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Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Lee.

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Speaker 1: We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. It

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Speaker 1: has been a joy this morning to have with us.

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Speaker 1: Randall Krosner of the Boos School of Chicago were thrilled

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Speaker 1: the former governor of the Federal Reserve continues with us

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Speaker 1: at Queen Victoria Street and sitting with me in New

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Speaker 1: York as Allan Ruskin, chief international strategist for Deutsche Bank

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Speaker 1: as well, if you could bring up this chart and

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Speaker 1: we ran this by Randy Crossing here moments ago, I

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Speaker 1: want to run it by Alan Ruskin as well. We

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Speaker 1: had QUEE and then we rolled over and we had

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Speaker 1: q T and Allen we got a new set of

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Speaker 1: options based around this repo market reality. One was asserted

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Speaker 1: to of QT the yellow line, one was the flat line.

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Speaker 1: And the new news, as we may expand the balance sheet,

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Speaker 1: is that the Deutsche Bank view. I think what you

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Speaker 1: saw from Chairman Powell is a reasonable characterization of where

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Speaker 1: we're at. I think it'll look and see how effective

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Speaker 1: the repos are. We've got some special circumstances now in

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Speaker 1: terms of braining factors, you know, particularly from settlements and

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Speaker 1: you know, just generally territory balances. But it looks like

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Speaker 1: excess reserves that are in the system are not doing

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Speaker 1: their job as such, and it does look like we're

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Speaker 1: gonna need more reserves. So I think ultimately the organic

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Speaker 1: path is probably to that green line to the top side.

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Speaker 1: So there's the light blue line of the top side. Okay,

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Speaker 1: I want you to speak to the academics and one

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Speaker 1: of the charms of Ragarajin and Randy Crosser at BOOST School,

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Speaker 1: like your charm at LSE, is you guys actually understand

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Speaker 1: there's a market out there. Explain to the academic economist

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Speaker 1: purists why they need to pay attention to the repo.

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Speaker 1: Explain to the monetary theoreticians why all this matters. Well,

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Speaker 1: it certainly matters that the Federal Reserve has control of

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Speaker 1: the very front end of the curve, that's the anchor

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Speaker 1: to the whole yield curve. So at a minimum they

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Speaker 1: want to be able to hit their effective funds read target.

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Speaker 1: It pretty much sets the tone for the rest of

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Speaker 1: the curve. Um, you don't really want extreme levels of

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Speaker 1: volatility either. That sort of sets in tune questions about

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Speaker 1: effectiveness and monetary policy, whether the Federal Reserve can also

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Speaker 1: quash short term volatility as well at the front of

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Speaker 1: the curve. So, um, they're want control. Okay, they want control,

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Speaker 1: And we were talking about this with you, Randy Crossner's

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Speaker 1: or anything. What can the FED do now to fix

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Speaker 1: this more permanently? So I think you know there at

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Speaker 1: least two things that they could do. One is exactly

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Speaker 1: Zellen said, allow the balance sheet to to continue to grow.

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Speaker 1: We talked about that before. And also they could set

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Speaker 1: up a facility that allows for more reserves to come

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Speaker 1: into the system just naturally as rates go up, rather

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Speaker 1: than the FIT having to decide, well, we're gonna put

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Speaker 1: in twenty billion at eleven AM or ten billion at

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Speaker 1: eleven AM. We the Fed does estimates of how much

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Speaker 1: is needed each day. It's difficult to get those estimates right.

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Speaker 1: Why not let the market decide that you So you

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Speaker 1: effectively could just have a standing facility that if rates

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Speaker 1: go above the target by a certain amount, then you

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Speaker 1: just provide as as much as as you need at

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Speaker 1: that and that would help to provide some stability there.

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Speaker 1: M Randy. If there was a liquidity problem in the markets,

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Speaker 1: like a real liquidity problem in the market, where would

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Speaker 1: we see it first? So I think this is exactly

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Speaker 1: where you would see it. In these money markets. You

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Speaker 1: see these these short term rates spike up because people

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Speaker 1: need the cash and they need it now. They don't

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Speaker 1: need it tomorrow, they need it now, and these are

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Speaker 1: these these kind of now rates. Um. If you look

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Speaker 1: at alan, you know the impact on the rest of

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Speaker 1: the markets. Does it have an impact on some of

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Speaker 1: the other central banks around the world on on how

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Speaker 1: they should look at liquidity? Um, Not to a great degree.

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Speaker 1: But I think what you have seen is that just temporarily,

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Speaker 1: there was some linkage between currencies and the tightness in

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Speaker 1: the liquidity markets, or the dollar liquidity markets. So you

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Speaker 1: did see, for example, as things tightened up, the dollar

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Speaker 1: briefly went through a spell where it actually did quite well,

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Speaker 1: and then when things eased up, the dollar gave back something.

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Speaker 1: So you know, some of that relates obviously to the

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Speaker 1: you know where the sources of funding. Some of the

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Speaker 1: funding comes through the cross currency basis market. So um,

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Speaker 1: you know there is a linkage there as well. Um,

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Speaker 1: I think the other central banks have got to know.

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Speaker 1: Obviously other issues you don't see particular natural spillover is

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Speaker 1: yet in terms of tension and I liquidity in other markets.

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Speaker 1: Let's keep on McCormick publishing on Australia in the cross

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Speaker 1: currency dynamics between Australia and all this last now, Randy

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Speaker 1: Krouser ill agrees and wrote a wonderful book, The Age

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Speaker 1: of Turbulence in the math world of you and Alan Ruskin.

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Speaker 1: Turbulence is at epsilon off the other side of the equation.

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Speaker 1: What's the new epsilon? What do we learned this week

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Speaker 1: about the new volatility that Mr Ruskin was talking about

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Speaker 1: moments ago? Well, I think that's right. I think these

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Speaker 1: these challenges and volatility of the market and the liquidity

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Speaker 1: the market, that's really it's the financial plumbing. It's the

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Speaker 1: base for for everything, and when it's working normally, we

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Speaker 1: don't even think about it. It's just like the plumbing

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Speaker 1: in your house. You never think about it working, but

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Speaker 1: man if it gets backed up, you know that you

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Speaker 1: want to run from that house. It causes all sorts

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Speaker 1: of troubles and it's foundational for it can cause volatility

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Speaker 1: and other markets that can cause difficulties for just making

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Speaker 1: making payments. And so I think what we need to

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Speaker 1: really do is think about do we have the right

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Speaker 1: institutions to make sure we have the smooth function of

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Speaker 1: the markets. And that's why allowing the balance sheet to

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Speaker 1: grow organically, that's why having a facility like many other

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Speaker 1: central banks have to just naturally provide more more reserves

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Speaker 1: into the system rather than the New York Fed and

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Speaker 1: and the Fed Reserve and Washington try to estimate each day.

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Speaker 1: But the right number is that those might be ways

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Speaker 1: to go to smoothen out, but still their fundamental fragilities

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Speaker 1: that are there that may be unintended consequences of regulation,

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Speaker 1: and we need a kind of a bigger rethink about

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Speaker 1: what those are. Thank you so much for Randy Crossner.

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Speaker 1: They're very generous with this time this morning of University

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Speaker 1: of Chicago, both school and Alan Ruskin from Deutsche Bank.

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Speaker 1: Why don't you bring in Mischelle? Michelle, do you want

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Speaker 1: to us now principal Global Investors chiefs strategist joining us

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Speaker 1: out of London. Same you live it every single day,

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Speaker 1: So walkers through what on earth is the lightest twist

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Speaker 1: and turn in the never ending Brexit story. Yeah, it's

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Speaker 1: certainly never ending. Um. To be honest, this this latest

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Speaker 1: twist is I think a little bit more of nothing.

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Speaker 1: I don't think we've learned anything new if we listen

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Speaker 1: really toward Junker said, I don't think he's given any

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Speaker 1: clear information about a potential deal. Um. And certainly if

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Speaker 1: you've just heard from the Ireland Finance minister, they're certainly

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Speaker 1: suggesting that the UK still far away from from getting

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Speaker 1: any kind of deal. The Irish thrown cold water on

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Speaker 1: the whole thing, and we've still got to wait to

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Speaker 1: see what the Supreme Court says about the ruling on

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Speaker 1: Boris Johnson suspending Parliament. Any insight on now whatsoever seem well,

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Speaker 1: I mean, it's an interesting one and and then again

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Speaker 1: it doesn't really likely have any impact on breaksit whatsoever

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Speaker 1: unless you were to have a completely drastic ruling which

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Speaker 1: meant that everyone was brought back in and a lot

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Speaker 1: of the powers taken away from Boris, which seems extremely

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Speaker 1: unlikely at this stage. I think for us, what it's

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Speaker 1: been really interesting is that people are still have some

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Speaker 1: optimism about brigs and and having Stirling and around one

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Speaker 1: twenty five against the dollar is to ask quite surprising.

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Speaker 1: Does that capture some optimism? See, it must do. It

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Speaker 1: must be that people are taking away the risk of

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Speaker 1: a no deal Brexit. For us, we would say there's

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Speaker 1: still about chance of a no deal Brexit. Uh, there

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Speaker 1: doesn't seem to be any advancement in negotiations whatsoever. We

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Speaker 1: still have no idea what any deal that Boris has

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Speaker 1: in mind is um and of course, and then we're

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Speaker 1: hearing that the you know, the chance of a general

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Speaker 1: election are increasing, which adds to more uncertainty. So if

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Speaker 1: anything actually going into October, we would have expected starting

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Speaker 1: to be closer to the one twenty mark rather than mark.

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Speaker 1: So tell us what you're telling clients about what they

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Speaker 1: should be doing right now. I think that if whatever

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Speaker 1: we know, we know that Brexit at some point is

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Speaker 1: likely to happen, we know there's going to be a

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Speaker 1: prolonged period of uncertainty. To us, that means that the

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Speaker 1: UK economy is going to be weakening. So if you

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Speaker 1: are willing to wait out and wait for a no

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Speaker 1: deal breaks or whatever form of Brexit it is, then

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Speaker 1: at some point then there maybe value ahead for any

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Speaker 1: kind of assets UK assets. The thing is is that

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Speaker 1: if you want to get back into the UK at

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Speaker 1: that point, you still have to have a very very

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Speaker 1: strong stomach for the macro weakness that's likely to ensue,

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Speaker 1: and also there a lot of volatility that's likely to

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Speaker 1: come because like breaks, it doesn't mean that there's certainty.

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Speaker 1: Businesses still have no idea what breaks it means and

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Speaker 1: how they will have to operate under what conditions. So

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Speaker 1: if anything that breaks it means I want to take

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Speaker 1: it seem into a broader view your work with Principal

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Speaker 1: Global Investors and in almost like a strategy into October,

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Speaker 1: John and I and all of our listeners worldwide are

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Speaker 1: getting bombarded by this story. This story is cacophony the

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Speaker 1: right word, John, I think it can be. There's a

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Speaker 1: cacophony of stuff going on. How do you synthesize that

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Speaker 1: into a cogent message for principal Global investors. I have

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Speaker 1: to say it is a very very difficult period for investors,

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Speaker 1: and one of the reasons is is it's not just

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Speaker 1: a geopolitical atmosphere which is quite volatile, but also the

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Speaker 1: macro picture is quite uncertain for us. What we've tried

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Speaker 1: to do is we're trying to take a step back

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Speaker 1: and look at what are the fundamentals. Now, that doesn't

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Speaker 1: mean you take away your eyes from the headlines, because

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Speaker 1: their headlines at this stage have a potential to hit.

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Speaker 1: And what I mean by that is we can see

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Speaker 1: ecting markets doing relatively well over the rest of the year,

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Speaker 1: so I mean a very modest rally. And that is

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Speaker 1: assuming that the global economy recovers, starts to recover of

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Speaker 1: stabilizers even towards the end of the year. But it

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Speaker 1: also has to imply that that none of the shocks

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Speaker 1: that are threatening the global economy come to fruition. So,

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Speaker 1: in other words, the market price for perfection. Okay, I'll

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Speaker 1: go with that. The the equity market is clearly priced

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Speaker 1: for perfection. Have we become immune to the dreaded exaggerate shark.

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Speaker 1: I don't think we're immune, because if you see how

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Speaker 1: markets fluctuate um with every single headline, I don't think

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Speaker 1: they're becoming immune. But it has been somewhat interesting to

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Speaker 1: us that when you consider where actually markets are compared

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Speaker 1: to the underlying economy, it's so much stronger that dislocation

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Speaker 1: has not disappeared. It's telling us that investors just want

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Speaker 1: to put their money to work, which in some ways

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Speaker 1: is surprising. But I think we just have to get

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Speaker 1: on the back of that. And you have seen some

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Speaker 1: capitulation number investors who have had a very bearish um

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Speaker 1: outlook for a while now, and now I happen to

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Speaker 1: get back on top of this and get behind the

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Speaker 1: acting market money. I mean, you have two shingles from

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Speaker 1: the London School of Economics. I know you went through

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Speaker 1: their international relations course. Is it always been like this?

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Speaker 1: I mean, if you go back to classic LSE and

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Speaker 1: like the beginning the advent of World War two, or

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Speaker 1: even back beyond that, has the cacophony we've been instance

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Speaker 1: August normal? Or is this like a new thing because

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Speaker 1: of new technology, new information transfer. I think it's something

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Speaker 1: of a new thing, and I really think it's down

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Speaker 1: to actually the politicians that we have um in the

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Speaker 1: global economy, the amount of geopolitical risks. It's an upproval

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Speaker 1: of what has become a global norm for a number

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Speaker 1: of decades is now being disrupted and I think that

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Speaker 1: is really worth driving a lot of the volatility and

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Speaker 1: uncertainty which is circling invested every day. Now, this has

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Speaker 1: been wonderful. Don't be a stranger. See Michelle with us

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Speaker 1: from a London thrill that she could be with us

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Speaker 1: today with principal global investors. Right now, I want to

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Speaker 1: get a snapshot John, of the American economy. But before that,

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Speaker 1: we must digress because it's far too important. Brighton and

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Speaker 1: Hove Albion. Is that how you pronounced that? That's right?

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Speaker 1: Are they like are they like a relegated coming up

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Speaker 1: a better team or have they been there for years?

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Speaker 1: I mean they're doing okay. They're doing okay and they're

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Speaker 1: going to play Newcastle. Yeah. Should we bring in someone

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Speaker 1: with some perspective might have a bit of something about Newcastle? Yeah,

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Speaker 1: in Shepherdson with us with Panthea, we're going to get

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Speaker 1: to the American economy. It it's funny ivan for me

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Speaker 1: to watch Newcastle because it's like totally different than the

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Speaker 1: fancy pants Tottenham, you know, in fancy new stadium. I mean,

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Speaker 1: Newcastle is a breath of fresh air to watch. Well,

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Speaker 1: I wouldn't know something because I've given up my season

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Speaker 1: ticket after twenty three years. Why did you do that?

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Speaker 1: It's my protest against the ownership. Not another penny goes

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Speaker 1: to Mike Ashley. Not another penny. Can you just explain

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Speaker 1: to Tom who Mike Ashley is, because is the retalent

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Speaker 1: character who bought the club about ten years ago and

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Speaker 1: it was kind of running into the ground. So this

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Speaker 1: is this is my I'm not the only one protesting.

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Speaker 1: There's about ten thou other season tickets you haven't read.

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Speaker 1: He like the equivalent of foot locker in the United

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Speaker 1: Kingdom sports Direct, one of these big chains of sports

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Speaker 1: stores in the UK. You also owns Newcastle United. I'm

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Speaker 1: gonna secure you this right over to the expertise of

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Speaker 1: Pantheon Economics. The consumer in the United Kingdom at their

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Speaker 1: foot locker, how's our foot locker doing? How is the consumer?

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Speaker 1: Ian Shepherdson. In America, the consumers fine? I mean, the

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Speaker 1: consumer is dragging along the whole economy. It looks to

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Speaker 1: me like we're going to get another three plus quarter

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Speaker 1: in the third quarter, which is really very good going

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Speaker 1: given that we've seen business confidence really take a pounding

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Speaker 1: from the trade war. Actually, the trade war might be

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Speaker 1: helping consumer spending right now, because looks to me looking

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Speaker 1: at the chain store sales numbers that people have been

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Speaker 1: pulling forward purchases of consumer goods because they know that

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Speaker 1: the tariffs are coming. There were tarwers from post September one,

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Speaker 1: so they'll start hitting the stores next month. So people

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Speaker 1: looked to have been spending more like bringing forward some

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Speaker 1: maybe some of the holiday purchases just to avoid the tariffits.

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Speaker 1: So that's going to flatter the third quarter. It's the

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Speaker 1: fourth quarter and beyond that. I'm a bit nervous about.

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Speaker 1: But I mean, certainly compared to the corporate sect of

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Speaker 1: the consumers, pretty a bit nervous about Bullet or bit

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Speaker 1: nervous about Rose and Grin George. That's that's an interesting question.

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Speaker 1: I gotta Sam. I'm more on the Rose and Grin

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Speaker 1: George to the spectrum Blore today talking about needing to

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Speaker 1: action downside inflation risks. But the fact is that core

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Speaker 1: CPI inflation now is two point four percent. A few

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Speaker 1: months ago it is two percent. It hasn't been a

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Speaker 1: both point four percent, yes, So I'm not quite sure

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Speaker 1: where he's coming from it. You know, we we know

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Speaker 1: there's some stuff in the pipeline from caiffs and some

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Speaker 1: of the things is going to push inflation higher. So

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Speaker 1: I think that that low inflation ship. You know, I

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Speaker 1: think maybe it's sailed, and I'm not quite sure why

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Speaker 1: Bullot is hanging onto it so tightly. Ian Shepherdson moments ago.

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Speaker 1: I'm sure you haven't seen this, because it just came

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Speaker 1: out seconds ago, literally from the Federris Bank of Boston,

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Speaker 1: Mr Rosen Grin commenting on dissenting vote at the meeting

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Speaker 1: of the Federal Open Market Committee. Folks, this is a

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Speaker 1: formal document stating his descent was that they should not

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Speaker 1: cut rates. The first sentence, Ian Shepherdson, The stance of

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Speaker 1: monetary policy is accommodative. Do you agree with that that

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Speaker 1: right now, even before this beet cut, that we were accommodative. Yes,

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Speaker 1: I'm in real interest rates are zero, depending how you

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Speaker 1: measure them, roughly zero long term rates, and some of

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Speaker 1: them are below zero implied real mortgage rates on negative

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Speaker 1: household service costs of corporate That service costs are rock rock.

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Speaker 1: So I'm looking for kigns of any lack of accommodation,

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Speaker 1: and as you pose, I'm not seeing them. You know,

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Speaker 1: I can I can kind of understand this sort of

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Speaker 1: insurance type of proachest risk management approach that Powell has

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Speaker 1: talked about, because after all, today core PC inflation is

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Speaker 1: one point six percent, and that's not terrifying at all. Um.

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Speaker 1: I just think that maybe a bit of forward thinking

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Speaker 1: might might might make it clearer than actually that rate

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Speaker 1: is going to rise, and that although the economy is

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Speaker 1: going to weaken, I think that it's probably not going

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Speaker 1: to roll over. So I think some of these tensions

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Speaker 1: are going to emerge, but probably not in the way

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Speaker 1: that Jim Ballard thinks, more in the way that Eric

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Speaker 1: Rosingren thinks, in that actually inflation and risk is not gone.

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Speaker 1: But I gotta tell you, Tom, this is a hard

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Speaker 1: thing to get over to people, because you know, we

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Speaker 1: we haven't seen core CPI inflay at both three percent

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Speaker 1: for more than twenty years. I think we might see

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Speaker 1: it again next next spring because of the tariffs, and

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Speaker 1: so that the sort of disinflation low inflation mindset is

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Speaker 1: extremely deeply entrenched, just like the high inflation mindset was

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Speaker 1: deeply entrenched in the seventies and eighties, and it took

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Speaker 1: a generation to work it out. But maybe we've we've

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Speaker 1: We've got so many people know who can't remember any

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Speaker 1: any rising inflation environment that they cannot think, well, it

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Speaker 1: can't happen, but actually I think it probably can. In

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Speaker 1: quick final word on the repo operations that the New

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Speaker 1: York Fed has been conducting, the former New York Fed

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Speaker 1: President Bill Dudley saying that you should get a crib.

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Speaker 1: The Fed can handle the repo market. Do you agree

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Speaker 1: with that? Ian? Are we're going to smooth out some

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Speaker 1: of the bumps of this week? They can handle it

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Speaker 1: if they keep doing repos on a very frequent basis.

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Speaker 1: But if they don't, then it won't work because the

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Speaker 1: reserves have shrunk so much that the IOE R FED

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Speaker 1: funds spread, which has caused a problem. I can't come

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Speaker 1: down permanently without a permanent reserve AD. So it's either

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Speaker 1: a permanent reserve AD or they have to do a

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Speaker 1: lot more frequent repos. I can't really say an Ian Sheperdson,

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Speaker 1: thank you so much with Pantheon. Nice update there. We're

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Speaker 1: gonna do this now, we're gonna we're spend this black

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Speaker 1: in a little bit of the next block with a

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Speaker 1: guy who's been all over the media on initial public

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Speaker 1: offerings because he's the only one we know east of

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Speaker 1: the Hudson River that actually reads a damn prospectus. Red

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Speaker 1: Wallace is with a Triton research and instead of going

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Speaker 1: like what's we're all gonna do? Or what's Peloton gonna do?

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Speaker 1: I want to talk for Global wall Street Wallace. How

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Speaker 1: did we get here? We used to get the prospectuses.

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Speaker 1: There was a dance, there was a ballet, and it

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Speaker 1: just seems to be blown up in the last eight

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Speaker 1: months or so. Um, well, it's longer than the last

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Speaker 1: eight months in the sense that you know, when Uber

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Speaker 1: came out, we did the look back of Uber us,

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Speaker 1: Microsoft and Microsoft in Public and nine with a you know,

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Speaker 1: fifty page perspectives, right, and a much smaller business that

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Speaker 1: was also much more profitable. So it was a simple,

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Speaker 1: smaller profitable business that could be described in fifty pages

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Speaker 1: and people could understand what they were or the dog perspectives.

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Speaker 1: Now three and eighty three pages, what's in there allowed

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Speaker 1: us to enjoy these losses. Well, so that's what you

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Speaker 1: want to do, is you want to be able to

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Speaker 1: build a model out of the materials that they give

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Speaker 1: you in the perspectus, and unfortunately you have to do

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Speaker 1: three eighty three pages of what looks like it should

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Speaker 1: contain the right information and it doesn't. This is well,

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Speaker 1: this is said. I mean, between the three of us

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Speaker 1: in this room, we've read four thousand twelve perspectives. Also

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Speaker 1: read for me, I mean, you know, it's interesting. We've

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Speaker 1: had is gonna be the hear of these great tech

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Speaker 1: I p o s. We had all lined up Airbnb,

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Speaker 1: we work, Uber, Lift, all that kind of stuff. It

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Speaker 1: hasn't been very good. And I'm going to go back

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Speaker 1: to Uber because for me that was kind of marked

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Speaker 1: a sea change from the public markets from the van markets,

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Speaker 1: which is the company did not do an adequate job

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Speaker 1: apparently of kind of giving investors a sense of the

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Speaker 1: path the profitability. How are you going to get there?

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Speaker 1: I understand you're not profitable profitable today, that's okay, But

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Speaker 1: what's the path of profitability? They didn't do that today.

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Speaker 1: Uh no, they didn't. But if you were going to,

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Speaker 1: you know, indict the entire I p O market, I

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Speaker 1: think you couldn't really do it. Just with you know, Uber,

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Speaker 1: you need lift we work now is three points make

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Speaker 1: a line, But I think they're clearly bifurcated from the

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Speaker 1: rest of the companies that have gone public in a

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Speaker 1: very successful showing. This year. I mean just data Dog

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Speaker 1: and cloud Flair recently, like going above their ranges with

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Speaker 1: great trading performance shows you what really is a tailor

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Speaker 1: to cities. Not to use it to blasioism, but um,

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Speaker 1: you know the guys who have a model that people understand,

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Speaker 1: and when they show investors from respect and give them

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Speaker 1: the numbers that expect to see so that you can

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Speaker 1: actually do the analysis correctly, it's different. I think you know,

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Speaker 1: lift Uber and now we Work are all hyper capitalized,

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Speaker 1: hyper opaque situations. And I think you know when we

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Speaker 1: look at it, like you know, as you guys know,

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Speaker 1: we score these companies on you know, a bunch of

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Speaker 1: over a dozen criteria. But the three things that when

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Speaker 1: we see them in combination it's really a killer are

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Speaker 1: big losses, which lift Uber and we Work all had opacity,

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Speaker 1: right when you can't actually look into the numbers and

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Speaker 1: pencil at a model that makes sense like okay, you're

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Speaker 1: losing two billion dollars today, but you can see how

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Speaker 1: I'm going to get my money back at some point.

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Speaker 1: And then the third thing that I think we work

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Speaker 1: is really shown is just arrogance. And so when you

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Speaker 1: have opacity and losses, the investors have to trust you,

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Speaker 1: and the arrogance makes trust impossible to obtain, which is

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Speaker 1: I think why we work as having the trouble they're having, right.

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Speaker 1: And one of the other things that's just really strikes me,

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Speaker 1: and I've been in this business thirty years, is the

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Speaker 1: mismatch right now invaluation between private markets I e. Forty

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Speaker 1: seven billion dollars before we work and public markets maybe

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Speaker 1: price talk of ten billion dollars. I've never seen that

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Speaker 1: before and I and we're now seeing these marked a

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Speaker 1: market in the public markets that are materially different and

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Speaker 1: lower than in some cases higher but oftentimes sometimes lower

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Speaker 1: this year. What's going on there? I mean, if I

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Speaker 1: was going to be positive about it, what I would

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Speaker 1: say is this that Uber and we work in particular,

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Speaker 1: are different kinds of companies in the sense that they've

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Speaker 1: changed the world. I mean, I don't know about you, guys,

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Speaker 1: like I can't go back to a world that doesn't

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Speaker 1: have Uber, and I don't think we're going to go

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Speaker 1: back to a world that doesn't have we work either, Right.

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Speaker 1: And so these were very big, bold bets by investors

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Speaker 1: that said, you know, we're onto something here that's growing

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Speaker 1: very quickly and changing people's behavior in a really fundamental way.

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Speaker 1: And so the products are great, right, and the companies

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Speaker 1: are great. The disclosure to investors who are asked to

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Speaker 1: take over for the private market investors is the thing

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Speaker 1: that you can quibble with because it's like, Okay, well,

431
00:22:33,640 --> 00:22:35,600
Speaker 1: the people who had access to perfect data on the

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00:22:35,600 --> 00:22:38,359
Speaker 1: private side paid one price, and now, based on the

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00:22:38,400 --> 00:22:40,399
Speaker 1: information we can see in the public side, that price

434
00:22:40,400 --> 00:22:42,959
Speaker 1: doesn't seem to make a lot of sense. I totally

435
00:22:43,000 --> 00:22:45,280
Speaker 1: agree that you just said, except they take grave issue.

436
00:22:45,640 --> 00:22:48,959
Speaker 1: In the old days, you went public and in the transaction,

437
00:22:49,640 --> 00:22:54,360
Speaker 1: the public corpus was the majority of the company. These

438
00:22:54,400 --> 00:23:00,320
Speaker 1: are essentially private transaction people selling a stub item, which

439
00:23:00,320 --> 00:23:04,359
Speaker 1: is how how how stubby is stubby? If you spin

440
00:23:04,440 --> 00:23:11,240
Speaker 1: off we works, the company is. But they're they're doing

441
00:23:11,280 --> 00:23:14,640
Speaker 1: split the difference. They're selling off percent of the company.

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00:23:14,760 --> 00:23:17,800
Speaker 1: And you're telling me that's a public company. I mean, well,

443
00:23:17,920 --> 00:23:20,159
Speaker 1: that's what Microsoft did. And also, by the way, like

444
00:23:20,280 --> 00:23:22,280
Speaker 1: you know, Bill Gates and Steve Bond were sold into

445
00:23:22,359 --> 00:23:24,679
Speaker 1: the I p O. Right, so they took money off

446
00:23:24,680 --> 00:23:26,120
Speaker 1: the table in that I p O. So I think

447
00:23:26,160 --> 00:23:30,040
Speaker 1: structurally it's similar. It's just the size is different, right

448
00:23:30,040 --> 00:23:32,280
Speaker 1: because you didn't mean you know, it's only an accounting

449
00:23:32,280 --> 00:23:35,320
Speaker 1: technicality that makes Uber a ten million dollar company. Really,

450
00:23:35,320 --> 00:23:38,800
Speaker 1: their GP is fifty billion dollars, so it's a gigantic company.

451
00:23:38,880 --> 00:23:41,399
Speaker 1: Can you stay around? Sure? Okay, I'm just you know,

452
00:23:41,600 --> 00:23:43,960
Speaker 1: he's the only one if I need eight thousand shares

453
00:23:44,000 --> 00:23:48,800
Speaker 1: of we dog and surveillance clarity here. We always are

454
00:23:48,800 --> 00:23:51,200
Speaker 1: going for clarity. I say we dog like, I say

455
00:23:51,280 --> 00:23:53,320
Speaker 1: bit dog like. You know, it's like, really are you

456
00:23:53,400 --> 00:23:58,040
Speaker 1: and I know, folks, I'm editorializing. Save me dated dog

457
00:23:58,440 --> 00:24:01,920
Speaker 1: is not a dog, No, it's the name of the company. Company,

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00:24:02,000 --> 00:24:04,600
Speaker 1: the name of the company. Remember dog Pile before Google,

459
00:24:06,040 --> 00:24:10,199
Speaker 1: before Google bought the algorithms of Dogpile. Dog Pile when

460
00:24:10,240 --> 00:24:12,720
Speaker 1: it came out, it was like stunning. It was like

461
00:24:13,000 --> 00:24:15,639
Speaker 1: what is this search engine? And that was this is

462
00:24:16,119 --> 00:24:18,000
Speaker 1: this is before your time. I think of the globe.

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00:24:18,040 --> 00:24:20,200
Speaker 1: Dot com is the sort of poster child of dumb

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00:24:20,560 --> 00:24:23,840
Speaker 1: you know dot com bubble companies. Yeah, speaking of I

465
00:24:23,840 --> 00:24:25,280
Speaker 1: mean one of the things that I was thinking about,

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00:24:25,320 --> 00:24:27,159
Speaker 1: just as far as how things have changed. If you

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00:24:27,200 --> 00:24:28,840
Speaker 1: look at we Work, we work as kind of its

468
00:24:28,840 --> 00:24:31,880
Speaker 1: own little dot com crash all by itself right. Well,

469
00:24:31,960 --> 00:24:34,879
Speaker 1: let's try time with this wisdom on your next I

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00:24:35,080 --> 00:24:40,000
Speaker 1: p O allocation. Thanks for listening to the Bloomberg Surveillance podcast.

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00:24:40,359 --> 00:24:45,360
Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or

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00:24:45,440 --> 00:24:49,760
Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom

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00:24:49,840 --> 00:24:53,760
Speaker 1: Keane before the podcast. You can always catch us worldwide.

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Speaker 1: I'm Bloomberg Radio