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Speaker 3: Boy, the appointments John are coming fast and furious from
Speaker 3: the Trump group here in terms of his appointments to
Speaker 3: his cabinet naming some I guess zar is the term
Speaker 3: for some of these people. But he's certainly wasting no
Speaker 3: time this time around to setting things up for his team.
Speaker 3: And if you want to get the inside skinny on
Speaker 3: kind of what's happening with the Trump group, mister Trump himself,
Speaker 3: President Like Trump. Tim O'Brien's the best guy, right, I mean,
Speaker 3: he's senior executive editor Bloomberg Opinion.
Speaker 4: He has a very long history with Donald Trump.
Speaker 3: You can google that and see the history there, so
Speaker 3: he knows what he's talking about. President Like Trump has
Speaker 3: been very busy for the last three or four days
Speaker 3: filling out his cabinet. What's your takeaway because there's some
Speaker 3: unusual choices.
Speaker 5: Well, you know, the thinking had been during his first
Speaker 5: visit in the White House that he had this mix
Speaker 5: of advisors that were people there who were loyalists. There
Speaker 5: were people there who were public servants who wanted to
Speaker 5: just fill portin rolls, people like Mattis, for example, and
Speaker 5: then there were other people who were like hangars on
Speaker 5: and in there running their own agenda. But it was
Speaker 5: a mixed bag, and I think from his view, I
Speaker 5: think he walked away from his first experience in the
Speaker 5: Oval Office feeling like not everybody was on board with
Speaker 5: his agenda. He wasn't sure everyone was loyal to him,
Speaker 5: and the thinking was coming into this round he would
Speaker 5: appoint more loyalists and people who were more deft at
Speaker 5: sort of manipulating the wheels of government in order to
Speaker 5: help him push his agenda through. And I think what
Speaker 5: you've found in this recent spurt of appointments is you
Speaker 5: certainly have loyalists, there's no doubt. But whether or not
Speaker 5: they're competent is another matter, and they're certainly controversial. Matt
Speaker 5: Gates is sort of front and center as an exhibit
Speaker 5: of he's been named Attorney General. He's someone who has
Speaker 5: been under investigation by the FBI and the DOJ for
Speaker 5: sex trafficking by the House Ethics Committee for a similar
Speaker 5: range of charges. He is the most unlikely person imaginable
Speaker 5: for a role like this. Republicans came out strongly against him.
Speaker 5: Susan Collins said she was shocked by it. He has
Speaker 5: to go through the vetting process with the Senate, so
Speaker 5: we may not make it through. But he's not necessarily
Speaker 5: someone you would put in the Justice Department because he
Speaker 5: is technically proficient, you know. On the other hand, Marco
Speaker 5: Rubio got appointed to be Secretary of State. He has
Speaker 5: very strong national security credentials, He's got a diplomatic experience.
Speaker 5: He is a serious person for a role like this.
Speaker 5: And so you know this array of people, you know,
Speaker 5: Christy Nomant Homeland Security, Tulsea Gabbard at DNI. Neither of
Speaker 5: them have any experience that would recommend them to those jobs,
Speaker 5: particularly management or subject expertise. But the common thread binding
Speaker 5: all of these people's loyalty to Trump.
Speaker 1: Now Congress of course is now Republican controlled, or will
Speaker 1: be under President Trump. Does anybody there can they still
Speaker 1: get through the process having Do they still face hurdles
Speaker 1: in the process?
Speaker 5: Yes, I think they do, and I think you know,
Speaker 5: the interesting sort of barometer of that was the battle
Speaker 5: to be Senate majority leader. There was a lot of
Speaker 5: push from the Maga wing of the party to have
Speaker 5: Rick Scott appointed his majority leader, and it ended up
Speaker 5: being John Thune, Senator John Thune, and I think he
Speaker 5: represents the wing of the Senate that prizes the institutional
Speaker 5: independence of the Senate and the role it plays as
Speaker 5: a as a check on presidential power. And there was
Speaker 5: a big push from Tucker Carlson in that wing of
Speaker 5: people you have to name Rick Scott the Senate, and
Speaker 5: it asserted itself. John Thune is in there. And I
Speaker 5: think some of the commentary you got from Republican members
Speaker 5: of the Senate yesterday about Matt Gates's appointment, you know,
Speaker 5: they all said he's still got to get through the
Speaker 5: nomination process, and so I do think you're going to
Speaker 5: see some of that.
Speaker 3: Tracy Alloway from Bloomberg News just mentioned from some of
Speaker 3: her sources that maybe one of the strategies of nominating
Speaker 3: Matt Gates is it will allow President look Trump to
Speaker 3: see who's with him and who's not with them in
Speaker 3: the Senate by just looking at the votes.
Speaker 4: It's gonna be pup public votes. That kind of makes
Speaker 4: some sense to me.
Speaker 5: It does, and he may get a lesson that even
Speaker 5: though he got elected president by a healthy margin, not
Speaker 5: everyone in his party is one hundred percent with him
Speaker 5: on his agenda, even within his own party. The other
Speaker 5: way to interpret what might be going on with Gates
Speaker 5: is Gates is just sort of a sacrificial lamb, and
Speaker 5: Trump will put him in there, it will soften the
Speaker 5: Senate up, and then he'll come back with someone else
Speaker 5: who maybe even more extreme or more capable, or whatever
Speaker 5: you want to define it, which is a comment has
Speaker 5: been a Supreme Court nominee strategy at different times in
Speaker 5: the past.
Speaker 1: There was a movie years ago, I don't know if
Speaker 1: you remember, with Albert Brooks Broadcast News, and there was
Speaker 1: a great scene in there where he's talking about his rival.
Speaker 1: I think he's the devil, not really, but you know,
Speaker 1: nobody's going to follow somebody with horns and goes. He says,
Speaker 1: just little by little, that person is somebody who is
Speaker 1: going to lower our standards. Where are our standards right
Speaker 1: now with these nominees.
Speaker 5: Well, they're Donald Trump's standards right now. And I think
Speaker 5: I think the moment that we're in now is where
Speaker 5: is that balance between the thing he wants as an
Speaker 5: individual and what our institutions and our laws and our
Speaker 5: democracy needs in a nonpartisan way to simply function in
Speaker 5: a healthy and constructive way. And I think it's really
Speaker 5: you know, the Republicans control Congress. Now, Trump has a
Speaker 5: tri fact that he has an unusual amount of power.
Speaker 6: And.
Speaker 5: I think it's really going to be on the members
Speaker 5: of his own party to check his behavior for the
Speaker 5: time being. If it goes beyond that, it may go
Speaker 5: to the courts. But right now it's really in Congress's hands,
Speaker 5: and we'll have to see. I'm you know, I don't
Speaker 5: have a crystal ball, so I'm not sure how that's
Speaker 5: going to play out. I do think there's going to
Speaker 5: be pushback against Gates, for example. I think there will
Speaker 5: be pushed back against Christino. I think they will be
Speaker 5: pushed back against Tulsey Gabbert, like she has no intelligence experience.
Speaker 5: She was a member of the Waiian National Guard. And
Speaker 5: you know, the thing to remember though, is Trump thinks
Speaker 5: cinematically about himself and he likes surrounding himself with people
Speaker 5: he as he's always said, look like they're out of
Speaker 5: central casting and they look like they play the part.
Speaker 5: Square chins, flowing locks. They look good on the poster.
Speaker 5: That doesn't necessarily mean they're good at management. As we
Speaker 5: all know from any organizations we've been in over the years,
Speaker 5: good looking people often that doesn't equate with great management
Speaker 5: or great expertise.
Speaker 1: We were talking about Elon must before, and I think
Speaker 1: you mentioned in your column is he getting too taking
Speaker 1: too much attention away from Donald Trump? And how's that
Speaker 1: going to play out?
Speaker 5: Well, that's a really interesting observation because it's injuring to
Speaker 5: watch jd Vance, I think, who has very much presented
Speaker 5: himself as the number two following mister Trump's lead. He
Speaker 5: phrases everything that way. Elon is a force of nature
Speaker 5: and and loves the spotlight as much as Trump does.
Speaker 5: And historically Trump doesn't share the spotlight very long with anyone.
Speaker 5: You may remember the first term, I don't know how
Speaker 5: many weeks, and I think it was weeks after Steve
Speaker 5: Bannon appeared on the cover of Time magazine, as you know,
Speaker 5: the sort of wise man puppeteer guiding Trump along, and boom,
Speaker 5: in short order, he was gone. You know, Trump understands
Speaker 5: the value of having Elon Musk the world's richest man
Speaker 5: with him. You know, that was a big factor I
Speaker 5: think in how his candidacy was perceived. You Knowltra ultra mail,
Speaker 5: ultra successful, ultra capable, and Trump likes to live in
Speaker 5: that glow. But the second people start saying that Elon
Speaker 5: Musk is telling Donald Trump what to do, Alon is
Speaker 5: probably have to pack up and go back to Austin.
Speaker 4: Is president? Like Trump? Is he a lane duck president today?
Speaker 5: Like that's like, why do you ask that? That's an
Speaker 5: interesting question, Like what suggests that to you? I mean,
Speaker 5: you know it's I would say no, but I don't.
Speaker 5: I don't know.
Speaker 4: I kind of feel like he can't run for another term.
Speaker 3: So I kind of feel like, unless he repeals the
Speaker 3: twenty second Amendment, well okay, and maybe you can factor
Speaker 3: that in.
Speaker 4: But if I'm a senator, I'm like, do I have
Speaker 4: to really worry about this guy? I know it's four years,
Speaker 4: but it's just four years.
Speaker 5: Yeah, I mean, I do think there's a strong faction
Speaker 5: in the Senate that's that are They are traditional conservative Republicans,
Speaker 5: they're not maga, and they're worried about the own future
Speaker 5: of the party. It's it's character, what it stands for,
Speaker 5: what kind of a force it is in US politics?
Speaker 5: And I think they see Trump as a useful blunt
Speaker 5: force to win an election, to dismantle parts of the
Speaker 5: administrative state, bring taxes down, uh, you know, revisit some
Speaker 5: other Republican policies that are familiar from years and while
Speaker 5: also dispensing with all of the cartoonish, buffoonish and dangerous things.
Speaker 5: Trump also likes to stick his feet in more often than.
Speaker 1: Not in the election, sort of the post mortem. One aspect,
Speaker 1: I was thinking, did people go into the polls and say,
Speaker 1: I can vote number one on the economy and number two,
Speaker 1: there's a state ballot initiative on reproductive rights, and I
Speaker 1: can vote on that. Separate, Keep those two things separate.
Speaker 1: Is that kind of what happened in some cases?
Speaker 5: Well, I certainly think that was truth. With white women. Yeah,
Speaker 5: you know, the three cohorts that you see in exit polls,
Speaker 5: and we got to wait for more data to come in.
Speaker 5: These are not highly exact, but I think I think
Speaker 5: I think he moved Trump moved up like four or
Speaker 5: five percentage points with white women between twenty sixteen and
Speaker 5: twenty twenty four. He moved up something like I think
Speaker 5: eight points with black men, and with Latino men it
Speaker 5: was more than twenty points, and with Latino women it
Speaker 5: was substantial. I think Latino men there's a huge Catholic
Speaker 5: cohort there. They are anti abortion. I think that informed
Speaker 5: their vote. I think you know what you're asking, Michael
Speaker 5: about the splitting the abortion ballot. I do think there
Speaker 5: was a number of women who were turned up by
Speaker 5: Trump's history as a sexual predator. He had been convicted
Speaker 5: of sexual assault, were found liabel for sexual assault, and
Speaker 5: it was anti abortion. But they felt they were traditional
Speaker 5: Republicans and they wanted to stay in the party, and
Speaker 5: ballot measures gave their ability to split their vote.
Speaker 3: YEP, fascinating, fascinating days we live in here again to
Speaker 3: President elect Trump nominating or putting up a lot of
Speaker 3: folks for to fill out his cabinets. So we'll see
Speaker 3: how that plays out over the next couple of days.
Speaker 3: Tim O'Brien's senior executive editor for Bloomberg Opinion.
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 2: Just say Alexa playing Bloomberg eleven thirty.
Speaker 3: All right, we got John Tucker here in for Alex
Speaker 3: steel On. Paul Sweeney. You're live here in our Bloomberg
Speaker 3: Interactive Brokers studio. We're streaming live on YouTube as well.
Speaker 3: YouTube dot Com. Just search Bloomberg Podcast and that's where
Speaker 3: you'll find us. That's where the advertisers going. Advertisers are
Speaker 3: going to advertise. The digital media. Think Facebook, think, you know, Google,
Speaker 3: think even YouTube is huge business in terms of advertising spend.
Speaker 3: And we're there, which is good things.
Speaker 1: So let's just daring to know. What counts as innovation
Speaker 1: in the airs space these days is the short term
Speaker 1: videos that the videos that I see.
Speaker 3: I think that better targeting. That's kind of always the
Speaker 3: holy grail. So you want to be you want somebody
Speaker 3: advertising grills to a guy like you, right, you're the
Speaker 3: grill guy.
Speaker 1: And or videos where the most effect for me the
Speaker 1: things that I'm interested like woodworking, where it's a show
Speaker 1: and they're using a piece of equipment and giving it
Speaker 1: the run through, and I'm like.
Speaker 4: You know what, I gotta have that I gotta have that.
Speaker 4: That's how it works.
Speaker 3: Marked August, president and CEO of Mountain. He joins us
Speaker 3: from Miami via zoom thing. Hey, Mark, we actually had
Speaker 3: a really interesting data point on the global media, global
Speaker 3: advertising space today last night with Disney. Their streaming business
Speaker 3: is turning profitable and like really profitable. What do you
Speaker 3: take away from the Disney numbers.
Speaker 7: Well, I'm not surprised. I think what you're seeing happen
Speaker 7: is the second half of twenty twenty four and now
Speaker 7: going into twenty twenty five, essentially all of the streaming
Speaker 7: networks have reached the largely reached the tipping point of
Speaker 7: being like streaming first, Like that's where they're all a
Speaker 7: sales effort is focused, they're focused and advertising as you
Speaker 7: guys were mentioning the innovation and things like that, And
Speaker 7: I think Disney is right there at the you know,
Speaker 7: head of that pack, really focusing a business on streaming
Speaker 7: and advertisers are responding and basically the growth and profitability
Speaker 7: that's resulting from it is a direct result of that.
Speaker 7: So they're at the head of the pack right now
Speaker 7: in terms of that kind of growth.
Speaker 1: Mark, are they hanging on to linear TV? To satisfy
Speaker 1: old people like me.
Speaker 7: Yeah, I mean, obviously they still own the assets. But
Speaker 7: I every conversation I have with every streaming network, they
Speaker 7: just want to talk about streaming. I think they see
Speaker 7: linear is obviously it's a revenue stream for it, but
Speaker 7: it's not it's not the meetings they're having as to
Speaker 7: how do they better monetize linear. It's all about, you know,
Speaker 7: audience first, which you know, the what we're taking AI
Speaker 7: to help identify the right consumers and making all of
Speaker 7: that available to brands and doing it on the biggest screen,
Speaker 7: on fifty five in screen, sixty five in screen as
Speaker 7: opposed to a phone, which is like a five point
Speaker 7: five industry.
Speaker 4: You know, it's interesting.
Speaker 3: I was reading some research on the Walt Disney Company
Speaker 3: this morning from Lar Martinette Needham and Company. What she does,
Speaker 3: and she says, investors just think this way. It's just
Speaker 3: kind of mushed together the digital streaming UH business as
Speaker 3: with their linear And what's going to happen over time
Speaker 3: is the digital business is going become a bigger, bigger,
Speaker 3: bigger percentage of that you know, streaming of that business
Speaker 3: of the video business. And you can see the growth
Speaker 3: rates just accelerate over time as linear gets smaller and smaller.
Speaker 3: Who else out there, Mark, do you think is going
Speaker 3: to be a really viable player out there? I'm not
Speaker 3: sure everybody who's out there in the marketplace can survive here.
Speaker 3: How do you think it's going to shake out in
Speaker 3: the streaming wars?
Speaker 7: Yeah, I mean we've talked about this before. I mean
Speaker 7: it's really easy to figure out who's gonna survive and thrive,
Speaker 7: which is you just play a game where you know,
Speaker 7: one person names the network and another person tells you
Speaker 7: why they would go there and watch. So I say
Speaker 7: ESPN and you say sports. If I say Netflix, you
Speaker 7: would say, you know, comedy documentaries, new shows every Tuesday.
Speaker 7: If you know, if I say CBS, there's probably applause
Speaker 7: in the conversation. Doesn't mean CBS is going to go away,
Speaker 7: but it's certainly going to be more challenging for them
Speaker 7: and their number of networks like that. And so I mean,
Speaker 7: the people with a brand with a clear reason to
Speaker 7: want to go and watch content there and be entertained
Speaker 7: there are going to thrive, and the others are going
Speaker 7: to be challenged and probably ultimately become part of some
Speaker 7: of those other brands, and I think in terms of
Speaker 7: the advertise and extend the question there. I think Netflix
Speaker 7: is I don't think people fully realize how big a
Speaker 7: backlog they're building right now. So half of all new
Speaker 7: subs are for their cheapest package, which is ad supported,
Speaker 7: but in they're not really serving that many ads relative
Speaker 7: to the number of subscribers. So they're building a huge
Speaker 7: revenue backlog that's going to get unlocked as they get
Speaker 7: as good as everyone else and monetizing, and I think
Speaker 7: that's going to you know, like like I'm super long
Speaker 7: on Netflix right now, meaning like if there was any
Speaker 7: stock I would want to invest in, it would be Netflix.
Speaker 7: And I'm not that far behind on Disney, although you know,
Speaker 7: Disney has parks and other things that make it a
Speaker 7: bit harder to you know, bet on the future.
Speaker 1: Can you close out real quick? What is the state
Speaker 1: of the digital ad business right now for your perspective.
Speaker 7: Yeah, it's very healthy. I think overall the best part
Speaker 7: of digital advertising is the long tail, mid size and
Speaker 7: small companies that you know my own company, that's what
Speaker 7: we focus on is bringing long those small, mid sized
Speaker 7: advertisers into the streaming television world. Advertising for the first time,
Speaker 7: I think all these streaming networks have really woken up
Speaker 7: to how that's an opportunity. I always like to say,
Speaker 7: it's really easy. The two ways to grow a business.
Speaker 7: You can grow the number of customers or the revenue
Speaker 7: per customer, and the TV industry for a lot of
Speaker 7: years in neither of those things. And so now I
Speaker 7: think they're waking up. They've woken up to we need
Speaker 7: to grow the number of customers, and in streaming there
Speaker 7: actually are some ways to grow the revenue for customers.
Speaker 7: So that's why I think it's media world is actually
Speaker 7: getting reinvigorated with growth right now.
Speaker 3: Mark, thanks so much for joining us. Always appreciate getting
Speaker 3: a few minutes of your time. Mark Douglas, President and
Speaker 3: CEO of Mountain. He's based in California, but he's done
Speaker 3: in Miami. How come all the smart young folks are
Speaker 3: down in Miami, John and they're not in Sheboygan.
Speaker 4: They're in Miami. Either in LA and He'll.
Speaker 1: Be are stuck in a hermetically sealed both with each other.
Speaker 4: Exactly right.
Speaker 3: That's what the smart people do, Mike mclowan. They're all done.
Speaker 3: And I guess Florida that's where the smart kids are. John,
Speaker 3: thank you so much for sitting yesterday.
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
Speaker 2: weekdays at ten am Eastern on Apple car Playing and
Speaker 2: Broun Auto with the Bloomberg Business App. Listen on demand
Speaker 2: wherever you get your podcasts, or watch us live on YouTube.
Speaker 3: John Tucker sitting in for Alex Steel on Paul Sweeney
Speaker 3: We live here on our Bloomberg Interactive Broker Studio, or
Speaker 3: streaming live on YouTube as well. John Lisa was just
Speaker 3: talking about, you know, some technicals on yes ANDP five hundred,
Speaker 3: So I type in S and P five hundred, you know,
Speaker 3: SPX index, and then it hit our SI for relative
Speaker 3: Strength index, and it kind of says, you know, it
Speaker 3: got a nice little chart there, and it shows you,
Speaker 3: you know, when you're at an indext level of seventy,
Speaker 3: maybe it's a little overbought, and if it's down at thirty,
Speaker 3: maybe a little bit over sold. We're sitting here at
Speaker 3: sixty four point five and we bounced or it came
Speaker 3: off of that seventy level just a few days ago.
Speaker 3: So from a technical perspective, maybe a little bit in
Speaker 3: the short term, a little bit expensive.
Speaker 1: But also twenty three times projected earnings at this point.
Speaker 3: Maybe that's the photography sold out that Magne it was
Speaker 3: in seven it's only you know, eighteen times.
Speaker 4: So let's see what the professionals are doing there.
Speaker 3: Margie Pttel joins that she's the senior portfolio manager at
Speaker 3: All Spring Global Investments. She's up there in Boston. Margie,
Speaker 3: you woke up a week ago today a Republican in
Speaker 3: the White House, Republican in the Senate, and now we
Speaker 3: learned today Republican control of the house. Here, your folks
Speaker 3: at All Springs, you change your outlook at all for
Speaker 3: think about allocating capital?
Speaker 8: No, I think we're still looking for continued economic growth,
Speaker 8: maybe more modest, say one and a half to two
Speaker 8: and a half percent in real growth. And we'll have
Speaker 8: to see if any of these plans Republicans have announced,
Speaker 8: how soon they will actually be enacted, how much of
Speaker 8: a positive they'll go to the real economy. The market's
Speaker 8: like it so far, but we'll have to see. So
Speaker 8: we're leaking more towards modest growth, same themes as we've
Speaker 8: had all year.
Speaker 1: Well, stocks don't operate in a bubble. How closely should
Speaker 1: we follow what's happening in the bond market as we
Speaker 1: look at equities.
Speaker 8: Well, I think it's interesting because you've actually had the
Speaker 8: bond market, looking at treasuries actually move up. You know,
Speaker 8: the FED made a cut of fifty basis points in
Speaker 8: the funds er eate and instead of bringing yields down,
Speaker 8: we had the ten year treasury actually go up by
Speaker 8: six to five basis points. Today is even higher, say
Speaker 8: around four point four percent. But I think with inflation,
Speaker 8: say two and a half three percent, I don't think
Speaker 8: a four and a half is percent yield on treasuries
Speaker 8: is really enough to be a negative or slow down
Speaker 8: economic growth. I think it's really a neutral factor. And
Speaker 8: maybe it says more we have a huge supply of treasuries,
Speaker 8: and so that is really dragging down the relative relationships
Speaker 8: between say treasuries and stocks or high yield bonds or
Speaker 8: corporate bonds, making traderes look relatively cheap just because there's
Speaker 8: too much supply.
Speaker 3: Argue on in the equity side of the business here,
Speaker 3: if you believe the Republicans they are going to be
Speaker 3: pro growth, pro economy, do I does that suggest I
Speaker 3: can invest along those lines? Maybe think about more economically
Speaker 3: sensitive stock speed industrials or maybe even energy yea.
Speaker 8: And actually industrials have been leading the market all year,
Speaker 8: which to me has been telegraphing that the market is
Speaker 8: not worried about economic growth or even the scene. A
Speaker 8: sector like industrials besides tech, be so strong. And we've
Speaker 8: actually seen an energy look like it says it's filing
Speaker 8: on a little bit of life here. Whether that's in
Speaker 8: reaction to growth or prospective new rules relating to US
Speaker 8: exploration and development left to see, but I think those
Speaker 8: are continuations. Industrials are one of the best sectors year
Speaker 8: to date. They look like that's going to continue next year.
Speaker 1: Is any of this priced in right now, like a
Speaker 1: proposed fifteen percent corporate tax rate.
Speaker 6: No.
Speaker 8: I just think that if you look at how much
Speaker 8: the market has moved since the election, maybe we really
Speaker 8: need a breather. Plus, we pretty much finished with third
Speaker 8: quarter earnings, which once again we're pretty good say earnings
Speaker 8: or up say average average about nine percent, So that
Speaker 8: certainly supports higher stock levels through the fourth quarter. And
Speaker 8: really December is always a good month for stock so
Speaker 8: it looks like we may have some short term modeling
Speaker 8: here and then have a strong finish to the year.
Speaker 3: Fixing comes actually back in the green here, just broadly
Speaker 3: defined MARGIE and best performing sector and fixed that come
Speaker 3: has been US corporate high yield like really outperforming. Where
Speaker 3: do you see opportunities in the credit markets.
Speaker 8: Well, you know that's been the trend. High yield was
Speaker 8: the best performer in twenty two when the had began
Speaker 8: grates twenty three and so far year to date, and
Speaker 8: in fact, the yield spreads have actually narrowed as treasures
Speaker 8: have backed up, so highield bond prices have held firm,
Speaker 8: yields have held firm while treasuries went up. So that's
Speaker 8: for example, double bs now yield less than two percentage
Speaker 8: points over the same maturity treasury. So that says to
Speaker 8: me the market is not worried about defaults. In fact,
Speaker 8: corporate defaults in high yield next year twenty five should
Speaker 8: probably be under two percent. So basically you actually could
Speaker 8: see yield spreads narrow even from these historic narrow levels.
Speaker 1: And what's the panther head for the FED twenty five
Speaker 1: at the December meeting and maybe appalls in January.
Speaker 8: Well that's what's priced in, but you know you can
Speaker 8: see it really the Fed's actions at the margin, haven't
Speaker 8: had a lot of influence on the equity markets or
Speaker 8: frankly on the economy as a whole. The economy is
Speaker 8: chugged along, and so I don't think the market will
Speaker 8: react to another twenty five basis point. It's pretty much
Speaker 8: a big deal, I think for the outlook. And then
Speaker 8: and then said, taking a.
Speaker 3: Pause, MARKI thank you so much for joining us. Really
Speaker 3: appreciate it, always getting a chance to chat with you.
Speaker 3: Margy Pateel, She's a senior portfolio managered all Spring Global
Speaker 3: Investments up there in Boston.
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 2: Just Say Alexa playing Bloomberg eleven thirty.
Speaker 3: Our good friends Meta find seven hundred and ninety eight
Speaker 3: million euros eight hundred and forty million US dollars by
Speaker 3: the European Union over classified ads dominance.
Speaker 4: I look at the stock unched on the day, no
Speaker 4: real change.
Speaker 3: It's up sixty percent year to date, so I'm kind
Speaker 3: of thinking it's not that big a deal. But let's
Speaker 3: go to an expert on that, Man Deep saying, senior
Speaker 3: tech analysts for Bloomberg Intelligence Joints is here in our
Speaker 3: Bloomberg Interactive Broker studio because he remembers the way to
Speaker 3: New York City, unlike his managers. Man Deep, thank you
Speaker 3: so much for joining us here. What does it mean
Speaker 3: for Meta here?
Speaker 6: I mean this could be a harbinger of more fines
Speaker 6: simply because even though this particular fine is like a
Speaker 6: zero point five percent of their total revenue, so really
Speaker 6: not a big deal. But in the grand scheme of things,
Speaker 6: what the EU is doing is saying their Digital Markets Act,
Speaker 6: which really prevents the gatekeeper companies, and Meta is deemed
Speaker 6: as a gatekeeper along with Alphabet and Microsoft and Amazon
Speaker 6: and Apple. These companies can give preferential treatment to their services.
Speaker 6: So in this case, Meta was fine because they show
Speaker 6: you ads on Facebook marketplace when people are browsing their
Speaker 6: social media platform. And one could argue, you know, I mean,
Speaker 6: they do it because they have this marketplace. It fits well,
Speaker 6: it improves the user experience. But clearly EU doesn't want
Speaker 6: that to happen, especially with these gatekeeper platforms and the
Speaker 6: same logic applies, you know, with Apple giving preference to
Speaker 6: their Safari browser or their maps, or Alphabet giving preference
Speaker 6: to their maps or flights product. So that's the kind
Speaker 6: of the really the focus that EU regulations have when
Speaker 6: it comes to these gatekeeper companies. And we'll probably see
Speaker 6: more finds in our view.
Speaker 1: How many regulatory speed bumps are there out there for
Speaker 1: this the digital ad business. It just seems to generate
Speaker 1: all this work for regulators.
Speaker 6: I mean, there are two ways to look at it.
Speaker 6: One is clearly there are you know, so many kind
Speaker 6: of regulations that are focused on these companies the ad
Speaker 6: businesses that generates you know, one hundred and fifty billion
Speaker 6: dollars plus in the case of Meta, in the case
Speaker 6: of Alphabet over two hundred billion dollars. So clearly the
Speaker 6: focus is on the scale here. But the other side
Speaker 6: of it is it actually prevents more competition because why
Speaker 6: would an Oracle or some other tech company get into
Speaker 6: an ads business where you are at the risk of
Speaker 6: paying over a billion dollar fines, Like, it's just not
Speaker 6: worth it anymore, you know, because of the scale of fines,
Speaker 6: I mean eight hundred and forty million dollars. It's it's
Speaker 6: a lot of money, but it's an It's not a
Speaker 6: lot for a company that's generating over one hundred and
Speaker 6: fifty billion dollars in revenue. So that's where I do
Speaker 6: think it has an unintended consequence in terms of limiting competition.
Speaker 6: But at the same time, I mean, it's very clear
Speaker 6: what the EU wants to do is they want more
Speaker 6: third party products. Apple can't just say you have to
Speaker 6: use Safari browser. They want more choice screens. So that's
Speaker 6: the same concept that's applicable to all these gatekeeper companies.
Speaker 2: I don't know.
Speaker 3: I was back in the day when Microsoft is getting
Speaker 3: fined by the opinion twenty five years ago.
Speaker 4: How did that work out?
Speaker 6: I mean beast Yeah, Well, all these companies have to
Speaker 6: make some remedies. That's what Microsoft did. Is you can't
Speaker 6: just bundle, you know, Internet Explorer with everything and be
Speaker 6: able to get away with it. So I think there
Speaker 6: are some things that they can do on their own,
Speaker 6: but clearly when it comes to paying these fines, and
Speaker 6: the finds could range anywhere from you know, low single
Speaker 6: digit to high single digit off their global revenue. So
Speaker 6: in the case of Meta, the finds could be as
Speaker 6: big as you know, ten billion dollars. I wouldn't be
Speaker 6: surprised if if it keeps happening and EU thinks they're
Speaker 6: not in compliance, we're talking about potentially a ten billion
Speaker 6: dollar fine here.
Speaker 1: The regulatory lineup is changing in your rank the faces
Speaker 1: and in the United States, does it matter that we're
Speaker 1: going might be going toward regulatory light.
Speaker 6: I don't know for Meta and Alphabet it will be
Speaker 6: regulatory light given a lot of these anti trust cases
Speaker 6: were started in Trump's first term, so and there is
Speaker 6: no indication whatsoever that says you know, these companies are
Speaker 6: likely to get away with it. I mean, we know
Speaker 6: the stance of Vice President Electate events in terms of
Speaker 6: what he thinks about the big tech companies. So I
Speaker 6: don't think the regulatory scrutiny is going away anytime.
Speaker 3: But here's the big wildcard I think, which is Elon Musk.
Speaker 3: We had Dan I haves on from what bust security
Speaker 3: is on and he says as rites to electric vehicles,
Speaker 3: he thinks this could really accelerate electric vehicles adoption.
Speaker 4: But it's you know, the conflict of interests. Who knows
Speaker 4: they'll figure it out a guess, but he could be
Speaker 4: positive for big tech.
Speaker 6: It could be I think on the electric vehicle side
Speaker 6: or robotaxis, probably lesser regulation. But when it comes to
Speaker 6: these giant AD businesses, I think that's where every regulator
Speaker 6: kind of agrees upon the fact that these companies have
Speaker 6: too much power when it comes to the AD revenue
Speaker 6: and the dollars they generate.
Speaker 1: I know this is just tangential, but Tim O'Brien's coming up,
Speaker 1: and I want to ask him that question about Elon Musk.
Speaker 1: Elon generates right now a little more attention than is good,
Speaker 1: buddy the president of the elect and you've got to
Speaker 1: wonder how that's going to play into the dynamics go.
Speaker 4: That it's going to be amazing.
Speaker 3: What are the tech Have the tech companies said anything
Speaker 3: about this election? Here? Have you heard anything from the
Speaker 3: tim Cooks of the world or anybody else there about
Speaker 3: this election?
Speaker 6: I think again our view is out of the mag seven.
Speaker 6: Probably Alphabet and Meta will have to contend with more
Speaker 6: scrutiny than the rest of the mag seven, simply because
Speaker 6: I think Apple has done a good job and it
Speaker 6: comes to building the relationship with Trump and Amazon as well.
Speaker 6: So in this case, clearly you're going to see more
Speaker 6: pressure on alphabet and Meta.
Speaker 1: What's the big story that you're following right now? What
Speaker 1: really captures your attention?
Speaker 6: I've spoke you know when it comes to the Trump administration.
Speaker 4: Tariffs is a big deal.
Speaker 6: You know of what sort of export restrictions will come
Speaker 6: into play given everyone is so focused on AI and
Speaker 6: what impact does that have on the development and the
Speaker 6: pace of AI. That to me is the biggest thing
Speaker 6: out there.
Speaker 4: Man Deep sing one of the best. We appreciated man
Speaker 4: Deep Singh. He's a senior technology analyst.
Speaker 3: He kind of runs all of our technology research on
Speaker 3: a global scale because technology is a global business. Obviously,
Speaker 3: Asia is a huge part of that, and we have
Speaker 3: a big team in Asia covering the companies there. We've
Speaker 3: got folks in Europe as well, but it's kind of
Speaker 3: run right out of here from New York with Mandeep
Speaker 3: Singh anarag Rana doing it all. And so technology big
Speaker 3: big issue here again. Meta fined by the European Union
Speaker 3: seven hundred ninety eight million euros about eight hundred and
Speaker 3: forty million US dollars over the classified ADS dominance that
Speaker 3: it has. So I have to see how these companies navigated.
Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 3: All right, we got John Tucker sitting at Fralex Steel
Speaker 3: on Paul Swhen. You're live here in our Bloomberg Interactive
Speaker 3: Broker studio or streaming live on YouTube as well ashead
Speaker 3: over YouTube dot com search Bloomberg Podcast and that's where
Speaker 3: you find us Joe Wisenthal, Tracy Alloway, Odd Lots podcast
Speaker 3: host there in our studio. John, you should talk with
Speaker 3: Joe and Tracy. Big, big weighty issues today. This is
Speaker 3: this could be big waity chickens the chicken industry. Do
Speaker 3: you think of the chicken industry often?
Speaker 2: John?
Speaker 1: I love chicken.
Speaker 4: I love chicken.
Speaker 9: Everyone loves chicken. It's so good.
Speaker 1: But I give the chicken roasters at the food town.
Speaker 5: Do you there?
Speaker 8: You go?
Speaker 1: You know what? It ain't cheap.
Speaker 4: It ain't cheap.
Speaker 3: Didn't you know it's a big business behind here, Tracy Jia,
Speaker 3: thanks so much for joining us here in our studio,
Speaker 3: Tracy talk to us about how you guys look at
Speaker 3: the US economy through the medium of chicken.
Speaker 10: Yeah, that's right. So we're releasing a three part series
Speaker 10: called Beat Capitalism, and it's all about chicken and what
Speaker 10: it says about the structure and nature of the US
Speaker 10: economy and things like consumer demand and inflation, also the
Speaker 10: labor market and how we structure that, and then finally
Speaker 10: how we think about the power of companies more broadly.
Speaker 10: And the weird thing about this series is, I guess
Speaker 10: it sounds a little bit random for us to be
Speaker 10: doing a whole thing on chicken, but like eighty percent
Speaker 10: of the guests that we have on in this series
Speaker 10: have already been on all blots before talking, so it
Speaker 10: seemed like a natural fit for us to do.
Speaker 9: There's so much there in terms of looking at one
Speaker 9: thing that people consume in myriad ways, chicken, and then
Speaker 9: going back and figuring out how many interesting I guess
Speaker 9: I would say macro questions that you can start to
Speaker 9: pick at from looking at how you get from an
Speaker 9: egg to a bird. So you know, there's the question
Speaker 9: of just how pricing power works at the retail level.
Speaker 9: There's obviously, as tracers talk about market competition and the
Speaker 9: degree to which a handful of large, massive poultry companies
Speaker 9: are this huge, you know, dominant player in the supply chain.
Speaker 9: There's labor issues, which is, you know, we think of
Speaker 9: like uber and we think about gig workers. A lot
Speaker 9: of chicken is essentially grown the same way technically independent
Speaker 9: contractors growing birds in their own farms, et cetera. There's
Speaker 9: the pandemic and the health related issues when thinking about
Speaker 9: bird flu and the effect that that had on egg
Speaker 9: prices which were so salient, and then egg prices had
Speaker 9: a effect on how people perceived inflation. So there's almost
Speaker 9: no topic in the US economy over the last several
Speaker 9: years that on some level can't be understood by this
Speaker 9: one specific supply chain.
Speaker 1: And it's not that the small producers were taken over
Speaker 1: by the big guys. They just couldn't afford to compete
Speaker 1: all anymore.
Speaker 10: Yeah, what it is, it's actually really interesting the chicken
Speaker 10: labor market. So you have these sort of small scale
Speaker 10: chicken producers, but they're all contracted out to big they
Speaker 10: call them integrators. So think about companies like Tyson or Purdue,
Speaker 10: and Tyson will give you the baby chicks, then you
Speaker 10: are responsible for raising them. But Tyson also gives you
Speaker 10: the food, they give you the medicines, They tell you
Speaker 10: exactly how you have to raise your chickens, but you,
Speaker 10: as the farmer, are taking on basically all the risk
Speaker 10: of actually doing that. So if Tyson says we want
Speaker 10: a better barn for those chickens, you have to build it,
Speaker 10: and that's pretty costly. And it kind of fits into
Speaker 10: a broader criticism of the economy right now, which is
Speaker 10: we have these really large, powerful companies that are dictating
Speaker 10: terms not just on the pricing side, but potentially on
Speaker 10: the labor side as well. And we also have more
Speaker 10: and more money being made by intermediaries. And we spoke
Speaker 10: to one person from the DOJ. She calls it the
Speaker 10: tear any of the intermediary in this economy.
Speaker 3: I'm going at Tyson's the stock. This is a big company.
Speaker 3: It's twenty three billion dollars a market cap, nearly stocks
Speaker 3: up eighteen percent a year to date. Joe, is the
Speaker 3: chicken business a good business?
Speaker 4: Yeah?
Speaker 9: I mean, so you look at Tyson, but you know,
Speaker 9: look at a stock like Wingstop, Okay, and that's I
Speaker 9: don't know, what it's done over the last few months.
Speaker 9: I haven't pulled it up in a while, but I mean,
Speaker 9: that's one of the most extraordinary long term stocks you'll
Speaker 9: see on the market. It's a it's a fantastic business.
Speaker 6: You know.
Speaker 9: One of the things that we get into as well
Speaker 9: on this episode is you know the McNugget, Right, it's
Speaker 9: just this like chunk. They're delicious. They are various versions
Speaker 9: of some sort of part of the chicken meat than
Speaker 9: deep fried everybody loves it and sandwiches, but like, this
Speaker 9: is the emergence of an industrial process that emerged over time,
Speaker 9: right because at some point, as you know, chickens were
Speaker 9: grown in the backyard and the meat wasn't really that good,
Speaker 9: et cetera. And then signs came to the rescue, made
Speaker 9: the big birds bigger, made them fatter, made them juicier,
Speaker 9: made them tastier. It found ways to process that meat
Speaker 9: such that we can get a chicken tender or a
Speaker 9: chicken finger or a McNugget, et cetera. So there's also
Speaker 9: this sort of long term march of science story as
Speaker 9: the chicken has become a more wonderful food to eat
Speaker 9: in various forms and flavors a real quick trace.
Speaker 1: I thought we had regulators who watched over this thing
Speaker 1: and made sure there's competition. Especially, but the small business
Speaker 1: owner guy raised with chickens wasn't going to get crushed.
Speaker 10: That's an excellent point. They've done some stuff. So they
Speaker 10: have done some things to sort of crack down on
Speaker 10: the integrators and the terms that they can dictate to
Speaker 10: small scale farmers. So, for instance, if you are a
Speaker 10: small scale farmer and you want to switch your integrator,
Speaker 10: you want to work with another big company, they used
Speaker 10: to punish you. They could penalize you for doing that,
Speaker 10: you know, charge you money. The DJ has cracked down
Speaker 10: on that. But you know, there's clearly a lot more
Speaker 10: to do here, and it's interesting one of the approaches
Speaker 10: the DOJ is taking now again going back to that
Speaker 10: intermediary point, they're not necessarily looking at Tyson and Purdue,
Speaker 10: although they tried previously, but they're looking at a company
Speaker 10: like Agrostats. Have you ever heard of that one?
Speaker 2: Never?
Speaker 1: But I'm sure it controls my life and.
Speaker 6: Some Yeah, yeah, yes.
Speaker 10: It's a pricing database for groceries basically, so if you
Speaker 10: are selling a grocery product, this company will tell you
Speaker 10: what it thinks you can sell that for and you
Speaker 10: can guess what effect that has on the market. So
Speaker 10: there's currently a suit going through on agrostats.
Speaker 3: Hi Tracy Great Stuff, Great Story, Tracy Alloy, Joe Wisenthal,
Speaker 3: Odd Lots podcast host.
Speaker 4: Joining us here in our Bloomberg and Active Broker.
Speaker 3: They've got a three part podcast coming out, Beak b
Speaker 3: Eak Beak Capitalism, talking about the looking at some of
Speaker 3: the issues in the US economy through the medium of
Speaker 3: chicken and who doesn't like a good chicken sandwich.
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