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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along

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Speaker 1: with my co host of Bonnie Quinn. Every business day

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Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts,

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Speaker 1: along with essential market moving news. Kind of Bloomberg Markets

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Speaker 1: Podcast on Apple podcast or wherever you listen to podcasts,

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Speaker 1: and on Bloomberg dot com. There is a major, major

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Speaker 1: hearing on Capitol Hill right now. Some tex CEOs defending

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Speaker 1: section to thirty old talk about malignant information, misinformation and

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Speaker 1: the spread of that. Twitter CEO Jack Dorsey is talking

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Speaker 1: right now. Twitter has been proposing an idea where users

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Speaker 1: can choose from a series of algorithms supposedly created by

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Speaker 1: groups outside Twitter. It's just an idea right now, but

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Speaker 1: you can be sure that all of the CEOs will

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Speaker 1: be proposing some sort of ideas so that they don't

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Speaker 1: have ideas imposed upon them. So now to talk more

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Speaker 1: about what we might hear today and the reaction to it,

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Speaker 1: let's bring in Jim Anderson of Social Capital, and just

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Speaker 1: for reasons of um disclosure, we should mention that Social

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Speaker 1: Flow is used by Bloomberg as well. So Jim explained

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Speaker 1: to us, first of all, what social flow actually does. Yeah,

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Speaker 1: We're we're the social marketing platform that many of the

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Speaker 1: big media companies use to get their content out to

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Speaker 1: Facebook and Twitter and other social network so so we're

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Speaker 1: very much the conduit through which a lot of that

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Speaker 1: information flows. And of course, reputable media companies that you know,

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Speaker 1: reputable is I suppose subject to some degree of interpretation.

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Speaker 1: You know, your view of what is reputable may be

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Speaker 1: different than someone else's. Use these social platforms enormously. You know,

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Speaker 1: we see about fifty million posts a year go out.

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Speaker 1: They get more than a trillion and annual reach. So

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Speaker 1: these are enormously important platforms for media companies, and of

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Speaker 1: course they're enormously important platforms for all kinds of messaging. So,

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Speaker 1: you know, it's interesting, Jim, I guess one of the

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Speaker 1: most fundamental questions is are these companies media companies, specifically

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Speaker 1: Facebook and then also Twitter and Alphabet or they just

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Speaker 1: simply technology platforms for content. Well, they'll certainly say their

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Speaker 1: technology platforms, right, they don't want to be branded as

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Speaker 1: media companies because that comes with a whole set of obligations,

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Speaker 1: including perhaps not Section two thirty protection, which is what's

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Speaker 1: being talked about in his hearing, and so that's been

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Speaker 1: sort of a long running debate. And and in fairness

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Speaker 1: to their position, uh, you know, they don't generally create

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Speaker 1: the content, right, what do media companies do? They create contents.

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Speaker 1: They typically take a point of view, they have editorial

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Speaker 1: judgment those kinds of things. And what Facebook and Twitter

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Speaker 1: and Google will all say is we don't do that, right,

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Speaker 1: We largely don't create the content. We try to avoid

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Speaker 1: being the editorial voice. You've hurt Mark Zuckerberg say time

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Speaker 1: and time again, we don't want to be the arbiter

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Speaker 1: of truth. Now, there are certainly counter arguments to that

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Speaker 1: and legitimate points on the other side, but at least

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Speaker 1: from their positioning, they don't want to be viewed as

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Speaker 1: media company. Where are they in agreement? I mean obviously there,

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Speaker 1: but but in general when it comes to making arguments

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Speaker 1: before the committee, where will they all sound like they're

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Speaker 1: in agreements and working together pretential even and where will

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Speaker 1: they differ and want to be very much obviously distant

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Speaker 1: from each other. Well, I think where they're going to

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Speaker 1: be together is they all depend on section two thirty.

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Speaker 1: Jack Dorsey's initial statement said, you know, section two thirty

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Speaker 1: is incredibly important, and that removing section to thirty protections

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Speaker 1: will removed content from the Internet. And I think you'll

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Speaker 1: see variations of that same theme coming from all three.

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Speaker 1: I think where you may differ is in terms of

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Speaker 1: algorithmic seed you know. I think Twitter has the opportunity

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Speaker 1: to create a little bit of daylight between Facebook and Google,

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Speaker 1: because relatively, Twitter tends to be more in the moment, live,

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Speaker 1: what's happening right now, whereas Facebook and YouTube, which is

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Speaker 1: the most sort of relevant um part of Google to

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Speaker 1: this conversation, tends to be more algorithms algorithmically driven. Uh.

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Speaker 1: And it may not be as important that it happened

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Speaker 1: five minutes ago, it may have happened yesterday. But if

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Speaker 1: the oderithm is determined that you might like it it

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Speaker 1: is relevant to you, they'll surface it. So I would

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Speaker 1: expect Twitter to be somewhat less defensive of algorithms and

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Speaker 1: more willing to compromise on Hey, if you want to

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Speaker 1: regulate somethings, then regulate the way the algorithms surface content. So, Jim,

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Speaker 1: I understand why Facebook is testifying today Twitter. These are

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Speaker 1: social network platforms that really traffic in, you know, news

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Speaker 1: and content I'm a little unsure why alphabet is involved.

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Speaker 1: Why why do you think they're there? Yeah, I think

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Speaker 1: it is mostly about YouTube. You think about the way

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Speaker 1: people consume YouTube. You know, you you open up and

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Speaker 1: watch a video. However you saw it, maybe you saw

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Speaker 1: I don't know, social network, or somebody emails or texted

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Speaker 1: it to you, or you just discovered it. Well, there's

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Speaker 1: a very powerful you know, sort of following videos other

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Speaker 1: videos like this pain that shows up. And so what

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Speaker 1: happens is you sit down to watch one YouTube video

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Speaker 1: and before you know what, you've watched twelve YouTube videos, right,

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Speaker 1: and what those other eleven that you watched are very

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Speaker 1: powerfully chosen by algorithms that are incredibly similar in concept

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Speaker 1: and the scope to what Facebook does. Right, So so

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Speaker 1: that hey, if you're interested in I'll just pick something

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Speaker 1: law in order, then you may be interested in this

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Speaker 1: other type of content. And the problem that Google has

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Speaker 1: run into is if this other type of content is

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Speaker 1: the white supremacy, you know, they end up having algorithms

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Speaker 1: that recommend content, it's highly questionable. And the algorithms don't know, right,

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Speaker 1: they don't exercise editorial judgment. So the algorithm just knows

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Speaker 1: that you watched a piece of content like this. Other

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Speaker 1: people who watch content like this would be interested in

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Speaker 1: something related, and so they served you up something that

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Speaker 1: may be entirely inappropriate and that even Google may ultimately

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Speaker 1: decide is inappropriate and removed from YouTube. But it's pretty

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Speaker 1: much a cat and mouse game in terms of keeping

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Speaker 1: that that questionable content off of the platforms. So this

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Speaker 1: is hilarious, Jim. They couldn't make contact with Mark Zuckerberg,

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Speaker 1: so now that there's a recess in order to be

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Speaker 1: able to continue the hearing on bad behavior shortly. But

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Speaker 1: how ironic is that? I mean? How also, how will

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Speaker 1: I be read that the committee couldn't get in touch

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Speaker 1: with Mark Zuckerberg? He walln't available to speak to the committee? Right? Well,

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Speaker 1: I mean, so you know, we all sort of deal

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Speaker 1: with zoom. You know, he does run Facebook, I understand.

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Speaker 1: So you know, I think your question about how will

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Speaker 1: it also want to be perceived. Is it just a

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Speaker 1: technical snatt food that's quickly resolved, or is he off

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Speaker 1: doing something and he just decided decided to blow off,

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Speaker 1: you know, congressional testimony that obviously wouldn't be received. Well,

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Speaker 1: I would have to believe that you know, he takes

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Speaker 1: this seriously, understands the importance of the Senate and Congress

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Speaker 1: and regulations. So my my guess is at the technical issue.

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Speaker 1: But you know, I guess we'll have to wait and speake. Yeah, yeah,

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Speaker 1: he's back now. I guess they've they've rebooted and he's back,

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Speaker 1: so hopefully they get started again. Jiff, just wondering. You know, historically,

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Speaker 1: um in the United States, regulators government has taken a

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Speaker 1: very light touch to regulating big tech, and arguably that's

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Speaker 1: allowed big tech to be what it is in Silicon Valley,

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Speaker 1: to be what it is with all the successes. You

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Speaker 1: sense it that's changing. I think it's definitely changing. I

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Speaker 1: think it's it's true they have taken a light touch,

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Speaker 1: and I think it's a very fair statement to say

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Speaker 1: that's been allowed for enormous growth, wealth creation. You know,

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Speaker 1: these companies are some of the biggest companies in the

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Speaker 1: world now as a result in part of that might touch.

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Speaker 1: But you know, when a company gets to be you know,

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Speaker 1: near a trillion dollars in market gap or in the

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Speaker 1: two trillion dollars, I'll throw Apple and this mix, obviously,

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Speaker 1: it's a it's a different kind of company, but it's

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Speaker 1: sort of certainly falls into big tech. You know, when

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Speaker 1: you end up with market capitalizations in the trillion dollar range,

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Speaker 1: you know you're you're almost government size at that point.

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Speaker 1: And I think, you know, you get to to be

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Speaker 1: too big and and have too many issues and too

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Speaker 1: many problems and too many enemies, just lantly from a

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Speaker 1: political standpoint, so, I think it's clear both Democrats and

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Speaker 1: Republicans have a very high degree of anxiety and angst

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Speaker 1: and even animosity against the tech platforms. The interesting thing

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Speaker 1: is that they're almost diametrically opposed. Right Democrats think that

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Speaker 1: the tech platforms are not doing enough to combat misinformation,

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Speaker 1: Republicans think that the text platforms are censoring conservative content.

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Speaker 1: Those are almost exactly diametrically opposed. And so where you

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Speaker 1: get into these real interesting questions is, well, what's the remedy?

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Speaker 1: Right If if you want to revoke Section two thirty

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Speaker 1: protections and make the platforms more liable from a conservative perspective,

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Speaker 1: then you're more likely to get somebody like Facebook and

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Speaker 1: Twitter removing conservative content because they don't have any legal

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Speaker 1: protections if they keep it up. And so I think

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Speaker 1: there's a very real risk here that that somebody will

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Speaker 1: actually make the situation worse from their standpoint, um, if

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Speaker 1: they're not very fontibule about how these regulations are determined

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Speaker 1: and enacted. Jim, what would you imagine will be the

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Speaker 1: role of Twitter in public life if the presidency turns over? Well,

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Speaker 1: I think in Twitter will still be very important. You know,

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Speaker 1: I think everybody may take a breath, and the pace

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Speaker 1: of tweets coming from the President I would have to

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Speaker 1: believe be considerably lower. Um. And in some ways that's

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Speaker 1: a negative for Twitter, because you know, you could argue

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Speaker 1: that Donald Trump's presidency has done a tremendous amount to

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Speaker 1: keep Twitter relevant. But I think Twitter, if if you

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Speaker 1: sort of got an honest view from them, might actually

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Speaker 1: welcome the rest of it, because it comes with a

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Speaker 1: lot of headaches and a lot of anxiety and a

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Speaker 1: lot of problems. So I think Twitter will continue to

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Speaker 1: be very important. But I don't think you'll see, let's say,

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Speaker 1: for instance, President Biden if he wins uh, you know,

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Speaker 1: making declarations on Twitter, certainly not at a volume and

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Speaker 1: in the way that President Trump does. Jim. I guess

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Speaker 1: the ultimate concern for tech investors is perhaps some of

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Speaker 1: these companies get broken up. Do you think there's a

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Speaker 1: material risk that that could happen. Yeah, I would almost

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Speaker 1: call it not just the material risk, but a likelihood. Now,

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Speaker 1: I think the real question is how and when and

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Speaker 1: how how long does it take? Right that this is

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Speaker 1: antitrust is a year's long process. There will be plenty

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Speaker 1: of litigation. But going back to the size of these companies,

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Speaker 1: it's hard to argue Facebook, Google, certainly. Twitter maybe is

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Speaker 1: a little bit of a different story because you know,

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Speaker 1: Facebook is sixty times larger than Twitter if you want

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Speaker 1: to think about it from a market capitalization standpoint. The

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Speaker 1: lands I checked, so you know, it's it's unfair to

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Speaker 1: lump Twitter into the antitrust conversation the way you would Facebook, Google,

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Speaker 1: or even Amazon or Apple if you want to be

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Speaker 1: more expansive. And I think every one of those four

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Speaker 1: big tech companies faces a very significant risk of of

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Speaker 1: antitrust action and then either ultimately being broken up or

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Speaker 1: reaching a settlement where they voluntarily choose to diveet certain

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Speaker 1: components to satisfy regulatory concerns. And by the way, not

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Speaker 1: just in the United States. These are global companies that

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Speaker 1: you have to start thinking about the EU and other

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Speaker 1: jurisdictions as well, if you're the CEO of one of

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Speaker 1: these companies, and in my mind it at least to

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Speaker 1: some degree or another, some degree of antitrust impact is

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Speaker 1: inevitable on all four of those big, big giant tech platforms. Yeah,

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Speaker 1: I mean, the EU is way far ahead in many ways,

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Speaker 1: and you notice it when you you you you browse

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Speaker 1: around on European websites, you get asked a whole range

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Speaker 1: of questions about you know, what, what what? What information

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Speaker 1: you want to give away? How many people can you

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Speaker 1: know can use it and pass it on and so on.

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Speaker 1: So it is interesting. But so we know that Mark

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Speaker 1: Zuckerberg had the year of President Trump. We know he

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Speaker 1: wasn't going to tell us what was said in that room.

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Speaker 1: Would he us the same kind of relationship with a

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Speaker 1: different president, Uh, you know that's a great question. I'm

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Speaker 1: not sure he will, right, I mean, you know, President

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Speaker 1: Trump is a unique president at a unique moment in time.

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Speaker 1: I think, if nothing else, for reasons of optics, President

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Speaker 1: Biden isn't necessarily going to want to be perceived as

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Speaker 1: cozying up the big tech and and then you know,

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Speaker 1: never mind what the specific personal conversations were in private.

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Speaker 1: I think all you know, big tech platforms have given

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Speaker 1: the opportunity to have an audience with the president, would

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Speaker 1: choose to say yes, Why why would you not do that? Uh?

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Speaker 1: You know, I think any anytime you have the ability

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Speaker 1: to advance your cause and how people understand your business

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Speaker 1: and your position, you're probably going to want to take it.

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Speaker 1: So I would not be at all surprised again as

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Speaker 1: president if if Joe Biden does win and become president,

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Speaker 1: that you'll see as somewhat of a distance put between

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Speaker 1: him and big tech in general. And then you ultimately

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Speaker 1: we'll have to see how the Congress shakes out as well. Uh.

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Speaker 1: You know what, what their appetite is a lot of

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Speaker 1: you know, what we see now is certainly inflamed by

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Speaker 1: the election in season. Um, once the election results are

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Speaker 1: decided and we're past that, then we'll find out what

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Speaker 1: the real appetite is for for real heavy lifting of

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Speaker 1: legislation and regulatory reform. You know, Jim, this seems to this,

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Speaker 1: maybe even this hearing seems to have really come about

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Speaker 1: in the wake of that New York Post Hunter Biden story.

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Speaker 1: Why do you why do you think that got so

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Speaker 1: much traction. Well, I think it's a Twitter you know,

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Speaker 1: handled that in a very aggressive way. Some people would

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Speaker 1: say mishandled that, right, I mean that's a matter of perspective.

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Speaker 1: I think what you see, though, is that the tech

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Speaker 1: platforms Twitter in this case, are are super sensitive to

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Speaker 1: the idea that there's an October surprise that will come out,

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Speaker 1: there's an information dump of unverified information. Uh, there's an

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Speaker 1: impact on the election, and before anybody has a chance

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Speaker 1: to really that what was going on, you know, it's

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Speaker 1: affected the election, and and you know, the tech platform

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Speaker 1: towards the center of it. I think that's the concern

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Speaker 1: of what happened, at least in the view of some

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Speaker 1: back in two thousand sixteen, and so they were super

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Speaker 1: primed for this, and so they acted very quickly, but

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Speaker 1: in many ways they overreached, right. They they suspended the

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Speaker 1: Twitter account of the New York Post. And whether you

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Speaker 1: agree with the New York Post and editorial view or not,

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Speaker 1: they are the New York Post. They are generally considered

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Speaker 1: to be a reputable news source. And so when you

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Speaker 1: haven't platforms blocking the Twitter Twitter handle of a news outlet,

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Speaker 1: that's a pretty significant move. Yeah, Jim, We're gonna have

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Speaker 1: to leave there. Jim Honderson, CEO of Social Flow. Yeah,

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Speaker 1: markets selling off, the excelling as accelerated. We have the

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Speaker 1: SMP that Dow and NASAC all off about three cent.

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Speaker 1: Let's bring in Sarah Posic Bloomberg across asset reporters. Sarah,

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Speaker 1: it seems like this selling has accelerated here. Uh, we're

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Speaker 1: seeing bigger losses. Selling has accelerated. If you look across

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Speaker 1: the major averages right now towards the loads of the days,

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Speaker 1: a couple of technical levels that some investors are watching.

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Speaker 1: For example, if you were to look at the SMP

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Speaker 1: five hundred, take a look at its one hundred day

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Speaker 1: moving average. We broke through the fifty day not too

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Speaker 1: long ago, just a couple of days ago till today,

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Speaker 1: we broke through that one day moving average, which stands

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Speaker 1: just at thirty three oh six or so. So we're

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Speaker 1: still trading below it as some investors, including Matt Maillie

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Speaker 1: over at Miller's Havoc, are looking closer to the thirty

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Speaker 1: two thirty level or so, uh for support should we

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Speaker 1: need it. We still are a ways away from that level.

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Speaker 1: But if we were to break that level there would

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Speaker 1: be concerned because we would then break the trend line

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Speaker 1: since March. But as you mentioned, you look at the

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Speaker 1: major averages, the DOUBT, the SMP, at the NAZAC, they

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Speaker 1: are all down more than three at the moment. The

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Speaker 1: worst thing for the SMP since early September when the

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Speaker 1: correction really first began, which was really led by tech

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Speaker 1: stocks at the time. But well, equity selling has really

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Speaker 1: picking up. You could say, what's interesting is that we

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Speaker 1: still see pretty moderate gains in treasuries. We're not seeing

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Speaker 1: a huge rust to safety and assets. You look at

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Speaker 1: the tenure for example right now at seventy six basis points,

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Speaker 1: not flat on the day, but not seeing too much movement.

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Speaker 1: So at least in the bond market, you haven't seen

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Speaker 1: the safe haven rush pick up as we have seen

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Speaker 1: equity losses accelerate throughout the morning. Let's also bring in

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Speaker 1: Gina Martin Adams, chief equity strategist for Bloomberg Intelligence. Gina,

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Speaker 1: you know, we we thought that the tech hearring would

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Speaker 1: be the big event of the day, but it turns

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Speaker 1: out the markets are becoming the major event of the day.

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Speaker 1: Is this something that we should start getting concerned about? Well,

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Speaker 1: I think that they're actually related issues. I mean, the

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Speaker 1: market is weakest in the tech base, um, the communication

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Speaker 1: stocks and tech stocks sort of leading to clines along

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Speaker 1: with energy. So I think that the two issues are

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Speaker 1: somewhat related. Um. You know, as Sarah mentioned back in

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Speaker 1: September is the start of this correction, and it all

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Speaker 1: started with tech stocks starting to sell off. And we

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Speaker 1: have seen a tremendous amount of rotation since September. Even

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Speaker 1: the early October rally was certainly suspicious given that it

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Speaker 1: was led by utility stocks. So you know, I think

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Speaker 1: that what you have here is a case of tech

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Speaker 1: stocks losing a little bit of their luster. They're expected

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Speaker 1: to be relatively weak in the third quarter. Uh, You've

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Speaker 1: got um some serious regulatory pressures dampening the outlook for

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Speaker 1: some of the communications stuck, some of those big bell

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Speaker 1: weathers that are related to tech. And at the same time,

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Speaker 1: we've got a little bit of loss of macro momentum

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Speaker 1: that is weighing on the market, and a lot of

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Speaker 1: election jitters. So it's kind of a confluence of events.

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Speaker 1: But I do think the tech is still at the

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Speaker 1: center of the market weakness and has been since early

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Speaker 1: September Gene. How much of this is just kind of

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Speaker 1: the pandemic numbers globally going the wrong direction. Ah, I

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Speaker 1: don't know how much of it honestly is a pandemic.

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Speaker 1: I know that that's an easy sort of culprit to

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Speaker 1: point to, and certainly the fact that the pandemic is

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Speaker 1: re accelerating case counts re accelerating once again does have

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Speaker 1: some people nervous about what that may mean for the

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Speaker 1: economic outlook. But I do think that for the most part,

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Speaker 1: it's unlikely that global economy shut down like they did

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Speaker 1: in March. Um. Instead, there do appear to be alternative

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Speaker 1: measures for dealing with the virus case count load moving higher,

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Speaker 1: and they don't all um necessarily results in a massive

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Speaker 1: economic shutdown. I think instead it may be related to

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Speaker 1: the fact that case counts are moving higher. We don't

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Speaker 1: have a vaccine yet, and fiscal policy seems to have stalled,

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Speaker 1: so we don't have a fiscal policy package to sort

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Speaker 1: of back stop the economy and help us re accelerate

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Speaker 1: that macro momentum in the face of case counts going higher.

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Speaker 1: We're not likely to reopen more in the face of

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Speaker 1: case counts going higher so it is. It is a

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Speaker 1: peripheral a fact, but I think it's more about the

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Speaker 1: fact that, you know, the global economy did recover pretty

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Speaker 1: substantially from March into college September, and that recovery has

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Speaker 1: slowed in the weeks since um and that slowdown has

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Speaker 1: investors a little bit nervous, particularly without any sign of

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Speaker 1: support coming from the fiscal policymakers. Sarah, We're looking across said,

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Speaker 1: and you know it, it's pretty cost the board today.

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Speaker 1: It's just a general feeling of mal is you know,

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Speaker 1: given everything that Gena Martinas said right. I mentioned that

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Speaker 1: we aren't really seeing a huge shift in the bond market.

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Speaker 1: But if you look at currency markets, for example, we

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Speaker 1: see the dollar higher today, we see the Japanese yenn

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Speaker 1: higher today. Those are the two best performing G ten currencies,

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Speaker 1: and the end is the only major currency that it's

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Speaker 1: higher against the U S dollars. So we are seeing

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Speaker 1: this flock to safety across FX market's a little bit

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Speaker 1: more so, even if we're not seeing it completely reflected

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Speaker 1: in the bond market. Granted, when we look at the

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Speaker 1: bond market, you look at the ten year around seventy

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Speaker 1: six basis points or so, I mean these are still extremely,

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Speaker 1: extremely low bond yield. There had been some talk about

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Speaker 1: movement back up towards one percent just last week. So

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Speaker 1: it's amazing to see how quickly this narrative has really flipped,

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Speaker 1: how quickly it has changed. And now we just see

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Speaker 1: yields stuck back in the range that we've almost been

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Speaker 1: stuck in all year long, with uncertainty as ahead. Gina

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Speaker 1: laid out many of them, including the election, including the

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Speaker 1: macro tailwinds kind of coming to a head at the moment.

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Speaker 1: And when we think about rising COVID case counts, yes,

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Speaker 1: we likely won't see a lockdown like we saw earlier

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Speaker 1: in the year, but there is a question about one.

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Speaker 1: We think about the rebound that we saw in the

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Speaker 1: equity markets, how many investors were looking to one and

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Speaker 1: saying the market is a forward looking mechanism, things will

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Speaker 1: get better. Well, how much better can they get if

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Speaker 1: we don't see total improvement, if we don't see treatments, vaccines,

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Speaker 1: whatever you need or deemed necessary to see a full

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Speaker 1: economic recovery. And Sarah just looking at the it's not

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Speaker 1: just the equities here and bonds and currencies. I'm just

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Speaker 1: looking at oil right here, off over six percent. Today

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Speaker 1: w t I crew trading about thirty seven dollars and

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Speaker 1: ten dollars thirty seven dollars and ten cents of barrel

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Speaker 1: to me, I guess that suggests that that market is

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Speaker 1: saying future demand it's not as good as we thought. Right,

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Speaker 1: that's exactly right. We have seen oil just lodged around

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Speaker 1: that forty dollar a barrel barrel mark, not all year long,

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Speaker 1: but ever since that catastrophe. When we prices go negative,

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Speaker 1: shoot back up, and we have since kind of just

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Speaker 1: been hovering around that level. If you look at w

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Speaker 1: t I crude oil right now, down more than six

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Speaker 1: that's the worst day since September eight. That day we

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Speaker 1: did see crude oil down more than seven and a

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Speaker 1: half percent. But like you said, it doesn't seem as

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Speaker 1: though the global demand picture is improving at least and

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Speaker 1: on that front, for example, if you bring it back

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Speaker 1: to stocks that do require plenty of gasoline, for example,

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Speaker 1: you look at airlines, you look at cruise lines, you

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Speaker 1: look at Carnival for example, down ten percent at the moment,

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Speaker 1: Norwegian down more than eight percent. Airlines also taking a hit.

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Speaker 1: So big picture, like you said, that global demand picture

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Speaker 1: just certainly doesn't look to be improving. It's not heading

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Speaker 1: in the right direction. Gina. Healthcare is funny one these

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Speaker 1: days because I'm seeing a lot of you know, negative

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Speaker 1: comments about healthcare and healthcare industry, and yet we have

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Speaker 1: so many of these companies working so hard on things

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Speaker 1: like pandemic you know, uh solutions and so on. Why

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Speaker 1: is healthcare being so maligned? Yeah, that's a good question.

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Speaker 1: We actually wrote about this this week because healthcare earnings

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Speaker 1: are starting to roll out in healthcare fundamentally is one

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Speaker 1: of the best position sectors in the SMP five DRED,

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Speaker 1: some of the strongest revenue and earnings growth currently and

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Speaker 1: expected to continue to produce pretty strong fundamental growth going

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Speaker 1: into Yet healthcare is discounted relative to consumer staples and

417
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Speaker 1: trading at its largest discount relative to the SMP five

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Speaker 1: DRED since it's two thousand nine low, And I think

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Speaker 1: that that's reflective of policy sort of dominating um the

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Speaker 1: outlook for healthcare stocks. Even in the face of the pandemic,

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Speaker 1: Investors are very concerned about what policy is going to

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Speaker 1: look like. Obviously, with the changes that we've had recently

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Speaker 1: at the Supreme Court, there's a lot of concern about

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Speaker 1: a rollback of Obamacare passed years ago and the impact

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Speaker 1: that that may have on the insurers. There's also some

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Speaker 1: concern about a blue wave taking over Washington and the

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Speaker 1: impact that may have across the healthcare spectrum spectrum, but

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Speaker 1: in particular on the pharmaceutical and biotech companies, and especially

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Speaker 1: even more targeted there on the prices of their products.

430
00:22:08,040 --> 00:22:10,480
Speaker 1: So there's a tremendous amount of concern just from the

431
00:22:10,560 --> 00:22:13,720
Speaker 1: policy perspective, and it's not it doesn't even stop there.

432
00:22:13,960 --> 00:22:16,520
Speaker 1: You've got to roll into tax policy as well, because

433
00:22:16,560 --> 00:22:19,639
Speaker 1: healthcare companies do practice inversions, they have a ton of

434
00:22:19,760 --> 00:22:22,880
Speaker 1: cash held overseas, they have a lot of multinational revenue,

435
00:22:23,480 --> 00:22:27,959
Speaker 1: and some of the Biden proposals on tax would um

436
00:22:28,080 --> 00:22:30,919
Speaker 1: sort of indiscriminately dampen the outlook for health care as

437
00:22:30,960 --> 00:22:34,080
Speaker 1: well as technology stuck. So there's a lot of concern

438
00:22:34,320 --> 00:22:38,280
Speaker 1: from a policy perspective impacting healthcare, and I think that

439
00:22:38,400 --> 00:22:42,879
Speaker 1: that's dominating the sentiment towards that sector, resulting in tremendously

440
00:22:42,920 --> 00:22:46,840
Speaker 1: low valuations in comparison to the rest of the other index. A. Jena,

441
00:22:46,880 --> 00:22:48,840
Speaker 1: thanks so much for joining us. We appreciate it. Jina

442
00:22:48,880 --> 00:22:53,280
Speaker 1: Martin's Adams, she is a senior strategist for Bloomberg Intelligence,

443
00:22:53,440 --> 00:22:56,800
Speaker 1: and Sara Ponzic, cross asset reporter for Bloomberg News joining

444
00:22:56,840 --> 00:22:58,680
Speaker 1: us as well. Thank you both, We appreciate your thoughts

445
00:22:58,800 --> 00:23:01,760
Speaker 1: on this very difficult day in the financial Market's a

446
00:23:01,880 --> 00:23:04,920
Speaker 1: huge sell off across the board, equities down about three.

447
00:23:07,960 --> 00:23:11,000
Speaker 1: Let's take a focus in a little bit more on technology.

448
00:23:11,280 --> 00:23:14,359
Speaker 1: Certainly center stage here today in Washington, going to be

449
00:23:14,400 --> 00:23:17,159
Speaker 1: center stage tomorrow when we have over chillion dollars of

450
00:23:17,200 --> 00:23:20,400
Speaker 1: market cap reporting earnings. Nobody better to talk to than

451
00:23:20,480 --> 00:23:24,400
Speaker 1: our friend Dan Eyes, Managing director equity analyst at Wedbush Securities.

452
00:23:24,440 --> 00:23:26,760
Speaker 1: Dan and I are still trying to recover from Penn

453
00:23:26,800 --> 00:23:30,000
Speaker 1: State's loss at Indiana last week. But Dan, let's try

454
00:23:30,080 --> 00:23:33,280
Speaker 1: to move forward here. What are you seeing here in

455
00:23:33,359 --> 00:23:35,920
Speaker 1: the world of big tech and earnings. It's gonna be

456
00:23:36,000 --> 00:23:41,040
Speaker 1: a huge day tomorrow. It's huge, and really it's fork

457
00:23:41,119 --> 00:23:44,239
Speaker 1: in the road situation for tech stocks. You look at

458
00:23:44,280 --> 00:23:47,159
Speaker 1: Microsoft or strong number stocks selling off. There's really a

459
00:23:47,280 --> 00:23:49,240
Speaker 1: risk off trade and I think you're seeing it with

460
00:23:49,800 --> 00:23:52,760
Speaker 1: election backdrop and a lot of evaluations that have moved

461
00:23:52,800 --> 00:23:56,320
Speaker 1: significantly higher. Now I really view tomorrow as a seminal

462
00:23:56,440 --> 00:24:00,000
Speaker 1: day for Fanning stocks. I believe fundamentally we're gonna see

463
00:24:00,080 --> 00:24:03,120
Speaker 1: strength across the board. I believe this sell off here

464
00:24:03,240 --> 00:24:06,920
Speaker 1: is short lived in my opinion, as the fundamental strength

465
00:24:07,280 --> 00:24:10,920
Speaker 1: in tech continues to be there. That's why tomorrow is

466
00:24:10,960 --> 00:24:14,160
Speaker 1: really we'll call it the world Series, the super Bowl

467
00:24:14,520 --> 00:24:19,800
Speaker 1: for textox. Well, after last night, I guess, I guess

468
00:24:19,840 --> 00:24:22,639
Speaker 1: there's no harm in doing that, right done? Just were

469
00:24:22,640 --> 00:24:24,879
Speaker 1: you watching the hearing this morning? Is very curious as

470
00:24:24,920 --> 00:24:27,520
Speaker 1: lone of things stood out to you. Well, I think

471
00:24:27,560 --> 00:24:30,600
Speaker 1: it's a little more of a grandstanding, but to some

472
00:24:30,800 --> 00:24:34,200
Speaker 1: extent it really it kicks off what is going to

473
00:24:34,359 --> 00:24:36,920
Speaker 1: be the belt Way versus Big Tech battle, and this

474
00:24:37,160 --> 00:24:41,080
Speaker 1: is not gonna softened in terms of momentum. We're gonna

475
00:24:41,160 --> 00:24:43,080
Speaker 1: see this more and more as begin two thousand and

476
00:24:43,080 --> 00:24:46,960
Speaker 1: twenty one. A blue weave, you know, potentially sends anti

477
00:24:47,320 --> 00:24:50,960
Speaker 1: trust as well as even Section two thirty issues more

478
00:24:51,000 --> 00:24:53,800
Speaker 1: in the forefront, and I think it just speaks to

479
00:24:54,720 --> 00:24:57,040
Speaker 1: right now there's a target on the back attack. And

480
00:24:57,080 --> 00:24:59,600
Speaker 1: I think when you see social media players like today,

481
00:25:00,600 --> 00:25:02,920
Speaker 1: you're really starting to see them leaser more in on

482
00:25:03,040 --> 00:25:06,159
Speaker 1: two thirty as it seems reforms is clearly on the

483
00:25:06,240 --> 00:25:10,880
Speaker 1: horizon regardless of who gets in the White House. So, Dan,

484
00:25:11,640 --> 00:25:14,800
Speaker 1: assuming we go that path, what do you think the

485
00:25:14,960 --> 00:25:18,720
Speaker 1: risk is to the business model of some of these

486
00:25:18,960 --> 00:25:22,000
Speaker 1: social media platforms? And I guess we'll throw Alphabet in

487
00:25:22,080 --> 00:25:25,760
Speaker 1: there as well, given its YouTube product. How do you

488
00:25:25,880 --> 00:25:29,080
Speaker 1: kind of frame that out? I think it all depends

489
00:25:29,240 --> 00:25:32,119
Speaker 1: on what the reform looks like on two thirty, and

490
00:25:32,200 --> 00:25:34,600
Speaker 1: it's going to be a battleground, you know, depending on

491
00:25:35,480 --> 00:25:38,760
Speaker 1: what we see from from both aisles. But I do

492
00:25:38,880 --> 00:25:41,280
Speaker 1: believe it's a business model risk, and I think it's

493
00:25:41,359 --> 00:25:44,400
Speaker 1: something where you know, it could change from an advertising

494
00:25:44,560 --> 00:25:47,080
Speaker 1: perspective what you see on the social media side, and

495
00:25:47,160 --> 00:25:50,119
Speaker 1: from a content perspective. And I think this is something

496
00:25:50,240 --> 00:25:52,560
Speaker 1: that investors, you know, if you think about just the

497
00:25:52,680 --> 00:25:56,520
Speaker 1: overall risk against big tax, just forget fundamentals for a sect.

498
00:25:57,400 --> 00:26:00,840
Speaker 1: It's been viewed as contained background noise rug the shoulders.

499
00:26:00,920 --> 00:26:03,879
Speaker 1: I think now as we start to get in and

500
00:26:04,040 --> 00:26:06,440
Speaker 1: through the election two thousand twenty one, it becomes a

501
00:26:06,520 --> 00:26:09,919
Speaker 1: more pronounced risk potentially to the business models here at

502
00:26:10,000 --> 00:26:12,760
Speaker 1: social media front and center, but especially when you look

503
00:26:12,760 --> 00:26:15,720
Speaker 1: at Google and from the d O j Frount. They're

504
00:26:15,840 --> 00:26:18,920
Speaker 1: really in the eye of the storm as well as Facebook.

505
00:26:20,760 --> 00:26:22,840
Speaker 1: Are any of the companies more talkative because of the

506
00:26:22,880 --> 00:26:29,680
Speaker 1: self look, I think, you know, when you overall look

507
00:26:29,760 --> 00:26:32,560
Speaker 1: at sort of big tech what we're seeing here, I

508
00:26:32,600 --> 00:26:35,800
Speaker 1: think you a must have to put into two different

509
00:26:35,840 --> 00:26:38,919
Speaker 1: sort of buckets. I think there's ones with fundamental catalysts

510
00:26:39,400 --> 00:26:41,760
Speaker 1: and now be ones with Apple and Amazon. I think

511
00:26:41,760 --> 00:26:44,520
Speaker 1: you'll see that tomorrow terms of Amazon the e commerce

512
00:26:44,560 --> 00:26:47,560
Speaker 1: cloud as well as Apple on five G what I

513
00:26:47,640 --> 00:26:50,720
Speaker 1: believe is a supercycled iPhone twelve. But when it comes

514
00:26:50,760 --> 00:26:53,720
Speaker 1: to social media, I mean this, this right now is

515
00:26:53,760 --> 00:26:55,960
Speaker 1: a risk, and that's why fundamental has become even that

516
00:26:56,200 --> 00:27:00,600
Speaker 1: much more important to show that advertisers are you know,

517
00:27:00,720 --> 00:27:03,200
Speaker 1: not leaven the platform. And that's really been the tale

518
00:27:03,240 --> 00:27:06,680
Speaker 1: of two cities the last six to nine months. Despite

519
00:27:06,760 --> 00:27:11,080
Speaker 1: the headwinds and despite potential black eyes, you've really seen

520
00:27:11,560 --> 00:27:15,480
Speaker 1: come as a Facebook thrive. Yeah. It's it's amazing, Dan,

521
00:27:15,560 --> 00:27:19,640
Speaker 1: I mean, even during this pandemic um we've seen digital

522
00:27:19,760 --> 00:27:24,560
Speaker 1: advertising hold up pretty darn well. It almost seems like,

523
00:27:26,000 --> 00:27:27,840
Speaker 1: you know, this might have been accelerated some of the

524
00:27:28,000 --> 00:27:31,240
Speaker 1: migration from traditional media to digital media is that something

525
00:27:31,280 --> 00:27:34,720
Speaker 1: you've seen. Yeah, I think components of it, but no

526
00:27:34,920 --> 00:27:38,359
Speaker 1: doubt Google in particular has seen some headwinds, and I

527
00:27:38,440 --> 00:27:41,160
Speaker 1: think that has been contained relative to sang names where

528
00:27:41,200 --> 00:27:44,280
Speaker 1: you've seen strength across the board from Netflix to Apple

529
00:27:44,280 --> 00:27:47,879
Speaker 1: and Amazon and and I think right now, if you

530
00:27:47,920 --> 00:27:51,040
Speaker 1: look at the valuations, you've had powered on moves, so

531
00:27:51,280 --> 00:27:55,280
Speaker 1: you've had re ratings, but now the fundamentals can need

532
00:27:55,359 --> 00:27:58,840
Speaker 1: to continue to sort of see beaton maries type stories

533
00:27:59,320 --> 00:28:01,680
Speaker 1: going into the next year. And I'll just use Microsoft

534
00:28:01,680 --> 00:28:04,600
Speaker 1: as a good example. Those are about as rebustive a

535
00:28:04,760 --> 00:28:07,960
Speaker 1: quarter that you'll get, and they gave strong guidance and

536
00:28:08,119 --> 00:28:11,639
Speaker 1: stocks off because investors it's a risk off trade. Stocks

537
00:28:11,680 --> 00:28:13,600
Speaker 1: had a huge move and they wanted more. And I

538
00:28:13,680 --> 00:28:17,200
Speaker 1: think that's going into tomorrow. You know, it's really tech

539
00:28:17,280 --> 00:28:19,760
Speaker 1: doesn't move higher without saying and I'd say the market

540
00:28:19,840 --> 00:28:23,080
Speaker 1: doesn't move higher without saying hims. That's why tomorrow is

541
00:28:23,240 --> 00:28:26,800
Speaker 1: really almost support some of their movement between the bulls

542
00:28:26,840 --> 00:28:30,840
Speaker 1: and the bears. Is we go into you know, earnings

543
00:28:31,200 --> 00:28:34,800
Speaker 1: as well as to the selection cycle. Don where is

544
00:28:34,880 --> 00:28:37,160
Speaker 1: the next round of innovation going to come from? Which

545
00:28:37,200 --> 00:28:39,760
Speaker 1: of these companies as best positions to you know, blow

546
00:28:39,800 --> 00:28:42,760
Speaker 1: our minds in the coming years. Well, I think it's

547
00:28:42,800 --> 00:28:47,120
Speaker 1: Apple to me when I think about five G and

548
00:28:47,280 --> 00:28:50,280
Speaker 1: ultimately when I think about a ARE and what they're

549
00:28:50,400 --> 00:28:53,160
Speaker 1: doing on wearables, I think that's sort of the next

550
00:28:53,360 --> 00:28:56,120
Speaker 1: level of innovation when I think about what's coming out

551
00:28:56,200 --> 00:28:59,680
Speaker 1: of Apple, even though many would say the innovations obviously

552
00:28:59,680 --> 00:29:01,760
Speaker 1: the rear humor, and they continue to prove it wrong.

553
00:29:02,400 --> 00:29:04,200
Speaker 1: I think when I look at Apple, and of course

554
00:29:04,240 --> 00:29:06,760
Speaker 1: on the e V side, you know it's really been

555
00:29:06,960 --> 00:29:09,360
Speaker 1: just testa. Now you look at GM and others that

556
00:29:09,480 --> 00:29:13,280
Speaker 1: disruptive technology, I think e V you're going to continue

557
00:29:13,280 --> 00:29:16,040
Speaker 1: to see that is really just a massive opportunity, and

558
00:29:16,200 --> 00:29:19,560
Speaker 1: you're seeing more of a blurring of the lines between

559
00:29:20,120 --> 00:29:25,000
Speaker 1: technology and automotive and some other traditional technology players. But

560
00:29:25,160 --> 00:29:28,480
Speaker 1: just if you compare look at Microsoft compared to SAP

561
00:29:28,600 --> 00:29:31,800
Speaker 1: and Enterprise, it just shows Cloud either a winner or

562
00:29:31,800 --> 00:29:33,560
Speaker 1: a loser. And I think it just shows that why

563
00:29:33,640 --> 00:29:38,200
Speaker 1: in the sand is continuing to become just that much

564
00:29:38,320 --> 00:29:44,840
Speaker 1: more evident in this world. Attack Dan, given what's going

565
00:29:44,880 --> 00:29:46,960
Speaker 1: on here from the regulatory front as it relates to

566
00:29:47,280 --> 00:29:51,320
Speaker 1: advertising social media platforms, do you expect Amazon to continue

567
00:29:51,560 --> 00:29:55,200
Speaker 1: it's push into advertising. It's really become a big, big

568
00:29:55,280 --> 00:29:58,280
Speaker 1: player in digital advertising. Yeah, and I think for them

569
00:29:58,560 --> 00:30:01,440
Speaker 1: it's been a great strategic move, but a slippery slope

570
00:30:01,480 --> 00:30:05,200
Speaker 1: as well as it becomes more and more from a

571
00:30:05,280 --> 00:30:09,720
Speaker 1: regulatory perspective front and center. And I think it's something

572
00:30:09,800 --> 00:30:12,600
Speaker 1: where when you look at an Amazon, it's all about monetization.

573
00:30:12,720 --> 00:30:15,959
Speaker 1: They're continued to monitize their ecosystem is as really as

574
00:30:16,000 --> 00:30:18,880
Speaker 1: good as any company has ever done. And I think

575
00:30:18,960 --> 00:30:22,560
Speaker 1: that's that's really what Bezos continues to drive an Amazon.

576
00:30:22,640 --> 00:30:26,640
Speaker 1: But no doubt regulatory especially, we're seeing the d og side.

577
00:30:27,400 --> 00:30:31,760
Speaker 1: It's going to really not just women acquisitions, but really

578
00:30:32,160 --> 00:30:35,880
Speaker 1: women some of these coming strategic moves into other areas

579
00:30:36,200 --> 00:30:38,680
Speaker 1: where they've been free as a bird to go into

580
00:30:39,280 --> 00:30:42,040
Speaker 1: and Amazon really being a good example where I think

581
00:30:42,040 --> 00:30:44,320
Speaker 1: you're gonna start to see the wings equipped a bit

582
00:30:45,120 --> 00:30:49,960
Speaker 1: regardless of what happens in the election cycle. To ask

583
00:30:50,000 --> 00:30:54,240
Speaker 1: you about these insurance disruptor, I guess they're being called

584
00:30:54,320 --> 00:30:59,320
Speaker 1: insure text roots financial going public today? Is that an

585
00:30:59,320 --> 00:31:02,600
Speaker 1: area that's right for disruption and if so, why hasn't

586
00:31:02,640 --> 00:31:06,360
Speaker 1: it been already? I think that's a good example where

587
00:31:06,440 --> 00:31:10,400
Speaker 1: you're starting to see more and more technology or sort

588
00:31:10,440 --> 00:31:14,560
Speaker 1: of next gen we'ves what i'd say traditional industries, and

589
00:31:15,080 --> 00:31:17,400
Speaker 1: I think we're seeing on the fan and side of

590
00:31:17,480 --> 00:31:20,120
Speaker 1: renaissance of growth not just in the US, but even

591
00:31:20,760 --> 00:31:23,000
Speaker 1: in China with the n I, p O and others.

592
00:31:23,400 --> 00:31:25,200
Speaker 1: And I think this is really going to be It's

593
00:31:25,240 --> 00:31:30,600
Speaker 1: almost a wild wild West in terms of uh disruption

594
00:31:30,680 --> 00:31:33,200
Speaker 1: of business models. And you're I think you're seeing on

595
00:31:33,280 --> 00:31:37,200
Speaker 1: the VC side more funding, especially in this area. Why

596
00:31:37,320 --> 00:31:40,640
Speaker 1: the private companies going after what could be just a

597
00:31:40,800 --> 00:31:44,400
Speaker 1: massive opportunity on what I've used for the next gen

598
00:31:44,520 --> 00:31:48,640
Speaker 1: finance side. Hey, Dan, thanks so much. We always appreciate

599
00:31:48,720 --> 00:31:51,840
Speaker 1: your thoughts. Dan Ives, Managing director, equity analyst that would

600
00:31:51,880 --> 00:31:54,200
Speaker 1: Bush Security hopefully are Nittney Alliance will have a better

601
00:31:54,320 --> 00:31:58,080
Speaker 1: weekend at this weekend coming up. Then, thanks for listening

602
00:31:58,120 --> 00:32:01,400
Speaker 1: to Bloomberg Markets podcast. You and subscribe and listen to

603
00:32:01,560 --> 00:32:05,320
Speaker 1: interviews at Apple Podcasts or whatever a podcast platform you prefer.

604
00:32:05,560 --> 00:32:08,520
Speaker 1: I'm Bonnie Quinn, I'm on Twitter at Bonnie Quinn, and

605
00:32:08,600 --> 00:32:11,200
Speaker 1: I'm Paul Sweeney. I'm on Twitter at pt Sweeney. Before

606
00:32:11,240 --> 00:32:14,080
Speaker 1: the podcast, you can always catch us worldwide at Bloomberg

607
00:32:14,160 --> 00:32:14,360
Speaker 1: radio