WEBVTT - Britain’s Decision to Go With Huawei on 5G 0:00:00.440 --> 0:00:02.960 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:03.040 --> 0:00:05.480 Jason Kelly. We're here every day bringing you the latest 0:00:05.519 --> 0:00:09.800 news from the world's of business and finance, plus technology, politics, economics, 0:00:09.840 --> 0:00:13.480 all harnessing the power of Bloomberg Business Week reporters and editors, 0:00:13.480 --> 0:00:16.639 not to mention our hundred journalists and analysts more than 0:00:16.680 --> 0:00:19.280 a hundred and twenty countries. You can download Bloomberg Business 0:00:19.320 --> 0:00:22.200 Week on iTunes, SoundCloud, or Bloomberg dot Com. You can 0:00:22.200 --> 0:00:24.520 also listen to our radio show weekdays at two pm 0:00:24.520 --> 0:00:33.080 Eastern only on Bloomberg Radio. So I have to think 0:00:33.159 --> 0:00:36.840 that Ashley advanced, you know that says walk in music 0:00:36.960 --> 0:00:42.280 in some ways. Given everything he has written about, we 0:00:42.320 --> 0:00:44.159 have many many things to talk to him about, not 0:00:44.360 --> 0:00:48.280 least which is his story in the most recent edition 0:00:48.400 --> 0:00:52.040 of Bloomberg Business Week. Ashley is a feature writer for 0:00:52.159 --> 0:00:55.480 the magazine. He joins on the phone from Palo Alto, California. 0:00:55.840 --> 0:00:57.800 Joel Weber, the editor of the magazine, is here with 0:00:57.840 --> 0:01:01.080 us in our Bloomberg Interactive Broker studio. All right, so 0:01:01.360 --> 0:01:04.919 a small rocket maker running a different kind of space race. 0:01:05.400 --> 0:01:08.119 Ashley all eyes on space. It feels like these days, 0:01:08.360 --> 0:01:11.720 tell us about this guy. Yeah, well, so there's this guy. 0:01:12.640 --> 0:01:15.679 These guys. Yeah, it's a company called Astra, and they're 0:01:15.720 --> 0:01:19.360 based in Alameda, California, which is just kind of right 0:01:19.400 --> 0:01:22.280 next door to Oakland in San Francisco. And for the 0:01:22.360 --> 0:01:26.640 last three years they've been building a what's meant to 0:01:26.680 --> 0:01:30.440 be a small cheap rocket pretty much in in secret 0:01:30.560 --> 0:01:35.560 until we did this story. So actually the talked about 0:01:35.600 --> 0:01:38.440 the model that they're trying to develop here. Yeah, I 0:01:38.440 --> 0:01:41.319 mean there's you know, for a long time, space was 0:01:41.319 --> 0:01:44.880 obviously kind of controlled by a handful of governments that 0:01:44.959 --> 0:01:48.160 had big, expensive rockets that didn't launch very often. And 0:01:48.160 --> 0:01:52.000 then Ellen came around with SpaceX and and made a big, 0:01:52.000 --> 0:01:55.400 expensive rocket that launched more often. And what these guys 0:01:55.440 --> 0:01:57.680 want to do is they're part of this the whole 0:01:57.720 --> 0:02:01.920 class of startups that want to build much smaller rockets that, 0:02:02.080 --> 0:02:05.480 instead of costing sixty million or a hundred million dollars 0:02:05.520 --> 0:02:09.280 per launch, cost anywhere from one to seven million dollars 0:02:09.360 --> 0:02:12.079 per launch, and so they can't take as much stuff, 0:02:12.240 --> 0:02:14.800 but they get you to space much more cheaply. And 0:02:14.840 --> 0:02:17.320 the idea is that they may be able to launch 0:02:17.600 --> 0:02:20.160 instead of once a month maybe as much as every 0:02:20.200 --> 0:02:22.200 single day. And so it's it's you know, I put 0:02:22.280 --> 0:02:24.359 it in the story, this idea of becoming like the 0:02:24.400 --> 0:02:29.160 FedEx for space right sustainability comes to the space uh industry. 0:02:29.360 --> 0:02:33.200 What's interesting is Astra Right was among a few finalists. 0:02:33.440 --> 0:02:36.360 Um they'd being out some really well known competitors. We're 0:02:36.400 --> 0:02:40.520 talking about Virgin and some others. Right, Yeah, there's this DARPA, 0:02:40.639 --> 0:02:43.040 the kind of R and d arm of the Defense 0:02:43.120 --> 0:02:46.000 Department is sponsoring one of these. They do these grand 0:02:46.080 --> 0:02:48.480 challenges for various things, and so they have this thing 0:02:48.480 --> 0:02:51.200 called the Launch Challenge, and the whole idea was to 0:02:51.200 --> 0:02:54.720 get all these small rocket startups to compete against each 0:02:54.720 --> 0:02:58.680 other to see who could launch two rockets in a 0:02:58.800 --> 0:03:00.959 very short span of time. I've few weeks in between 0:03:01.000 --> 0:03:05.200 the launches, and and dozens of companies applied to be 0:03:05.280 --> 0:03:08.919 in this. Virgin was one of the three finalists. As 0:03:09.000 --> 0:03:11.640 the list got whittled down in another company called Vector, 0:03:11.800 --> 0:03:14.600 and so Vector went out of business last year and 0:03:14.680 --> 0:03:17.320 Virgin pulled out of the competition, and so now Astra 0:03:17.600 --> 0:03:23.760 is the last rocket makers standing. So actually, another part 0:03:23.840 --> 0:03:25.960 that I'm kind of interested in here is like where 0:03:26.000 --> 0:03:29.440 they are in their trials, because this is like, it's 0:03:29.480 --> 0:03:31.560 not a foregone conclusion that this is all going to 0:03:31.720 --> 0:03:34.160 go their away. No, not at all. Yeah, I mean, 0:03:34.240 --> 0:03:38.440 you know, this is this business is hard SpaceX. Yeah. 0:03:38.480 --> 0:03:41.560 You know, they blew up their first three rockets before 0:03:41.800 --> 0:03:44.320 they finally got one to work, and so um, you know, 0:03:44.360 --> 0:03:46.520 as I mentioned at the beginning, Astra has been operating 0:03:46.520 --> 0:03:49.320 in secret, but I've been following them, um during this 0:03:49.360 --> 0:03:52.840 whole journey. And so they have actually already flown to 0:03:53.400 --> 0:03:57.200 rockets from a spaceport in Alaska that's that's kind of 0:03:57.280 --> 0:04:00.800 run by the government, and both of those and quite badly, 0:04:01.080 --> 0:04:04.240 the rockets came back to Earth before they were supposed to. 0:04:04.600 --> 0:04:08.000 And and this new rocket is you know, they spent 0:04:08.040 --> 0:04:12.160 the last year revamping it, making it bigger, redoing the engines. 0:04:12.400 --> 0:04:16.640 And so in February, late February, they're gonna make another 0:04:16.680 --> 0:04:19.640 attempt to go to orbit. But again, like you said, 0:04:19.680 --> 0:04:22.400 I mean, this this may not work. And if it 0:04:22.440 --> 0:04:25.000 doesn't work, they're under a lot of pressure because there 0:04:25.120 --> 0:04:28.440 is a company in New Zealand called rocket Lab UM 0:04:28.440 --> 0:04:31.359 that's been doing very very well and has been launching 0:04:31.360 --> 0:04:34.160 all the time. And actually, you know, this world so 0:04:34.200 --> 0:04:37.479 well from so much reporting that that you've done, I mean, 0:04:37.800 --> 0:04:40.919 where are we in sort of the the development of 0:04:40.960 --> 0:04:44.400 this industry as it were? Is this, we're still at 0:04:44.400 --> 0:04:47.640 the stage where a lot of flowers are going to bloom, 0:04:47.640 --> 0:04:51.080 as they say, and ultimately there will be consolidation. Has 0:04:51.080 --> 0:04:53.600 there already been consolidation? What does this look like as 0:04:53.640 --> 0:04:55.320 we go through the next five to ten years in 0:04:55.360 --> 0:04:57.599 your estimation? Yeah, I mean it's kind of funny. You know. 0:04:57.680 --> 0:05:01.160 So when SpaceX finally sort of hit its stride, I mean, 0:05:01.200 --> 0:05:05.160 it opened up this idea that okay, individuals and in 0:05:05.279 --> 0:05:08.680 private companies can finally get rockets to space. And so 0:05:08.760 --> 0:05:12.200 there's been this flood of startups who are come in 0:05:12.279 --> 0:05:14.200 and tried to prove they can build a rocket and 0:05:14.240 --> 0:05:16.760 all this money that's come in, but it's just completely 0:05:16.920 --> 0:05:19.880 unclear that there is a market for this many rockets 0:05:19.960 --> 0:05:22.560 and and the need to launch a rocket every day. 0:05:22.720 --> 0:05:24.600 The well, yeah to that in like who do they 0:05:24.600 --> 0:05:28.159 see being potential customers? Yeah? I mean the big driver 0:05:28.279 --> 0:05:31.600 for this is that that traditionally satellites were things that 0:05:31.680 --> 0:05:33.960 took like ten years to build, they cost a billion 0:05:34.000 --> 0:05:35.760 dollars each, and they were about the size of a 0:05:35.839 --> 0:05:38.279 car or a bus, and and you just launched it 0:05:38.320 --> 0:05:39.880 and you left it up there for a long time. 0:05:39.920 --> 0:05:43.040 But now there's there's literally, you know, anywhere from like 0:05:44.000 --> 0:05:47.240 it's probably about a hundred UM satellite startups that have 0:05:47.480 --> 0:05:50.799 much smaller satellites about the size of a basketball, and 0:05:51.040 --> 0:05:54.040 they want to put up hundreds, if not tens of 0:05:54.040 --> 0:05:57.680 thousands of these satellites for all kinds of tasks, imaging 0:05:57.760 --> 0:06:00.400 the Earth, connecting, you know, the Internet of Things, all 0:06:00.440 --> 0:06:04.200 these devices, creating sort of space based internet networks. UM. 0:06:04.360 --> 0:06:07.520 And so the whole theory is that these small rocket 0:06:07.520 --> 0:06:10.760 companies will serve these small satellite makers and you'll just 0:06:10.800 --> 0:06:14.320 have these rockets going up every day taking new satellite 0:06:14.320 --> 0:06:17.440 in the orbit. But we don't know, We only know. 0:06:17.760 --> 0:06:19.760 We don't know if the business case for these satellites 0:06:19.760 --> 0:06:21.520 will work. We don't know how many of these companies 0:06:21.560 --> 0:06:23.960 will survive or how many rockets will be needed to 0:06:24.000 --> 0:06:27.240 do all this. Okay, so what is it about these 0:06:27.279 --> 0:06:30.040 guys and their technology, Like, what what's been the breakthrough 0:06:30.080 --> 0:06:33.239 that that you know makes them the one to watch 0:06:33.960 --> 0:06:37.200 the So so if Rocket Labs kind of the gold 0:06:37.240 --> 0:06:40.120 standard right now for these small rocket makers, you know, 0:06:40.160 --> 0:06:42.919 and it charges about seven point five million per launch. 0:06:43.000 --> 0:06:45.520 It has this beautiful rocket that's made of carbon fiber 0:06:45.640 --> 0:06:48.440 and and all these three D printed engines and everything. 0:06:48.560 --> 0:06:51.400 Astra wants to be the low end of all this. 0:06:51.520 --> 0:06:55.000 So they're using really kind of like no breakthrough techniques. 0:06:55.000 --> 0:06:58.359 They're they're using aluminum um. Everything in the machine shop 0:06:58.480 --> 0:07:01.719 is is sort of techniques that have been perfected for years. 0:07:01.720 --> 0:07:04.640 But their whole pitch is that they'll be the first 0:07:04.680 --> 0:07:08.119 ones who get mass manufacturing of these types of things 0:07:08.160 --> 0:07:11.239 down and actually get the cost. Instead of seven point 0:07:11.280 --> 0:07:13.040 five million, they want to get it down to like 0:07:13.040 --> 0:07:15.600 a million pro launch, and so price would be their 0:07:15.760 --> 0:07:18.080 their big weapon. I guess actually just got about a 0:07:18.080 --> 0:07:19.960 minute left. Got to ask you, you wrote the book 0:07:20.000 --> 0:07:22.320 on Elon Musk, Tesla SpaceX and the Quest for a 0:07:22.320 --> 0:07:24.760 Fantastic Future. We'd be remiss. What do you make of 0:07:24.840 --> 0:07:28.280 Tesla um just you know, shooting to the Moon no 0:07:28.440 --> 0:07:31.920 pun intended. It's up another twenty just got about forty 0:07:31.960 --> 0:07:33.840 five seconds. What do you make of what we were 0:07:33.840 --> 0:07:36.520 seeing this year when it comes to Elon Musk. I mean, 0:07:36.560 --> 0:07:38.720 it's kind of amazing because this time last year it 0:07:38.720 --> 0:07:40.559 looked like the whole thing was going to go under, 0:07:40.600 --> 0:07:42.880 and that's what everyone was asking me, and so, I mean, 0:07:42.960 --> 0:07:45.000 it's just it's just it's it's sort of crazy. It's 0:07:45.040 --> 0:07:47.680 hard to put into words. I mean to me, if 0:07:47.680 --> 0:07:49.600 you look at it now, they've obviously got their house 0:07:49.600 --> 0:07:52.240 in order a lot better. But but people are clearly 0:07:52.320 --> 0:07:55.160 betting that this is like much more than If you 0:07:55.200 --> 0:07:58.720 believe this valuation, you're sort of believing in a future 0:07:58.720 --> 0:08:02.400 where Teslas and energy compy and your car market and so, 0:08:02.440 --> 0:08:04.680 I don't know, it's a little hard for me to yeah, 0:08:04.920 --> 0:08:07.200 fully buy in where it is right now. But they're 0:08:07.240 --> 0:08:09.720 doing much better forward looking pee of ninety five. What's 0:08:09.760 --> 0:08:12.800 wrong with that? Just get a say? Check out Ashley's 0:08:12.840 --> 0:08:15.280 book Elon Musk, Tesla SpaceX in The Quest for a 0:08:15.280 --> 0:08:18.360 Fantastic Future, and of course check out the magazine UH 0:08:18.400 --> 0:08:20.560 that story going to be featured when it hits news 0:08:20.600 --> 0:08:23.560 stands later this week. It's already at Bloomberg dot com 0:08:23.560 --> 0:08:26.120 and on the Bloomberg terminal our thanks to Ashley Vance 0:08:26.200 --> 0:08:29.160 joining us from California on the phontal webber or thanks 0:08:29.160 --> 0:08:31.120 to him as well, Bloomberg Business Week editor in our 0:08:31.160 --> 0:08:37.360 interactive Broker Studio. You are listening to Bloomberg Business Week 0:08:37.480 --> 0:08:40.040 here on a Monday afternoon, Andy Brown, with his editorial 0:08:40.080 --> 0:08:44.839 director for Bloomberg New Economy. His column, I have to say, 0:08:45.200 --> 0:08:48.040 is a must read every week, especially at a time 0:08:48.480 --> 0:08:52.400 where we are fascinated and have to be with the 0:08:52.440 --> 0:08:56.840 nexus of the US and China in the broader global economy. 0:08:56.880 --> 0:08:58.920 And that really took an interesting term when it comes 0:08:58.960 --> 0:09:05.040 to Huawei. Recently with a country with which the United 0:09:05.080 --> 0:09:08.400 States has traditionally had a quote unquote special relationship got 0:09:08.440 --> 0:09:12.280 a little less special, or a little more complicated, to 0:09:12.440 --> 0:09:15.120 say the least. Uh. Andy, He's here with us in 0:09:15.160 --> 0:09:19.120 our Bloomberg Interactive Broker Studio talking about Boris Johnson, newly 0:09:19.880 --> 0:09:23.800 freed up, newly brexited, and he's saying, whoa wait, yeah, 0:09:23.880 --> 0:09:26.320 we'll do a deal with you, Donald Trump. Sorry about 0:09:26.360 --> 0:09:29.680 that exactly. The relationship is now a little bit less special. 0:09:29.720 --> 0:09:31.560 It was only a few years ago under the cameraon 0:09:31.640 --> 0:09:34.320 Government that the British were talking about the golden age 0:09:34.360 --> 0:09:38.320 of relations between the U, between the United Kingdom and China, 0:09:38.480 --> 0:09:41.439 and that's certainly had a bearing on the outcome of 0:09:41.520 --> 0:09:44.000 this decision. Look, this is really I think a historical 0:09:44.040 --> 0:09:47.880 turning point. Um. The White House was warning, it was 0:09:47.880 --> 0:09:50.920 was issuing these warnings about Huawei in almost you know, 0:09:51.160 --> 0:09:55.320 apocalyptic terms, right. The message to friends, to allies was 0:09:55.640 --> 0:09:59.760 if you go with Huawei, you must be mad. Right. 0:09:59.840 --> 0:10:03.600 So Matt Partinger, who runs China Natural Security Council UH 0:10:04.040 --> 0:10:06.920 used a Cold War analogy. He said, can you imagine 0:10:06.960 --> 0:10:09.160 in the middle of the Cold War, Reagan and Thatcher 0:10:09.200 --> 0:10:11.360 getting together and say, hey, how about this for an idea. 0:10:11.800 --> 0:10:16.520 Let's get the KGB to build calms networks and and 0:10:16.520 --> 0:10:22.240 and and get a cut price on on the deal. Right, crazy? Right, 0:10:22.280 --> 0:10:25.240 So in Britain takes all this on board. Boris Johnson 0:10:25.440 --> 0:10:27.240 hears this and it was like, yeah, we get it. 0:10:27.240 --> 0:10:30.719 We understand Huawei is a risk. We're only gonna let them, 0:10:31.240 --> 0:10:33.719 but we're gonna we're gonna let them in, right. Um, 0:10:33.840 --> 0:10:36.400 And I think this idea that I mean it was 0:10:36.440 --> 0:10:39.120 Henry kissing your at our New Economy Forum just a 0:10:39.120 --> 0:10:41.920 few months ago, was warning that we are in the 0:10:41.920 --> 0:10:45.160 foothills of a new Cold War. Well, you know, maybe 0:10:45.200 --> 0:10:48.000 we're always going to remain in the foothills because it's 0:10:48.040 --> 0:10:50.840 really going to be incredibly difficult for the United States 0:10:50.880 --> 0:10:54.720 to put together a coalition of friends and allies to 0:10:54.800 --> 0:10:57.320 have a cold war with China. The world is not 0:10:57.520 --> 0:11:00.680 working that way anymore. If it ever did right limiting 0:11:00.679 --> 0:11:02.520 the flow of technology in and out of China, it's 0:11:02.520 --> 0:11:06.040 just it can't. It's not possible, surely. So the UK 0:11:06.240 --> 0:11:09.120 so UK UK saying several things. First of all, it's 0:11:09.120 --> 0:11:12.959 too expansive. They already have Huawei gear embedded in their 0:11:13.000 --> 0:11:14.719 three G four G network, so if they're gonna go 0:11:14.760 --> 0:11:16.520 with Huawei and five G, it means they have to 0:11:16.800 --> 0:11:18.680 rip all that out, and then they're gonna have to 0:11:18.679 --> 0:11:22.480 pay more for presumably ericson no no Nokia Networks plus. 0:11:22.520 --> 0:11:26.000 And here's the killer thing. It's going to offend China. 0:11:26.720 --> 0:11:29.920 If you're the United States, you can take on China. 0:11:30.000 --> 0:11:32.280 You can stand up to China. We've seen that, right, 0:11:32.360 --> 0:11:34.520 Donald Trump, the White House take on China. We're gonna 0:11:34.520 --> 0:11:36.360 have a trade war with China. If you're the UK, 0:11:36.600 --> 0:11:39.280 you cannot do that. They need a trade deal with China, 0:11:39.400 --> 0:11:41.360 just as they need a trade deal with the United States. 0:11:41.440 --> 0:11:44.120 Now they're out of the EU. Now you imagine this, 0:11:44.120 --> 0:11:46.360 This is Britain. This is as you say, the Special 0:11:46.400 --> 0:11:50.960 relationship America's closest. Ally, if you are a Singapore or 0:11:51.000 --> 0:11:56.120 a you know, Philippines or a smaller, weaker country more 0:11:56.160 --> 0:11:58.640 distant from the United States, you're looking at this and 0:11:58.679 --> 0:12:02.720 you're you're also way in your alliances, your allegiances, and 0:12:02.760 --> 0:12:04.720 which way you're gonna go if you're gonna be asked 0:12:04.760 --> 0:12:07.240 to choose. I also thought it was interesting Andy in 0:12:07.320 --> 0:12:12.079 your column how you also wrote about Britain really knowing 0:12:12.160 --> 0:12:14.880 Huawei better than anyone else, that they have really looked 0:12:14.880 --> 0:12:17.480 at this company from a bunch of different angles. Correct, 0:12:17.960 --> 0:12:19.920 They've ripped, They've ripped a pot all the software. They 0:12:19.960 --> 0:12:23.320 haven't found anything in the software. In fact, nobody has 0:12:23.360 --> 0:12:27.760 any hard evidence that Huawei has backdoors or that it is, 0:12:27.920 --> 0:12:32.280 you know, actively planning sabotage or surveillance. Um, the issue 0:12:32.360 --> 0:12:36.080 really is its relationship with the Chinese state. Would Huawei, 0:12:36.120 --> 0:12:39.559 if usked act on behalf of the Chinese Communist Party? 0:12:39.800 --> 0:12:42.760 And Huawei will say definitively No. The rest of the world, 0:12:42.840 --> 0:12:44.800 much of the rest of the world says definitively, are 0:12:44.800 --> 0:12:48.040 you kidding? Of course, they would write skeptical and at 0:12:48.120 --> 0:12:50.360 least so, while we have you and just a couple 0:12:50.400 --> 0:12:52.840 months we have left. I have to ask you about 0:12:52.880 --> 0:12:58.560 the coronavirus and certainly the political implications of it, especially 0:12:58.559 --> 0:13:02.559 in China, because you wrote about this last week and 0:13:02.640 --> 0:13:07.600 it feels like this whole notion of the impact on 0:13:07.720 --> 0:13:12.360 President she especially is being talked about a lot. Remind 0:13:12.440 --> 0:13:14.640 us what you think. So you know, we have a 0:13:14.800 --> 0:13:17.920 we have a top down system in China, uh and 0:13:18.000 --> 0:13:22.040 she Jimping has concentrated power in his hands beyond any 0:13:22.120 --> 0:13:26.480 leader since Chairman Mao, and it means that you know, 0:13:27.040 --> 0:13:31.280 he ultimately is responsible for this. The story that's been 0:13:31.320 --> 0:13:34.280 the story that's been coming out has been the initial 0:13:34.480 --> 0:13:38.920 cover up that China missed early opportunities. And why is this? 0:13:39.160 --> 0:13:41.720 You know, why did lower level officials not kick it up? 0:13:41.720 --> 0:13:43.920 Were they afraid to kick it up because it was 0:13:44.080 --> 0:13:47.920 too politically sensitive? Were they sitting on their hands waiting 0:13:47.920 --> 0:13:50.200 for the Chinese leadership to make a decision up in 0:13:50.240 --> 0:13:53.280 Beijing and then hand it down. Certainly, I think you 0:13:53.320 --> 0:13:56.240 can say this without any doubt, is that a free 0:13:56.520 --> 0:13:59.680 media in China would have picked up on these cases 0:14:00.040 --> 0:14:01.920 and would have had it out there in the public 0:14:02.000 --> 0:14:04.600 view and in the public mind way earlier, on which 0:14:04.640 --> 0:14:07.360 would have allowed for a more rapid response, and I 0:14:07.400 --> 0:14:09.040 forgive me, and because I want has to be quick 0:14:09.040 --> 0:14:12.079 thirty seconds. So as president g at risk at all. 0:14:12.880 --> 0:14:15.520 You know this, you know country better than most. You know, 0:14:15.600 --> 0:14:18.680 it really depends on how this whole coronavirus plays out. 0:14:18.760 --> 0:14:20.320 I mean, we don't we just it's just so much 0:14:20.360 --> 0:14:22.000 about it. We don't know. I mean, if it all 0:14:22.000 --> 0:14:24.160 burns out in the next few weeks. Look, the government 0:14:24.200 --> 0:14:27.080 is also doing a great job. They're building hospitals. You know, 0:14:27.120 --> 0:14:30.800 they've taken decisive action. So you know, it's it's it's 0:14:30.840 --> 0:14:33.640 a central government that appears to be in control and 0:14:33.720 --> 0:14:36.280 in command. I think the picture looks very different if 0:14:36.320 --> 0:14:39.240 there's if there's drags on for months, really knocks the 0:14:39.320 --> 0:14:43.840 Chinese economy, really knocks employment um and does lasting damage 0:14:43.880 --> 0:14:46.640 to you know, salaries and livelihoods. All Right, we're gonna 0:14:46.640 --> 0:14:48.520 be talking a lot more to you about this, we 0:14:48.600 --> 0:14:50.560 know in the coming weeks. Andy Brown, thank you so much, 0:14:50.680 --> 0:14:53.440 editorial director for Bloomberg New Economy. Here were that's in 0:14:53.440 --> 0:15:02.400 our Bloomberg Interactive Broker studio. Oh journal, but you let 0:15:02.400 --> 0:15:07.240 me drive, Oh no, no, no no, no, honey, please, I'll 0:15:07.280 --> 0:15:10.760 do the ride, revels me. I want to drive ball, 0:15:13.200 --> 0:15:26.440 just drive baby. Good questions, Drying us the drive to 0:15:26.520 --> 0:15:31.360 the globe community. Thanks well, dry Us on Bloomberg Radio. 0:15:31.760 --> 0:15:34.320 All right, it's time now for the Drive to the 0:15:34.520 --> 0:15:38.200 close on an update on the market to bounce back 0:15:38.400 --> 0:15:41.040 from Friday. What to make of it? All of these 0:15:41.040 --> 0:15:44.240 different things that we've been trying to synthesize. We're gonna 0:15:44.280 --> 0:15:47.240 put all those questions to Sean Cruz, manager of trader 0:15:47.320 --> 0:15:49.880 strategy at Tediumrritrade. He joins us on the phone from 0:15:49.960 --> 0:15:52.840 Jersey City, New Jersey. Sean, great to have you back 0:15:52.880 --> 0:15:55.880 with us. Hey, thanks for having me. All right, so 0:15:56.760 --> 0:15:59.480 what a difference you know? I guess seventy two hours 0:15:59.520 --> 0:16:01.920 makes to some extent with the market, because had we 0:16:02.000 --> 0:16:04.920 talked to you on Friday when we were in Miami 0:16:05.000 --> 0:16:08.600 sort of half watching Super Bowl preparation and half watching 0:16:08.640 --> 0:16:12.400 a meltdown, it felt very different. What do you make 0:16:12.400 --> 0:16:15.800 of the trade today? I think markets are really just 0:16:15.800 --> 0:16:17.960 sort of pulling risk off the table going into the 0:16:18.000 --> 0:16:20.720 long weekend. We had quite a few items coming out 0:16:20.800 --> 0:16:23.560 over the week when when markets are closed that they 0:16:23.600 --> 0:16:25.360 probably were just sitting by and saying, you know, and 0:16:25.440 --> 0:16:27.760 things are open again, and I can respond to this 0:16:27.800 --> 0:16:30.240 information as it comes out. That's when I want to 0:16:30.280 --> 0:16:32.520 have some of that risk on the table. And so 0:16:32.600 --> 0:16:35.280 we had a lot of potential news that could have 0:16:35.320 --> 0:16:38.280 come out about the coronavirus. You also had um the 0:16:38.320 --> 0:16:41.600 impeachment trial going on in Capitol Hill, um, and we 0:16:41.640 --> 0:16:46.720 also were looking forward to the Shanghai markets finally reopening Monday. 0:16:46.800 --> 0:16:49.200 And then keep in mind, you know those markets were 0:16:49.240 --> 0:16:52.920 going to open actually Sunday evening before we actually open 0:16:52.960 --> 0:16:55.200 here Monday morning. So I think there was just a 0:16:55.200 --> 0:16:57.800 lot that could potentially come out over the weekend where 0:16:57.960 --> 0:17:00.000 there was just really no one wanted to stop up 0:17:00.040 --> 0:17:01.800 and take risk. And that's why you just saw this 0:17:02.280 --> 0:17:05.600 gradual grind lower throughout the session on Friday. But that 0:17:05.640 --> 0:17:08.360 money looks like it's going back to work today, Yeah, exactly. 0:17:08.359 --> 0:17:10.800 And I am curious where you're seeing people put money 0:17:10.800 --> 0:17:13.560 to work. Despite all these things, Sean that we're worried about, 0:17:13.640 --> 0:17:17.080 people are still buying and selling stocks pretty aggressively, it 0:17:17.080 --> 0:17:20.439 seems like they are. And then we see that, you know, 0:17:20.480 --> 0:17:22.640 not only in our client baseball, as we just look 0:17:22.680 --> 0:17:27.320 at metrics for retail investors across across the industry um. 0:17:27.359 --> 0:17:30.680 But what we see is that during earning season there's 0:17:30.840 --> 0:17:34.080 there's a lot of individual stocks that get traded and 0:17:34.160 --> 0:17:37.040 see activity pick up um and some of those names 0:17:37.040 --> 0:17:40.000 that are coming out and reporting, And what's interesting is 0:17:40.040 --> 0:17:43.480 really the behavior. So last week we actually see a 0:17:43.520 --> 0:17:45.320 lot We saw a lot of selling in Amazon as 0:17:45.359 --> 0:17:48.080 it gapped higher, and that was just clients lightening up 0:17:48.080 --> 0:17:51.240 those positions, um maybe taking some profits. And they were 0:17:51.280 --> 0:17:53.640 also doing it a little bit in Tesla as well, 0:17:53.760 --> 0:17:57.040 so they're sort of selling into that strength. And then 0:17:57.200 --> 0:17:59.800 on the flip side of that, when Facebook sold off postings, 0:17:59.840 --> 0:18:02.240 we actually saw a little bit of buying interest in 0:18:02.320 --> 0:18:04.720 that name. So that's that's kind of the EBB and 0:18:04.760 --> 0:18:07.560 flow for how we see our our active treader clients 0:18:07.560 --> 0:18:12.120 trading around earnings specific names and sort of managing their 0:18:12.200 --> 0:18:14.640 their risk levels and I just scaling in on pullbacks 0:18:14.760 --> 0:18:18.040 and then sort of taking profits and managing their exposure 0:18:18.160 --> 0:18:21.200 on on strong rallies. So tell me Amazon Tesla were 0:18:21.200 --> 0:18:24.280 people buying that big time? There there was quite a 0:18:24.320 --> 0:18:27.520 bit of interest in Amazon and Tesla throughout the month 0:18:27.600 --> 0:18:30.879 of January, and we didn't see them flipped just completely 0:18:30.960 --> 0:18:33.480 closing out of their positions. I think what they were 0:18:33.520 --> 0:18:36.800 doing was just taking some profits when you saw these 0:18:36.880 --> 0:18:39.280 massive run ups. And if you look at Tesla once 0:18:39.280 --> 0:18:42.879 again today, Um, you know, I think there is legitimate 0:18:42.920 --> 0:18:45.480 buying going on in here. There's a story that there's 0:18:45.520 --> 0:18:47.680 just a lot of short covering. I don't really even 0:18:47.680 --> 0:18:51.240 think shortcovering could do something because a move like we've 0:18:51.280 --> 0:18:54.120 seen out of Tesla. I think there's some legitimate buyers 0:18:54.119 --> 0:18:58.960 coming in and pushing Tesla higher. And so earnings. You mentioned, 0:18:59.320 --> 0:19:02.200 you know, specific fake names. What are the ones? What 0:19:02.280 --> 0:19:04.720 are the names we should be looking at for some 0:19:04.840 --> 0:19:09.600 sense of where the consumer is, how investors are generally 0:19:09.800 --> 0:19:13.760 generally excuse me, feeling about the state of the world. Yeah, 0:19:13.800 --> 0:19:15.879 I think you know, if we're you look at it 0:19:15.960 --> 0:19:17.520 something like that, you want to look at some of 0:19:17.720 --> 0:19:19.800 the companies that have a little bit more of a 0:19:19.880 --> 0:19:23.800 global footprint. Um, this week coming out, there's some names 0:19:23.800 --> 0:19:25.160 that are that are interesting in US, and I don't 0:19:25.160 --> 0:19:27.520 know that they're necessarily anything. You can get a strong 0:19:27.600 --> 0:19:30.159 readthrough of what's going on globally. Um, you know we 0:19:30.200 --> 0:19:33.639 have Chipotle it coming out, Disney, UM, Google S evening 0:19:33.720 --> 0:19:36.399 could be something interesting to look at um qual Comms 0:19:36.440 --> 0:19:38.200 coming out later this week, And I think the chip 0:19:38.280 --> 0:19:41.480 makers have been a very interesting space to follow along with, 0:19:41.600 --> 0:19:44.280 not just this earning cycle, but over the past year 0:19:44.280 --> 0:19:46.520 as they try and work out the supply and demand 0:19:46.560 --> 0:19:49.840 balances and if you think about the end use cases 0:19:49.880 --> 0:19:52.159 for a lot of these chips, it is interesting to 0:19:52.200 --> 0:19:54.400 see what sort of demand they're seeing in their businesses 0:19:54.440 --> 0:19:57.719 because they are strong global companies and they have a 0:19:57.760 --> 0:20:01.040 lot of different applications for their chips. So it's always 0:20:01.040 --> 0:20:03.159 interesting to dig into those reports and see where the 0:20:03.240 --> 0:20:06.439 strength and weaknesses out of their various business units. All Right, 0:20:06.440 --> 0:20:08.840 I gotta ask you about Tesla because we've been talking 0:20:08.880 --> 0:20:11.399 about it all day. Uh, we've been talking about it 0:20:11.440 --> 0:20:13.000 for the last couple of weeks. There was a great 0:20:13.000 --> 0:20:14.639 cover story I'm not sure if you saw it in 0:20:14.640 --> 0:20:17.280 Bloomberg Business Week a couple of weeks ago about the 0:20:17.320 --> 0:20:20.000 shorts getting burned. I mean, they are just getting chicken 0:20:20.040 --> 0:20:22.919 fried at this point, as this stock just goes higher 0:20:22.920 --> 0:20:25.840 and higher and higher. How do you as a trader 0:20:26.040 --> 0:20:30.080 read a name like that. So there's something that he said, 0:20:30.160 --> 0:20:34.320 and there's actually a very popular firm that that's really 0:20:34.400 --> 0:20:37.760 a really big short seller even said that they tend 0:20:37.800 --> 0:20:39.919 to try and stay away from names that sort of 0:20:39.960 --> 0:20:44.000 have that disruptive feel that some of the worst you know, 0:20:44.000 --> 0:20:46.600 they've gotten burned the worst on shorting names when they 0:20:46.600 --> 0:20:49.320 turn out to be disruptive UM and they can actually 0:20:49.320 --> 0:20:51.720 really achieve some of that growth that gets priced in. 0:20:52.000 --> 0:20:55.919 And I think Tesla is finally actually starting to really 0:20:56.040 --> 0:20:58.320 deliver on a lot of those those problemses that they 0:20:58.680 --> 0:21:00.800 kind of kept getting a sense that we'll get it 0:21:00.920 --> 0:21:03.600 next quarter, we'll get it next quarter. They're finally getting 0:21:03.640 --> 0:21:06.720