1 00:00:05,800 --> 00:00:08,360 Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim 2 00:00:08,400 --> 00:00:11,200 Speaker 1: Fox along with my co host Lisa A. Bramowitz. Each 3 00:00:11,240 --> 00:00:14,440 Speaker 1: day we bring you the most important, noteworthy, and useful 4 00:00:14,480 --> 00:00:17,079 Speaker 1: interviews for you and your money, whether you're at the 5 00:00:17,120 --> 00:00:20,360 Speaker 1: grocery store or the trading floor. Find the Bloomberg P 6 00:00:20,520 --> 00:00:32,120 Speaker 1: and L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. 7 00:00:32,240 --> 00:00:35,120 Speaker 1: Well as we've been reporting Commerce Secretary Wilbur Ross saying 8 00:00:35,159 --> 00:00:38,840 Speaker 1: that the Trump administration will impose new duties on steel 9 00:00:38,960 --> 00:00:44,760 Speaker 1: and aluminum imports from three key trading partners, the European Union, Canada, 10 00:00:44,960 --> 00:00:48,040 Speaker 1: and Mexico. And here to tell us more about this 11 00:00:48,120 --> 00:00:50,879 Speaker 1: is Joe Doe. He is our metals and mining reporter 12 00:00:50,920 --> 00:00:53,519 Speaker 1: for Bloomberg News and you can follow him on Twitter 13 00:00:54,080 --> 00:00:57,240 Speaker 1: at Joe Dough And that's d E a u X 14 00:00:57,480 --> 00:01:01,080 Speaker 1: for dough. All right, Joe Doe? Why are we doing 15 00:01:01,120 --> 00:01:06,840 Speaker 1: this to three entities that are ostensibly our allies? You know, 16 00:01:06,840 --> 00:01:09,080 Speaker 1: I had a source yesterday on the phone tell me 17 00:01:09,160 --> 00:01:12,600 Speaker 1: when we were gathering that this would likely happen. Say, 18 00:01:13,120 --> 00:01:15,959 Speaker 1: it looks like the administration is finally having their welcome 19 00:01:16,040 --> 00:01:18,800 Speaker 1: to Queen's moment. The only problem is a welcome to 20 00:01:18,880 --> 00:01:21,160 Speaker 1: Queen's moment only works in real estate and not in 21 00:01:21,160 --> 00:01:24,399 Speaker 1: global trade? What is a welcome to Queen's moment? Essentially 22 00:01:24,440 --> 00:01:27,120 Speaker 1: saying this is New York, this is our territory, and 23 00:01:27,120 --> 00:01:30,959 Speaker 1: you're gonna play by our rules. And um. The Trump administration, 24 00:01:31,520 --> 00:01:33,880 Speaker 1: as we know, brought this up back in April of 25 00:01:33,959 --> 00:01:36,120 Speaker 1: last year. I mean, he's been talking about something like 26 00:01:36,160 --> 00:01:39,720 Speaker 1: this since the beginning of his presidency. But a year later, 27 00:01:39,840 --> 00:01:41,760 Speaker 1: one of the things that we kept hearing was, you know, 28 00:01:42,319 --> 00:01:46,640 Speaker 1: we think he might actually just pass the tariff on everybody. 29 00:01:46,760 --> 00:01:49,880 Speaker 1: And the thought behind that is nobody gets away from it, 30 00:01:49,960 --> 00:01:51,960 Speaker 1: and it doesn't matter who you are or what you are. 31 00:01:52,000 --> 00:01:54,840 Speaker 1: We're going to protect this industry. Uh. They have now 32 00:01:54,880 --> 00:01:58,400 Speaker 1: done it, and yeah, okay, so so let's just take 33 00:01:58,440 --> 00:02:01,360 Speaker 1: stock of where we are. So Wilbur Ross today Commerce 34 00:02:01,400 --> 00:02:03,760 Speaker 1: Secretary announced these tariffs, said that there was not going 35 00:02:03,800 --> 00:02:06,040 Speaker 1: to be an exemption for some of our main trading allies. 36 00:02:06,320 --> 00:02:08,400 Speaker 1: Mexico already has come back and said that they are 37 00:02:08,440 --> 00:02:12,080 Speaker 1: going to reciprocate with either tariffs or other measures. You 38 00:02:12,160 --> 00:02:16,760 Speaker 1: have discussions now that the reason why the tariffs are 39 00:02:16,760 --> 00:02:20,600 Speaker 1: going ahead is because now after talks were insufficient from 40 00:02:20,800 --> 00:02:24,640 Speaker 1: the White House is perspective, where do we move forward 41 00:02:25,680 --> 00:02:28,160 Speaker 1: with this? I mean, if this was a negotiating tool, 42 00:02:28,639 --> 00:02:31,200 Speaker 1: it's over. So what does that mean going forward? So 43 00:02:31,240 --> 00:02:33,320 Speaker 1: I think there's two ways of moving forward. There's the 44 00:02:33,320 --> 00:02:36,440 Speaker 1: there's the markets. Right, so the markets just play by 45 00:02:36,480 --> 00:02:38,440 Speaker 1: the rules. They say, listen, we've got to accept that 46 00:02:38,480 --> 00:02:42,919 Speaker 1: there are these tariffs on aluminum imports and on steel imports, 47 00:02:43,240 --> 00:02:44,760 Speaker 1: and you just have to deal with it. So any 48 00:02:44,760 --> 00:02:48,080 Speaker 1: customers that want steel or aluminium that's outside of the country, 49 00:02:48,080 --> 00:02:50,400 Speaker 1: they gotta pay that premium, they gotta pay that duty. 50 00:02:50,680 --> 00:02:52,760 Speaker 1: And that's that's that right. And so you just go 51 00:02:52,800 --> 00:02:55,320 Speaker 1: back to normal and you act like whatever is now 52 00:02:55,960 --> 00:02:58,839 Speaker 1: in place is just how you play by the game. Politically, 53 00:02:59,560 --> 00:03:02,280 Speaker 1: it's a mid term season. Uh, there's a question as 54 00:03:02,280 --> 00:03:05,440 Speaker 1: to whether or not this protection ism will play up 55 00:03:05,480 --> 00:03:11,560 Speaker 1: well in battleground states, battleground districts, and that part is 56 00:03:11,639 --> 00:03:15,240 Speaker 1: yet to be seen. Uh. We know that companies don't 57 00:03:15,240 --> 00:03:19,920 Speaker 1: necessarily benefit from this. American companies, ALCA, the biggest aluminium 58 00:03:19,960 --> 00:03:23,079 Speaker 1: maker in the United States, probably the best known aluminium 59 00:03:23,120 --> 00:03:26,119 Speaker 1: maker in the world, will not necessarily benefit from these 60 00:03:26,160 --> 00:03:29,400 Speaker 1: because they actually produce more of their aluminum in Canada 61 00:03:29,560 --> 00:03:33,000 Speaker 1: than they do in the United States. Uh. These steelmakers 62 00:03:33,080 --> 00:03:35,840 Speaker 1: generally look like they'll benefit from this, but steals a 63 00:03:35,920 --> 00:03:39,640 Speaker 1: much more domestic industry. I mean, six of our consumption 64 00:03:39,680 --> 00:03:42,880 Speaker 1: of steel is made in the US. Only fift of 65 00:03:42,920 --> 00:03:45,000 Speaker 1: what we consume from aluminium is made in the U S. 66 00:03:45,240 --> 00:03:49,040 Speaker 1: Canada makes nearly fifty of aluminium that we use. That's 67 00:03:49,040 --> 00:03:50,840 Speaker 1: what makes this a big deal. The EU, on the 68 00:03:50,840 --> 00:03:53,240 Speaker 1: grand scheme of things, not that big of a producer 69 00:03:53,280 --> 00:03:56,040 Speaker 1: for aluminium the steel used in the US. The EU 70 00:03:56,240 --> 00:03:59,200 Speaker 1: is big because of the larger trade implications that this has. 71 00:03:59,600 --> 00:04:02,320 Speaker 1: The you is moving because now they have to react 72 00:04:02,400 --> 00:04:05,520 Speaker 1: to our tariffs because of the worries that dumping will 73 00:04:05,560 --> 00:04:08,920 Speaker 1: no longer be in the United States, it will instead 74 00:04:09,040 --> 00:04:12,160 Speaker 1: go to the EU. So politically, the EU says we're 75 00:04:12,200 --> 00:04:15,120 Speaker 1: raising trade barriers and retaliation to the United States, but 76 00:04:15,240 --> 00:04:18,400 Speaker 1: in actuality, they're raising trade barriers because they need to 77 00:04:18,480 --> 00:04:22,680 Speaker 1: protect their own industry as well, because other countries will 78 00:04:22,720 --> 00:04:24,800 Speaker 1: start trying to dump there because they don't have to 79 00:04:24,839 --> 00:04:27,720 Speaker 1: pay the tariffs. So there's so much going on here 80 00:04:27,920 --> 00:04:30,239 Speaker 1: and now that this has come into place, we're gonna 81 00:04:30,279 --> 00:04:32,560 Speaker 1: see it play out. I don't know if this was 82 00:04:32,600 --> 00:04:34,760 Speaker 1: something that I expected. I don't know if this is 83 00:04:34,800 --> 00:04:38,200 Speaker 1: something that the market expected. But it has happened, and 84 00:04:38,279 --> 00:04:40,440 Speaker 1: now this is the new reality, and we're going to 85 00:04:40,480 --> 00:04:42,880 Speaker 1: see whether or not Trump actually making good on a 86 00:04:42,960 --> 00:04:46,480 Speaker 1: truly Trumpian policy is going to benefit or hurt him 87 00:04:46,480 --> 00:04:51,000 Speaker 1: in the long run. Is this going to hurt US consumers? 88 00:04:51,600 --> 00:04:55,280 Speaker 1: U S consumers have already adjusted to these higher prices, 89 00:04:55,320 --> 00:04:58,599 Speaker 1: they expected some sort of higher prices would come. The 90 00:04:58,720 --> 00:05:01,440 Speaker 1: people who end up probably getting hurt of the makers, 91 00:05:01,480 --> 00:05:05,240 Speaker 1: the manufacturers of the stuff that we use. So if 92 00:05:05,279 --> 00:05:09,120 Speaker 1: you're ariconic, you make airplane wings, you make pieces used 93 00:05:09,120 --> 00:05:13,360 Speaker 1: an automotive. Actually the same with any steel producer outside 94 00:05:13,360 --> 00:05:16,039 Speaker 1: of the United States sending to Detroit. These are the 95 00:05:16,040 --> 00:05:19,160 Speaker 1: ones that are really worried. That's why Caterpillar would even 96 00:05:19,200 --> 00:05:22,080 Speaker 1: say whoa, whoa, whoa. Let's hold on a second here. 97 00:05:22,560 --> 00:05:25,320 Speaker 1: So I was just looking at Ian Bremer he just 98 00:05:25,360 --> 00:05:27,919 Speaker 1: put out on Twitter. Trans Atlantic relations just hit a 99 00:05:27,920 --> 00:05:31,800 Speaker 1: new post war low. But we're not at bottom yet. 100 00:05:32,240 --> 00:05:34,880 Speaker 1: Can you give us a sense of the last time 101 00:05:34,960 --> 00:05:38,239 Speaker 1: that the US imposed tariffs like this and what happened 102 00:05:38,440 --> 00:05:41,960 Speaker 1: we imposed terrorists? It was a two oh one petition 103 00:05:42,160 --> 00:05:46,040 Speaker 1: by President Bush back in two thousand two, and it 104 00:05:46,080 --> 00:05:48,359 Speaker 1: was to protect the industry that was getting hurt. What 105 00:05:48,440 --> 00:05:51,360 Speaker 1: eventually happened was they passed the two oh one and 106 00:05:51,520 --> 00:05:54,360 Speaker 1: there was so much outcry by industry across the board 107 00:05:54,560 --> 00:05:57,520 Speaker 1: that they started giving exemptions and rolling things back, rolling 108 00:05:57,520 --> 00:06:01,040 Speaker 1: things back, and ultimately saying, forget about. We're just we're 109 00:06:01,080 --> 00:06:04,400 Speaker 1: getting rid of this entire policy, and they scrapped it. 110 00:06:04,400 --> 00:06:06,279 Speaker 1: That's no pun intended, but they got rid of it 111 00:06:06,320 --> 00:06:12,160 Speaker 1: because it was just so unpopular and for businesses, very detrimental. 112 00:06:12,520 --> 00:06:15,840 Speaker 1: Just to your point, Caterpillar shares down nearly two right now, 113 00:06:15,960 --> 00:06:18,800 Speaker 1: there you go too, doo. Thank you so much for 114 00:06:18,839 --> 00:06:20,720 Speaker 1: being with us. We will be hearing more from you 115 00:06:21,040 --> 00:06:24,440 Speaker 1: as this does play out. Really important inside. Joe Doe 116 00:06:24,520 --> 00:06:28,520 Speaker 1: covers the medals and mining industries for us here at 117 00:06:28,640 --> 00:06:32,160 Speaker 1: Bloomberg News, and we've just been talking about how Commerce 118 00:06:32,160 --> 00:06:36,560 Speaker 1: Secretary wolver Ross did say that the European Union, Canada 119 00:06:36,760 --> 00:06:41,800 Speaker 1: and Mexico would all not be exempt from these steel 120 00:06:41,800 --> 00:07:00,920 Speaker 1: and aluminium tariffs. What keeps money managers up at night, Well, 121 00:07:00,960 --> 00:07:03,120 Speaker 1: that's why we've got a John Moniger. He is a 122 00:07:03,160 --> 00:07:06,040 Speaker 1: managing director of Eaton Vans, helping to manage over four 123 00:07:06,120 --> 00:07:09,560 Speaker 1: hundred and twenty billion dollars. He's based in Boston, but 124 00:07:09,640 --> 00:07:12,960 Speaker 1: he joins us here in our eleven three oh studios. John, 125 00:07:13,000 --> 00:07:15,880 Speaker 1: it's a pleasure to have you here. And eating Vance 126 00:07:15,920 --> 00:07:20,080 Speaker 1: Advisors has something called the Top of Mind Index. Tell 127 00:07:20,160 --> 00:07:23,360 Speaker 1: us what is this index? What is it supposed to do? Yeah, Pim, 128 00:07:23,360 --> 00:07:25,320 Speaker 1: thank you for having us today. So the Advisor Top 129 00:07:25,320 --> 00:07:27,160 Speaker 1: of Mind Index is a survey we do every quarter. 130 00:07:27,440 --> 00:07:29,800 Speaker 1: We survey about a thousand advisors and it's really trying 131 00:07:29,800 --> 00:07:31,680 Speaker 1: to get in the mind of what's on their mind 132 00:07:31,680 --> 00:07:33,480 Speaker 1: and what's on the mind of their investors that they're 133 00:07:33,520 --> 00:07:35,800 Speaker 1: working with. And so through that survey you try to 134 00:07:35,920 --> 00:07:39,040 Speaker 1: get some insights into what's driving their decision making. Uh. 135 00:07:39,080 --> 00:07:41,120 Speaker 1: In particular, if you think about what's going on now, 136 00:07:41,120 --> 00:07:44,480 Speaker 1: I'll just give you the highlight of of this particular survey. Um, 137 00:07:44,720 --> 00:07:47,400 Speaker 1: we had volatility continue to be one of the top 138 00:07:47,440 --> 00:07:50,440 Speaker 1: marks in top concerns of advisors and maybe not surprising 139 00:07:50,480 --> 00:07:52,800 Speaker 1: by any means, income being number two and a bit 140 00:07:52,800 --> 00:07:54,640 Speaker 1: of a distant number two. We've seen that kind of 141 00:07:54,680 --> 00:07:56,760 Speaker 1: move around a little bit from quarter to quarter, but 142 00:07:56,800 --> 00:07:59,280 Speaker 1: certainly volatility kind of really driving a lot of what's 143 00:07:59,280 --> 00:08:01,320 Speaker 1: on their mind. And I would say the number one 144 00:08:01,400 --> 00:08:04,320 Speaker 1: cause of that has really been centered around geo political risk. 145 00:08:04,560 --> 00:08:06,160 Speaker 1: So although we see a lot of market movement, it's 146 00:08:06,160 --> 00:08:07,680 Speaker 1: a lot of things like even what we saw this 147 00:08:07,720 --> 00:08:10,800 Speaker 1: morning with you know, tariffs being put in place, which 148 00:08:10,840 --> 00:08:13,160 Speaker 1: is you can question, both has a downstream effect but 149 00:08:13,200 --> 00:08:15,200 Speaker 1: also just has a headline or effect as well, makes 150 00:08:15,200 --> 00:08:18,040 Speaker 1: people really nervous. So can you connect the top of 151 00:08:18,040 --> 00:08:21,880 Speaker 1: mind index to actions? I mean, if they're worried about volatility, 152 00:08:21,960 --> 00:08:24,600 Speaker 1: that means what for how they manage their money? Yeah, 153 00:08:24,600 --> 00:08:26,720 Speaker 1: that's a really great question. So so what we're seeing 154 00:08:26,760 --> 00:08:28,680 Speaker 1: is a few things. You've seen this in just fun flows, 155 00:08:28,680 --> 00:08:30,280 Speaker 1: and we'll see this in the survey as well. Start 156 00:08:30,280 --> 00:08:32,640 Speaker 1: with the survey, I'll connect it to fund flows. In 157 00:08:32,720 --> 00:08:36,040 Speaker 1: the survey, you'd see number one issue, what are they 158 00:08:36,080 --> 00:08:39,120 Speaker 1: doing about it? Short duration strategies on the fixingcome side 159 00:08:39,120 --> 00:08:40,680 Speaker 1: is where they've been going in a pretty big way. 160 00:08:40,920 --> 00:08:42,800 Speaker 1: So we've seen a pretty big pull down and flows 161 00:08:42,800 --> 00:08:45,400 Speaker 1: in equities, we've seen a pretty good resurgence of fixing 162 00:08:45,400 --> 00:08:47,800 Speaker 1: come flows. But really on the short duration side, let 163 00:08:47,800 --> 00:08:49,880 Speaker 1: me drive into that for a minute. So what we're 164 00:08:49,880 --> 00:08:53,360 Speaker 1: seeing specifically is floating rate strategies picking up makes a 165 00:08:53,400 --> 00:08:55,320 Speaker 1: lot of sense rising rates. What can I do to 166 00:08:55,360 --> 00:08:58,600 Speaker 1: participate in rising rates is certainly floating rate strategies, But 167 00:08:58,679 --> 00:09:01,640 Speaker 1: also you're seeing just traditional your duration strategies moving in 168 00:09:02,120 --> 00:09:03,719 Speaker 1: in a very big way. In fact, if you look 169 00:09:03,720 --> 00:09:05,760 Speaker 1: at the fund flows just in the last six months alone, 170 00:09:05,960 --> 00:09:08,319 Speaker 1: but a hundred fifty three billion dollars have come into 171 00:09:08,400 --> 00:09:12,520 Speaker 1: taxable fix income. But about that was short duration strategies. Again, 172 00:09:12,520 --> 00:09:14,400 Speaker 1: you'll see a pretty good move going on. There are 173 00:09:14,440 --> 00:09:16,240 Speaker 1: people not sure where to go. What do I do? 174 00:09:16,280 --> 00:09:19,000 Speaker 1: I put into more of a conservative play, I'll add. 175 00:09:19,120 --> 00:09:21,200 Speaker 1: The one that we're seeing as quite interesting is on 176 00:09:21,200 --> 00:09:23,480 Speaker 1: the municipal bond side. We've seen a lot of pressure 177 00:09:23,559 --> 00:09:27,160 Speaker 1: muni bonds certainly performances negative year today and pretty much 178 00:09:27,160 --> 00:09:30,280 Speaker 1: cross the board, we've seen some movement in the floating 179 00:09:30,360 --> 00:09:32,400 Speaker 1: rate muni bond area. We don't hear a lot about 180 00:09:32,400 --> 00:09:34,320 Speaker 1: that in the marketplace. We actually offer one of the 181 00:09:34,360 --> 00:09:36,480 Speaker 1: few strategies that do this, but other firms do it. 182 00:09:36,520 --> 00:09:37,840 Speaker 1: There's firms that are out there that play in the 183 00:09:37,880 --> 00:09:41,600 Speaker 1: space in floating rate municipal bonds. Actually have higher quality 184 00:09:41,840 --> 00:09:45,160 Speaker 1: and are certainly great place to participate in today's markets. John, 185 00:09:45,200 --> 00:09:48,479 Speaker 1: I want to get your thoughts on what the customer 186 00:09:49,080 --> 00:09:51,680 Speaker 1: is really interested in, because I thought this was a 187 00:09:51,800 --> 00:09:55,280 Speaker 1: very telling point. And you know, you can debate and 188 00:09:55,280 --> 00:09:58,160 Speaker 1: and you know, if you're kind of drawn just investor, 189 00:09:58,200 --> 00:10:01,440 Speaker 1: you can say, well, you know, responsible investing. It sounds nice. 190 00:10:01,480 --> 00:10:04,520 Speaker 1: It's got a chief feely thing to it. Whether whatever 191 00:10:04,600 --> 00:10:08,880 Speaker 1: you're feeling or thinking about it. The reality is the 192 00:10:09,000 --> 00:10:12,840 Speaker 1: customer is really interested in this. There is no question. 193 00:10:12,880 --> 00:10:14,440 Speaker 1: Thank you for bringing this up. I'll tell you the 194 00:10:14,840 --> 00:10:17,960 Speaker 1: in the survey will tell you two thirds of investors 195 00:10:18,240 --> 00:10:20,719 Speaker 1: care about responsible investing at some level. It might be 196 00:10:20,760 --> 00:10:22,320 Speaker 1: at a minor level, might be I want to restrict 197 00:10:22,360 --> 00:10:24,400 Speaker 1: something in a portfolio, or it might be at a 198 00:10:24,520 --> 00:10:27,920 Speaker 1: very deep environmental, social and governance type level, and we're 199 00:10:27,920 --> 00:10:30,319 Speaker 1: seeing the full spectrum of that. The flip side of 200 00:10:30,360 --> 00:10:32,760 Speaker 1: that as advisors aren't as educated, so they're a little 201 00:10:32,800 --> 00:10:34,800 Speaker 1: more nervous to bring this forth to their investors. I'll 202 00:10:34,800 --> 00:10:37,760 Speaker 1: tell you two quick stories. One, um, that's the number 203 00:10:37,800 --> 00:10:40,319 Speaker 1: one asked. We put in place a very strong educational 204 00:10:40,360 --> 00:10:42,760 Speaker 1: effort to educate the financial advisor on how to actually 205 00:10:42,800 --> 00:10:45,720 Speaker 1: have this conversation with a client. Importantly, though, if you 206 00:10:45,720 --> 00:10:48,400 Speaker 1: look at the elite advisors the top in the space today, 207 00:10:48,800 --> 00:10:50,600 Speaker 1: I would say we've seen a shift, and I would 208 00:10:50,600 --> 00:10:52,120 Speaker 1: say in the shift has only occurred in the past 209 00:10:52,120 --> 00:10:55,080 Speaker 1: twelve months, where they've went from being prepared to have 210 00:10:55,160 --> 00:10:58,360 Speaker 1: the conversation to now leaning in and saying, Wow, this 211 00:10:58,400 --> 00:11:00,640 Speaker 1: is now a conversation I have to have every client 212 00:11:00,920 --> 00:11:02,960 Speaker 1: so they know I'm prepared and can actually have this 213 00:11:03,280 --> 00:11:07,000 Speaker 1: ability capability to deliver responsible investing to their investors. So 214 00:11:07,440 --> 00:11:10,000 Speaker 1: that's a big shift that will transcend, no question, as 215 00:11:10,000 --> 00:11:12,760 Speaker 1: we know, down into the other advisors. So the educational 216 00:11:12,800 --> 00:11:15,000 Speaker 1: ask is becoming I would say, greater and greater every 217 00:11:15,040 --> 00:11:18,160 Speaker 1: single day. And this comes after yesterday to Sporting Goods 218 00:11:18,840 --> 00:11:23,280 Speaker 1: reported better than expected earnings even though they had stopped 219 00:11:23,280 --> 00:11:26,960 Speaker 1: selling guns in response to what happened. Their shares gained 220 00:11:27,040 --> 00:11:30,199 Speaker 1: almost twenty six percent. That's flying in the face of 221 00:11:30,200 --> 00:11:31,480 Speaker 1: a lot of people who said, you know what, if 222 00:11:31,520 --> 00:11:33,840 Speaker 1: you stop selling guns you make this big stance, You're 223 00:11:33,880 --> 00:11:37,440 Speaker 1: gonna suffer. They didn't. So with returns and sort of 224 00:11:37,600 --> 00:11:41,320 Speaker 1: you know, doing good and getting returns, I mean the 225 00:11:41,320 --> 00:11:43,400 Speaker 1: focus is still on getting returns right, So how do 226 00:11:43,400 --> 00:11:45,360 Speaker 1: you how are you instructing people have that conversation. Yeah, 227 00:11:45,400 --> 00:11:47,480 Speaker 1: it's a great question because because there are return matters 228 00:11:47,480 --> 00:11:49,400 Speaker 1: most right, at the end of the day, responsible investing 229 00:11:49,400 --> 00:11:50,480 Speaker 1: is only as good as the fact that you can 230 00:11:50,520 --> 00:11:52,080 Speaker 1: put up returns out are in line with the market. 231 00:11:52,720 --> 00:11:55,280 Speaker 1: We have through our Cavert affiliate as an example or 232 00:11:55,320 --> 00:11:57,680 Speaker 1: parametric we've been able to demonstrate a long term track 233 00:11:57,720 --> 00:12:00,320 Speaker 1: record of that just using basic indexes. Frankly, so putting 234 00:12:00,320 --> 00:12:02,160 Speaker 1: an E s G structure on top of an index 235 00:12:02,200 --> 00:12:04,920 Speaker 1: like the Russell one thousand, we can demonstrate ten years 236 00:12:04,920 --> 00:12:07,520 Speaker 1: of performance at show we can match the market. Many 237 00:12:07,520 --> 00:12:09,680 Speaker 1: other organizations do the same thing, so we're not alone 238 00:12:09,679 --> 00:12:12,080 Speaker 1: in that. I think the markets starting to realize you 239 00:12:12,120 --> 00:12:15,240 Speaker 1: can actually get better performance, or at least market level 240 00:12:15,280 --> 00:12:17,520 Speaker 1: performance by actually doing the right thing. And it starts 241 00:12:17,520 --> 00:12:20,360 Speaker 1: to make sense when you start breaking down take foreign countries, 242 00:12:20,400 --> 00:12:23,360 Speaker 1: take emerging markets, for example. If you have really solid 243 00:12:23,720 --> 00:12:28,080 Speaker 1: social governance and environmental considerations built in your portfolio and 244 00:12:28,080 --> 00:12:30,960 Speaker 1: you're acting against that, they tend to do better. And 245 00:12:30,960 --> 00:12:33,959 Speaker 1: we've got again a history of showing that in our portfolios, 246 00:12:34,280 --> 00:12:36,719 Speaker 1: or we're able to uh to outperform over periods of time, 247 00:12:36,720 --> 00:12:38,199 Speaker 1: and again we're not the only ones in that space 248 00:12:38,240 --> 00:12:40,520 Speaker 1: doing it. John Moninger, thank you so much for being 249 00:12:40,600 --> 00:12:43,839 Speaker 1: with us and for illiminating the results from the top 250 00:12:43,840 --> 00:12:47,360 Speaker 1: of Mind Index or a tomics. John Moninger is managing 251 00:12:47,360 --> 00:12:51,720 Speaker 1: director at Eton Vans, overseeing about four billion dollars. Normally 252 00:12:51,720 --> 00:12:53,800 Speaker 1: it is based in Boston, but joins us here in 253 00:12:53,960 --> 00:13:13,280 Speaker 1: our eleven three oh studios. Is Italy an emerging market? 254 00:13:13,440 --> 00:13:16,440 Speaker 1: Is it like Argentina? Is it like Turkey? Well, let's 255 00:13:16,480 --> 00:13:19,440 Speaker 1: find out. We have Damian sasaur fixed income strategist for 256 00:13:19,480 --> 00:13:23,760 Speaker 1: Bloomberg Intelligence in the studio here to tell us more. Damian, 257 00:13:23,920 --> 00:13:27,600 Speaker 1: so is Italy on par with an emerging market? I 258 00:13:27,600 --> 00:13:30,920 Speaker 1: wouldn't say that, especially Argentina and Turkey. Um, what we're 259 00:13:30,920 --> 00:13:33,640 Speaker 1: seeing here, I think is a good old fashioned run 260 00:13:33,720 --> 00:13:36,880 Speaker 1: on the on Italian bonds, right. I mean, it's how 261 00:13:36,920 --> 00:13:40,240 Speaker 1: Italy is basically one of the largest issuers of debt 262 00:13:40,280 --> 00:13:43,720 Speaker 1: globally um, far larger than Turkey or Argentina. But the 263 00:13:43,800 --> 00:13:46,199 Speaker 1: important thing for remembers that all that debt is denominated 264 00:13:46,200 --> 00:13:48,680 Speaker 1: in Europe, right, so in order for it to trade 265 00:13:48,760 --> 00:13:53,200 Speaker 1: even close to Argentina and Turkey, which which I mean 266 00:13:53,200 --> 00:13:55,160 Speaker 1: if you're investing in those bonds are carrying in Lira 267 00:13:55,840 --> 00:13:59,040 Speaker 1: and UH and pacer respectively. I mean, it's just it's 268 00:13:59,040 --> 00:14:01,720 Speaker 1: just far riskier when you do that cross border currency calculation. 269 00:14:01,760 --> 00:14:04,360 Speaker 1: And so for me, I just don't see how your 270 00:14:04,480 --> 00:14:07,719 Speaker 1: denominated Italian bonds are trading on par with them or 271 00:14:07,760 --> 00:14:09,280 Speaker 1: how you can even compare them at this stage. But 272 00:14:09,520 --> 00:14:11,120 Speaker 1: they are, but they are kind of I mean, if 273 00:14:11,120 --> 00:14:13,480 Speaker 1: you look at credit to fault swaps, for example, Italy 274 00:14:13,559 --> 00:14:15,760 Speaker 1: is looking more like an emerging market. See so I 275 00:14:15,800 --> 00:14:18,200 Speaker 1: set you up for that, and then you dissed me. 276 00:14:18,280 --> 00:14:20,560 Speaker 1: You would, just would It's just a quote you said. Now, 277 00:14:20,600 --> 00:14:23,160 Speaker 1: I mean five year cd explain, explain what that all means. 278 00:14:23,160 --> 00:14:26,200 Speaker 1: So so in order to protect against the default, one 279 00:14:26,280 --> 00:14:28,280 Speaker 1: might buy a credit the fault swap, and so five 280 00:14:28,360 --> 00:14:31,880 Speaker 1: year CDs for Italy is now on par with that 281 00:14:31,960 --> 00:14:34,360 Speaker 1: of Turkey in fact that you traded through Turkey, meaning 282 00:14:34,440 --> 00:14:37,880 Speaker 1: to protect against default in Italy is more expensive than 283 00:14:37,920 --> 00:14:40,720 Speaker 1: it is to protect against default in Turkey. So in 284 00:14:40,840 --> 00:14:42,920 Speaker 1: order for first of all Italy to default, it's got 285 00:14:42,920 --> 00:14:45,280 Speaker 1: a first break from the EU and then it's got 286 00:14:45,320 --> 00:14:47,720 Speaker 1: a default on its dead opplications, right, so it's a 287 00:14:47,840 --> 00:14:50,920 Speaker 1: huge Sorry, no, no, no, I mean to me though, 288 00:14:50,960 --> 00:14:53,600 Speaker 1: I want to just push back because it makes sense 289 00:14:53,600 --> 00:14:55,760 Speaker 1: what you're saying. The risk of Italy defaulting at this 290 00:14:55,840 --> 00:14:58,760 Speaker 1: point does not seem, when you take a step back, 291 00:14:59,000 --> 00:15:01,600 Speaker 1: like it is greater than Turkey, which can't get its 292 00:15:01,600 --> 00:15:06,720 Speaker 1: currency under control. That said, perhaps what this shows is 293 00:15:06,880 --> 00:15:10,560 Speaker 1: that central banks are losing some control and that everything 294 00:15:10,640 --> 00:15:13,360 Speaker 1: is mispriced, and Italy is being priced a little bit 295 00:15:13,360 --> 00:15:16,000 Speaker 1: more on fundamentals with the fear of the ECB stepping back, 296 00:15:16,440 --> 00:15:19,200 Speaker 1: And maybe the question should be asking, does this mean 297 00:15:19,560 --> 00:15:23,320 Speaker 1: that the emerging markets should be priced at completely different 298 00:15:23,440 --> 00:15:25,960 Speaker 1: levels with risk much higher than it is right now? Yeah, 299 00:15:26,040 --> 00:15:28,080 Speaker 1: I mean, that's exactly what we're talking about. Think about 300 00:15:28,080 --> 00:15:31,480 Speaker 1: where we are. Rates globally are still near historical lows, 301 00:15:31,520 --> 00:15:34,600 Speaker 1: so any little move is a very is an exaggerated 302 00:15:34,640 --> 00:15:36,840 Speaker 1: move in developed and emerging market right now, and that's 303 00:15:36,840 --> 00:15:39,000 Speaker 1: exactly what we just saw in Italy. And in fact, 304 00:15:39,440 --> 00:15:42,240 Speaker 1: a lot of the move in in in Italian yields 305 00:15:42,240 --> 00:15:46,000 Speaker 1: and Italian bonds BTPs were was driven by the relative 306 00:15:46,040 --> 00:15:47,760 Speaker 1: lack of liquidity in those bonds, right, So they just 307 00:15:47,760 --> 00:15:50,720 Speaker 1: got marked up pretty quickly, and now people are kind 308 00:15:50,720 --> 00:15:52,600 Speaker 1: of saying, well, maybe things aren't so bad, you know, 309 00:15:52,720 --> 00:15:54,560 Speaker 1: maybe you know, the five star movements, so on and 310 00:15:54,600 --> 00:15:56,880 Speaker 1: so forth. So I think you're absolutely right. I think 311 00:15:56,920 --> 00:15:59,280 Speaker 1: it has something to do with liquidity and and the 312 00:15:59,320 --> 00:16:02,440 Speaker 1: structural makeup of the market itself that's kind of driving things. 313 00:16:02,480 --> 00:16:05,760 Speaker 1: But but you know, as these markets sort of normalized, 314 00:16:05,800 --> 00:16:07,760 Speaker 1: as the U s he Old curve pushes higher, as 315 00:16:07,840 --> 00:16:11,800 Speaker 1: rates globally push higher, you're gonna see these dislocations be 316 00:16:11,880 --> 00:16:14,440 Speaker 1: that much more magnified. Right, rate ball is going up. 317 00:16:14,800 --> 00:16:16,920 Speaker 1: I mean, I think we've pretty much hit the psycho 318 00:16:16,960 --> 00:16:21,480 Speaker 1: volatility those right, Sorry, rate volatility is definitely going up globally, 319 00:16:21,800 --> 00:16:23,560 Speaker 1: and so as that happens, what you see are these 320 00:16:23,640 --> 00:16:26,520 Speaker 1: you know, kind of exaggerated moves and and and I 321 00:16:26,560 --> 00:16:29,200 Speaker 1: think that's quite frankly what's been happening in Italy this 322 00:16:29,240 --> 00:16:32,440 Speaker 1: week and Spain tomorrow. I mean, I guess you're right. So, 323 00:16:32,520 --> 00:16:34,920 Speaker 1: I mean that's the other thing, right, I mean, it's 324 00:16:35,000 --> 00:16:36,520 Speaker 1: kind of amazing. There is a little bit of a 325 00:16:36,520 --> 00:16:40,120 Speaker 1: fundamental take to this, because Italy's fundamentals, you know, are 326 00:16:40,160 --> 00:16:43,120 Speaker 1: not nearly as good as Spain, right, and so Spain 327 00:16:43,240 --> 00:16:46,080 Speaker 1: hasn't really moved the way Italy has, even though I 328 00:16:46,080 --> 00:16:49,360 Speaker 1: think the Basques just announced that they're gonna back you know, Sancha. 329 00:16:49,400 --> 00:16:51,280 Speaker 1: So I think I think Spain is at risk of 330 00:16:51,320 --> 00:16:54,360 Speaker 1: a no confidence vote, right, so, so that's a pretty 331 00:16:54,360 --> 00:16:57,800 Speaker 1: big deal. And yet Spanish CDs is not really moving 332 00:16:57,840 --> 00:17:00,240 Speaker 1: the same way Italian CDs is and and Spanish bonds 333 00:17:00,240 --> 00:17:02,880 Speaker 1: haven't really reacted as much as you would have thought. So, 334 00:17:03,000 --> 00:17:05,080 Speaker 1: um so for me, I guess you know, the the 335 00:17:05,119 --> 00:17:06,919 Speaker 1: you know what I'm looking at in terms of emerging 336 00:17:06,960 --> 00:17:09,600 Speaker 1: markets is Argentina and Turkey are on an island all 337 00:17:09,640 --> 00:17:12,520 Speaker 1: to themselves. Um, you know, their currencies are a mass, 338 00:17:12,560 --> 00:17:15,840 Speaker 1: their economies are are are are a mess really and 339 00:17:16,359 --> 00:17:19,040 Speaker 1: you know they're gonna need to really kind of clean 340 00:17:19,080 --> 00:17:21,160 Speaker 1: things up. It leaves in a different situation. It'll least 341 00:17:21,160 --> 00:17:23,840 Speaker 1: still part of the EU until further notice. And in 342 00:17:23,920 --> 00:17:26,919 Speaker 1: order for anything to kind of, you know, move the 343 00:17:26,960 --> 00:17:29,520 Speaker 1: needle in Italy, you're gonna have to see you I'm 344 00:17:29,560 --> 00:17:31,920 Speaker 1: gonna have to see them break from the EU. Has 345 00:17:31,960 --> 00:17:36,960 Speaker 1: that working in Brazil that truckers strike, So so what's 346 00:17:37,000 --> 00:17:38,840 Speaker 1: what I took out of the trucker strike? And I'm 347 00:17:38,840 --> 00:17:40,480 Speaker 1: not as close to it as I should be. Is 348 00:17:40,520 --> 00:17:43,240 Speaker 1: the fact that petrol Brass, I mean, you know, basically, 349 00:17:43,280 --> 00:17:45,240 Speaker 1: petrol Brass makes their money by selling fuel and last 350 00:17:45,280 --> 00:17:47,760 Speaker 1: week what happened was they made the decision to a 351 00:17:47,800 --> 00:17:50,480 Speaker 1: lower petrol prices and they did it and partly in 352 00:17:50,520 --> 00:17:52,800 Speaker 1: response to the fact that you have this trucker strike, 353 00:17:52,880 --> 00:17:54,680 Speaker 1: and you know that the government may be applied a 354 00:17:54,680 --> 00:17:56,679 Speaker 1: little bit of pressure to petrol Brass, to petrol Brass 355 00:17:57,160 --> 00:17:59,480 Speaker 1: despite the fact that sixty some odd percent owned by 356 00:17:59,520 --> 00:18:02,399 Speaker 1: the Brazilian government, it's not part of the government. And 357 00:18:02,400 --> 00:18:04,760 Speaker 1: people who are invested in Petro Brass bonds, when they're 358 00:18:04,840 --> 00:18:07,239 Speaker 1: quite a few of them, um like to think that 359 00:18:07,280 --> 00:18:09,760 Speaker 1: the company is making decisions that are in the creditors 360 00:18:09,760 --> 00:18:11,720 Speaker 1: best interest, meaning we're going to charge you more for 361 00:18:11,760 --> 00:18:14,400 Speaker 1: your gas or your oil. And that's not what happened here. 362 00:18:14,440 --> 00:18:16,119 Speaker 1: So now people are kind of saying, well, we'll wait 363 00:18:16,160 --> 00:18:19,240 Speaker 1: a second. Maybe Petrol Brass really is being pushed by 364 00:18:19,280 --> 00:18:21,960 Speaker 1: the government, Maybe they don't have our best interest at heart. 365 00:18:21,960 --> 00:18:23,880 Speaker 1: And I think that's why what we're seeing, at least 366 00:18:23,880 --> 00:18:26,520 Speaker 1: in petrol Brass, which is one of the largest constituents 367 00:18:26,560 --> 00:18:29,320 Speaker 1: in emerging market hard country that is, you're seeing you know, 368 00:18:29,359 --> 00:18:31,160 Speaker 1: spreads blow out on the back of that, and people 369 00:18:31,320 --> 00:18:34,000 Speaker 1: you know, kind of calling into their calling into question 370 00:18:34,000 --> 00:18:37,000 Speaker 1: their integrity and the efficacy of management. Okay, I want 371 00:18:37,000 --> 00:18:38,640 Speaker 1: to I want to go back to a point here, 372 00:18:38,680 --> 00:18:41,600 Speaker 1: just on a broader level, with emerging markets. If we're 373 00:18:41,600 --> 00:18:45,880 Speaker 1: talking about how all risk has been muted by central banks, 374 00:18:46,280 --> 00:18:49,680 Speaker 1: and then a flare up causes people to suddenly uh 375 00:18:49,960 --> 00:18:53,040 Speaker 1: price fundamental risk, you know, and then it goes back 376 00:18:53,080 --> 00:18:56,680 Speaker 1: to this sort of complacency. I'm just wondering how much 377 00:18:56,680 --> 00:19:00,639 Speaker 1: would emerging markets have to read price if people started 378 00:19:00,680 --> 00:19:03,800 Speaker 1: to feel like central banks weren't back stopping the market. Well, 379 00:19:03,840 --> 00:19:07,800 Speaker 1: I think sentiment is a function of returns, and e 380 00:19:07,960 --> 00:19:10,399 Speaker 1: M has is off to the worst start on record 381 00:19:10,480 --> 00:19:13,120 Speaker 1: this year, right, And as those losses build, or let's 382 00:19:13,119 --> 00:19:15,560 Speaker 1: not say they build, but let's say they persist, sentiments 383 00:19:15,560 --> 00:19:18,960 Speaker 1: starts to sour for the asset class at large. And 384 00:19:19,119 --> 00:19:21,600 Speaker 1: I think that's the real risk because Okay, fine, you 385 00:19:21,600 --> 00:19:24,280 Speaker 1: know things are still good, the economies are still healthy. Yeah, okay, 386 00:19:24,320 --> 00:19:28,280 Speaker 1: yields are climbing, and we're pushing the currencies uh down, 387 00:19:28,400 --> 00:19:30,240 Speaker 1: you know, relative to the dollar. But but by and 388 00:19:30,320 --> 00:19:32,159 Speaker 1: large things are better today than they were, you know, 389 00:19:32,240 --> 00:19:35,119 Speaker 1: only five years ago, and emerging markets. But the longer 390 00:19:35,160 --> 00:19:38,600 Speaker 1: these losses persist, that drives investors who are invested in 391 00:19:38,640 --> 00:19:42,439 Speaker 1: emerging markets to redeem, to basically withdraw their investments. And 392 00:19:42,480 --> 00:19:45,639 Speaker 1: that's gonna basically make it that much more difficult for 393 00:19:45,680 --> 00:19:48,800 Speaker 1: these local economies to to to to borrow and too 394 00:19:49,000 --> 00:19:50,680 Speaker 1: and to lever up, and and and and to run 395 00:19:50,720 --> 00:19:53,600 Speaker 1: their economies. And and that's when it hits the real 396 00:19:53,640 --> 00:19:56,640 Speaker 1: economy or the real economies within emerging markets, right and 397 00:19:56,680 --> 00:19:59,800 Speaker 1: that's when you know, you really can start to feel 398 00:19:59,800 --> 00:20:02,720 Speaker 1: the pain, and that transmission mechanism doesn't happen overnight. Certain 399 00:20:02,760 --> 00:20:04,719 Speaker 1: countries are different than others. Turkey, which has a lot 400 00:20:04,760 --> 00:20:07,359 Speaker 1: of external debt, you're seeing them get smacked right on, 401 00:20:07,600 --> 00:20:09,560 Speaker 1: you know, because it's a liquidity issue right now. In 402 00:20:09,600 --> 00:20:12,160 Speaker 1: Turkey they can't refinance their debt. But at a place 403 00:20:12,160 --> 00:20:15,439 Speaker 1: like Brazil, it's not a liquidity issue, it's a solvency issue, right. 404 00:20:15,440 --> 00:20:18,080 Speaker 1: They have long term structural problems pimped to your point, 405 00:20:18,119 --> 00:20:20,399 Speaker 1: you know, with trucker strikes and all the things that 406 00:20:20,400 --> 00:20:22,760 Speaker 1: are going on there with you know, social security, you know, 407 00:20:22,800 --> 00:20:24,920 Speaker 1: and what have you, but but that's a long term 408 00:20:24,960 --> 00:20:27,720 Speaker 1: issue in Brazil and and and that's why Brazil is 409 00:20:27,720 --> 00:20:29,960 Speaker 1: not getting hit as badly. Just real quick, are we 410 00:20:30,000 --> 00:20:33,240 Speaker 1: starting to see those withdrawals in any real volume. We've 411 00:20:33,240 --> 00:20:35,480 Speaker 1: been seeing them and they're not. I mean, look, they've 412 00:20:35,480 --> 00:20:38,000 Speaker 1: started to peter off a bit um. In fact, what 413 00:20:38,040 --> 00:20:39,800 Speaker 1: you saw was a kind of a transfer. It was 414 00:20:39,880 --> 00:20:42,240 Speaker 1: it was e M debt that was driving the outflows 415 00:20:42,240 --> 00:20:44,239 Speaker 1: for the better probably the last few few months, and 416 00:20:44,240 --> 00:20:46,080 Speaker 1: that shifted over to the equity side, which to me 417 00:20:46,160 --> 00:20:48,160 Speaker 1: is maybe an indication that we're getting to the ninth 418 00:20:48,160 --> 00:20:50,440 Speaker 1: inning there and that things might get a little better. 419 00:20:50,920 --> 00:20:53,159 Speaker 1: Damian Sassaur, we love having you on. Thank you so 420 00:20:53,240 --> 00:20:56,040 Speaker 1: much for being with us. Damien Sassaur, fixed incomes strategist 421 00:20:56,119 --> 00:21:00,359 Speaker 1: for a Bloomberg Intelligence and expert in developing mark gets. 422 00:21:00,640 --> 00:21:04,240 Speaker 1: Really an interesting story. It's amazing to see Italian credit 423 00:21:04,320 --> 00:21:20,359 Speaker 1: default swaps trade in tandem with those of Turkey. It 424 00:21:20,440 --> 00:21:23,639 Speaker 1: has come to light that your personal data is worth 425 00:21:23,720 --> 00:21:26,440 Speaker 1: a lot, and the more people realize this, the more 426 00:21:26,520 --> 00:21:31,200 Speaker 1: questions that are about who profits from this data. Joining 427 00:21:31,240 --> 00:21:33,760 Speaker 1: us now Brian O'Kelly, chief executive officer and co founder 428 00:21:33,800 --> 00:21:37,679 Speaker 1: of app Nexus. It is an exchange the second largest 429 00:21:37,760 --> 00:21:41,280 Speaker 1: only to Google, behind only Google's Double Click exchange for 430 00:21:41,320 --> 00:21:45,040 Speaker 1: real time bidding on the Open Internet. UM. And basically, 431 00:21:45,119 --> 00:21:48,760 Speaker 1: if I understand this correctly, when advertisers want to figure 432 00:21:48,760 --> 00:21:52,520 Speaker 1: out what to pay for you personally to view a 433 00:21:52,600 --> 00:21:56,639 Speaker 1: certain ad of theirs on say whatever, pick your news site, 434 00:21:57,560 --> 00:22:02,159 Speaker 1: you your platform helps them auction off at particular place 435 00:22:02,480 --> 00:22:05,560 Speaker 1: in real time, correct exactly, So you're assessing how much 436 00:22:05,560 --> 00:22:08,360 Speaker 1: people are worth. So do you feel like there has 437 00:22:08,400 --> 00:22:12,840 Speaker 1: been a market pushback recently, especially as the European Union 438 00:22:13,200 --> 00:22:16,520 Speaker 1: enforces the General Data Protection Regulation? Has there been more 439 00:22:16,640 --> 00:22:20,360 Speaker 1: kind of obstacles for you in this process? It's interesting 440 00:22:20,800 --> 00:22:24,360 Speaker 1: as long as you're as a consumer aware that you're 441 00:22:24,400 --> 00:22:27,879 Speaker 1: going to be advertised to, UH, in concept, you should 442 00:22:27,880 --> 00:22:30,160 Speaker 1: be okay with it. The idea here is that privacy 443 00:22:30,240 --> 00:22:32,879 Speaker 1: is a fundamental human right. But if you decide that 444 00:22:32,920 --> 00:22:36,040 Speaker 1: you want your information used by advertisers in return for 445 00:22:36,080 --> 00:22:38,879 Speaker 1: free content, so that new site you're going to, that 446 00:22:38,960 --> 00:22:41,680 Speaker 1: content is free for you because of the advertising. As 447 00:22:41,680 --> 00:22:43,919 Speaker 1: long as you're comfortable with that trade, you should be 448 00:22:43,960 --> 00:22:47,080 Speaker 1: comfortable with advertising. And so, because we've always operated within 449 00:22:47,119 --> 00:22:50,159 Speaker 1: those constraints, UH, this is probably a good thing for 450 00:22:50,200 --> 00:22:52,880 Speaker 1: our business overall, but it certainly is causing a lot 451 00:22:52,920 --> 00:22:56,240 Speaker 1: of chaos and confusion across the market. Who's best at 452 00:22:56,240 --> 00:22:58,840 Speaker 1: figuring this out? I mean, is that the Is it Google? 453 00:22:58,960 --> 00:23:01,520 Speaker 1: Is it Facebook? I mean, who's actually really good at it? 454 00:23:01,560 --> 00:23:05,080 Speaker 1: And who's terrible? Well, it's funny if you think of 455 00:23:05,400 --> 00:23:10,040 Speaker 1: who really deeply understands privacy. Uh, I don't think anybody does. 456 00:23:10,160 --> 00:23:12,040 Speaker 1: I don't think we as humans have figured out what 457 00:23:12,080 --> 00:23:14,200 Speaker 1: it's going to mean to have all of our data 458 00:23:14,240 --> 00:23:17,760 Speaker 1: floating around in the cloud for the rest of our lives. Um. 459 00:23:17,800 --> 00:23:19,840 Speaker 1: So I think it's the regulators in Europe trying to 460 00:23:19,880 --> 00:23:22,480 Speaker 1: take a first step. I think there's some small companies 461 00:23:22,520 --> 00:23:24,919 Speaker 1: like app Nexus that are starting to think about what 462 00:23:25,000 --> 00:23:29,439 Speaker 1: does advertising mean and a privacy first a privacy first world. Um, 463 00:23:29,480 --> 00:23:32,600 Speaker 1: but we're just learning what this is going to mean. So, Brian, 464 00:23:32,640 --> 00:23:36,040 Speaker 1: there's been some discussion about how the GDPR Europe and 465 00:23:36,119 --> 00:23:39,280 Speaker 1: other privacy rules are going to make people realize, Wow, 466 00:23:39,400 --> 00:23:42,800 Speaker 1: my data is valuable. I should be making money from it. 467 00:23:43,320 --> 00:23:46,760 Speaker 1: Do you see that happening where people directly get income 468 00:23:47,040 --> 00:23:52,840 Speaker 1: from advertisers. There are programs where they do so. Amazon 469 00:23:52,920 --> 00:23:55,640 Speaker 1: has an affiliate program where if you put an Amazon 470 00:23:55,760 --> 00:23:57,879 Speaker 1: ad on your site, you know, they'll pay you for 471 00:23:57,920 --> 00:24:01,919 Speaker 1: all the products that are sold through that links. An example. Um, 472 00:24:01,960 --> 00:24:04,520 Speaker 1: I think the challenges that we're already getting value from 473 00:24:04,520 --> 00:24:08,239 Speaker 1: our data through the content. So if I'm you know, 474 00:24:08,480 --> 00:24:13,040 Speaker 1: on on Facebook and I'm seeing my friends baby pictures 475 00:24:13,119 --> 00:24:16,159 Speaker 1: for free, I guess, um, that's being subsidized. All the 476 00:24:16,200 --> 00:24:19,080 Speaker 1: servers and engineers at Facebook are getting paid by ads. Pam. 477 00:24:19,119 --> 00:24:22,199 Speaker 1: I get the sense that he doesn't necessarily view his 478 00:24:22,320 --> 00:24:26,080 Speaker 1: friends baby pictures as a benefit, but I would pay 479 00:24:26,080 --> 00:24:28,200 Speaker 1: a lot of money for that. Okay, Yeah, But I 480 00:24:28,720 --> 00:24:30,760 Speaker 1: think you raised an interesting point because there's on the 481 00:24:30,800 --> 00:24:33,439 Speaker 1: one hand, there's this big conversation about privacy, right, you know, 482 00:24:33,480 --> 00:24:35,680 Speaker 1: there's a debate about it. Oh, everyone wants to secure 483 00:24:35,680 --> 00:24:39,560 Speaker 1: everything and so on. But when it comes to saying, oh, um, 484 00:24:39,760 --> 00:24:43,400 Speaker 1: we'll give you frequent flyer miles or we'll give you 485 00:24:43,520 --> 00:24:47,400 Speaker 1: some kind of bonus if you type in your age 486 00:24:47,600 --> 00:24:52,160 Speaker 1: and your address and your zip code, oh we want that, right, 487 00:24:52,200 --> 00:24:54,200 Speaker 1: So they want the plus side, but they don't want 488 00:24:54,200 --> 00:24:57,840 Speaker 1: the negative. I guess you're right. I mean, at the 489 00:24:57,920 --> 00:25:01,040 Speaker 1: end of the day, it's all about out you know. 490 00:25:01,160 --> 00:25:04,520 Speaker 1: Value transfer. So I'm willing to tell you my age 491 00:25:04,560 --> 00:25:08,000 Speaker 1: and my my gender because it doesn't cost me much. 492 00:25:08,080 --> 00:25:09,480 Speaker 1: You can just look at me right now and I 493 00:25:09,480 --> 00:25:13,399 Speaker 1: can probably infer it. Um. I'm not giving up much information. Now. 494 00:25:13,440 --> 00:25:15,879 Speaker 1: If I told you that I, you know, I am 495 00:25:15,920 --> 00:25:18,600 Speaker 1: an active road gain user, you might be like, ah ha, 496 00:25:18,880 --> 00:25:20,800 Speaker 1: I can market to this man, and I might not 497 00:25:20,920 --> 00:25:24,399 Speaker 1: want that being broadcast. We're not live, right, so you 498 00:25:24,440 --> 00:25:27,280 Speaker 1: know that's the thing I might want to Okay, good, good, 499 00:25:28,440 --> 00:25:31,320 Speaker 1: all right, So let me follow that up. Then, are 500 00:25:31,480 --> 00:25:34,639 Speaker 1: publishers getting a fair shake when it comes to the 501 00:25:34,680 --> 00:25:40,080 Speaker 1: information that they think they're receiving from the intermediary between 502 00:25:40,119 --> 00:25:43,920 Speaker 1: them and their supposed online customers. Now that's the hundred 503 00:25:43,920 --> 00:25:47,240 Speaker 1: billion dollar question. Google has built a hundred billion dollar 504 00:25:47,280 --> 00:25:52,080 Speaker 1: revenue business basically being that intermediary between publishers and the consumer. 505 00:25:52,480 --> 00:25:55,479 Speaker 1: Facebook has built a massive business where all they do 506 00:25:55,520 --> 00:25:58,640 Speaker 1: is take those baby pictures, layer on ads and sell 507 00:25:58,680 --> 00:26:02,760 Speaker 1: them back effectively to other consumers. So I don't think 508 00:26:03,000 --> 00:26:07,000 Speaker 1: that journalists and other real producers of content of high 509 00:26:07,040 --> 00:26:10,719 Speaker 1: quality editorial journalism are getting full fair value for that. 510 00:26:11,160 --> 00:26:12,560 Speaker 1: And I do think that's the thing that we as 511 00:26:12,560 --> 00:26:15,159 Speaker 1: a society are going to be really confronting over the 512 00:26:15,160 --> 00:26:18,440 Speaker 1: next few years. Perhabit the advertisers, are they getting real 513 00:26:18,560 --> 00:26:22,440 Speaker 1: information when it comes to who they think they're reaching? 514 00:26:23,240 --> 00:26:26,080 Speaker 1: I would argue no. Um, you know Google has used 515 00:26:26,080 --> 00:26:29,760 Speaker 1: this European privacy law to restrict the data that advertisers 516 00:26:29,760 --> 00:26:31,879 Speaker 1: can get. So as a publisher, you can give your 517 00:26:31,960 --> 00:26:34,280 Speaker 1: data to Google. As a consumer, you can give it 518 00:26:34,280 --> 00:26:36,800 Speaker 1: to Google. As an advertiser, you can give it to Google, 519 00:26:37,080 --> 00:26:39,680 Speaker 1: but nobody gets it back. So I want to talk 520 00:26:39,720 --> 00:26:42,000 Speaker 1: a little bit about app nexus because I think it's 521 00:26:42,000 --> 00:26:45,440 Speaker 1: a fascinating idea that in real time you can auction 522 00:26:45,520 --> 00:26:50,360 Speaker 1: off space on a website to advertisers and see who 523 00:26:50,400 --> 00:26:54,080 Speaker 1: bids the most for a specific viewers data and their 524 00:26:54,119 --> 00:26:57,919 Speaker 1: eyeballs for that moment. I just want to figure out 525 00:26:58,000 --> 00:27:02,199 Speaker 1: how much the costs of arry, how many advertisers bid 526 00:27:02,240 --> 00:27:05,040 Speaker 1: on each spot. I mean, how how active is this? 527 00:27:06,000 --> 00:27:09,480 Speaker 1: It's incredibly active. So on a given impression, so a 528 00:27:09,600 --> 00:27:13,000 Speaker 1: video or a website, as you say, um, there can 529 00:27:13,040 --> 00:27:16,000 Speaker 1: be hundreds or thousands of advertisers bidding and for a 530 00:27:16,040 --> 00:27:19,320 Speaker 1: really high value user. Um, let's say someone who just 531 00:27:19,359 --> 00:27:22,600 Speaker 1: searched for a vacation on a travel site, you can 532 00:27:22,640 --> 00:27:26,800 Speaker 1: see bids up to a thousand dollars per thousand impressions, 533 00:27:26,800 --> 00:27:30,199 Speaker 1: so a dollar per ad which is amazing at the 534 00:27:30,200 --> 00:27:33,080 Speaker 1: skill of the Internet. And then for other users you 535 00:27:33,119 --> 00:27:36,000 Speaker 1: might see it in the pennies. So huge range of 536 00:27:36,160 --> 00:27:39,439 Speaker 1: interest in different users in different contexts. So just to 537 00:27:39,440 --> 00:27:42,399 Speaker 1: be clear, the way that advertisers know who is looking 538 00:27:42,440 --> 00:27:45,399 Speaker 1: at them is that they use the cookies, uh and 539 00:27:45,480 --> 00:27:48,520 Speaker 1: sort of the information that they can glean from the website. 540 00:27:49,000 --> 00:27:53,000 Speaker 1: UH that is sort of asking them to be present 541 00:27:53,080 --> 00:27:56,240 Speaker 1: on and they also use the context. So someone who's 542 00:27:56,280 --> 00:27:59,280 Speaker 1: listening to this show right now is probably a very 543 00:27:59,359 --> 00:28:02,320 Speaker 1: high value user just because of you know, how great 544 00:28:02,359 --> 00:28:05,320 Speaker 1: this content is. And so of course, so an advertiser 545 00:28:05,400 --> 00:28:08,199 Speaker 1: might say, I'll pay more for that show than I 546 00:28:08,200 --> 00:28:12,040 Speaker 1: would for you know, some random stream on on Spotify 547 00:28:12,080 --> 00:28:14,720 Speaker 1: no one's ever heard. Um. So it's both who you 548 00:28:14,760 --> 00:28:17,440 Speaker 1: are and what you're listening to or what you're watching 549 00:28:17,520 --> 00:28:21,200 Speaker 1: or what you're doing. Interesting. Many thanks to you for 550 00:28:21,520 --> 00:28:24,399 Speaker 1: coming on and sharing this with us. I guess it 551 00:28:24,560 --> 00:28:27,320 Speaker 1: just reminds everybody that there's a lot that we don't 552 00:28:27,359 --> 00:28:29,640 Speaker 1: know about what goes on online. I love the idea 553 00:28:29,680 --> 00:28:31,840 Speaker 1: that somebody who just booked. A vacation is red meat. 554 00:28:31,920 --> 00:28:33,560 Speaker 1: It's like, Oh, we gotta sell them stuff. You're gonna 555 00:28:33,600 --> 00:28:37,560 Speaker 1: be buying lots of stuff, so travel insurance, you'll get those. 556 00:28:42,920 --> 00:28:45,440 Speaker 1: Thanks for listening to the Bloomberg P and L podcast. 557 00:28:45,800 --> 00:28:49,680 Speaker 1: You can subscribe and listen to interviews at Apple Podcasts, SoundCloud, 558 00:28:49,800 --> 00:28:53,280 Speaker 1: or whatever podcast platform you prefer. I'm Pim Fox. I'm 559 00:28:53,280 --> 00:28:57,320 Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa Abramo. 560 00:28:57,440 --> 00:29:00,000 Speaker 1: It's one before the podcast. You can always catch us 561 00:29:00,080 --> 00:29:04,760 Speaker 1: worldwide on Bloomberg radioh