1 00:00:05,800 --> 00:00:08,720 Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm pim Fox. 2 00:00:08,760 --> 00:00:11,520 Speaker 1: Along with my co host Lisa Bramowitz. Each day we 3 00:00:11,640 --> 00:00:15,120 Speaker 1: bring you the most important, noteworthy, and useful interviews for 4 00:00:15,200 --> 00:00:17,840 Speaker 1: you and your money, whether you're at the grocery store 5 00:00:17,960 --> 00:00:20,720 Speaker 1: or the trading floor. Find the Bloomberg P M L 6 00:00:20,840 --> 00:00:32,959 Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. Right now, 7 00:00:33,000 --> 00:00:36,200 Speaker 1: we want to turn our focus to China. Ongoing discussions 8 00:00:36,240 --> 00:00:40,160 Speaker 1: between the US and the world's second biggest economy as 9 00:00:40,200 --> 00:00:43,040 Speaker 1: to how they are going to deal with trade going forward. 10 00:00:43,120 --> 00:00:46,320 Speaker 1: Joining us now, Andy Brown, editorial director for the Bloomberg 11 00:00:46,400 --> 00:00:49,559 Speaker 1: New Economy Forum, Joining us here in the Bloomberg Interactive 12 00:00:49,560 --> 00:00:52,320 Speaker 1: Broker's Studios. Andy, thank you so much for being here. 13 00:00:52,680 --> 00:00:55,800 Speaker 1: You want a really compelling piece about how the US 14 00:00:56,120 --> 00:01:00,520 Speaker 1: may have some allies behind China lines, who are these 15 00:01:00,520 --> 00:01:04,360 Speaker 1: people and why? Yeah? Well, thanks, Lesa's great to be here. Um. 16 00:01:04,400 --> 00:01:06,839 Speaker 1: The the argument is a is A is a pretty simple. 17 00:01:06,920 --> 00:01:11,240 Speaker 1: What China should throw open its economy. It should level 18 00:01:11,360 --> 00:01:15,920 Speaker 1: the playing field. It should dismantle state monopolies. It should 19 00:01:16,080 --> 00:01:19,800 Speaker 1: stop giving preference to state players in terms of subsidies, 20 00:01:19,880 --> 00:01:24,920 Speaker 1: cheap loans, policy advantages, in terms of licensing, standards setting 21 00:01:24,920 --> 00:01:28,080 Speaker 1: and so on. And it should do all this not 22 00:01:28,319 --> 00:01:31,240 Speaker 1: because Donald Trump is asking for it, but because the 23 00:01:31,280 --> 00:01:35,559 Speaker 1: private sector in China is demanding it, and in acceding 24 00:01:35,640 --> 00:01:40,080 Speaker 1: to that internal pressure rather than external pressure, China can 25 00:01:40,120 --> 00:01:42,959 Speaker 1: get its economy out of the funk that it's now in. 26 00:01:43,040 --> 00:01:45,479 Speaker 1: And it's actually in a much much worse funk than 27 00:01:45,520 --> 00:01:49,000 Speaker 1: people imagine. So you don't buy the six GDP growth. 28 00:01:49,160 --> 00:01:52,000 Speaker 1: I don't care what the numbers say. I mean, China's 29 00:01:52,040 --> 00:01:56,160 Speaker 1: economy is slowing, and I think it's stunning the Chinese leadership. 30 00:01:56,200 --> 00:01:59,080 Speaker 1: I think they've been surprised at the extent to which 31 00:01:59,240 --> 00:02:03,000 Speaker 1: Trump's pressure are on trade has exacerbated all of these 32 00:02:03,040 --> 00:02:07,080 Speaker 1: issues structural issues in the Chinese economy. But any some 33 00:02:07,160 --> 00:02:10,680 Speaker 1: of what you're talking about is adopting more Western values 34 00:02:10,720 --> 00:02:14,239 Speaker 1: when it comes to markets in China. And how much 35 00:02:14,240 --> 00:02:17,680 Speaker 1: of that is actually on the table with these trade negotiations, 36 00:02:17,680 --> 00:02:19,400 Speaker 1: I mean, how much is this ultimately going to come 37 00:02:19,400 --> 00:02:22,040 Speaker 1: down to bushels of soybeans? Well, you see, I don't 38 00:02:22,120 --> 00:02:25,320 Speaker 1: really see it as a clash of values between China 39 00:02:25,400 --> 00:02:28,080 Speaker 1: and the United States. You have to remember that all 40 00:02:28,120 --> 00:02:30,400 Speaker 1: of the things that Trump as many of the things 41 00:02:30,440 --> 00:02:32,840 Speaker 1: that Trump is pushing for and the private sector in 42 00:02:32,960 --> 00:02:37,000 Speaker 1: China were promised by C. Jim Ping himself. Don't forget 43 00:02:37,040 --> 00:02:39,360 Speaker 1: he came in five years ago, right he came. He 44 00:02:39,440 --> 00:02:42,280 Speaker 1: had a long career as a bureaucrat in coastal provinces, 45 00:02:42,320 --> 00:02:45,560 Speaker 1: which is really where the private sector in China is 46 00:02:45,560 --> 00:02:49,480 Speaker 1: is concentrated. He comes in, he calls a big has buddies, 47 00:02:50,000 --> 00:02:52,400 Speaker 1: Jack mar you know who runs Ali Baba. He's on 48 00:02:52,440 --> 00:02:55,000 Speaker 1: first name terms with Hank Polson. You know, the business 49 00:02:55,000 --> 00:02:58,120 Speaker 1: community know him. He throws this big Communist party meeting 50 00:02:58,360 --> 00:03:02,120 Speaker 1: Third Planet, and he says we're moving towards markets, and 51 00:03:02,120 --> 00:03:05,440 Speaker 1: he lays it all out, sixty point agenda for opening 52 00:03:05,520 --> 00:03:09,359 Speaker 1: up the economy. And basically this whole plan has been 53 00:03:09,440 --> 00:03:12,480 Speaker 1: gathering dust ever since. Not just that the economy has 54 00:03:12,520 --> 00:03:15,000 Speaker 1: flipped backwards. All of the trade and trends that were 55 00:03:15,040 --> 00:03:18,760 Speaker 1: pointing in it towards markets have gone in the opposite direction. 56 00:03:18,800 --> 00:03:21,000 Speaker 1: He's doubled down on the state. That's right, That's what 57 00:03:21,040 --> 00:03:22,320 Speaker 1: it might The point I was gonna make you. You 58 00:03:22,600 --> 00:03:25,520 Speaker 1: lay at a very intelligent argument in your piece about 59 00:03:25,560 --> 00:03:28,600 Speaker 1: what the Chinese economy should do, what the states should do. 60 00:03:29,000 --> 00:03:31,560 Speaker 1: It appears just from my perspective that they're actually, as 61 00:03:31,560 --> 00:03:34,800 Speaker 1: you said, going the opposite way over the last several years. 62 00:03:34,840 --> 00:03:38,920 Speaker 1: So does the private sector have any influence to really 63 00:03:38,960 --> 00:03:42,320 Speaker 1: push for these reforms? Well, to the extent that these 64 00:03:42,560 --> 00:03:48,400 Speaker 1: status reforms, which are ideologically politically driven, not driven by economics, 65 00:03:48,400 --> 00:03:51,160 Speaker 1: are killing the economy. I mean, the facts are very 66 00:03:51,280 --> 00:03:54,839 Speaker 1: very clear. The state enterprise is not just bad, it's 67 00:03:54,880 --> 00:03:59,040 Speaker 1: shockingly bad. I mean, private businesses on average have a 68 00:03:59,320 --> 00:04:04,720 Speaker 1: three time is the return on assets as their state competitors, right, 69 00:04:04,760 --> 00:04:07,680 Speaker 1: and yet they suck up fift of all the credit 70 00:04:07,720 --> 00:04:10,000 Speaker 1: in the economy. I don't understand what the problem is then, 71 00:04:10,160 --> 00:04:12,760 Speaker 1: I mean, if there's a pressure and if understands the 72 00:04:13,200 --> 00:04:15,640 Speaker 1: need for some of these reforms, and this could actually 73 00:04:15,640 --> 00:04:18,000 Speaker 1: play into what the U S is arguing for why 74 00:04:18,040 --> 00:04:22,360 Speaker 1: hasn't there been an agreement? Well, well, you know, I 75 00:04:23,000 --> 00:04:28,479 Speaker 1: mean the key here is id is ideology, and that 76 00:04:28,560 --> 00:04:32,560 Speaker 1: she Jimping simply can't bring himself to dismantle a system 77 00:04:32,600 --> 00:04:36,000 Speaker 1: which he believes is going to protect the Communist Party 78 00:04:36,000 --> 00:04:38,280 Speaker 1: and keep it in power. Don't forget the Chinese are 79 00:04:38,320 --> 00:04:41,080 Speaker 1: constantly looking for lessons to the collapse of the Soviet 80 00:04:41,200 --> 00:04:44,480 Speaker 1: Union and then what happened after the Soviet Union collapsed. 81 00:04:45,320 --> 00:04:48,479 Speaker 1: Isn't the same kind of communism as Russia. It's a 82 00:04:48,560 --> 00:04:53,000 Speaker 1: very different one now it's not. But they are very determined. 83 00:04:53,080 --> 00:04:55,600 Speaker 1: The Communist Party of China will not go the same 84 00:04:55,600 --> 00:04:59,000 Speaker 1: way as the Communist Party and Russia, which essentially gave up. 85 00:04:59,040 --> 00:05:02,080 Speaker 1: And they see stay it own enterprises being a bullwark 86 00:05:02,880 --> 00:05:06,880 Speaker 1: uh to communist party rule. So is there any scenario 87 00:05:07,160 --> 00:05:09,159 Speaker 1: let's go to let's go to the trade negotiations. Do 88 00:05:09,160 --> 00:05:12,400 Speaker 1: you have how optimistic, if at all, are you about 89 00:05:12,400 --> 00:05:15,479 Speaker 1: the U. S And China reaching any kind of meaningful 90 00:05:15,520 --> 00:05:20,280 Speaker 1: trade agreement. Um, let's just go there and start there. Look, 91 00:05:21,000 --> 00:05:23,320 Speaker 1: I think it's really it's gonna be relatively simple to 92 00:05:23,360 --> 00:05:26,840 Speaker 1: get an agreement which does something about the trade deficits. 93 00:05:26,880 --> 00:05:29,600 Speaker 1: I mean, China can instructed state companies to buy more 94 00:05:29,680 --> 00:05:33,600 Speaker 1: soy beings by US natural gas. Um. You know, we 95 00:05:33,640 --> 00:05:37,640 Speaker 1: saw this big import expo in Shanghai and November see 96 00:05:37,680 --> 00:05:41,400 Speaker 1: jumping instructs. You know, state on ENTERBRASO out. But by 97 00:05:41,480 --> 00:05:43,280 Speaker 1: bye for this type of But this is kind of 98 00:05:43,400 --> 00:05:46,240 Speaker 1: nibbling around, this playing around at the edges there talking 99 00:05:46,240 --> 00:05:49,520 Speaker 1: about structural Now, the incentive, the real incentive for him 100 00:05:49,560 --> 00:05:52,160 Speaker 1: to give ground is this slowing economy. He's got to 101 00:05:52,200 --> 00:05:56,760 Speaker 1: pick the economy up and and so just going forward 102 00:05:56,880 --> 00:06:00,560 Speaker 1: in thirty seconds, how bad will this be the landing 103 00:06:00,560 --> 00:06:05,279 Speaker 1: that people have feared for China. Well, we were already 104 00:06:05,320 --> 00:06:09,160 Speaker 1: looking at something that looks a bit like a hard landing. 105 00:06:09,240 --> 00:06:14,359 Speaker 1: Growth is growth has come off very badly. Um. The 106 00:06:13,680 --> 00:06:17,600 Speaker 1: the the real key is going to be whether she 107 00:06:17,880 --> 00:06:22,520 Speaker 1: Jimping can use the pressure from the United States uh 108 00:06:22,640 --> 00:06:25,680 Speaker 1: in or rather use the pressure that's coming from his 109 00:06:25,800 --> 00:06:29,560 Speaker 1: private sector as an excuse as cover to implement the 110 00:06:29,600 --> 00:06:32,279 Speaker 1: type of reforms that are needed to get the economy 111 00:06:32,320 --> 00:06:34,680 Speaker 1: back on track. Andy Brown, thank you so much for 112 00:06:34,720 --> 00:06:37,360 Speaker 1: being with us and your insights. A great article, uh 113 00:06:37,400 --> 00:06:40,760 Speaker 1: and create comments. Andy Brown is editorial director for The 114 00:06:40,760 --> 00:06:44,839 Speaker 1: Bloom New Economy. For him, he was formerly China editor 115 00:06:44,880 --> 00:07:03,680 Speaker 1: senior corresponding a columnist for The Wall Street Journal. The 116 00:07:03,720 --> 00:07:08,120 Speaker 1: swing has been notable This morning before markets open, City 117 00:07:08,120 --> 00:07:11,800 Speaker 1: Group shares were down two percent immediately after reporting earnings. 118 00:07:11,840 --> 00:07:15,480 Speaker 1: Now shares up by more than three percent as an 119 00:07:15,480 --> 00:07:19,400 Speaker 1: earnings call seems to bolster optimism among investors joining us 120 00:07:19,400 --> 00:07:21,800 Speaker 1: now in our Bloomberg Interactive Broker Studios to discuss is 121 00:07:21,880 --> 00:07:25,960 Speaker 1: Yellmen Iran. He's senior finance writer for Bloomberg News. So, y'ellmen, 122 00:07:26,040 --> 00:07:28,840 Speaker 1: what happened here on the earnings call? Um, Well, you know, 123 00:07:29,080 --> 00:07:32,480 Speaker 1: the earnings numbers aren't aren't bad either. There's there there's 124 00:07:32,520 --> 00:07:35,400 Speaker 1: good stuff to to see in cities earnings. Um. You know, 125 00:07:35,840 --> 00:07:39,560 Speaker 1: fixed income numbers are bad, and everybody initially focused on that, 126 00:07:39,680 --> 00:07:42,640 Speaker 1: but you look at other stuff. Actually it's okay. Um, 127 00:07:42,800 --> 00:07:46,000 Speaker 1: loans are up, deposits are up, NIM, the net interest 128 00:07:46,040 --> 00:07:48,960 Speaker 1: margin is up. So on the banking side, the bank 129 00:07:49,120 --> 00:07:53,480 Speaker 1: is still really doing fine. Markets, as we know, have 130 00:07:53,600 --> 00:07:55,640 Speaker 1: been all over the place and and they have they 131 00:07:55,680 --> 00:07:58,880 Speaker 1: have heard um and so that has hurt the investment 132 00:07:58,920 --> 00:08:01,440 Speaker 1: banking side, the trading side. But the other part of 133 00:08:01,480 --> 00:08:03,400 Speaker 1: the banking is doing well. So the numbers are good. 134 00:08:03,600 --> 00:08:05,840 Speaker 1: And and on the calls, there was a media call 135 00:08:05,920 --> 00:08:08,840 Speaker 1: with the CFO, the outgoing CFO GARSPAC and then the 136 00:08:08,880 --> 00:08:12,240 Speaker 1: annals call is continuing with with CEO started to make 137 00:08:12,280 --> 00:08:16,240 Speaker 1: comments and the CFO is talking now and and there's there. 138 00:08:16,240 --> 00:08:19,880 Speaker 1: They kept saying, both of them kept saying the economy 139 00:08:19,920 --> 00:08:23,480 Speaker 1: in the US and worldwide is not doing bad. The 140 00:08:23,520 --> 00:08:26,760 Speaker 1: real economy has not been impacted. Everything is still on 141 00:08:26,880 --> 00:08:30,320 Speaker 1: four cylinders. It's all really chugging along, and we're not 142 00:08:30,400 --> 00:08:33,240 Speaker 1: seeing client demand go down. So I think that all 143 00:08:33,520 --> 00:08:37,360 Speaker 1: those things maybe you know, people are more optimistic that 144 00:08:37,520 --> 00:08:40,000 Speaker 1: banks are are continuing to do the business for a 145 00:08:40,000 --> 00:08:42,360 Speaker 1: few more quarters. I mean there was one point where 146 00:08:42,360 --> 00:08:44,960 Speaker 1: where the outgoing CFO said, well, you know, if we 147 00:08:45,040 --> 00:08:47,760 Speaker 1: start seeing impact of this, only real economy might be 148 00:08:47,800 --> 00:08:50,600 Speaker 1: towards the end of two thousand nineteen. Okay, so that's 149 00:08:50,600 --> 00:08:54,080 Speaker 1: a few quarters away. You know, there's still time until then. 150 00:08:54,120 --> 00:08:56,560 Speaker 1: Maybe we should be happy. And it's probably what's going on. Well, 151 00:08:56,600 --> 00:08:59,760 Speaker 1: you know, we can't really push that fixed income performance 152 00:08:59,800 --> 00:09:01,680 Speaker 1: under the rug as much as I'm sure management would 153 00:09:01,679 --> 00:09:03,160 Speaker 1: like to. I mean, it's a it's a huge part 154 00:09:03,160 --> 00:09:05,520 Speaker 1: of their capital markets business, and it was the you know, 155 00:09:05,559 --> 00:09:09,280 Speaker 1: the worst quarter they've had in fixed for several years. 156 00:09:09,760 --> 00:09:13,480 Speaker 1: What did they claim as the drivers of that underperformance 157 00:09:13,520 --> 00:09:15,640 Speaker 1: and what is their outlook for twenty nineteen? Like I 158 00:09:15,800 --> 00:09:18,600 Speaker 1: you know, having been on a trading desk, volatilities, my friend, 159 00:09:18,840 --> 00:09:21,440 Speaker 1: that's how I can generate alpha. That clearly wasn't the 160 00:09:21,480 --> 00:09:24,560 Speaker 1: case for city here in the fourth quarter. Well, you know, 161 00:09:24,640 --> 00:09:30,199 Speaker 1: the the commentary on whether volatility is good or bad 162 00:09:30,559 --> 00:09:33,559 Speaker 1: changes according to the numbers they were quarter by every 163 00:09:33,559 --> 00:09:38,760 Speaker 1: bank official. Um so when when volatility helps the bottom line, 164 00:09:38,800 --> 00:09:41,360 Speaker 1: everybody loves it and it's a friend, but but it 165 00:09:41,440 --> 00:09:44,800 Speaker 1: doesn't always and and actually in the same quarter, Uh, 166 00:09:45,000 --> 00:09:47,920 Speaker 1: some banks are aided by it and some aren't. Which 167 00:09:47,960 --> 00:09:51,440 Speaker 1: is part of the game of fixed income market making. 168 00:09:51,559 --> 00:09:54,200 Speaker 1: When you're when you're really buying and selling and the 169 00:09:54,240 --> 00:09:56,640 Speaker 1: spread is where you're making the money, you know you 170 00:09:56,679 --> 00:09:59,840 Speaker 1: can you can get caught in the wrong positions so easily. 171 00:10:00,000 --> 00:10:02,559 Speaker 1: And markets are going down for three days and then 172 00:10:02,559 --> 00:10:04,400 Speaker 1: going up for three days, so you think it's going 173 00:10:04,440 --> 00:10:06,120 Speaker 1: to go down for three more days and it and 174 00:10:06,200 --> 00:10:09,080 Speaker 1: it doesn't. So it's it's tough for these banks. And 175 00:10:09,120 --> 00:10:12,400 Speaker 1: even even if clients and and the typical commentary they 176 00:10:12,400 --> 00:10:15,360 Speaker 1: give is while clients stayed on the sidelines because of 177 00:10:15,360 --> 00:10:17,800 Speaker 1: a lottilty, I don't know if that's really the case. 178 00:10:17,840 --> 00:10:21,400 Speaker 1: It's just again market making in fixed income you and 179 00:10:21,480 --> 00:10:24,520 Speaker 1: you can lose money as well as make bray and 180 00:10:24,559 --> 00:10:27,400 Speaker 1: you just add up those days where you lost sources gain. 181 00:10:27,600 --> 00:10:29,720 Speaker 1: One thing that I'm struck by the Okay, so putting 182 00:10:29,760 --> 00:10:32,920 Speaker 1: market making aside, I'm struck in the first quarter that 183 00:10:33,000 --> 00:10:36,839 Speaker 1: trading volumes are down in credit markets, particularly the risk 184 00:10:36,920 --> 00:10:40,839 Speaker 1: your credit markets, and debt issuance is also way down, 185 00:10:40,960 --> 00:10:43,600 Speaker 1: especially on the risk your tiers, which is actually where 186 00:10:43,640 --> 00:10:46,120 Speaker 1: these banks make a lot of the money, right, I mean, 187 00:10:46,320 --> 00:10:49,440 Speaker 1: risk your deals tend to offer bigger premiums. I'm just 188 00:10:49,480 --> 00:10:53,600 Speaker 1: wondering what gives them confidence that things are turning up, since, 189 00:10:53,840 --> 00:10:56,840 Speaker 1: I mean, from all other empirical data, things are slower 190 00:10:56,880 --> 00:10:59,400 Speaker 1: than the first quarter. The issues is going down, and 191 00:10:59,559 --> 00:11:02,439 Speaker 1: that actually comes to hur r trading as well as 192 00:11:02,440 --> 00:11:05,240 Speaker 1: you said, so so it's normal. I mean, trading can 193 00:11:05,320 --> 00:11:08,680 Speaker 1: be can be better while issuance starts slowing down, but 194 00:11:08,760 --> 00:11:11,280 Speaker 1: eventually the issuance will make a difference. And they do 195 00:11:11,360 --> 00:11:13,000 Speaker 1: make a lot of money on the issuance as well, 196 00:11:13,040 --> 00:11:16,600 Speaker 1: and the issuance um debt and equity are down, so 197 00:11:16,600 --> 00:11:21,439 Speaker 1: so that's being reflected and um so so they kept 198 00:11:21,760 --> 00:11:24,600 Speaker 1: I mean they they're talking about the financial economy not 199 00:11:24,720 --> 00:11:28,000 Speaker 1: doing as well. That's what markets are reflecting, but the 200 00:11:28,040 --> 00:11:32,920 Speaker 1: real economy still going well. Um. But those cannot be 201 00:11:33,080 --> 00:11:36,320 Speaker 1: in in diverging paths. For too long, right, they catch up. 202 00:11:36,320 --> 00:11:38,840 Speaker 1: I mean, the real economy does get impacted by what 203 00:11:39,080 --> 00:11:41,560 Speaker 1: the financial economy is doing. Um and and it's a 204 00:11:41,600 --> 00:11:44,600 Speaker 1: sign too. I mean, as as companies are selling less dead, 205 00:11:44,960 --> 00:11:47,000 Speaker 1: that means they're they're not going to invest in new things, 206 00:11:47,040 --> 00:11:49,240 Speaker 1: and they're not. The economy is not going in a 207 00:11:49,280 --> 00:11:52,280 Speaker 1: great direction. So it's maybe a matter of time. But 208 00:11:52,360 --> 00:11:55,200 Speaker 1: this is you know, markets can be very short term oriented, 209 00:11:55,240 --> 00:11:57,040 Speaker 1: so you know, they could be looking for the next 210 00:11:57,240 --> 00:11:59,440 Speaker 1: couple of weeks instead of a couple of months. Right, 211 00:11:59,559 --> 00:12:02,160 Speaker 1: just real, quickly fifteen seconds. When I think City Bank, 212 00:12:02,200 --> 00:12:04,880 Speaker 1: I think a huge consumer franchise. Did they have any 213 00:12:04,880 --> 00:12:07,840 Speaker 1: commentary about how the consumers doing both here in US 214 00:12:07,880 --> 00:12:11,160 Speaker 1: and outside? They were pretty positive. They said they have 215 00:12:11,320 --> 00:12:14,040 Speaker 1: not felt the consumers pulling back at all in the 216 00:12:14,120 --> 00:12:17,920 Speaker 1: US or other places. Interesting. That is interesting. We'll see 217 00:12:17,920 --> 00:12:20,240 Speaker 1: whether the rest of the banks say this, yeah, exactly, 218 00:12:20,280 --> 00:12:24,120 Speaker 1: and honestly, in very early trading, the rest of the 219 00:12:24,120 --> 00:12:27,320 Speaker 1: banks were declining in sympathy with City Group. It'll be 220 00:12:27,360 --> 00:12:30,760 Speaker 1: interesting to see whether city groups sets odd momentum after 221 00:12:30,880 --> 00:12:34,559 Speaker 1: disappointing earnings. Go figure, and it's rare that City Bank 222 00:12:34,679 --> 00:12:36,839 Speaker 1: leads off the bank earnings week. Usually that's left for 223 00:12:36,920 --> 00:12:40,520 Speaker 1: JP Morgan. That's right, Well, let's see how they do. Yalman, owner, 224 00:12:40,559 --> 00:12:42,839 Speaker 1: and so far they're doing okay. Y'alman, owner and senior 225 00:12:42,840 --> 00:12:45,320 Speaker 1: finance writer for Bloomberg. Thank you so much for being 226 00:12:45,360 --> 00:13:06,800 Speaker 1: with us. Well, the world of sports has transformed from 227 00:13:06,880 --> 00:13:10,120 Speaker 1: hitting a ball to directing a ball on a computer screen. 228 00:13:10,200 --> 00:13:12,280 Speaker 1: Joining us now, Chris Russo, managing director and ahead of 229 00:13:12,320 --> 00:13:15,080 Speaker 1: sports practice at Hula. He and Loki joining us here 230 00:13:15,120 --> 00:13:17,920 Speaker 1: in our Bloomberg directive broker's studios. Chris, let's get a 231 00:13:18,000 --> 00:13:21,839 Speaker 1: lay of the land for as you prepare for mergers 232 00:13:21,960 --> 00:13:24,319 Speaker 1: and as you try to get a sense of where 233 00:13:24,360 --> 00:13:28,720 Speaker 1: the eyeballs are going. Has ears e sports peaked or 234 00:13:28,800 --> 00:13:31,280 Speaker 1: are we just getting started with the adoption of this trend. 235 00:13:31,800 --> 00:13:33,920 Speaker 1: I think we're just getting started with the sports, in 236 00:13:34,040 --> 00:13:37,559 Speaker 1: part because the amount of people playing e sports games, 237 00:13:37,600 --> 00:13:42,280 Speaker 1: attending events, watching and streaming on Twitch has just continued 238 00:13:42,320 --> 00:13:45,040 Speaker 1: to grow. And so over the past eighteen to twenty 239 00:13:45,040 --> 00:13:47,720 Speaker 1: four months, you've seen these new e sports teams created 240 00:13:48,040 --> 00:13:50,880 Speaker 1: by the big publishers like Riot and Activision, and those 241 00:13:50,880 --> 00:13:53,760 Speaker 1: teams have been bought by professional sports team owners and 242 00:13:53,800 --> 00:13:56,560 Speaker 1: some of those valuations are now a hundred and fifty million, 243 00:13:56,600 --> 00:13:59,120 Speaker 1: two hundred million dollars for these teams, and I see 244 00:13:59,160 --> 00:14:02,040 Speaker 1: them continuing to grow because of the audience, passion and 245 00:14:02,040 --> 00:14:05,160 Speaker 1: the great demographics we have any sports. I just can't 246 00:14:05,280 --> 00:14:09,600 Speaker 1: imagine a sport watching other people play games. But I've 247 00:14:09,600 --> 00:14:11,600 Speaker 1: been told time and time again, and I've seen the numbers, 248 00:14:11,600 --> 00:14:14,040 Speaker 1: and I've seen Jeff Wilson, as you mentioned, to make 249 00:14:14,080 --> 00:14:17,480 Speaker 1: an investment. But let's go back to maybe you know, 250 00:14:17,520 --> 00:14:19,800 Speaker 1: the next big m and a trade involving sports might 251 00:14:19,840 --> 00:14:22,840 Speaker 1: just be the regional sports networks that the Walt Disney 252 00:14:22,840 --> 00:14:28,080 Speaker 1: Company acquired from twenty one century Fox. Big numbers, big markets, 253 00:14:28,560 --> 00:14:31,640 Speaker 1: big companies involved. What do you expect that to happen 254 00:14:31,640 --> 00:14:32,840 Speaker 1: and what do you how do you expect that to 255 00:14:32,840 --> 00:14:34,600 Speaker 1: play out? Well, I think there's kind of two ways 256 00:14:34,640 --> 00:14:37,600 Speaker 1: of looking at that opportunity, and these are twenty two 257 00:14:37,640 --> 00:14:41,160 Speaker 1: regional sports networks with great teams that they broadcast and 258 00:14:41,480 --> 00:14:44,680 Speaker 1: great rights. The sort of negative view would be Cable 259 00:14:44,760 --> 00:14:47,360 Speaker 1: going forward is going to be a diminishing place because 260 00:14:47,360 --> 00:14:51,520 Speaker 1: of cord cutting and challenges on subscribers. The positive outlook 261 00:14:51,520 --> 00:14:54,280 Speaker 1: would be there's gonna be streaming opportunities. There's going to 262 00:14:54,320 --> 00:14:58,240 Speaker 1: be gambling potentially incorporated into these broadcasts. So I'm actually 263 00:14:58,240 --> 00:15:01,360 Speaker 1: more bullish on the rs AN opportunity than some other 264 00:15:01,400 --> 00:15:04,000 Speaker 1: folks are. Where the bidding ends up may depend upon 265 00:15:04,000 --> 00:15:06,160 Speaker 1: how many finalists are there and how they drive the price, 266 00:15:06,400 --> 00:15:09,440 Speaker 1: but actually this is a quite uh interesting asset and 267 00:15:09,480 --> 00:15:11,800 Speaker 1: I think ultimately will be be a good one. You know, 268 00:15:11,920 --> 00:15:13,760 Speaker 1: let's see about a little bit, because what you're just 269 00:15:13,800 --> 00:15:16,880 Speaker 1: talking about, and Paul's really good question, and the concept 270 00:15:16,880 --> 00:15:18,800 Speaker 1: of the sports kind of comes together with this idea 271 00:15:18,880 --> 00:15:21,760 Speaker 1: that more people are cutting the cord and that big 272 00:15:21,760 --> 00:15:25,160 Speaker 1: sports companies aren't going with them. They're staying in cable 273 00:15:25,160 --> 00:15:27,920 Speaker 1: and as a result, they're losing some viewers. And perhaps 274 00:15:27,920 --> 00:15:31,000 Speaker 1: this is allowing the sports to take off more because 275 00:15:31,080 --> 00:15:34,760 Speaker 1: that's what's available to people can use. To foresee a 276 00:15:34,800 --> 00:15:38,760 Speaker 1: time in the near future where big teams move to 277 00:15:39,080 --> 00:15:42,880 Speaker 1: online streaming services as well. I do believe that teams 278 00:15:42,920 --> 00:15:46,600 Speaker 1: and leagues will rely more on streaming rights over time 279 00:15:46,640 --> 00:15:48,400 Speaker 1: than they are today. I think you see some of 280 00:15:48,400 --> 00:15:51,720 Speaker 1: that happening now with Amazon having a Thursday Night package 281 00:15:51,760 --> 00:15:54,960 Speaker 1: from the NFL. Other leagues have licensed parts of their 282 00:15:55,400 --> 00:15:59,600 Speaker 1: their packages to the major streaming companies and video companies. 283 00:15:59,720 --> 00:16:01,920 Speaker 1: But I think until the big rights are available, which 284 00:16:01,920 --> 00:16:04,280 Speaker 1: will happen in the next three to five years, you're 285 00:16:04,280 --> 00:16:06,800 Speaker 1: still seeing things around the edges. But with the younger 286 00:16:06,880 --> 00:16:10,320 Speaker 1: viewers spending more time online with mobile devices, I think 287 00:16:10,320 --> 00:16:12,040 Speaker 1: the league's will have to go there and have to 288 00:16:12,040 --> 00:16:14,600 Speaker 1: be robust in those offerings. Let's you know. I know 289 00:16:14,920 --> 00:16:17,960 Speaker 1: Joe Uh Chris worked at the NFL prior to Landlogate 290 00:16:18,040 --> 00:16:22,360 Speaker 1: and nobody uh slices and dices broadcast rites better than 291 00:16:22,400 --> 00:16:25,000 Speaker 1: the NFL. So I suspect, as you mentioned in one 292 00:16:25,080 --> 00:16:28,280 Speaker 1: or whenever that is um that the NFL that I'm 293 00:16:28,320 --> 00:16:30,280 Speaker 1: sure the technology companies will be at the table. Is 294 00:16:30,320 --> 00:16:32,320 Speaker 1: that your thought, it is my thought, And I think 295 00:16:32,320 --> 00:16:34,280 Speaker 1: at the end of the day, people that have our 296 00:16:34,280 --> 00:16:37,040 Speaker 1: companies that have great content will still do well. They 297 00:16:37,080 --> 00:16:39,640 Speaker 1: will just find new ways to exploit the content through 298 00:16:39,880 --> 00:16:42,880 Speaker 1: new platforms doing digital media, and I think it will 299 00:16:42,920 --> 00:16:45,520 Speaker 1: be an opportunity to reach new audiences as this next 300 00:16:45,560 --> 00:16:49,520 Speaker 1: generation of fans evolves. So what do you expect in 301 00:16:49,640 --> 00:16:53,480 Speaker 1: terms of the overall M and A volumes in sports 302 00:16:53,520 --> 00:16:56,120 Speaker 1: media this year? Well, I think that we there will 303 00:16:56,120 --> 00:16:57,600 Speaker 1: be a lot of m and A this year in 304 00:16:57,640 --> 00:17:01,560 Speaker 1: the sports space, in part because warts gambling has emerged 305 00:17:01,600 --> 00:17:04,400 Speaker 1: and that creates a disruption, and that creates new kinds 306 00:17:04,440 --> 00:17:06,800 Speaker 1: of opportunity. We already saw a lot of them and 307 00:17:06,840 --> 00:17:09,560 Speaker 1: a last year around the sports gambling space, fan Duel 308 00:17:09,840 --> 00:17:12,760 Speaker 1: did a transaction, sport Radar, a sport data company, did 309 00:17:12,800 --> 00:17:16,600 Speaker 1: a transaction Genus Sports and other sports data company. You 310 00:17:16,640 --> 00:17:19,320 Speaker 1: see a lot of companies getting prepared for the advent 311 00:17:19,400 --> 00:17:22,879 Speaker 1: of gambling, and as a result, you'll see combinations, new investments, 312 00:17:22,920 --> 00:17:26,360 Speaker 1: and new configurations of companies. So we've seen the league's 313 00:17:26,880 --> 00:17:29,680 Speaker 1: most notably Major League Baseball, but all the professional leagues 314 00:17:29,760 --> 00:17:32,520 Speaker 1: really really kept the gambling at a a you know, 315 00:17:32,680 --> 00:17:35,600 Speaker 1: more than an arms length for generations. Now they seem 316 00:17:35,640 --> 00:17:37,560 Speaker 1: to be embracing it. So can you give us a 317 00:17:37,600 --> 00:17:41,359 Speaker 1: sense of where gambling is in this country? Now? I 318 00:17:41,359 --> 00:17:43,840 Speaker 1: know I live in New Jersey and it's legal linew 319 00:17:43,920 --> 00:17:45,720 Speaker 1: Jersey sports books. Where are we and how do you 320 00:17:45,720 --> 00:17:48,840 Speaker 1: think that's gonna play out? Right now, sports gambling is 321 00:17:48,840 --> 00:17:52,160 Speaker 1: only legal in six or seven states, but many experts 322 00:17:52,200 --> 00:17:55,520 Speaker 1: believe that will increase to twenty to twenty five states 323 00:17:55,560 --> 00:17:58,040 Speaker 1: over the next couple of years. I think initially, as 324 00:17:58,119 --> 00:18:01,119 Speaker 1: you mentioned, the sports leagues were very hesitant and reluctant 325 00:18:01,320 --> 00:18:03,760 Speaker 1: about sports gambling. But now that it is going to 326 00:18:03,840 --> 00:18:06,560 Speaker 1: be legal, they are trying to figure out how they 327 00:18:06,560 --> 00:18:09,119 Speaker 1: can make money but be keep the integrity of the 328 00:18:09,119 --> 00:18:11,560 Speaker 1: games and make sure that gambling is done in a 329 00:18:11,600 --> 00:18:15,399 Speaker 1: responsible way so they preserve the authenticity and integrity of 330 00:18:15,400 --> 00:18:18,399 Speaker 1: these sports. Do either of you gamble to sports gambling? 331 00:18:19,040 --> 00:18:22,760 Speaker 1: Do you actually have occasion? When I'm in Las Vegas? Occasion? Yeah? 332 00:18:22,880 --> 00:18:24,719 Speaker 1: Would you? I mean, but my question is, you know, 333 00:18:24,840 --> 00:18:28,320 Speaker 1: how much would this with the appetite widen or is 334 00:18:28,359 --> 00:18:31,600 Speaker 1: the field already there? Well? You know, in my opinion, 335 00:18:31,640 --> 00:18:33,120 Speaker 1: there are there are a lot of reports out there 336 00:18:33,119 --> 00:18:36,760 Speaker 1: that say the offshore the illegal amount of gambling is 337 00:18:36,800 --> 00:18:38,920 Speaker 1: about a hundred and fifty billion dollars. No one knows 338 00:18:38,960 --> 00:18:41,880 Speaker 1: if that's really true. I think what could happen over 339 00:18:41,960 --> 00:18:45,040 Speaker 1: time is that number gets even bigger because people who 340 00:18:45,040 --> 00:18:47,040 Speaker 1: didn't want to bet on an offshore book or go 341 00:18:47,080 --> 00:18:48,760 Speaker 1: to some website, they didn't know if their money was 342 00:18:48,760 --> 00:18:51,360 Speaker 1: going to come back, now feel it's safe, it's comfortable. 343 00:18:51,400 --> 00:18:53,920 Speaker 1: You've got brands like Fando on DraftKings which people now 344 00:18:54,000 --> 00:18:56,720 Speaker 1: trust and and understand, I think you have potential to 345 00:18:56,760 --> 00:18:59,600 Speaker 1: have this thing get get even bigger than anticipated. And 346 00:18:59,640 --> 00:19:02,159 Speaker 1: what did the um? The ratings I guess for the 347 00:19:02,240 --> 00:19:04,640 Speaker 1: NFL were up a little bit this year so far, 348 00:19:04,680 --> 00:19:07,000 Speaker 1: but they've been a you know, kind of a downward trend. 349 00:19:07,800 --> 00:19:11,640 Speaker 1: How concerned is the NFL in particular about their ratings 350 00:19:11,760 --> 00:19:14,240 Speaker 1: or do they feel like there there are incillary businesses, 351 00:19:14,240 --> 00:19:16,879 Speaker 1: whether it's red zone and other things that might be 352 00:19:16,960 --> 00:19:20,040 Speaker 1: making up for it. Yeah, you know, in my view, um, 353 00:19:20,160 --> 00:19:23,359 Speaker 1: the NFL is doing just fine. Uh. Again, they had 354 00:19:23,359 --> 00:19:25,719 Speaker 1: a good year in terms of ratings, but as you 355 00:19:25,760 --> 00:19:29,560 Speaker 1: mentioned earlier, they're continuing to experiment and look at new platforms, 356 00:19:29,800 --> 00:19:32,640 Speaker 1: new ways to distribute content, and I think they'll continue 357 00:19:32,640 --> 00:19:35,080 Speaker 1: to be very shrewd about how they slice and dice 358 00:19:35,200 --> 00:19:37,920 Speaker 1: rights to let them maximize the opportunity. I think the key, though, 359 00:19:38,160 --> 00:19:40,359 Speaker 1: for the NFL and all of these sort of major 360 00:19:40,440 --> 00:19:42,800 Speaker 1: leagues is to make sure they're serving the next generation 361 00:19:42,840 --> 00:19:45,000 Speaker 1: of fans with the kind of content and on the 362 00:19:45,040 --> 00:19:47,600 Speaker 1: platforms that that those fans want to want to consume it. 363 00:19:47,720 --> 00:19:49,520 Speaker 1: All Right, Chris, I'm gonna put you on the spot 364 00:19:50,119 --> 00:19:54,040 Speaker 1: fifteen seconds. What's the one surprise deal that you think 365 00:19:54,080 --> 00:19:57,000 Speaker 1: will get done in this space this year. Oh boy, 366 00:19:57,080 --> 00:20:00,000 Speaker 1: the one surprise deal. I don't have necessarily one surprise 367 00:20:00,000 --> 00:20:01,520 Speaker 1: a deal. I do think you're going to see a 368 00:20:01,560 --> 00:20:04,520 Speaker 1: lot more sports team activity this year. The last three 369 00:20:04,560 --> 00:20:07,000 Speaker 1: or four years that activity has been pretty slow, only 370 00:20:07,160 --> 00:20:09,359 Speaker 1: two WISH deals a year. I think this year you 371 00:20:09,359 --> 00:20:11,679 Speaker 1: could see four or five deals, in part because I 372 00:20:11,680 --> 00:20:13,439 Speaker 1: think some owners want to take some chips off the 373 00:20:13,480 --> 00:20:15,760 Speaker 1: table with the markets being as strong as they are. 374 00:20:15,880 --> 00:20:19,320 Speaker 1: All right, so so Hedge fun billionaires, get your purses 375 00:20:19,320 --> 00:20:22,680 Speaker 1: ready because you can go buy a sports team. Thank 376 00:20:22,720 --> 00:20:24,639 Speaker 1: you so much for being with us. Chris Russo at 377 00:20:24,840 --> 00:20:42,320 Speaker 1: Hula and Loki's Sports practice. Here with us, we are 378 00:20:42,440 --> 00:20:45,360 Speaker 1: in New York City in our cozy when we're gonna 379 00:20:45,400 --> 00:20:48,680 Speaker 1: active Broker's studios. David Coudla is in a brisk in 380 00:20:48,760 --> 00:20:52,640 Speaker 1: Detroit where it's twenty six degrees and sunny at the 381 00:20:52,720 --> 00:20:55,720 Speaker 1: auto show. And this is the last North American International 382 00:20:55,720 --> 00:20:58,720 Speaker 1: Auto Show that's going to be held in January. They're 383 00:20:58,760 --> 00:21:00,880 Speaker 1: kind of upping their game move thing to a warmer 384 00:21:01,119 --> 00:21:04,320 Speaker 1: month in June. David, thank you so much for being 385 00:21:04,320 --> 00:21:06,800 Speaker 1: with us. David Coudla is founder and chief executive officer 386 00:21:06,840 --> 00:21:10,320 Speaker 1: of Mainstay Capital Management. Before we get into what is 387 00:21:10,359 --> 00:21:13,359 Speaker 1: actually being announced and discussed at the auto show, can 388 00:21:13,400 --> 00:21:16,360 Speaker 1: you just set the tone for us, how how pessimistic 389 00:21:16,480 --> 00:21:20,879 Speaker 1: are different automakers given the overall sort of bleak sales 390 00:21:20,920 --> 00:21:24,480 Speaker 1: picture for for the car industry. Well, there had been 391 00:21:25,280 --> 00:21:30,280 Speaker 1: a lot of pessimism coming into with the slowing global 392 00:21:30,320 --> 00:21:34,880 Speaker 1: economy and fears by some of a recession and a 393 00:21:34,920 --> 00:21:38,239 Speaker 1: possible recession in the US in twenty nineteen, or at 394 00:21:38,280 --> 00:21:42,960 Speaker 1: least a slowing economy in the auto industry is as 395 00:21:43,000 --> 00:21:45,639 Speaker 1: cyclical as they come, and that's sent a lot of 396 00:21:45,640 --> 00:21:49,240 Speaker 1: fears for slowing sales in twenty nineteen, which which we 397 00:21:49,280 --> 00:21:52,120 Speaker 1: do expect UH in the U s and globally. We've 398 00:21:52,119 --> 00:21:55,560 Speaker 1: already seen that slowing sales in China. China had their 399 00:21:56,240 --> 00:22:00,320 Speaker 1: UH first sales decline in over two decades, falling six 400 00:22:00,359 --> 00:22:03,600 Speaker 1: percent last year. We expected to slow this year. That's 401 00:22:03,600 --> 00:22:06,440 Speaker 1: the largest market in the world, and after the four 402 00:22:06,600 --> 00:22:12,639 Speaker 1: best years for US sales ever from we expect sales 403 00:22:12,680 --> 00:22:15,720 Speaker 1: to slow here. And then on Friday, of course, Mary Bara, 404 00:22:16,600 --> 00:22:21,360 Speaker 1: the CEO of GM, came out with some very good 405 00:22:21,359 --> 00:22:24,880 Speaker 1: expectations for Wall Street on what they expect in terms 406 00:22:24,880 --> 00:22:28,080 Speaker 1: of sales and profitability this year. So a very good 407 00:22:28,119 --> 00:22:31,000 Speaker 1: picture out of GM. Uh So what we've heard from 408 00:22:31,000 --> 00:22:35,359 Speaker 1: a lot of the CEOs they expect good. We'll see. So, David, 409 00:22:35,560 --> 00:22:39,359 Speaker 1: you know, the automobile industry has really evolved into a 410 00:22:39,480 --> 00:22:43,679 Speaker 1: technology industry, I mean essentially taken over the CS Consumer 411 00:22:43,720 --> 00:22:48,119 Speaker 1: Electronics Show in Las Vegas every year. Um, what what 412 00:22:48,359 --> 00:22:53,560 Speaker 1: is really the near term realistic technological innovations that are 413 00:22:53,560 --> 00:22:57,119 Speaker 1: creating the most buzz there at the auto show this year? Well, 414 00:22:57,160 --> 00:23:00,639 Speaker 1: it is about electric It is about electrification, It is 415 00:23:00,680 --> 00:23:06,359 Speaker 1: about electric vehicles, and it is about autonomous. But you 416 00:23:06,400 --> 00:23:10,640 Speaker 1: know those still electric vehicles still represent less than one 417 00:23:10,720 --> 00:23:16,000 Speaker 1: percent of the market globally and in the US. Uh, 418 00:23:16,040 --> 00:23:18,960 Speaker 1: those are still products yet to come. A lot coming 419 00:23:19,080 --> 00:23:23,280 Speaker 1: over the next few model years, but still yet to come. Uh. 420 00:23:23,320 --> 00:23:26,080 Speaker 1: You know that what's happening in cars. We see this 421 00:23:26,200 --> 00:23:29,760 Speaker 1: at CS and and we've seen a lot of the introductions. 422 00:23:29,800 --> 00:23:33,320 Speaker 1: I T is playing a bigger, bigger and bigger role 423 00:23:33,400 --> 00:23:38,720 Speaker 1: in terms of the new introductions and in technology, uh, 424 00:23:38,880 --> 00:23:42,879 Speaker 1: in in automotive and in terms of what's new and 425 00:23:43,040 --> 00:23:46,560 Speaker 1: vehicles each year. Design is still is still a big deal. 426 00:23:47,200 --> 00:23:53,119 Speaker 1: Improvements in fuel economy, horsepower, uh, transmission, suspension, all those things. 427 00:23:53,119 --> 00:23:56,800 Speaker 1: But what's happening in terms of I T is becoming 428 00:23:56,800 --> 00:24:00,440 Speaker 1: a bigger, bigger deal and is evolving very rapidly. Uh. 429 00:24:00,480 --> 00:24:03,359 Speaker 1: You know, the cars and the technology we see today 430 00:24:03,440 --> 00:24:06,680 Speaker 1: are our leaps and bounds from just five or seven 431 00:24:06,720 --> 00:24:11,000 Speaker 1: years ago. So David, I know you're big on Michigan 432 00:24:11,080 --> 00:24:14,720 Speaker 1: since that's where you live, but I really and and 433 00:24:14,720 --> 00:24:19,320 Speaker 1: and it rightly, rightfully so, Um, Detroit's Auto Show has 434 00:24:19,400 --> 00:24:22,240 Speaker 1: kind of lost some of its relevance. Paul is mentioning 435 00:24:22,280 --> 00:24:24,920 Speaker 1: the Consumer Electronics Show in Las Vegas, and that really 436 00:24:25,000 --> 00:24:28,520 Speaker 1: is kind of taken on a more dominant role in 437 00:24:28,560 --> 00:24:32,240 Speaker 1: the auto industry. Do you think what is the role 438 00:24:32,280 --> 00:24:36,159 Speaker 1: for the Detroit Auto Show these days? Well, you know 439 00:24:36,240 --> 00:24:39,480 Speaker 1: that the heritage from you know, from where it comes from, 440 00:24:39,600 --> 00:24:43,520 Speaker 1: and um, you know it is you know, probably the 441 00:24:43,600 --> 00:24:48,040 Speaker 1: move to June makes sense from the standpoint of warmer weather, 442 00:24:48,640 --> 00:24:51,600 Speaker 1: being able to actually drive some vehicles, along with coming 443 00:24:51,600 --> 00:24:55,280 Speaker 1: to see them and moving away from h C e 444 00:24:55,560 --> 00:24:58,880 Speaker 1: s which now kind of steals its thunder a week 445 00:24:58,920 --> 00:25:03,800 Speaker 1: ahead of time. Um. The German automakers, except for VW, 446 00:25:03,880 --> 00:25:09,280 Speaker 1: are noticeably absent this year, so it's hopefully that will 447 00:25:09,600 --> 00:25:13,879 Speaker 1: bringe some new life into the Detroit Auto Show, the 448 00:25:13,920 --> 00:25:18,399 Speaker 1: North American International Auto Show. We hope and UH will 449 00:25:18,600 --> 00:25:21,920 Speaker 1: will will help with the resurgence of the show. So David, 450 00:25:22,040 --> 00:25:25,600 Speaker 1: as the automakers continue to ramp up their investment in technology, 451 00:25:25,800 --> 00:25:28,040 Speaker 1: is it too early to maybe gauge who are some 452 00:25:28,080 --> 00:25:30,760 Speaker 1: winners or losers. Who's doing a better job than than 453 00:25:30,760 --> 00:25:34,480 Speaker 1: others of some of the majors. It's it's interesting to 454 00:25:34,480 --> 00:25:38,159 Speaker 1: see the partnerships that are that are coming together Honda 455 00:25:38,240 --> 00:25:42,320 Speaker 1: with General Motors UH the announcement, we expect further announcements 456 00:25:42,359 --> 00:25:47,840 Speaker 1: of Ford and VW UM, you know VW or. We've 457 00:25:47,880 --> 00:25:52,119 Speaker 1: seen UH that really I think General Motors has been 458 00:25:52,119 --> 00:25:56,600 Speaker 1: in a leadership role in both autonomous and UH E 459 00:25:56,760 --> 00:26:01,119 Speaker 1: v UH. We've seen UH for word, you know, when 460 00:26:01,119 --> 00:26:03,480 Speaker 1: we're talking about here in the US, has has has 461 00:26:03,520 --> 00:26:06,600 Speaker 1: been a little bit behind in that game. UM and 462 00:26:06,600 --> 00:26:09,680 Speaker 1: those partnerships that we're seeing because of the cost to 463 00:26:09,760 --> 00:26:12,600 Speaker 1: move from I, I, C, D E v UH and 464 00:26:13,280 --> 00:26:15,760 Speaker 1: the cost for a Thomas significant cost to make that 465 00:26:15,800 --> 00:26:19,680 Speaker 1: transition from what we call what some people call auto 466 00:26:19,760 --> 00:26:21,720 Speaker 1: one point out auto two point oh we call it 467 00:26:21,760 --> 00:26:25,840 Speaker 1: from the legacy business to the future of mobility. Uh, 468 00:26:26,080 --> 00:26:32,280 Speaker 1: it's a very expensive transformation. So these partnerships are going 469 00:26:32,320 --> 00:26:35,720 Speaker 1: to going to be very important. But that's where we're 470 00:26:35,760 --> 00:26:39,919 Speaker 1: seeing the synergies like that is I think that's going 471 00:26:39,960 --> 00:26:42,880 Speaker 1: to be most what will be most important. David Coudla, 472 00:26:42,920 --> 00:26:45,240 Speaker 1: thank you so much for being with us as always. 473 00:26:45,320 --> 00:26:48,520 Speaker 1: David Coudler is chief executive in chief investments tragist at 474 00:26:48,560 --> 00:26:51,080 Speaker 1: Mainstay Capital Management with two and a half billion dollars 475 00:26:51,160 --> 00:26:55,159 Speaker 1: under management. Coming to us from the North American International 476 00:26:55,200 --> 00:26:58,600 Speaker 1: Auto Show in Detroit, it is going to be the 477 00:26:58,720 --> 00:27:01,320 Speaker 1: last one where it's going to be a brisk twenty 478 00:27:01,400 --> 00:27:04,080 Speaker 1: five degrees. Since this is the last one being held 479 00:27:04,119 --> 00:27:06,280 Speaker 1: in January, it is now going to be moving to 480 00:27:06,359 --> 00:27:08,880 Speaker 1: June where it's going to be sunny and people can 481 00:27:09,119 --> 00:27:11,840 Speaker 1: drive through the town with a breeze going through their hair. 482 00:27:15,680 --> 00:27:18,240 Speaker 1: Thanks for listening to the Bloomberg P and L podcast. 483 00:27:18,560 --> 00:27:22,480 Speaker 1: You can subscribe and listen to interviews at Apple Podcasts, SoundCloud, 484 00:27:22,600 --> 00:27:26,040 Speaker 1: or whatever podcast platform you prefer. I'm pim Fox. I'm 485 00:27:26,080 --> 00:27:30,080 Speaker 1: on Twitter at pim Fox. I'm on Twitter at Lisa Abramo. 486 00:27:30,200 --> 00:27:32,800 Speaker 1: It's one before the podcast. You can always catch us 487 00:27:32,840 --> 00:27:34,440 Speaker 1: worldwide on Bloomberg Radio