 318 00:18:20,840 --> 00:18:23,320 Speaker 1: What's fake is that the economy as a whole is 319 00:18:23,320 --> 00:18:25,439 Speaker 1: not being starved of credit. There's plenty of it to 320 00:18:25,440 --> 00:18:27,919 Speaker 1: go around, and there will be dislocations, but this is 321 00:18:27,920 --> 00:18:31,639 Speaker 1: not the beginning of, you know, she's massive crackdown where 322 00:18:32,119 --> 00:18:36,200 Speaker 1: the economy runs dry of its fuel. Leland tell people 323 00:18:36,240 --> 00:18:40,200 Speaker 1: about made in China and how that has in many 324 00:18:40,560 --> 00:18:45,080 Speaker 1: cases obscured what is really going on in the relationship 325 00:18:45,119 --> 00:18:48,399 Speaker 1: between the United States and China. Well, I think it 326 00:18:48,440 --> 00:18:50,240 Speaker 1: all comes back to the fact that the White House 327 00:18:50,320 --> 00:18:53,280 Speaker 1: doesn't really agree on the China strategy. So there's people 328 00:18:53,600 --> 00:18:55,680 Speaker 1: in the White House who think that made in China 329 00:18:57,240 --> 00:19:00,000 Speaker 1: is something that needs to be addressed. Encounter tell people 330 00:19:00,040 --> 00:19:01,560 Speaker 1: what it is. So first of all, it's it's a 331 00:19:01,600 --> 00:19:05,320 Speaker 1: it's a Chinese It's a Chinese plan to bring as 332 00:19:05,400 --> 00:19:11,040 Speaker 1: much of this focus on advanced manufacturing, AI, robotics, biomedicine, uh, 333 00:19:11,080 --> 00:19:15,040 Speaker 1: it's basically advanced up the food chain type of production 334 00:19:15,440 --> 00:19:19,040 Speaker 1: back to China, to have China capture those markets, to 335 00:19:19,520 --> 00:19:22,840 Speaker 1: have the Chinese government subsidize these companies and really take 336 00:19:22,880 --> 00:19:26,680 Speaker 1: control of this globally. And this went under the radar 337 00:19:26,760 --> 00:19:28,600 Speaker 1: for a long time in d C, and it caught 338 00:19:28,640 --> 00:19:31,479 Speaker 1: on when people realize, well, look, this is this is 339 00:19:31,520 --> 00:19:34,240 Speaker 1: another form of cheating a more dangerous form of cheating 340 00:19:34,240 --> 00:19:36,400 Speaker 1: than the Chinese would potentially be doing. And this needs 341 00:19:36,400 --> 00:19:38,879 Speaker 1: to be the focus of policymakers. So even though you 342 00:19:38,880 --> 00:19:40,600 Speaker 1: have a bunch of people in d C focused on 343 00:19:40,640 --> 00:19:43,320 Speaker 1: the bilettal trade deficit and others are focused on investment 344 00:19:43,320 --> 00:19:46,800 Speaker 1: restrictions made in China, five is this is this is 345 00:19:46,840 --> 00:19:51,040 Speaker 1: this central rallying point because it's about Chinese companies coming 346 00:19:51,040 --> 00:19:54,320 Speaker 1: in and and and stealing i P. It's about Chinese 347 00:19:54,320 --> 00:19:57,720 Speaker 1: companies buying uh US innovation and bringing it to China. 348 00:19:58,040 --> 00:20:00,280 Speaker 1: It covers all these bases. So it's really called a 349 00:20:00,359 --> 00:20:02,919 Speaker 1: toxic word in Washing d C. Right now, You know, Leland, 350 00:20:02,960 --> 00:20:06,840 Speaker 1: you started the conversation really saying that you're not seeing 351 00:20:06,880 --> 00:20:09,439 Speaker 1: the sort of material slow down on the ground. And 352 00:20:09,480 --> 00:20:12,359 Speaker 1: one of the great things about your organization, the China 353 00:20:12,400 --> 00:20:16,479 Speaker 1: Bag Book International, is that you look for what the 354 00:20:16,560 --> 00:20:19,919 Speaker 1: actual signs are of growth of economic activity. What are 355 00:20:19,960 --> 00:20:23,000 Speaker 1: you seeing right now that gives you such confidence to 356 00:20:23,040 --> 00:20:26,560 Speaker 1: say people are wrong that China is about to experience 357 00:20:26,600 --> 00:20:29,720 Speaker 1: something more significant in a downturn way. Well, we saw 358 00:20:29,840 --> 00:20:32,520 Speaker 1: we saw an improved economy from the second from from 359 00:20:32,520 --> 00:20:34,159 Speaker 1: the first quarter of the second quarter which is not 360 00:20:34,200 --> 00:20:37,080 Speaker 1: what people think has happened. They saw may official data 361 00:20:37,359 --> 00:20:40,399 Speaker 1: and you have these incredible headlines, very scary. So retail 362 00:20:40,440 --> 00:20:43,040 Speaker 1: sales the worst in fifteen years, you know, investment worst 363 00:20:43,080 --> 00:20:44,840 Speaker 1: and what was it twenty year or something like that. 364 00:20:45,119 --> 00:20:47,159 Speaker 1: And when we look at our data, we see that 365 00:20:47,240 --> 00:20:50,160 Speaker 1: this is not the case. We actually saw retail had 366 00:20:50,160 --> 00:20:53,320 Speaker 1: gone through a difficult time earlier this year, and it's 367 00:20:53,359 --> 00:20:56,760 Speaker 1: already potentially taking a turn upwards, not great, but taking 368 00:20:56,760 --> 00:20:59,240 Speaker 1: a turn upwards. Investment, we we we look at this 369 00:20:59,359 --> 00:21:01,920 Speaker 1: much more broad, leave them the very specific category of 370 00:21:01,960 --> 00:21:05,520 Speaker 1: fixed assets fixed asset investment UH in official data, and 371 00:21:05,560 --> 00:21:08,280 Speaker 1: what we're seeing is stronger trends that are being recognized. 372 00:21:08,520 --> 00:21:11,120 Speaker 1: And then credit, everyone thinks again that credits being drained 373 00:21:11,119 --> 00:21:13,320 Speaker 1: to the economy. You've got plenty of credit going in. 374 00:21:13,400 --> 00:21:15,680 Speaker 1: So one of the reasons the economy is stronger is 375 00:21:15,720 --> 00:21:17,840 Speaker 1: because they're not cracking down investment the way they say 376 00:21:17,840 --> 00:21:19,520 Speaker 1: they are, they're not cracking down on credit the way 377 00:21:19,560 --> 00:21:21,560 Speaker 1: they say they are. These things are still happening, So 378 00:21:21,600 --> 00:21:23,840 Speaker 1: the economy stronger, but it means that they're pushing off 379 00:21:23,880 --> 00:21:27,000 Speaker 1: a lot of these these reforms and restructuring points till later, 380 00:21:27,200 --> 00:21:29,560 Speaker 1: just real quick, then what do you make of the 381 00:21:29,600 --> 00:21:33,800 Speaker 1: decline in the U N Look the Chinese, Uh, you 382 00:21:33,800 --> 00:21:35,679 Speaker 1: know this, this looks unexpected. But if you look at 383 00:21:35,720 --> 00:21:39,320 Speaker 1: what happened right up to where President Trump was inaugurated, 384 00:21:39,480 --> 00:21:41,800 Speaker 1: the Chinese ran this to six nine to the dollar, 385 00:21:42,320 --> 00:21:45,600 Speaker 1: and then steadily ever since have strength and strength and 386 00:21:45,640 --> 00:21:47,560 Speaker 1: strengthen until very recently they got it up to around 387 00:21:47,600 --> 00:21:50,600 Speaker 1: with six two or so. And recently you've seen some 388 00:21:50,680 --> 00:21:52,840 Speaker 1: fear over the trade warrior sees some fear over the 389 00:21:53,040 --> 00:21:54,760 Speaker 1: of the state of the Chinese economy, which again we 390 00:21:54,800 --> 00:21:57,760 Speaker 1: think is mostly unfounded and it's it's effect and they've 391 00:21:57,760 --> 00:22:00,399 Speaker 1: weakened it. They they're weak, but they're not we getting it. 392 00:22:00,440 --> 00:22:04,360 Speaker 1: They are stopping holding back any significant strengthening, so they're 393 00:22:04,359 --> 00:22:05,679 Speaker 1: just sort of letting it go a little bit more, 394 00:22:05,760 --> 00:22:08,639 Speaker 1: letting it go. Um, this this will be a problem 395 00:22:08,720 --> 00:22:10,680 Speaker 1: if it gets six seven, six eight, I think we'll 396 00:22:10,680 --> 00:22:12,520 Speaker 1: freak out. Markets. Where it is right now is not 397 00:22:12,560 --> 00:22:14,520 Speaker 1: an issue. Leland Miller, thank you so much for being 398 00:22:14,520 --> 00:22:17,879 Speaker 1: with us. Leland Miller, chief executive of the China Beige 399 00:22:17,880 --> 00:22:38,680 Speaker 1: Book International, based in New York. Well the Standard and 400 00:22:38,720 --> 00:22:43,560 Speaker 1: Poors the SMP five hundred casinos and gaming industry index 401 00:22:44,080 --> 00:22:47,720 Speaker 1: is down about ten percent so far this year, and 402 00:22:47,800 --> 00:22:51,120 Speaker 1: yet in Atlantic City they are set to open two 403 00:22:51,359 --> 00:22:55,080 Speaker 1: new casinos at the same time that sports betting has 404 00:22:55,119 --> 00:22:57,960 Speaker 1: begun in New Jersey. For more on the world of gaming, 405 00:22:57,960 --> 00:23:00,880 Speaker 1: we turned to Brian Egger are senior game and lodging 406 00:23:00,960 --> 00:23:05,240 Speaker 1: analysts for Bloomberg Intelligence, and you can follow Brian as 407 00:23:05,240 --> 00:23:10,399 Speaker 1: we all do on Twitter at breaking call. Actually, agronomics changes, 408 00:23:10,440 --> 00:23:15,200 Speaker 1: agronomics you changed this ye? Sorry, oh my gosh. All right, well, agronomics. 409 00:23:15,280 --> 00:23:17,520 Speaker 1: Tell us about these two new casinos. You've got the 410 00:23:17,560 --> 00:23:22,960 Speaker 1: Ocean Resort and the Hard Rock Casino. Why are they 411 00:23:23,000 --> 00:23:25,760 Speaker 1: opening in a place that, by all measures seems to 412 00:23:25,800 --> 00:23:28,399 Speaker 1: already have enough capacity. Well that's a good point. So 413 00:23:28,440 --> 00:23:31,600 Speaker 1: the view is that by any more entertainment, entertainment attractions 414 00:23:32,200 --> 00:23:34,359 Speaker 1: uh the city will be able to increase the average 415 00:23:34,400 --> 00:23:37,520 Speaker 1: visitor length of stay, attract a younger audience with entertainment 416 00:23:37,520 --> 00:23:40,159 Speaker 1: and concerts, and some of that may be true. But 417 00:23:40,280 --> 00:23:43,160 Speaker 1: our concern is that while these openings, which take place 418 00:23:43,160 --> 00:23:46,520 Speaker 1: today actually will grow capacity in the market by about 419 00:23:47,400 --> 00:23:50,360 Speaker 1: they may only increase the markets overall revenue by ten 420 00:23:50,440 --> 00:23:53,520 Speaker 1: or eleven percent. So we're really concerned they take business 421 00:23:53,600 --> 00:23:57,359 Speaker 1: away from other players in the city. Can we just 422 00:23:57,480 --> 00:24:00,440 Speaker 1: get a sense of snapshot taking a step back of 423 00:24:00,840 --> 00:24:03,640 Speaker 1: what the volumes have been like in Atlantic City, because 424 00:24:03,640 --> 00:24:06,679 Speaker 1: my understanding is that they had actually been losing popularity 425 00:24:06,720 --> 00:24:09,840 Speaker 1: with respect to uh to gambling. So so they've been 426 00:24:09,880 --> 00:24:12,520 Speaker 1: they've been better. But bear in mind that we until 427 00:24:12,600 --> 00:24:17,480 Speaker 1: yesterday had seven casinos. After four casinos closed in they 428 00:24:17,480 --> 00:24:20,320 Speaker 1: all they all shut down. The Atlantic Club, Showboat, Revel, 429 00:24:20,359 --> 00:24:23,440 Speaker 1: and Trump Plaza basically went out of business. What you're 430 00:24:23,440 --> 00:24:26,960 Speaker 1: seeing today is the Revel being reborn as the Ocean Resort, 431 00:24:27,080 --> 00:24:30,400 Speaker 1: and the Trump taj Mahal, which also closed down, being 432 00:24:30,440 --> 00:24:34,720 Speaker 1: reopened as the hard Rock. So these are reopenings after 433 00:24:34,760 --> 00:24:38,800 Speaker 1: a period of a shakeout and downsizing. Admittedly, the market 434 00:24:38,840 --> 00:24:41,359 Speaker 1: has been behaving somewhat better, but Atlantic City is not 435 00:24:41,400 --> 00:24:44,480 Speaker 1: the only area expanding. We've had expansion and ongoing expansion 436 00:24:44,880 --> 00:24:49,480 Speaker 1: in Pennsylvania, New York, elsewhere throughout the mid Atlantic, along 437 00:24:49,480 --> 00:24:51,399 Speaker 1: with sports betting. Okay, well, so yeah, that's what I 438 00:24:51,400 --> 00:24:53,119 Speaker 1: wanted to go with this, and New Jersey also just 439 00:24:53,240 --> 00:24:56,440 Speaker 1: legalized sports betting. How much betting can people do? I mean, 440 00:24:56,520 --> 00:24:59,000 Speaker 1: is there like a point of peak betting capacity, peak 441 00:24:59,080 --> 00:25:01,320 Speaker 1: gambling an interest charter. Look to the other day. If 442 00:25:01,359 --> 00:25:04,000 Speaker 1: you look at a map of tensam od are almost 443 00:25:04,040 --> 00:25:08,080 Speaker 1: a dozen Northeast and mid Atlantic states. Uh. Twenty years ago, 444 00:25:08,920 --> 00:25:12,040 Speaker 1: when I was a younger gaming analysts, there were about 445 00:25:12,080 --> 00:25:16,000 Speaker 1: sixteen casinos in those ten states. Today there are fifty one. 446 00:25:16,320 --> 00:25:19,359 Speaker 1: So we've had significant expansion not only nationally but also 447 00:25:19,760 --> 00:25:22,919 Speaker 1: in the Man Atlantic region as we've seen this liberalization 448 00:25:22,960 --> 00:25:26,200 Speaker 1: of gaming. This is generally a mature industry. You know, 449 00:25:26,240 --> 00:25:28,560 Speaker 1: are concern as these casinos made, you find, but they 450 00:25:28,600 --> 00:25:33,120 Speaker 1: take business away from other operators because as they're doing this. Uh, 451 00:25:33,160 --> 00:25:35,800 Speaker 1: there's much more competition in the mid Atlantic and greater 452 00:25:35,920 --> 00:25:40,600 Speaker 1: Northeast market today than there was five or ten years ago. Brian, 453 00:25:40,840 --> 00:25:43,760 Speaker 1: if you happen to be an investor that believes that 454 00:25:43,920 --> 00:25:46,800 Speaker 1: sports betting as it comes to New Jersey is going 455 00:25:46,840 --> 00:25:50,280 Speaker 1: to be a win, and you'd like to participate in 456 00:25:50,320 --> 00:25:53,920 Speaker 1: that experience, what is the best way to do so? Sure? Well, 457 00:25:53,960 --> 00:25:56,240 Speaker 1: there are companies that we don't follow, but they're actively 458 00:25:56,280 --> 00:25:59,679 Speaker 1: involved in managing the sports books of both the Ocean 459 00:25:59,680 --> 00:26:02,320 Speaker 1: resort opening today and the mom with race track which 460 00:26:02,320 --> 00:26:05,560 Speaker 1: started sports betting two weeks ago have sports books operated 461 00:26:05,640 --> 00:26:09,800 Speaker 1: by William Hill. Draft Kings, the Delhi fantasy sports operator, 462 00:26:09,840 --> 00:26:12,359 Speaker 1: will soon have a sports book at Resorts Casino, and 463 00:26:12,400 --> 00:26:14,399 Speaker 1: we've got Patty Power Betfair in the Meadowlands. So a 464 00:26:14,480 --> 00:26:17,520 Speaker 1: lot of these sports books are being operated either by 465 00:26:17,520 --> 00:26:21,199 Speaker 1: the fantasy sports companies or these European companies that have 466 00:26:21,320 --> 00:26:24,479 Speaker 1: operated in markets where sports betting and online gaming has 467 00:26:24,520 --> 00:26:27,080 Speaker 1: been legal for quite some time. All Right, so here's 468 00:26:27,119 --> 00:26:30,440 Speaker 1: what I'm struggling with. You now have more than doubling, 469 00:26:31,400 --> 00:26:35,600 Speaker 1: almost tripling, right of the casinos in the Northeast UH 470 00:26:35,640 --> 00:26:39,399 Speaker 1: in recent years. You have new casinos being built at 471 00:26:39,440 --> 00:26:42,800 Speaker 1: a time when people are doing more things online and 472 00:26:43,119 --> 00:26:45,520 Speaker 1: there has been a liberalization, so they're more areas that 473 00:26:45,560 --> 00:26:49,040 Speaker 1: are expanding. I'm just wondering, at what point is it 474 00:26:49,160 --> 00:26:51,920 Speaker 1: sort of overkill, and at what point is it sort 475 00:26:51,960 --> 00:26:53,920 Speaker 1: of people can get out what they need to get 476 00:26:53,960 --> 00:26:56,919 Speaker 1: out easily with the touch of their fingers and they 477 00:26:56,920 --> 00:26:59,080 Speaker 1: don't really need to go to these big buildings anymore. 478 00:26:59,359 --> 00:27:01,800 Speaker 1: I think there are some risk of channel shift towards 479 00:27:01,800 --> 00:27:03,639 Speaker 1: online gaming, but I think the bigger issue is that 480 00:27:03,680 --> 00:27:05,840 Speaker 1: Atlantic City has tried to be like Lallas Vegas. Bear 481 00:27:05,920 --> 00:27:08,360 Speaker 1: mind of the the number of visitors staying in Atlantic 482 00:27:08,400 --> 00:27:10,440 Speaker 1: City for more than three days is only one third 483 00:27:10,440 --> 00:27:13,600 Speaker 1: of the visitor base in Vegas, it's three quarters. So 484 00:27:13,680 --> 00:27:16,080 Speaker 1: one of the challenges that Atlantic City has, other than 485 00:27:16,119 --> 00:27:19,879 Speaker 1: the competition for monoline gaming, is people stay shorter lengths 486 00:27:19,880 --> 00:27:23,119 Speaker 1: of stay, they tend to be somewhat older, uh, and 487 00:27:23,280 --> 00:27:26,320 Speaker 1: they spend less on entertainment and more pure gambling. Some 488 00:27:26,440 --> 00:27:29,120 Speaker 1: of that has to begin to change for these new 489 00:27:29,280 --> 00:27:32,880 Speaker 1: resort properties to really bring a full complement of entertainment 490 00:27:32,880 --> 00:27:37,320 Speaker 1: that makes it worth building these additional resorts. Brian, let's 491 00:27:37,359 --> 00:27:39,480 Speaker 1: go out west for just a second to Las Vegas. 492 00:27:39,800 --> 00:27:42,520 Speaker 1: Who's doing the best right now? So right now, we've 493 00:27:42,520 --> 00:27:44,119 Speaker 1: had a bit of a slowdown in parts of the 494 00:27:44,160 --> 00:27:47,240 Speaker 1: Las Vegas Strip after the tragic shooting last October. UH. 495 00:27:47,280 --> 00:27:50,200 Speaker 1: That has slowed down MGM a bit, although we put 496 00:27:50,200 --> 00:27:52,879 Speaker 1: out a report this morning on the terminal indking that 497 00:27:52,920 --> 00:27:54,840 Speaker 1: we think twenty nine team will be much better year 498 00:27:54,880 --> 00:27:57,560 Speaker 1: for MGM in the Las Vegas Strip. Generally, it's been 499 00:27:57,560 --> 00:27:59,959 Speaker 1: a it's been a challenging year because of that slowdown, 500 00:28:00,240 --> 00:28:03,720 Speaker 1: because of the construction of Monte Carlo being re retrofitted, 501 00:28:04,359 --> 00:28:07,480 Speaker 1: as the park MGM because of the shooting last October, 502 00:28:07,480 --> 00:28:11,000 Speaker 1: which really slowed down leisure visits. I think in that 503 00:28:11,080 --> 00:28:14,359 Speaker 1: context will be better here. Brian Iger, thank you so 504 00:28:14,440 --> 00:28:17,400 Speaker 1: much for being with us. I find this so interesting, 505 00:28:17,480 --> 00:28:19,960 Speaker 1: just the shift in the whole business model at the 506 00:28:20,000 --> 00:28:24,240 Speaker 1: time when people are still building as much as they can. 507 00:28:24,359 --> 00:28:26,159 Speaker 1: I mean, is it going to be builded? If you know, 508 00:28:26,560 --> 00:28:28,240 Speaker 1: build it and they will come. But as I but 509 00:28:28,320 --> 00:28:31,440 Speaker 1: as Brian mentioned, you know what's sixteen when you started 510 00:28:31,840 --> 00:28:35,159 Speaker 1: covering this whole thing that will watch sixteen operations and 511 00:28:35,200 --> 00:28:39,800 Speaker 1: now we've got you know yeah. Brian Iger, Senior Gaming 512 00:28:39,800 --> 00:28:47,480 Speaker 1: and Lodging analysts for Bloomberg Intelligence. Thanks for listening to 513 00:28:47,560 --> 00:28:50,440 Speaker 1: the Bloomberg P and L podcast. You can subscribe and 514 00:28:50,480 --> 00:28:54,480 Speaker 1: listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast 515 00:28:54,480 --> 00:28:58,000 Speaker 1: platform you prefer. I'm Pim Fox. I'm on Twitter at 516 00:28:58,160 --> 00:29:01,520 Speaker 1: pim Fox. I'm on Twitter at Lisa Abramo. It's one 517 00:29:01,760 --> 00:29:04,480 Speaker 1: before the podcast. You can always catch us worldwide on 518 00:29:04,520 --> 00:29:05,360 Speaker 1: Blueberg Radio.