WEBVTT - US House Passes TikTok Bill 0:00:02.920 --> 0:00:10.840 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.840 --> 0:00:15.000 Bloomberg Intelligence Podcast. Catch us Live weekdays at ten am 0:00:15.040 --> 0:00:17.520 Eastern on fo car Playing and broyd Otto with the 0:00:17.520 --> 0:00:21.400 Bloomberg Business app. Listen on demand wherever you get your podcasts, 0:00:21.640 --> 0:00:24.480 or watch us live on YouTube. 0:00:25.480 --> 0:00:27.880 The US House is passing the bill that would force 0:00:28.320 --> 0:00:31.320 TikTok sale or face a band. We want to get 0:00:31.320 --> 0:00:33.720 a little bit more on this with Daniel Flatley, Bloomberg 0:00:33.760 --> 0:00:38.240 national security reporter, joining us on this. Daniel, what happens 0:00:38.240 --> 0:00:40.800 now and kind of what is the victory here on 0:00:40.840 --> 0:00:42.160 a national security level? 0:00:43.560 --> 0:00:45.839 Yeah, I mean it's a it's a great question. So, 0:00:46.080 --> 0:00:48.640 like you said, the House just voted a pretty big 0:00:49.960 --> 0:00:53.480 vote in terms of support for the sale or band 0:00:53.520 --> 0:00:55.840 of TikTok. That was a vote of three fifty two 0:00:56.600 --> 0:01:00.160 in favor of sixty five against. So that gives it 0:01:00.240 --> 0:01:04.840 some momentum heading into what might be a much murkier 0:01:04.920 --> 0:01:07.520 pass forward in the Senate. You know, we've talked to 0:01:07.600 --> 0:01:11.160 senators over the last couple of days and basically they 0:01:11.200 --> 0:01:14.760 have some concerns as senators are wont to do about 0:01:14.760 --> 0:01:17.240 the speed with which this has passed The House and 0:01:18.040 --> 0:01:20.360 or moved through the House. And also is this the 0:01:20.440 --> 0:01:23.200 right approach? Do we want to you know, target a 0:01:23.240 --> 0:01:26.720 specific company. So we don't know yet. In the Senate's 0:01:26.760 --> 0:01:30.800 out today inconveniently, so we don't know exactly what the 0:01:30.800 --> 0:01:32.720 path forward will be in that chamber. But Biden has 0:01:32.760 --> 0:01:35.240 said that he would sign this if it passes Congress. 0:01:35.280 --> 0:01:37.039 So I think they're moving very quickly at the moment. 0:01:37.720 --> 0:01:39.679 Can you you know, you made this interesting point that 0:01:39.800 --> 0:01:42.319 the future of this looks a little bit murky, But 0:01:42.440 --> 0:01:46.240 can you just remind us what's the national security risk 0:01:46.400 --> 0:01:49.320 that we're facing, you know, such that we need to 0:01:49.360 --> 0:01:51.280 have this bill in order for it to be solved. 0:01:52.640 --> 0:01:57.320 Yeah, no, it's a great question. So critics of TikTok, 0:01:57.560 --> 0:02:01.840 you know, national security officials, including most prominently probably the 0:02:01.880 --> 0:02:05.360 FBI director Christopher Ray, have long sort of warned about 0:02:05.360 --> 0:02:09.680 two primary vectors, if you will, of national security threats 0:02:09.720 --> 0:02:13.440 that could come from TikTok. One is data. So you know, 0:02:13.560 --> 0:02:16.840 the government of China several years ago now passed a 0:02:16.919 --> 0:02:20.440 law that says any company that was within the Chinese 0:02:20.560 --> 0:02:23.400 territory could be compelled to give data over to the 0:02:23.480 --> 0:02:26.760 Chinese government. You know, if they ask for it. So 0:02:27.120 --> 0:02:29.919 that's one big problem. And then the other big problem 0:02:29.960 --> 0:02:33.160 is sort of could TikTok be used in an influence campaign, 0:02:33.200 --> 0:02:36.760 could have used to spread propaganda, you know, all sorts 0:02:36.800 --> 0:02:39.160 of things like that, could have been married potentially some 0:02:39.200 --> 0:02:41.880 of the data that's collected through TikTok with some other 0:02:41.960 --> 0:02:44.120 data that the Chinese government has gotten through hacks or 0:02:44.160 --> 0:02:49.399 other sort of cyber security actions and used to blackmail 0:02:49.480 --> 0:02:51.200 or bribe people. So that's all of that. 0:02:51.600 --> 0:02:53.720 Yeah, that's the one that really makes me nervous. Ll right, 0:02:53.760 --> 0:02:55.679 Daniel Thoughtley, We appreciate it when you're quite busy. A 0:02:55.680 --> 0:02:59.639 Bloomberg National security reporter joining us. So the broader question 0:02:59.680 --> 0:03:01.600 then is if TikTok is banned here in the US, 0:03:01.720 --> 0:03:04.240 what do you do with your ad dollars? Like, where 0:03:04.280 --> 0:03:06.560 do they wind up going? One person to go to 0:03:06.720 --> 0:03:09.480 on this Siemashaw, vice president of Research and Insights at 0:03:09.520 --> 0:03:12.799 Censor Tower. She joins us now to discuss Sema also 0:03:12.919 --> 0:03:15.680 used to work here, and she's really fabulous. You So 0:03:15.680 --> 0:03:17.160 we have I'm an advertiser. What do I do? Do 0:03:17.200 --> 0:03:19.799 I just go pile all that money into Instagram? Well? 0:03:19.840 --> 0:03:21.480 Okay, first, so the best way that we can go 0:03:21.480 --> 0:03:23.600 about thinking about this is thinking about what happened in 0:03:23.600 --> 0:03:26.200 India and June of twenty twenty when India band TikTok. 0:03:26.600 --> 0:03:30.040 So essentially what we saw was huge gains for both 0:03:30.160 --> 0:03:33.880 for Instagram in particular in terms of active users, but 0:03:34.000 --> 0:03:38.280 also on an absolute basis for YouTube. And to step 0:03:38.400 --> 0:03:41.000 up one step back, the reason is we've seen a 0:03:41.080 --> 0:03:44.560 huge growth in the popularity of short form video. Based 0:03:44.600 --> 0:03:47.760 on our data, users spend about three hundred and fifty 0:03:47.760 --> 0:03:50.840 million hours per day on short form video versus one 0:03:50.920 --> 0:03:53.480 hundred and fifty million for social media and less than 0:03:53.480 --> 0:03:57.400 fifteen million for streaming. So it's the popularity of this 0:03:57.560 --> 0:04:00.440 short form video and that's why you saw in Instagram 0:04:00.480 --> 0:04:03.840 roll out reels right. So now about forty over forty 0:04:03.840 --> 0:04:06.360 percent of peopil's time on Instagram is spent on the 0:04:06.360 --> 0:04:09.240 reels portion. So when you're an advertiser, not only do 0:04:09.240 --> 0:04:11.880 you want to be on the app where people have 0:04:11.920 --> 0:04:14.080 the most engagement, but you also want to be on 0:04:14.120 --> 0:04:16.760 the right place on the app. So in Instagram's case, 0:04:16.800 --> 0:04:20.000 it would be in reels. And so to think about 0:04:20.080 --> 0:04:21.680 so that's how much time people spend on short from 0:04:21.760 --> 0:04:25.400 video for TikTok in particular, globally, people spend seventy eight 0:04:25.440 --> 0:04:28.600 minutes per day on it compared to forty eight for Instagram, 0:04:28.680 --> 0:04:32.520 and I think it's like twenty three sub thirty for Snapchat. 0:04:32.720 --> 0:04:36.000 So Instagram has a highly engaged audience. It's become increasingly 0:04:36.040 --> 0:04:39.400 popular with advertisers because it has a younger audience. Right, 0:04:39.480 --> 0:04:42.680 So you see, we've seen ad dollars shift within the 0:04:42.800 --> 0:04:47.919 United States to TikTok, but Instagram remains popular. So I 0:04:47.960 --> 0:04:51.320 think that the short answer is you'll see gains in 0:04:51.440 --> 0:04:55.120 share for Instagram in terms of ad dollars, and probably YouTube, 0:04:56.040 --> 0:04:59.839 maybe less so Facebook because Instagram still has a younger 0:05:00.560 --> 0:05:04.960 audience than Facebook. But I think that is the biggest repercussion. 0:05:04.960 --> 0:05:07.680 But for TikTok itself, the US is ten percent of 0:05:07.680 --> 0:05:10.600 their active users, twenty percent of their in app revenue, 0:05:11.720 --> 0:05:14.720 and they've been growing their advertising business in the US 0:05:14.760 --> 0:05:18.400 and probably globally, so on an absolute basis, this would 0:05:18.480 --> 0:05:23.200 be a blow to them and symbolic because it's if 0:05:23.240 --> 0:05:25.240 it happened in the US, it could be copied in 0:05:25.320 --> 0:05:26.599 Western Europe as well. 0:05:27.080 --> 0:05:30.520 I had absolutely no idea that the proportion of people 0:05:30.560 --> 0:05:34.160 watching short form video versus social media was so skewed 0:05:34.240 --> 0:05:36.640 that way. But let me ask you a question from 0:05:36.640 --> 0:05:39.280 the point of view of an advertiser. So this is 0:05:39.320 --> 0:05:42.080 all about, well, where advertisers is going to put their money. 0:05:42.240 --> 0:05:44.520 But can you take a step back for me and 0:05:44.600 --> 0:05:49.799 give me a picture of where how popular is social 0:05:49.880 --> 0:05:54.679 media short form video spending versus other types of spending, billboards, whatever, 0:05:54.880 --> 0:05:55.640 magazine ads. 0:05:56.680 --> 0:05:58.839 So our data focuses on digital advertise. 0:05:59.080 --> 0:05:59.440 Digital. 0:05:59.680 --> 0:06:02.800 Digital is growing because that's where a greater portion of 0:06:02.839 --> 0:06:07.279 people's attention is, and particularly within apps, right because time 0:06:07.320 --> 0:06:09.960 on apps and you're kind of trapped you're looking at 0:06:09.960 --> 0:06:11.720 the ad, right, so if they place it on your 0:06:11.720 --> 0:06:13.440 feed or in your reels, you don't really have a 0:06:13.520 --> 0:06:17.960 choice but to see it. And because apps like Instagram 0:06:18.080 --> 0:06:20.160 and TikTok knows so much about the user, they can 0:06:20.200 --> 0:06:24.320 target their ads, right, so they can tell their advertisers, look, 0:06:24.360 --> 0:06:26.680 our audience is this, We're going to show your ad 0:06:26.720 --> 0:06:29.440 here where these people will see it. So I don't 0:06:29.480 --> 0:06:32.240 have the breakdown of digital versus traditional, but certainly digital 0:06:32.279 --> 0:06:35.520 is growing at a much much faster rate, and particularly 0:06:35.720 --> 0:06:36.600 in the mobile space. 0:06:36.640 --> 0:06:40.479 I mean, this is a very appealing business model. With 0:06:40.560 --> 0:06:43.560 a lot of growth, So yes, would it be easy 0:06:43.640 --> 0:06:46.680 for another company to buy TikTok. Then, based on all 0:06:46.720 --> 0:06:49.760 these users, all this AD revenue and the growing. 0:06:49.440 --> 0:06:53.479 Platform, assuming they could just buy TikTok as is without 0:06:53.520 --> 0:06:57.039 any other changes, it would be a huge gain for 0:06:57.120 --> 0:07:01.560 somebody who's trying to grow in this space, right, because 0:07:01.680 --> 0:07:04.960 it's really hard now to grow users. Instagram as growing users, 0:07:06.080 --> 0:07:08.680 TikTok has seen a deceleration in the growth rate, it's 0:07:08.680 --> 0:07:14.120 still positive. And then apps like Snapchat are seeing growth internationally, 0:07:14.600 --> 0:07:16.640 but that's because they haven't been there before. But for 0:07:16.680 --> 0:07:21.040 the most part, similar to streaming, it's the apps are 0:07:21.120 --> 0:07:23.480 very saturated right in terms of downloads, so you have 0:07:23.560 --> 0:07:26.000 to think of what can you do to drive that engagement, 0:07:26.480 --> 0:07:28.840 right and so reels and then obviously TikTok have been 0:07:28.880 --> 0:07:31.680 able to get that attention and drive that engagement. So 0:07:32.000 --> 0:07:34.000 if you're somebody who wants to be in this space 0:07:34.240 --> 0:07:36.800 and you're not owned by a Chinese company, this would 0:07:36.800 --> 0:07:38.320 be a great opportunity for you. 0:07:39.840 --> 0:07:41.559 So get into this real quick. 0:07:41.960 --> 0:07:44.440 This is the trick question or the billion dollar question. Now, 0:07:44.640 --> 0:07:47.200 who would be a potential buyer? Do you have any 0:07:47.240 --> 0:07:47.880 thoughts on that? 0:07:49.400 --> 0:07:52.200 I've heard news of a lot of different companies buying it. 0:07:52.320 --> 0:07:55.280 I mean, I think you would depend also on a regulation. 0:07:55.480 --> 0:07:58.360 I mean, clearly one of the existing social media platforms 0:07:58.360 --> 0:08:01.600 may want to buy them. I don't think meta platforms 0:08:01.600 --> 0:08:03.560 would be allowed to do so. But then you have 0:08:03.640 --> 0:08:08.960 someone like a Snap or even smaller ones like Pinterest, 0:08:09.440 --> 0:08:11.480 if they were able to finance such a purchase, that 0:08:11.520 --> 0:08:16.360 would certainly push them way up in terms of active users, engagement, 0:08:16.480 --> 0:08:19.560 and understanding the audience even better because they'd have that 0:08:19.600 --> 0:08:21.000 many more users to analyze. 0:08:21.040 --> 0:08:23.600 Semen, it's so great to see you, amazing analysis and 0:08:23.600 --> 0:08:27.440 stat Semasheaw, vice president of Research Insights over at Sensor Tower, 0:08:27.680 --> 0:08:29.400 giving us the lay of the land on what's up 0:08:29.400 --> 0:08:32.000 next for TikTok. As the House does pass the bill 0:08:32.120 --> 0:08:34.200 to either banon or spin an off, does it go 0:08:34.280 --> 0:08:36.280 to the Senate? Is really now the question? 0:08:37.960 --> 0:08:41.839 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:08:41.920 --> 0:08:45.440 weekdays at ten am Eastern on applecar Play and Android 0:08:45.480 --> 0:08:48.240 Auto with the Bloomberg Business app. You can also listen 0:08:48.360 --> 0:08:51.440 live on Amazon Alexa from our flagship New York station, 0:08:51.840 --> 0:08:54.880 Just Say Alexa Play Bloomberg eleven thirty. 0:08:56.080 --> 0:08:57.920 The other breaking news we had in the last half 0:08:58.000 --> 0:09:02.560 hour is a jug dug in Georgia has dismissed some 0:09:02.840 --> 0:09:06.640 of the counts against former President Trump. Trying to understand 0:09:06.679 --> 0:09:10.560 what that means, particularly how that sets him up going forward. 0:09:10.600 --> 0:09:15.360 Wendy Benjaminson is Washington Senior editor, and she joins us, Now, Wendy, 0:09:15.360 --> 0:09:16.120 what does this mean. 0:09:17.080 --> 0:09:20.600 Well, it is certainly good news for Donald Trump, and 0:09:20.679 --> 0:09:23.000 I'm sure he will he will crow about it and 0:09:24.440 --> 0:09:28.000 offer it up as proof that these are political persecutions. However, 0:09:28.080 --> 0:09:30.480 it leaves some of the more serious charges in place. 0:09:30.800 --> 0:09:34.040 The charges that were dismissed were the charges involving that 0:09:34.360 --> 0:09:37.480 quote unquote perfect many one of his many perfect phone calls, 0:09:37.480 --> 0:09:41.160 so quote unquote to the Secretary of State of Georgia, 0:09:41.200 --> 0:09:44.760 the administer of the elections who you know who heard 0:09:44.840 --> 0:09:47.880 Trump say to him, I just need you to find 0:09:47.880 --> 0:09:52.600 me eleven thousand votes. So that the charge was interfering 0:09:52.679 --> 0:09:56.960 with acted official or solicitation of you know, bad acts. 0:09:57.040 --> 0:09:59.800 So those charges were dismissed. However, there are still these 0:10:00.080 --> 0:10:04.400 rico charges. Those are the racketeering and influence corrupt organization 0:10:04.640 --> 0:10:08.760 charges that prosecutor Fannie Willis has charged Trump with and 0:10:08.800 --> 0:10:12.880 those charges remain, so he is still in jeopardy of 0:10:12.440 --> 0:10:16.400 a felony conviction in the state of Georgia. However, this 0:10:16.520 --> 0:10:19.480 is the same judge who is deciding whether Fannie Willis 0:10:19.480 --> 0:10:24.360 can remain as the prosecutor who you know, over these 0:10:24.559 --> 0:10:28.240 allegations of favoring a certain prosecutor that she was dating 0:10:28.960 --> 0:10:31.920 the man whom she made special prosecutor, so that's still 0:10:31.960 --> 0:10:35.160 hanging over her head. The other reason this may not 0:10:35.320 --> 0:10:39.160 be as great news for Trump as he will undoubtedly 0:10:39.200 --> 0:10:45.800 post or talk about later today is that the judge 0:10:45.840 --> 0:10:50.679 said that Fannie Willis was free to refile charges in 0:10:50.720 --> 0:10:53.400 a different way. So clearly there was some technicality we 0:10:53.440 --> 0:10:56.360 don't know about that led him to dismiss the charges. 0:10:56.400 --> 0:10:57.520 I'm sure we'll know more later. 0:11:00.440 --> 0:11:02.040 Can you give us some sense of the timeline for 0:11:02.120 --> 0:11:04.720 all of these charges in court cases getting resolved, not 0:11:04.760 --> 0:11:07.040 just in Georgia but elsewhere well. 0:11:07.200 --> 0:11:11.640 The hope of some, particularly Democrats, that this would be 0:11:11.679 --> 0:11:15.400 resolved before the election are dimming now there is supposed 0:11:15.400 --> 0:11:18.520 to be jury's election later this month. In the New 0:11:18.600 --> 0:11:22.840 York case over his hush money payments to the porn 0:11:22.920 --> 0:11:25.320 star of Stormy Daniels, whom we allegedly had an affair 0:11:25.360 --> 0:11:28.200 with that's supposed to start later this month. Trump is 0:11:28.240 --> 0:11:31.760 trying to delay it by arguing that they need to 0:11:31.800 --> 0:11:34.679 wait till the Supreme Court rules on immunity. That may 0:11:34.720 --> 0:11:39.800 not be till June. So, like I said, the chances 0:11:39.840 --> 0:11:43.320 of these trials all coming to fruition before the election 0:11:43.520 --> 0:11:47.600 are are slim, but they may be in progress on 0:11:47.640 --> 0:11:52.760 election day, which would be just another unprecedented moment in 0:11:52.840 --> 0:11:53.760 this crazy election. 0:11:53.880 --> 0:11:57.040 Here talk about unprecedented. It is now official. The US 0:11:57.080 --> 0:12:00.320 House passes the bill that would force TikTok sale or 0:12:00.360 --> 0:12:04.000 potentially face a ban. We will talk about that in 0:12:04.040 --> 0:12:06.720 just a moment, sort of what advertisers do in that 0:12:06.840 --> 0:12:09.199 kind of situation. Again, the US passes bill that would 0:12:09.559 --> 0:12:13.320 force TikTok sale or face a ban, as one hundred 0:12:13.360 --> 0:12:20.000 and seventy million people cry, particularly teenagers, cry with pain. 0:12:21.080 --> 0:12:24.400 I do want to get your understanding, Wendy, that what 0:12:24.600 --> 0:12:27.360 is now the smoking gun case that President Trump is 0:12:27.440 --> 0:12:30.280 up against? Right like in all the polling, there is 0:12:30.320 --> 0:12:32.960 always that one thing. If he's convicted on that, I 0:12:33.000 --> 0:12:35.880 won't vote for him. Is there a that still? 0:12:36.440 --> 0:12:39.720 No? Actually, there isn't our Bloomberg News Morning Console poll 0:12:39.840 --> 0:12:42.839 shows that the country the least swing staved voters, who 0:12:42.840 --> 0:12:46.040 are the crucial voters were waiting for are evenly split 0:12:46.280 --> 0:12:48.559 on whether they would still vote for Trump if he 0:12:48.640 --> 0:12:50.600 were convicted on any of these charges. 0:12:51.640 --> 0:12:51.840 There. 0:12:52.160 --> 0:12:54.240 If you just asked the question, would you vote for 0:12:54.320 --> 0:12:57.320 him if he were convicted felon, fifty three percent said 0:12:57.360 --> 0:13:00.000 they would not. But when you divide the cases up 0:13:00.120 --> 0:13:02.199 up into the hush money payments for a point star 0:13:02.320 --> 0:13:05.200 or overthrowing the government, they feel the same way. They 0:13:05.440 --> 0:13:09.839 they're not seeing these cases as one more important than 0:13:09.880 --> 0:13:10.160 the other. 0:13:10.720 --> 0:13:13.000 All right, Wendy, we appreciate it. Thank you very much 0:13:13.000 --> 0:13:17.360 for jumping on with us, Wendy. Benjaminson is Washington Senior editor. 0:13:19.840 --> 0:13:23.720 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:13:23.800 --> 0:13:26.400 weekdays at ten am Eastern on Apple car Play and 0:13:26.440 --> 0:13:29.040 the Broyd Outo with the Bloomberg Business app. Listen on 0:13:29.160 --> 0:13:32.400 demand wherever you get your podcasts, or watch us live 0:13:32.520 --> 0:13:33.880 on YouTube. 0:13:34.600 --> 0:13:37.520 Let's get Ben Emmons take here, you senior portfolio manager, 0:13:37.559 --> 0:13:39.920 head of fixed income at you as well. He's standing 0:13:39.920 --> 0:13:42.720 by here. So and also if you were in the market, 0:13:42.880 --> 0:13:45.120 you read his notes. They are so great, they are 0:13:45.160 --> 0:13:47.600 so sweeping. They come at least two to three times 0:13:47.640 --> 0:13:49.840 a day. It's one of my go to things to read. Ben. 0:13:49.840 --> 0:13:51.960 So I do want to say thank you for those notes. 0:13:52.880 --> 0:13:54.640 Do you have a Tesla, Juba tesla or an EV? 0:13:56.080 --> 0:13:59.199 I don't, Alix, by the way, fantastic to be with 0:13:59.280 --> 0:14:01.760 you on the show. I think the last time you 0:14:01.800 --> 0:14:05.240 and I spoke was more than five years ago, actually 0:14:05.240 --> 0:14:08.840 were Yeah, it's true. It was right before the pandemic. 0:14:08.880 --> 0:14:10.480 It was in it was in the studio of New 0:14:10.520 --> 0:14:13.960 York with you. So great. Great to be back with you. Yeah, 0:14:14.120 --> 0:14:15.640 so thank you by the way for the shadow on 0:14:15.679 --> 0:14:18.760 the notes. I I don't have a Tesla. In fact, 0:14:18.760 --> 0:14:21.400 I have a Volvo. That's uh, you know that's kind 0:14:21.400 --> 0:14:24.520 of my favorite from my wife. Yeah, that's like European thing, right, 0:14:24.520 --> 0:14:27.800 It's like, you know, it was stuck with that, yeah, 0:14:27.920 --> 0:14:30.600 you know, but a normal gas car. But you know 0:14:30.720 --> 0:14:34.040 to the EV discussion, you know I wrote about us 0:14:34.400 --> 0:14:36.960 not that long ago, but these EV terrors right as in, 0:14:37.440 --> 0:14:39.720 there's going to be I think part of that trade 0:14:39.720 --> 0:14:42.480 war story coming back that the flood of evs from 0:14:42.520 --> 0:14:45.360 out of China is so significant. I was just reading 0:14:45.360 --> 0:14:48.200 the B y D Company, Right, they're putting out a 0:14:48.240 --> 0:14:51.600 new car for twelve thousand dollars that you can buy. 0:14:51.800 --> 0:14:54.560 And this is why these evs are flooding our markets. 0:14:54.560 --> 0:14:55.720 And I think you're going to get a lot of 0:14:55.720 --> 0:14:59.440 pushback from from from the US and Europe and trying 0:14:59.440 --> 0:15:02.120 to you know, curb those those those cars coming into 0:15:02.120 --> 0:15:04.880 countries because it's a major price competition to the likes 0:15:04.880 --> 0:15:05.800 of Tesla and others. 0:15:06.360 --> 0:15:08.080 Well, can you talk a little bit more about that, 0:15:08.120 --> 0:15:10.640 because we've got all the major automakers got their have 0:15:10.720 --> 0:15:12.800 their own EV plays and then we've seen some some 0:15:12.880 --> 0:15:15.360 of them pulling back, and so where is this all 0:15:15.400 --> 0:15:16.040 going to settle? 0:15:18.080 --> 0:15:20.120 Yeah, I think it's going to settle at lower prices. 0:15:20.160 --> 0:15:24.480 I'm afraid. Right, this is real price competition. And you know, 0:15:25.040 --> 0:15:27.440 I think part of the reason why why Tesla is 0:15:27.480 --> 0:15:31.320 losing its Magnificent seven status it was it had a 0:15:31.400 --> 0:15:33.800 very smart tactic I think about a year two years ago, 0:15:34.400 --> 0:15:37.680 lowering prices and thereforejuiceing the sales. And now you're seeing 0:15:37.720 --> 0:15:40.320 the opposite sign of it, at least for now, right 0:15:40.320 --> 0:15:42.760 there may have to cut more in prices to get 0:15:43.000 --> 0:15:47.200 higher sales, right, So it's the competition aspect microeconomics as 0:15:47.240 --> 0:15:49.560 you will. But I think this is what what what 0:15:49.600 --> 0:15:51.880 the EV market is ultimately about, is going to be 0:15:51.920 --> 0:15:55.120 even lower prices. And for China that doesn't matter, right, 0:15:55.200 --> 0:15:57.960 They like to continue to produce at even lower prices, 0:15:57.960 --> 0:15:59.800 So I expect more competition. 0:16:00.360 --> 0:16:02.200 So, Ben, let's broad out for a second, because we've 0:16:02.240 --> 0:16:05.240 been talking about how the NASDAC is selling off. I've 0:16:05.320 --> 0:16:08.040 used that relative term, and you still have small caps 0:16:08.040 --> 0:16:12.320 holding up. Is this a rotation that we think putting 0:16:12.480 --> 0:16:16.720 yesterday aside, this rotation from tech to small caps has legs. 0:16:18.000 --> 0:16:21.400 I think it does have sum legs alex because it 0:16:21.520 --> 0:16:25.400 makes sense that if you have a specific group semiconductors 0:16:25.400 --> 0:16:28.400 in this case in the video, maybe the star of it, 0:16:28.480 --> 0:16:31.119 but there's other related ones if you think of Broadcom, 0:16:31.120 --> 0:16:35.040 of IBM or any of those companies, that it expands 0:16:35.040 --> 0:16:37.760 itself out to other sectors. Now, I thought what was 0:16:37.840 --> 0:16:41.680 really interesting was the earnings from Navidia highlighting that their 0:16:41.760 --> 0:16:45.800 technology is now being used in healthcare and financial services, 0:16:46.200 --> 0:16:49.880 in automotive and I thought that was like, Okay, this 0:16:50.000 --> 0:16:55.080 is actually along Gens's view about these AI agents, right, 0:16:55.080 --> 0:16:59.280 they're spreading across the industries, and I think this is 0:16:59.360 --> 0:17:01.920 part of that moddening aspect of the market. Like if 0:17:01.920 --> 0:17:05.399 that's true the investment that the administration making in the 0:17:05.880 --> 0:17:09.240 semis in the economy, plus in the VIA being such 0:17:09.280 --> 0:17:12.240 a powerful force on the economy in itself by spreading 0:17:12.240 --> 0:17:14.920 all this technology, then the other sectors are going to 0:17:14.960 --> 0:17:16.480 lift up too. At least the market will try to 0:17:16.520 --> 0:17:18.800 price it. You know what it means for the economy 0:17:18.840 --> 0:17:22.320 for out companies. Of course, in the end of the day, 0:17:22.440 --> 0:17:25.320 we do have to see AI truly pay off with sales, 0:17:25.960 --> 0:17:29.159 meaning you use AI and it can actually generate more sales, 0:17:29.160 --> 0:17:32.640 and say in healthcare of financial financial sector, say right, 0:17:33.480 --> 0:17:35.679 we haven't seen that yet, But I think the market 0:17:35.720 --> 0:17:38.840 wants to broaden out to discount that these sales will 0:17:38.920 --> 0:17:41.880 increase over time as AI is more widely adopted. 0:17:42.720 --> 0:17:44.800 I wonder if we could shift here just a little 0:17:44.840 --> 0:17:48.640 bit and think about the yesterday's CPI print, because we've 0:17:48.680 --> 0:17:50.880 got this broadening out in the equity market, but there's 0:17:50.920 --> 0:17:53.720 also an enthusiasm there for the Fed to continue with 0:17:53.800 --> 0:17:56.560 its easing message, and so I wondered if you thought 0:17:56.880 --> 0:18:00.760 the CPI number yesterday should you know, give anyone some 0:18:00.800 --> 0:18:03.040 confidence that there's still cuts coming, or are you more 0:18:03.080 --> 0:18:05.119 of a mind that, hang on a minute, we might 0:18:05.160 --> 0:18:06.800 see fewer cuts and people are expecting. 0:18:08.160 --> 0:18:11.200 Yeah, I'm more on that on that camp fewer cuts, 0:18:11.520 --> 0:18:14.479 because I think what this CPI data showed was that 0:18:14.960 --> 0:18:19.960 one the disinflation is stalling out. That's clearly now happening. 0:18:21.280 --> 0:18:24.480 Two we're certainly not going to go back to where 0:18:24.480 --> 0:18:28.160 we came from pre pandemic. There's too much pricing pressure 0:18:28.280 --> 0:18:31.800 building in the economy. Still, We're certainly not that the 0:18:31.840 --> 0:18:34.920 disinflation is going to flip over into deflation, even though 0:18:34.920 --> 0:18:37.800 I would know that. Bloomer Intelligence are a very nice 0:18:37.840 --> 0:18:41.360 graph out on how the number of categories with prices 0:18:41.400 --> 0:18:44.359 below zero has definitely increased. But if you look at 0:18:44.359 --> 0:18:46.800 the percentage was about thirty five percent of CPI index. 0:18:47.119 --> 0:18:49.560 That's not too significantly different from a few years ago, 0:18:49.640 --> 0:18:53.160 but it has somewhat increased. I guess again, price competition 0:18:53.240 --> 0:18:56.880 probably in the economy. So I think the feeds at 0:18:56.880 --> 0:19:00.879 that moment to say this CPI data there underscores that 0:19:00.920 --> 0:19:04.399 the economy stays above trend and until the economy truly 0:19:04.440 --> 0:19:07.479 moves back to trend right, just to trend, you cannot 0:19:07.520 --> 0:19:10.640 actually cut rates. I think that that is I think 0:19:10.640 --> 0:19:13.320 the big challenge for the fat here why they probably 0:19:13.359 --> 0:19:14.840 stay on hold for a little while. 0:19:15.080 --> 0:19:17.160 Right, And first of all, if you shot ut Bloomberg 0:19:17.200 --> 0:19:19.560 intelligence like you're coming back all the time, like that's 0:19:19.600 --> 0:19:23.280 a definite plus one for ben Emmons. But if that's 0:19:23.320 --> 0:19:25.639 the case, and I mentioned earlier that Jeffrey is starting 0:19:25.680 --> 0:19:28.440 to talk about that also sort of following Torsten slockover 0:19:28.480 --> 0:19:30.719 at Apollo, why buy small caps? 0:19:32.520 --> 0:19:35.880 Yeah, I think you need to trade that differently. Ale said, 0:19:35.960 --> 0:19:38.800 you know, people, if you traded too simplistically, like cut 0:19:38.880 --> 0:19:41.800 rates and then buy small caps. There's a lot in 0:19:41.840 --> 0:19:44.879 between there, right, you know one the small cup index. 0:19:45.119 --> 0:19:46.760 You know a lot of people look at that like, Okay, 0:19:46.800 --> 0:19:48.960 there's about I guess forty percent or so that our 0:19:49.200 --> 0:19:52.760 companies are highly indebted, non profitable companies. I guess they 0:19:52.840 --> 0:19:57.160 benefit from lower rates. But it's also just I think 0:19:57.200 --> 0:20:00.480 it was of the economy in itself. I think small caps, 0:20:00.520 --> 0:20:02.720 I think of small business, I think of you know, 0:20:02.800 --> 0:20:06.520 what's all happening on the ground. So was I think 0:20:06.560 --> 0:20:09.040 notable is what Bostic said that they went out and 0:20:09.040 --> 0:20:12.280 did a survey among businesses, and as businesses said like, well, 0:20:12.840 --> 0:20:14.960 we think that if you cut rates the economy is 0:20:14.960 --> 0:20:17.159 only going to get stronger. We're actually waiting for you 0:20:17.240 --> 0:20:19.639 to do that and then we'll re see even more activity. 0:20:20.160 --> 0:20:23.080 So it is partly true that I think cutting rates 0:20:23.080 --> 0:20:26.520 will benefit small caps, but there's also some micro aspects 0:20:26.520 --> 0:20:29.280 to it, so I won't be all in our view 0:20:29.320 --> 0:20:31.320 by the way the new edge is said, as Cameron 0:20:31.359 --> 0:20:33.600 probably talked to you about it, is that we're taking 0:20:33.680 --> 0:20:36.879 very selective approach to small caps because as you can 0:20:36.920 --> 0:20:38.879 tell when we haven't set a new record higher small 0:20:38.920 --> 0:20:41.520 caps really because they are downs about radcots. On the 0:20:41.520 --> 0:20:44.439 other end, it's also about specific companies there. So it's 0:20:44.480 --> 0:20:46.199 a bit of a mixed back I think, and it 0:20:46.240 --> 0:20:48.640 probably will stay that way until we get a little 0:20:48.640 --> 0:20:51.600 bit more clarity on if the economy is going to 0:20:51.680 --> 0:20:53.879 keep tracking on the way we are doing right now. 0:20:54.160 --> 0:20:55.879 What do you think is the biggest risk there for 0:20:55.920 --> 0:20:57.920 the economy to keep tracking the way that we're going now? 0:20:59.680 --> 0:21:03.040 Wow, One, it's that we are going to see a 0:21:03.200 --> 0:21:07.520 change in fiscal spending. If that actually happens as in 0:21:08.200 --> 0:21:11.560 more cuts, right then I think the economy could slow, 0:21:11.880 --> 0:21:13.800