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Speaker 1: This is Bloomberg Business Week. I'm Charle Masser and I'm

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Speaker 1: Bloomberg Quick Takes Tim Stanibek. We're here every day bringing

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Speaker 1: you the latest news from the world of business and finance,

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Speaker 1: plus technology, politics, economics, all parnessing the power of Business

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Speaker 1: Week reporters and editors, not to mention our journalists and

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Speaker 1: analysts in more than one and twenty countries. You can

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Speaker 1: download Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot com.

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Speaker 1: You can also listen to our radio show at two

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Speaker 1: pm Eastern Time on Bloomberg Radio or watch us on

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Speaker 1: YouTube search Bloomberg Global News. So this week's Bloomberg Business

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Speaker 1: Week cover story, it's a business takeover about vaccine passports,

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Speaker 1: which could not only help global tourism, but also some

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Speaker 1: other industries as well. In fact, every industry is safe

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Speaker 1: to say. Here's more with Bloomberg Business Week Assistant Managing

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Speaker 1: editor Jim Ellis. So, we've we've heard so much about,

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Speaker 1: you know, the pain that businesses have had and the

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Speaker 1: countries have had, you know, particularly tourist dependent countries, since

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Speaker 1: the pandemic has pretty much stopped the ability that's sort

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Speaker 1: of easily moved tween places or even the congregating groups.

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Speaker 1: So I thought it would be a great idea to

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Speaker 1: sort of take a long look, deep dive at, you know,

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Speaker 1: a the problem and also the range of solutions that

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Speaker 1: are coming out now and whether this vaccine passport, this

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Speaker 1: sort of mythical savior that so many people have been

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Speaker 1: talking about, is really going to be as effective and

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Speaker 1: is easy to put together as a lot of people

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Speaker 1: seem to think. I mean, this is one of those

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Speaker 1: things that this is a solution that people came up

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Speaker 1: with quite so quickly before actually understanding what it means.

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Speaker 1: It's like, look at that, really, will it be the

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Speaker 1: golden ticket? And you guys take us to Israel, you

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Speaker 1: take us to uh Europe, where I feel like this

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Speaker 1: is where we're starting to see kind of moves in

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Speaker 1: that direction, at least more ahead than some other parts

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Speaker 1: of the world. Yeah, they've been very, very much more

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Speaker 1: interested in in in getting things reopened in a coordinated

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Speaker 1: way than here in the US for for a lot

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Speaker 1: of reasons. I mean, it's in some ways it's simpler

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Speaker 1: because their health systems sort of centralize a lot of

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Speaker 1: data and so therefore, uh, here in the US, we've

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Speaker 1: got a health system where you know, millions of different

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Speaker 1: systems in every state and so it's sort of hard

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Speaker 1: to be able to track people. That's easier and in

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Speaker 1: countries that have their own health systems. But more importantly, um,

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Speaker 1: certain parts of the world are so impacted by the

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Speaker 1: drop and travel that they have an interesting getting this

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Speaker 1: back together, particularly Europe. Europe has a lot of countries,

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Speaker 1: particularly in southern Europe, like a Greece or Spain or

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Speaker 1: in Italy, that desperately need to urism to come back.

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Speaker 1: It's a big piece of their GDP and they want

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Speaker 1: some reason to say that it's safe to travel, whether

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Speaker 1: it's truly safe or whether that's just a big lead.

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Speaker 1: It seems more and more businesses, whether it's an airline,

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Speaker 1: whether it's in the hospitality business, but increasingly whether it's

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Speaker 1: in things like sporting events, um um, you know, gyms,

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Speaker 1: all those are looking to a vaccine passport as a

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Speaker 1: way to say, hey, it's safe, here's your get out

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Speaker 1: of jail car. You have this. Now let's get back

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Speaker 1: to business as usual, all right, So let's talk about

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Speaker 1: some of the things that are out there. There's the

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Speaker 1: International Air Transport Association. They've got a travel pass app.

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Speaker 1: You've got the EU with their digital Green Pass proposal,

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Speaker 1: You've got the A Okay Pass. Any of this really

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Speaker 1: working well or at least maybe some tests of it, well, yeah,

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Speaker 1: the things are in test. The issue is that there's

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Speaker 1: right now no coherent standard about what these things should um,

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Speaker 1: you know, sort of what kind of data they should capture,

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Speaker 1: and how they should be able to sort of share

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Speaker 1: that data, and what do you have to do to

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Speaker 1: make sure that data is sort of private because it's

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Speaker 1: often tied to other data, other health data on you

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Speaker 1: and other sort of just personal information on you, which

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Speaker 1: is a really big issue in parts of the world,

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Speaker 1: particularly in Europe, where privacy is a major concern amount

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Speaker 1: over everything. And so you've got a lot of competing

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Speaker 1: systems as opposed to a standard, whether it's you know,

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Speaker 1: right now, Air Frances trialing something called an a O

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Speaker 1: K pass, um you know, IATA you know has its

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Speaker 1: travel Pass, the Common Pass, which is something that's backed

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Speaker 1: by the World Economic Forum. All of these are basically

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Speaker 1: competing systems that in various ways take your vaccination and

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Speaker 1: and and COVID testing history and put it uh into

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Speaker 1: a form that can somehow be displayed on a screen. Uh.

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Speaker 1: The problem is that, um, you know, how that happens

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Speaker 1: can really affect how private the data is. So increasingly

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Speaker 1: what we're seeing is people are you know, coalescing around

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Speaker 1: sort of an open standard that's tied in with the

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Speaker 1: way that we look at security on the Worldwide Web,

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Speaker 1: which is pretty well adopted around the world. And the

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Speaker 1: key here is rather than having a central database that

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Speaker 1: has everyone in the world's health data, which is something

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Speaker 1: that most people would not want, I'm just gonna say,

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Speaker 1: you made me really nervous. Like I think about it's

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Speaker 1: like similar to what we're trying to do with you know,

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Speaker 1: medical history. Every time I go to the doctor's office,

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Speaker 1: I'm frustrated that I file something out. But will I

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Speaker 1: be ultimately comfortable if there is a universal database that

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Speaker 1: knows everything medically on me, particularly since that database is

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Speaker 1: you know, some people would say that's cool if it's

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Speaker 1: just to transport, to transit borders or something like that

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Speaker 1: where government is involved, but increasingly, you know, this is

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Speaker 1: going to be used in Britain is arguing now about

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Speaker 1: whether this can be whether a vaccine passport can be

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Speaker 1: used for admissions to pubs. Um you know and um

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Speaker 1: in other places. I mean, high It earlier this month

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Speaker 1: said that it would consider using one of these apps,

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Speaker 1: exploring using one of these apps to determine whether you

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Speaker 1: should be able to attend a meeting or convention at

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Speaker 1: one of its hotels. So, I mean a lot of

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Speaker 1: people are worried about that leaking out. So what the

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Speaker 1: standard that seems to be emerging will be something that

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Speaker 1: actually allows the data from your sort of health center

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Speaker 1: or your health a tester to somehow go into a

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Speaker 1: secure app within your phone and then you can decide

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Speaker 1: what what piece of it you want to put out.

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Speaker 1: And so therefore the border guard or the hard tender

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Speaker 1: or whatever wouldn't have access to all of your information,

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Speaker 1: just what little piece you determine that they can have

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Speaker 1: from the phone at that time, and that the user,

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Speaker 1: the person whose data this is, would always be in control.

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Speaker 1: If they can make that work, and they think that

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Speaker 1: they can use web protocols to do that, then that

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Speaker 1: may be a solution. Vaccine passport, Yes for me, Yes

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Speaker 1: for you. Yeah. Look, it is so tricky and I

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Speaker 1: hesitate to be totally willing to give up my information,

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Speaker 1: but we are really in unprecedented times right now. And

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Speaker 1: it's so sticky because and we talked about this on

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Speaker 1: Quick Take yesterday, there are so many issues with this,

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Speaker 1: so many issues when it comes to equal access to vaccines.

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Speaker 1: But I don't know, I don't know. I'm I'm I say,

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Speaker 1: I say yes, but I'm also on the fence. I

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Speaker 1: don't know. I feel like there's so much already information

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Speaker 1: we put out there. Is it just so bad to

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Speaker 1: just say, Okay, yeah, I've got the vaccine. Is it

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Speaker 1: as simple as that? And it's just, you know, some

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Speaker 1: universal system that really makes it possible for us to

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Speaker 1: start moving around. I mean, you know, my wife went

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Speaker 1: got her first dose this week and she got a

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Speaker 1: sticker that said that she got vaccinated. She just feeling

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Speaker 1: probably kind of good. Not like she goes outside and

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Speaker 1: wears it around, right, It's not like we're going anywhere

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Speaker 1: right now. Well, that, of course was Bloomberg Business Week

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Speaker 1: Assistant Managing editor Jim l Is just really breaking down

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Speaker 1: he oversaw the coverage. Be sure to check out the

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Speaker 1: Vaccine Passport issue of the magazine. It's on newsstands now

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Speaker 1: at Bloomberg dot com, Slash business Week, and of course,

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Speaker 1: on the Bloomberg terminal. All of those stories really a

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Speaker 1: thoughtful deep dive into the possibility of vaccine passports. This

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Speaker 1: is Bloomberg Business Week with Carol Messer and Bloomberg. It

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Speaker 1: takes Tim Stenovik on Bloomberg Radio. Alright, so we are

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Speaker 1: glued to our live blog that is all about three

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Speaker 1: well known tech CEOs testifying up on Capitol Hill. We're

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Speaker 1: talking about CEO Mark Zuckerberg, Google CEO Sundchi, and Twitter

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Speaker 1: CEO Jack Dorsey testifying right now before the House Energy

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Speaker 1: and Commerce Committee. The committee Tim is called Disinformation Nation

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Speaker 1: social media's role and promoting extremism and misinformation. Take that,

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Speaker 1: your three tex CEOs. You know, I'm starting to see

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Speaker 1: a pattern here. All right, let's get into it. What's

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Speaker 1: the pattern that these guys get grilled all the time

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Speaker 1: by members of the house, warm and fuzzy and cozy

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Speaker 1: when they're up there. Let's get into it with Sarah Roberts,

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Speaker 1: Assistant Professor of Information Studies at u c l A

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Speaker 1: Graduate School of Education, Information studies author behind the screen

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Speaker 1: content moderation in the Shadows of social Media. She's with

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Speaker 1: us from l A on the phone, John Erlickman, anchor

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Speaker 1: byan and Bloomberg's the Open correspondent for CTV National News

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Speaker 1: on the phone from Toronto. A great twosome to talking

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Speaker 1: to Sarah. Let me kick it off with you, um

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Speaker 1: this hearing. What's the problem? Who needs to be really accountable?

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Speaker 1: How do you see it? You understand this world? Yes?

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Speaker 1: Thanks for having me to discuss um. I think one

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Speaker 1: of the big takeaways that I had very early on

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Speaker 1: in this hearing today, which is as we as we

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Speaker 1: acknowledge one in a series, we see, we've seen that

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Speaker 1: we've seen these guys being created before Congress now with

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Speaker 1: the fair amount of regularity. One of the things that

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Speaker 1: I was noting today was that there really are conversations

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Speaker 1: happening by our Congress members that a number of different

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Speaker 1: registers with regard to UH their their complaints, and they're

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Speaker 1: they're questioning to the CEOs. We have some members of

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Speaker 1: Congress who are representing their constituents and talking about individual

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Speaker 1: perceptions of you know, biased towards them based on perhaps

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Speaker 1: political or religious orientation or creed or practice. We have

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Speaker 1: other members of Congress talking about much larger issues such

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Speaker 1: as the Rohinga genocide and me and mar that seems

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Speaker 1: to have been orchestrated and and carried out through people

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Speaker 1: communicating on Facebook. That's fairly well known at this point.

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Speaker 1: And then we have even members of Congress bringing it UH.

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Speaker 1: Multilateral trade agreements into the conversation. Trade agreements notorious for

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Speaker 1: their secrecy, and it comes comes to be the case

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Speaker 1: that Section two thirty UH like language is being built

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Speaker 1: into them. So in a way, although I'm not known

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Speaker 1: for my great UH sympathy towards the pech firms, I

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Speaker 1: do have to say that it's it's quite a it's

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Speaker 1: quite a feat for them to respond to all of

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Speaker 1: these different registers that the problems are being asked to

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Speaker 1: respond to are just coming at them from all different directions,

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Speaker 1: and there's not a lot of cohesion from our Congress members.

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Speaker 1: It's you know, just as a constituent, I find that

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Speaker 1: a little disappointing because it really does derail in some

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Speaker 1: ways the kinds of complexity is that could be gotten into.

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Speaker 1: Of course, we know that there's a lot of grand

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Speaker 1: standing that goes on things that a lot of just

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Speaker 1: yes or no, I answer the question to prove a points.

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Speaker 1: So we got to take that political theater into and

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Speaker 1: to the equation to right, and then that happens every time,

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Speaker 1: as we've seen time and time again. I should note that,

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Speaker 1: as planned, the committee is recessing for fifteen minutes right now.

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Speaker 1: I John Erlickman, come on in here and talk a

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Speaker 1: little bit about the lawmakers and their lines of questioning here,

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Speaker 1: because a common criticism over the past few years when

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Speaker 1: it comes to the way that these members of Congress

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Speaker 1: do speak to these CEOs, has been that it's not

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Speaker 1: always clear that they know exactly what they're talking about.

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Speaker 1: Do they seem, you know, quote unquote read in on this. Yeah,

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Speaker 1: it's a great question, Tim, And I'll be honest, after

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Speaker 1: listening to so many of these grill sessions and I

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Speaker 1: and I totally um um see you're serious coming from

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Speaker 1: It's true that they have thrown at a whole bunch

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Speaker 1: of stuff, and maybe the net result is you don't

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Speaker 1: get as far as you need to get with what

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Speaker 1: ultimately the goal may have been with today. But at

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Speaker 1: the same time, this has been some of the most

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Speaker 1: compelling testimony that I've observed, partly because at the very

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Speaker 1: least I have walked away so far feeling as if

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Speaker 1: we have moved beyond whether we actually you know understand

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Speaker 1: the business, you know, just watching everything, it felt to

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Speaker 1: me like I don't need to know if this lawmaker

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Speaker 1: understands everything that goes into the business of Facebook or Google.

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Speaker 1: There's a robust conversation around whether or not these massive

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Speaker 1: platforms should have the power to ignore or police their content.

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Speaker 1: Content that for years they said we don't create, so

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Speaker 1: we're not responsible for and now they are saying we

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Speaker 1: have or we want to implement better ways to police

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Speaker 1: the content. And to the same A's point, they have

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Speaker 1: come to the table with a lot of great examples

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Speaker 1: summary total. Maybe it's a you know, one politician whose

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Speaker 1: posts were taken down, or maybe it's something else, but

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Speaker 1: we've got we've gotten to a point where things can

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Speaker 1: be toxic as a result of what happens on these platforms.

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Speaker 1: They've done a lot of exciting things. The technology has

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Speaker 1: allowed us to do a lot, but I would have

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Speaker 1: hoped that they these executives were in many ways more prepared.

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Speaker 1: And so now headlines are coming out because there are

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Speaker 1: served specific examples used like the capital riots. Right. Uh,

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Speaker 1: some of the lawmakers were asking yes or no, do

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Speaker 1: you bear responsibility for this? And there's sort of these

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Speaker 1: stuttering answers, and you know, Jack Dorsey walks away as

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Speaker 1: the one who acknowledges Okay, yes, Twitter did play a

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Speaker 1: role in that. And I and I think that, um,

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Speaker 1: I think that the line of questioning, although scattered, is

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Speaker 1: actually far more improved from when this process began. Accountability,

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Speaker 1: yes or now Sarah, I'm pretending I'm one of the lawmakers.

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Speaker 1: But do they ultimately need to be Sarah accountable for

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Speaker 1: the content? I think this is what we're trying to

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Speaker 1: figure out. Are they accountable? Should they be accountable? And

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Speaker 1: we've only got about forty seconds and then we'll come

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Speaker 1: back and talk some more. Yeah, I'll tell you that

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Speaker 1: that that normative question is a bit of a misnomer

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Speaker 1: because the fact is that they are already accountable. They're

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Speaker 1: just accountable to themselves. So it's not as if we're

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Speaker 1: going from no kind of remediation and accountability. It's just

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Speaker 1: that the public and now we both sides the aisle

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Speaker 1: very much united in this hearing, with with with anger

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Speaker 1: towards the firms. Well, or does it need to be

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Speaker 1: accountability to an outside entity and not just internally? All right,

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Speaker 1: let's get right back to our discussion we're talking about

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Speaker 1: the three big tech CEOs, Mark Zuckerberg, Sounder Pichai, and

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Speaker 1: Jack Dorsey up on Capitol Hill right now. They're taking

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Speaker 1: a little bit of a recess, but they are testifying

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Speaker 1: about really disinformation on their platform. Sarah Roberts is still

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Speaker 1: with US, Associate Professor of Information Studies at u c

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Speaker 1: l A Graduate School of Education Information Studies and also

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Speaker 1: still with US. She's from l A. John Erlichman on

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Speaker 1: the phone in Toronto. He's anchored being in Bloomberg's The

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Speaker 1: Open Chris Bonnet for CTV National News. Um, Sarah, I

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Speaker 1: just want to quickly follow up I was talking about,

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Speaker 1: you know, you said there is accountability, but do we

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Speaker 1: need to have more outside accountability of these social media

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Speaker 1: platforms in order for it to be better and especially

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Speaker 1: in terms of the spread of disinformation? Just quickly, yes,

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Speaker 1: absolutely absolutely we do. And you know, I made the

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Speaker 1: point somewhat facetiously to illustrate the fact that what we

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Speaker 1: have right now is the case of the Fox reguarding

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Speaker 1: the hen House, and that doesn't usually turn out so

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Speaker 1: well for the hen. Uh. It's it's just not a

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Speaker 1: it's not a good model. And moreover, many other industries

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Speaker 1: don't seem to enjoy this kind of uh, this kind

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Speaker 1: of leeway that has led to the front uh becoming

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Speaker 1: the bihemos that they are. One Early on in the hearing,

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Speaker 1: Zuckerberg pointed ingestured at his firms development of their Facebook

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Speaker 1: Oversight board, the mechanism they're using once again to put

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Speaker 1: a check on their decision making power. And that board

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Speaker 1: is designed as a as a separate entity in the

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Speaker 1: body that is wholly independent from Facebook. But the thing

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Speaker 1: is still inside of Facebook's logic, and it still doesn't

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Speaker 1: curry the same kind of weight and power. That's something

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Speaker 1: like governmental regulation might or should, and certainly does in

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Speaker 1: the context of other industries. Broadcasting comes to mind as

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Speaker 1: just right as we speak on the radio today, Hey John,

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Speaker 1: come on in here and talk a little bit about

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Speaker 1: this from the investor in business perspective, here, I'm looking

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Speaker 1: at a chart of Facebook intra day. It's down four

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Speaker 1: tents of one percent. Twitter is down about eight tents

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Speaker 1: of one percent, and Alphabet is tired by just two

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Speaker 1: tents of one percent from a business perspective, From an

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Speaker 1: investor perspective, what is the worst case scenario for these

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Speaker 1: companies when it comes to regulation and it happens. I mean,

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Speaker 1: you know, the reality, Tim is that we just this

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Speaker 1: this hearing today. I think we started this conversation by

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Speaker 1: saying a lot has been thrown out. The biggest question

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Speaker 1: becomes what contangibly come from this. So if there was

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Speaker 1: something truly meaningful that did come, well, that would definitely

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Speaker 1: changed the game. But I want to be clear that

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Speaker 1: Facebook itself is being proactive in wanting to, you know,

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Speaker 1: have a new version of the script because that way

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Speaker 1: they can essentially, you know, have a way to just

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Speaker 1: manage how things are playing out Washington, but on Wall Street, Uh,

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Speaker 1: you know, with their messaging to investors. Um, the numbers

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Speaker 1: are pretty astounding, Kim and Carol. I mean, Facebook is

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Speaker 1: going to generate more than a billion in revenue this

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Speaker 1: year for the first time. Um, it will have done

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Speaker 1: that in seventeen years. That's faster than Microsoft, Amazon, Walmart, GM,

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Speaker 1: Chevron A, T M T. And you know, it comes

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Speaker 1: back to the fact that they're used by everybody and

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Speaker 1: they have this massive advice you know, there was a

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Speaker 1: funny there was interesting moment when Mark Zuckerberg was asked

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Speaker 1: about advertising targeting those under the age of thirteen on Instagram,

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Speaker 1: at which point he said, well, people under thirteen aren't

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Speaker 1: allowed on Instagram, and um, come on, well exactly, and

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Speaker 1: and and he and and and so the lawmaker asked, well, okay,

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Speaker 1: how do you verify that? And you know, well you

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Speaker 1: enter your age and so I think there will come

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Speaker 1: on John. But but Zuckerberg, what he talked about really

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Speaker 1: the first time was that they're thinking of an Instagram

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Speaker 1: for people who are under the age so they can

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Speaker 1: further police it. So they've got a business plan for everything.

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Speaker 1: And I gotta tell you, guys, to answer Tim's question,

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Speaker 1: I mean, investors have loved this story. That is the reality.

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Speaker 1: You know, making money attracts people who want to make money.

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Speaker 1: So what does that mean then, John from the investor

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Speaker 1: world just quickly that I don't really think unless there

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Speaker 1: are are our real teeth and what Wall makes are

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Speaker 1: going to do. And I don't think we know that

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Speaker 1: right now. That Facebook is still in a power position

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Speaker 1: along with Google. Yeah, exactly, and they've gotten smarter in

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Speaker 1: terms of lobbying and spending a lot more money, just

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Speaker 1: like UH companies that have been around for a hundred years. Sarah. Realistically,

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Speaker 1: we've just got about a minute and a half left here.

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Speaker 1: I mean, realistically, is this just grandstanding? We'll have these

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Speaker 1: hearings and then we're gonna move on and nothing really changes. Well,

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Speaker 1: you know, you you set it up perfectly for me

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Speaker 1: to spike it over the net. I was reading report

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Speaker 1: yesterday about the biggest players in the in the government

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Speaker 1: relations a k a. Lobbying scene in terms of dollars

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Speaker 1: and boots on the ground in places like DC. Guests

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Speaker 1: who's leading that race right now? If you guess Facebook,

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Speaker 1: you'd be right. If you guess Amazon, you'd be right

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Speaker 1: to their number two. And of course we're not talking

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Speaker 1: about them today, but they're in the background here as well. So, um,

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Speaker 1: you know, the question remains beyond these kinds of hearings

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Speaker 1: that are a lot of political theater. We have to

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Speaker 1: see what we'll actually shake out in the form of legislation.

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Speaker 1: But it's important to know that lawmakers often know where

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Speaker 1: the bread is buttered, right, and these lobbyists are there

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Speaker 1: to remind them. Uh So the money piece following the

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Speaker 1: money is going to be important. And I also have

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Speaker 1: to say, just as an industry watcher, you know, I

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Speaker 1: just checked in with this with the trading and stock

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Speaker 1: prices just before I got on the call. And as

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Speaker 1: we all know, these uh, these these firms have their

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Speaker 1: shares trading at darn year fifty two week highs in

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Speaker 1: some cases all time highs for for a firm like Twitter,

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Speaker 1: which was languishing and languering, uh, languishing and linkering and

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Speaker 1: these like really low places. It's way you know, right,

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Speaker 1: many many times. Hey, guys, Sarah, we gotta run. This

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Speaker 1: is great and I know we'll come back to this,

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Speaker 1: no doubt about it over the next few months. Sarah Roberts,

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Speaker 1: Associate Professor of Information Studies at u c l A

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Speaker 1: Graduate School of Education Information Studies. John Arlickman anchor Being

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Speaker 1: and Bloomberg is the open Chris Bonnet for CTV National News. Guys,

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Speaker 1: thank you so much. This is Bloomberg Journal. Yeah, but

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Speaker 1: you let me drive. No, no drive home an please,

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Speaker 1: I'll do the right drivel Lets me I want to drive,

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Speaker 1: Just drive baby, question, get drying. This is the drive

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Speaker 1: to the Globe. Give me thanks well, drying us down

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Speaker 1: on Bloomberg Radio quite just about nine minutes left in

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Speaker 1: today's trading session. Let's get to the drive to the close.

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Speaker 1: Bill Smede back with US CEO ce IO at Smede

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Speaker 1: Capital Management, based in Seattle, but on the phone in Phoenix, Arizona.

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Speaker 1: The Speed Value Fund, by the way, beating just about

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Speaker 1: all of its peers so far this year and really

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Speaker 1: over the past five years, returning on average more than annually.

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Speaker 1: Hey Bill, good to have you here with Tim and me.

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Speaker 1: How are you very well? Thank you? So, how do

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Speaker 1: you see the market environment right now? It's very interesting

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Speaker 1: as always, that's one of the beauties of having this

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Speaker 1: as an occupation. Uh, you have what is likely a

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Speaker 1: bear market developing in the NASDAC. At the same time

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Speaker 1: you have bull markets and the things that benefit the

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Speaker 1: most from reopening. And it's harder to understand if you're

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Speaker 1: in a place that hasn't reopened. I'm in Phoenix, Arizona,

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Speaker 1: and the this this town is almost completely open. There

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Speaker 1: were a hundred and thirty eight cases in the state

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Speaker 1: of Arizona recorded today, and you know that's down from

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Speaker 1: ten thousand or something like that, you know, not very

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Speaker 1: long ago. And and so watching the activity of people

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Speaker 1: here is a nice picture of what it will look

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Speaker 1: like once the combination of vaccinated plus you know already

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Speaker 1: already had the virus, UH reaches that six level. So

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Speaker 1: bill a bear market for the NASDAC. What about value

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Speaker 1: and where you see opportunity? What are some names? Well, uh,

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Speaker 1: you know, we like the home builders. There's a line

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Speaker 1: of logic out there that says, g because home building

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Speaker 1: has gone so well that it has to be some

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Speaker 1: kind of a top or a cyclical high. And we

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Speaker 1: have a chart that shows the number of homes built

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Speaker 1: each year divided by population going back sixty two years

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Speaker 1: and the current the current home building level just gets

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Speaker 1: us up to the deepest recession levels of the sixties, seventies, eighties,

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Speaker 1: nineties and two thousand's. So so basically we're just still

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Speaker 1: about the third or fourth inning of a nine inning

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Speaker 1: housing recovery that should stretch the next decade. We like Lennar,

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Speaker 1: We liked d R. Horton and UH and we own NBR.

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Speaker 1: And what everyone is kind of forgetting is that the

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Speaker 1: market share of these companies has grown immensely. Uh. We

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Speaker 1: have one chart that shows that DR Horton, the largest

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Speaker 1: home builder, had one percent market share in and they

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Speaker 1: have about nine market share this year, and and that

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Speaker 1: so we have a lot of houses to build, and

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Speaker 1: those houses are going to predominantly be built by the

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Speaker 1: ten largest home builders, and we own three of the

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Speaker 1: top five. Hey, Bill, we got Jeff Mezger, the CEO

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Speaker 1: of KB Home, joining us uh later than the show

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Speaker 1: in the next hour. What would you ask him? Oh? Uh,

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Speaker 1: you know, I don't think we need to ask a lot.

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Speaker 1: We we we We've been listening to Stuart Miller and

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Speaker 1: UH and and speaking regularly and understanding their industry. KB

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00:24:59,560 --> 00:25:04,480
Speaker 1: is I believe a big California builder. And that's problematic

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Speaker 1: because California is a weird state for a couple of reasons. One,

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Speaker 1: my my cousin helped create Proposition thirteen a long time ago,

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Speaker 1: which caps people's property taxes at the price they bought

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Speaker 1: the home at and and so people that are in

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Speaker 1: their home never want to leave them because they never

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Speaker 1: want to have to pay higher property taxes. And then secondarily,

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Speaker 1: there's not a lot of land left in the most

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Speaker 1: attractive UH cities like San Francisco, Los Angeles, San Diego, etcetera. Therefore,

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Speaker 1: it's just not that great a place to build homes

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Speaker 1: unless you move quite a ways away, and they're doing that,

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Speaker 1: I'm sure. But the big opportunity really is going to

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Speaker 1: seventy five percent of the geography the United States where

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Speaker 1: you can build homes for half the price of what

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Speaker 1: you can build them in California. Well, and do you

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Speaker 1: think working from home and you know all of these

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Speaker 1: stories about people and companies now saying listen, you don't

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Speaker 1: have to work at our of it says you can

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Speaker 1: work anywhere you want in the country. Do you think

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Speaker 1: that's going to create some housing booms elsewhere and some

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Speaker 1: opportunities in terms of home building in other markets? Well,

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Speaker 1: I do, but I think the offices will move to

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Speaker 1: the less expensive areas also to accommodate that. And and

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Speaker 1: I'm actually in the camp that thinks works from work

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Speaker 1: from home is overrated. A good friend of mine ran

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Speaker 1: a successful business for a long time. He said, it's

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Speaker 1: not what's expected that gets done, it's what's inspected interesting,

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Speaker 1: and it's it's hard to inspect what your employees are

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Speaker 1: doing when you're not around them. Hey, I'm I'm in

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Speaker 1: your camp. Okay, not necessarily because I don't trust, you know,

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Speaker 1: my colleagues, but I just like to be at work

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Speaker 1: rather than at home. Um. Hey, it's it's good from

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Speaker 1: a social stamp. Listen, just got about thirty seconds left.

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Speaker 1: There any other names that you think are on your

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Speaker 1: radar right now that you've committed new money and just

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Speaker 1: got to be really quick if you could. We think

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Speaker 1: that people around the country that haven't opened up yet

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Speaker 1: are going to be shocked at the number of people

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Speaker 1: that go to class A malls like Mace rich On

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Speaker 1: Simon malls shopping. I haven't want to get back to it.

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Speaker 1: I haven't done that in years. Um, good stuff, Bill,

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Speaker 1: Thank you so much. Stay well. Bill Smeade. He is

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Speaker 1: CEO and c i O at SMAD Capital Management. As

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Speaker 1: I mentioned, their value fund has been beating almost all

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Speaker 1: of its peers consistently over the past five years. Joining

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Speaker 1: us on the phone in Phoenix. Thanks for listening to

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Speaker 1: Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or

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00:27:32,960 --> 00:27:35,119
Speaker 1: Bloomberg dot com, and you can also listen to our

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Speaker 1: radio show at two pm Eastern on Bloomberg Radio or

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