WEBVTT - Interest Rates Are Going to Normalize, Blain Says 0:00:05.120 --> 0:00:13.040 Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 0:00:13.480 --> 0:00:17.560 Jai Ley. We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:33.200 Bloomberg dot Com, and of course, on the Bloomberg The 0:00:33.240 --> 0:00:36.760 Top News this morning, Lisa does come from China. I'm 0:00:36.760 --> 0:00:43.040 cutting the car import duty on passenger cast from previously. Um. 0:00:43.080 --> 0:00:45.320 It's news and it's a big move. It is a 0:00:45.320 --> 0:00:48.120 big move. The question is who will it help? Is 0:00:48.159 --> 0:00:50.360 it going to more likely help Tesla? Is it going 0:00:50.400 --> 0:00:53.440 to more likely help European carmakers. They also say that 0:00:53.479 --> 0:00:56.520 they're going to increase some of their agricultural purchases, and 0:00:56.720 --> 0:00:59.000 the US is saying that they're probably not going to 0:00:59.040 --> 0:01:01.600 impose some of the pariffs that they had talked about earlier. 0:01:01.920 --> 0:01:05.120 My question is with all of this, what's tradeable here? Right? 0:01:05.160 --> 0:01:08.839 I mean, how how much you actually rely on these 0:01:08.880 --> 0:01:11.560 sorts of tea leaves that are coming from Washington, d C. 0:01:12.120 --> 0:01:14.479 And here to answer that for US is Bill Blaine. 0:01:14.720 --> 0:01:17.200 He is Mint Partners, a fixed and come strategist and 0:01:17.280 --> 0:01:20.120 head of capital markets. Bill come on in here, can 0:01:20.160 --> 0:01:23.000 you just give us your sense of whether any headlines 0:01:23.080 --> 0:01:25.120 that we've gotten with respect to China and U s 0:01:25.160 --> 0:01:29.440 trade negotiations have actually made you want to trade anything. Um, 0:01:29.520 --> 0:01:33.120 good morning. It's all part of the ongoing narrative. I 0:01:33.160 --> 0:01:38.280 suppose it's very easy to find negative confirmation bias in 0:01:38.400 --> 0:01:44.039 practically anything that's to do with global geopolitical news these days. 0:01:44.160 --> 0:01:47.559 So when you do get something that sounds positive, like 0:01:48.000 --> 0:01:51.680 your Treasury secretary saying the trade war is over, or 0:01:51.720 --> 0:01:55.800 the Chinese making such a conciliatory gesture, you would expect 0:01:55.880 --> 0:01:59.080 that markets would go soaring high words on the good news. 0:01:59.520 --> 0:02:02.880 But in act, that rally we had yesterday in the 0:02:02.960 --> 0:02:07.360 US stock market was just about the least convincing thing 0:02:07.920 --> 0:02:11.600 I've ever seen. Volumes were tiny, and it petered out 0:02:11.680 --> 0:02:14.040 during the day. John, that's a technical term. Is that? 0:02:14.200 --> 0:02:16.919 Is that a technical term? Bill? What? Which one? Which 0:02:16.919 --> 0:02:21.640 one of my many? Yeah, least convincing lest least convincing 0:02:21.680 --> 0:02:24.760 ever since last week? But what what was I'm convincing 0:02:24.800 --> 0:02:27.240 about it? Bill? And what's I'm convincing about? The moves 0:02:27.280 --> 0:02:30.080 that we've seen in the volume was absolutely tiny. It 0:02:30.200 --> 0:02:33.480 opened up much higher and then just range traded through 0:02:33.520 --> 0:02:35.880 the day. So do you think this is it? Bill? 0:02:36.040 --> 0:02:38.000 Do you think the market is unconvinced of what can 0:02:38.040 --> 0:02:40.160 happen with China in the United States? So ultimately is 0:02:40.160 --> 0:02:42.320 your view that what happens with China in the United 0:02:42.360 --> 0:02:47.720 States isn't of importance at this point? People always overestimate 0:02:47.760 --> 0:02:51.680 the effects del politics or politics. What you need to 0:02:51.720 --> 0:02:54.560 do is draw what the long term is going to be. 0:02:54.720 --> 0:02:58.000 And I'm actually very positive on the long term. What's 0:02:58.080 --> 0:03:02.400 really going on in terms of the US China called 0:03:02.520 --> 0:03:06.520 trade war, is about negotiating new terms of trade which 0:03:06.520 --> 0:03:09.399 are long term going to be very very positive. We're 0:03:09.400 --> 0:03:12.320 going to see the issue of IP addressed. We're going 0:03:12.360 --> 0:03:16.880 to see a complete change in the way that trade 0:03:16.880 --> 0:03:19.560 has done, not just between China and the US, but 0:03:19.560 --> 0:03:22.800 we're going to see negotiations all around the world, especially 0:03:22.880 --> 0:03:26.040 here in the UK where we need to make new friends. Yeah, 0:03:26.360 --> 0:03:29.440 you have quite quite something positive in your porridge. You know, 0:03:29.440 --> 0:03:32.400 in your morning note that you put out last week, 0:03:32.680 --> 0:03:35.600 you you blamed us. You said that we just like 0:03:35.720 --> 0:03:38.200 bad news because it's what sells, and then people are 0:03:38.240 --> 0:03:41.160 focusing on that um but that we've got it all 0:03:41.200 --> 0:03:44.960 wrong and things are great. I wouldn't say things are great, 0:03:45.040 --> 0:03:48.240 but things are far less bad than than a lot 0:03:48.280 --> 0:03:51.120 of the negative bias would have us believe. Al Right, 0:03:51.200 --> 0:03:53.560 so give us a sense, given the fact that we 0:03:53.600 --> 0:03:56.240 do have a strengthening dollar, that we have seen you know, 0:03:56.280 --> 0:03:59.160 some increasing jitters and emerging markets and some other places. 0:03:59.520 --> 0:04:01.839 You know, is that wrong? I mean, do you think 0:04:01.880 --> 0:04:04.120 that that we can just have, you know, yield rise 0:04:04.240 --> 0:04:07.040 and you know in the US and ever else, stay 0:04:07.040 --> 0:04:10.560 calm and this is all fine and a great normalization 0:04:10.800 --> 0:04:13.640 or does anything keep you up at night? Oh gosh, 0:04:13.640 --> 0:04:15.680 there's so many things keep me up at night just now. 0:04:16.480 --> 0:04:18.880 Lots of things to worry about, and there are so 0:04:18.920 --> 0:04:22.400 many inconsistencies in this market. But if we we go 0:04:22.480 --> 0:04:25.120 to the basics, there's three things I think like the 0:04:25.120 --> 0:04:28.360 basics of where we should be market wise. Just now, 0:04:28.480 --> 0:04:32.280 it is clear that interest rates are going to normalize. 0:04:32.800 --> 0:04:36.600 We are into a bond bear market. The problem is 0:04:36.760 --> 0:04:40.200 parts of that bear market don't yet realize it. So 0:04:40.240 --> 0:04:45.040 we've got the incredible situation where investment grade bonds issued 0:04:45.120 --> 0:04:48.440 by the most likely people to pay you back are 0:04:48.480 --> 0:04:52.080 actually the worst performing part of the market, whereas the 0:04:52.160 --> 0:04:55.200 high yield market, ie those who are least likely to 0:04:55.240 --> 0:04:58.479 pay you back are outperforming the people who will pay 0:04:58.520 --> 0:05:02.880 you back, and that just doesn't make any sense to me. Um, 0:05:03.000 --> 0:05:08.200 then we've got people worried about stock markets because if 0:05:08.279 --> 0:05:12.240 bond rates rise, that's bad for stocks, where we were 0:05:12.279 --> 0:05:15.719 a long way from that being a real concern. But 0:05:15.760 --> 0:05:18.320 then I think we're also seeing completely new parts of 0:05:18.360 --> 0:05:22.479 the market marriage for instance, the alternative sector investing in 0:05:22.560 --> 0:05:27.000 real assets, which provides you with natural inflation hedges because 0:05:27.040 --> 0:05:29.960 you own a real asset, and that's very important in 0:05:30.000 --> 0:05:33.359 the world where we see the oil prices have now 0:05:33.520 --> 0:05:37.799 effectively doubled since the low. And remember when oil prices 0:05:37.880 --> 0:05:41.080 hit forty dollars, we were all telling ourselves this was 0:05:41.120 --> 0:05:44.400 the new long term future for oil. Well, guess what. 0:05:44.440 --> 0:05:46.560 We're back up to eighty and I guess we're going 0:05:46.600 --> 0:05:49.800 to go higher from here because the world changes, and 0:05:49.839 --> 0:05:53.560 the world is an incredibly complex place, and it is changing. 0:05:53.560 --> 0:05:55.720 And let's pick up on the first point, the issuing 0:05:55.760 --> 0:05:58.360 credit right now, it's not just that junk is outperforming, 0:05:58.440 --> 0:06:01.880 it's the junkiest part of junk that is outperforming. It's 0:06:01.880 --> 0:06:05.560 been the triple cs. What is the message, the signal 0:06:05.640 --> 0:06:08.279 that someone experienced in the world of credit like yourself, 0:06:08.800 --> 0:06:13.479 takes from that this year. Um, well, what's signal? Well, 0:06:13.560 --> 0:06:15.440 you know what, John, I've been doing this so long 0:06:15.480 --> 0:06:19.320 that nothing surprises me anymore. What worries me more than 0:06:19.400 --> 0:06:24.320 high yield is why people are involved in high yield. Now. 0:06:24.360 --> 0:06:27.760 There are lots of people who understand high yield perfectly. 0:06:27.839 --> 0:06:32.000 What's worrying me is the number of yield tourists who 0:06:32.040 --> 0:06:34.800 ten years ago would be buying triple A sovereign paper, 0:06:34.839 --> 0:06:38.279 who are now buying triple C paper, and even worse, 0:06:38.320 --> 0:06:42.320 are buying triple B paper that one little step above 0:06:42.440 --> 0:06:46.080 junk status in the expectation that it's an investment grade 0:06:46.120 --> 0:06:48.880 piece of paper. Now they're going to get a terrible 0:06:48.880 --> 0:06:52.719 shock when interest rates really start to bite and we 0:06:52.800 --> 0:06:55.320 start to see an awful lot of companies going into 0:06:55.320 --> 0:06:58.839 a downgrade cycle because we are still lagging when it 0:06:58.920 --> 0:07:01.560 comes to downgrades. So to what extent, Bill, is there 0:07:01.560 --> 0:07:05.800 significant right risk in high yield that perhaps people aren't appreciating. 0:07:08.080 --> 0:07:11.280 That's a very very good question. My own view is 0:07:11.320 --> 0:07:14.600 that there is significant risk that a lot of zombie 0:07:14.600 --> 0:07:18.760 companies that have been there are highly levered in the 0:07:18.800 --> 0:07:22.240 bond markets and the leverage lending markets are going to 0:07:22.320 --> 0:07:28.239 experience difficulties, but that could be overcome if we see 0:07:28.720 --> 0:07:32.520 real economic performance that enables these companies to do better. 0:07:33.080 --> 0:07:35.680 My warrior is that we are going to remain in 0:07:35.720 --> 0:07:39.560 this kind of new normal, slow recovery rather than stellar 0:07:39.640 --> 0:07:42.200 growth environment, and that's very negative for a lot of 0:07:42.240 --> 0:07:46.880 over leverage companies as rates starts to seriously rise. Bill Blank, 0:07:47.000 --> 0:07:48.280 great to catch out with you. A good friend of 0:07:48.320 --> 0:07:50.200 mine from back in London who haven't been able to 0:07:50.200 --> 0:07:51.760 speak to for a long long time. So Bill, we 0:07:51.800 --> 0:07:54.440 finally got to do it on radio live. Bill blame 0:07:54.520 --> 0:07:58.440 Mint Partners, Fixed incomes strategist and head of capital Markets, 0:07:58.440 --> 0:08:00.880 always greing to catch out with you. It's not a 0:08:00.920 --> 0:08:03.480 pop quiz as such. But of the twenty eight point 0:08:03.520 --> 0:08:07.000 nine million automobiles sold in China last year, do you 0:08:07.040 --> 0:08:10.800 know how many were imported? Uh? No, I do not, 0:08:11.040 --> 0:08:13.600 but I'm going to guess a smart proportional. It was 0:08:13.720 --> 0:08:16.600 four point two percent. There you go, by the way. 0:08:16.680 --> 0:08:20.080 Four So I don't think that we fully appreciated the 0:08:20.120 --> 0:08:23.400 intimacy of your connections that you catch up with people. Well, 0:08:23.400 --> 0:08:26.320 I've got to do so I have no time to 0:08:26.360 --> 0:08:29.680 pick up the phone. There's real life, those lovely heart 0:08:29.720 --> 0:08:33.920 to hearts that if you don't know Bill Blaine on 0:08:33.960 --> 0:08:37.200 pretty much every credit desk in London, if you've been 0:08:37.200 --> 0:08:39.160 around for a couple of decades, at some point you've 0:08:39.160 --> 0:08:42.680 worked with Bill builds that well connected in credit markets 0:08:42.920 --> 0:08:44.720 in the city. So it's always great to get bills 0:08:44.760 --> 0:08:47.280 inside because so many people have worked alongside Bill. So 0:08:47.280 --> 0:08:49.199 we'll have listeners in the city of London right now 0:08:49.440 --> 0:08:52.160 in a world of credit that probably no Bill at 0:08:52.240 --> 0:08:54.880 some point from somewhere, and they'll be catching up with 0:08:54.960 --> 0:09:12.480 him the same way that you are. Precisely, I'm ready 0:09:12.480 --> 0:09:14.280 pleased to say that joining us now is a giant 0:09:14.320 --> 0:09:17.000 in advertising. He ran USLS for Google. He is the 0:09:17.040 --> 0:09:19.360 former CEO of a o L. He now serves as 0:09:19.400 --> 0:09:22.600 the CEO of OATH, overseeing a o L and Yahoo 0:09:22.920 --> 0:09:26.360 for the Rising, it's Tim Armstrock, the OATH CEO, and Tim, 0:09:26.440 --> 0:09:29.320 I didn't realize that you're a journalist back in the day, 0:09:29.640 --> 0:09:32.800 Back in the day Boston Local News point five years ago. 0:09:32.960 --> 0:09:34.560 So should we start there and have a chat about 0:09:34.640 --> 0:09:37.280 journalism just to begin, Are we seeing the death of 0:09:37.320 --> 0:09:39.960 click bait? Is that finally happening. Tim. I think what 0:09:40.040 --> 0:09:43.160 you've seen is you're seeing a flight to quality right now. 0:09:43.280 --> 0:09:45.320 And one of the great things that's happening on the 0:09:45.360 --> 0:09:48.160 Internet mobile right now is as the services are getting 0:09:48.200 --> 0:09:52.319 more and more focused on not having fake news and 0:09:52.360 --> 0:09:56.239 really consumer trust, that's going to have all the algorithms 0:09:56.320 --> 0:09:58.880 change underneath how news gets distributed, and you're going to 0:09:58.960 --> 0:10:01.920 find that journalism as going to come up in the ecosystem, 0:10:02.000 --> 0:10:05.120 you know, very quickly. Back in two thousand nine, Google 0:10:05.160 --> 0:10:07.960 release something called the Panda release on the Web Index 0:10:07.960 --> 0:10:09.960 which put higher quality up and I think what you're 0:10:10.000 --> 0:10:12.640 seeing now is the quote unquote Panda release for the 0:10:12.679 --> 0:10:15.320 rest of the Internet and social and so I'm very bullish. 0:10:15.360 --> 0:10:17.079 Even if you look at this all the services in 0:10:17.080 --> 0:10:20.000 the last six seven months, all of them have been 0:10:20.000 --> 0:10:22.640 putting higher quality journalism up to the top of the 0:10:22.679 --> 0:10:25.840 consumer front end. And that's great, great for journalism. Um, 0:10:25.880 --> 0:10:30.600 there's a dirty secret though, that quality journalism actually costs money, 0:10:30.760 --> 0:10:33.720 and you're seeing an increasing number of outlets, including this one, 0:10:33.800 --> 0:10:37.920 recognized that and start charging people to see their articles. 0:10:37.920 --> 0:10:41.199 And wondering how that challenges you from a distributor model, 0:10:41.360 --> 0:10:45.000 given the fact that so many headlines lead to pay walls. Yeah, 0:10:45.040 --> 0:10:47.440 so we're in a process right now. Our our future 0:10:47.480 --> 0:10:53.280 will have advertising models and also subscription models for content UM. 0:10:53.320 --> 0:10:55.520 But I would also say one thing that's really great 0:10:55.559 --> 0:10:59.080 about what you just said is that consumer time is 0:10:59.280 --> 0:11:02.080 really important, and I think consumers optimize their time around it. 0:11:02.120 --> 0:11:05.080 So if consumers willing to pay for content UM, I 0:11:05.080 --> 0:11:07.120 think that's a good signal. And second of all, I 0:11:07.120 --> 0:11:10.320 think on the ads model, the quality UM will force 0:11:10.400 --> 0:11:13.520 advertising to get higher quality as well. Overall, so this 0:11:14.000 --> 0:11:16.520 whole whole trend will have improvements on both sides of 0:11:16.520 --> 0:11:19.280 the business. You talked about subscription model, and one thing 0:11:19.320 --> 0:11:21.720 the number of outlets have tried to do is pull 0:11:21.800 --> 0:11:25.160 together a bunch of the major media outlets and offer 0:11:25.320 --> 0:11:27.720 a sort of joint subscription to all of them. That's 0:11:27.720 --> 0:11:30.560 struggled to get all of them on board. I'm wondering, 0:11:30.720 --> 0:11:32.640 have you tried that, are you going to try that? 0:11:33.040 --> 0:11:35.200 What progress is there to be made in that front. Yeah. 0:11:35.200 --> 0:11:37.400 One of the things that we're heavily thinking through is 0:11:37.400 --> 0:11:40.520 a much deeper membership model where where members will uh 0:11:40.880 --> 0:11:43.040 you know, basically get more and more benefits from us. 0:11:43.080 --> 0:11:45.200 And we have a billion consumers, so we have access 0:11:45.240 --> 0:11:49.040 to a lot of consumer scale. Um, the biggest thing 0:11:49.080 --> 0:11:51.640 that we want out of the future of the media 0:11:51.640 --> 0:11:54.960 system and journalism is to basically have we're big investors 0:11:54.960 --> 0:11:58.480 in high quality journalism is for our journalists and our 0:11:58.520 --> 0:12:01.520 partner We have about forty publishing partners for all of 0:12:01.559 --> 0:12:04.400 the biggest scale access they can and whether that's paid, 0:12:04.480 --> 0:12:06.800 whether it's a subscription model, or whether it's through ads. 0:12:07.160 --> 0:12:08.640 One of the things we're innovating right now on the 0:12:08.640 --> 0:12:11.000 front end a lot is how do we have more 0:12:11.040 --> 0:12:14.480 consumers on more types of high quality content more constantly. 0:12:14.800 --> 0:12:17.840 In the summer, we're gonna launch for super channels and news, sports, finance, 0:12:18.160 --> 0:12:21.559 and entertainment, and that will give our partners plus our 0:12:21.600 --> 0:12:24.680 content direct access on mobile to some of the highest 0:12:24.760 --> 0:12:26.920 quality journalism in the world. We just announced to do 0:12:26.960 --> 0:12:29.800 with Samsung two weeks ago to put our brands directly 0:12:29.800 --> 0:12:32.600 on Samsung phones, and so you know, our we're a 0:12:32.600 --> 0:12:35.200 company that's investing in what you're talking about, So our 0:12:35.280 --> 0:12:37.080 job is to get it on the biggest distribution we 0:12:37.120 --> 0:12:39.319 possibly can. Seem it just feels like we're a bit 0:12:39.320 --> 0:12:42.400 of a tipping point at the moment. With Mark Zuckerberg 0:12:42.480 --> 0:12:45.240 on his apology tour on the way they've used data 0:12:45.360 --> 0:12:48.400 and the way they've essentially made money through advertising as well. 0:12:48.720 --> 0:12:51.760 Have we reached a tipping point? Have we reached saturation 0:12:51.960 --> 0:12:54.880 so to speak? After years of immense growth of places 0:12:54.960 --> 0:12:57.800 like Google, Facebook, etcetera. Are we there now? Yeah? We'll 0:12:57.880 --> 0:13:00.600 just say, you know, there's something physical happening this week 0:13:00.640 --> 0:13:03.360 in the digital world, which is GDPR, you know, launching 0:13:03.360 --> 0:13:06.080 in Europe. And that's a that's a real physical change 0:13:06.160 --> 0:13:08.439 the way that the internet and mobile works in Europe. 0:13:08.480 --> 0:13:10.880 It's also going to cascade across the rest of the world. 0:13:11.000 --> 0:13:13.439 So what you're seeing in Europe this week of the 0:13:13.480 --> 0:13:16.400 reviews with Mark Zuckerberg is really the start of what 0:13:16.440 --> 0:13:19.080 I would say is I would call it almost reverse 0:13:19.200 --> 0:13:22.120 commerce with consumers, where consumers have had all their data 0:13:22.120 --> 0:13:24.360 on servers and now data is going to start to 0:13:24.400 --> 0:13:27.320 be transferred back to the consumer. We built our dashboards 0:13:27.360 --> 0:13:29.840 a year ago thinking this was going to happen globally, 0:13:29.840 --> 0:13:32.120 so we're we're our business model in the future will 0:13:32.160 --> 0:13:34.920 allow consumers to own their data transact on their data, 0:13:35.080 --> 0:13:36.920 and that's a super important change. And by the way, 0:13:37.160 --> 0:13:39.040 that's why this week is getting a lot of attention, 0:13:39.080 --> 0:13:41.120 but there's actually a big physical change that many people 0:13:41.160 --> 0:13:43.240 don't know about happening this week. Well, you talk about 0:13:43.280 --> 0:13:44.960 transact on their data. I want to pick up on 0:13:45.000 --> 0:13:47.120 that because that's a really compelling point. In other words, 0:13:47.160 --> 0:13:49.880 people might be able to get paid for giving their 0:13:49.920 --> 0:13:53.680 data over to certain advertisers. That might take the revenue 0:13:53.679 --> 0:13:57.080 away from you, right because advertisers can just go direct 0:13:57.160 --> 0:14:01.040 to the consumer, uh and pay them. How concerned are 0:14:01.040 --> 0:14:03.720 you about that? UM and our business model, We're not concerned. 0:14:03.760 --> 0:14:06.120 To add, businesses between a probably eight hundred billion and 0:14:06.120 --> 0:14:09.000 trillion dollar industry, much of it is built on not 0:14:09.200 --> 0:14:12.800 direct to consumer right now, going through really large third parties, 0:14:13.280 --> 0:14:15.800 we can be one of the largest directed consumer businesses 0:14:15.800 --> 0:14:18.319 and facilitate that. So I think our model actually is 0:14:18.360 --> 0:14:21.040 going to get advantaged in this change because we have 0:14:21.120 --> 0:14:24.160 access directly on people's mobile phones. We have access directly 0:14:24.200 --> 0:14:26.480 to a billion consumers, So you're going to offer them 0:14:26.480 --> 0:14:29.280 money by way of the advertisers act as a broker 0:14:29.280 --> 0:14:32.200 for them kind of we uh. We believe in the 0:14:32.240 --> 0:14:35.720 future there will be more economic models for consumers to 0:14:35.720 --> 0:14:39.000 to make money or get value directly from their data, 0:14:39.040 --> 0:14:41.440 which is not at scale out there right now, so 0:14:41.800 --> 0:14:43.920 so we we I think that's one of the things 0:14:43.920 --> 0:14:46.680 that we're hopeful that that will innovate. Tim what the 0:14:46.720 --> 0:14:49.320 advertisers sank you at the moment. If you take Facebook 0:14:49.320 --> 0:14:51.120 as an example, a couple of months ago, people were 0:14:51.120 --> 0:14:53.720 worried if they were in the stock whether the advertisers 0:14:53.760 --> 0:14:55.920 would run UM. Next sign of that actually happening, what 0:14:55.920 --> 0:14:58.160 do they signed to you? So the advertisers, you know, 0:14:58.320 --> 0:15:00.840 again the big digital players. If you're an advertiser, you 0:15:00.840 --> 0:15:03.040 have pretty much have to be in digital state with consumers. 0:15:03.040 --> 0:15:05.040 So I think over time a lot of the advertisers 0:15:05.040 --> 0:15:07.320 will say they want to have some of the changes 0:15:07.360 --> 0:15:09.560 they've been talking about, but the reality that they're continuing 0:15:09.600 --> 0:15:12.760 to spend um. I was just on the phone yesterday 0:15:12.760 --> 0:15:16.440 with our new president CEO, Guru uh with the head 0:15:16.480 --> 0:15:19.000 of strategy Form, one of the largest brands in the world. 0:15:19.000 --> 0:15:21.800 Actually when we're taught, we had this exact conversation with them, 0:15:21.880 --> 0:15:23.520 and that you know, the brand said to us, there's 0:15:23.560 --> 0:15:26.160 three things they're really interested in. One is direct to 0:15:26.200 --> 0:15:29.760 consumer relationships. Two is using their data effectively. They have 0:15:29.840 --> 0:15:31.360 tons of data but don't know how to use it. 0:15:31.440 --> 0:15:36.240 And three is how do they basically add non commoditized value. 0:15:36.400 --> 0:15:38.640 Some of the digital channels they go through take all 0:15:38.640 --> 0:15:41.080 the value away from them, and the consumer thinks the 0:15:41.120 --> 0:15:43.880 platform has the value and not the brand. So you know, 0:15:43.960 --> 0:15:46.320 our business right now is to take those three items 0:15:46.360 --> 0:15:49.400 direct the consumer data and how to decommoditize the ad 0:15:49.480 --> 0:15:52.080 system and build that. And that's a differentiator from us 0:15:52.080 --> 0:15:54.320 from Google and Facebook. Let's wrap things up by talking 0:15:54.320 --> 0:15:56.520 about your business. It's been a year, I believe since 0:15:56.560 --> 0:15:59.240 oath came about and I laughed at you want to 0:15:59.240 --> 0:16:02.880 air and said, really, Tim, And you said to me, 0:16:03.000 --> 0:16:05.200 give it time, you'll get used to it. And I 0:16:05.240 --> 0:16:07.200 guess I've got used to it a little bit. Do 0:16:07.240 --> 0:16:09.520 you have your three word oath yet? I don't? Should 0:16:09.560 --> 0:16:12.280 I have? You have to have one? Yea, you have 0:16:12.320 --> 0:16:16.600 to have a Mine is never give up you guys, 0:16:16.640 --> 0:16:20.240 You each everybody in your company have Everyone has an oath, 0:16:20.320 --> 0:16:22.560 and not just everyone in our company. Now our partners 0:16:22.560 --> 0:16:26.200 and customers are starting to come up with them. They laugh. No. 0:16:26.360 --> 0:16:29.440 They By the way, if you go around people meaningfully, 0:16:29.600 --> 0:16:32.600 on their email signatures or on the walls around the office, 0:16:32.880 --> 0:16:34.840 put their oath up and you would be a surprised. 0:16:34.880 --> 0:16:37.160 How you know, thirteen thousand people come up with three 0:16:37.160 --> 0:16:40.720 word ohs that are just amazing and very personal to them. 0:16:40.760 --> 0:16:43.320 So it's actually become a big part. What would it be, 0:16:43.440 --> 0:16:49.000 Let's go, mets, let's go. That's a perfect One's gonna 0:16:49.000 --> 0:16:53.640 have to come up with a com Well, next time 0:16:53.680 --> 0:16:58.280 I come back, I promise I'll have that house business doing. 0:16:58.320 --> 0:17:00.720 What are you excited about at the moment? UH, Super 0:17:00.760 --> 0:17:03.200 excited about what we're doing, both on the brand experience 0:17:03.280 --> 0:17:05.679 the side. So we have tech Crunch Disrupt coming up 0:17:05.680 --> 0:17:08.720 in September and San Francisco. It's at the Mosconi Center, 0:17:08.760 --> 0:17:11.280 which is the largest convention center there. So that's gone 0:17:11.320 --> 0:17:13.239 from a startup when we bought it now to being 0:17:13.240 --> 0:17:15.920 one of the most influential tech brands. We have can 0:17:15.960 --> 0:17:18.440 coming up with all the global advertisers in France. A 0:17:18.480 --> 0:17:21.160 couple of weeks we're launching a new UH add uh 0:17:21.760 --> 0:17:25.160 system basically there. So we're excited about all the work 0:17:25.240 --> 0:17:28.000 that's gotten done and more importantly excited about the fact 0:17:28.000 --> 0:17:30.359 that the companies came together. You know, we have a 0:17:30.359 --> 0:17:33.240 clear strategy of building brands people love and UH. I 0:17:33.240 --> 0:17:35.119 think as you go through the summer and into the fall. 0:17:35.520 --> 0:17:38.119 The proof points we've gone through a construction zone into 0:17:38.280 --> 0:17:41.280 something that will look like a finished product. And UH, 0:17:41.600 --> 0:17:44.159 just really excited about the thirteen thousand people and the 0:17:44.520 --> 0:17:46.760 billion consumers we have and putting them at the center 0:17:46.800 --> 0:17:48.679 of everything that we're doing. I promised to come up 0:17:48.680 --> 0:17:51.760 with a three word if I gets cans um with 0:17:52.119 --> 0:17:54.679 the See there you go. Tim, never never give us. 0:17:56.680 --> 0:17:59.639 I always learned something when Tim joins us and whenever 0:17:59.680 --> 0:18:01.840 I list since to him. Truly a jihant in advertising, 0:18:01.840 --> 0:18:03.359 and I mean that sim is trying to catch up 0:18:03.359 --> 0:18:19.040 with you. Thank you, sim Anstrom, the o CEO. Since 0:18:19.080 --> 0:18:22.680 the March Lows, the shares of Facebook have gained more 0:18:22.800 --> 0:18:26.919 than twenty and today members of the European Parliament are 0:18:26.920 --> 0:18:29.600 going to get the chance to question Facebook Chief executive 0:18:29.680 --> 0:18:34.160 Mark Zuckerberg about everything from Cambridge Analytica as well as 0:18:34.200 --> 0:18:38.000 Europe's new privacy rules. Here to help us understand what's 0:18:38.040 --> 0:18:42.479 going on at Facebook is David Kirkpatrick. He is the 0:18:42.520 --> 0:18:46.119 author of The Facebook Effect, and he is also the 0:18:46.160 --> 0:18:50.960 chief executive and the founder of Teconomy. David Kirkpatrick, what 0:18:51.000 --> 0:18:55.600 do you believe Mark Zuckerberg will try to get across 0:18:55.760 --> 0:19:00.560 to EU regulators. Hey, thanks toim Well. I think the 0:19:00.600 --> 0:19:03.000 main thing he's going to get across is please don't 0:19:03.240 --> 0:19:07.080 mess with me, um. And what he will do how 0:19:07.119 --> 0:19:10.840 he will do that is by saying he's sorry. Um. 0:19:10.920 --> 0:19:14.320 It's I think some of his testimony has already been 0:19:14.320 --> 0:19:19.360 reported publicly where he's planning to apologize and say they 0:19:19.400 --> 0:19:23.840 need to do better, that they're taking responsibility, blah blah blah. 0:19:23.960 --> 0:19:28.040 It's pr one oh one, and an effort simply too, 0:19:28.400 --> 0:19:32.679 I would say, deflect attention and try to minimize the 0:19:32.760 --> 0:19:38.720 significance of the inquiry. Generally, So, David, uh, some pretty 0:19:38.760 --> 0:19:41.280 negative on Facebook and you have been and with respect 0:19:41.400 --> 0:19:46.480 to their data disclosures, their data usage and uh and 0:19:46.600 --> 0:19:49.119 sort of the lack of a quick fix to some 0:19:49.200 --> 0:19:51.919 of the problems that people have pointed out for many years. 0:19:52.200 --> 0:19:55.760 And yet what should they be doing right now that 0:19:55.880 --> 0:19:59.560 would put them in better standing? To you? They should 0:19:59.600 --> 0:20:02.359 be much more transparent than their beings. They should be 0:20:02.400 --> 0:20:05.520 having a much more ongoing dialogue where they're much more 0:20:05.600 --> 0:20:10.720 open to really explaining, taking input from They should be 0:20:10.760 --> 0:20:13.680 asking others what they should do rather than saying what 0:20:13.720 --> 0:20:15.439 they're that they're going to do the right thing and 0:20:15.520 --> 0:20:19.120 leaving it to an opaque process for that to be determined. 0:20:19.520 --> 0:20:22.760 And I want to clarify I'm actually not negative on Facebook. 0:20:22.800 --> 0:20:25.800 I'm I consider myself quite knowledgeable about them, but I 0:20:25.800 --> 0:20:28.960 think among their critics, I'm somewhat unusual in that I 0:20:29.040 --> 0:20:32.199 still argue Facebook as fundamentally a very positive force in 0:20:32.280 --> 0:20:36.320 society and has a lot of wonderful characteristics. But I 0:20:36.359 --> 0:20:39.800 believe that when it comes to their political impact and 0:20:39.840 --> 0:20:42.959 also to a similar in a similar way, their impact 0:20:43.000 --> 0:20:47.240 on the privacy of individuals, they have been extremely cavalier 0:20:47.440 --> 0:20:51.480 over an extremely long time, and they refuse to even 0:20:51.520 --> 0:20:55.359 think about taking to even use the word responsibility until 0:20:55.440 --> 0:21:00.160 the Russian electoral manipulation scandal arose in the United States 0:21:00.880 --> 0:21:05.520 UM and the Cambridge Analytica thing that followed UM and 0:21:05.520 --> 0:21:08.240 and they've really changed their tune for what seemed to 0:21:08.320 --> 0:21:12.320 me to be pr reasons rather than a genuine desire 0:21:12.440 --> 0:21:17.120 to take stock of and take responsibility for the inordinate 0:21:17.160 --> 0:21:21.080 weight they have in public discourse around the world. They 0:21:21.119 --> 0:21:25.080 are in an absolutely unique position as a commercial company 0:21:25.119 --> 0:21:27.600 that is in effect the public square in many many 0:21:27.640 --> 0:21:33.439 countries and that is probably fundamentally untenable, but at a minimum, 0:21:33.480 --> 0:21:37.200 it is something that requires a much more robust dialogue 0:21:37.240 --> 0:21:39.760 between the company and the public, which they have been 0:21:39.800 --> 0:21:43.960 resisting and continued to resist. David Kirkpatrick, is it at 0:21:43.960 --> 0:21:46.320 all possible? And I'm just you know, I have no 0:21:46.520 --> 0:21:50.399 detailed knowledge of their own technology systems, but that the 0:21:50.480 --> 0:21:56.399 company is just technically overwhelmed by their success and the 0:21:56.560 --> 0:21:59.040 scale of the issue. I mean, I read last I 0:21:59.040 --> 0:22:01.600