WEBVTT - China Tariffs Are Mild, Investors Should Be Relieved: Miller 0:00:05.800 --> 0:00:08.720 Welcome to the Bloomberg p m L Podcast. I'm pim Fox. 0:00:08.760 --> 0:00:11.520 Along with my co host Lisa Bramowitz. Each day we 0:00:11.640 --> 0:00:15.120 bring you the most important, noteworthy, and useful interviews for 0:00:15.200 --> 0:00:17.840 you and your money, whether you're at the grocery store 0:00:17.960 --> 0:00:20.720 or the trading floor. Find the Bloomberg p m L 0:00:20.840 --> 0:00:32.600 Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. Is 0:00:32.680 --> 0:00:36.960 fifty billion dollars in tariffs on China to penalize them 0:00:37.000 --> 0:00:42.440 for their intellectual property infringements. Too much or perhaps not enough. 0:00:42.560 --> 0:00:45.400 Here to talk about that is Leland Miller, chief executive 0:00:45.400 --> 0:00:48.800 officer of China Beige Book. He made it into our 0:00:48.880 --> 0:00:51.360 eleven three oh studios despite the fact that we still 0:00:51.360 --> 0:00:54.400 see a smattering of snow. So Leland, thank you so 0:00:54.480 --> 0:00:58.240 much for being here. What was your take on the expectation. 0:00:58.360 --> 0:01:02.640 We haven't gotten confirmation from President himself on the fifty 0:01:02.680 --> 0:01:06.360 billion dollar figure, but what was your reaction to that number. Well, 0:01:06.400 --> 0:01:07.920 it may surprise a lot of people, but I think 0:01:07.920 --> 0:01:12.280 this is actually the baby option. So fifty billion certainly 0:01:12.319 --> 0:01:14.960 sounds like a big number, but if you look at 0:01:15.200 --> 0:01:17.639 what the stakes are in this, the types of numbers 0:01:17.640 --> 0:01:21.119 the President has been throwing around. You have a hundred 0:01:21.120 --> 0:01:23.560 billion dollar trade surplus that he said he was going 0:01:23.640 --> 0:01:27.280 to reverse from the Chinese. We now have a potential 0:01:27.319 --> 0:01:31.240 announcement of fifty billion in products getting tariffs on them 0:01:32.240 --> 0:01:34.560 tariff The numbers aren't that big, So I think the 0:01:34.560 --> 0:01:36.000 way that this is going to be looked at is 0:01:36.440 --> 0:01:39.520 the smaller option that he could have gone. He still 0:01:39.560 --> 0:01:41.840 may go bigger, but I think if you're Beijing, you're 0:01:41.840 --> 0:01:43.800 looking at this and saying this is this is very 0:01:43.840 --> 0:01:46.080 far from a worst case scenario. So does that mean 0:01:46.120 --> 0:01:50.120 that they are going to lessen their threats of retaliation 0:01:50.320 --> 0:01:53.080 or that it mitigates some of that threat or does 0:01:53.120 --> 0:01:55.680 this just say well, they've got the upper hand because 0:01:55.680 --> 0:01:57.760 they're dealing with someone who isn't sure how to how 0:01:57.800 --> 0:02:01.400 to go about this. Well, the Trump White House believes 0:02:01.440 --> 0:02:03.240 that they have all the leverage in this. At the 0:02:03.280 --> 0:02:06.160 same time, there's apparently going to be a long comments 0:02:06.200 --> 0:02:10.800 period where businesses can can can can talk about, you know, 0:02:10.960 --> 0:02:14.000 alterations to this regime, where the Chinese can certainly come 0:02:14.040 --> 0:02:16.360 and have talks. But I think that the most important 0:02:16.400 --> 0:02:18.520 thing is that the president wanted to get a number 0:02:18.560 --> 0:02:22.000 out there. Uh, he wanted to start this, and then 0:02:22.280 --> 0:02:24.480 tariffs are only half of this. Tariffs are other ones 0:02:24.520 --> 0:02:26.600 are gonna play the larger political be part of the 0:02:26.680 --> 0:02:29.960 larger political conversation. But there are investment restrictions, there are 0:02:29.960 --> 0:02:31.640 other things that are being talked about which will have 0:02:31.760 --> 0:02:37.320 much farther, longer term UH repercussions in the relationship and 0:02:37.400 --> 0:02:39.920 all of this. So it's very hard to evaluate what 0:02:40.000 --> 0:02:41.680 this is gonna look like in the end. But from 0:02:41.680 --> 0:02:44.480 the tariff number alone, this is actually on the smaller side, 0:02:44.480 --> 0:02:48.919 I would say Leland. Looking at the China Daily and 0:02:49.000 --> 0:02:54.280 the newspapers in in China, the UM spokesperson for China's 0:02:54.280 --> 0:02:59.000 Ministry of Foreign Affairs says, quote, we want no trade 0:02:59.000 --> 0:03:01.480 war with any one, but if our hands are forced, 0:03:01.600 --> 0:03:05.200 we will not quail nor recoil from it. Therefore, if 0:03:05.200 --> 0:03:07.320 the day did come when the U S took measures 0:03:07.400 --> 0:03:10.680 to hurt our interests, we will definitely take firm and 0:03:10.800 --> 0:03:16.880 necessary countermeasures to safeguard our legitimate interests. Now, are there 0:03:17.160 --> 0:03:21.840 legitimate interests there? We're talking about commercial interests because this 0:03:21.919 --> 0:03:25.720 is from the Farm Affairs Ministry. And at the same time, 0:03:25.760 --> 0:03:27.880 when you look at what is popular at least into 0:03:27.960 --> 0:03:31.160 carding the media in China. It is not necessarily US 0:03:31.280 --> 0:03:35.880 China relations. It is China relations with other countries in 0:03:36.160 --> 0:03:39.880 Asia and specifically with what is going on in Taiwan. 0:03:40.920 --> 0:03:44.320 Right well, I mean right now the Chinese. This this 0:03:44.360 --> 0:03:47.680 comment period is going to give the Chinese a wonderful 0:03:47.720 --> 0:03:52.040 opportunity to be able to threaten repercussions on the economic side. 0:03:52.520 --> 0:03:56.760 They'll threaten subtly some security issues, whether you're talking about 0:03:56.760 --> 0:03:59.640 Taiwan is suddenly in the news, South China see may 0:03:59.720 --> 0:04:03.040 become come back in the news before not too long. Uh, 0:04:03.080 --> 0:04:05.680 but to threaten, Look, this can be bad for you too. 0:04:05.720 --> 0:04:07.960 And I think that again, you know the Trump White 0:04:07.960 --> 0:04:09.600 House things, they have all the leverage in this and 0:04:09.640 --> 0:04:12.280 in a long term battle, China would be heard the 0:04:12.320 --> 0:04:14.800 worst in the United States. But in the short term, 0:04:15.080 --> 0:04:18.800 what China simply does is subsidizes industries, keep them afloat. 0:04:18.839 --> 0:04:21.200 They'll feel less pain than than the U. S industry, 0:04:21.440 --> 0:04:24.680 so they can play this game too. And I think 0:04:24.680 --> 0:04:27.919 the major threat is the president announced is something the 0:04:28.040 --> 0:04:31.960 Chinese announced the possibility of light retaliation, And then the 0:04:32.040 --> 0:04:35.400 question is is whether the President gets angry at that 0:04:35.560 --> 0:04:38.280 idea or whether he says Okay, well, this is exactly 0:04:38.320 --> 0:04:39.720 what I wanted to do. I wanted to bring him 0:04:39.720 --> 0:04:42.880 to the table. Let's talk. Yeah, well, I wanted just 0:04:42.920 --> 0:04:47.840 to get your perspective about just other Republicans in Congress 0:04:48.000 --> 0:04:50.719 and policy advisors in Washington, d C. I know you 0:04:50.760 --> 0:04:53.040 talk with a lot of people in d C. What's 0:04:53.200 --> 0:04:59.080 their response to this whole trade tension, but specifically with China, 0:04:59.320 --> 0:05:02.680 and how are they worried about House will play into 0:05:02.720 --> 0:05:05.800 mid terms. So Section three oh one is which which 0:05:05.880 --> 0:05:08.000 it's what we're talking about today, is the the anti 0:05:08.200 --> 0:05:12.800 China tariffs for unfair trade practices. Uh, that has widespread support. 0:05:12.839 --> 0:05:15.920 It actually has a lot of bipartisan support. UM. Very 0:05:16.000 --> 0:05:18.800 different from the steel and aluminum tariffs that we saw 0:05:19.480 --> 0:05:23.080 a number of weeks ago. Those were uh not supported, 0:05:23.400 --> 0:05:26.520 uh even within the White House, certainly amongst Republicans, certainly 0:05:26.520 --> 0:05:30.279 in Congress. Uh, they were not supported because they thought 0:05:30.279 --> 0:05:32.120 that it was a bad idea. They were not supported 0:05:32.120 --> 0:05:34.839 because two thirty two is a blunt mechanism which could 0:05:35.080 --> 0:05:37.039 cause a lot of problems if it goes into effect, 0:05:37.440 --> 0:05:40.080 which it looks like it's not going to. So there 0:05:40.160 --> 0:05:42.840 was two thirty two, the aluminium tariffs steel tariffs. We 0:05:43.000 --> 0:05:45.320 were opposed that China tariffs. There's a lot of support 0:05:45.320 --> 0:05:47.599 in that. I think that there's a bipartisant understanding now 0:05:47.839 --> 0:05:51.320 that China has to feel pain or they will not move. 0:05:51.600 --> 0:05:54.400 I think that the fear is that the President will 0:05:54.440 --> 0:05:57.360 do something too aggressive or too loud, and he will 0:05:57.720 --> 0:06:00.279 go too far in this and not accomplis is what 0:06:00.360 --> 0:06:02.520 he what what people hope he will. But the idea 0:06:02.560 --> 0:06:04.880 that they needed that China needs to be pushed actually 0:06:04.920 --> 0:06:08.080 has broad support in d C. Just quickly, Leland, if 0:06:08.080 --> 0:06:10.480 you were an investor making an investment in China, I 0:06:10.480 --> 0:06:12.400 don't mean a stock investment, but I mean actually a 0:06:12.440 --> 0:06:15.720 physical investment, would you do it now? I wouldn't hesitate 0:06:15.760 --> 0:06:17.680 to do it right now if this is where it stops. 0:06:17.839 --> 0:06:19.479 So if you, if you, if you, if this is 0:06:19.520 --> 0:06:23.599 the president's broad blow against China, then this is actually 0:06:23.600 --> 0:06:27.080 pretty mild, and I think the investors should probably be 0:06:27.160 --> 0:06:30.760 pretty relieved. It could escalate though, we'll see. Thanks very much. 0:06:30.920 --> 0:06:33.760 Leland Miller is the chief executive of China beij book 0:06:34.160 --> 0:06:37.360 giving us his thoughts on tariffs and trade wars and 0:06:37.680 --> 0:06:40.560 China and the President said to announce fifty billion dollars 0:06:40.560 --> 0:06:45.080 worth of tariffs against a China over intellectual property violations. 0:07:00.240 --> 0:07:03.920 Facebook shares are deepening their losses today, down nearly two 0:07:03.960 --> 0:07:08.680 point five percent right now following ball games yesterday, but 0:07:08.880 --> 0:07:12.000 the biggest two day loss UH in a very long time, 0:07:12.240 --> 0:07:14.920 equal to a decline in market value equal to the 0:07:14.960 --> 0:07:19.040 market capitalization of Tesla joining us now. David Garretty, chief 0:07:19.080 --> 0:07:23.320 executive officer of g v A Research, we had some 0:07:23.360 --> 0:07:26.760 words from Mark Zuckerberg. Clearly the markets have said it's 0:07:26.800 --> 0:07:30.400 not enough. How do you interpret the market action and 0:07:30.560 --> 0:07:33.560 the failure of Mark Zuckerberg to stave off some of 0:07:33.600 --> 0:07:38.040 the declines a negative sentiment. Well, in early crises at Facebook, 0:07:38.080 --> 0:07:41.440 you know, Zuckerberg has taken this same approach in terms 0:07:41.480 --> 0:07:43.840 of having a blog post, having a very sincere sort 0:07:43.840 --> 0:07:47.200 of video interval interview in a in a T shirt, 0:07:47.240 --> 0:07:52.679 maybe a hoodie, depending how formally occasion might be. But nevertheless, 0:07:52.720 --> 0:07:55.680 what's been put forward by Zuckerberg here is really just 0:07:55.720 --> 0:07:58.200 a matter of saying, oh, we'll make a few fixes 0:07:58.240 --> 0:08:01.400 and we'll promise to do better going forward. Uh. Certainly 0:08:01.600 --> 0:08:04.720 you know the market isn't buying it. We also know 0:08:04.880 --> 0:08:08.600 from what's been seeing relative to regulators and legislators, not 0:08:08.720 --> 0:08:11.880 just here in the United States, but also overseas in Europe. 0:08:11.920 --> 0:08:15.320 It's not proving to be satisfactory. People want to see 0:08:15.400 --> 0:08:19.760 Mike Zuckerberg Mark Zuckerberg in person, front and center in 0:08:19.840 --> 0:08:23.560 terms of doing congressional testimony or also impearing before either 0:08:23.600 --> 0:08:27.000 Parliament in the UK or perhaps even the European Parliament. 0:08:27.120 --> 0:08:28.440 And the one thing that we need to bear in 0:08:28.480 --> 0:08:30.560 mind here is the fact that it's not just the 0:08:30.600 --> 0:08:34.160 fact that regulators and legislators have these concerns. There's actually 0:08:34.200 --> 0:08:38.520 a significant consent decree out there since two thousand eleven 0:08:38.520 --> 0:08:43.160 that Facebook operates under which can have significant financial implications 0:08:43.360 --> 0:08:46.200 for the company. Give people the details. How about this 0:08:46.440 --> 0:08:48.400 consent to cree. They may not have that long of 0:08:48.400 --> 0:08:52.120 a memory. Yeah, In two thousand eleven, ages ago before 0:08:52.120 --> 0:08:55.960 the last presidential election to presidential elections, the Federal Trade Commission, 0:08:56.000 --> 0:08:58.840 the FDC, and Facebook entered into an agreement at consent 0:08:58.880 --> 0:09:02.280 decree in why Facebook said that if they were to 0:09:02.360 --> 0:09:06.720 expose any users personal information for a day, that they 0:09:06.720 --> 0:09:09.839 would pay a fine of up to forty thou dollars. 0:09:09.840 --> 0:09:12.120 But now that we have an instance here going back 0:09:12.160 --> 0:09:15.360 to two thousand and fourteen, where there were fifty million 0:09:15.520 --> 0:09:19.960 users personal data that was exposed without their consent. Uh, 0:09:20.200 --> 0:09:22.800 if that fine were applied to forty dollars a day 0:09:22.840 --> 0:09:26.240 per user, the math works out to two trillion dollars 0:09:26.320 --> 0:09:29.400 a day. And we're working here with Facebook that you know, 0:09:29.679 --> 0:09:33.400 had a market cap that was roughly of that at 0:09:33.400 --> 0:09:36.199 the time. Hold on a second, So could this fine 0:09:36.240 --> 0:09:39.080 I mean, obviously it won't be implemented with two trillion dollars, 0:09:39.080 --> 0:09:42.240 but could Facebook still face some significant fines? And who 0:09:42.280 --> 0:09:45.880 would be the person to make that decision? Well, certainly 0:09:45.920 --> 0:09:48.480 from the standpoint of the Federal Trade Commission. The FTC 0:09:48.679 --> 0:09:52.640 has already expressed that they take very seriously any violation 0:09:52.880 --> 0:09:56.120 of their consent decrees. So one might say that the 0:09:56.200 --> 0:10:00.960 idea the decision for enforcement of this consent decree rests 0:10:01.120 --> 0:10:04.600 very much with the Federal Trade Commission and what determination 0:10:04.800 --> 0:10:08.920 they make in terms of violation having taken place. Obviously, 0:10:08.960 --> 0:10:12.480 there will be I'm sure scores of lobbyists being deployed 0:10:12.480 --> 0:10:16.000 by Facebook, but this is just one thing that's already 0:10:16.080 --> 0:10:19.520 on the books that could be used against Facebook, not 0:10:19.600 --> 0:10:22.560 to consider what other prospective measures might be applied. By 0:10:22.559 --> 0:10:25.680 the UK or the EU or other countries, but has 0:10:25.679 --> 0:10:28.880 it been applied already? This decree be the first time 0:10:28.920 --> 0:10:32.320 the decree has been applied, but we haven't seen Facebook 0:10:32.440 --> 0:10:36.319 paying any fines for it as of yet. In response 0:10:36.360 --> 0:10:38.559 to the news that broke over the weekend through the 0:10:38.600 --> 0:10:41.160 New York Times and The Observer, Okay, well, um, if 0:10:41.160 --> 0:10:44.520 you go back to the November two eleven consent decree 0:10:44.720 --> 0:10:47.480 that you're describing, and I'll put it out on a Twitter. 0:10:48.600 --> 0:10:52.319 One of the complaints that is listed by the Federal 0:10:52.360 --> 0:10:56.520 Trade Commission has to do with third party apps, which 0:10:56.600 --> 0:10:58.920 is what we're talking about in terms of limiting the 0:10:58.960 --> 0:11:03.679 ability of not on Facebook companies to access personal information. 0:11:04.120 --> 0:11:08.280 And it says Facebook representative represented that the third party 0:11:08.320 --> 0:11:12.360 apps that users installed would have access only to user 0:11:12.400 --> 0:11:15.520 information that they needed to operate. In fact, the apps 0:11:15.559 --> 0:11:20.680 could actually access nearly all of users personal data, data 0:11:20.720 --> 0:11:24.880 the apps didn't need. In addition, Facebook had a quote 0:11:25.120 --> 0:11:28.960 Verified Apps program and claimed it certified the security of 0:11:29.040 --> 0:11:33.680 participating apps. It didn't. If this goes back to two 0:11:33.720 --> 0:11:37.200 thousand and eleven, what has Facebook been doing for the 0:11:37.280 --> 0:11:41.920 last seven years? Facebook essentially has been promising to do 0:11:41.960 --> 0:11:46.040 better going forward. You know, overlook our sins um. You know, 0:11:46.240 --> 0:11:50.000 we're good guys, um, stay with us. And people have 0:11:50.120 --> 0:11:53.640 accepted that. And the question is, you know, Facebook, having 0:11:53.640 --> 0:11:56.000 gotten to a scale where you've got over two billion users, 0:11:56.120 --> 0:11:59.120 you know there's the ability here to move society, to 0:11:59.240 --> 0:12:03.959 change nation. This obviously is something that cannot persist going forward. 0:12:04.240 --> 0:12:08.199 The question really for the moment is are the regulators 0:12:08.200 --> 0:12:12.360 going to enforce existing decrees on the books? And is 0:12:12.400 --> 0:12:16.440 Facebook management really cognizant of that? Well, I'm glad you 0:12:16.440 --> 0:12:19.480 mentioned management, and yes, that's a question for them to 0:12:19.920 --> 0:12:24.880 uh answer, perhaps before Congress. But I'm wondering if investors 0:12:24.880 --> 0:12:28.680 can put this question to the members of the board 0:12:28.960 --> 0:12:33.000 of Facebook because they signed the proxy statement and if 0:12:33.040 --> 0:12:37.240 there is a material loss, can't this open up the 0:12:37.280 --> 0:12:40.120 company to lawsuits? I mean Erskine Balls has been on 0:12:40.160 --> 0:12:42.800 the board for over six years. Read Hastings has been 0:12:42.800 --> 0:12:45.439 on the board for more than six years, so has 0:12:45.520 --> 0:12:48.840 Mark Entries, and Peter Thiel and Cheryl Sandberg has been 0:12:48.880 --> 0:12:51.480 on the board for nearly six years now. Certainly the 0:12:51.480 --> 0:12:53.520 board has to be concerned here with respect of their 0:12:53.520 --> 0:12:56.000 fiduciary duty and the fact that where the liabilities have 0:12:56.080 --> 0:12:59.760 not been adequately reported in terms of the company's financial statements. 0:13:00.080 --> 0:13:02.880 I mean, these are significant concerns, and yes, the board 0:13:02.880 --> 0:13:05.480 has come out and made a statement on their own, 0:13:05.840 --> 0:13:09.200 but they next haven't owned up to the extent that 0:13:09.280 --> 0:13:11.960 this is as big a problem that it could be. 0:13:12.000 --> 0:13:14.520 I mean, this is an eight pound guerrilla or this 0:13:14.600 --> 0:13:16.800 is the elephant in the room, if you will, that 0:13:16.840 --> 0:13:19.400 no one really is paying much attention to as of yet. 0:13:19.559 --> 0:13:22.719 And even though the board from the standpoint of governance 0:13:23.160 --> 0:13:25.960 doesn't have majority control over the company that stays with 0:13:26.000 --> 0:13:29.640 Mark Zuckerberg given the capital structure and the nature of 0:13:29.679 --> 0:13:33.920 Facebook's classes of stock, uh, the board still has the 0:13:34.000 --> 0:13:38.120 legal liability from a fiduciary standpoint. And yes, investors have 0:13:38.400 --> 0:13:42.320 redress in this regard. So you know, we've already had 0:13:42.480 --> 0:13:46.160 some class action suits have been filed against Facebook. But 0:13:46.360 --> 0:13:50.200 clearly this opens the floodgates real quick in thirty seconds. 0:13:50.320 --> 0:13:54.040 If this order is enforced by the FTC. What does 0:13:54.080 --> 0:13:56.920 that mean for other companies, including Google, which shares down 0:13:57.240 --> 0:13:59.640 more than three percent today. Well, I think with respect 0:13:59.679 --> 0:14:03.120 too well, they weren't necessarily party to the consent decree, 0:14:03.320 --> 0:14:05.880 but it's certainly will have to look more at the 0:14:06.000 --> 0:14:09.480 environment and look at other countries the UK, the EU, 0:14:09.559 --> 0:14:12.040 and to see whether there are other finds that are 0:14:12.080 --> 0:14:15.440 potentially going to be levied. What are the changes that 0:14:15.480 --> 0:14:17.160 are going to be made in terms of trying to 0:14:17.160 --> 0:14:21.880 provide uh greater protection around personal information? You know, one 0:14:21.920 --> 0:14:24.360 has to also stand back and say, you know, do 0:14:24.440 --> 0:14:27.960 we have an Internet as it is currently structured and 0:14:28.040 --> 0:14:32.240 operates that's really capable of being reformed, or do we 0:14:32.320 --> 0:14:35.880 potentially have to start looking at other forms of how 0:14:35.920 --> 0:14:39.440 else can we construct the Internet to put privacy first? 0:14:39.920 --> 0:14:43.200 Because in the past it's really been more redundancy and openness. 0:14:43.440 --> 0:14:45.760 We know that this is clearly something that has failed 0:14:45.960 --> 0:14:48.720 in this area. So we have to find and make 0:14:48.760 --> 0:14:51.240 a decision in a very large way how our society 0:14:51.320 --> 0:14:53.920 is going to operate. Thanks very much, David Garty. He 0:14:54.040 --> 0:15:13.520 is the chief executive of g v A Research. Now 0:15:13.560 --> 0:15:17.000 let's turn our attention to Time Warner and A T 0:15:17.240 --> 0:15:20.600 and T. Tara la Chapelle, our Deal's columnist for Bloomberg 0:15:20.680 --> 0:15:23.560 gad Fly, joins us now in studio. You can follow 0:15:23.680 --> 0:15:27.960 Tara on Twitter at Tara l A c H. All Right, 0:15:28.120 --> 0:15:31.840 Tara l A c H, what are the attorneys for 0:15:32.040 --> 0:15:36.200 Time Warner and a T and T saying today in Washington, 0:15:36.400 --> 0:15:39.600 d C. Right, So today are the opening arguments. This 0:15:39.640 --> 0:15:41.560 trial means a lot for the future of media, not 0:15:41.680 --> 0:15:44.320 just this deal. But it's interesting because the d o 0:15:44.400 --> 0:15:46.960 J attorneys that are trying to have this merger blocked 0:15:46.960 --> 0:15:50.360 are basically asking the judge here to predict the future, 0:15:50.800 --> 0:15:52.600 which is of course very hard to do and not 0:15:52.760 --> 0:15:55.720 something that the law normally does. We're very backward looking 0:15:55.720 --> 0:15:58.320 with these cases. So when you look back in history, 0:15:58.440 --> 0:16:03.480 obviously Comcast NBS went through with concessions, and I think 0:16:03.560 --> 0:16:05.720 that's why this A T and T Time Warner deal 0:16:05.760 --> 0:16:08.720 stands a really good shot in court. Um, most people 0:16:08.760 --> 0:16:10.920 seem to believe that the lawyers on the d o 0:16:11.000 --> 0:16:12.640 J side have a lot of work to do, as 0:16:12.640 --> 0:16:15.560 opposed to necessarily the companies, and I think that's a 0:16:15.560 --> 0:16:17.440 big reason why it doesn't mean that the deal should 0:16:17.480 --> 0:16:19.320 go through. It's just that there's not a whole lot 0:16:19.320 --> 0:16:22.160 of precedent for blocking a vertical merger like this. So 0:16:22.200 --> 0:16:25.320 what's the government arguing. The government is arguing that this 0:16:25.440 --> 0:16:29.840 merger will raise prices for consumers by reducing competition, basically 0:16:29.840 --> 0:16:33.640 because a T and T could in theory, keep Time 0:16:33.640 --> 0:16:36.120 owners content for themselves for their own products, which they 0:16:36.120 --> 0:16:38.000 say they're not going to a T and T. So 0:16:38.160 --> 0:16:41.120 that that's preposterous, but it's really not. I mean, what's 0:16:41.120 --> 0:16:42.920 the point of doing a merger like this except to 0:16:42.960 --> 0:16:45.880 have more control over the content that is very popular 0:16:45.920 --> 0:16:48.640 that people love to watch, like HBO, T N T, 0:16:48.640 --> 0:16:52.120 TB S, Warner Brothers movies. Um, So it's a very 0:16:52.480 --> 0:16:55.200 it's a justified concern. Um. But A T n T 0:16:55.360 --> 0:16:57.640 is saying, look, we we just want to be able 0:16:57.680 --> 0:16:59.720 to bundle more of these things with our services, make 0:16:59.760 --> 0:17:02.400 better packages for our customers. We're not going to keep 0:17:02.440 --> 0:17:04.119 this content out of the hands of our rivals. What 0:17:04.119 --> 0:17:07.360 would be the point we generate fees from them airing this. 0:17:07.720 --> 0:17:10.320 So A T N T and Time Warner, in addition 0:17:10.359 --> 0:17:13.800 to the chief executives testifying their lawyers, how much do 0:17:13.840 --> 0:17:18.800 you expect an argument that this is completely politically motivated 0:17:19.040 --> 0:17:21.960 and sort of draw in some of the tweets and 0:17:21.960 --> 0:17:25.320 comments that President Trump has made about this deal. I mean, 0:17:25.400 --> 0:17:28.320 it seems like that would be that's an interesting route 0:17:28.320 --> 0:17:29.600 for A T and T to play. I don't know 0:17:29.640 --> 0:17:31.320 if that's going to work in court, because I think 0:17:31.320 --> 0:17:34.400 what this is about is how is the landscape going 0:17:34.440 --> 0:17:36.920 to look in the next few years and the next decade. 0:17:37.160 --> 0:17:39.639 Who's going to be controlling what content? What are the 0:17:40.080 --> 0:17:42.800 distribution channels going to look like? Online video? Not just 0:17:42.920 --> 0:17:45.560 regular cable TV that you know we have. Now there's 0:17:45.560 --> 0:17:48.840 going to be all these different ways of watching video 0:17:49.040 --> 0:17:51.320 on your mobile phone, on your computer, I mean, all 0:17:51.359 --> 0:17:53.960 these different things that we probably can't even dream about yet. 0:17:54.160 --> 0:17:56.199 So I think they're more focused on that, and I 0:17:56.200 --> 0:17:59.080 think it's a distraction to say that, you know, somehow 0:17:59.119 --> 0:18:01.520 there's this Trump angle. I'm sure that Trump would love 0:18:01.560 --> 0:18:03.399 to see this deal blocked and kind of stick it 0:18:03.440 --> 0:18:05.480 to the CNN folks, But at the end of the day, 0:18:05.480 --> 0:18:07.800 I don't think that's what these attorneys are I don't 0:18:07.800 --> 0:18:11.199 think this is their angle. You you mentioned that, you know, 0:18:11.240 --> 0:18:13.800 this is about something that's forward looking versus something that 0:18:13.920 --> 0:18:17.160 is backwards looking. But if the government were to block this, 0:18:17.280 --> 0:18:20.800 would they then have any basis to go after Comcast 0:18:20.880 --> 0:18:24.480 and NBC and a variety of other deals in which 0:18:24.520 --> 0:18:28.400 the distributor owns the actual content. I don't know how 0:18:28.440 --> 0:18:30.480 motivated they are to do that, but I think it 0:18:30.560 --> 0:18:32.800 is important to look at which companies are as a 0:18:32.840 --> 0:18:34.800 result of A T and D Time Warner agreeing to 0:18:34.840 --> 0:18:38.280 their merger seventeen months ago, have already started kind of 0:18:38.400 --> 0:18:40.679 moving the ball forward on what deals they could do 0:18:40.720 --> 0:18:42.480 as a follow up to this. Everyone's watching this deal 0:18:42.560 --> 0:18:45.399 very closely, and I think what the judge knows is 0:18:45.440 --> 0:18:47.840 that while he doesn't want to predict the future, and 0:18:47.840 --> 0:18:49.480 he said that he's going to need a crystal ball 0:18:49.520 --> 0:18:51.919 for this case, which is an ideal, he knows that 0:18:51.960 --> 0:18:54.399 if this deal goes through a lot of other transactions, 0:18:54.440 --> 0:18:56.600 you're going to come out of the woodwork. So I 0:18:56.600 --> 0:18:59.040 think that's important to consider in this That's what I 0:18:59.080 --> 0:19:01.440 was going to ask, you know, what are the implications 0:19:02.000 --> 0:19:05.600 both legally and practically. And you're saying that if h 0:19:05.920 --> 0:19:09.080 if Time Warner and A T and T win, it 0:19:09.119 --> 0:19:12.439 will unleash an even bigger wave of M and A. 0:19:13.000 --> 0:19:15.920 Is there a particular deal that you're looking at that 0:19:16.560 --> 0:19:19.280 hinges most directly on the outcome of this case. I 0:19:19.320 --> 0:19:21.479 don't think there's one that's announced yet that does. I mean, 0:19:21.520 --> 0:19:24.480 obviously Disney, Fox, Comcast getting into the ring for that 0:19:24.920 --> 0:19:26.560 UM has something to do with it. I mean it 0:19:26.600 --> 0:19:29.600 comes down to this question about power over content, but 0:19:29.680 --> 0:19:31.879 I think there's gonna be other machinations. I mean, think 0:19:31.880 --> 0:19:34.119 about what a Verizon could do, What could some of 0:19:34.119 --> 0:19:36.360 the tech companies do if this is allowed. I mean 0:19:36.400 --> 0:19:38.520 there's a lot of different players that could get into 0:19:38.560 --> 0:19:41.879 this because they see that content is so important, and 0:19:42.200 --> 0:19:44.679 the content companies don't have enough scale in this day 0:19:44.720 --> 0:19:47.360 and age. So I think they're seeing these vertical mergers 0:19:47.400 --> 0:19:49.400 could be really good for them, but not so good 0:19:49.440 --> 0:19:51.720 for consumers. At the end of the day, we mentioned 0:19:51.720 --> 0:19:53.760 that not being good for consumers is that because we 0:19:53.760 --> 0:19:57.080 would see the price of monthly subscription rates increase. I 0:19:57.119 --> 0:19:59.320 think that could be a result down the road. So 0:19:59.359 --> 0:20:01.119 what a T and T you saying is that what 0:20:01.200 --> 0:20:03.000 would be the point right there? Their whole thing is 0:20:03.000 --> 0:20:05.680 they want to lower prices, have these more attractive bundles. 0:20:05.720 --> 0:20:09.480 But by controlling more content, you have more negotiating power 0:20:09.560 --> 0:20:12.920 with your distributors, which then means there's less choice for consumers, 0:20:12.960 --> 0:20:15.280 which then means you can raise your prices for your 0:20:15.320 --> 0:20:17.679 own consumers. And it comes back to this idea of 0:20:17.720 --> 0:20:20.919 media tribalism, which is something some media reports have been 0:20:20.960 --> 0:20:23.480 saying lately where you know, look at Disney pulling their 0:20:23.480 --> 0:20:26.000 content off of Netflix putting it on their own apps. 0:20:26.400 --> 0:20:28.720 These companies are becoming more and more insular, which is 0:20:28.760 --> 0:20:30.920 against the tide of what consumers want. And I think 0:20:30.920 --> 0:20:33.480 it's very dangerous if we give them that ability. Tara 0:20:33.560 --> 0:20:36.520 la Chapelle, thank you so much. A really insightful look 0:20:36.720 --> 0:20:40.240 at what we're seeing in Washington, d C. Arguably the 0:20:40.280 --> 0:20:45.800 most high profile antitrust case ever in US history. Thank 0:20:45.840 --> 0:20:49.040 you so much. Tara La Chapelle, deal's columnist for Bloomberg Gadfly. 0:20:49.440 --> 0:20:52.159 Read her stuff. There are fabulous columns. It's got a 0:20:52.200 --> 0:20:54.119 great calm just to tell your TV's death by a 0:20:54.160 --> 0:21:12.520 thousand streaming apps. It's a wonderful column. Let's talk about 0:21:12.560 --> 0:21:16.560 commodities and specifically fossil fuels. John Love is the president 0:21:16.560 --> 0:21:20.400 and the chief executive officer of the United States Commodity Funds, 0:21:20.400 --> 0:21:22.880 helping the manager about three and a half billion dollars. 0:21:23.200 --> 0:21:26.120 Based in Redondo Beach, California, but he joins us here 0:21:26.119 --> 0:21:28.879 in an hour eleven three oh studios. John, always a pleasure, 0:21:28.920 --> 0:21:31.800 Thank you for being here. Uh, tell us about what's 0:21:31.800 --> 0:21:34.760 going on right now with the oil market. Dynamics. I'm 0:21:34.800 --> 0:21:37.679 looking at crude on the NIMEX, down about one percent 0:21:37.720 --> 0:21:40.920 at sixty four dollar barrow. What has changed in your 0:21:41.000 --> 0:21:42.960 view over the last let's say three months when it 0:21:43.000 --> 0:21:45.720 comes to the oil market. Sure, well, we had a 0:21:45.960 --> 0:21:47.600 and thanks for having me, by the way, we had 0:21:47.600 --> 0:21:52.200 a spectacular run since September. The between September and January, 0:21:52.760 --> 0:21:54.800 the market was up w t I was up about 0:21:54.800 --> 0:21:59.040 fifty six. We have since since they've been trading, you know, 0:21:59.040 --> 0:22:00.800 a little bit in a side is range. And then 0:22:00.880 --> 0:22:04.960 yesterday we had a very bullish stock draw on US 0:22:05.040 --> 0:22:08.000 inventories which led to the price jumping three percent. I 0:22:08.080 --> 0:22:09.439 think that might have just been a little bit of 0:22:09.440 --> 0:22:11.840