WEBVTT - DraftKings, Tech, Marijuana, and Steve Cohen (Podcast) 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:23.279 at Bloomberg dot com slash podcast. Well, the most read story, 0:00:23.320 --> 0:00:25.320 has Matt Miller pointed out to me, is from our 0:00:25.360 --> 0:00:28.120 good friends in Zirch, Credit Swiss Group. Are there, then, sir, 0:00:28.280 --> 0:00:30.280 not Geneva? Right, that's where the base Yeah, they're both 0:00:30.280 --> 0:00:32.840 in Zurich. Okay, alright. Credit Swiss Group offered to buy 0:00:32.840 --> 0:00:35.400 back up the three billion dollars of its own debt 0:00:35.920 --> 0:00:38.320 and a move aimed to coming investor Jitters ahead of 0:00:38.360 --> 0:00:42.599 the unveiling of a crucial strategy revamp later this month. 0:00:42.680 --> 0:00:44.960 Let's bring in Allison Williams. She's our senior banks analyst 0:00:45.000 --> 0:00:47.640 of Bloomberg Intelligence. She's been coming the banking industry on 0:00:47.640 --> 0:00:51.559 a global basis for decades. So, Alison, what does this 0:00:51.600 --> 0:00:54.040 mean to you? What does this mean for I guess 0:00:54.120 --> 0:00:59.080 equity investors, for creditors here for Credit Swiss, I think 0:00:59.280 --> 0:01:01.120 like like a lot of things that have happened over 0:01:01.160 --> 0:01:04.160 the past week, it's it's sort of more symbolic than 0:01:04.600 --> 0:01:07.240 anything else. It is a way for them to come 0:01:07.240 --> 0:01:11.119 out and say that, you know, we have ample liquidity 0:01:11.240 --> 0:01:14.399 in a way that people will believe if you will 0:01:14.520 --> 0:01:19.319 so as we know, um, over many years, when banks 0:01:19.319 --> 0:01:22.320 come out and say they don't need capital, they have liquidity, 0:01:22.400 --> 0:01:25.560 it ends up sometimes having the opposite effect, which is 0:01:25.600 --> 0:01:28.600 actually what we saw earlier this week in an effort 0:01:28.640 --> 0:01:33.680 to calm things. It didn't And by coming out today 0:01:33.720 --> 0:01:38.240 and doing this offer, they're showing that they do have 0:01:39.200 --> 0:01:42.000 you know, they do have ample liquidity, that's not the issue, 0:01:42.600 --> 0:01:45.200 and you are seeing the intended effect, which is some 0:01:45.319 --> 0:01:48.840 studying in the stock and bonds in fact on a 0:01:48.960 --> 0:01:52.040 very red screen today. Um, the stock is up it 0:01:52.040 --> 0:01:54.800 it was doing better earlier in the day. Is there 0:01:56.040 --> 0:01:58.880 is there an actual playbook like did John cry and 0:01:59.080 --> 0:02:01.800 have a leather bound book that he handed over to 0:02:02.040 --> 0:02:04.360 the leadership at Credit Squeeze because Deutsche Bank did the 0:02:04.400 --> 0:02:08.840 exact same thing. Um, right when right when they're uh, 0:02:09.040 --> 0:02:12.480 you know when when there was a concern about liquidity 0:02:12.520 --> 0:02:17.160 of the German bank, Well, and I think it is UM. 0:02:17.240 --> 0:02:20.440 You know, I think it is a tactical move UM 0:02:20.520 --> 0:02:23.440 to study things. I do think that the situations are 0:02:23.480 --> 0:02:26.680 are a little bit different in the sense that UM, 0:02:26.720 --> 0:02:29.200 you know, credit sweet perhaps as a little bit a 0:02:29.280 --> 0:02:31.240 little bit more to build on if you look at 0:02:31.280 --> 0:02:36.320 their some of their higher returning businesses, UM, whereas UH 0:02:36.600 --> 0:02:41.000 Deutsche Bank, I think, you know, their their portfolio is 0:02:41.120 --> 0:02:44.560 under what was under a lot more pressure, and you know, 0:02:44.560 --> 0:02:46.960 after three years of restructuring, I think they're finally coming 0:02:46.960 --> 0:02:50.440 out of it, which is a positive UM. But both banks. 0:02:50.919 --> 0:02:54.400 The similarity is when you come out and we've been 0:02:54.440 --> 0:02:56.120 talking about this this week, when you come out and 0:02:56.120 --> 0:02:58.400 say we're gonna come out with a plan it's going 0:02:58.480 --> 0:03:02.680 to be in several weeks and UM without saying it 0:03:02.760 --> 0:03:05.800 investors knowing that that might include a capital raise. It's 0:03:05.919 --> 0:03:10.000 it's uncertainty and it's sort of UM obviously can can 0:03:10.040 --> 0:03:12.519 recap it in a tough market. And so I think 0:03:12.560 --> 0:03:16.600 also having this news come out on a Friday, UM, 0:03:16.639 --> 0:03:19.200 you know, we'll make for a much less stressful and 0:03:19.320 --> 0:03:22.960 must less uncertain weekend. Hopefully UM that when we saw 0:03:23.080 --> 0:03:25.120 last weekend when there were a lot of stories and 0:03:25.160 --> 0:03:27.040 a lot of posts going around and they come out 0:03:27.080 --> 0:03:29.800 in uh, you know, two weeks and say we need 0:03:29.800 --> 0:03:33.919 to raise five billion dollars after they just blew three 0:03:33.960 --> 0:03:38.680 billion dollars on their own debt. Well again, I think 0:03:38.760 --> 0:03:41.880 that to the extent, you know, the issue with credit 0:03:41.880 --> 0:03:45.080 sueets right now is the bargaining position that they're in 0:03:45.080 --> 0:03:49.600 in terms of, uh, you know, the price that they're 0:03:49.600 --> 0:03:52.720 going to pay if you will to issue that capital 0:03:52.920 --> 0:03:56.240 right so as the stacko's lower gets less attractive, and 0:03:56.320 --> 0:03:59.760 also negotiations that they might be having with a potential 0:03:59.800 --> 0:04:03.880 buyers or investors UM the investment bank to securitized product 0:04:03.960 --> 0:04:07.160 group UM is something that they would like to get 0:04:07.200 --> 0:04:09.920 external capital. It seems like that makes the most sense 0:04:10.040 --> 0:04:12.880 if they can get a good price. The markets are 0:04:12.880 --> 0:04:15.920 obviously UM putting them in a bad position. I think 0:04:15.960 --> 0:04:18.440 if they can study things and sort of improve their 0:04:18.440 --> 0:04:23.359 negotiating position and give themselves the couple of weeks that 0:04:23.400 --> 0:04:25.960 they need to really put together a solid plan, because 0:04:26.480 --> 0:04:29.320 if they're going to come out and raise capital, you know, 0:04:29.480 --> 0:04:32.119 they're they're going to want a credible plan to offer 0:04:32.200 --> 0:04:35.480 to investors who are going to give them that capital. Alison, 0:04:35.560 --> 0:04:38.720 is there any appetite at all within the Swiss government 0:04:38.760 --> 0:04:43.600 to maybe permit ubs and credit Swiss to ever merge. 0:04:44.839 --> 0:04:47.960 I believe that's unlikely. Um. You know, we've always said, 0:04:48.400 --> 0:04:52.479 you know, not impossible, but very unlikely. If you think 0:04:52.520 --> 0:04:56.360 about ubs and credit suits and the size of those 0:04:56.360 --> 0:05:00.520 banks in particular related to the Swiss economy U. Um, 0:05:00.760 --> 0:05:03.680 it's really outside versus some of the bigger banks we 0:05:03.720 --> 0:05:06.240 have here. So we have much bigger banks, but we 0:05:06.279 --> 0:05:09.440 also have a much bigger economy, and for that reason, 0:05:10.040 --> 0:05:14.800 the Swiss regulators have sort of bigger capital requirements for 0:05:14.839 --> 0:05:18.640 these banks, um. Because the two each on their own 0:05:19.120 --> 0:05:21.159 are so significant to the economy. So I think it 0:05:21.160 --> 0:05:24.039 would be tougher um to think about, you know, the 0:05:24.080 --> 0:05:28.080 pair together. To the extent though that credit Sweeze is 0:05:28.080 --> 0:05:31.560 going to reduce its bounce sheet, reduce some of these 0:05:31.600 --> 0:05:36.240 investment backing activities, perhaps that does clear something clear the 0:05:36.240 --> 0:05:39.680 way for something down the road. Um. But again I 0:05:39.720 --> 0:05:41.440 guess we'll have to see what the new credit sweeze 0:05:41.480 --> 0:05:44.280 is going to look like. Where's the where's the office 0:05:44.279 --> 0:05:48.239 down town? Where's the New York office? Madisone levin Madison Avenue? 0:05:48.480 --> 0:05:55.440 Fantastic building? Is it? A big restaurant right there. We 0:05:55.520 --> 0:05:58.200 used to go there, like you know, when it just opened, 0:05:58.279 --> 0:06:00.279 it wasn't anything, so we'd go down there to scrap 0:06:00.279 --> 0:06:03.040 dinner after work. And now you it's again one of 0:06:03.040 --> 0:06:06.520 the top restaurants around period. So I don't know. They 0:06:06.560 --> 0:06:09.560 have a great New York City office. Credit Swiss. First 0:06:09.560 --> 0:06:11.200 Boston is a great place to work for me, a 0:06:11.400 --> 0:06:14.599 good memories. But I have to admit, and I've spoken 0:06:14.600 --> 0:06:16.159 to Allison a lot about this, it just seems like 0:06:16.200 --> 0:06:18.640 every two or three or four years they blow themselves up, 0:06:18.680 --> 0:06:21.320 and that goes back thirty years as far as I 0:06:21.320 --> 0:06:23.760 can recall, Allison Williams, thanks so much for joining us. 0:06:23.960 --> 0:06:28.080 Allison covers all the big banks for Bloomberg Intelligence. She's 0:06:28.080 --> 0:06:30.760 based in our Princeton office, and she's been doing that 0:06:30.800 --> 0:06:33.279 for decades. Before she was at Bloomberg in Tellgent, she 0:06:33.279 --> 0:06:36.240 was at Morgan Stanley Investment Management the by side, and 0:06:36.279 --> 0:06:39.799 they owned huge steaks in all of the big financial 0:06:39.839 --> 0:06:43.320 institutions across the world, and Allison was the analyst supporting 0:06:43.320 --> 0:06:45.360 all that stuff. So we appreciate getting her thoughts here. 0:06:45.440 --> 0:06:47.920 Credit Swiss. Trying to steady the ship. Gonna have a 0:06:48.000 --> 0:06:50.440 new strategy coming out later this month, and we'll be 0:06:50.520 --> 0:06:57.719 covering that as well. All Right, sports gambling, sports betting 0:06:58.000 --> 0:07:00.840 in sport, it is just a huge business. You know, 0:07:00.920 --> 0:07:04.720 it's a real business. When Bloomberg actually has a TV show, 0:07:04.720 --> 0:07:08.279 Bloomberg Television talking about the business of sports betting, and 0:07:08.320 --> 0:07:11.120 it is in the news this week again, ESPN is 0:07:11.120 --> 0:07:14.600 said to be near a large partnership with Draft Kings. Uh, 0:07:14.720 --> 0:07:17.760 that's getting a lot of interest. We want to talk 0:07:17.760 --> 0:07:20.200 about that. We're gonna be with Kaylee Lines. She is 0:07:20.760 --> 0:07:24.200 a Bloomberg Television anchor for us and joining us and 0:07:24.200 --> 0:07:26.400 she's here in our Bloomberg interactor Brooker studio. Joining us 0:07:26.400 --> 0:07:28.440 on the phone is Keith Rung and Athan. She covers 0:07:28.480 --> 0:07:31.760 all things media and against her better judgment, she has 0:07:31.840 --> 0:07:34.800 had to learn about the gambling business and the gaming 0:07:34.840 --> 0:07:37.320 business because of Mickey Mouse is getting into it. You've 0:07:37.320 --> 0:07:41.120 gotta pay attention, Kaylee. That's the crazy part, right part 0:07:41.280 --> 0:07:44.760 is getting into an addictive vice that Bruin's families exactly 0:07:44.880 --> 0:07:46.800 and go figure, that's how the world's changed. So Kaylee, 0:07:46.840 --> 0:07:49.320 let's start there. Talk to us about the sports betting business. 0:07:49.840 --> 0:07:51.920 First of all, talk to us about that and it 0:07:51.920 --> 0:07:54.920 talks about how your show addresses it. Yeah. So the 0:07:54.920 --> 0:07:56.840 show is called The Lineup. It's on Friday nights and 0:07:56.880 --> 0:08:00.400 Saturday mornings on Bloomberg Television and it essentially just at 0:08:00.880 --> 0:08:03.920 sports bets historically what has paid off for different leagues, 0:08:03.960 --> 0:08:05.920 but then also just the business of betting, because it 0:08:06.000 --> 0:08:08.559 is huge and this is why you're seeing ESPN having 0:08:08.880 --> 0:08:11.160 a growing interest. When you look at the handle, which 0:08:11.200 --> 0:08:14.680 is the total dollar amounts that spent on sports wagers 0:08:14.680 --> 0:08:16.679 in the US, it could reach a hundred billion dollars 0:08:16.680 --> 0:08:19.920 this year because you've had legalization. Now it's getting legalized 0:08:20.280 --> 0:08:22.800 in more and more states, and it's just this incredible 0:08:22.920 --> 0:08:24.920 boom and a lot of people are looking to take 0:08:24.920 --> 0:08:26.920 advantage of it. And we thought that was something worthy 0:08:26.960 --> 0:08:30.520 of digging into more. And we haven't even gotten into 0:08:30.560 --> 0:08:32.880 betting the way other cultures. Yeah. I mean, if you 0:08:32.920 --> 0:08:35.280 grew up in the UK, you understand spread betting by 0:08:35.280 --> 0:08:37.800 the time you entered school. Well, they have sixty years 0:08:37.800 --> 0:08:40.080 of history on their side. It's it's relatively new here 0:08:40.080 --> 0:08:43.760 in the US exactly. So so what is this going 0:08:43.840 --> 0:08:48.839 to Farrell walked by, He's like, yep, that's Barrel knows 0:08:48.880 --> 0:08:52.000 how to do it. Uh, what does this mean for 0:08:52.000 --> 0:08:53.760 for ESPN, for Disney? I mean, are we going to 0:08:53.840 --> 0:08:57.760 be able to place bets on ESPN dot Com. No. 0:08:57.880 --> 0:09:01.000 I don't think that's what they're trying to do here, Matt. 0:09:01.080 --> 0:09:03.280 I think it's really what what they want to do 0:09:03.480 --> 0:09:07.199 is license their name out to a sports book. They're 0:09:07.200 --> 0:09:09.280 not looking to actually create a sports book per se, 0:09:09.320 --> 0:09:12.280 because there's just too many operational, too many regulatory headaches 0:09:12.280 --> 0:09:14.920 associated with that. Rather, I think what they're looking to do, 0:09:14.960 --> 0:09:16.240 and this has kind of been in the news now 0:09:16.320 --> 0:09:18.480 for almost a year. I think they've been looking to 0:09:18.559 --> 0:09:21.839 partner with some of the sports book operators their Draft Kings, 0:09:21.920 --> 0:09:24.880 of course in the news today. Um just kind of 0:09:24.920 --> 0:09:28.840 licensing out their name and probably integrating um, you know, 0:09:29.480 --> 0:09:33.520 odds data with the ESPN broadcast. Basically kind of a 0:09:33.520 --> 0:09:36.480 win win for both because it widens the audience for 0:09:36.559 --> 0:09:39.760 both the Draft Kings as well as for ESPN. So, 0:09:40.120 --> 0:09:42.560 you know, Gith, I guess you know, the media companies, 0:09:42.600 --> 0:09:45.800 they're you know, obviously always looking for new revenue streams, 0:09:45.880 --> 0:09:50.000 whether it's advertising from some of these sports books or 0:09:50.160 --> 0:09:52.600 doing you know, a deal actually getting you know, in 0:09:52.679 --> 0:09:54.800 bed if you will, with with the DraftKings in this 0:09:54.880 --> 0:09:58.839 particular example, how the media companies kind of changed their 0:09:58.880 --> 0:10:02.120 view of just kind of sports betting because boy, for 0:10:02.160 --> 0:10:05.880 the longest time it was taboo. Oh absolutely, Pole, You're 0:10:05.920 --> 0:10:08.440 absolutely right about that. I mean, it kind of goes 0:10:08.480 --> 0:10:11.120 against the grain a little bit of you know, Disney's 0:10:11.280 --> 0:10:14.120 you know, family friendly ethos if you will. But they 0:10:14.120 --> 0:10:16.760 do realize that they're leaving money on the table here. 0:10:16.760 --> 0:10:18.000 So if you just kind of look at some of 0:10:18.040 --> 0:10:22.480 the financials for ESPN, ESPN will bring in about thirteen 0:10:22.520 --> 0:10:25.920 and a half billion dollars in revenue for the for 0:10:25.960 --> 0:10:28.920 the Walt Disney Company about four point q billion by 0:10:28.920 --> 0:10:31.960 our calculations of EBITDA. That's going to be about of 0:10:31.960 --> 0:10:35.880 the pair and companies, so a pretty sizable number. The 0:10:35.960 --> 0:10:39.440 problem though, is that ESPN is losing subscribers just like 0:10:39.480 --> 0:10:43.080 the left the rest of the cable network ecosystem, and 0:10:43.160 --> 0:10:45.480 we actually estimate that they're even down, maybe down by 0:10:45.480 --> 0:10:49.960 about so they have to come up. So there are 0:10:49.960 --> 0:10:51.520 two things here. They have to come up with new 0:10:51.559 --> 0:10:53.920 cost cutting incentives, and they've done that, so they let 0:10:53.960 --> 0:10:56.439 go of the Big ten rights. For instance, they let 0:10:56.440 --> 0:10:58.960 go of I P. L. Cricket rights in India, but 0:10:59.000 --> 0:11:01.080 they also have to look to grow their revenue and 0:11:01.120 --> 0:11:05.920 that's exactly what this is about, monetizing their audiences, trying 0:11:05.960 --> 0:11:08.120 to find new streams of revenue. As you pointed out, 0:11:09.240 --> 0:11:12.600 so um kylie, when you're anchoring the lineup, what do 0:11:12.679 --> 0:11:16.520 you uh with with Damian Sassaur too, who is a 0:11:16.600 --> 0:11:19.400 maniac on this stuff. He is so knowledgeable on this 0:11:19.440 --> 0:11:22.320 whole sports betting thing. I mean, you get him started, 0:11:22.360 --> 0:11:24.079 he can't stop. But how deep does it go? It's 0:11:24.120 --> 0:11:27.080 not just about betting if like the Cowboys win against 0:11:27.120 --> 0:11:29.960 the Giants, right, I mean, it's so much more complex 0:11:29.960 --> 0:11:32.199 than that. Yeah, I mean you can get really granular 0:11:32.240 --> 0:11:34.280 with these things. There are simple money line bets where 0:11:34.280 --> 0:11:36.120 you're just betting on who's going to win and who's 0:11:36.160 --> 0:11:38.200 going to lose. And we have troves and troves of 0:11:38.240 --> 0:11:40.640 historical data from our partners sport Radar that help us 0:11:40.679 --> 0:11:43.120 analyze historically when you look over the course of say 0:11:43.160 --> 0:11:46.120 ten seasons, when usually those bets will pay off. But 0:11:46.160 --> 0:11:48.040 you can bet on anything. You can bet on what 0:11:48.160 --> 0:11:49.800 color the gator rate is going to be when it 0:11:49.800 --> 0:11:51.240 gets dumped on the coach ahead at the end of 0:11:51.240 --> 0:11:54.240 the game. I mean it gets, it gets super super granular, 0:11:54.400 --> 0:11:57.400 and it's the barrier to entry right now is really low. 0:11:57.440 --> 0:12:00.240 You can do this on mobile. You can do it 0:12:00.240 --> 0:12:03.800 basically anywhere except for the states were legal. But regulation 0:12:03.920 --> 0:12:06.679 is changing. Is it still changing or have we gotten 0:12:06.679 --> 0:12:09.560 to a point where we think it's we understand it well. 0:12:09.600 --> 0:12:12.320 It is now legal in a number of states, really 0:12:12.360 --> 0:12:14.679 the only big ones that haven't come online yet or 0:12:14.720 --> 0:12:16.600 Texas in California, but you can do it here in 0:12:16.640 --> 0:12:19.760 New York. Um. And so it definitely is still a 0:12:19.840 --> 0:12:22.280 nascent industry and that this only has been legal for 0:12:22.320 --> 0:12:24.679 several number of years, and obviously it will evolve. But 0:12:25.040 --> 0:12:26.880 just the fact that you can do it and people 0:12:26.920 --> 0:12:29.760 are taking advantage of doing it and you're seeing the 0:12:29.800 --> 0:12:32.480 growth is kind of kind of the point here. And 0:12:32.520 --> 0:12:34.679 what we're trying to see z on and so we 0:12:34.800 --> 0:12:37.080 we've got you know, ESPN, you know, kind of dipping 0:12:37.120 --> 0:12:39.240 its toe into this business, maybe even more than dipping it. Still. 0:12:39.280 --> 0:12:41.720 How about some of the other networks, whether it's Fox 0:12:41.800 --> 0:12:44.520 or CBS or NBC. Have you seen any moves on 0:12:44.800 --> 0:12:50.480 their part? Yeah, actually they all have some stake. Um, 0:12:50.679 --> 0:12:52.880 you know, in a bedding platform. So Fox actually has 0:12:52.920 --> 0:12:56.160 been really aggressive I think on on this front. They 0:12:56.200 --> 0:13:00.480 have a deal with a flutter um and uh you 0:13:00.480 --> 0:13:04.080 know which owns fan Duel here in the US, UM 0:13:04.280 --> 0:13:06.439 and they have all they all they have almost a 0:13:06.480 --> 0:13:09.560 four percent stake, but they're right now actually in arbituation 0:13:09.720 --> 0:13:14.040 because UM about how to kind of exercise their options there. 0:13:14.040 --> 0:13:15.520 So that's a little bit you know, we don't know 0:13:15.679 --> 0:13:17.280 exactly how that's going to stay out. But all of 0:13:17.280 --> 0:13:19.840 these media companies they know that, UM, you know this 0:13:20.080 --> 0:13:23.640 is there is a huge growth opportunity here. You know, NBC, 0:13:24.240 --> 0:13:28.320 UM has you know again um uh an agreement with 0:13:28.400 --> 0:13:32.359 points that sort of CBS. They all have these small agreements, 0:13:32.360 --> 0:13:35.559 but remember there are some regular regulatory issues, so they 0:13:35.600 --> 0:13:38.360 can't cross like a five percent stake because that's when 0:13:38.360 --> 0:13:43.000 they kind of trigger that uh that regulation. UM. But 0:13:43.080 --> 0:13:46.000 definitely everybody is kind of trying to find new ways 0:13:46.080 --> 0:13:49.280 of monetizing their audiences and their broadcast. So one of 0:13:49.320 --> 0:13:54.400 the biggest obviously DraftKings is huge flutter You just mentioned 0:13:54.440 --> 0:13:57.640 fan Duel. We all know about UM. What are the 0:13:57.679 --> 0:14:00.800 other big betting companies up there and are they are 0:14:01.040 --> 0:14:07.880 all or the most part based in London for you. Yeah, 0:14:07.920 --> 0:14:10.199 I mean there there are a number and you are 0:14:10.240 --> 0:14:13.240 seeing some consolidation as well, where UK based companies are 0:14:13.240 --> 0:14:15.920 starting to make oppositions here in the US to capitalize 0:14:15.920 --> 0:14:17.960 on the fact that you now have a growing US 0:14:18.040 --> 0:14:20.120 market for this as well. So there's a ton of 0:14:20.120 --> 0:14:23.040 sports books out there. Obviously, DraftKings, FanDuel are among the 0:14:23.080 --> 0:14:26.080 big ones that you will see every day. But you're 0:14:26.080 --> 0:14:27.960 probably going to see more pop up because this is 0:14:28.000 --> 0:14:31.600 something including Disney in the ESPN, everybody's looking at exactly 0:14:31.840 --> 0:14:34.360 all right, Kaylee Lines, thank you so much. Katie Line's 0:14:34.360 --> 0:14:36.760 anchor for Bloomberg News, joinings here on a Bloomberg Interactive 0:14:36.760 --> 0:14:39.400 Brook which on the show again seven pm and eleven 0:14:39.440 --> 0:14:42.400 pm Saturday, Friday night and Friday night, seven am and 0:14:42.480 --> 0:14:47.520 eleven am Saturday morning. Oh, seven pmm pm tonight, seven 0:14:47.560 --> 0:14:50.080 am and eleven am Tomorrow morning. Very good. And Ethan 0:14:50.120 --> 0:14:53.400 Rockhan she's Bloomberg Intelligence. She covers all things media for 0:14:53.560 --> 0:15:00.160 Bloomberg Intelligence. Now's that really feeling to paying here today? 0:15:00.160 --> 0:15:02.760 Off two and a half percent here, it's got a 0:15:02.760 --> 0:15:04.760 sense of what's going on with technology. We're gonna focus 0:15:04.760 --> 0:15:06.400 a little bit on Amazon as well. And we can 0:15:06.480 --> 0:15:09.520 do that because we've got some really smart people at Bloomberg, 0:15:09.720 --> 0:15:12.200 including Bloomberg News Equity supporter Jess Met and she joins 0:15:12.240 --> 0:15:14.800 us here in our Bloomberg Interactive Broker studio and put 0:15:14.920 --> 0:15:17.760 him Goyle Senior analystics she covers all the retailing stuff 0:15:17.760 --> 0:15:20.480 for Bloomberg Intelligence, and then you can imagine spends a 0:15:20.560 --> 0:15:23.400 lot of time on that thing called Amazon, just because 0:15:23.440 --> 0:15:24.960 give us a sense kind of what we're seeing out there. 0:15:25.000 --> 0:15:27.800 For for tech stocks, we really comes down to what 0:15:27.840 --> 0:15:31.040 we're seeing in the pain in chip stocks. And right 0:15:31.080 --> 0:15:35.640 now we're coming into today the Philadelphia Semiconductor Index, which 0:15:35.640 --> 0:15:39.280 has plunged this year, had actually been up nearly nine 0:15:39.280 --> 0:15:42.360 percent for the week, but with today's losses, it's basically 0:15:42.360 --> 0:15:45.320 cut those gains in half. And really what's happened is 0:15:45.520 --> 0:15:49.440 once Samsung reported basically it's first profit drops since twenty nineteen, 0:15:49.440 --> 0:15:52.520 it really just just showing the depth of the global 0:15:52.560 --> 0:15:56.400 PC and memory chip downturn and also advanced micro devices. 0:15:56.440 --> 0:15:59.240 They had a preliminary third quarter sales that basically missed 0:15:59.520 --> 0:16:02.320 projects by more than one billion dollars, and so that's 0:16:02.400 --> 0:16:05.240 really weighing on chip stocks, and like I mentioned already 0:16:05.240 --> 0:16:07.840 down when you're looking at the Philadelphia semi Conductor index 0:16:08.680 --> 0:16:10.840 this year, which would be the most since two thousand eight, 0:16:10.960 --> 0:16:12.840 and just looking more broadly, if you're looking at a 0:16:13.040 --> 0:16:16.160 video ticker symbol n v d A down about five 0:16:16.200 --> 0:16:19.160 percent today. Also looking over at micro not down quite 0:16:19.160 --> 0:16:21.360 as much, but ticker symbol M you that's stock down 0:16:21.400 --> 0:16:25.000 about two percent. But still even if that's UM index 0:16:25.320 --> 0:16:27.880 does continue to post games this week, that would snap 0:16:27.920 --> 0:16:29.800 three straight weeks of losses. But if you pull it 0:16:29.840 --> 0:16:32.080 back over the past two months, that index is only 0:16:32.080 --> 0:16:34.960 close higher for two weeks in the past eight weeks, 0:16:34.960 --> 0:16:37.400 so really showing the pain there that's happening in chip stocks. 0:16:37.800 --> 0:16:40.680 It also this highlights how little I know about the 0:16:40.720 --> 0:16:44.560 micro chip industry because you know they go in your cars. Though, yeah, 0:16:44.800 --> 0:16:50.160 my truck stood on the lot with tho others for 0:16:50.320 --> 0:16:53.120 months because they couldn't find the right chips to like 0:16:53.280 --> 0:16:57.120 control lane, keep assist. And yet they're made. They've made 0:16:57.160 --> 0:16:59.800 way too many chips for PCs, so these things are 0:16:59.800 --> 0:17:02.960 not fungible, right, So you went from a chip shortage 0:17:03.000 --> 0:17:06.000 to now a chip glut. But still in cars there's 0:17:06.000 --> 0:17:08.880 a chip shortage, so still there's an automotive chip shortage. 0:17:08.920 --> 0:17:12.440 They can't get enough of them. Rivan especially is having problems. 0:17:12.480 --> 0:17:16.639 Tesla had problems to Obviously the incumbent players are still 0:17:16.880 --> 0:17:20.040 grappling with the issues. And yet I can't think of 0:17:20.200 --> 0:17:24.320 PC makers but a sir, I guess has gotten way 0:17:24.359 --> 0:17:26.800 too many. The chip makers should have sent most of 0:17:26.840 --> 0:17:29.840 them over to Tesla and held back the ones that 0:17:29.880 --> 0:17:32.840 they were making for IBM. And they've also still been 0:17:32.840 --> 0:17:36.440 dealing with those rising prices. And obviously weaker economies has 0:17:36.480 --> 0:17:39.160 heard consumption and they're also obviously also not helped by 0:17:39.359 --> 0:17:41.639 the Federal Reserve and other central banks really having this 0:17:41.680 --> 0:17:44.600 aggressive stance on their monetary policy. But then another factor 0:17:45.160 --> 0:17:48.119 is when it comes to the dynamic between Washington and 0:17:48.240 --> 0:17:51.600 Beijing and the export restrictions on China, which obviously is 0:17:51.880 --> 0:17:55.200 a top consumer of chips. Interesting enough, though Morgan Stanley 0:17:55.400 --> 0:17:57.720 had not necessarily called the bottom and chip stocks, but 0:17:57.760 --> 0:18:00.320 thinks that we're getting closer. They were looking more when 0:18:00.800 --> 0:18:03.639 looking basically at the price to earnings ratio. So the 0:18:03.680 --> 0:18:06.399 Philadelphia Index is priced at fourteen a half times earnings 0:18:06.480 --> 0:18:08.960 right now, and that's eleven percent discount to its average 0:18:09.000 --> 0:18:12.480 multiple around sixteen for the past decades, so they're keeping 0:18:12.480 --> 0:18:14.879 a close eye on that, but still those corner of 0:18:14.920 --> 0:18:17.600 the market today really feeling the pain. And when put 0:18:17.680 --> 0:18:21.639 Um Goyle, Bloomberg's intelligence retail anild started her coverage of 0:18:21.640 --> 0:18:24.920 the retail space years ago at Goldman Sachs, a little 0:18:24.960 --> 0:18:28.119 firm downtown, she never thought she'd be talking technology, but 0:18:28.200 --> 0:18:31.399 then this whole thing called e commerce came along and 0:18:31.480 --> 0:18:36.480 she has been becoming an astute technology analyst as well. 0:18:36.760 --> 0:18:40.199 So put them when you think about your industry, what 0:18:40.359 --> 0:18:44.399 Amazon has done to the retail industry, this whole e 0:18:44.520 --> 0:18:48.480 commerce thing has really become front and center. What's the 0:18:48.520 --> 0:18:51.680 status of e commerce in the retail space? Yeah, e 0:18:51.840 --> 0:18:53.800 commerce is still front and center. You know, there's been 0:18:53.840 --> 0:18:57.120 a lot of discussion about e commerce flowing, and yes, 0:18:57.240 --> 0:18:59.840 coming off of pandemic level, there will be some slow 0:18:59.880 --> 0:19:02.560 to out, but let that not be mistaken for the 0:19:02.600 --> 0:19:05.359 growth that's still ahead for e commerce. E Commerce is 0:19:05.400 --> 0:19:08.760 still very under penetrated in the US. Why not even 0:19:08.760 --> 0:19:11.640 at a third of US retail sales coming from e commerce, 0:19:11.680 --> 0:19:14.159 which we think we'll get there in just a matter 0:19:14.200 --> 0:19:16.920 of three years. So right now we're about a quarter 0:19:17.359 --> 0:19:20.200 of total retail sales are from the e commerce world, 0:19:20.440 --> 0:19:23.040 but that number is steadily increasing, and you know, this 0:19:23.119 --> 0:19:26.000 year maybe a little slower given the tougher comparisons, but 0:19:26.080 --> 0:19:28.920 next year and going forward, we do expect e commerce 0:19:29.240 --> 0:19:32.800 to return to healthy, high single digit double EDGIT games. 0:19:33.040 --> 0:19:36.720 I've been uh, the pandemic has transformed the way my 0:19:36.800 --> 0:19:38.920 family shops, and I'm sure that's the case for most 0:19:38.960 --> 0:19:42.639 families in America. I get now far more goods on 0:19:42.680 --> 0:19:46.000 Amazon than I ever had um in the pre pandemic 0:19:46.080 --> 0:19:50.400 years combined. UM and I've been waiting for a drone 0:19:50.680 --> 0:19:53.119 or a robot to drop off one of my packages. 0:19:53.480 --> 0:19:56.720 Is it never going to happen to them? I wouldn't 0:19:56.720 --> 0:19:59.440 say never, but I don't think you'll happen in the 0:19:59.480 --> 0:20:02.000 next you years. I think you know, as you know, 0:20:02.040 --> 0:20:05.600 they've been testing the drone concept for years now, and 0:20:05.920 --> 0:20:08.760 the hawks that they've placed on the scout just goes 0:20:08.840 --> 0:20:11.399 to show that either it's not economical, either it's not 0:20:11.600 --> 0:20:15.600 fast enough, or it's just not being received well by customers. Yet. 0:20:15.720 --> 0:20:18.440 Maybe the customer isn't ready for a drone to pull 0:20:18.520 --> 0:20:22.240 up into their driveway, navigate around their cards, find the door, 0:20:22.440 --> 0:20:24.399 and drop things off, right. I don't know if we 0:20:24.480 --> 0:20:27.879 have that sophistication, I would I promised to double my 0:20:27.920 --> 0:20:31.200 purchases of Amazon delivers my stuff with a robot, because 0:20:31.280 --> 0:20:35.160 that would be awesome. Alright, So just just real quickly here, 0:20:36.040 --> 0:20:37.680 when you think about the text SOX, is it all 0:20:37.720 --> 0:20:40.280 just the FED and where rates are going? I mean, 0:20:40.320 --> 0:20:43.200 that obviously is a big part of that, just because 0:20:43.240 --> 0:20:45.600 when you're thinking about the direction of interest rates and 0:20:45.600 --> 0:20:48.359 how that incorporates to their future profits and obviously in 0:20:48.359 --> 0:20:51.240 turn their stock prices, that is a big thing. But also, 0:20:51.359 --> 0:20:53.720 like I was mentioned before, the recent tensions between the 0:20:53.800 --> 0:20:57.280 US and China that could actually worsen the imbalance when 0:20:57.320 --> 0:21:00.119