Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene
Speaker 1: Jay Lee. We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. Let's
Speaker 1: get you back up to speed with that ECB rate decision.
Speaker 1: Shall we rates unchanged? But they've always was always this
Speaker 1: suspicion that maybe they tweaked forward guidance, and they have done.
Speaker 1: The forward guidange used to be the e C B
Speaker 1: c S rates as a present level for as long
Speaker 1: as needed, or at least through the end of the
Speaker 1: new guidance essentially is that rates at present or lower
Speaker 1: levels for as long as needed. So that's an extension
Speaker 1: and strengthening of forward guidance. So that story wants story
Speaker 1: two on rates. If they introduce a lower interest rates.
Speaker 1: They've ordered a review of options, including a tiered system
Speaker 1: for rates, so that would offset some of the paying
Speaker 1: for the financials. Good news sort of financials, good news
Speaker 1: for the bank. So you're a weaker down by a tenth.
Speaker 1: Banks up on the stocks, fifty euro stocks fifty up
Speaker 1: by a little more than two percent, So that's forward guidance,
Speaker 1: that's rates. Let's talk about asset purchases. ECB staff also
Speaker 1: examining options for potential new asset buying, so under consideration,
Speaker 1: a review of options on rates included in a tiered
Speaker 1: system for rates and options for potential new asset buying
Speaker 1: as well. So qui under consideration, tearing under consideration, and
Speaker 1: it looks like this could all come Lisa Bravits as
Speaker 1: soon as September. This is exactly what the market was
Speaker 1: expecting though, right, I mean, honestly, this is this is
Speaker 1: pretty much Uh. They figured the ECB would being trying
Speaker 1: to assemble some sort of package to really hit the
Speaker 1: Eurozone and try to ignite some growth. This how it
Speaker 1: confirms that. Yeah. I think it's really encouraging though to
Speaker 1: see the bank stocks up by two point nine percent
Speaker 1: in Europe. Less focused on the euro for me at least,
Speaker 1: just looking at the financials and the equities responding positively
Speaker 1: to this decision. Basically, the the idea, the implication here
Speaker 1: being that that the ECB understands the pain that would
Speaker 1: be inflicted on the banks if it didn't do some
Speaker 1: sort of alleviation of the steep discount rate given the
Speaker 1: fact that they would have to pay zero point five
Speaker 1: percent on their deposits held overnight if they did lower
Speaker 1: rates without tearing, the idea that they wouldn't have to
Speaker 1: pay all of that is giving some confidence to European
Speaker 1: banks at least. I would also say my other interpretation
Speaker 1: of this decision as well, I don't think they've held
Speaker 1: off until September because they get the staff forecast. I
Speaker 1: think they've hold off. They're holding off until September because
Speaker 1: they haven't really agreed on the parameters for a new
Speaker 1: asset purchase program. Is pretty clear that they're still examining
Speaker 1: options for that. That headline has come across the Bloomberg
Speaker 1: also pretty clear over the last few months since President
Speaker 1: drag first head up the idea of tearing if rates
Speaker 1: went eve and lower, it looks like they're still reviewing
Speaker 1: that too. So I think the reasons to hold off
Speaker 1: until September are not about forecast. It's about actually coming
Speaker 1: to an agreement about the parameters for new bond buying
Speaker 1: and whether you introduced hearing and coming out with a
Speaker 1: full guns of blazing package to say here's what we
Speaker 1: got and shark and are let's get this started. I
Speaker 1: mean really, and it's not just going to be one
Speaker 1: little blip of a move and then sort of trickle
Speaker 1: out the rest. Let's bring in Semas Shash now were
Speaker 1: principal global investors chief strategies seem a great timing with
Speaker 1: us on the program. Your interpretation of the decision in
Speaker 1: the last ten minutes, Yeah, not too dissimil to what
Speaker 1: you've said. I mean, I think maybe what happened this
Speaker 1: morning was given the very weak iPhone number and then
Speaker 1: also the week here nights from yesterday, but that perhaps
Speaker 1: the market had raised slightly their expectations for every cup today.
Speaker 1: But in truth this has really met expectations. I think
Speaker 1: they have done some pretty good staff in terms of
Speaker 1: an auncual tearing as you said that it's very important
Speaker 1: for banks because up till now you've had easily policy
Speaker 1: which is really been undermined by generally to rate not
Speaker 1: really helping banks. So that's certainly positive and with potential
Speaker 1: for que You know, I don't think anyone was really
Speaker 1: expecting an announcement today, but the fact is that they
Speaker 1: are layering the laying the groundwork or something to be
Speaker 1: done at least some more details in September. It may
Speaker 1: be that it's really left for Christine regards to actually
Speaker 1: bring it into force, and really the market just wants
Speaker 1: to know that, and I think from here on there's
Speaker 1: a lot of focus on what are they likely to buy?
Speaker 1: And we know from previous times that the corporate bond
Speaker 1: purchase program was the most effective, and that is what
Speaker 1: the market is frexing on, so seeming let's focus on
Speaker 1: that just for a moment. As we know and pointed
Speaker 1: out by Mergy investments of the high grade market in
Speaker 1: the European credit market right now of financials, do you
Speaker 1: think there's a possibility that the ECB could start buying
Speaker 1: the debt of the companies that they also have to regulate.
Speaker 1: I think that may well be a step too far
Speaker 1: at this stage. I think there's so many umt of
Speaker 1: various constraints constructions that they are under that that may
Speaker 1: have to be a step further. And you may only
Speaker 1: see that once the market or the economy continues to weaken.
Speaker 1: You don't feel like aner deposit is really helping banks.
Speaker 1: So I think that's that's further step in the same
Speaker 1: way that you know, we hear all the circulations. Are
Speaker 1: the ECB ever been to buy equities. I think you
Speaker 1: need to your really drastic deterioration in the economy before
Speaker 1: they go down that road. So let's say the ECB
Speaker 1: does come through with what the market is currently expecting,
Speaker 1: a rate cut, tearing and some sort of format for
Speaker 1: what further asset purchases would look for, look like, will
Speaker 1: that work? Will that? Will that actually jumps out the
Speaker 1: European economy? Well, you know, I think that's a key
Speaker 1: question because what we have here is you have Montro policy.
Speaker 1: Really it's at the walls of its effectiveness, so you
Speaker 1: can only move the das so much. A lot of
Speaker 1: it's going to be via the communication and simply you know,
Speaker 1: if they were to just do a rate cut and
Speaker 1: maybe tearing, that's simply not enough. It definitely needs the
Speaker 1: quite I think for me, when I look at as
Speaker 1: the classes, the key beneficiary assuming all of that comes in,
Speaker 1: is going to be the credit side. Um And it's
Speaker 1: not a fundamental it's simply a technical move and that's
Speaker 1: what the markets happened. But that from the fundamentals, I
Speaker 1: am very gubious this is going to really push Europe
Speaker 1: out of the kind of stagnation that we are seeing
Speaker 1: in just the next year. Yes, s, I think you've
Speaker 1: touched on something really important, just a supply story. Are
Speaker 1: you going to buy the supply story? If they buy
Speaker 1: more corporate debt will be less corporate debt for other
Speaker 1: people to buy yours a going lower that may well
Speaker 1: apply to credit on the sovereigns. What fascinates me is
Speaker 1: whether you buy the effectiveness story, because ultimately that would
Speaker 1: mean you sell ten year buns because you believe the
Speaker 1: ECB policy will work. Are you essentially saying seeing on
Speaker 1: the sovereign side, don't expect higher bund yields on longer
Speaker 1: maturities anytime soon. No, I don't think this can be
Speaker 1: any meetings or thing on on buns. I mean, I
Speaker 1: think you know there's keeping of you know, you simply
Speaker 1: cannot cite the technicals, so they may well I think,
Speaker 1: you know, especially if he comes in and be surprising marketing,
Speaker 1: you could see your slightly down the bund deal. But
Speaker 1: they have to be close to best law. Um. You know,
Speaker 1: we all know that the peripheral yields are the ones
Speaker 1: are gonna be the key beneficiaries for any ECG move
Speaker 1: and the boon side the kind of France, they may
Speaker 1: not be the key beneficiaries that I fee that we
Speaker 1: could see some movement from Italy from Spain still, but
Speaker 1: there's you said Germany. It could be a different question,
Speaker 1: seem I. Do you agree with Larry Fink of Black
Speaker 1: Rock that the ECB should buy equities? You know, I
Speaker 1: think that there is certainly case, but I think there's
Speaker 1: a very big difference between Europe and the U S
Speaker 1: And the key thing is this in the US, whereas
Speaker 1: a lot of retail investors are in equity, in Europe,
Speaker 1: it is simply not the case because they have a
Speaker 1: smaller holding of equities related to the US. So if
Speaker 1: the ECB buy equities, it actually has less of an
Speaker 1: impact on the underlying economy than it would do in
Speaker 1: the US. There is less of a reason. The ECB
Speaker 1: is also under major constraints politically, illegally, um So I
Speaker 1: think that that is actually the last step in the
Speaker 1: Roadman Ta right now down three basis points, fresh record
Speaker 1: low on a ten year maturity in the bond market,
Speaker 1: you'll yield negative forty one basis points. Lisa Ramots yields
Speaker 1: grinding even lower on the continent. Well, and this really
Speaker 1: raises a question Seema about the efficacy as we were
Speaker 1: just talking about, because if you look at market expectations,
Speaker 1: it is that the ECB will be ineffective. I mean,
Speaker 1: you're seeing the yield curve shrink, given the fact that
Speaker 1: you're seeing that ten year boon yield dropped to all
Speaker 1: time record lows if you look at five year, five
Speaker 1: year forward break even raids. I'm just wondering, you know,
Speaker 1: will this effectively hurt the recovery of the euro Zone
Speaker 1: of the ECB doubles down and add stimulus here. I mean,
Speaker 1: I don't know if it would necessarily hurt, but I
Speaker 1: think that maybe, you know, maybe we're am looking at
Speaker 1: the wrong wrong indicator, which is the key stimulus is
Speaker 1: going to come in through the Euro and I think
Speaker 1: maybe that's what they're trying to move here. Um, you know,
Speaker 1: so far this is it's on expectation to you. Wait,
Speaker 1: this is important, hold on a second. So in other words,
Speaker 1: currency wars, yeah, and you know, I mean let's say,
Speaker 1: let's say, for example, that Jegy had done stoping today
Speaker 1: is something pretty aggressive in terms of rate cuts. We
Speaker 1: know that there would be some kind of response from
Speaker 1: the Use administration. Now today we haven't got that, and
Speaker 1: I think they're gonna be keeping an eye on what
Speaker 1: the FED does next week and that may actually load
Speaker 1: someder ground rates of what they do in September. But
Speaker 1: I do think that the currency side, when you get
Speaker 1: to a point where montropology is losing inspectiveness, and it
Speaker 1: certainly is that it's walls in many countries, then you're
Speaker 1: only route to hit the economy is via the currency.
Speaker 1: And as you said that in RT current I seem
Speaker 1: a greater to catcher with you, Michelle the Principal Global
Speaker 1: Investors Chief strategist. I think my focus at the moment
Speaker 1: leads to the prospect of lobal rates in Europe. My
Speaker 1: first question how will the bank's tolerates it? And to
Speaker 1: see the financials on the euro stocks fifty up by
Speaker 1: a round about two point four four percent, I think
Speaker 1: it is encouraging on the idea that they also implement
Speaker 1: tearing if they drop rates in September. That's someone encouraging. Yeah.
Speaker 1: It basically is an expectation that the ECB recognizes the
Speaker 1: pain that they would be inflicting on the banks that
Speaker 1: they already have, and that they would lighten the cost
Speaker 1: that they wouldn't have to necessarily pay banks UH the
Speaker 1: full negative zero point five repay their zero point five
Speaker 1: pc deposit rate for all of their assets. So we'll see,
Speaker 1: let's bring a Jeremy stretch show. We see IBC header
Speaker 1: G ten FX strategy. Jeremy really thoughts ahead of that
Speaker 1: news conference in twenty eight minutes time, Well, obviously the
Speaker 1: the headlines have you've just been discussing, and I think
Speaker 1: in a sense it looks increasingly likely that to drive
Speaker 1: you we use his penultimate meeting to effectively through the
Speaker 1: kitchen sincat. This will be underlying backdrop in order to
Speaker 1: facilitate as better as best a condition as possible to
Speaker 1: hand over to his successor after his last meeting October UM.
Speaker 1: So I think you're right to laud the prospect of
Speaker 1: tearing because I think that was one particular concern in
Speaker 1: relation to the negative deposit rates spectrum, because the ECB
Speaker 1: has been the only of the negative yielding center banks
Speaker 1: to avoid that scenario thus far. Um. But it seems
Speaker 1: to be the case that you know ten basis point
Speaker 1: is very much baked in four September. The question is
Speaker 1: will draw you allow the market to discuss or consider
Speaker 1: more than that, and of course if he does, then
Speaker 1: that will be a catalyst for the Euro to continue
Speaker 1: to retreat, and of course that will be interesting. Uh.
Speaker 1: And I will be keeping my eye on Mr Trump's
Speaker 1: Twitter feed to just to see if he has an
Speaker 1: early early response to this. Well, Jeremy, I want to
Speaker 1: pick up on that because Sima Chaw was just on
Speaker 1: a principal global investors since she was saying, Uh, this
Speaker 1: essentially is a bid to weaken the euro, because we
Speaker 1: were talking about the potential efficacy and if you look
Speaker 1: at German markets right now, European markets, it isn't a
Speaker 1: material boost inflation expectations, yield curve flatter, Uh, Inflation rates
Speaker 1: over the next ten years not materially higher. I'm just wondering,
Speaker 1: do you think that this is just a reignition of
Speaker 1: currency warriors. Well, of course Mr Dragon will be asked
Speaker 1: about the currency today, and as ever, he will always
Speaker 1: back that back and say that the ECP has no
Speaker 1: specific intention on the currency. But of course implicit to
Speaker 1: their inflation assumptions are the influence of imported prices and
Speaker 1: of course if you are going to cheapen up the Euro,
Speaker 1: then you would get higher imported prices and find some
Speaker 1: stimulus on the inflation side. So in a sense, it's
Speaker 1: it's sort of an implied process, but it does raise
Speaker 1: the risk of adding to already a relatively feeble atmosphere
Speaker 1: in terms of the currency world, because of course these
Speaker 1: tensions in terms of currency levels are becoming much more politicized,
Speaker 1: and I think that is something that markets will remain
Speaker 1: very mindful of, even if as a as a say
Speaker 1: Mr Dragon will push back against any explicit commitment on
Speaker 1: currency values. Jeremy, we're a week less than a week
Speaker 1: away from what we could get a right cut from
Speaker 1: the fellow Reserve. I just wonder if we've had enough
Speaker 1: today from the e C and we don't know what
Speaker 1: comes in the news conference, but just so far, if
Speaker 1: you can make a judgment that would be welcome, Whether
Speaker 1: we've had enough from the ECB so far to insulate
Speaker 1: the euro from strength. If the Federal Reserve comes out
Speaker 1: swinging next week, well, it's it's it is interesting to
Speaker 1: know to sort of think about the sort of the
Speaker 1: juxtaposition between the interplay of central banks, and I think
Speaker 1: that was one of the reasons why it made sense
Speaker 1: for the c B two to row back from policy
Speaker 1: action now and to wait and to see what the
Speaker 1: federal Reserve we're going to do now. Of course, the
Speaker 1: U c B would also argue they need to consider
Speaker 1: these other package of majures to go with the negative
Speaker 1: rate story. Um, I think we've we've obviously seen the
Speaker 1: market which has has been anticipating and assuming that there
Speaker 1: would bear and coming from the Eurozone, alongside the macro
Speaker 1: weakness of that has been keeping the euro on the defensive.
Speaker 1: I guess the question is how how low can we go?
Speaker 1: And I think if we do see a print in
Speaker 1: the upper one tens at this point, I think it
Speaker 1: may well be the case of just sort of looking
Speaker 1: to lighten some of those eurosual positions, and we may
Speaker 1: well see a little bit of a constructed by US
Speaker 1: coming back in which might just ease the burden a
Speaker 1: little bit for Mr Powell next week. So, Jeremy, I
Speaker 1: want to sort of discuss the consequences of a potential
Speaker 1: currency war race to the bottom in terms of what
Speaker 1: you do as an investor. Wouldn't you just double down
Speaker 1: on emerging markets and the riskiest currencies could develop markets
Speaker 1: are all racing to try to make their currencies as
Speaker 1: weak as possible. Well in the world where there is
Speaker 1: this perception of trying to cheapen currency and or by
Speaker 1: virtue of monitor policy stimulus, then of course then carry
Speaker 1: is potentially king. So you're you are coming back to
Speaker 1: looking at those high ulding markets. And I was discussing
Speaker 1: Turkey with with your colleagues on television a little bit
Speaker 1: earlier in the context of even with the more aggressive
Speaker 1: rate cuts that we've seen from these center bank today,
Speaker 1: you've still got a very substantial real yield level compared
Speaker 1: to elsewhere. So I think there is going to be
Speaker 1: a case for investors to continue to look in general
Speaker 1: for opportunities in high uning markets. But I think it
Speaker 1: is very much the case that you need to be
Speaker 1: wary of some of the specific idiocy and cracking issues
Speaker 1: and some of those nations. But ultimately, in a world
Speaker 1: where the developed markets or the developed currencies are seemingly
Speaker 1: under obvious pressure and or external downside this, then investors
Speaker 1: may well continue to look for those high uling alternatives
Speaker 1: as well. So Jeremy, I don't know if you read it,
Speaker 1: but there was a story yesterday by my colleague Craig
Speaker 1: torres about a professional worrying unit in the New York
Speaker 1: Federal Reserve, a woman who has a unit whose job
Speaker 1: it is just to think, what is the Federal Reserve
Speaker 1: doing wrong? What could potentially go bust in financial markets?
Speaker 1: And I would guess that she may be tearing her
Speaker 1: hair out as she listens to this conversation, thinking, Wow,
Speaker 1: people are being encouraged to lever up, double down on
Speaker 1: carry trades. What's the potential consequence of that longer term? Well,
Speaker 1: of course, we are an environment where the assumption is
Speaker 1: that inflation is relatively benign or if not dead, and
Speaker 1: so if there were to be some degree of consequence
Speaker 1: of an inflation respector coming back into the marketplace, then
Speaker 1: clearly that would create enormous degrees of instability. And of course,
Speaker 1: as we as we well know, when you're looking at
Speaker 1: your markets or less liquid markets than of course there
Speaker 1: is that liquidity risk, and that of course is one
Speaker 1: of the one of the sort of the legacies of
Speaker 1: the post crisis well over ten years ago when we
Speaker 1: had those difficulties in terms of liquidity. So it is
Speaker 1: you know, it is this sort of fear or perception
Speaker 1: of revisiting some of the some of the mistakes of
Speaker 1: the past, which I guess will be causing some consternation
Speaker 1: for those that are played too to worry about what
Speaker 1: could go wrong. Jeremy. We're very much in an easing
Speaker 1: cycle now, Australia cutting rates, South Africa cutting rates, South
Speaker 1: Korea cutting rates, Indonesia cutting rates. The ECB team one up,
Speaker 1: the Federal Reserve next week, slipping under the radar, and
Speaker 1: no one's really talking about it. The Bank of Japan, Jeremy,
Speaker 1: you expect think anything from the bo J anytime soon.
Speaker 1: That's a very good question. In a sense, they have
Speaker 1: You're You're absolutely right. They have been sort of left
Speaker 1: out of the sort of the market discussion for some
Speaker 1: considerable time. Um. And we are in an environment where
Speaker 1: the sort of the macro story remains under a little
Speaker 1: bit of threat. And obviously there's there's this ongoing issue
Speaker 1: regarding the consumption tax hike that's coming through and how
Speaker 1: that will impact on the on the consumer side. UM.
Speaker 1: So I think it is going to be a case
Speaker 1: that markets will be watching out for, perhaps the the
Speaker 1: Bank of Japan looking to continue to extend its own
Speaker 1: balance sheets. So in a sense, it has been the
Speaker 1: one central banket. It's been off the radar screen. I
Speaker 1: think invariably markets have become accustomed to the Bank of
Speaker 1: Japan always consistently arguing that we'll get to its inflation
Speaker 1: target over the over the rainbow, almost as we speak,
Speaker 1: but never actually achieving it. And I think still that's
Speaker 1: the presumption, and so the the Bank of Japan will
Speaker 1: continue to remain exceptionally easy. But I think it's it's
Speaker 1: not the sort of the pre eminent story in terms
Speaker 1: of the global central bank cycle. As we as we
Speaker 1: turn to speak, Jeremy Gright to catch you with you,
Speaker 1: Jeremy stretch that c I PC head of Strategy. Well,
Speaker 1: Saturday Night Live has become an institution. Since nineteen seventy five,
Speaker 1: Louren Michaels has brought SNL into our living rooms each
Speaker 1: Saturday night. David Rubinstein, Carlisle Group, co founder and host
Speaker 1: of Peer to Peer Conversations, sat down with Mr Michaels.
Speaker 1: Take a listen to what they had to say. So
Speaker 1: from seventy five the late seventies or early eighties, how
Speaker 1: has humor changed or the people who laughed at the
Speaker 1: same kind of things or certain things you can make
Speaker 1: fun of now you couldn't or vice versa. There's almost
Speaker 1: nothing we did in the seventies that I could do now.
Speaker 1: Gilda Rodner would not be able to play Rose Amazona
Speaker 1: down and John Belushi would not be able to play Japanese. Uh.
Speaker 1: Garret Morris Julry News for the heart of hearing would
Speaker 1: have been making fun of a handicap. So it's it's
Speaker 1: just all values change. And then I always said that
Speaker 1: between the movie Arthur and the movie Arthur to alcoholism
Speaker 1: became a disease and no one wanted to laugh at
Speaker 1: drunks anymore, whereas for two years they had left the drunk.
Speaker 1: That's David Rubinstein speaking with SNLS Lauren Michael's David Rubinstein,
Speaker 1: Carloud Group, co founder and host of Peer to Peer Conversations.
Speaker 1: You can hear that tonight on Bloomberg Radio at five pm. David,
Speaker 1: thanks so much for joining us. Just a fascinating discussion
Speaker 1: I'm sure you had uh with Lauren. Could you just
Speaker 1: give us a key takeaways that you had from your conversation? Well,
Speaker 1: Lauren is somebody who has I've been running this show
Speaker 1: more or last for forty years. Um he started and
Speaker 1: for five years he ran it, and then he took
Speaker 1: five years five years off to do some producing of
Speaker 1: movies in Hollywood and so forth, and other TV shows,
Speaker 1: and then he came back. So he's been running it
Speaker 1: for forty years. Think about how many people have been
Speaker 1: at the top of their profession for forty years. But
Speaker 1: this show has sustained itself because he's been able to
Speaker 1: figure out what makes people laugh and to evolve that.
Speaker 1: As he said, it's different than it was years ago.
Speaker 1: But he's a very smart person, very much has his
Speaker 1: finger on the pulse of what's funny and what is
Speaker 1: not funny. And obviously his political humor recently has got
Speaker 1: an enormous amount of attention talking about the enormous amount
Speaker 1: of tension around political humor and the things that you
Speaker 1: could say in the seventies versus not today, by the way,
Speaker 1: that was hysterical. I'm wondering how their approach to political
Speaker 1: news has shifted. I mean, other things that they can
Speaker 1: do now or can't do now, that they used to
Speaker 1: be able to do. There. I think that they are
Speaker 1: willing to take on both sides, Democrats, Republicans, everybody, and
Speaker 1: they think they feel they can make fun of virtually
Speaker 1: anybody in politics, because politicians probably have a lower public
Speaker 1: esteem than they did many years ago, and therefore I
Speaker 1: don't think they upset that many people when they attack politicians.
Speaker 1: But obviously you're the one being attacked, or you're the
Speaker 1: supporters of the one being attacked, yes you're not happy.
Speaker 1: But generally the political humor is what they find is
Speaker 1: the most appealing thing that they put on the air.
Speaker 1: So I think they're going to continue to do that.
Speaker 1: And obviously many politicians are pretty good, uh, examples of
Speaker 1: people that you can make fun of. So, David, one
Speaker 1: of the things you mentioned, or one of the things
Speaker 1: I find so fascinating about Lord Michaels is that he's
Speaker 1: been at the top of his game for so long.
Speaker 1: It's you rarely see that in any walk off life,
Speaker 1: much less show business. Did you get a sense of
Speaker 1: what continues to drive Lauren Michaels. Well, he's driven by
Speaker 1: I think the fact that he is a perfectionist. He
Speaker 1: likes being the top of the profession. He let me
Speaker 1: come to one of the shows that he was producing.
Speaker 1: I saw he's deeply involved in every detail he's on
Speaker 1: the set. He goes through every script, he goes through
Speaker 1: all the rehearsals, so he is pretty much a hands
Speaker 1: on person very often for forty years. Some people tend
Speaker 1: to kick themselves upstairs a bit and aren't has involved
Speaker 1: in the DTL, but he's involved in everything, and I
Speaker 1: think that's one of the keys to his success. What
Speaker 1: was the most surprising thing that you learned from the interview? Well,
Speaker 1: the most surprising thing, I guess is that um he
Speaker 1: um doesn't really want to say what who's the funniest
Speaker 1: person of all time? Or what was the funniest show.
Speaker 1: He's very reluctant to the point out one show versus another,
Speaker 1: one comedian versus another, So um he wouldn't say Eddie
Speaker 1: Murphy's funnier than the Gilda Radner or so forth. Um.
Speaker 1: He obviously has his views on that, but he didn't
Speaker 1: really want to talk about that, in part because I
Speaker 1: don't think he really wants to pick between the various comedians.
Speaker 1: If you look at the comedians he's had over the
Speaker 1: forty years, it's it's virtually anybody who's been funny over
Speaker 1: the last forty years in television or in movies has
Speaker 1: been on that show. And I guess he does as
Speaker 1: one of the like saying which of your children do
Speaker 1: you like the most? And nobody wants to answer that question.
Speaker 1: Nobody wants to answer that question. Have you watched S
Speaker 1: and L for a long time? Personally, I've watched it
Speaker 1: for a long time and I'm glad they haven't made
Speaker 1: fun of me yet, but I suspent something point you will. So, David,
Speaker 1: going forward, what do you think Lauren Michael's next five
Speaker 1: to ten years? I don't want to think forty years.
Speaker 1: But is he plan on doing this for the foreseeable future?
Speaker 1: Like many people at the top of the profession who've
Speaker 1: done it for a while, they are reluctant to say
Speaker 1: when they're going to step down, because when you say that,
Speaker 1: you've become a bit of a lame duck. Um. He
Speaker 1: is in pretty good health mentally physically, it's clear he
Speaker 1: has a great work quotition, So I don't see him
Speaker 1: slowly down any time soon. And in this eight day
Speaker 1: and age, you can work to your eight I think
Speaker 1: he's in mid seventies now, you can work your eighties
Speaker 1: and people are still saying, okay, if you can do
Speaker 1: the job, fine, So I think he'll be there for
Speaker 1: quite some time, and the ratings are good, so why
Speaker 1: would anybody want to get rid of them? If you're
Speaker 1: a Comcast, which is the owner of NBC. That's right,
Speaker 1: the ratings are good. That's always the bottom line. David Rubinstein,
Speaker 1: thank you so much for joining us. David Rubinstein, Carlisle Group,
Speaker 1: co founder and host of Peer to Peer Conversations. You
Speaker 1: can hear that tonight on Bloomberg Radio at five pm
Speaker 1: Wall Street Time. Well, one of the things that big
Speaker 1: technology has to deal with, I think, which is new
Speaker 1: for Silicon Valley is regulatory oversight by US politicians and regulators. Historically,
Speaker 1: Washington has taken a fairly light touch to Silicon Valley,
Speaker 1: but that may be changing. To get a sense of
Speaker 1: how this might develop, we welcome our good friends Shira Overday,
Speaker 1: Bloomberg Opinion Colmas covering all things technology. She joins us
Speaker 1: here in our Bloomberg Interactive Broker studio. Sure, thanks so
Speaker 1: much for joining us. It seems like things have changed
Speaker 1: a little bit. The rhetoric coming out of Washington has
Speaker 1: changed a little bit as it relates to big tech.
Speaker 1: What do you make of it? I think that's a
Speaker 1: correct assessment. I mean, particularly the last couple of years
Speaker 1: there has been I think a little bit more focus
Speaker 1: among the public and people like me and lawmakers about
Speaker 1: some of the downsides of technology. Right that the focus,
Speaker 1: I think in the prior decade had been about all
Speaker 1: these great things that technolog G had brought us, you know,
Speaker 1: iPhones and breaking down barriers between people and and kind
Speaker 1: of removing the power of distribution from the hands of
Speaker 1: the elites. And those things are all true, but we're
Speaker 1: also thinking about G there were some bad things that
Speaker 1: went along with that, and I think now you're seeing
Speaker 1: that big technology companies, particularly in Washington, which is I
Speaker 1: think new for Silicon Valley, big tech companies are now
Speaker 1: this punching bag. It's literally the only bipartisan issue in
Speaker 1: Washington is to criticize big technology companies for um for
Speaker 1: their downsides. Again, I think both real and somewhat imagined.
Speaker 1: In some cases, big tech has become a verbal punching
Speaker 1: bag as to actual action. Perhaps they're missing with their
Speaker 1: punches because so far, certainly there doesn't seem to be
Speaker 1: much of an impact on share price, it doesn't seem
Speaker 1: to be much of an impact on the bottom line,
Speaker 1: and frankly, lobbying costs may have ticked up a bit
Speaker 1: on part of big tech because it has hit a record,
Speaker 1: but other than that, it seems rather ineffectual. Well, this
Speaker 1: US Department of Justice inquiry, which they announced on Tuesday,
Speaker 1: be somewhat different. So I think it's easy to be
Speaker 1: cynical and I am to write about the speed of
Speaker 1: Washington relative to rhetoric. But I do think that this
Speaker 1: kind of broad tech reckoning it is having an impact. So,
Speaker 1: just to pull out a couple of examples, Amazon last
Speaker 1: year announced that it was increasing the minimum wage for
Speaker 1: all of its workers fifteen dollars an hour. And you
Speaker 1: know that may have been a business decision, right, the
Speaker 1: labor market is tight, and that may have been kind
Speaker 1: of a decision to attract a better caliber of workers
Speaker 1: on Amazon's part, But it also came after the company
Speaker 1: faced high degree of criticism, particularly from Bernie Sanders, the
Speaker 1: now Democratic presidential candidate, for working conditions, particularly of the
Speaker 1: warehouse workers, people who work in the warehouses. Right, So
Speaker 1: that's a case where um, political red rick probably did
Speaker 1: have an impact. Um, if you look at Facebook's earnings yesterday, Again,
Speaker 1: if you look at Facebook's top line, you can say, well,
Speaker 1: the FTC find them five billion dollars and it didn't matter.
Speaker 1: There's been all these privacy headaches and scandals and it
Speaker 1: didn't matter. But Facebook is talking about a sort of
Speaker 1: step down in growth over time, including late this year
Speaker 1: and into next year, and it blamed in part some
Speaker 1: of these privacy changes that either it's implementing because of
Speaker 1: all these scandals or that are being imposed on it
Speaker 1: from the outside. Like in Europe there's been last year
Speaker 1: they implemented a fairly strict data privacy law, and Facebook
Speaker 1: has said that is having an impact on our ability
Speaker 1: to highly target these ads based on our human surveillance machine,
Speaker 1: and that's resulting in kind of a slower rate of
Speaker 1: revenue growth. So I think those are some examples where yeah,
Speaker 1: there's a lot of rhetoric and a lot of below
Speaker 1: any um in political capitals all over the world, but
Speaker 1: some of these privacy and broad tech reckonings are actually
Speaker 1: having an impact on business. So when we talk about
Speaker 1: big tech, we think about Google, Amazon, Facebook, Apple, Is
Speaker 1: there a sense that one is more at risk than
Speaker 1: the others others? I mean, you mentioned Facebook and that
Speaker 1: seems like one because we're talking about people's privacy and
Speaker 1: their personal communications. Is there a sense that one might
Speaker 1: be more at risk than the other. It's a little
Speaker 1: bit hard to know, because the issue with antitrust investigations
Speaker 1: is that you just they're so unpredictable. You have no
Speaker 1: sense of where they're going to lead. And if you
Speaker 1: give government investigators basically power to dig up every email
Speaker 1: that Mark Zuckerberg and Jeff Bezos has ever have ever sent,
Speaker 1: who knows what they will find. But saying that, I
Speaker 1: think it's generally thought that both Google and Facebook are
Speaker 1: maybe a little bit more exposed than Amazon and Apple
Speaker 1: um in part because of the size and just kind
Speaker 1: of global span of their businesses. And also they're both
Speaker 1: these kind of ad machines that basically have their hooks
Speaker 1: into just about every corner of the Internet economy. So,
Speaker 1: as I mentioned before, lobbying costs on part of big
Speaker 1: tech have reached record levels, not only for big tech
Speaker 1: but just for any industry whatsoever. Certainly trying to make
Speaker 1: their influence felt in Washington, d C. What do they
Speaker 1: want to see? Well, I think they want to influence
Speaker 1: any kind of legislative action, right, So, I mean there's
Speaker 1: another way of phrases is are they conceding there will
Speaker 1: be legislative action, and they're basically going to propose some
Speaker 1: sort of self regulatory mechanism. And if that's the case,
Speaker 1: what is it, Yes, I do that is exactly what
Speaker 1: they want. Like any company, right, the tech companies, they
Speaker 1: realize there is probably going to be both federal and
Speaker 1: state legislation in the United States that impacts their business,
Speaker 1: and so they're trying to have a hand and in
Speaker 1: influencing the outcome of that legislation. So there's privacy legislation
Speaker 1: that's being considered both in Congress and in multiple states.
Speaker 1: California past a what seems like a fairly strict kind
Speaker 1: of online privacy regulation. Recently other states are considering similar things.
Speaker 1: There's all kinds of activity around political election advertisements that
Speaker 1: also affect the big tech companies again these antitrust investigations.
Speaker 1: Congress is also engaged in its own antitrust investigations of
Speaker 1: big tech companies. So on multiple fronts, you see the
Speaker 1: big tech companies again like any giant industry before, at banking, energy,
Speaker 1: they're trying to influence lawmakers and to make sure that
Speaker 1: if there is legislation pass that affects their business, that
Speaker 1: they try to control any downside. We've even heard some
Speaker 1: you know, some of the politicians, probably most likely like
Speaker 1: uh Senator Elizabeth warren't talk about potentially breaking up big tech.
Speaker 1: Is that even remote risk? Do you think I'll go
Speaker 1: back to say, I don't know, because you just don't
Speaker 1: know what happens when these anti trust investigators get involved.
Speaker 1: I think right now that doesn't feel like a serious possibility.
Speaker 1: But we'll see. The nature of investigations is that they're unpredictable.
Speaker 1: You know one thing that strikes me as you're talking.
Speaker 1: I'm thinking, you know, these big tech executives, they have
Speaker 1: to get ahead, both in terms of legislative action, but
Speaker 1: also from a public relations standpoint. They have to come
Speaker 1: out and say privacy is important. We don't want bad
Speaker 1: actors some smaller companies that operate in the tech space
Speaker 1: or using your data for things that are bad. We
Speaker 1: don't hear all the protections that we have. Are you
Speaker 1: expecting statements like that in the earnings and I'm thinking
Speaker 1: Amazon reporting earnings after the bell. Is that something that
Speaker 1: they that you expect them to do, or or that
Speaker 1: they should do. I think the tech companies, you can
Speaker 1: see it. They are now very concerned about their public
Speaker 1: perception and companies. Let's take Apple as an example. They
Speaker 1: have made um kind of data privacy and explicit marketing
Speaker 1: pitch to its customers, saying, you're worried about the safety
Speaker 1: of you and your kids online. We're worried about that too.
Speaker 1: Here ways that we are implementing kind of data privacy
Speaker 1: protections and encryption on our gadgets. Please buy them. And
Speaker 1: I think you can go on down the list and
Speaker 1: of all of these tech companies, they realize they need
Speaker 1: to project the image to their customers and potential customers
Speaker 1: and advertisers and other business allies that they are taking
Speaker 1: seriously concerns that these companies are too big, hurting the economy,
Speaker 1: hurting workers, hurting competition, hurting privacy. They know this, and
Speaker 1: so yeah, they are engaged in kind of image burnishing efforts.
Speaker 1: Sure overday, Thank you. I know you've been crazy busy
Speaker 1: and we always love getting our insights as we do
Speaker 1: also reading your columns. You can find them on the
Speaker 1: on the terminal O P I N go, or you
Speaker 1: can go online Bloomberg dot com, slash Opinion. Sharah Oviday
Speaker 1: is a technology columnist and she is basically glued to
Speaker 1: her computer. It actually just came with her and it's
Speaker 1: sort of stuck to her back as she writes her
Speaker 1: column of the week. But definitely interesting to say. What's
Speaker 1: gonna happen with the Amazon ear next? Thanks for listening
Speaker 1: to the Bloomberg Surveillance Podcast. Subscribe and listen to interviews
Speaker 1: on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer.
Speaker 1: I'm on Twitter at Tom Keane before the podcast. You
Speaker 1: can always catch us worldwide. I'm Bloomberg Radio.