1 00:00:02,680 --> 00:00:04,320 Speaker 1: All right, thanks so much for joining us with a 2 00:00:04,400 --> 00:00:07,480 Speaker 1: special edition of Bloomberg Daybreak, the US stock market close 3 00:00:07,600 --> 00:00:10,680 Speaker 1: for the good Friday holiday. I'm John Tucker, and coming 4 00:00:10,760 --> 00:00:13,120 Speaker 1: up this hour a look at where the anti trust 5 00:00:13,160 --> 00:00:17,040 Speaker 1: investigations against big tech stand under the Trump administration. We're 6 00:00:17,040 --> 00:00:21,240 Speaker 1: going to speak with Jenniferree, senior litigation analysts with Bloomberg Intelligence. 7 00:00:21,360 --> 00:00:24,360 Speaker 1: Plus we have seen our share of market volatility so 8 00:00:24,440 --> 00:00:27,800 Speaker 1: far this year. We'll go inside the markets with Eric Balchunis, 9 00:00:27,840 --> 00:00:31,800 Speaker 1: the senior ETF strategist at Bloomberg Intelligence, and Jess Metton 10 00:00:31,880 --> 00:00:34,400 Speaker 1: of the Bloomberg Stocks team. But first we're going to 11 00:00:34,440 --> 00:00:37,239 Speaker 1: focus on the future of FED, Shair J. Powell and 12 00:00:37,280 --> 00:00:39,920 Speaker 1: what's in store for the economy amid the trade wars. 13 00:00:40,280 --> 00:00:43,640 Speaker 1: We're pleased to welcome Bloomberg International Economics and Policy course. 14 00:00:43,680 --> 00:00:48,560 Speaker 1: But Michael McKee and Stuart Paul us economists with Bloomberg Economics. 15 00:00:49,000 --> 00:00:52,479 Speaker 1: So the posting from President Trump said it all. Trump 16 00:00:52,520 --> 00:00:57,520 Speaker 1: says Powell's termination can't happen fast enough. Well, it's so 17 00:00:57,600 --> 00:01:01,080 Speaker 1: much for FED independence, is it really? If he's threatening 18 00:01:01,200 --> 00:01:04,160 Speaker 1: it sounds like a thread against Powell. Is he threatening 19 00:01:04,240 --> 00:01:06,920 Speaker 1: Powell or threatening FED independence? Or both. 20 00:01:07,240 --> 00:01:09,520 Speaker 2: Nice, Fed, you got there too bad if something happened 21 00:01:09,520 --> 00:01:15,560 Speaker 2: to it. Right, in theory, he's threatening Powell, but does 22 00:01:15,600 --> 00:01:18,039 Speaker 2: he really mean termination in the sense of I'm going 23 00:01:18,040 --> 00:01:23,080 Speaker 2: to fire him. That's an open question because there are 24 00:01:23,520 --> 00:01:28,240 Speaker 2: court cases right now about what power the president has 25 00:01:28,720 --> 00:01:32,720 Speaker 2: to fire the heads of independent agencies, And while they 26 00:01:32,760 --> 00:01:37,360 Speaker 2: don't exactly correlate to the FED, there is a feeling 27 00:01:37,400 --> 00:01:40,240 Speaker 2: that if the Supreme Court were to rule that the 28 00:01:40,280 --> 00:01:44,160 Speaker 2: president has unfettered power to fire the heads of agencies, 29 00:01:44,520 --> 00:01:48,040 Speaker 2: that he could try to fire Powell. It all may 30 00:01:48,080 --> 00:01:51,160 Speaker 2: be moot because Powell's term as chair is up in 31 00:01:51,240 --> 00:01:54,760 Speaker 2: May of next year, so Trump could be just talking 32 00:01:54,800 --> 00:01:58,480 Speaker 2: about him leaving as the FED chairman. 33 00:01:59,080 --> 00:02:03,400 Speaker 1: And it's still so the independence of the FED. We 34 00:02:03,440 --> 00:02:06,880 Speaker 1: can go back to the Knicks administration when the President 35 00:02:06,960 --> 00:02:10,280 Speaker 1: had one of his economic people become the Federal Reserve chair. 36 00:02:10,360 --> 00:02:13,320 Speaker 1: That was Arthur Burns. We know what happened there. 37 00:02:13,720 --> 00:02:16,920 Speaker 3: That's right. So there's no such thing famously as a 38 00:02:16,960 --> 00:02:19,200 Speaker 3: free lunch in economics, But if there is one thing 39 00:02:19,240 --> 00:02:22,600 Speaker 3: that comes close, it's central bank independence. Countries that have 40 00:02:22,720 --> 00:02:26,560 Speaker 3: independent central banks have lower, more stable inflation. Countries that 41 00:02:26,560 --> 00:02:29,799 Speaker 3: are more heavily influenced by the political process their central banks, 42 00:02:29,800 --> 00:02:34,680 Speaker 3: when they're determined by by political actors, when there are 43 00:02:34,720 --> 00:02:38,079 Speaker 3: political appointees, when they have less independence, you tend to 44 00:02:38,080 --> 00:02:42,880 Speaker 3: get higher, less stable inflation. I think that Mike is right. 45 00:02:42,960 --> 00:02:45,040 Speaker 3: This might end up just being a moot point, and 46 00:02:45,240 --> 00:02:49,200 Speaker 3: folks in the administration could encourage Trump to just wait 47 00:02:49,320 --> 00:02:52,800 Speaker 3: out Powell's term. And the real question is, then, who 48 00:02:52,960 --> 00:02:54,720 Speaker 3: would we end up seeing filling the. 49 00:02:54,680 --> 00:02:55,640 Speaker 1: FED chair role. 50 00:02:56,080 --> 00:02:59,200 Speaker 3: Would it be someone like Trump had rolled out as 51 00:02:59,320 --> 00:03:01,640 Speaker 3: potential appoint point ease in his first term, people like 52 00:03:01,720 --> 00:03:04,640 Speaker 3: Judy Shelton, who would be a bit more hawkish, or 53 00:03:04,680 --> 00:03:07,600 Speaker 3: would it be somebody a bit more dubbish than so 54 00:03:07,760 --> 00:03:11,560 Speaker 3: much of his proposed policies would require someone quite a 55 00:03:11,560 --> 00:03:13,160 Speaker 3: bit more dubbish. 56 00:03:12,960 --> 00:03:16,480 Speaker 2: If you'd like a great conspiracy theory though John that way, 57 00:03:16,480 --> 00:03:21,560 Speaker 2: Oh sure, that would really fascinate the markets. Suppose that 58 00:03:21,680 --> 00:03:26,600 Speaker 2: Donald Trump does try to fire Powell, and to a 59 00:03:26,600 --> 00:03:29,320 Speaker 2: certain extent is successful. Obviously, the FED would fight that 60 00:03:30,040 --> 00:03:34,160 Speaker 2: there is no opening on the FED to fill a 61 00:03:34,200 --> 00:03:36,520 Speaker 2: governor's job. Powell would still be a governor of the 62 00:03:36,520 --> 00:03:41,480 Speaker 2: Federal Reserve and until January. In January, there's an opening, 63 00:03:41,560 --> 00:03:45,400 Speaker 2: so he could appoint somebody who's the FED chair and waiting. 64 00:03:45,760 --> 00:03:48,640 Speaker 2: It is also possible that if Powell were gone, he 65 00:03:48,720 --> 00:03:53,400 Speaker 2: could as chairman, he could appoint that person. But the 66 00:03:53,440 --> 00:03:55,960 Speaker 2: Open Market Committee that makes interest rate decisions is a 67 00:03:55,960 --> 00:03:59,760 Speaker 2: separate body from the FED itself, So the Open Market 68 00:03:59,760 --> 00:04:03,560 Speaker 2: com could just rename Powell as chair, and you could 69 00:04:03,600 --> 00:04:06,960 Speaker 2: have a chair designate for the Fed who is not 70 00:04:07,160 --> 00:04:10,520 Speaker 2: the chair making decisions on interest rate policy. 71 00:04:10,640 --> 00:04:13,840 Speaker 3: That's a really important and interesting point. We've had a 72 00:04:13,880 --> 00:04:15,680 Speaker 3: little bit of an experience, a little bit of an 73 00:04:15,720 --> 00:04:19,800 Speaker 3: experiment with Michael Barr, the former Vice Chair for Supervision. 74 00:04:20,640 --> 00:04:23,760 Speaker 3: Of course, the administration as it was coming into office 75 00:04:24,080 --> 00:04:27,440 Speaker 3: was eyeing who could take the Vice Chair for Supervision role, 76 00:04:27,520 --> 00:04:30,280 Speaker 3: someone perhaps a little bit more lenient on banks than 77 00:04:30,360 --> 00:04:34,960 Speaker 3: Barr was. Barr preempted that by resigning his role as 78 00:04:35,080 --> 00:04:38,000 Speaker 3: Vice Chair for Supervision but retain the title of governor. 79 00:04:38,240 --> 00:04:42,440 Speaker 3: To your point, and what that sort of did was 80 00:04:42,440 --> 00:04:45,200 Speaker 3: that it created an opening for the Trump administration to 81 00:04:45,400 --> 00:04:48,200 Speaker 3: offer somebody up who's already a governor in this case 82 00:04:48,240 --> 00:04:52,080 Speaker 3: Mickey Bowman, and in theory, the Trump administration if Powell 83 00:04:52,080 --> 00:04:55,560 Speaker 3: were to take that route, lose his chairman's role, but 84 00:04:55,640 --> 00:04:58,359 Speaker 3: stay on as a governor, totally departing from convention. 85 00:04:58,560 --> 00:04:59,839 Speaker 1: But if that were to be. 86 00:04:59,839 --> 00:05:03,120 Speaker 3: The case, it would be somebody like Chris Waller, currently 87 00:05:03,200 --> 00:05:06,520 Speaker 3: a governor, who could step in and fill that share role. 88 00:05:06,680 --> 00:05:10,720 Speaker 1: Well. On Wednesday, speaking in Chicago was the FED Shair 89 00:05:10,880 --> 00:05:13,760 Speaker 1: Jerome Powell, and here's part of what he had to say. 90 00:05:14,400 --> 00:05:18,320 Speaker 4: The level of tariff increases announced so far is significantly 91 00:05:18,400 --> 00:05:20,880 Speaker 4: larger than anticipated, and the same is likely to be 92 00:05:20,960 --> 00:05:24,920 Speaker 4: true of the economic effects, which will include higher inflation 93 00:05:25,200 --> 00:05:26,200 Speaker 4: and slower growth. 94 00:05:26,560 --> 00:05:29,520 Speaker 1: So it doesn't sound like there's going to be a 95 00:05:29,560 --> 00:05:30,240 Speaker 1: FED put. 96 00:05:31,080 --> 00:05:34,920 Speaker 2: No, And he addressed that specifically. He was asked would 97 00:05:34,960 --> 00:05:37,279 Speaker 2: you step in? And he said no, because. 98 00:05:37,279 --> 00:05:40,600 Speaker 1: I should explain to everybody listening what a FED put is. Basically, 99 00:05:40,800 --> 00:05:43,400 Speaker 1: you get to backstop the market if things really could 100 00:05:43,400 --> 00:05:44,400 Speaker 1: start to go haywire. 101 00:05:45,200 --> 00:05:47,719 Speaker 2: The FED, and this has long been in their position 102 00:05:47,839 --> 00:05:52,239 Speaker 2: that the FED doesn't interfere when there is money being 103 00:05:52,279 --> 00:05:54,680 Speaker 2: lost in the markets because the markets are going down, 104 00:05:54,720 --> 00:05:58,760 Speaker 2: that's not their job. But if trading is interrupted, if 105 00:05:58,800 --> 00:06:02,400 Speaker 2: there is a systemic problem, if there are all sellers 106 00:06:02,440 --> 00:06:04,120 Speaker 2: and no buyers as we saw. 107 00:06:04,279 --> 00:06:07,080 Speaker 5: If there's problem with the plumbing right, he's going to 108 00:06:07,080 --> 00:06:10,679 Speaker 5: whether FED would do something to open open the pipes, 109 00:06:11,080 --> 00:06:14,360 Speaker 5: But no, they're not going to rescue the markets. 110 00:06:14,400 --> 00:06:18,360 Speaker 2: And his suggestion that inflation is going to be worse 111 00:06:18,440 --> 00:06:21,599 Speaker 2: because the tariffs are worse just tells the markets that 112 00:06:21,640 --> 00:06:24,119 Speaker 2: the Fed's going to be very slow to think about 113 00:06:24,200 --> 00:06:26,400 Speaker 2: cutting rates in the future, which is why we saw 114 00:06:26,520 --> 00:06:31,039 Speaker 2: an additional reaction after the markets were already down on Wednesday. 115 00:06:31,600 --> 00:06:34,719 Speaker 1: So still you want to weigh in on that, pal says, 116 00:06:35,000 --> 00:06:37,320 Speaker 1: you know, maybe inflation, maybe employment, they're going to be 117 00:06:37,360 --> 00:06:39,640 Speaker 1: impacted by the tariffs, And I got to wonder also 118 00:06:39,680 --> 00:06:41,880 Speaker 1: if that's kind of what set President Trump off. 119 00:06:43,000 --> 00:06:47,919 Speaker 3: It's it's interesting to see the market in the context 120 00:06:47,920 --> 00:06:49,839 Speaker 3: of the FED put right now, markets are pricing at 121 00:06:49,839 --> 00:06:52,159 Speaker 3: about ninety bases points of cuts this year. We think 122 00:06:52,200 --> 00:06:55,680 Speaker 3: that's so that's so off from reality. As you heard, 123 00:06:56,520 --> 00:06:59,640 Speaker 3: it's sounding which direction, that's way too many cuts that 124 00:06:59,680 --> 00:07:03,520 Speaker 3: are pre thin in our view. It's as we heard 125 00:07:03,560 --> 00:07:06,400 Speaker 3: from Chairman Pally, Yes, we're likely to see slower growth, 126 00:07:06,440 --> 00:07:08,279 Speaker 3: We're likely to see some inflation pressures. 127 00:07:08,320 --> 00:07:10,000 Speaker 1: The question would be which does the FED. 128 00:07:09,800 --> 00:07:13,200 Speaker 3: Care more about. In the same breath, we're also hearing 129 00:07:13,240 --> 00:07:16,320 Speaker 3: from the chairman that we're very close to the full 130 00:07:16,360 --> 00:07:18,880 Speaker 3: employment that the FED is a maximum employment that the 131 00:07:18,880 --> 00:07:21,280 Speaker 3: FED is charged with trying to achieve as part of 132 00:07:21,280 --> 00:07:25,160 Speaker 3: its dual mandate. And if you have upward inflation pressures, 133 00:07:25,840 --> 00:07:27,720 Speaker 3: then it's likely to be the case that the Fed's 134 00:07:27,720 --> 00:07:30,600 Speaker 3: going to maintain it's higher for a longer position. So 135 00:07:30,880 --> 00:07:33,440 Speaker 3: we don't see a FED pull looming. We see ninety 136 00:07:33,440 --> 00:07:35,960 Speaker 3: basis points of rate cut price, then it looks a 137 00:07:36,000 --> 00:07:37,240 Speaker 3: little bit crazy to buy eye. 138 00:07:37,640 --> 00:07:40,000 Speaker 1: What's the data been telling us, the hard data and 139 00:07:40,240 --> 00:07:43,320 Speaker 1: even the soft data which measures I guess sentiment. 140 00:07:43,800 --> 00:07:45,920 Speaker 2: It's really hard for the FED right now because the 141 00:07:45,920 --> 00:07:48,880 Speaker 2: soft data is awful and the hard data is so 142 00:07:48,960 --> 00:07:53,239 Speaker 2: far so good. Pyle said Wednesday, labor market's in good shape. Thursday, 143 00:07:53,240 --> 00:07:56,640 Speaker 2: we got a decline in initial jobless claims that sort 144 00:07:56,680 --> 00:07:59,960 Speaker 2: of suggests that that is the case. But we also 145 00:08:00,120 --> 00:08:03,840 Speaker 2: saw the Philadelphia FED report a collapse in business confidence 146 00:08:03,960 --> 00:08:08,320 Speaker 2: in their district during the month of April that portends 147 00:08:08,400 --> 00:08:13,000 Speaker 2: bad things for the economy. But also they reported that 148 00:08:13,400 --> 00:08:17,840 Speaker 2: inflation expectations went up among manufacturers in the Philadelphia region, 149 00:08:17,960 --> 00:08:21,280 Speaker 2: So they're kind of caught in between. The question is 150 00:08:22,240 --> 00:08:29,720 Speaker 2: does all this negative sentiment actually change business and consumer decisions, 151 00:08:30,080 --> 00:08:32,040 Speaker 2: and that'll take us a couple of months to see. 152 00:08:33,000 --> 00:08:36,800 Speaker 2: So we've fed. Even if they were going to have 153 00:08:36,920 --> 00:08:39,240 Speaker 2: to move one way or another, they're not going to 154 00:08:39,280 --> 00:08:45,240 Speaker 2: have evidence until we get to maybe July that would 155 00:08:45,280 --> 00:08:47,880 Speaker 2: tell them one way or another what's going on? 156 00:08:48,559 --> 00:08:53,080 Speaker 1: Just tangentially, since you mentioned the Philly FED, who's Anna Paulson. 157 00:08:53,840 --> 00:08:57,240 Speaker 2: Anna Paulson is the new incoming president of the Philadelphia FED. 158 00:08:57,320 --> 00:08:59,400 Speaker 1: She's currently and this is somebody who's not picked by 159 00:08:59,400 --> 00:09:00,400 Speaker 1: the president. 160 00:09:00,960 --> 00:09:04,079 Speaker 2: Of the board of directors of each bank picked there on. 161 00:09:04,200 --> 00:09:07,880 Speaker 2: The FED Board of Governors has veto power, but they 162 00:09:07,920 --> 00:09:12,360 Speaker 2: can't other than that influence it. She's the research director 163 00:09:12,360 --> 00:09:15,559 Speaker 2: at the Chicago Fed. Patrick Harker. The current president has 164 00:09:15,600 --> 00:09:20,320 Speaker 2: to retire under FED rules in at the end of June, 165 00:09:20,400 --> 00:09:22,040 Speaker 2: so she'll take over July first. 166 00:09:22,200 --> 00:09:24,400 Speaker 1: All right, Stull, I'm going to ask you to sort 167 00:09:24,440 --> 00:09:28,600 Speaker 1: of school us on tariffs. The President has said so 168 00:09:28,760 --> 00:09:33,520 Speaker 1: far it's brought in billions the tariffs bill. Who pays tariffs? 169 00:09:33,520 --> 00:09:36,400 Speaker 1: I mean, remind everybody when the stuff comes in from 170 00:09:36,480 --> 00:09:40,160 Speaker 1: I don't know wherever China comes into Port Nork, Elizabeth 171 00:09:40,240 --> 00:09:42,800 Speaker 1: not far from here. The guy who picks it up 172 00:09:42,880 --> 00:09:44,839 Speaker 1: is the guy who pays the tariffs. 173 00:09:44,760 --> 00:09:48,800 Speaker 3: Essentially, essentially yes, when the real question is. 174 00:09:49,000 --> 00:09:52,040 Speaker 1: The tariffs aren't charged in China as they leave the 175 00:09:52,040 --> 00:09:55,280 Speaker 1: port by some you know, anonymous US official. It's you 176 00:09:55,360 --> 00:09:55,880 Speaker 1: pay it here. 177 00:09:56,160 --> 00:09:59,040 Speaker 3: Sure, But just like all taxes, the real question is 178 00:09:59,120 --> 00:10:01,679 Speaker 3: who bears the incidents of the tax or who bears 179 00:10:01,679 --> 00:10:05,120 Speaker 3: the burden of the tax. Does the imposition of attacks 180 00:10:05,160 --> 00:10:08,160 Speaker 3: take more out of margins or can companies then pass 181 00:10:08,200 --> 00:10:11,560 Speaker 3: along higher prices to consumers. Separate from who has the 182 00:10:11,640 --> 00:10:15,160 Speaker 3: legal obligation to cut the check for the tariff, what 183 00:10:15,280 --> 00:10:17,640 Speaker 3: really matters is the incidence of the tariff and how 184 00:10:17,720 --> 00:10:21,640 Speaker 3: much firms can pass along higher input costs to consumers. 185 00:10:22,040 --> 00:10:26,360 Speaker 3: We see from surveys like the pmis that firms are 186 00:10:26,400 --> 00:10:29,640 Speaker 3: facing higher input costs. They report that they are trying 187 00:10:29,679 --> 00:10:31,960 Speaker 3: to pass along higher prices. We see that in the 188 00:10:32,000 --> 00:10:37,600 Speaker 3: regional FED indices like we saw from Philly earlier last week. 189 00:10:38,080 --> 00:10:43,880 Speaker 3: But the main question is just how demand destructive are tariffs? 190 00:10:43,920 --> 00:10:48,080 Speaker 3: How demand destructive is uncertainty and how much can tariffs 191 00:10:48,120 --> 00:10:52,240 Speaker 3: get passed through to consumers. Basic FED models would suggest 192 00:10:52,880 --> 00:10:55,880 Speaker 3: that the level of the average effect of tariff rate 193 00:10:55,960 --> 00:11:01,679 Speaker 3: would create an additional two percentage points of corelation. Personally, 194 00:11:01,720 --> 00:11:03,760 Speaker 3: I think that that's probably a little bit high, because 195 00:11:03,800 --> 00:11:05,920 Speaker 3: I do think that the degree of demand destruction that 196 00:11:06,000 --> 00:11:09,160 Speaker 3: comes from effect that from the average effect of ta 197 00:11:09,360 --> 00:11:12,200 Speaker 3: RAID being above twenty percent is going to limit the 198 00:11:12,240 --> 00:11:15,280 Speaker 3: extent to how much firms can pass along those higher 199 00:11:15,280 --> 00:11:16,080 Speaker 3: input costs. 200 00:11:16,320 --> 00:11:18,640 Speaker 1: And Mike, one of the stated purposes is to re 201 00:11:18,880 --> 00:11:21,840 Speaker 1: sure bring employment back to the US to make all 202 00:11:21,920 --> 00:11:25,360 Speaker 1: this stuff that's being made over It seems to forget 203 00:11:25,400 --> 00:11:28,960 Speaker 1: the idea that it's basically labor arbitrage. Why stuff moved 204 00:11:28,960 --> 00:11:31,960 Speaker 1: overseas to be produced in the first place, because it's 205 00:11:32,040 --> 00:11:34,960 Speaker 1: cheaper to do so overseas, not to mention the fact 206 00:11:34,960 --> 00:11:39,360 Speaker 1: that with productivity gains, it takes fewer people here in 207 00:11:39,400 --> 00:11:42,320 Speaker 1: the country to make the stuff that we used to make. 208 00:11:42,760 --> 00:11:46,200 Speaker 2: Yeah, and there's also the cost of shipping you have 209 00:11:46,280 --> 00:11:52,360 Speaker 2: to put into this as well. The cost advantage in 210 00:11:52,480 --> 00:11:56,520 Speaker 2: terms of labor is starting to fade as other countries 211 00:11:57,360 --> 00:12:01,640 Speaker 2: raise their living standards, but it's still an important input. 212 00:12:01,679 --> 00:12:05,960 Speaker 2: But the problem that you have here is that nobody 213 00:12:06,040 --> 00:12:10,600 Speaker 2: knows what Donald Trump is actually doing. We don't know 214 00:12:10,880 --> 00:12:13,640 Speaker 2: what tariffs are going to be put on, and we 215 00:12:13,679 --> 00:12:15,600 Speaker 2: don't know how long they'll last, and we don't know 216 00:12:15,640 --> 00:12:17,560 Speaker 2: how he'll change his mind. So if you're a company 217 00:12:18,440 --> 00:12:23,439 Speaker 2: planning a major expansion and investment in some sort of factory, 218 00:12:24,800 --> 00:12:27,120 Speaker 2: you don't know whether it's going to be worthwhile or not. 219 00:12:27,320 --> 00:12:31,520 Speaker 2: So it's going to really be hard to justify moving 220 00:12:31,559 --> 00:12:34,320 Speaker 2: in and that is going to hold the president back. 221 00:12:34,440 --> 00:12:40,360 Speaker 2: Now he's talking about making deals with trade deals with countries. 222 00:12:40,880 --> 00:12:43,240 Speaker 2: That's not going to bring any factories back. 223 00:12:43,040 --> 00:12:43,320 Speaker 6: All right. 224 00:12:43,320 --> 00:12:46,880 Speaker 1: Thanks to Bloomberg International Economics and Policy correspondent Michael McKee 225 00:12:46,960 --> 00:12:51,120 Speaker 1: and Stuart paul Us economists with Bloomberg Economics and just 226 00:12:51,160 --> 00:12:53,440 Speaker 1: a hand to look at how the market politicity is 227 00:12:53,480 --> 00:12:57,560 Speaker 1: impacting the retail investor in the world of exchange traded funds. 228 00:12:57,960 --> 00:13:05,960 Speaker 1: It is twenty minutes past the hour is Bloomberg. Welcome 229 00:13:06,000 --> 00:13:08,559 Speaker 1: back to the special edition of Bloomberg Day Greek. I'm 230 00:13:08,600 --> 00:13:11,400 Speaker 1: John Tucker. The US stock market closed for the Good 231 00:13:11,480 --> 00:13:15,120 Speaker 1: Friday holiday. The ongoing tariff saga has made for historic 232 00:13:15,200 --> 00:13:18,040 Speaker 1: moves in the stock market, and for a look at 233 00:13:18,120 --> 00:13:22,400 Speaker 1: how it's impacting the retail market the exchange traded fund industry, 234 00:13:22,760 --> 00:13:26,199 Speaker 1: let's bring in Eric bellcunis, the senior ETF Strategies at 235 00:13:26,200 --> 00:13:29,760 Speaker 1: Bloomberg Intelligence, and just met in Deputy team leader of 236 00:13:29,840 --> 00:13:34,040 Speaker 1: Equities at Bloomberg News. Hi, guys, thanks for being here. Hey, 237 00:13:34,440 --> 00:13:36,320 Speaker 1: where is money flowing these days? 238 00:13:36,600 --> 00:13:40,600 Speaker 6: Believe it or not, it's in the US. A lot 239 00:13:40,640 --> 00:13:44,120 Speaker 6: of investors who are using ets putting that money into 240 00:13:44,200 --> 00:13:46,840 Speaker 6: US stocks, so risk assets. 241 00:13:46,880 --> 00:13:49,760 Speaker 1: I would have guessed just the opposite. Everybody's hiding under 242 00:13:49,760 --> 00:13:50,200 Speaker 1: a rock. 243 00:13:51,240 --> 00:13:54,880 Speaker 6: Well cash like ets and gold have done better than normal, 244 00:13:55,920 --> 00:13:58,920 Speaker 6: but they haven't interrupted to sort of flow us on 245 00:13:58,960 --> 00:14:01,959 Speaker 6: as we call it, into US stock ets. So if 246 00:14:01,960 --> 00:14:04,080 Speaker 6: you were to look at the stocks on I don't know, 247 00:14:04,280 --> 00:14:07,800 Speaker 6: any period this year, you're going to see stock of 248 00:14:07,880 --> 00:14:11,000 Speaker 6: ETFs like VU, which is the Vanguard, SMP five hundred, 249 00:14:11,640 --> 00:14:14,480 Speaker 6: IVV which is the black Rock SMP five hundred, the 250 00:14:14,600 --> 00:14:17,520 Speaker 6: QUES are in the top ten. It got some little 251 00:14:17,559 --> 00:14:18,960 Speaker 6: bit of value and growth in there. 252 00:14:19,960 --> 00:14:22,800 Speaker 1: Ces for everybody because you have to explain it to made. 253 00:14:22,800 --> 00:14:26,120 Speaker 6: So yeah, So SMP five hundred is like the five 254 00:14:26,200 --> 00:14:29,080 Speaker 6: hundred biggest stocks. The QUES is the NASTAC one hundred. 255 00:14:29,640 --> 00:14:32,560 Speaker 6: The stocks that list on NAZAC and they tend to 256 00:14:32,560 --> 00:14:36,320 Speaker 6: be like more tech and innovative, so it's a little 257 00:14:36,480 --> 00:14:41,680 Speaker 6: more high volatile, and the Nastak one hundred over time 258 00:14:41,760 --> 00:14:44,680 Speaker 6: has done way better than the SMP, but it can 259 00:14:44,720 --> 00:14:47,760 Speaker 6: go down further in his selloff, and it has it's 260 00:14:47,840 --> 00:14:49,760 Speaker 6: draught out and has been rougher than the SMP, but 261 00:14:49,960 --> 00:14:52,960 Speaker 6: people still buying it. We got about ten billion into 262 00:14:53,000 --> 00:14:56,520 Speaker 6: both the QUES ETF So I think what's going on 263 00:14:56,640 --> 00:15:00,480 Speaker 6: is this, over the last fifteen years, the trail crowd 264 00:15:00,560 --> 00:15:04,040 Speaker 6: has been rewarded for buying the dip, and so they 265 00:15:04,080 --> 00:15:06,520 Speaker 6: are buying the dip still. And there's been a couple 266 00:15:06,560 --> 00:15:09,440 Speaker 6: of days in this tariff tantrum where the dip has worked. 267 00:15:09,520 --> 00:15:12,400 Speaker 6: You know, there's like a huge run up, and so 268 00:15:12,680 --> 00:15:17,440 Speaker 6: those you know, quick boosts up inter of these down 269 00:15:17,560 --> 00:15:20,440 Speaker 6: weeks or days are going to keep them coming back. 270 00:15:20,760 --> 00:15:23,000 Speaker 6: And then the retail crowd, the sort of buying holders, 271 00:15:23,280 --> 00:15:25,680 Speaker 6: I think a lot of them over the years have 272 00:15:25,800 --> 00:15:27,880 Speaker 6: just thrown up their hands in terms of market timing. 273 00:15:27,960 --> 00:15:30,560 Speaker 6: I think they're just like, I can't time this stuff. 274 00:15:30,600 --> 00:15:32,640 Speaker 6: I mean, after COVID, like who could have timed the 275 00:15:32,720 --> 00:15:35,280 Speaker 6: FED buying ets and the market rallied and had a 276 00:15:35,280 --> 00:15:37,040 Speaker 6: good year. So I think a lot of them are like, 277 00:15:37,200 --> 00:15:39,480 Speaker 6: I'm not even I'm tuning out. I got a good 278 00:15:39,600 --> 00:15:42,880 Speaker 6: cheap ets. I'm just got a dollar cost average until 279 00:15:42,920 --> 00:15:45,600 Speaker 6: the sun goes down and I retire, and that's that. 280 00:15:45,840 --> 00:15:48,200 Speaker 6: And so we call that the vanguard put in that 281 00:15:48,520 --> 00:15:51,680 Speaker 6: in a market that's going down, there's the FED put 282 00:15:51,720 --> 00:15:53,480 Speaker 6: that they might step in. Now there's the Trump put 283 00:15:53,520 --> 00:15:56,000 Speaker 6: that he might reverse, but we also the vanguard put. 284 00:15:56,040 --> 00:15:59,040 Speaker 6: There's a just a bunch of retail investors who are 285 00:15:59,080 --> 00:16:00,960 Speaker 6: just gonna buy them matter what, and it does help 286 00:16:01,000 --> 00:16:03,120 Speaker 6: buffer these downturns a little bit. 287 00:16:03,720 --> 00:16:05,640 Speaker 1: Jess. So you've seeing kind of the same thing. What's 288 00:16:05,640 --> 00:16:07,880 Speaker 1: your perspective sitting at the equities desk? 289 00:16:08,000 --> 00:16:10,520 Speaker 7: That's right. We like to look at the individual stocks 290 00:16:10,520 --> 00:16:13,280 Speaker 7: as well. That I'm sure Eric looks at two and 291 00:16:13,640 --> 00:16:16,000 Speaker 7: Emma Woo over at GP Morgan, she heads up their 292 00:16:16,040 --> 00:16:18,920 Speaker 7: derivative strategy and she always collects a lot of great 293 00:16:19,000 --> 00:16:22,280 Speaker 7: data for individuals shares, especially when it comes to retail 294 00:16:22,360 --> 00:16:24,800 Speaker 7: specifically and what they're buying. And we've begun to see 295 00:16:24,800 --> 00:16:28,240 Speaker 7: more of a divergence here in two particular popular names 296 00:16:28,280 --> 00:16:30,040 Speaker 7: that we constantly talk about. So if you look at 297 00:16:30,080 --> 00:16:34,920 Speaker 7: the inflows recently into Tesla, those are still going into records, 298 00:16:34,920 --> 00:16:38,600 Speaker 7: whereas the outflows from Nvidia those are breaching record levels too, 299 00:16:38,640 --> 00:16:41,000 Speaker 7: so you're seeing those going in opposite direction. What's the 300 00:16:41,040 --> 00:16:43,800 Speaker 7: reason it's important is because typically when I'm talking to 301 00:16:43,840 --> 00:16:46,080 Speaker 7: fund managers, they're keeping a close eye on their clients 302 00:16:46,080 --> 00:16:48,120 Speaker 7: and what, especially on the retail side, what they're willing 303 00:16:48,280 --> 00:16:49,840 Speaker 7: to let go of and what they're not willing to 304 00:16:49,920 --> 00:16:52,120 Speaker 7: let go of, because you can use that as contrarian indicators. 305 00:16:52,120 --> 00:16:54,440 Speaker 7: Because for a while, especially the last two years of 306 00:16:54,520 --> 00:16:56,640 Speaker 7: the AI boom, of course, people were going to continue 307 00:16:56,640 --> 00:16:59,240 Speaker 7: to pile into shares like in Vidia, and it's still, 308 00:16:59,280 --> 00:17:02,200 Speaker 7: of course well off of its record reach just earlier 309 00:17:02,240 --> 00:17:04,080 Speaker 7: this year, because it's been on up and up the 310 00:17:04,160 --> 00:17:06,000 Speaker 7: last few years. But now you're starting to see that 311 00:17:06,119 --> 00:17:09,640 Speaker 7: shift a bit with retail versus Tesla, though people are 312 00:17:09,640 --> 00:17:12,119 Speaker 7: still piling in despite that stock being well off of 313 00:17:12,160 --> 00:17:14,560 Speaker 7: its all time high back in December, So that's what 314 00:17:14,600 --> 00:17:16,240 Speaker 7: you're seeing a divergence there. So it's going to be 315 00:17:16,280 --> 00:17:19,080 Speaker 7: interesting to see how that impacts its stock price because 316 00:17:19,119 --> 00:17:21,760 Speaker 7: typically people's and air can talk more about this. People 317 00:17:21,840 --> 00:17:23,720 Speaker 7: like to talk about when retail sort of throws in 318 00:17:23,760 --> 00:17:25,840 Speaker 7: the towel if that can be contraired, and that's kind 319 00:17:25,880 --> 00:17:28,000 Speaker 7: of the bottom overall of the market. But of course 320 00:17:28,200 --> 00:17:30,600 Speaker 7: I'm sure he remembers like in the depths of COVID 321 00:17:30,680 --> 00:17:34,199 Speaker 7: in twenty twenty, everything happened so fast where retail investors 322 00:17:34,200 --> 00:17:36,040 Speaker 7: didn't have time to make a lot of changes and 323 00:17:36,080 --> 00:17:38,520 Speaker 7: then they ended up not necessarily throwing in the talent 324 00:17:38,560 --> 00:17:39,360 Speaker 7: getting that call right. 325 00:17:39,920 --> 00:17:43,680 Speaker 1: You also look at who's investing in their own company, 326 00:17:44,080 --> 00:17:47,920 Speaker 1: corporate to inside, yes, what are they doing in these 327 00:17:48,080 --> 00:17:49,199 Speaker 1: troubled times? 328 00:17:49,280 --> 00:17:51,560 Speaker 7: And the reason we look at corporate insiders because there's 329 00:17:51,560 --> 00:17:53,399 Speaker 7: a variety of reasons that they could still buy. But 330 00:17:53,480 --> 00:17:55,480 Speaker 7: if you have a situation like this, especially with the 331 00:17:55,480 --> 00:17:58,040 Speaker 7: broader market in a correction and even the NAZAC one 332 00:17:58,080 --> 00:18:00,119 Speaker 7: hundred obviously in a bear market, you want to see 333 00:18:00,160 --> 00:18:02,639 Speaker 7: what are corporate insiders doing. Are they still continuing to 334 00:18:02,760 --> 00:18:04,399 Speaker 7: buy more of their stock, because that can give you 335 00:18:04,440 --> 00:18:06,840 Speaker 7: confidence of what they see for their businesses as well 336 00:18:06,840 --> 00:18:10,000 Speaker 7: as the economy, And you're actually seeing that happen right now. 337 00:18:10,040 --> 00:18:12,360 Speaker 7: So corporate insiders still scooping up shares of their own 338 00:18:12,359 --> 00:18:14,719 Speaker 7: companies at the fastest pace in about sixteen months, So 339 00:18:14,840 --> 00:18:16,119 Speaker 7: that would have been when the S and P was 340 00:18:16,200 --> 00:18:18,440 Speaker 7: last in a correction in the fall of twenty twenty three, 341 00:18:18,680 --> 00:18:20,600 Speaker 7: so that is something in the nearer term that's giving 342 00:18:20,640 --> 00:18:24,239 Speaker 7: investors and portfolio managers more confidence that corporate insiders are 343 00:18:24,280 --> 00:18:24,560 Speaker 7: doing that. 344 00:18:24,760 --> 00:18:31,719 Speaker 1: Hey, guys, active versus passive investment management, that's been a 345 00:18:31,720 --> 00:18:35,879 Speaker 1: debate going back and forth for years and years In 346 00:18:35,960 --> 00:18:40,240 Speaker 1: times like this, Eric, let me start with you, do 347 00:18:40,320 --> 00:18:44,040 Speaker 1: the active managers perform better than you know if I 348 00:18:44,080 --> 00:18:47,240 Speaker 1: stuck my money into it just an index fund. 349 00:18:47,640 --> 00:18:50,400 Speaker 6: Yeah, So what's interesting is it depends on what fast 350 00:18:50,400 --> 00:18:52,520 Speaker 6: the class you're talking about. David Cohen, who covers active 351 00:18:52,520 --> 00:18:54,879 Speaker 6: and mutual funds for US, did a study. He just 352 00:18:54,960 --> 00:18:57,360 Speaker 6: looked at the crazy week, you know, the week where 353 00:18:57,359 --> 00:19:00,760 Speaker 6: everything just was wild and the market was down a lot, 354 00:19:00,920 --> 00:19:03,720 Speaker 6: and he just wondered how actas did And what we 355 00:19:03,800 --> 00:19:07,440 Speaker 6: found was interesting. On the stock side, that beat rates, 356 00:19:07,480 --> 00:19:10,639 Speaker 6: the outperformance of the index rates doubled the average. So 357 00:19:11,240 --> 00:19:15,879 Speaker 6: stock pickers over the last couple of years they've not 358 00:19:16,040 --> 00:19:18,480 Speaker 6: been able to sort of buy the MAG seven at 359 00:19:18,480 --> 00:19:21,640 Speaker 6: the same rate as the benchmarks, so they've been lagging 360 00:19:21,680 --> 00:19:24,439 Speaker 6: because the MAG seven has done so well. But that 361 00:19:24,480 --> 00:19:27,040 Speaker 6: actually pays off in the selloff when the MAG seven 362 00:19:27,080 --> 00:19:29,479 Speaker 6: goes down worst to the benchmark. And I think it's 363 00:19:29,520 --> 00:19:33,320 Speaker 6: because stock pickers tend to be looking at fundamentals and 364 00:19:33,359 --> 00:19:35,280 Speaker 6: some of the evaluations of the MAG seven were getting 365 00:19:35,359 --> 00:19:37,359 Speaker 6: high and they were like, I need to buy more value, 366 00:19:38,000 --> 00:19:40,960 Speaker 6: and that allowed them to outperform during this rough patch. 367 00:19:41,400 --> 00:19:45,320 Speaker 6: On the flip side, the bond investors, who normally outperform, 368 00:19:45,880 --> 00:19:48,879 Speaker 6: they actually got their beat rates cut in half because 369 00:19:48,920 --> 00:19:53,480 Speaker 6: bond investors they actually benchmarked against the indexes that are 370 00:19:53,560 --> 00:19:57,080 Speaker 6: weighted by debt, you know, whereas the SMP is an 371 00:19:57,119 --> 00:19:59,320 Speaker 6: index weighted by market caps, so it has momentum in it, 372 00:19:59,560 --> 00:20:02,760 Speaker 6: but benchmarks are not that good. They're waited by debt 373 00:20:03,320 --> 00:20:05,600 Speaker 6: equate it to playing the Washington Generals, which is the 374 00:20:05,640 --> 00:20:08,040 Speaker 6: scene the Globe Shutters play. It's just a poor, easy 375 00:20:08,080 --> 00:20:09,760 Speaker 6: to beat up team. All you do is aut a 376 00:20:09,760 --> 00:20:12,800 Speaker 6: little high yield or international and you're good. And so 377 00:20:12,840 --> 00:20:16,159 Speaker 6: what happens though, in a crazy sell off where you 378 00:20:16,320 --> 00:20:21,240 Speaker 6: have treasuries doing good, the ag actually or their benchmark 379 00:20:21,240 --> 00:20:25,000 Speaker 6: beats them, so they actually have more risk typically, and 380 00:20:25,040 --> 00:20:27,960 Speaker 6: then you hit a sell off, they underperform more. So 381 00:20:28,480 --> 00:20:31,359 Speaker 6: it is really an interesting dichotomy between the two, but 382 00:20:31,600 --> 00:20:34,080 Speaker 6: for both of them. The problem without performing in a 383 00:20:34,160 --> 00:20:37,200 Speaker 6: rough market is people don't care as much. We've found 384 00:20:37,240 --> 00:20:39,520 Speaker 6: that if you beat the market like the markets in 385 00:20:39,560 --> 00:20:42,520 Speaker 6: the market's down twenty percent and you're down fifteen, it 386 00:20:42,560 --> 00:20:45,120 Speaker 6: doesn't do a lot like it's unfortunate, like you should 387 00:20:45,160 --> 00:20:47,679 Speaker 6: get rewarded for that. That said, if you can go 388 00:20:47,800 --> 00:20:51,120 Speaker 6: down fifteen when the market's down twenty, that could help 389 00:20:51,160 --> 00:20:53,120 Speaker 6: you when the market goes back up over a year 390 00:20:53,200 --> 00:20:56,000 Speaker 6: or two. Now you've got some credits from beating it 391 00:20:56,040 --> 00:20:58,960 Speaker 6: when it was down, and maybe you outperform. You're up 392 00:20:59,000 --> 00:21:01,600 Speaker 6: ten the market's up eight, that's when it can pay off. 393 00:21:01,600 --> 00:21:05,280 Speaker 6: But right now all the active stuff bonds and stocks 394 00:21:05,359 --> 00:21:10,040 Speaker 6: on the mutual financyeing outflows. So this outperformance doesn't matter 395 00:21:10,119 --> 00:21:11,800 Speaker 6: in the short term. It could matter long term. But 396 00:21:11,880 --> 00:21:14,080 Speaker 6: it's interesting the way it's different depending on which as 397 00:21:14,160 --> 00:21:14,880 Speaker 6: class you look at. 398 00:21:15,200 --> 00:21:18,359 Speaker 1: You're listening to Bloomberg Daybreak. I'm John Tucker, and we're 399 00:21:18,400 --> 00:21:22,960 Speaker 1: talking with Eric Valchunis, Senior ETF Strategies as Bloomberg Intelligence, 400 00:21:23,000 --> 00:21:25,639 Speaker 1: and Jess Meant and Deputy team leader of Equities at 401 00:21:25,640 --> 00:21:30,200 Speaker 1: Bloomberg News. Jess, you've been writing about the death cross. 402 00:21:30,920 --> 00:21:32,560 Speaker 1: That's ominous. What is that? 403 00:21:32,880 --> 00:21:36,200 Speaker 7: Okay, I know it sounds ominous, but I'll break down 404 00:21:36,240 --> 00:21:40,000 Speaker 7: why it not necessarily always is and typically what you 405 00:21:40,000 --> 00:21:41,800 Speaker 7: would happen in this and you can use this for 406 00:21:41,840 --> 00:21:46,000 Speaker 7: indexes as well as individual stocks, so this particular exactly, 407 00:21:46,359 --> 00:21:48,000 Speaker 7: so this is what happens when the S and P 408 00:21:48,200 --> 00:21:51,240 Speaker 7: five hundreds fifty day moving average, so it's shorter term 409 00:21:51,240 --> 00:21:54,680 Speaker 7: moving average, crosses below it's longer term two hundred day 410 00:21:54,680 --> 00:21:57,120 Speaker 7: moving average. So when stocks are in an up trend, 411 00:21:57,160 --> 00:21:59,239 Speaker 7: typically you wouldn't see that happen like the last two 412 00:21:59,320 --> 00:22:01,520 Speaker 7: years of the AI run. But when you begin to 413 00:22:01,560 --> 00:22:04,400 Speaker 7: see a correction like this happening, that's when you see 414 00:22:04,440 --> 00:22:07,000 Speaker 7: the shorter term moving averages move below it's longer term 415 00:22:07,040 --> 00:22:09,560 Speaker 7: moving averages. So typically people want to point that out 416 00:22:09,600 --> 00:22:11,719 Speaker 7: because it sounds like doom and gloom, because that happens, 417 00:22:11,760 --> 00:22:14,880 Speaker 7: say during the dot com era in nineteen ninety nine, 418 00:22:15,000 --> 00:22:18,520 Speaker 7: also in October two thousand, right after the stock bubble 419 00:22:18,560 --> 00:22:21,720 Speaker 7: burst earlier that year that march. You also saw it 420 00:22:21,720 --> 00:22:23,680 Speaker 7: happen in December two thousand and seven, right ahead of 421 00:22:23,680 --> 00:22:26,800 Speaker 7: the global financial crisis, and of course it happened in 422 00:22:26,840 --> 00:22:29,320 Speaker 7: March of twenty twenty. But again I want to point 423 00:22:29,320 --> 00:22:30,040 Speaker 7: out that that's. 424 00:22:30,000 --> 00:22:33,800 Speaker 1: I mean, we're we're not calling it a good indicator. 425 00:22:33,840 --> 00:22:34,920 Speaker 1: We're not well. 426 00:22:34,960 --> 00:22:37,760 Speaker 7: It depends on how severe an economic downturn is, because 427 00:22:37,760 --> 00:22:39,760 Speaker 7: if you go back since the fifties, this has happened 428 00:22:39,920 --> 00:22:42,440 Speaker 7: over forty times, So people want to point to kind 429 00:22:42,480 --> 00:22:44,480 Speaker 7: of the handful of times that it has happened. But 430 00:22:44,520 --> 00:22:47,040 Speaker 7: even in COVID when it happened in March of that year, 431 00:22:47,119 --> 00:22:49,960 Speaker 7: it happened on March thirtieth, whereas the stock market bottomed 432 00:22:49,960 --> 00:22:52,760 Speaker 7: on March twenty third. So it doesn't always work. I mean, 433 00:22:52,840 --> 00:22:54,960 Speaker 7: since nineteen fifty, the S and P five hundred had 434 00:22:55,000 --> 00:22:57,240 Speaker 7: posted a meetiing loss about seven tents of a percent 435 00:22:57,440 --> 00:22:59,280 Speaker 7: a month later, but if you look three months out, 436 00:22:59,280 --> 00:23:00,920 Speaker 7: it was about a two sent game for an index 437 00:23:00,920 --> 00:23:02,840 Speaker 7: in a year later ten percent on average. So really 438 00:23:02,880 --> 00:23:05,879 Speaker 7: what hinges it on is is there a more severe 439 00:23:05,920 --> 00:23:08,800 Speaker 7: economic downturn or not. We don't necessarily know that yet, 440 00:23:08,840 --> 00:23:11,399 Speaker 7: but that's why people watch it, because it depends on 441 00:23:11,440 --> 00:23:14,280 Speaker 7: how much further pain could be happening. So sometimes it's worked, 442 00:23:14,400 --> 00:23:15,359 Speaker 7: other times it hasn't. 443 00:23:15,440 --> 00:23:18,720 Speaker 1: All right, so if you want to preserve your money. Eric, 444 00:23:19,800 --> 00:23:23,199 Speaker 1: it sounds like the death crosses here. Where in the 445 00:23:23,320 --> 00:23:29,159 Speaker 1: ETF world do you put money to preserve your cash? 446 00:23:29,280 --> 00:23:32,920 Speaker 6: Yeah, some of the names for the technicals are pretty clever. 447 00:23:33,040 --> 00:23:35,600 Speaker 6: The golden cross, I think is what you want to see. 448 00:23:35,600 --> 00:23:38,000 Speaker 6: I think that happens. Hopefully down the road we'll get 449 00:23:38,040 --> 00:23:42,119 Speaker 6: a golden cross. But yeah, So what we found is 450 00:23:42,160 --> 00:23:45,240 Speaker 6: even though there's a lot of buying of US docks 451 00:23:45,280 --> 00:23:49,560 Speaker 6: like normal, what you do find is the cash like ets. 452 00:23:49,600 --> 00:23:53,080 Speaker 6: So Eskov and Bill these are the second and third 453 00:23:53,160 --> 00:23:56,440 Speaker 6: best selling ets this year after vu Escov and Bill 454 00:23:56,600 --> 00:23:58,840 Speaker 6: did the same thing, which is they're probably the two 455 00:23:58,880 --> 00:24:01,840 Speaker 6: most boring ets one to three or one to three 456 00:24:01,840 --> 00:24:05,399 Speaker 6: month treasuries. So it's literally like a money market fund. 457 00:24:05,600 --> 00:24:08,480 Speaker 6: So a lot of people are hiding out. That's probably 458 00:24:08,520 --> 00:24:12,400 Speaker 6: the safest, most organic way to sort of hide out 459 00:24:12,520 --> 00:24:15,359 Speaker 6: when things are rough. In my opinion, there's no catch there. 460 00:24:16,000 --> 00:24:18,639 Speaker 6: There's some other things people do to kind of hedge, 461 00:24:18,680 --> 00:24:20,600 Speaker 6: you know, one thing they do they might use a 462 00:24:20,600 --> 00:24:24,640 Speaker 6: one time inverse ETF like SAH that we have seen 463 00:24:24,720 --> 00:24:28,280 Speaker 6: people do. But there's a little bit of volatility drag 464 00:24:28,640 --> 00:24:30,800 Speaker 6: that can corrode your investment long term so you kind 465 00:24:30,800 --> 00:24:33,199 Speaker 6: of have to, like, you know, watch that thing. You know, 466 00:24:33,280 --> 00:24:37,159 Speaker 6: it's not totally natural. Some other people are looking at 467 00:24:37,200 --> 00:24:41,560 Speaker 6: treasuries long long data treasuries, but they kind of had 468 00:24:41,800 --> 00:24:44,520 Speaker 6: a couple bays and periods there where they went down 469 00:24:44,560 --> 00:24:47,639 Speaker 6: with stops. And this is something that's an interesting point 470 00:24:47,760 --> 00:24:50,640 Speaker 6: is that bonds, you know, especially as you go along 471 00:24:50,680 --> 00:24:53,240 Speaker 6: the curve to the mid and the long long data section. 472 00:24:54,600 --> 00:24:57,359 Speaker 6: You know, people buy those thinking that's the forty to 473 00:24:57,440 --> 00:25:00,520 Speaker 6: hedge their sixty, but it's become less reliable. Seen twenty 474 00:25:00,520 --> 00:25:03,120 Speaker 6: twenty two, bombs were down thirteen percent, stops are down 475 00:25:03,119 --> 00:25:05,760 Speaker 6: eighteen percent. And so what we found is a lot 476 00:25:05,800 --> 00:25:08,920 Speaker 6: of people use buffer ets now, which are ets and 477 00:25:09,040 --> 00:25:14,399 Speaker 6: like structure products, they use options basically to target an outcome. 478 00:25:14,480 --> 00:25:16,680 Speaker 6: So you buy one of these and it will tell 479 00:25:16,720 --> 00:25:19,000 Speaker 6: you you're only going to get a five percent no more, 480 00:25:19,600 --> 00:25:22,760 Speaker 6: or you take the first ten percent, or you know, 481 00:25:22,800 --> 00:25:24,760 Speaker 6: we'll cover the first ten percent. Anything beyond that is 482 00:25:24,760 --> 00:25:28,000 Speaker 6: on you or hey, no downside hedge, and every one 483 00:25:28,040 --> 00:25:30,239 Speaker 6: of the sort of situations you have to give up 484 00:25:30,240 --> 00:25:33,400 Speaker 6: some upside. So it's basically an option strategy package into 485 00:25:33,400 --> 00:25:36,600 Speaker 6: an ETF. But people like these because unlike bonds which 486 00:25:36,640 --> 00:25:39,159 Speaker 6: can be shaky, or these other hedging instruments for to 487 00:25:39,160 --> 00:25:41,879 Speaker 6: have like technical things that corrode your money. 488 00:25:42,160 --> 00:25:45,639 Speaker 1: Eric, thanks very much, appreciate it. Eric Balcunas, the senior 489 00:25:45,640 --> 00:25:49,320 Speaker 1: ETF Strategies at Bloomberg Intelligence, and Jess Manton stopping by 490 00:25:49,320 --> 00:25:52,840 Speaker 1: the studio today at Bloomberg News. Up next, the latest 491 00:25:52,840 --> 00:25:56,440 Speaker 1: and the government's effort to break up Facebook owner meta platforms. 492 00:25:56,960 --> 00:26:04,399 Speaker 1: Thirty eight minutes past the hour. This is Bloomberg and 493 00:26:04,520 --> 00:26:07,760 Speaker 1: thanks for joining us for this special edition of Bloomberg Daybreak. 494 00:26:07,920 --> 00:26:10,920 Speaker 1: The stock market closed for good Friday holiday. Hi there, 495 00:26:10,920 --> 00:26:13,359 Speaker 1: I'm John Tucker. Well, big tech has been in the 496 00:26:13,400 --> 00:26:16,600 Speaker 1: crosshairs of US anti trust agencies and so far it's 497 00:26:16,640 --> 00:26:20,320 Speaker 1: continuing under the Trump administration. Let's get the update on 498 00:26:20,560 --> 00:26:24,320 Speaker 1: where all these cases stand, and we bring in Jennifer Ree, 499 00:26:24,400 --> 00:26:27,840 Speaker 1: senior litigation analyst with Bloomberg Intelligence, to go over it 500 00:26:27,880 --> 00:26:31,920 Speaker 1: with us. Well, let's start with the courtroom drama. It's 501 00:26:31,960 --> 00:26:35,000 Speaker 1: got it all. A billionaire witness on the stand, smoking 502 00:26:35,040 --> 00:26:40,200 Speaker 1: gun emails, paranoia and even cutthroat competition. We're talking Mark 503 00:26:40,320 --> 00:26:44,440 Speaker 1: Zuckerberg's Meta on trial. It's the Federal Trade Commission. Jen 504 00:26:44,520 --> 00:26:48,439 Speaker 1: trying to break up Meta and force it to sell 505 00:26:48,480 --> 00:26:52,520 Speaker 1: Instagram and WhatsApp. Why is the government going after Meta? 506 00:26:52,600 --> 00:26:55,280 Speaker 1: I mean I thought they were kind of hands off 507 00:26:55,320 --> 00:26:56,440 Speaker 1: in the Trump administration. 508 00:26:56,760 --> 00:26:59,320 Speaker 8: Well, I think that's what people expected to happen, but 509 00:26:59,400 --> 00:27:01,959 Speaker 8: we're not really seeing very much evidence of hands off 510 00:27:02,000 --> 00:27:04,919 Speaker 8: approach when it comes to big tech yet. You know, 511 00:27:05,119 --> 00:27:08,440 Speaker 8: Meta was first sued during the first Trump administration. And 512 00:27:08,520 --> 00:27:11,320 Speaker 8: what the FTC is saying is that these acquisitions that 513 00:27:11,359 --> 00:27:14,320 Speaker 8: men have made now back in twenty twelve, in twenty fourteen, 514 00:27:14,400 --> 00:27:17,560 Speaker 8: have you of Instagram and WhatsApp, we're anti competitive. That 515 00:27:17,640 --> 00:27:20,840 Speaker 8: the only purpose for buying the companies by Meta at 516 00:27:20,840 --> 00:27:23,760 Speaker 8: that time, Facebook was to just take out a potential 517 00:27:23,760 --> 00:27:27,199 Speaker 8: competitor that they were very concerned about both of these apps, 518 00:27:27,240 --> 00:27:30,280 Speaker 8: that they would eventually grow to become something more like 519 00:27:30,359 --> 00:27:33,480 Speaker 8: Facebook and then prop you know, possibly supplant them in 520 00:27:33,480 --> 00:27:36,119 Speaker 8: the market, and that they had a strategy to either 521 00:27:36,280 --> 00:27:38,879 Speaker 8: bury a competitor or buy a competitor in order to 522 00:27:39,000 --> 00:27:41,840 Speaker 8: eliminate that rival. And that's what they did here. 523 00:27:41,920 --> 00:27:45,040 Speaker 1: Well, I mean, there's no denying they bought up successful rifles. 524 00:27:45,760 --> 00:27:48,120 Speaker 1: Sounds to me on the surface case closed. 525 00:27:48,560 --> 00:27:51,120 Speaker 8: Well, the interesting thing is That's what makes this case 526 00:27:51,160 --> 00:27:53,720 Speaker 8: so difficult because based on the documents you mentioned, these 527 00:27:53,760 --> 00:27:59,679 Speaker 8: hot documents, we've been hearing about Zuckerberg's emails. 528 00:27:59,800 --> 00:28:02,639 Speaker 1: Yeah, quote unquote smoking good, right, he was what are 529 00:28:02,640 --> 00:28:03,359 Speaker 1: he's saying those? 530 00:28:03,520 --> 00:28:06,120 Speaker 8: You know, he said it's better to buy than compete. 531 00:28:06,160 --> 00:28:09,240 Speaker 8: I mean, you don't really get more straightforward than that 532 00:28:09,280 --> 00:28:11,960 Speaker 8: in terms of supporting the FTC's case. But here's the thing. 533 00:28:12,359 --> 00:28:16,359 Speaker 8: Even if the intent was bad back then you have 534 00:28:16,440 --> 00:28:19,040 Speaker 8: to prove more elements than that to win a monopolization case. 535 00:28:19,320 --> 00:28:22,200 Speaker 8: It's more than just that intent. You have to properly 536 00:28:22,240 --> 00:28:24,840 Speaker 8: define the sphere of competition. You have to prove the 537 00:28:24,840 --> 00:28:27,080 Speaker 8: company as a monopoly, and you have to show how 538 00:28:27,160 --> 00:28:30,080 Speaker 8: consumers were harmed, and you have to show that that 539 00:28:30,240 --> 00:28:33,959 Speaker 8: harm was not outweighed by the pro competitive benefits. And 540 00:28:34,000 --> 00:28:37,040 Speaker 8: look at what Meta did after it acquired Instagram and WhatsApp. 541 00:28:37,119 --> 00:28:39,560 Speaker 8: It put in a lot of resources to what we're 542 00:28:39,680 --> 00:28:42,640 Speaker 8: really fledgling companies at the time that they were acquired. 543 00:28:42,800 --> 00:28:44,840 Speaker 8: And they have a good argument here that it was 544 00:28:44,880 --> 00:28:47,080 Speaker 8: pro competitive. We may have bought them, but we didn't 545 00:28:47,080 --> 00:28:48,560 Speaker 8: bury them. We grew them. 546 00:28:48,920 --> 00:28:51,320 Speaker 1: And the judge in this case has to consider also 547 00:28:51,400 --> 00:28:56,600 Speaker 1: something called network effects. Basically, if you're on this platform 548 00:28:57,040 --> 00:29:00,000 Speaker 1: they did all this, it's really hard to go anywhere else. 549 00:29:00,520 --> 00:29:01,640 Speaker 1: I mean, what are you going to go to a 550 00:29:01,680 --> 00:29:03,560 Speaker 1: smaller platform that doesn't have as. 551 00:29:03,480 --> 00:29:06,560 Speaker 8: Many users you need the users you need to be 552 00:29:06,640 --> 00:29:07,880 Speaker 8: on it. If you have a lot of your friends 553 00:29:07,880 --> 00:29:10,479 Speaker 8: are on it, there is a network effect. But the judge, 554 00:29:10,520 --> 00:29:12,040 Speaker 8: you know, some of the evidence that's come out is 555 00:29:12,040 --> 00:29:14,920 Speaker 8: that things have changed over time with TikTok and with 556 00:29:15,480 --> 00:29:18,200 Speaker 8: x and with YouTube, and that we're moving a little 557 00:29:18,240 --> 00:29:22,040 Speaker 8: bit away from that network effect need because people are 558 00:29:22,160 --> 00:29:25,360 Speaker 8: multi homing and moving around and sharing data and videos 559 00:29:25,360 --> 00:29:27,880 Speaker 8: and information in a different way. And the judge even 560 00:29:27,960 --> 00:29:31,000 Speaker 8: questioned whether network effects are as important today as they 561 00:29:31,000 --> 00:29:31,960 Speaker 8: were ten years ago. 562 00:29:32,160 --> 00:29:35,040 Speaker 1: So but wait a second here, I just remember the 563 00:29:35,080 --> 00:29:38,560 Speaker 1: government approved these acquisitions in the first place. 564 00:29:38,800 --> 00:29:41,560 Speaker 8: Very good point they did. So this would send a 565 00:29:41,600 --> 00:29:44,760 Speaker 8: difficult signal to businesses. Now, legally, they have the right 566 00:29:44,920 --> 00:29:48,120 Speaker 8: that the laws say, the Federal Trade Commission or Department 567 00:29:48,160 --> 00:29:52,080 Speaker 8: of Justice can go after any deal any time. They 568 00:29:52,120 --> 00:29:54,880 Speaker 8: can change their mind, and they've said, look, times have changed. 569 00:29:55,160 --> 00:29:57,600 Speaker 8: The industry was different back then when we first looked 570 00:29:57,600 --> 00:29:59,440 Speaker 8: at these deals, and they did it was about a 571 00:29:59,440 --> 00:30:03,080 Speaker 8: six month investigation I think into the Instagram deal before 572 00:30:03,160 --> 00:30:04,120 Speaker 8: they allowed it to close. 573 00:30:04,360 --> 00:30:06,880 Speaker 1: There's no jury here, I mean, how does this work? 574 00:30:07,200 --> 00:30:09,000 Speaker 8: Just a judge. It's called a bench trial. It is 575 00:30:09,080 --> 00:30:10,800 Speaker 8: Judge Boseberg who's. 576 00:30:12,160 --> 00:30:14,280 Speaker 1: This judge doesn't have enough honest plate. 577 00:30:14,400 --> 00:30:18,640 Speaker 8: He doesn't catch a break. So it'll be his decision, 578 00:30:18,920 --> 00:30:21,880 Speaker 8: and he'll first make a decision about liability, whether they're 579 00:30:21,880 --> 00:30:25,200 Speaker 8: actually guilty, whether the FTC proved its case. If that's 580 00:30:25,240 --> 00:30:27,479 Speaker 8: the case, he will move on to remedy and decide 581 00:30:27,520 --> 00:30:29,080 Speaker 8: what is the right remedy. 582 00:30:28,960 --> 00:30:32,920 Speaker 1: And jen we also have two lawsuits against Google parent Alphabet. 583 00:30:33,440 --> 00:30:37,240 Speaker 1: On Monday, we're going to get a remedy on Search 584 00:30:37,760 --> 00:30:40,720 Speaker 1: because there's there's been a ruling that were found guilty, 585 00:30:41,000 --> 00:30:44,000 Speaker 1: so they're going to remedy that. Coming up Thursday, we 586 00:30:44,120 --> 00:30:48,520 Speaker 1: actually got a decision on a liability. This comes in 587 00:30:48,560 --> 00:30:53,640 Speaker 1: respect to the lawsuit that's focused on digital advertising at Google. 588 00:30:54,160 --> 00:30:54,880 Speaker 1: Tell us about that. 589 00:30:54,920 --> 00:30:57,400 Speaker 8: What happened right, Well, you know that one was unexpected. 590 00:30:57,480 --> 00:31:00,680 Speaker 8: This decision on liability was expected to few months ago, 591 00:31:00,800 --> 00:31:03,240 Speaker 8: and when it didn't come out, everyone was wondering, well, 592 00:31:03,240 --> 00:31:06,200 Speaker 8: when will it came out? On Thursday? And it was 593 00:31:06,240 --> 00:31:10,440 Speaker 8: a partial victory for the Department of Justice. These products 594 00:31:10,480 --> 00:31:13,560 Speaker 8: that the Department of Justice head challenged are very complicated, right. 595 00:31:13,600 --> 00:31:15,800 Speaker 8: There are a series of products that Google has that 596 00:31:15,920 --> 00:31:19,520 Speaker 8: connect digital publishers and advertisers together, and so they're all 597 00:31:20,440 --> 00:31:23,000 Speaker 8: software essentially, and a couple of them are on the 598 00:31:23,000 --> 00:31:24,640 Speaker 8: publisher end and a couple of them are on the 599 00:31:24,680 --> 00:31:27,800 Speaker 8: advertiser end. And what Google was basically alleged to have 600 00:31:27,840 --> 00:31:30,720 Speaker 8: done is sort of manipulate the whole process because fees 601 00:31:30,720 --> 00:31:33,120 Speaker 8: are taken out for each of these products that are used, 602 00:31:33,360 --> 00:31:36,640 Speaker 8: so that it keeps publishers and advertisers within their whole 603 00:31:36,800 --> 00:31:39,880 Speaker 8: supply chain right to place an ad on a website. 604 00:31:40,240 --> 00:31:40,920 Speaker 7: So what this. 605 00:31:40,920 --> 00:31:45,320 Speaker 8: Judge decided was that Google was found liable for monopolization 606 00:31:45,440 --> 00:31:47,680 Speaker 8: of what's called the Publisher ad Server, So it's one 607 00:31:47,720 --> 00:31:50,920 Speaker 8: of the products on the publisher side. Google actually bought 608 00:31:50,920 --> 00:31:53,840 Speaker 8: this product. It was originally called double Click and Google. 609 00:31:53,880 --> 00:31:56,880 Speaker 8: When Google bought double Click, it obtained this product also 610 00:31:57,560 --> 00:32:00,560 Speaker 8: monopolization of the ad exchange market. That's one of the 611 00:32:00,600 --> 00:32:03,720 Speaker 8: advertiser sides. It's in exchange where they can actually come 612 00:32:03,760 --> 00:32:06,640 Speaker 8: together to buy and sell ads and for tying the 613 00:32:06,680 --> 00:32:09,120 Speaker 8: two of them together. What that means in antitrust is 614 00:32:09,200 --> 00:32:13,200 Speaker 8: conditioning access to one to conditioning the access of one 615 00:32:13,200 --> 00:32:15,200 Speaker 8: to get the other, and that is illegal under the 616 00:32:15,200 --> 00:32:18,040 Speaker 8: anti trust laws. So that came out on Thursday, and 617 00:32:18,080 --> 00:32:20,920 Speaker 8: what the judges said is, Okay, here's my decision. The 618 00:32:21,000 --> 00:32:23,239 Speaker 8: next step is to have a hearing to decide what 619 00:32:23,240 --> 00:32:24,320 Speaker 8: the proper reality is going to do. 620 00:32:24,720 --> 00:32:26,680 Speaker 1: What are we going to do? What do you suppose 621 00:32:26,720 --> 00:32:28,760 Speaker 1: the proper remedy remedy with this? 622 00:32:29,200 --> 00:32:32,000 Speaker 8: And of the lawsuit, well, you know, like several of 623 00:32:32,000 --> 00:32:35,080 Speaker 8: the government lawsuits against the big tech companies, they will 624 00:32:35,120 --> 00:32:39,960 Speaker 8: seek divestiture, forced asset sale, as they're doing FTC's doing 625 00:32:39,960 --> 00:32:42,320 Speaker 8: with Meta, as the Department of Justice is doing with 626 00:32:42,400 --> 00:32:45,360 Speaker 8: Google on the search case that you mentioned. They will 627 00:32:45,360 --> 00:32:47,760 Speaker 8: seek that. I don't think that they'll get that here. 628 00:32:47,840 --> 00:32:49,959 Speaker 8: And the reason I don't think so is because I 629 00:32:50,000 --> 00:32:54,280 Speaker 8: believe judges are really looking for the most straightforward and 630 00:32:54,400 --> 00:32:57,719 Speaker 8: kind of non intrusive way of remedying a problem. And 631 00:32:57,760 --> 00:33:00,880 Speaker 8: so if the problem is this unlawful hying, let's say 632 00:33:01,240 --> 00:33:03,400 Speaker 8: they're told you have to stop this, you have to 633 00:33:03,440 --> 00:33:06,280 Speaker 8: make access unconditional. You can't say you must use one 634 00:33:06,320 --> 00:33:09,760 Speaker 8: in order to get the other and again the decision 635 00:33:10,160 --> 00:33:12,240 Speaker 8: only recently came out, so I haven't had a chance 636 00:33:12,280 --> 00:33:15,080 Speaker 8: to digest it yet looking at hundreds of pages. But 637 00:33:15,200 --> 00:33:18,160 Speaker 8: whatever it is, the judge found that Google is doing 638 00:33:18,400 --> 00:33:22,640 Speaker 8: that monopolizes the publisher ad server. It's really she'll really 639 00:33:22,680 --> 00:33:25,400 Speaker 8: just say you have to stop doing that. That's more 640 00:33:25,560 --> 00:33:26,880 Speaker 8: likely than a divest chat. 641 00:33:27,080 --> 00:33:30,479 Speaker 1: Okay, let's move to the other case in which they 642 00:33:30,480 --> 00:33:33,240 Speaker 1: were found guilty with respect to the search engine. Right, 643 00:33:33,800 --> 00:33:35,280 Speaker 1: are they going to have to get rid of search 644 00:33:35,760 --> 00:33:36,880 Speaker 1: Google Search? 645 00:33:37,400 --> 00:33:40,440 Speaker 8: I don't think so. So what's starting on April twenty 646 00:33:40,440 --> 00:33:43,840 Speaker 8: first is a hearing also on what the proper remedy 647 00:33:43,880 --> 00:33:46,600 Speaker 8: should be since a liability decision was made, and this 648 00:33:46,800 --> 00:33:51,960 Speaker 8: was about Google paying other companies, say yeah, Chrome right. 649 00:33:52,240 --> 00:33:53,200 Speaker 1: Just Google Search man. 650 00:33:53,360 --> 00:33:56,400 Speaker 8: Google was paying other companies to install Google Search as 651 00:33:56,400 --> 00:34:00,000 Speaker 8: the default behind other search engines at other Internet app 652 00:34:00,000 --> 00:34:03,360 Speaker 8: access points in various devices, and basically it locked up 653 00:34:03,400 --> 00:34:06,200 Speaker 8: all the distribution points for the use of a search 654 00:34:06,240 --> 00:34:08,239 Speaker 8: and so rival search engines couldn't get in there. And 655 00:34:08,280 --> 00:34:11,000 Speaker 8: the judge that these default agreements are illegal. So, as 656 00:34:11,040 --> 00:34:13,200 Speaker 8: I said, if you're looking at judges that are going 657 00:34:13,239 --> 00:34:15,400 Speaker 8: to do the most straightforward thing In my view, what 658 00:34:15,440 --> 00:34:18,600 Speaker 8: the judge will say is you cannot force this exclusivity 659 00:34:18,640 --> 00:34:22,000 Speaker 8: anymore on all these third parties, on Apple, Samsung making 660 00:34:22,040 --> 00:34:24,680 Speaker 8: Android devices, and instead you have to you know, you 661 00:34:24,719 --> 00:34:27,680 Speaker 8: can't pay them anymore to put your search engine exclusively 662 00:34:27,719 --> 00:34:28,600 Speaker 8: in those positions. 663 00:34:28,760 --> 00:34:33,320 Speaker 1: There are other cases too of what it's Apple, Apple, Amazon. 664 00:34:33,040 --> 00:34:35,160 Speaker 8: Live Nation, Yes, and Visa. 665 00:34:35,320 --> 00:34:36,480 Speaker 1: What are the O Visa? Okay? 666 00:34:36,560 --> 00:34:39,640 Speaker 8: Yeah, Visa. You know, it's the most active that the 667 00:34:39,640 --> 00:34:43,160 Speaker 8: government's been in thirty years in terms of going after 668 00:34:43,200 --> 00:34:46,560 Speaker 8: big companies for monopolistic conducts. So it's really pretty remarkable. 669 00:34:46,760 --> 00:34:49,319 Speaker 8: You know. The last one was to make Microsoft back 670 00:34:49,320 --> 00:34:51,400 Speaker 8: in the late nineteen nineties, right, Yeah, and sort of 671 00:34:51,400 --> 00:34:55,239 Speaker 8: a smaller case against qualcomby the FTC in around twenty seventeen. 672 00:34:55,600 --> 00:34:59,160 Speaker 1: Right Apple, Now, I get, I mean, I get with 673 00:34:59,360 --> 00:35:03,319 Speaker 1: the Trumpet administration, uh and social media, they say it's 674 00:35:03,400 --> 00:35:07,680 Speaker 1: bias against the conservative conservatives. I kind of get that. 675 00:35:08,239 --> 00:35:11,400 Speaker 1: I don't understand the whole climate though, why it hasn't 676 00:35:11,480 --> 00:35:14,319 Speaker 1: changed under what we thought was going to be more 677 00:35:14,320 --> 00:35:17,560 Speaker 1: of a laissez fair administration when it came to cases 678 00:35:17,640 --> 00:35:17,880 Speaker 1: like this. 679 00:35:18,239 --> 00:35:21,120 Speaker 8: Well, I think that there's always been this anti big 680 00:35:21,160 --> 00:35:25,400 Speaker 8: tech sentiment amongst mostly the populist part of the Republican Party. 681 00:35:25,600 --> 00:35:28,600 Speaker 8: You know, you have jd Vance who has who praised 682 00:35:28,760 --> 00:35:31,799 Speaker 8: Biden's anti trust authorities saying he thought what they were, 683 00:35:31,920 --> 00:35:35,200 Speaker 8: that they were doing a good job. And it's for 684 00:35:35,239 --> 00:35:40,120 Speaker 8: a couple different reasons. I mean that the alleged censorship 685 00:35:40,120 --> 00:35:42,600 Speaker 8: of conservative content is one of them. But I think 686 00:35:42,920 --> 00:35:45,160 Speaker 8: in some respects Big Tech is also kind of considered 687 00:35:45,239 --> 00:35:49,840 Speaker 8: leftist organization that push liberal ideas that this administration doesn't 688 00:35:49,840 --> 00:35:52,319 Speaker 8: really agree with, and I think the intent is to 689 00:35:52,360 --> 00:35:53,480 Speaker 8: continue to be aggressive. 690 00:35:54,200 --> 00:35:56,560 Speaker 1: Are these other cases strong in your view? 691 00:35:56,800 --> 00:36:00,200 Speaker 8: No, I actually don't think the case against Apple or 692 00:36:00,239 --> 00:36:03,399 Speaker 8: Amazon that you mentioned, both very slow moving, are particularly 693 00:36:03,440 --> 00:36:07,280 Speaker 8: strong cases. And for those reasons, as those litigations develop 694 00:36:07,640 --> 00:36:09,680 Speaker 8: and move closer to trial, I do think there might 695 00:36:09,719 --> 00:36:11,360 Speaker 8: be some possibility of settlements there. 696 00:36:12,480 --> 00:36:15,480 Speaker 1: Explain everybody. This give us a sort of a primer 697 00:36:15,560 --> 00:36:19,760 Speaker 1: when we're talking about anti trust cases anti monopolization cases. 698 00:36:20,560 --> 00:36:24,520 Speaker 1: It is both the Federal Trade Commission and the Justice 699 00:36:24,560 --> 00:36:28,440 Speaker 1: Departments that are in on this right. They bring separate cases, 700 00:36:28,520 --> 00:36:30,920 Speaker 1: they work together. How does that work? 701 00:36:31,280 --> 00:36:34,560 Speaker 8: They do? They both have authority to enforce the anti 702 00:36:34,560 --> 00:36:37,400 Speaker 8: trust laws, and what happened we understand in this case 703 00:36:37,680 --> 00:36:40,040 Speaker 8: is that several years ago, I think this was during 704 00:36:40,080 --> 00:36:43,320 Speaker 8: Trump one point zero, the agencies did get together and 705 00:36:43,360 --> 00:36:45,520 Speaker 8: they kind of divided up the big tech companies and 706 00:36:45,680 --> 00:36:48,880 Speaker 8: FTC took Amazon and took Meta, and the Department of 707 00:36:49,000 --> 00:36:52,000 Speaker 8: Justice took Google and took Apple. They started investigations of 708 00:36:52,040 --> 00:36:54,920 Speaker 8: the companies which then culminated in these litigations. But that 709 00:36:55,080 --> 00:36:57,120 Speaker 8: is how they work. They tend to talk to each 710 00:36:57,160 --> 00:36:59,680 Speaker 8: other say who will take on responsibility. They do the 711 00:36:59,719 --> 00:37:01,000 Speaker 8: same in the merger space. 712 00:37:01,320 --> 00:37:04,400 Speaker 1: And who are the personalities at the FTC and well 713 00:37:04,520 --> 00:37:08,040 Speaker 1: beyond the Justice Department, beyond Pambondi. 714 00:37:07,880 --> 00:37:10,239 Speaker 8: Well, we have an interesting situation at the Federal Trade 715 00:37:10,239 --> 00:37:13,400 Speaker 8: Commission now because it is technically supposed to have five commissioners, 716 00:37:13,760 --> 00:37:16,440 Speaker 8: only three of which can be from one party. So normally, 717 00:37:16,440 --> 00:37:19,680 Speaker 8: with the Republican president, you'd have three Republicans and two Democrats. 718 00:37:19,960 --> 00:37:23,000 Speaker 8: But President Trump just fired the two Democrats. So at 719 00:37:23,040 --> 00:37:26,080 Speaker 8: this point we have only three Republicans that are running 720 00:37:26,120 --> 00:37:27,960 Speaker 8: the Commission, and it looks like it's going to be 721 00:37:28,040 --> 00:37:31,000 Speaker 8: that way for some time. The two Democrats have filed 722 00:37:31,000 --> 00:37:34,719 Speaker 8: a lawsuit saying that this firing was illegal but obviously 723 00:37:35,040 --> 00:37:36,959 Speaker 8: those things take time to work their way through court. 724 00:37:37,280 --> 00:37:39,799 Speaker 1: We know about all these cases that you just went over. 725 00:37:40,360 --> 00:37:42,320 Speaker 1: What's next, Well, I think. 726 00:37:42,239 --> 00:37:45,520 Speaker 8: At least in terms of new monopolization cases, I'm not 727 00:37:45,560 --> 00:37:48,839 Speaker 8: so sure anything's going to come along quickly, because, first 728 00:37:48,880 --> 00:37:52,200 Speaker 8: of all, you know, Trump's enforcers took over the FTC 729 00:37:52,280 --> 00:37:55,440 Speaker 8: and DOJ with a lot of workload. They inherited a 730 00:37:55,480 --> 00:37:59,120 Speaker 8: lot of cases. They are resources constrained. They've been resource 731 00:37:59,160 --> 00:38:02,920 Speaker 8: constrained for many years. Actually, they can only bring so 732 00:38:02,960 --> 00:38:06,240 Speaker 8: many cases. And if more mergers begin to be notified 733 00:38:06,280 --> 00:38:08,399 Speaker 8: and filed, they're also going to have those that they're 734 00:38:08,400 --> 00:38:12,000 Speaker 8: going to have to review, possibly negotiate settlements, possibly even 735 00:38:12,080 --> 00:38:14,560 Speaker 8: challenge deals they find to be anti competitive. So I think, 736 00:38:14,800 --> 00:38:18,279 Speaker 8: at least with respect to the monopolization space, these are 737 00:38:18,320 --> 00:38:20,160 Speaker 8: all going to play out. I don't think we're going 738 00:38:20,200 --> 00:38:22,680 Speaker 8: to see very many new cases, all right. 739 00:38:22,680 --> 00:38:26,279 Speaker 1: Thanks to Jenniferree, senior Litigation analyst of Anti Trust with 740 00:38:26,280 --> 00:38:29,840 Speaker 1: Bloomberg Intelligence. We would also like to thank Eric Baltoon Is, 741 00:38:30,080 --> 00:38:33,840 Speaker 1: Senior ETF strategist at Bloomberg Intelligence and Just Meant and 742 00:38:33,920 --> 00:38:37,399 Speaker 1: Deputy Team Leader Equities at Bloomberg News as well as 743 00:38:37,400 --> 00:38:41,000 Speaker 1: Bloomberg International Economics and Policy Course meen with Michael McKee 744 00:38:41,160 --> 00:38:45,560 Speaker 1: and Stuart Paul Us economists with Bloomberg Economics would also 745 00:38:45,680 --> 00:38:48,399 Speaker 1: like to thank you for listening. I'm John Tucker. Stayed 746 00:38:48,400 --> 00:38:52,520 Speaker 1: with US top stories, global business headlines coming up right 747 00:38:52,560 --> 00:38:52,759 Speaker 1: now