Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along
Speaker 1: with my co host of Bonnie Quinn. Every business day
Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts,
Speaker 1: along with essential market moving news. Kind of Bloomberg Markets
Speaker 1: Podcast on Apple podcast or wherever you listen to podcasts,
Speaker 1: and on Bloomberg dot com. There is a major, major
Speaker 1: hearing on Capitol Hill right now. Some tex CEOs defending
Speaker 1: section to thirty old talk about malignant information, misinformation and
Speaker 1: the spread of that. Twitter CEO Jack Dorsey is talking
Speaker 1: right now. Twitter has been proposing an idea where users
Speaker 1: can choose from a series of algorithms supposedly created by
Speaker 1: groups outside Twitter. It's just an idea right now, but
Speaker 1: you can be sure that all of the CEOs will
Speaker 1: be proposing some sort of ideas so that they don't
Speaker 1: have ideas imposed upon them. So now to talk more
Speaker 1: about what we might hear today and the reaction to it,
Speaker 1: let's bring in Jim Anderson of Social Capital, and just
Speaker 1: for reasons of um disclosure, we should mention that Social
Speaker 1: Flow is used by Bloomberg as well. So Jim explained
Speaker 1: to us, first of all, what social flow actually does. Yeah,
Speaker 1: We're we're the social marketing platform that many of the
Speaker 1: big media companies use to get their content out to
Speaker 1: Facebook and Twitter and other social network so so we're
Speaker 1: very much the conduit through which a lot of that
Speaker 1: information flows. And of course, reputable media companies that you know,
Speaker 1: reputable is I suppose subject to some degree of interpretation.
Speaker 1: You know, your view of what is reputable may be
Speaker 1: different than someone else's. Use these social platforms enormously. You know,
Speaker 1: we see about fifty million posts a year go out.
Speaker 1: They get more than a trillion and annual reach. So
Speaker 1: these are enormously important platforms for media companies, and of
Speaker 1: course they're enormously important platforms for all kinds of messaging. So,
Speaker 1: you know, it's interesting, Jim, I guess one of the
Speaker 1: most fundamental questions is are these companies media companies, specifically
Speaker 1: Facebook and then also Twitter and Alphabet or they just
Speaker 1: simply technology platforms for content. Well, they'll certainly say their
Speaker 1: technology platforms, right, they don't want to be branded as
Speaker 1: media companies because that comes with a whole set of obligations,
Speaker 1: including perhaps not Section two thirty protection, which is what's
Speaker 1: being talked about in his hearing, and so that's been
Speaker 1: sort of a long running debate. And and in fairness
Speaker 1: to their position, uh, you know, they don't generally create
Speaker 1: the content, right, what do media companies do? They create contents.
Speaker 1: They typically take a point of view, they have editorial
Speaker 1: judgment those kinds of things. And what Facebook and Twitter
Speaker 1: and Google will all say is we don't do that, right,
Speaker 1: We largely don't create the content. We try to avoid
Speaker 1: being the editorial voice. You've hurt Mark Zuckerberg say time
Speaker 1: and time again, we don't want to be the arbiter
Speaker 1: of truth. Now, there are certainly counter arguments to that
Speaker 1: and legitimate points on the other side, but at least
Speaker 1: from their positioning, they don't want to be viewed as
Speaker 1: media company. Where are they in agreement? I mean obviously there,
Speaker 1: but but in general when it comes to making arguments
Speaker 1: before the committee, where will they all sound like they're
Speaker 1: in agreements and working together pretential even and where will
Speaker 1: they differ and want to be very much obviously distant
Speaker 1: from each other. Well, I think where they're going to
Speaker 1: be together is they all depend on section two thirty.
Speaker 1: Jack Dorsey's initial statement said, you know, section two thirty
Speaker 1: is incredibly important, and that removing section to thirty protections
Speaker 1: will removed content from the Internet. And I think you'll
Speaker 1: see variations of that same theme coming from all three.
Speaker 1: I think where you may differ is in terms of
Speaker 1: algorithmic seed you know. I think Twitter has the opportunity
Speaker 1: to create a little bit of daylight between Facebook and Google,
Speaker 1: because relatively, Twitter tends to be more in the moment, live,
Speaker 1: what's happening right now, whereas Facebook and YouTube, which is
Speaker 1: the most sort of relevant um part of Google to
Speaker 1: this conversation, tends to be more algorithms algorithmically driven. Uh.
Speaker 1: And it may not be as important that it happened
Speaker 1: five minutes ago, it may have happened yesterday. But if
Speaker 1: the oderithm is determined that you might like it it
Speaker 1: is relevant to you, they'll surface it. So I would
Speaker 1: expect Twitter to be somewhat less defensive of algorithms and
Speaker 1: more willing to compromise on Hey, if you want to
Speaker 1: regulate somethings, then regulate the way the algorithms surface content. So, Jim,
Speaker 1: I understand why Facebook is testifying today Twitter. These are
Speaker 1: social network platforms that really traffic in, you know, news
Speaker 1: and content I'm a little unsure why alphabet is involved.
Speaker 1: Why why do you think they're there? Yeah, I think
Speaker 1: it is mostly about YouTube. You think about the way
Speaker 1: people consume YouTube. You know, you you open up and
Speaker 1: watch a video. However you saw it, maybe you saw
Speaker 1: I don't know, social network, or somebody emails or texted
Speaker 1: it to you, or you just discovered it. Well, there's
Speaker 1: a very powerful you know, sort of following videos other
Speaker 1: videos like this pain that shows up. And so what
Speaker 1: happens is you sit down to watch one YouTube video
Speaker 1: and before you know what, you've watched twelve YouTube videos, right,
Speaker 1: and what those other eleven that you watched are very
Speaker 1: powerfully chosen by algorithms that are incredibly similar in concept
Speaker 1: and the scope to what Facebook does. Right, So so
Speaker 1: that hey, if you're interested in I'll just pick something
Speaker 1: law in order, then you may be interested in this
Speaker 1: other type of content. And the problem that Google has
Speaker 1: run into is if this other type of content is
Speaker 1: the white supremacy, you know, they end up having algorithms
Speaker 1: that recommend content, it's highly questionable. And the algorithms don't know, right,
Speaker 1: they don't exercise editorial judgment. So the algorithm just knows
Speaker 1: that you watched a piece of content like this. Other
Speaker 1: people who watch content like this would be interested in
Speaker 1: something related, and so they served you up something that
Speaker 1: may be entirely inappropriate and that even Google may ultimately
Speaker 1: decide is inappropriate and removed from YouTube. But it's pretty
Speaker 1: much a cat and mouse game in terms of keeping
Speaker 1: that that questionable content off of the platforms. So this
Speaker 1: is hilarious, Jim. They couldn't make contact with Mark Zuckerberg,
Speaker 1: so now that there's a recess in order to be
Speaker 1: able to continue the hearing on bad behavior shortly. But
Speaker 1: how ironic is that? I mean? How also, how will
Speaker 1: I be read that the committee couldn't get in touch
Speaker 1: with Mark Zuckerberg? He walln't available to speak to the committee? Right? Well,
Speaker 1: I mean, so you know, we all sort of deal
Speaker 1: with zoom. You know, he does run Facebook, I understand.
Speaker 1: So you know, I think your question about how will
Speaker 1: it also want to be perceived. Is it just a
Speaker 1: technical snatt food that's quickly resolved, or is he off
Speaker 1: doing something and he just decided decided to blow off,
Speaker 1: you know, congressional testimony that obviously wouldn't be received. Well,
Speaker 1: I would have to believe that you know, he takes
Speaker 1: this seriously, understands the importance of the Senate and Congress
Speaker 1: and regulations. So my my guess is at the technical issue.
Speaker 1: But you know, I guess we'll have to wait and speake. Yeah, yeah,
Speaker 1: he's back now. I guess they've they've rebooted and he's back,
Speaker 1: so hopefully they get started again. Jiff, just wondering. You know, historically,
Speaker 1: um in the United States, regulators government has taken a
Speaker 1: very light touch to regulating big tech, and arguably that's
Speaker 1: allowed big tech to be what it is in Silicon Valley,
Speaker 1: to be what it is with all the successes. You
Speaker 1: sense it that's changing. I think it's definitely changing. I
Speaker 1: think it's it's true they have taken a light touch,
Speaker 1: and I think it's a very fair statement to say
Speaker 1: that's been allowed for enormous growth, wealth creation. You know,
Speaker 1: these companies are some of the biggest companies in the
Speaker 1: world now as a result in part of that might touch.
Speaker 1: But you know, when a company gets to be you know,
Speaker 1: near a trillion dollars in market gap or in the
Speaker 1: two trillion dollars, I'll throw Apple and this mix, obviously,
Speaker 1: it's a it's a different kind of company, but it's
Speaker 1: sort of certainly falls into big tech. You know, when
Speaker 1: you end up with market capitalizations in the trillion dollar range,
Speaker 1: you know you're you're almost government size at that point.
Speaker 1: And I think, you know, you get to to be
Speaker 1: too big and and have too many issues and too
Speaker 1: many problems and too many enemies, just lantly from a
Speaker 1: political standpoint, so, I think it's clear both Democrats and
Speaker 1: Republicans have a very high degree of anxiety and angst
Speaker 1: and even animosity against the tech platforms. The interesting thing
Speaker 1: is that they're almost diametrically opposed. Right Democrats think that
Speaker 1: the tech platforms are not doing enough to combat misinformation,
Speaker 1: Republicans think that the text platforms are censoring conservative content.
Speaker 1: Those are almost exactly diametrically opposed. And so where you
Speaker 1: get into these real interesting questions is, well, what's the remedy?
Speaker 1: Right If if you want to revoke Section two thirty
Speaker 1: protections and make the platforms more liable from a conservative perspective,
Speaker 1: then you're more likely to get somebody like Facebook and
Speaker 1: Twitter removing conservative content because they don't have any legal
Speaker 1: protections if they keep it up. And so I think
Speaker 1: there's a very real risk here that that somebody will
Speaker 1: actually make the situation worse from their standpoint, um, if
Speaker 1: they're not very fontibule about how these regulations are determined
Speaker 1: and enacted. Jim, what would you imagine will be the
Speaker 1: role of Twitter in public life if the presidency turns over? Well,
Speaker 1: I think in Twitter will still be very important. You know,
Speaker 1: I think everybody may take a breath, and the pace
Speaker 1: of tweets coming from the President I would have to
Speaker 1: believe be considerably lower. Um. And in some ways that's
Speaker 1: a negative for Twitter, because you know, you could argue
Speaker 1: that Donald Trump's presidency has done a tremendous amount to
Speaker 1: keep Twitter relevant. But I think Twitter, if if you
Speaker 1: sort of got an honest view from them, might actually
Speaker 1: welcome the rest of it, because it comes with a
Speaker 1: lot of headaches and a lot of anxiety and a
Speaker 1: lot of problems. So I think Twitter will continue to
Speaker 1: be very important. But I don't think you'll see, let's say,
Speaker 1: for instance, President Biden if he wins uh, you know,
Speaker 1: making declarations on Twitter, certainly not at a volume and
Speaker 1: in the way that President Trump does. Jim. I guess
Speaker 1: the ultimate concern for tech investors is perhaps some of
Speaker 1: these companies get broken up. Do you think there's a
Speaker 1: material risk that that could happen. Yeah, I would almost
Speaker 1: call it not just the material risk, but a likelihood. Now,
Speaker 1: I think the real question is how and when and
Speaker 1: how how long does it take? Right that this is
Speaker 1: antitrust is a year's long process. There will be plenty
Speaker 1: of litigation. But going back to the size of these companies,
Speaker 1: it's hard to argue Facebook, Google, certainly. Twitter maybe is
Speaker 1: a little bit of a different story because you know,
Speaker 1: Facebook is sixty times larger than Twitter if you want
Speaker 1: to think about it from a market capitalization standpoint. The
Speaker 1: lands I checked, so you know, it's it's unfair to
Speaker 1: lump Twitter into the antitrust conversation the way you would Facebook, Google,
Speaker 1: or even Amazon or Apple if you want to be
Speaker 1: more expansive. And I think every one of those four
Speaker 1: big tech companies faces a very significant risk of of
Speaker 1: antitrust action and then either ultimately being broken up or
Speaker 1: reaching a settlement where they voluntarily choose to diveet certain
Speaker 1: components to satisfy regulatory concerns. And by the way, not
Speaker 1: just in the United States. These are global companies that
Speaker 1: you have to start thinking about the EU and other
Speaker 1: jurisdictions as well, if you're the CEO of one of
Speaker 1: these companies, and in my mind it at least to
Speaker 1: some degree or another, some degree of antitrust impact is
Speaker 1: inevitable on all four of those big, big giant tech platforms. Yeah,
Speaker 1: I mean, the EU is way far ahead in many ways,
Speaker 1: and you notice it when you you you you browse
Speaker 1: around on European websites, you get asked a whole range
Speaker 1: of questions about you know, what, what what? What information
Speaker 1: you want to give away? How many people can you
Speaker 1: know can use it and pass it on and so on.
Speaker 1: So it is interesting. But so we know that Mark
Speaker 1: Zuckerberg had the year of President Trump. We know he
Speaker 1: wasn't going to tell us what was said in that room.
Speaker 1: Would he us the same kind of relationship with a
Speaker 1: different president, Uh, you know that's a great question. I'm
Speaker 1: not sure he will, right, I mean, you know, President
Speaker 1: Trump is a unique president at a unique moment in time.
Speaker 1: I think, if nothing else, for reasons of optics, President
Speaker 1: Biden isn't necessarily going to want to be perceived as
Speaker 1: cozying up the big tech and and then you know,
Speaker 1: never mind what the specific personal conversations were in private.
Speaker 1: I think all you know, big tech platforms have given
Speaker 1: the opportunity to have an audience with the president, would
Speaker 1: choose to say yes, Why why would you not do that? Uh?
Speaker 1: You know, I think any anytime you have the ability
Speaker 1: to advance your cause and how people understand your business
Speaker 1: and your position, you're probably going to want to take it.
Speaker 1: So I would not be at all surprised again as
Speaker 1: president if if Joe Biden does win and become president,
Speaker 1: that you'll see as somewhat of a distance put between
Speaker 1: him and big tech in general. And then you ultimately
Speaker 1: we'll have to see how the Congress shakes out as well. Uh.
Speaker 1: You know what, what their appetite is a lot of
Speaker 1: you know, what we see now is certainly inflamed by
Speaker 1: the election in season. Um, once the election results are
Speaker 1: decided and we're past that, then we'll find out what
Speaker 1: the real appetite is for for real heavy lifting of
Speaker 1: legislation and regulatory reform. You know, Jim, this seems to this,
Speaker 1: maybe even this hearing seems to have really come about
Speaker 1: in the wake of that New York Post Hunter Biden story.
Speaker 1: Why do you why do you think that got so
Speaker 1: much traction. Well, I think it's a Twitter you know,
Speaker 1: handled that in a very aggressive way. Some people would
Speaker 1: say mishandled that, right, I mean that's a matter of perspective.
Speaker 1: I think what you see, though, is that the tech
Speaker 1: platforms Twitter in this case, are are super sensitive to
Speaker 1: the idea that there's an October surprise that will come out,
Speaker 1: there's an information dump of unverified information. Uh, there's an
Speaker 1: impact on the election, and before anybody has a chance
Speaker 1: to really that what was going on, you know, it's
Speaker 1: affected the election, and and you know, the tech platform
Speaker 1: towards the center of it. I think that's the concern
Speaker 1: of what happened, at least in the view of some
Speaker 1: back in two thousand sixteen, and so they were super
Speaker 1: primed for this, and so they acted very quickly, but
Speaker 1: in many ways they overreached, right. They they suspended the
Speaker 1: Twitter account of the New York Post. And whether you
Speaker 1: agree with the New York Post and editorial view or not,
Speaker 1: they are the New York Post. They are generally considered
Speaker 1: to be a reputable news source. And so when you
Speaker 1: haven't platforms blocking the Twitter Twitter handle of a news outlet,
Speaker 1: that's a pretty significant move. Yeah, Jim, We're gonna have
Speaker 1: to leave there. Jim Honderson, CEO of Social Flow. Yeah,
Speaker 1: markets selling off, the excelling as accelerated. We have the
Speaker 1: SMP that Dow and NASAC all off about three cent.
Speaker 1: Let's bring in Sarah Posic Bloomberg across asset reporters. Sarah,
Speaker 1: it seems like this selling has accelerated here. Uh, we're
Speaker 1: seeing bigger losses. Selling has accelerated. If you look across
Speaker 1: the major averages right now towards the loads of the days,
Speaker 1: a couple of technical levels that some investors are watching.
Speaker 1: For example, if you were to look at the SMP
Speaker 1: five hundred, take a look at its one hundred day
Speaker 1: moving average. We broke through the fifty day not too
Speaker 1: long ago, just a couple of days ago till today,
Speaker 1: we broke through that one day moving average, which stands
Speaker 1: just at thirty three oh six or so. So we're
Speaker 1: still trading below it as some investors, including Matt Maillie
Speaker 1: over at Miller's Havoc, are looking closer to the thirty
Speaker 1: two thirty level or so, uh for support should we
Speaker 1: need it. We still are a ways away from that level.
Speaker 1: But if we were to break that level there would
Speaker 1: be concerned because we would then break the trend line
Speaker 1: since March. But as you mentioned, you look at the
Speaker 1: major averages, the DOUBT, the SMP, at the NAZAC, they
Speaker 1: are all down more than three at the moment. The
Speaker 1: worst thing for the SMP since early September when the
Speaker 1: correction really first began, which was really led by tech
Speaker 1: stocks at the time. But well, equity selling has really
Speaker 1: picking up. You could say, what's interesting is that we
Speaker 1: still see pretty moderate gains in treasuries. We're not seeing
Speaker 1: a huge rust to safety and assets. You look at
Speaker 1: the tenure for example right now at seventy six basis points,
Speaker 1: not flat on the day, but not seeing too much movement.
Speaker 1: So at least in the bond market, you haven't seen
Speaker 1: the safe haven rush pick up as we have seen
Speaker 1: equity losses accelerate throughout the morning. Let's also bring in
Speaker 1: Gina Martin Adams, chief equity strategist for Bloomberg Intelligence. Gina,
Speaker 1: you know, we we thought that the tech hearring would
Speaker 1: be the big event of the day, but it turns
Speaker 1: out the markets are becoming the major event of the day.
Speaker 1: Is this something that we should start getting concerned about? Well,
Speaker 1: I think that they're actually related issues. I mean, the
Speaker 1: market is weakest in the tech base, um, the communication
Speaker 1: stocks and tech stocks sort of leading to clines along
Speaker 1: with energy. So I think that the two issues are
Speaker 1: somewhat related. Um. You know, as Sarah mentioned back in
Speaker 1: September is the start of this correction, and it all
Speaker 1: started with tech stocks starting to sell off. And we
Speaker 1: have seen a tremendous amount of rotation since September. Even
Speaker 1: the early October rally was certainly suspicious given that it
Speaker 1: was led by utility stocks. So you know, I think
Speaker 1: that what you have here is a case of tech
Speaker 1: stocks losing a little bit of their luster. They're expected
Speaker 1: to be relatively weak in the third quarter. Uh, You've
Speaker 1: got um some serious regulatory pressures dampening the outlook for
Speaker 1: some of the communications stuck, some of those big bell
Speaker 1: weathers that are related to tech. And at the same time,
Speaker 1: we've got a little bit of loss of macro momentum
Speaker 1: that is weighing on the market, and a lot of
Speaker 1: election jitters. So it's kind of a confluence of events.
Speaker 1: But I do think the tech is still at the
Speaker 1: center of the market weakness and has been since early
Speaker 1: September Gene. How much of this is just kind of
Speaker 1: the pandemic numbers globally going the wrong direction. Ah, I
Speaker 1: don't know how much of it honestly is a pandemic.
Speaker 1: I know that that's an easy sort of culprit to
Speaker 1: point to, and certainly the fact that the pandemic is
Speaker 1: re accelerating case counts re accelerating once again does have
Speaker 1: some people nervous about what that may mean for the
Speaker 1: economic outlook. But I do think that for the most part,
Speaker 1: it's unlikely that global economy shut down like they did
Speaker 1: in March. Um. Instead, there do appear to be alternative
Speaker 1: measures for dealing with the virus case count load moving higher,
Speaker 1: and they don't all um necessarily results in a massive
Speaker 1: economic shutdown. I think instead it may be related to
Speaker 1: the fact that case counts are moving higher. We don't
Speaker 1: have a vaccine yet, and fiscal policy seems to have stalled,
Speaker 1: so we don't have a fiscal policy package to sort
Speaker 1: of back stop the economy and help us re accelerate
Speaker 1: that macro momentum in the face of case counts going higher.
Speaker 1: We're not likely to reopen more in the face of
Speaker 1: case counts going higher so it is. It is a
Speaker 1: peripheral a fact, but I think it's more about the
Speaker 1: fact that, you know, the global economy did recover pretty
Speaker 1: substantially from March into college September, and that recovery has
Speaker 1: slowed in the weeks since um and that slowdown has
Speaker 1: investors a little bit nervous, particularly without any sign of
Speaker 1: support coming from the fiscal policymakers. Sarah, We're looking across said,
Speaker 1: and you know it, it's pretty cost the board today.
Speaker 1: It's just a general feeling of mal is you know,
Speaker 1: given everything that Gena Martinas said right. I mentioned that
Speaker 1: we aren't really seeing a huge shift in the bond market.
Speaker 1: But if you look at currency markets, for example, we
Speaker 1: see the dollar higher today, we see the Japanese yenn
Speaker 1: higher today. Those are the two best performing G ten currencies,
Speaker 1: and the end is the only major currency that it's
Speaker 1: higher against the U S dollars. So we are seeing
Speaker 1: this flock to safety across FX market's a little bit
Speaker 1: more so, even if we're not seeing it completely reflected
Speaker 1: in the bond market. Granted, when we look at the
Speaker 1: bond market, you look at the ten year around seventy
Speaker 1: six basis points or so, I mean these are still extremely,
Speaker 1: extremely low bond yield. There had been some talk about
Speaker 1: movement back up towards one percent just last week. So
Speaker 1: it's amazing to see how quickly this narrative has really flipped,
Speaker 1: how quickly it has changed. And now we just see
Speaker 1: yields stuck back in the range that we've almost been
Speaker 1: stuck in all year long, with uncertainty as ahead. Gina
Speaker 1: laid out many of them, including the election, including the
Speaker 1: macro tailwinds kind of coming to a head at the moment.
Speaker 1: And when we think about rising COVID case counts, yes,
Speaker 1: we likely won't see a lockdown like we saw earlier
Speaker 1: in the year, but there is a question about one.
Speaker 1: We think about the rebound that we saw in the
Speaker 1: equity markets, how many investors were looking to one and
Speaker 1: saying the market is a forward looking mechanism, things will
Speaker 1: get better. Well, how much better can they get if
Speaker 1: we don't see total improvement, if we don't see treatments, vaccines,
Speaker 1: whatever you need or deemed necessary to see a full
Speaker 1: economic recovery. And Sarah just looking at the it's not
Speaker 1: just the equities here and bonds and currencies. I'm just
Speaker 1: looking at oil right here, off over six percent. Today
Speaker 1: w t I crew trading about thirty seven dollars and
Speaker 1: ten dollars thirty seven dollars and ten cents of barrel
Speaker 1: to me, I guess that suggests that that market is
Speaker 1: saying future demand it's not as good as we thought. Right,
Speaker 1: that's exactly right. We have seen oil just lodged around
Speaker 1: that forty dollar a barrel barrel mark, not all year long,
Speaker 1: but ever since that catastrophe. When we prices go negative,
Speaker 1: shoot back up, and we have since kind of just
Speaker 1: been hovering around that level. If you look at w
Speaker 1: t I crude oil right now, down more than six
Speaker 1: that's the worst day since September eight. That day we
Speaker 1: did see crude oil down more than seven and a
Speaker 1: half percent. But like you said, it doesn't seem as
Speaker 1: though the global demand picture is improving at least and
Speaker 1: on that front, for example, if you bring it back
Speaker 1: to stocks that do require plenty of gasoline, for example,
Speaker 1: you look at airlines, you look at cruise lines, you
Speaker 1: look at Carnival for example, down ten percent at the moment,
Speaker 1: Norwegian down more than eight percent. Airlines also taking a hit.
Speaker 1: So big picture, like you said, that global demand picture
Speaker 1: just certainly doesn't look to be improving. It's not heading
Speaker 1: in the right direction. Gina. Healthcare is funny one these
Speaker 1: days because I'm seeing a lot of you know, negative
Speaker 1: comments about healthcare and healthcare industry, and yet we have
Speaker 1: so many of these companies working so hard on things
Speaker 1: like pandemic you know, uh solutions and so on. Why
Speaker 1: is healthcare being so maligned? Yeah, that's a good question.
Speaker 1: We actually wrote about this this week because healthcare earnings
Speaker 1: are starting to roll out in healthcare fundamentally is one
Speaker 1: of the best position sectors in the SMP five DRED,
Speaker 1: some of the strongest revenue and earnings growth currently and
Speaker 1: expected to continue to produce pretty strong fundamental growth going
Speaker 1: into Yet healthcare is discounted relative to consumer staples and
Speaker 1: trading at its largest discount relative to the SMP five
Speaker 1: DRED since it's two thousand nine low, And I think
Speaker 1: that that's reflective of policy sort of dominating um the
Speaker 1: outlook for healthcare stocks. Even in the face of the pandemic,
Speaker 1: Investors are very concerned about what policy is going to
Speaker 1: look like. Obviously, with the changes that we've had recently
Speaker 1: at the Supreme Court, there's a lot of concern about
Speaker 1: a rollback of Obamacare passed years ago and the impact
Speaker 1: that that may have on the insurers. There's also some
Speaker 1: concern about a blue wave taking over Washington and the
Speaker 1: impact that may have across the healthcare spectrum spectrum, but
Speaker 1: in particular on the pharmaceutical and biotech companies, and especially
Speaker 1: even more targeted there on the prices of their products.
Speaker 1: So there's a tremendous amount of concern just from the
Speaker 1: policy perspective, and it's not it doesn't even stop there.
Speaker 1: You've got to roll into tax policy as well, because
Speaker 1: healthcare companies do practice inversions, they have a ton of
Speaker 1: cash held overseas, they have a lot of multinational revenue,
Speaker 1: and some of the Biden proposals on tax would um
Speaker 1: sort of indiscriminately dampen the outlook for health care as
Speaker 1: well as technology stuck. So there's a lot of concern
Speaker 1: from a policy perspective impacting healthcare, and I think that
Speaker 1: that's dominating the sentiment towards that sector, resulting in tremendously
Speaker 1: low valuations in comparison to the rest of the other index. A. Jena,
Speaker 1: thanks so much for joining us. We appreciate it. Jina
Speaker 1: Martin's Adams, she is a senior strategist for Bloomberg Intelligence,
Speaker 1: and Sara Ponzic, cross asset reporter for Bloomberg News joining
Speaker 1: us as well. Thank you both, We appreciate your thoughts
Speaker 1: on this very difficult day in the financial Market's a
Speaker 1: huge sell off across the board, equities down about three.
Speaker 1: Let's take a focus in a little bit more on technology.
Speaker 1: Certainly center stage here today in Washington, going to be
Speaker 1: center stage tomorrow when we have over chillion dollars of
Speaker 1: market cap reporting earnings. Nobody better to talk to than
Speaker 1: our friend Dan Eyes, Managing director equity analyst at Wedbush Securities.
Speaker 1: Dan and I are still trying to recover from Penn
Speaker 1: State's loss at Indiana last week. But Dan, let's try
Speaker 1: to move forward here. What are you seeing here in
Speaker 1: the world of big tech and earnings. It's gonna be
Speaker 1: a huge day tomorrow. It's huge, and really it's fork
Speaker 1: in the road situation for tech stocks. You look at
Speaker 1: Microsoft or strong number stocks selling off. There's really a
Speaker 1: risk off trade and I think you're seeing it with
Speaker 1: election backdrop and a lot of evaluations that have moved
Speaker 1: significantly higher. Now I really view tomorrow as a seminal
Speaker 1: day for Fanning stocks. I believe fundamentally we're gonna see
Speaker 1: strength across the board. I believe this sell off here
Speaker 1: is short lived in my opinion, as the fundamental strength
Speaker 1: in tech continues to be there. That's why tomorrow is
Speaker 1: really we'll call it the world Series, the super Bowl
Speaker 1: for textox. Well, after last night, I guess, I guess
Speaker 1: there's no harm in doing that, right done? Just were
Speaker 1: you watching the hearing this morning? Is very curious as
Speaker 1: lone of things stood out to you. Well, I think
Speaker 1: it's a little more of a grandstanding, but to some
Speaker 1: extent it really it kicks off what is going to
Speaker 1: be the belt Way versus Big Tech battle, and this
Speaker 1: is not gonna softened in terms of momentum. We're gonna
Speaker 1: see this more and more as begin two thousand and
Speaker 1: twenty one. A blue weave, you know, potentially sends anti
Speaker 1: trust as well as even Section two thirty issues more
Speaker 1: in the forefront, and I think it just speaks to
Speaker 1: right now there's a target on the back attack. And
Speaker 1: I think when you see social media players like today,
Speaker 1: you're really starting to see them leaser more in on
Speaker 1: two thirty as it seems reforms is clearly on the
Speaker 1: horizon regardless of who gets in the White House. So, Dan,
Speaker 1: assuming we go that path, what do you think the
Speaker 1: risk is to the business model of some of these
Speaker 1: social media platforms? And I guess we'll throw Alphabet in
Speaker 1: there as well, given its YouTube product. How do you
Speaker 1: kind of frame that out? I think it all depends
Speaker 1: on what the reform looks like on two thirty, and
Speaker 1: it's going to be a battleground, you know, depending on
Speaker 1: what we see from from both aisles. But I do
Speaker 1: believe it's a business model risk, and I think it's
Speaker 1: something where you know, it could change from an advertising
Speaker 1: perspective what you see on the social media side, and
Speaker 1: from a content perspective. And I think this is something
Speaker 1: that investors, you know, if you think about just the
Speaker 1: overall risk against big tax, just forget fundamentals for a sect.
Speaker 1: It's been viewed as contained background noise rug the shoulders.
Speaker 1: I think now as we start to get in and
Speaker 1: through the election two thousand twenty one, it becomes a
Speaker 1: more pronounced risk potentially to the business models here at
Speaker 1: social media front and center, but especially when you look
Speaker 1: at Google and from the d O j Frount. They're
Speaker 1: really in the eye of the storm as well as Facebook.
Speaker 1: Are any of the companies more talkative because of the
Speaker 1: self look, I think, you know, when you overall look
Speaker 1: at sort of big tech what we're seeing here, I
Speaker 1: think you a must have to put into two different
Speaker 1: sort of buckets. I think there's ones with fundamental catalysts
Speaker 1: and now be ones with Apple and Amazon. I think
Speaker 1: you'll see that tomorrow terms of Amazon the e commerce
Speaker 1: cloud as well as Apple on five G what I
Speaker 1: believe is a supercycled iPhone twelve. But when it comes
Speaker 1: to social media, I mean this, this right now is
Speaker 1: a risk, and that's why fundamental has become even that
Speaker 1: much more important to show that advertisers are you know,
Speaker 1: not leaven the platform. And that's really been the tale
Speaker 1: of two cities the last six to nine months. Despite
Speaker 1: the headwinds and despite potential black eyes, you've really seen
Speaker 1: come as a Facebook thrive. Yeah. It's it's amazing, Dan,
Speaker 1: I mean, even during this pandemic um we've seen digital
Speaker 1: advertising hold up pretty darn well. It almost seems like,
Speaker 1: you know, this might have been accelerated some of the
Speaker 1: migration from traditional media to digital media is that something
Speaker 1: you've seen. Yeah, I think components of it, but no
Speaker 1: doubt Google in particular has seen some headwinds, and I
Speaker 1: think that has been contained relative to sang names where
Speaker 1: you've seen strength across the board from Netflix to Apple
Speaker 1: and Amazon and and I think right now, if you
Speaker 1: look at the valuations, you've had powered on moves, so
Speaker 1: you've had re ratings, but now the fundamentals can need
Speaker 1: to continue to sort of see beaton maries type stories
Speaker 1: going into the next year. And I'll just use Microsoft
Speaker 1: as a good example. Those are about as rebustive a
Speaker 1: quarter that you'll get, and they gave strong guidance and
Speaker 1: stocks off because investors it's a risk off trade. Stocks
Speaker 1: had a huge move and they wanted more. And I
Speaker 1: think that's going into tomorrow. You know, it's really tech
Speaker 1: doesn't move higher without saying and I'd say the market
Speaker 1: doesn't move higher without saying hims. That's why tomorrow is
Speaker 1: really almost support some of their movement between the bulls
Speaker 1: and the bears. Is we go into you know, earnings
Speaker 1: as well as to the selection cycle. Don where is
Speaker 1: the next round of innovation going to come from? Which
Speaker 1: of these companies as best positions to you know, blow
Speaker 1: our minds in the coming years. Well, I think it's
Speaker 1: Apple to me when I think about five G and
Speaker 1: ultimately when I think about a ARE and what they're
Speaker 1: doing on wearables, I think that's sort of the next
Speaker 1: level of innovation when I think about what's coming out
Speaker 1: of Apple, even though many would say the innovations obviously
Speaker 1: the rear humor, and they continue to prove it wrong.
Speaker 1: I think when I look at Apple, and of course
Speaker 1: on the e V side, you know it's really been
Speaker 1: just testa. Now you look at GM and others that
Speaker 1: disruptive technology, I think e V you're going to continue
Speaker 1: to see that is really just a massive opportunity, and
Speaker 1: you're seeing more of a blurring of the lines between
Speaker 1: technology and automotive and some other traditional technology players. But
Speaker 1: just if you compare look at Microsoft compared to SAP
Speaker 1: and Enterprise, it just shows Cloud either a winner or
Speaker 1: a loser. And I think it just shows that why
Speaker 1: in the sand is continuing to become just that much
Speaker 1: more evident in this world. Attack Dan, given what's going
Speaker 1: on here from the regulatory front as it relates to
Speaker 1: advertising social media platforms, do you expect Amazon to continue
Speaker 1: it's push into advertising. It's really become a big, big
Speaker 1: player in digital advertising. Yeah, and I think for them
Speaker 1: it's been a great strategic move, but a slippery slope
Speaker 1: as well as it becomes more and more from a
Speaker 1: regulatory perspective front and center. And I think it's something
Speaker 1: where when you look at an Amazon, it's all about monetization.
Speaker 1: They're continued to monitize their ecosystem is as really as
Speaker 1: good as any company has ever done. And I think
Speaker 1: that's that's really what Bezos continues to drive an Amazon.
Speaker 1: But no doubt regulatory especially, we're seeing the d og side.
Speaker 1: It's going to really not just women acquisitions, but really
Speaker 1: women some of these coming strategic moves into other areas
Speaker 1: where they've been free as a bird to go into
Speaker 1: and Amazon really being a good example where I think
Speaker 1: you're gonna start to see the wings equipped a bit
Speaker 1: regardless of what happens in the election cycle. To ask
Speaker 1: you about these insurance disruptor, I guess they're being called
Speaker 1: insure text roots financial going public today? Is that an
Speaker 1: area that's right for disruption and if so, why hasn't
Speaker 1: it been already? I think that's a good example where
Speaker 1: you're starting to see more and more technology or sort
Speaker 1: of next gen we'ves what i'd say traditional industries, and
Speaker 1: I think we're seeing on the fan and side of
Speaker 1: renaissance of growth not just in the US, but even
Speaker 1: in China with the n I, p O and others.
Speaker 1: And I think this is really going to be It's
Speaker 1: almost a wild wild West in terms of uh disruption
Speaker 1: of business models. And you're I think you're seeing on
Speaker 1: the VC side more funding, especially in this area. Why
Speaker 1: the private companies going after what could be just a
Speaker 1: massive opportunity on what I've used for the next gen
Speaker 1: finance side. Hey, Dan, thanks so much. We always appreciate
Speaker 1: your thoughts. Dan Ives, Managing director, equity analyst that would
Speaker 1: Bush Security hopefully are Nittney Alliance will have a better
Speaker 1: weekend at this weekend coming up. Then, thanks for listening
Speaker 1: to Bloomberg Markets podcast. You and subscribe and listen to
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Speaker 1: I'm Bonnie Quinn, I'm on Twitter at Bonnie Quinn, and
Speaker 1: I'm Paul Sweeney. I'm on Twitter at pt Sweeney. Before
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