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Speaker 1: Welcome to the Bloomberg Penel podcast. I'm Paul Swinge. You

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Speaker 1: along with my co host Lisa Brahma Waits. Each day

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Speaker 1: we bring you the most noteworthy and useful interviews for

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Speaker 1: you and your money. Whether at the grocery store or

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Speaker 1: the trading floor. Find a Bloomberg penl podcast on Apple

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Speaker 1: Podcast or wherever you listen to podcasts, as well as

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Speaker 1: at Bloomberg dot com. Well, Bermuda has become a prominent

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Speaker 1: player in the growing market for blockchain, fintech and virtual currencies.

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Speaker 1: Help us better understand what is going on in Bermuda.

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Speaker 1: We welcome the honorable David Birt. He's Premier of the

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Speaker 1: government in Bermuda. He joins us live here on a

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Speaker 1: Bloomberg Interactive Broker Studio premiere. Thank you so much for

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Speaker 1: being with us. I wonder if you could just get

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Speaker 1: my When I think blockchain, when I think krypto, I

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Speaker 1: don't necessarily think of Bermuda. So tell me what's going

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Speaker 1: on on that beautiful island Bermuda. Thank you very much. Paul. Well,

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Speaker 1: when you think blockchain and crypto in the future, you

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Speaker 1: should think about Bermuda because Bermuda was the first country

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Speaker 1: in the world to actually have a full suite of

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Speaker 1: laws and regulations to govern companies in this space. And

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Speaker 1: we did that because we want to remain on the

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Speaker 1: forefront of innovation in financial services. So now our Bermuda

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Speaker 1: Monetary Authority, who is a world renowned regulator UM has

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Speaker 1: an entire fintech team and we are there now able

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Speaker 1: to license companies in this space to make sure that

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Speaker 1: consumers are protected and that companies can grow and expand

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Speaker 1: their services in a well regulated environment. So, uh, just

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Speaker 1: I'm wondering, premiere, how closely do you watch the price

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Speaker 1: of bitcoin? UM? I actually don't watch the price of bitcoin.

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Speaker 1: I just gave him a quote bitcoin I just popped

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Speaker 1: up on the screen. Well, I guess the reason why

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Speaker 1: I ask is does the price of bitcoin cohere or

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Speaker 1: sort of match the growing or waning demand by institutional

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Speaker 1: investors for blockchain for the services that you're hoping Bermuda

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Speaker 1: will be home to UM. I think that certainly the

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Speaker 1: price of bitcoin as a factor, because a lot of

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Speaker 1: the companies that are backed by persons who did make

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Speaker 1: a lot of money during the run up in the

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Speaker 1: price of bitcoin certainly are able to better deploy that

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Speaker 1: capital but I think on a broader level, we're not

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Speaker 1: looking at it from the short term. We're looking at

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Speaker 1: it from the long term. This is just getting started.

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Speaker 1: So what we want to ensure is that companies that

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Speaker 1: are looking for that regulation have a home where they

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Speaker 1: have a government that understands this. I have a technology background,

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Speaker 1: they have a government that understands this, they have a

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Speaker 1: regulator that's willing to work with them so they can

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Speaker 1: design these new cutting edge products which will not have

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Speaker 1: you know, digital currency is its own asset class, but

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Speaker 1: we're talking about new financial products which heretofore you were

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Speaker 1: not able to create, which you can now create UM

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Speaker 1: with UH with these new UH distributed currencies. So we

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Speaker 1: think about blockchain the technology, what are some of the

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Speaker 1: applications that some of the companies that are coming to

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Speaker 1: Bermuda think that might be some of the initial applications

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Speaker 1: of blockchain or fintech. And broadly speaking, I can give

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Speaker 1: you an example of one company which is called Diamond Standard,

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Speaker 1: which is just announced that they're increasing the amount of

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Speaker 1: jobs which UH. They have UM in Bermuda and are

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Speaker 1: currently in the being regulated by the Muta Monitory Authority.

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Speaker 1: And these are things that which you can do which

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Speaker 1: you weren't able to do before. Their commoditizing diamonds. So

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Speaker 1: before diamonds are one of those things you can't cut

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Speaker 1: it because it loves its value. But that value is there,

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Speaker 1: that value exists, So you can have secure custody those uh,

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Speaker 1: those diamonds while at the same points in time leveraging

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Speaker 1: those uh leveraging that asset and making use of it

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Speaker 1: from that perspective, and you can do that with blockchain.

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Speaker 1: You couldn't do that before. So Premiere, I'm just wondering.

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Speaker 1: We talk about blockchain, we talked about virtual currencies. Blockchain

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Speaker 1: increasingly is becoming sort of the state domain of back

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Speaker 1: office operations. Virtual currencies still have a certain sexiness to them,

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Speaker 1: but what is the primary business that you expect to

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Speaker 1: fuel the industry in Bermuda? Is it blockchain? Is the

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Speaker 1: back office sort of operations and tracking, or is it

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Speaker 1: sort of this idea of virtual gold um I would

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Speaker 1: say that it's more blockchain generally distributed leisure technologies, but

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Speaker 1: they're but they're hard to divide because when we talk

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Speaker 1: about you here bitcoin, which is a digital currency in

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Speaker 1: its effect, but there are so many other types of

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Speaker 1: digital currencies of which can be deployed to incentivize certain

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Speaker 1: types of behavior. So when you're talking about the data,

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Speaker 1: the data which you own, how do you get paid

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Speaker 1: for the data which you own? In many different aspects.

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Speaker 1: These are just two new structures which are able to

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Speaker 1: be brought in place by distributed leisure technology. So it's

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Speaker 1: the entire gamut right now. As I say, we're just

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Speaker 1: at lead cutting edge, we're just at the beginning. So

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Speaker 1: we're now beginning to see companies that are thinking. So

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Speaker 1: in Bermuda right now, you can have a Bermuda company

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Speaker 1: that can tokenize a real estate asset here in New

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Speaker 1: York City and divide that amongst investors into multiple intantestimal divisions.

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Speaker 1: These are things of which you can do efficiently now

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Speaker 1: through blockchain that you were not able to do previously

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Speaker 1: through traditional financial sector. We're speaking with the Honorable David Bird,

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Speaker 1: the Premier of the Government of Bermuda, talking about all

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Speaker 1: things crypto and fintech on the island of Bermuda. So

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Speaker 1: a mirror wondering you know, Bermuda has always had a

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Speaker 1: very strong regulatory framework. As you mentioned, I'm guessing from

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Speaker 1: the insurance industry that that that's been home to the

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Speaker 1: NFER for a long time. Who does Bermuda compete against

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Speaker 1: in these early stages of trying to be the a

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Speaker 1: home or a trust at home for UH blockchain type

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Speaker 1: technology companies. Bermuda is not in composition with anyone. And

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Speaker 1: there's a reason why I say that there's a lot

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Speaker 1: of other countries around the world that will be engaged

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Speaker 1: in the hype cycle. The fact is that as this

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Speaker 1: early stages, there's going to be a lot of companies

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Speaker 1: that pop up and a lot of companies that don't.

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Speaker 1: In Bermuda, we started our licensing regime in September and

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Speaker 1: today we've only had one company that's passed our licensing process.

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Speaker 1: And there's a reason why we want quality and not quantity.

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Speaker 1: We want to have those large institutional back companies that

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Speaker 1: can actually pass those large hurdles because we don't want

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Speaker 1: to have as a jurisdiction that protects its reputation consumers

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Speaker 1: that would have lost a lot of money due to

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Speaker 1: a cybersecurity era and the wrest. We have strict custody rules,

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Speaker 1: strict cybersecurity rules and all those things which is necessary

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Speaker 1: for adoption of this industry. So what I would say

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Speaker 1: is that from that perspective we compete with no one.

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Speaker 1: But I just want to say where Bermuda stands, there's

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Speaker 1: only two countries in the world that have regulatory equivalents

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Speaker 1: when it comes to risk, with both United States and

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Speaker 1: the European Union, and that's Bermuda in Switzerland. And that's

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Speaker 1: the class in which Bermuda plays in premiere. There is

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Speaker 1: a little bit of a complication recently which has to

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Speaker 1: do with Britain and Brexit. We do know that you

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Speaker 1: guys are self governed, but you are a British territory

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Speaker 1: and I'm just wondering how this sort of escalating debate

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Speaker 1: in Parliament and and the likelihood of the increasing likelihood

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Speaker 1: of potentially even a heartbreak affects your your your your

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Speaker 1: territories economy. The only thing that I can say is

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Speaker 1: the uncertainty is not helpful and we hope that someone

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Speaker 1: would make a decision at some point in time um

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Speaker 1: and it's very unfortunate. Ber Bermuda has its own relationships

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Speaker 1: with the European Union and those relations as will continue.

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Speaker 1: We have solvency to equivalents in insurance that was not

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Speaker 1: through the United Kingdom that was through Bermuda and Bermuda

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Speaker 1: Monitor Authority, direct liaise with the European Union, and those

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Speaker 1: things will continue. We just hope that they can have

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Speaker 1: some clarity as the nature the relationships so that we

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Speaker 1: can actually plan our future engagement. But we expect minimal

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Speaker 1: impact Bermuda from Brexit. Do you actually watch any of

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Speaker 1: the Parliament debates? I woke up this morning watching Premier

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Speaker 1: Prime Minister's question time, so I do. Actually. My wife

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Speaker 1: laughs at me. She says that I'm addicted to Brexit

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Speaker 1: and I can't get enough of the Brexit news. Well

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Speaker 1: then you can. You'd be right at home up Bloomberg,

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Speaker 1: cause we cover it very closely. Unfortunately, people have to

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Speaker 1: be addicted because the outcome could potentially have pretty big

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Speaker 1: ramifications on Britain and the territories. The Honorable David Burt,

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Speaker 1: thank you so much for being with us. The Honorable

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Speaker 1: David Burt, Premiere of the Government of Bermuda, joining us

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Speaker 1: from our interactive broker studios in New York. Well. As

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Speaker 1: the US and China trade tensions continue to simmer, markets

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Speaker 1: are understandably nervous and our next guest is eminently qualified

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Speaker 1: to a pine on these ongoing trade negotiations. Christopher Smartest,

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Speaker 1: head of Bearings Investment Institute UH, and from he served

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Speaker 1: US Special Assistant to the President at the National Economic

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Speaker 1: Council and the National Security Council, where he was principal

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Speaker 1: advisor on trade, investment and a wide range of global

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Speaker 1: economic issues. Christopher, thank you so much for being with us.

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Speaker 1: You just want to get your sense for the last

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Speaker 1: ten days of really seeing these trade negotiations and the

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Speaker 1: tensions between US and China really make a significant turn.

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Speaker 1: Where do you think we are right now? I think

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Speaker 1: right now we're still in kind of late stage throws

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Speaker 1: of closing in on a deal. Of course, you get

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Speaker 1: different messages from the White House in different days, but

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Speaker 1: I think that seems to be where we're still headed.

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Speaker 1: I think those who have done the long term negotiations

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Speaker 1: with China this is relatively typical as we get closer

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Speaker 1: to the end, where the bureaucracy back home may pull

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Speaker 1: back from one or two agreed principles UH. And that's

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Speaker 1: not unusual. I think it's not unusual for an American side,

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Speaker 1: a political leader too threatened to walk away from the

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Speaker 1: deal to sort of try and secure as much as

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Speaker 1: as he can at the end of the day, but

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Speaker 1: I think that's where we're still headed. I think the

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Speaker 1: broader issue, though, is that looking out over the next

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Speaker 1: few years or even decades, UH tariffs are going to

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Speaker 1: be very much a part of our relationship with China.

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Speaker 1: Whether they come off in the near term, I think

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Speaker 1: they will always be looming in the background as a

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Speaker 1: potential threat. And that's a new thing that investors in

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Speaker 1: business UM managers are gonna have to deal with. Well

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Speaker 1: and Christopher, we have seen money coming out of emerging

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Speaker 1: markets funds over the past week or so as the

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Speaker 1: rhetoric has gotten increasingly heated between China and the US.

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Speaker 1: If the threat of tariffs does hang over China and

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Speaker 1: the relationship between China the US in the years to come,

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Speaker 1: what does that do for UM. Well, it's not great,

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Speaker 1: since EM always depends on vibrant and growing UH international trade.

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Speaker 1: But I think as investors learned to understand what the

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Speaker 1: new framework is. I mean, tariffs are principally on the

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Speaker 1: US China trade relationship. That creates opportunities for other emerging markets,

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Speaker 1: particularly in South Asia. We've already seen that over the

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Speaker 1: last few years, where costs in China have been rising

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Speaker 1: and so people are looking for expanding their supply chains

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Speaker 1: to UM, Malaysia, Singapore, Indonesia and other other countries, so

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Speaker 1: that will continue as well. One of the concerns Christopher

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Speaker 1: is as to the extent that this trade tension goes

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Speaker 1: on longer than people expect and the tariffs remain in place,

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Speaker 1: it may prompt China to sell uh U S treasuries

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Speaker 1: their holdings of US treasuries. What is do you think

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Speaker 1: that could occur will occur? And topic of a deal

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Speaker 1: is that, well, if if they did, it would be

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Speaker 1: a big deal. I think the chances of them doing

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Speaker 1: that in this sudden, reactive, punitive way or next to

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Speaker 1: nil uh it would be a tremendously self self damaging

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Speaker 1: act to undertake. China uses those reserves in order to

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Speaker 1: help manage the movements of its own currency uh and

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Speaker 1: you know, a quick sell off would um would lower

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Speaker 1: the value of those um of those treasuries it continues

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Speaker 1: to own, as well as raising interest rates and all

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Speaker 1: the consequences of the global economy on which China ultimately depends.

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Speaker 1: So I think that's a very you know, there will

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Speaker 1: be times where they buy slightly less or they buy

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Speaker 1: slightly more. But I think looking to that as the

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Speaker 1: way they would react is the wrong place to look.

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Speaker 1: More likely than not, they will react by imposing new

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Speaker 1: restrictions on American companies doing business in China. Um something

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Speaker 1: they've been very good at, something they've been trying to

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Speaker 1: loosen up on. But it's very easy to reimpose those

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Speaker 1: restrictions making it more difficult for American firms already in China.

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Speaker 1: So Chris, President Trump has talked about how he now

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Speaker 1: has to deal with this because previous presidents have not,

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Speaker 1: and that the just the relationship between the U. S

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Speaker 1: and China has been incredibly complicated in China's been taking

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Speaker 1: advantage of US companies for years. As a former member

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Speaker 1: of the Obama administration, what's your response, Well, we have

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Speaker 1: been as a country dealing with the rise of China

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Speaker 1: for years, for decades, and to be you know, honest,

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Speaker 1: I think what President Trump is trying to achieve is

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Speaker 1: very much in line with what previous presidents in both

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Speaker 1: parties have been trying to achieve, which is to recognize

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Speaker 1: that China is a very big and growing part of

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Speaker 1: the global economy that we needed to be more integrated

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Speaker 1: and more um in line with global trade and investment practices.

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Speaker 1: How do you achieve that? That's the big question. The

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Speaker 1: President has chosen to be much more forthcoming on the

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Speaker 1: punitive tariff side of things. Uh, it may work. Uh,

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Speaker 1: you know, time will tell. I think the issue is

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Speaker 1: that there is a single agreement that will solve the

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Speaker 1: problem anything that is done or agreed over the next

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Speaker 1: few months. These are long term issues that will be

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Speaker 1: coming back to and talking to China with for years

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Speaker 1: and years ahead. And it's really much more about the

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Speaker 1: kind of relationship you're able to develop with China to

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Speaker 1: manage these issues, I think, much more than any particular

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Speaker 1: deal that you may sign. Christopher Smart, thank you so

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Speaker 1: much for being with us. Christopher Smart, head of Bearings

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Speaker 1: Investment Institute Bearings Overseas more than three hundred billion dollars

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Speaker 1: coming to us from Boston. Christopher really raises some interesting points,

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Speaker 1: which is this is not that big of a departure

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Speaker 1: from previous administrations in terms of trying to address the U. S.

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Speaker 1: China relationship when it comes to trade. It is just

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Speaker 1: a different approach and the question is will tariffs work?

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Speaker 1: And only time will tell. Well, we did get those

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Speaker 1: weaker than expected retail sales data figures out of the

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Speaker 1: US this morning. There is a question of what this

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Speaker 1: means for the consumer joining us now. Craig Johnson, president

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Speaker 1: of Customer Growth Partners, joining us in our eleven three

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Speaker 1: oh studios. Craig, thank you so much for being with us.

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Speaker 1: When you joined us back in February, you said that

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Speaker 1: the dismal, the dismal retail sales print that we saw

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Speaker 1: earlier in the year was calculated wrong and the you

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Speaker 1: expect five percent retail sales growth for this year. Do

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Speaker 1: you still see that to be the case after April's report? Well,

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Speaker 1: we were actually very encouraged by the April report because

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Speaker 1: we look at things on a year of year unadjusted basis,

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Speaker 1: and April sales ex autos, Excasole and X rests was

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Speaker 1: up five pe a touch above our forecast for the

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Speaker 1: year um and that shows very strong growth. The nominal

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Speaker 1: sequential zero point to growth, we think to fall to

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Speaker 1: the way to look fall the way to look at

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Speaker 1: things because the adjustment factors two to ten full points

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Speaker 1: in any given month, you know more than an order

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Speaker 1: of magnitude. So the question is as a point to

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Speaker 1: represent actual sales growth or the accuracy of the adjustment factor.

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Speaker 1: So but apples and apples the year of the year,

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Speaker 1: it's five point one up. So, Craig, we had Macy's report,

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Speaker 1: and we're gonna have a bunch of the big retailers

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Speaker 1: report their earnings coming up better than expected results out

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Speaker 1: of macy Today stocks trading up modestly. What did you

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Speaker 1: take out of the Macy's numbers, Well, the department store

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Speaker 1: sector is is very troubled now. And the zero point

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Speaker 1: seven percent comp they posted, it's like the old line

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Speaker 1: in the Land of the Blind and one eyed man

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Speaker 1: is king, and so of a sorry bunch um the

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Speaker 1: zero point seven it was a very credible thing, uh performance.

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Speaker 1: And the other aspect of it is the quarters started

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Speaker 1: out very slow. The first six or seven weeks of

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Speaker 1: the quarter were very slow, almost abysmal. Allen sharply and

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Speaker 1: so Mazie's ended up on a on a high note

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Speaker 1: entering May and we think it's that may well be

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Speaker 1: nicely positioned for um for summer and back to school.

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Speaker 1: Not that the point seven is going to be a pin,

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Speaker 1: you know, five percent, but it should creep up from

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Speaker 1: that point. So Greig I want to go back to

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Speaker 1: what you were just talking about with the fact that

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Speaker 1: you still are optimistic that the retail sales aut it

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Speaker 1: that we saw this morning was actually much more positive

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Speaker 1: than the market is reading it to be. What's the

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Speaker 1: market getting wrong because you saw so off deep end

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Speaker 1: after this data come out and you saw yields plunge

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Speaker 1: on on US treasury is given the fact that people

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Speaker 1: are pricing in slower growth without consumer support. Um, well,

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Speaker 1: I think there's a There's a couple of factors at play. UM.

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Speaker 1: One is the accuracy of the adjustment factor, and the

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Speaker 1: Census Bureau has been changing their methodology uh for calculating

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Speaker 1: the figure. And we believe that the adjustment factors retail

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Speaker 1: is changing so quickly um with the rise of the

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Speaker 1: Internet that um uh that the statistics generated by the

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Speaker 1: Censors Bureau, we think are faulty unless you look at

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Speaker 1: things on an unadjusted year of a year basis and

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Speaker 1: take online Online is by far the fastest growing sector

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Speaker 1: in December they showed since BREL showed like a one

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Speaker 1: percent growth for the Internet. That's that hasn't happened like

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Speaker 1: ever to have just a one percent growth, And then

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Speaker 1: now this month in April, year of a year, Uh,

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Speaker 1: it was aleven point nine. Um, so they're they're the

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Speaker 1: numbers are gradually improving on a accuracy basis, but we

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Speaker 1: think there are some questions about the methodology that over time,

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Speaker 1: hopeully'll get cleared up. So so Craig. When I look

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Speaker 1: at the Macy's release, I see a lot of talk

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Speaker 1: about from management by cutting costs. And I can understand

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Speaker 1: the need to cut costs in a in an environment,

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Speaker 1: in a business where there's not a lot of top

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Speaker 1: line growth. But at the same time, you feel like

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Speaker 1: the traditional retailers that department stores ought to be investing

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Speaker 1: in there maybe in their business trying to come but

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Speaker 1: new models, new ways to reach perhaps the the the

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Speaker 1: new consumer. How do you come out on balancing the

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Speaker 1: cost cuts to make your numbers versus spending to try

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Speaker 1: to drive top line growth. Well, I think your poll

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Speaker 1: your point is well taken. And Macy's and other smart

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Speaker 1: department stores, first of all, they they're beginning to recognize

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Speaker 1: that they they work in a declining sector. Um it's

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Speaker 1: department stares. Traditional department store is only comprised about one

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Speaker 1: point three percent of over our retail sales, So it's

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Speaker 1: a declining size of the pie. And so a store

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Speaker 1: like Macy's, which has six D eight unit fleet, needs

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Speaker 1: to trim the fleet on the one hand, but ramp

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Speaker 1: up what they call their growth fifty, which is growth

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Speaker 1: one fifty, which is the premier stores that are actually

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Speaker 1: you know, pulling the train there, and they need to

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Speaker 1: dump about another hundred stores that are just not pulling

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Speaker 1: their weight. So I wanted to sort of broaden out

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Speaker 1: here with respect to retailers because we talked about sort

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Speaker 1: of the weakening consumer. You think is is a data issue,

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Speaker 1: but what about tariffs? I mean, how much can these

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Speaker 1: retailers absorb the costs? How much can they pass it along?

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Speaker 1: And what are you expecting there? Well, um, we did

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Speaker 1: a study that shows about everything that's been enacted now,

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Speaker 1: in other words, through I think it was May ten um,

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Speaker 1: the households would have an incremental um uh burden of

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Speaker 1: about five and sixty dollars per household. And to put

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Speaker 1: that in perspective, collectively across retail, that represents about zero

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Speaker 1: point nine of total sales, which is not nothing, but

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Speaker 1: it's not zero, but it's not some huge burden. And

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Speaker 1: what happens is is that UM retailers UH or brands

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Speaker 1: that try to raise prices are going to meet a

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Speaker 1: lot of price resistance from the consumer. And if the

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Speaker 1: retailer or the brand is smart, they will take that

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Speaker 1: pressure from consumers and work it right back up the

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Speaker 1: supply chain. UM. So example, number one known branded consumer

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Speaker 1: product coming out of China's chin Dao. Let's say the

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Speaker 1: landed cost of a six packs four bucks, and they

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Speaker 1: try to raise that up UH, and after wholesale and

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Speaker 1: retail margins, they're going to get something around the webbin

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Speaker 1: dollars well from what might be now about nine and

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Speaker 1: a half or ten dollars. Consumers will flock out of that,

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Speaker 1: they'll bail out of chin Dao, and if they want

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Speaker 1: to keep the business, they're going to have to eat

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Speaker 1: eat some of you. That's it would be interesting to see.

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Speaker 1: It's a very good point about, you know, how much

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Speaker 1: will be passed along the consumers or will be taken

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Speaker 1: by the supply chain. Craig Johnson, president of Customer Growth Partners,

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Speaker 1: joining us here in our Bloomberg Interactive Broker Studio talking

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Speaker 1: about Macy's talking about the retail sales number UH Craig says,

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Speaker 1: you know, a year of a year better than the

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Speaker 1: headline looks, and also talking about tariffs and the impact

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Speaker 1: on the consumer end on retail spending. Well, two of

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Speaker 1: the tech giants out of China reported earnings, Ali Baba,

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Speaker 1: Intense Cent. Both stocks are up about one to two today.

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Speaker 1: So to dig deeper into those earnings, so what it

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Speaker 1: might mean about the underlying Chinese economy the Chinese consumer,

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Speaker 1: we turned to Lulu Chen. Lulu is a reporter for

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Speaker 1: Bloomberg News based in Hong Kong. Lulu, thanks for staying

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Speaker 1: up late to be with us. Let's start with Ali

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Speaker 1: Baba first. What are the takeaways the highlights for you

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Speaker 1: from the Ali Baba earnings? So for Ali Baba, it

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Speaker 1: proved to be really resilient, especially given how the economy

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Speaker 1: has not been doing that great in China. Um, if

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Speaker 1: you look at their core e commerce business, social really

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Speaker 1: strong growth there. And then also the key metric that

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Speaker 1: people are looking at is their customer management revenue and

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Speaker 1: that's where advertising is included. That posted a thirty one

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Speaker 1: percent growth, definitely a pickup and showing the fact that

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Speaker 1: the company is able to monetize what it has been

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Speaker 1: trying to push out a new initiative called recommendation feed

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Speaker 1: and based on what consumers like their past shopping experiences,

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Speaker 1: and and that has able been able to help the

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Speaker 1: company leare more consumers to buy products on the on

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Speaker 1: the site, and and returns also get advertisers to spend

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Speaker 1: more money as well. So Lulu, the fact that Ali

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Speaker 1: Baba posted sales and earnings that both topped estimates, is

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Speaker 1: this a sign that the Chinese consumer is stronger than

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Speaker 1: some people are giving them credit for, or is this

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Speaker 1: a sign that Ali Baba is simply consolidating the market share.

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Speaker 1: I think if you look at the total transaction figures,

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Speaker 1: the growth was not that strong. So I don't think

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Speaker 1: that Chinese e commerce as a whole is immune to

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Speaker 1: the slowdown and macro economy. But Ali Baba has been

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Speaker 1: managing to do really well as um introduced this thing

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Speaker 1: called recommendations based feeds, and it's really using the eye

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Speaker 1: and algorithms to show different people different user interfaces and

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Speaker 1: product fees and that and return generates more shopping h

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Speaker 1: churn from users, and for advertisers, what they want is

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Speaker 1: to make sure that there are a lot their their

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Speaker 1: dollar is spent in the right places and so for them, uh,

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Speaker 1: it's also great to know that they're targeting the right

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Speaker 1: users when they spent those advertising dollars. So Ali Baba

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Speaker 1: has really been hunting in on that. So let's switch

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Speaker 1: gears to ten Cent, another large Chinese technology company. They

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Speaker 1: reported as well, what were your takeaways there? That stock

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Speaker 1: has not been as strong a performer, you know over

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Speaker 1: the its recent past as Ali Baba has been. Yeah,

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Speaker 1: it's a it's a next picture for a ten Cent,

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Speaker 1: I guess. They also showed signs of recovery definitely. Analysts

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Speaker 1: are saying that the worst is behind us, given how

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Speaker 1: brutal the past year has been, especially with the regulatary crackdowns.

434
00:24:10,560 --> 00:24:14,280
Speaker 1: At least for now, their their game approval. The pipelines

435
00:24:14,359 --> 00:24:18,760
Speaker 1: are back on UM. The company is rolling out this

436
00:24:18,800 --> 00:24:23,639
Speaker 1: new game called a Peacekeeper Leak, and it's sort of

437
00:24:23,680 --> 00:24:27,760
Speaker 1: in the same drama as Battle Royale, UM in the

438
00:24:27,800 --> 00:24:31,639
Speaker 1: same vein as pup G and also Fortnite. So a

439
00:24:31,800 --> 00:24:34,720
Speaker 1: good game breaks in twenty million dollars within the first

440
00:24:34,720 --> 00:24:38,880
Speaker 1: five days that there is. Also, user reviews are kind

441
00:24:38,920 --> 00:24:41,960
Speaker 1: of a mixed bag as well, so we still need

442
00:24:42,040 --> 00:24:44,880
Speaker 1: some more time to see whether Tencent can really get

443
00:24:44,920 --> 00:24:48,280
Speaker 1: back to its glory days where they were just posting

444
00:24:48,359 --> 00:24:52,080
Speaker 1: so much revenue growth UM based on share gaming demand.

445
00:24:52,560 --> 00:24:55,280
Speaker 1: You know, there was a stunning statistic in ten cents

446
00:24:55,320 --> 00:24:58,520
Speaker 1: earnings that the cash the company spent on investing in

447
00:24:58,560 --> 00:25:02,840
Speaker 1: other companies was at from the year before. How barished

448
00:25:03,000 --> 00:25:06,879
Speaker 1: is that for the entire tech sector in China. UM

449
00:25:07,040 --> 00:25:10,919
Speaker 1: that statistic is is based on I think what the

450
00:25:10,960 --> 00:25:14,600
Speaker 1: company really said was that the amount that they spent

451
00:25:14,880 --> 00:25:18,920
Speaker 1: on cash for investing and its investing as a whole

452
00:25:19,880 --> 00:25:24,119
Speaker 1: has actually dropped in UH. Investing in Portofolio companies is

453
00:25:24,160 --> 00:25:29,120
Speaker 1: definitely part of that UM for Tencent. UM management has

454
00:25:29,160 --> 00:25:32,400
Speaker 1: always been very adamant and since that they said, they

455
00:25:32,440 --> 00:25:35,360
Speaker 1: say that they're going to keep investing. The company has

456
00:25:35,440 --> 00:25:39,160
Speaker 1: invested in more than seven companies globally. I don't think

457
00:25:39,160 --> 00:25:42,720
Speaker 1: they're backtracking from that strategy as of now. So the

458
00:25:42,880 --> 00:25:46,199
Speaker 1: Legitio briefly did either company, how any commentary what they

459
00:25:46,240 --> 00:25:49,359
Speaker 1: thought or how they thought trade negotiations would go. Yeah,

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00:25:49,400 --> 00:25:52,879
Speaker 1: Ali Baba um Joe's Hive vice chairman for Ali Baba

461
00:25:53,320 --> 00:25:57,160
Speaker 1: was very vocal about this. UM. He tried to obviously

462
00:25:57,240 --> 00:26:00,440
Speaker 1: put a positive spin on it and say that as

463
00:26:00,480 --> 00:26:04,240
Speaker 1: part of the negotiation for the trade wars, China will

464
00:26:04,320 --> 00:26:08,040
Speaker 1: become a net import country. And Ali Baba has been

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00:26:08,080 --> 00:26:10,879
Speaker 1: positioning for this for a very long period of time.

466
00:26:11,280 --> 00:26:15,040
Speaker 1: They really want to leverage their cross border transaction UH

467
00:26:15,119 --> 00:26:20,840
Speaker 1: infrastructure UH to fully help OTHERIR exporters outside of China

468
00:26:20,960 --> 00:26:24,080
Speaker 1: to sell to train consumers. And it's all part of

469
00:26:24,119 --> 00:26:27,159
Speaker 1: the whole consumption upgrade narrative that they've been talking for

470
00:26:27,240 --> 00:26:29,760
Speaker 1: many years. Very good, Lulu Chen, Thank you so much.

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00:26:29,920 --> 00:26:33,840
Speaker 1: Lulu's reporter for Bloomberg News in Hong Kong, staying up

472
00:26:33,920 --> 00:26:36,560
Speaker 1: late to cover the Ali Baba intencent earnings and to

473
00:26:36,600 --> 00:26:39,120
Speaker 1: share her thoughts with us. We appreciate that. Again, Ali

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00:26:39,160 --> 00:26:42,359
Speaker 1: Bab inten sent to Chinese tech giants reporting earnings. I

475
00:26:42,359 --> 00:26:44,960
Speaker 1: think Ali Baba people really look at the Alibaba story

476
00:26:45,080 --> 00:26:48,359
Speaker 1: really as a call on or a view into the

477
00:26:48,440 --> 00:26:52,280
Speaker 1: Chinese consumer and consumer spending. And you know, good numbers, Lisa,

478
00:26:52,400 --> 00:26:55,040
Speaker 1: and I think you know, at least in the short term, um,

479
00:26:55,400 --> 00:26:57,560
Speaker 1: you know, not much of an impact from the trade uncertainty,

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00:26:57,600 --> 00:27:00,600
Speaker 1: but obviously it'll be quarters to come to see how

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00:27:00,760 --> 00:27:04,879
Speaker 1: the Chinese consumer really responds to trade uncertainty. Thanks for

482
00:27:04,880 --> 00:27:07,119
Speaker 1: listening to the Bloomberg P and L podcast. You can

483
00:27:07,119 --> 00:27:09,960
Speaker 1: subscribe and listen to interviews at Apple Podcasts or whatever

484
00:27:10,000 --> 00:27:13,000
Speaker 1: podcast platform you prefer. I'm Paul Sweeney. I'm on Twitter

485
00:27:13,080 --> 00:27:15,680
Speaker 1: at pt Sweeney. I'm Lisa abram Woyits I'm on Twitter

486
00:27:15,760 --> 00:27:18,399
Speaker 1: at Lisa abram Woits One. Before the podcast, you can

487
00:27:18,400 --> 00:27:20,840
Speaker 1: always catch us worldwide on Bloomberg Radio