1 00:00:03,120 --> 00:00:06,640 Speaker 1: This is Bloomberg Surveillance. Looking back at the fourth quarter, 2 00:00:06,760 --> 00:00:10,080 Speaker 1: the message wasn't consistent on the economy. If we compare 3 00:00:10,240 --> 00:00:12,760 Speaker 1: the labor market to t d P day that there's 4 00:00:12,800 --> 00:00:15,480 Speaker 1: a lot of talk of US recession. I think it's 5 00:00:15,520 --> 00:00:18,360 Speaker 1: ghostly exaggerated. Leaders have to step up to the plate 6 00:00:18,400 --> 00:00:20,919 Speaker 1: and say, Okay, there's a problem here. We're aware of 7 00:00:20,960 --> 00:00:23,520 Speaker 1: it at least, and we're considering options to fix it 8 00:00:23,560 --> 00:00:25,919 Speaker 1: that will certainly make the equity work obscure a lot better. 9 00:00:26,040 --> 00:00:30,280 Speaker 1: Bloomberg Surveillance, your link to the world of economics, finance, 10 00:00:30,360 --> 00:00:35,160 Speaker 1: and investment on Bloomberg Radio. Good morning at his seven 11 00:00:35,159 --> 00:00:37,880 Speaker 1: AM on Wall Street and Michael McKee future is higher 12 00:00:38,120 --> 00:00:40,960 Speaker 1: this morning. Can we make it three up days in 13 00:00:40,960 --> 00:00:43,159 Speaker 1: a row? Is this a reversal or is there more 14 00:00:43,200 --> 00:00:48,000 Speaker 1: trouble ahead? Our questions today on Surveillance. Later this morning, 15 00:00:48,560 --> 00:00:52,000 Speaker 1: Neil cash Cary of the Minneapolis Fed here on Fed 16 00:00:52,120 --> 00:00:56,880 Speaker 1: Minutes Day. Is their job now avoiding recession? He's also 17 00:00:57,040 --> 00:01:01,640 Speaker 1: calling for a breakup of the big banks. Will explore 18 00:01:01,720 --> 00:01:04,640 Speaker 1: that with him and Sir Martin Sorrow coming up in 19 00:01:04,680 --> 00:01:06,800 Speaker 1: a few minutes. His view of the economy and what 20 00:01:07,040 --> 00:01:11,680 Speaker 1: role will business play in the Brexit debate. As I 21 00:01:11,760 --> 00:01:14,640 Speaker 1: mentioned green on equity screens this morning. Europe higher the 22 00:01:14,640 --> 00:01:17,240 Speaker 1: stock six hundred by five points one point six percent, 23 00:01:17,319 --> 00:01:19,560 Speaker 1: the Dacks is up a hundred and fifty three that's 24 00:01:19,560 --> 00:01:22,360 Speaker 1: one point seven percent, and look at Paris eighty one 25 00:01:22,400 --> 00:01:25,680 Speaker 1: points up almost two percent on the day. Futures in 26 00:01:25,720 --> 00:01:29,600 Speaker 1: the US are higher, SMP futures by fourteen three quarters 27 00:01:29,640 --> 00:01:32,360 Speaker 1: of a percent, about a seven tenths game for Dowie 28 00:01:32,400 --> 00:01:35,360 Speaker 1: Mini futures a hundred and six, Nasdaq futures up thirty 29 00:01:35,360 --> 00:01:38,360 Speaker 1: one three quarters of eight percent. The bond market little 30 00:01:38,440 --> 00:01:41,560 Speaker 1: change from yesterday morning, one point seven nine your tenure 31 00:01:41,640 --> 00:01:43,800 Speaker 1: yield the five year going for one point to three 32 00:01:44,240 --> 00:01:46,280 Speaker 1: seventy two basis points for the two year. We do 33 00:01:46,360 --> 00:01:49,800 Speaker 1: see some movement in currencies, with the dollar index touch lower, 34 00:01:50,160 --> 00:01:53,840 Speaker 1: the yen at the moment basically unchanged at one four 35 00:01:54,160 --> 00:01:57,680 Speaker 1: oh eight, and the euro one eleven eight little changed 36 00:01:57,720 --> 00:02:01,960 Speaker 1: as well. On the day. Oil everybody watching Oil West 37 00:02:02,000 --> 00:02:07,400 Speaker 1: Texas sixty eight cents two point three Brent crude n 38 00:02:07,920 --> 00:02:11,360 Speaker 1: cents higher. That's three percent, but as we have seen 39 00:02:11,840 --> 00:02:14,560 Speaker 1: over the last couple of days, that doesn't mean a 40 00:02:14,600 --> 00:02:19,679 Speaker 1: whole lot. Prices changes more US traders come into the marketplace, 41 00:02:19,720 --> 00:02:23,440 Speaker 1: so we'll track that throughout the morning for you. Volatility 42 00:02:23,720 --> 00:02:28,640 Speaker 1: is still high across basically all asset classes. The VIX 43 00:02:28,960 --> 00:02:35,200 Speaker 1: still above twenty eleven was the closed yesterday. Right now 44 00:02:35,320 --> 00:02:40,800 Speaker 1: the futures vixed. Futures are two down with green on 45 00:02:40,800 --> 00:02:43,320 Speaker 1: the screen, but still elevated, and certainly we are seeing 46 00:02:44,080 --> 00:02:47,840 Speaker 1: elevated volatility in bonds and currencies as well. The man 47 00:02:47,880 --> 00:02:52,520 Speaker 1: who tracts all that Dean Credit of Macro Risk Advisors, 48 00:02:52,639 --> 00:02:56,160 Speaker 1: good morning, Dean Um. Is the volatility? This is what 49 00:02:56,200 --> 00:02:57,639 Speaker 1: I wanted to ask you when I was listening to 50 00:02:57,680 --> 00:03:01,679 Speaker 1: you earlier with tom UH and surveillance TV. Is the 51 00:03:01,760 --> 00:03:05,040 Speaker 1: volatility we are seeing telling us the markets know something 52 00:03:05,840 --> 00:03:09,440 Speaker 1: or the markets don't know something. That's a great way 53 00:03:09,440 --> 00:03:11,639 Speaker 1: of framing. I think it's a combination of both. There's 54 00:03:11,680 --> 00:03:16,760 Speaker 1: definitely a UH question around uncertainty about the future. A 55 00:03:16,800 --> 00:03:19,160 Speaker 1: lot of it's just looking at the global economy, looking 56 00:03:19,200 --> 00:03:23,200 Speaker 1: for growth leadership, seeing how big a sponsor of global 57 00:03:23,240 --> 00:03:27,400 Speaker 1: growth China was and it's deceleration. UH is UH clear 58 00:03:27,440 --> 00:03:31,720 Speaker 1: in plain sight, as is the complications of its UH 59 00:03:31,919 --> 00:03:35,360 Speaker 1: policy and how it interacts with markets. From a communication standpoint. 60 00:03:35,760 --> 00:03:39,880 Speaker 1: I also think the volatility is a result of a 61 00:03:39,920 --> 00:03:44,400 Speaker 1: build up over many many years fed sponsored of carry trades. 62 00:03:44,480 --> 00:03:48,200 Speaker 1: And carry trade really is just simply a trade that 63 00:03:48,240 --> 00:03:51,200 Speaker 1: makes money most of the time, UH, and it feels 64 00:03:51,200 --> 00:03:55,240 Speaker 1: good along the way. But it's one that becomes increasingly 65 00:03:55,280 --> 00:03:58,240 Speaker 1: sponsored over time because it's it's sort of the easy money. 66 00:03:58,320 --> 00:04:02,040 Speaker 1: And then when the census changes, and it changes quickly, 67 00:04:02,520 --> 00:04:05,160 Speaker 1: there's a rush for the exits, and that creates volatility 68 00:04:05,160 --> 00:04:06,880 Speaker 1: and asset price. That's the problem we can't get rid of, 69 00:04:06,960 --> 00:04:10,120 Speaker 1: right because as long as the well Chuck Prince, you know, 70 00:04:10,240 --> 00:04:14,119 Speaker 1: you gotta keep dancing. And so anytime any central bank 71 00:04:14,200 --> 00:04:16,400 Speaker 1: wants to go the other way, we're gonna have this issue. Well, 72 00:04:16,440 --> 00:04:19,520 Speaker 1: I think the central banks have set up markets to UH. 73 00:04:20,400 --> 00:04:22,760 Speaker 1: The markets are the way in which central bank policy 74 00:04:22,800 --> 00:04:27,039 Speaker 1: manifests itself on on the economy. UH. This portfolio balanced 75 00:04:27,080 --> 00:04:30,440 Speaker 1: channel that the uh Bernanke was a big sponsor of, 76 00:04:30,520 --> 00:04:32,599 Speaker 1: yelling talks about it. In other words, if we can 77 00:04:32,920 --> 00:04:35,680 Speaker 1: make asset prices rise, there's a wealth effect, there's a 78 00:04:35,720 --> 00:04:38,680 Speaker 1: confidence effect that feeds back into the real economy, and 79 00:04:38,960 --> 00:04:43,080 Speaker 1: everyone's happy. I think it's particularly dangerous, especially when it 80 00:04:43,680 --> 00:04:46,640 Speaker 1: uh when it allows asset prices to get divorced from 81 00:04:46,680 --> 00:04:49,640 Speaker 1: underlying fundamentals. Dean current where this macro was goodvice. It's 82 00:04:49,640 --> 00:04:54,120 Speaker 1: good morning everyone, Bloomberg Surveillance with futures up. We're brought 83 00:04:54,160 --> 00:04:57,400 Speaker 1: to you by Investo. Don't settle for average in your 84 00:04:57,440 --> 00:05:00,839 Speaker 1: portfolio to invest go the right approach means investing with 85 00:05:01,000 --> 00:05:05,119 Speaker 1: high conviction. Find out more at investco dot com slash 86 00:05:05,480 --> 00:05:08,120 Speaker 1: high Conviction. A Dina mentioned earlier, I've never seen you 87 00:05:08,200 --> 00:05:11,960 Speaker 1: so cautious, really folding the real economy over into your 88 00:05:11,960 --> 00:05:15,039 Speaker 1: look at the financial world. Which which when you go 89 00:05:15,080 --> 00:05:18,200 Speaker 1: to the Bloomberg terminal, which is the series or the 90 00:05:18,240 --> 00:05:22,320 Speaker 1: function or the measurement of your volatile world that that 91 00:05:22,680 --> 00:05:26,160 Speaker 1: gives you that that that cause for concern. Well, I think, uh, 92 00:05:26,400 --> 00:05:29,640 Speaker 1: just a quick spin through some of the analytics. Yeah. 93 00:05:29,680 --> 00:05:32,280 Speaker 1: The v c A page is your cross asset dashboard. 94 00:05:32,320 --> 00:05:35,960 Speaker 1: It's looking at implied volatilities across not just equities, but 95 00:05:36,480 --> 00:05:40,320 Speaker 1: uh FX and commodities, which have been increasingly important as 96 00:05:40,880 --> 00:05:44,520 Speaker 1: UH leading indicators of where equity volatility is headed. UH. 97 00:05:44,600 --> 00:05:46,839 Speaker 1: Last year for US it was it was UH you 98 00:05:46,920 --> 00:05:50,480 Speaker 1: had distress in rate markets and FX markets and credit markets, 99 00:05:50,480 --> 00:05:52,840 Speaker 1: but you really didn't see the same in equity markets, 100 00:05:52,839 --> 00:05:55,840 Speaker 1: and for us, it just felt like equities were behind. 101 00:05:56,120 --> 00:05:57,600 Speaker 1: And I think a second page I just want to 102 00:05:57,640 --> 00:05:59,000 Speaker 1: point to. I look at it all the time. I 103 00:05:59,040 --> 00:06:02,040 Speaker 1: can't help but stare w b X, which is just 104 00:06:02,520 --> 00:06:06,120 Speaker 1: yields in Germany, I'm sorry, in the Eurozone. And you 105 00:06:06,160 --> 00:06:08,920 Speaker 1: click into the to your point and ten fully ten 106 00:06:08,960 --> 00:06:12,600 Speaker 1: countries have got negative nominal interest rates, and it just 107 00:06:12,640 --> 00:06:16,239 Speaker 1: speaks to the that's I've said it before, that's finance 108 00:06:16,279 --> 00:06:19,280 Speaker 1: turned upside down. You know. Negative nominal interest rates is 109 00:06:19,360 --> 00:06:21,919 Speaker 1: just not in the textbook, and it speaks to a dysfunction, 110 00:06:21,960 --> 00:06:24,400 Speaker 1: and I think a danger in the system. So let's go, Matthew, 111 00:06:24,440 --> 00:06:27,039 Speaker 1: from that beautiful walk through again. Those symbols, folks, w 112 00:06:27,320 --> 00:06:30,440 Speaker 1: b X Walter bob X Ray and v c A 113 00:06:30,720 --> 00:06:35,320 Speaker 1: Victor Charles Allen. V c A is to some two 114 00:06:35,560 --> 00:06:38,240 Speaker 1: blue word pages that Dean Karnet uses. If if you 115 00:06:38,320 --> 00:06:42,360 Speaker 1: go with on all this functionality, the underlying, Mathew nous 116 00:06:42,440 --> 00:06:45,719 Speaker 1: of your world is a Bell curve, is a Gaussian curve, 117 00:06:46,200 --> 00:06:49,360 Speaker 1: except everything you're describing has nothing to do with a 118 00:06:49,400 --> 00:06:52,640 Speaker 1: Bell curve. How out of whack is the present system 119 00:06:52,960 --> 00:06:56,440 Speaker 1: to the underlying mathematics. It's a great uh the way 120 00:06:56,480 --> 00:06:58,839 Speaker 1: that so, so the Bell curve is the basis for 121 00:06:58,880 --> 00:07:01,919 Speaker 1: option pricing, and at what do we know that the 122 00:07:02,440 --> 00:07:05,080 Speaker 1: you know, the distribution is not at all normal. You've 123 00:07:05,080 --> 00:07:07,200 Speaker 1: got the fat tails to to both the upside and 124 00:07:07,200 --> 00:07:09,960 Speaker 1: the downside. And I think it was yesterday, the day before, 125 00:07:10,000 --> 00:07:12,120 Speaker 1: the naked was up eight percent in a single day. 126 00:07:12,520 --> 00:07:16,360 Speaker 1: It's just nowhere in the Bell curve of outcomes that 127 00:07:16,360 --> 00:07:19,640 Speaker 1: that can happen. That's a you know, an upcrash in 128 00:07:19,680 --> 00:07:22,560 Speaker 1: a single day. Again, all coming back to a very 129 00:07:22,640 --> 00:07:27,320 Speaker 1: central bank dictated um market, you know, set set of outcomes. 130 00:07:27,320 --> 00:07:31,200 Speaker 1: And I think it speaks to an underlying interaction between 131 00:07:31,240 --> 00:07:34,680 Speaker 1: the real economy and the financial economy linked by central banks, 132 00:07:34,720 --> 00:07:38,520 Speaker 1: where uh, the adjustment process is not pretty right now. Uh, 133 00:07:38,560 --> 00:07:41,160 Speaker 1: And it's you know, it's it's a challenging one, especially 134 00:07:41,160 --> 00:07:44,040 Speaker 1: when the financial has become a bigger part of the 135 00:07:44,120 --> 00:07:47,360 Speaker 1: risk story. That's a particular concern for us right now. Well, yeah, 136 00:07:47,360 --> 00:07:50,720 Speaker 1: I was looking. Somebody pointed out today that the European 137 00:07:50,800 --> 00:07:54,040 Speaker 1: banks in the in the eurostock indecks, I think there's 138 00:07:54,080 --> 00:07:58,840 Speaker 1: forty of them, all of them have lost this year 139 00:07:59,320 --> 00:08:01,800 Speaker 1: and thirty eight of them have lost more than ten 140 00:08:02,600 --> 00:08:05,880 Speaker 1: of their value. So, um, it is a tough world 141 00:08:06,000 --> 00:08:11,840 Speaker 1: for the banks. What could regulators do, if anything, at 142 00:08:11,840 --> 00:08:14,960 Speaker 1: this point? Or have they created a hole so big 143 00:08:15,720 --> 00:08:19,400 Speaker 1: that there's no way to fill it? Very very tricky 144 00:08:19,480 --> 00:08:22,760 Speaker 1: for for policymakers. I think they've dug you know, quite 145 00:08:22,800 --> 00:08:27,240 Speaker 1: a hole here. And Uh said earlier Um on TV 146 00:08:27,400 --> 00:08:32,520 Speaker 1: that UM when the when Kuroda and drag both Um 147 00:08:33,080 --> 00:08:35,760 Speaker 1: suggests that there's no limit to what the central banks 148 00:08:35,800 --> 00:08:38,960 Speaker 1: can do, I think you start to get into a 149 00:08:39,000 --> 00:08:42,679 Speaker 1: credibility question where if the market isn't reacting in a 150 00:08:42,720 --> 00:08:46,319 Speaker 1: way that suggests the central banks are control, are in control, 151 00:08:46,920 --> 00:08:51,640 Speaker 1: then that skepticism will very quickly bleed back into asset prices. 152 00:08:51,679 --> 00:08:55,080 Speaker 1: And then again asset prices being the lever around which 153 00:08:55,280 --> 00:08:58,480 Speaker 1: central banks have tried to influence the real economy. If 154 00:08:58,520 --> 00:09:01,600 Speaker 1: that's not working, then you're you're gonna see an erosion 155 00:09:01,600 --> 00:09:03,839 Speaker 1: of risk sentiment that again can can feed on it. 156 00:09:03,920 --> 00:09:05,880 Speaker 1: Song you get back to v C A, there's different 157 00:09:05,920 --> 00:09:09,400 Speaker 1: asset categories there, which asset class gives you the best 158 00:09:09,640 --> 00:09:13,000 Speaker 1: value now and getting out front on where agitation is 159 00:09:13,000 --> 00:09:18,000 Speaker 1: going to go? Well, I think the crude is the 160 00:09:18,040 --> 00:09:20,480 Speaker 1: epicenter of so many risk outcomes. And I just was 161 00:09:20,520 --> 00:09:23,319 Speaker 1: looking at the implied volatility for three months, and crude 162 00:09:23,720 --> 00:09:25,960 Speaker 1: to the put side, you're in the eighties. To the 163 00:09:26,000 --> 00:09:28,520 Speaker 1: call side, you're in the high sixties. These are just 164 00:09:28,640 --> 00:09:32,160 Speaker 1: tremendous numbers that it's suggesting that crude is going to 165 00:09:32,280 --> 00:09:34,720 Speaker 1: move four to five percent a day. And of course 166 00:09:34,760 --> 00:09:37,480 Speaker 1: it has been UM. Where does that translate to and 167 00:09:37,520 --> 00:09:40,880 Speaker 1: where I think uncertainly is underpriced. I think it's underpriced 168 00:09:40,920 --> 00:09:43,840 Speaker 1: in the short end of the U S YELD curve. UM, 169 00:09:44,000 --> 00:09:48,960 Speaker 1: You've you've had trades where people are effectively betting that 170 00:09:49,000 --> 00:09:51,520 Speaker 1: the US will go to negative interest rate policy. You 171 00:09:51,559 --> 00:09:54,360 Speaker 1: can do that by way of your dollar options. So 172 00:09:54,400 --> 00:09:57,480 Speaker 1: you can buy the one strike call, which has been 173 00:09:57,520 --> 00:10:01,120 Speaker 1: trading in September and December expiration, and the pay out 174 00:10:01,120 --> 00:10:05,160 Speaker 1: of that only occurs if library nominal library is negative 175 00:10:05,160 --> 00:10:08,280 Speaker 1: at expiration. These are teenys, meaning that they are very 176 00:10:08,360 --> 00:10:10,800 Speaker 1: very cheap in price. I don't think it's an option 177 00:10:10,840 --> 00:10:13,320 Speaker 1: to sell. I think it's an option to buy UM 178 00:10:13,360 --> 00:10:16,000 Speaker 1: just because the leverage that's associated with it. And I 179 00:10:16,000 --> 00:10:17,920 Speaker 1: think the other part, the other side of it is 180 00:10:17,960 --> 00:10:19,920 Speaker 1: the FED goes quicker. We also look at this w 181 00:10:20,040 --> 00:10:22,880 Speaker 1: I r P page, which is the FED probabilities, and 182 00:10:22,960 --> 00:10:25,880 Speaker 1: the markets basically priced the FED out this year for 183 00:10:25,960 --> 00:10:28,840 Speaker 1: most next year as well. I think that's under prices. 184 00:10:29,240 --> 00:10:31,960 Speaker 1: Deans very valuable. Dean current whether this Macro Risk Advisors 185 00:10:32,000 --> 00:10:35,000 Speaker 1: giving us perspective on volatility. We'll try to get some 186 00:10:35,080 --> 00:10:38,080 Speaker 1: graphs and charts out of those functions out to you today. 187 00:10:38,120 --> 00:10:41,280 Speaker 1: Future's risk on is Michael he mentioned up thirteen down, 188 00:10:41,360 --> 00:10:47,000 Speaker 1: futures up West Texas up fifty two cents fifty very 189 00:10:47,080 --> 00:10:53,599 Speaker 1: Brent thirty three oh three. This hour of surveillance is 190 00:10:53,600 --> 00:10:55,840 Speaker 1: brought to you by a Muzda White Planes. Visit Muzda 191 00:10:55,920 --> 00:10:58,720 Speaker 1: white Planes dot com. Here's Michael R with news headlines. 192 00:10:58,840 --> 00:11:00,840 Speaker 1: Mike Tom, thank you very much. It is a battle 193 00:11:00,920 --> 00:11:04,560 Speaker 1: between privacy versus security. Apple says it will fight a 194 00:11:04,559 --> 00:11:07,400 Speaker 1: federal court or order directing the company to help the 195 00:11:07,520 --> 00:11:11,160 Speaker 1: FBI break into an encrypted iPhone belonging to one of 196 00:11:11,160 --> 00:11:14,880 Speaker 1: the San Bernardino shooters. Apple CEO Tim Cooks has such 197 00:11:14,920 --> 00:11:18,720 Speaker 1: action would have implications far beyond the legal case at hand. 198 00:11:19,120 --> 00:11:21,960 Speaker 1: Cook says the FBI is asking for the equivalent of 199 00:11:22,000 --> 00:11:25,560 Speaker 1: a master key capable of opening hundreds of millions of locks. 200 00:11:25,960 --> 00:11:28,360 Speaker 1: A convoy of eight trucks appears to be getting ready 201 00:11:28,360 --> 00:11:31,560 Speaker 1: to head into the besieged areas of Syria. The UN 202 00:11:31,600 --> 00:11:34,480 Speaker 1: says the government of President of Son has approved access 203 00:11:34,720 --> 00:11:38,080 Speaker 1: to seven of the estimated eighteen besieged areas. The South 204 00:11:38,160 --> 00:11:41,480 Speaker 1: Dakota Senate has approved a bill that would require transgender 205 00:11:41,480 --> 00:11:45,440 Speaker 1: students to use bathrooms and locker rooms that correspond to 206 00:11:45,480 --> 00:11:48,720 Speaker 1: their sex at birth. Global News twenty four hours a day, 207 00:11:48,800 --> 00:11:51,880 Speaker 1: powered by our two hundred journalists more than a hundred 208 00:11:51,920 --> 00:11:54,160 Speaker 1: fifty news bureaus from around the world. Not Michael bar 209 00:11:54,840 --> 00:11:57,040 Speaker 1: and Michael thanks so much. See yeah in one fourteen 210 00:11:57,400 --> 00:12:00,640 Speaker 1: zero one Michael McKee and Chim Key from New York 211 00:12:00,679 --> 00:12:07,120 Speaker 1: stay with its Bloomberg Surveillance. Bloomberg Surveillance is brought to 212 00:12:07,120 --> 00:12:09,600 Speaker 1: you by your tri State BMW centers. Visit them online 213 00:12:09,600 --> 00:12:12,160 Speaker 1: at Try State BMW dot Com. At BMW they make 214 00:12:12,200 --> 00:12:23,640 Speaker 1: only one thing, the ultimate driving machine. Global Business News 215 00:12:23,720 --> 00:12:26,599 Speaker 1: twenty four hours a day. It's Bloomberg dot Com, the 216 00:12:26,760 --> 00:12:29,839 Speaker 1: Radio plus Mobile Act and on your radio, this is 217 00:12:29,880 --> 00:12:33,400 Speaker 1: a Bloomberg Business Flash and I'm Karen Moscow. These updates 218 00:12:33,440 --> 00:12:35,920 Speaker 1: brought to you by eisener Amper. Does your accountant do 219 00:12:36,000 --> 00:12:38,760 Speaker 1: more than crunch numbers. Eisener Amper understands them. More of 220 00:12:38,760 --> 00:12:41,200 Speaker 1: their clients know, the better the outcome. That's why they've 221 00:12:41,200 --> 00:12:45,600 Speaker 1: created a personal tax guide free downloaded eisener Amper dot Com. 222 00:12:45,640 --> 00:12:49,400 Speaker 1: Slash strategies and futures this morning are higher with SNP 223 00:12:49,520 --> 00:12:52,360 Speaker 1: EVENI futures up thirteen points, Dow e Many futures up 224 00:12:52,400 --> 00:12:55,280 Speaker 1: ninety eight, NAS documenty futures up thirty two and the 225 00:12:55,360 --> 00:12:58,439 Speaker 1: acts in Germany up one percent ten Your Treasury down 226 00:12:58,480 --> 00:13:00,960 Speaker 1: five thirty seconds, the yeld one in seven eight percent, 227 00:13:01,360 --> 00:13:03,439 Speaker 1: Nimex screwed oil up one point nine per cent or 228 00:13:03,480 --> 00:13:07,120 Speaker 1: fifty four cents a barrel, comex goal down to ten 229 00:13:07,240 --> 00:13:09,640 Speaker 1: percent or a dollar seventy to twelve or six fifty 230 00:13:09,679 --> 00:13:12,000 Speaker 1: an ounce. And that's a Bloomberg Business flash. Tom and 231 00:13:12,040 --> 00:13:15,360 Speaker 1: Mike baron Moscow, thank you very much. Well, Tom, this 232 00:13:15,480 --> 00:13:18,000 Speaker 1: is a very exciting moment for me. When I started 233 00:13:18,040 --> 00:13:20,880 Speaker 1: as a young financial reporter on the other side of 234 00:13:20,880 --> 00:13:23,640 Speaker 1: that's building in Bloomberg News, they told me the guy 235 00:13:23,720 --> 00:13:25,960 Speaker 1: you want to be like is Jona Sara. He said, 236 00:13:25,960 --> 00:13:28,800 Speaker 1: a lot of people know the News but Joe reads 237 00:13:28,840 --> 00:13:33,080 Speaker 1: the documents, and Joe, Joe is here now because he 238 00:13:33,120 --> 00:13:37,560 Speaker 1: read the documents about the National Collegiate Athletic Association and 239 00:13:37,679 --> 00:13:39,920 Speaker 1: he did not like what he found. The result is 240 00:13:39,960 --> 00:13:43,320 Speaker 1: a book Indentured, the inside story of the Rebellion against 241 00:13:43,320 --> 00:13:47,559 Speaker 1: the n c Double A, along with Ben Strauss he uh, 242 00:13:47,640 --> 00:13:51,040 Speaker 1: and Ben is here as well. Uh, Joe, it took 243 00:13:51,040 --> 00:13:52,840 Speaker 1: me only a few pages in the book to become 244 00:13:52,880 --> 00:13:55,480 Speaker 1: sort of thoroughly disgusted. You make a very good case 245 00:13:55,559 --> 00:13:57,640 Speaker 1: that the n c Double A is basically on a 246 00:13:57,640 --> 00:14:00,640 Speaker 1: witch hunt against athletes, particularly poor black athletes, and they 247 00:14:00,679 --> 00:14:04,199 Speaker 1: get to decide who's a witch and what a witch is. Uh, 248 00:14:04,760 --> 00:14:07,160 Speaker 1: that's pretty much. And we started right off with chapter 249 00:14:07,240 --> 00:14:11,240 Speaker 1: one when we write about uh young Connecticut basketball player 250 00:14:11,559 --> 00:14:15,480 Speaker 1: who was in trouble with the n c A because 251 00:14:16,280 --> 00:14:19,960 Speaker 1: they were after his mother. His mother. Yeah, so many 252 00:14:20,000 --> 00:14:22,960 Speaker 1: of these stories are about players who had no idea 253 00:14:23,760 --> 00:14:26,120 Speaker 1: why the n c A was. They had done nothing 254 00:14:26,240 --> 00:14:28,800 Speaker 1: and they didn't know what others were doing around them. 255 00:14:28,800 --> 00:14:32,400 Speaker 1: The story of one who whose coach took money to 256 00:14:32,520 --> 00:14:35,600 Speaker 1: steer him to a college. He didn't know that. Uh, 257 00:14:35,640 --> 00:14:38,000 Speaker 1: that's right. In fact, that was I think you're talking 258 00:14:38,040 --> 00:14:42,400 Speaker 1: about Albert Means and in Alabama. Ben Ben can tell 259 00:14:42,440 --> 00:14:44,440 Speaker 1: that story a little bit better because he reported it. 260 00:14:44,800 --> 00:14:49,160 Speaker 1: But that kid was a sacrificial lamb because they were 261 00:14:49,200 --> 00:14:51,600 Speaker 1: trying to get a big time booster and they basically 262 00:14:51,680 --> 00:14:54,920 Speaker 1: destroyed his career in the process, right Ben, Yeah, he 263 00:14:55,080 --> 00:14:59,000 Speaker 1: was this this this this uh this stop rated uh 264 00:14:59,200 --> 00:15:04,360 Speaker 1: lineman out of Memphis, and and he was getting steered 265 00:15:04,360 --> 00:15:08,080 Speaker 1: to Alabama by this big booster who you know, was 266 00:15:08,320 --> 00:15:10,480 Speaker 1: rumored to have done this with a number of players 267 00:15:10,800 --> 00:15:14,360 Speaker 1: down there. And the SEC found out about it, and 268 00:15:14,440 --> 00:15:18,000 Speaker 1: instead of stepping in and and and telling the kid 269 00:15:18,080 --> 00:15:20,760 Speaker 1: what was going on, they they they let him take 270 00:15:20,760 --> 00:15:22,560 Speaker 1: the money. They let the family take the money just 271 00:15:22,600 --> 00:15:25,040 Speaker 1: so they could bust the booster. And and that's sort 272 00:15:25,040 --> 00:15:28,560 Speaker 1: of where the priorities are here. I would find it 273 00:15:28,600 --> 00:15:31,040 Speaker 1: hard to believe that without some kind of governing body 274 00:15:31,040 --> 00:15:33,080 Speaker 1: there wouldn't be corruption. You go back to the point 275 00:15:33,160 --> 00:15:35,920 Speaker 1: shaving scandals in the in the nineteen fifties. So how 276 00:15:35,920 --> 00:15:38,400 Speaker 1: did we get to this point? Well, the point shaving 277 00:15:38,440 --> 00:15:41,200 Speaker 1: standal is a good place to start. Uh. The n 278 00:15:41,200 --> 00:15:45,480 Speaker 1: c A was very young at the time when Kentucky 279 00:15:45,560 --> 00:15:48,960 Speaker 1: got caught in the point shaving scandal, and it proved 280 00:15:49,040 --> 00:15:52,400 Speaker 1: its power at its twenty nine year old new executive 281 00:15:52,400 --> 00:15:55,840 Speaker 1: director Walter Byers proved he was powerful because he got 282 00:15:55,920 --> 00:16:00,240 Speaker 1: every other school to agree not to play kent Key 283 00:16:00,280 --> 00:16:02,920 Speaker 1: basketball for a year. So that was an example of 284 00:16:02,920 --> 00:16:05,720 Speaker 1: the first what they called death penalty. Right, So suddenly 285 00:16:05,720 --> 00:16:09,000 Speaker 1: he's powerful and it goes on from there. He continues 286 00:16:09,040 --> 00:16:11,560 Speaker 1: to be powerful and he builds a powerful organization that 287 00:16:11,680 --> 00:16:14,680 Speaker 1: cares a lot about its power. Jonah Sarah and Ben 288 00:16:14,760 --> 00:16:17,600 Speaker 1: Stros with this indenture the inside story of the rebellion 289 00:16:17,680 --> 00:16:20,960 Speaker 1: against the n C Double A basketball player one Kareem 290 00:16:21,040 --> 00:16:24,360 Speaker 1: Abdul Jabbar says, I think it should be required reading. 291 00:16:24,440 --> 00:16:29,840 Speaker 1: Jonah Sarah page you talk about the University of Catholic America, 292 00:16:29,920 --> 00:16:33,960 Speaker 1: the fighting Irish for instance, to climb bowling invitations from 293 00:16:35,360 --> 00:16:39,160 Speaker 1: until nineteen sixty nine. If we need leadership to make 294 00:16:39,240 --> 00:16:43,760 Speaker 1: for a better student athlete n C Double A, whatever, 295 00:16:43,760 --> 00:16:46,200 Speaker 1: that better outcome is a good place to start with 296 00:16:46,320 --> 00:16:49,160 Speaker 1: the South at Indiana. What does Notre Dame need to 297 00:16:49,160 --> 00:16:52,120 Speaker 1: do to make for a better Jona Sera world. Well, 298 00:16:52,600 --> 00:16:55,680 Speaker 1: they're not gonna do it. Jack Swarburg, who is the 299 00:16:55,720 --> 00:16:58,280 Speaker 1: athletic director and one of the people in college sports 300 00:16:58,320 --> 00:17:02,200 Speaker 1: I most admire, I might add, has said that if 301 00:17:03,120 --> 00:17:06,200 Speaker 1: players players get paid, which is what I advocate, which 302 00:17:06,240 --> 00:17:08,640 Speaker 1: I think is just as an issue of plain fairness, 303 00:17:09,320 --> 00:17:12,040 Speaker 1: he says, you know, we won't be in Division one 304 00:17:12,080 --> 00:17:14,720 Speaker 1: anymore Stanford. By the way, I said the exact same thing. 305 00:17:15,080 --> 00:17:18,760 Speaker 1: They're so adamant about the current system being good for athletes, 306 00:17:18,800 --> 00:17:21,120 Speaker 1: and I think the current system is terrible for athletes. 307 00:17:21,160 --> 00:17:24,920 Speaker 1: That's uh where I divide and Ben and I divide 308 00:17:25,080 --> 00:17:28,400 Speaker 1: with most of the college sports establishment, the college sports establishment. 309 00:17:28,400 --> 00:17:30,720 Speaker 1: It works great for them, it doesn't work so great 310 00:17:30,760 --> 00:17:32,359 Speaker 1: for the plan quickly or I know Mike wants to 311 00:17:32,440 --> 00:17:34,639 Speaker 1: jump in quickly or do you you get responses from 312 00:17:34,640 --> 00:17:36,800 Speaker 1: an athletes saying you guys are wrong. The n C 313 00:17:36,880 --> 00:17:41,000 Speaker 1: double A knows what they're doing. Uh not especially uh 314 00:17:43,480 --> 00:17:45,760 Speaker 1: not especially I I talked to it to a number 315 00:17:45,800 --> 00:17:48,479 Speaker 1: of players, UM and and who who who want books, 316 00:17:48,480 --> 00:17:52,400 Speaker 1: who want to learn more? UM. I think athletes, uh, 317 00:17:52,440 --> 00:17:55,560 Speaker 1: they're they're often so focused on their sport that these issues, 318 00:17:55,680 --> 00:17:59,919 Speaker 1: these politics are not something that that that they pay attention. 319 00:18:00,119 --> 00:18:02,840 Speaker 1: I mean, even Sony Vacaro, you know, has told stories 320 00:18:02,880 --> 00:18:07,080 Speaker 1: about trying UM to to educate athletes, UM, sort of 321 00:18:07,119 --> 00:18:10,440 Speaker 1: about gambling issues and and other issues. And and oftentimes 322 00:18:10,720 --> 00:18:14,399 Speaker 1: you know, coaches and and athletic departments UH don't particularly 323 00:18:14,440 --> 00:18:18,040 Speaker 1: want their athletes to be as politically aware as as 324 00:18:18,080 --> 00:18:20,000 Speaker 1: even they would like to be. And when the union 325 00:18:20,480 --> 00:18:23,200 Speaker 1: UM issue was taking hold at Northwestern had this big 326 00:18:23,320 --> 00:18:28,000 Speaker 1: union drive, UM, you had other athletic departments, other football 327 00:18:28,040 --> 00:18:31,760 Speaker 1: coaches gathering their teams and telling them this is not 328 00:18:31,880 --> 00:18:34,240 Speaker 1: something you want to do your you know, your scholarships 329 00:18:34,240 --> 00:18:36,920 Speaker 1: will become tax this is this is a disaster when 330 00:18:36,960 --> 00:18:40,359 Speaker 1: when you know that wasn't necessarily true. But but the 331 00:18:40,400 --> 00:18:44,200 Speaker 1: idea is to is to um keep them perhaps less 332 00:18:44,240 --> 00:18:47,440 Speaker 1: informed than they should be. Only got one minute left, Joe, 333 00:18:47,800 --> 00:18:49,680 Speaker 1: But I gotta ask, and I don't think I don't 334 00:18:49,680 --> 00:18:52,439 Speaker 1: want to know the answer. But why do the college 335 00:18:52,480 --> 00:18:55,680 Speaker 1: presidents who who profess their goal is to educate students 336 00:18:55,680 --> 00:18:59,640 Speaker 1: put up with this? Because it's big money? Uh and 337 00:18:59,680 --> 00:19:02,800 Speaker 1: because as their board of prestees often think of themselves 338 00:19:02,960 --> 00:19:06,600 Speaker 1: as being the Jerry Joneses of college sports. Uh, this 339 00:19:06,760 --> 00:19:09,119 Speaker 1: is really true. The trustees care more about football and 340 00:19:09,160 --> 00:19:13,399 Speaker 1: they care about the history department. UH. And because it 341 00:19:13,600 --> 00:19:17,520 Speaker 1: really generates money for the school. There's there's all kinds 342 00:19:17,560 --> 00:19:20,639 Speaker 1: of reasons, and they delude themselves. One of the things, 343 00:19:20,960 --> 00:19:25,240 Speaker 1: university presidents delude themselves into thinking that they're giving the 344 00:19:25,359 --> 00:19:29,120 Speaker 1: athletes a fair bargain because they get an education. And 345 00:19:29,160 --> 00:19:34,080 Speaker 1: we all know that in way too many cases, they're 346 00:19:34,080 --> 00:19:36,879 Speaker 1: not getting a real education. They're majoring in what I 347 00:19:36,960 --> 00:19:40,200 Speaker 1: like to call eligibility, just taking the kind of courses 348 00:19:40,840 --> 00:19:43,760 Speaker 1: or enough courses to stay on the field. And that 349 00:19:43,800 --> 00:19:46,040 Speaker 1: make no rhyme or reason if you actually care about 350 00:19:46,040 --> 00:19:49,920 Speaker 1: a major or getting skills for life. Jonah Sarah, thank 351 00:19:49,960 --> 00:19:52,439 Speaker 1: you so much. Ben Streuss, thank you so much. Indentured 352 00:19:52,680 --> 00:19:55,880 Speaker 1: the inside story of the rebellion against the n C 353 00:19:55,960 --> 00:20:00,200 Speaker 1: double A blistering and entertaining stay with the SMA. More 354 00:20:00,400 --> 00:20:07,119 Speaker 1: of Bloomberg Surveillance. Bloomberg Surveillance brought to you by the 355 00:20:07,160 --> 00:20:09,760 Speaker 1: Jewish Community Fund j c F donor advised fund is 356 00:20:09,800 --> 00:20:12,360 Speaker 1: the smart and efficient choice to manage your philanthropy. Called 357 00:20:12,359 --> 00:20:15,439 Speaker 1: to one to seven, five to eight to seven seven 358 00:20:23,520 --> 00:20:27,800 Speaker 1: broadcasting live to New York, Bloomberg eleventh, Rio to Washington, 359 00:20:27,880 --> 00:20:32,919 Speaker 1: d C. Bloomberg to Boston, Bloomberg twelve on to San Francisco, 360 00:20:33,040 --> 00:20:37,200 Speaker 1: Bloomberg nine to the Country Series Exam Channel one ninety 361 00:20:37,400 --> 00:20:40,920 Speaker 1: and around the globe the Bloomberg Radio plus Aben Bloomberg 362 00:20:40,920 --> 00:20:45,360 Speaker 1: dot Com. This is Bloomberg Surveillance. Good morning at seventh 363 00:20:45,359 --> 00:20:48,600 Speaker 1: thirty on Wall Street. I Michael McKee along with Tom Keene. 364 00:20:48,640 --> 00:20:51,320 Speaker 1: Where two hours away from the start of maybe what 365 00:20:51,480 --> 00:20:54,159 Speaker 1: could be the third update in a row, which is 366 00:20:54,200 --> 00:20:57,480 Speaker 1: something we haven't said in a long time. Some corporate 367 00:20:57,520 --> 00:21:01,040 Speaker 1: news that will be watching during the day. Credit Agricole 368 00:21:01,119 --> 00:21:03,040 Speaker 1: says it will sell back shares and more than three 369 00:21:03,040 --> 00:21:05,480 Speaker 1: dozen French regional banks going to show up capital pave 370 00:21:05,560 --> 00:21:08,280 Speaker 1: the way for all cash dividends. They also posted fourth 371 00:21:08,359 --> 00:21:11,119 Speaker 1: quarter earnings that beat estimates, and that's one reason Europe 372 00:21:11,520 --> 00:21:15,040 Speaker 1: is higher this morning. The stock six by six points 373 00:21:15,040 --> 00:21:18,600 Speaker 1: one point seven. Bombardier says it planned to cut about 374 00:21:18,680 --> 00:21:22,600 Speaker 1: seven thousand jobs. It reported fourth quarter profit that fell 375 00:21:22,680 --> 00:21:27,800 Speaker 1: short of analyst estimates. Anglo Americans credit assessment cut to junk, 376 00:21:27,920 --> 00:21:30,240 Speaker 1: a negative outlook by Fitch Ratings. The miners trying to 377 00:21:30,240 --> 00:21:33,359 Speaker 1: reduce its asset based and trim debt. Company's rating reduced 378 00:21:33,400 --> 00:21:37,840 Speaker 1: to double B plus from triple B minus. Now let's 379 00:21:37,920 --> 00:21:40,520 Speaker 1: check in with Michael barr and get the latest world 380 00:21:40,600 --> 00:21:43,600 Speaker 1: in national headlines, Michael, Mike Don, thank you very much. 381 00:21:43,680 --> 00:21:45,800 Speaker 1: Apple has rejected a cord at order to help the 382 00:21:45,920 --> 00:21:49,760 Speaker 1: FBI unlock an iPhone used by one of the shooters 383 00:21:50,040 --> 00:21:54,120 Speaker 1: in the San Bernardino, California attack. Apple CEO Tim Cook 384 00:21:54,240 --> 00:21:58,120 Speaker 1: argues that such a move would undermine encryption by creating 385 00:21:58,119 --> 00:22:01,720 Speaker 1: a backdoor that could potentially be used on other future devices. 386 00:22:02,160 --> 00:22:05,880 Speaker 1: Bernie Sanders fired back at Bill Clinton's latest comments after 387 00:22:05,920 --> 00:22:09,320 Speaker 1: the former presidents seemed to compare Sanders to the Tea Party, 388 00:22:09,520 --> 00:22:11,960 Speaker 1: claiming he is just telling people what they want to 389 00:22:12,000 --> 00:22:15,439 Speaker 1: hear on the campaign trail. Sanders spoke on Bloomberg TV's 390 00:22:15,480 --> 00:22:18,359 Speaker 1: with all due respect, well, I think it's unfortunate. I 391 00:22:18,400 --> 00:22:20,919 Speaker 1: think because some of the things that the President Clinton 392 00:22:20,960 --> 00:22:25,520 Speaker 1: hasn't been saying are unfortunate. I do understand obviously he's 393 00:22:25,560 --> 00:22:29,240 Speaker 1: trying to do his best to get his wife to 394 00:22:29,280 --> 00:22:31,679 Speaker 1: win the nomination and become president. I understand that my 395 00:22:31,720 --> 00:22:34,280 Speaker 1: wife is doing our best to try to get me 396 00:22:34,359 --> 00:22:37,000 Speaker 1: to become president. But we should not be making silly remarks. 397 00:22:37,280 --> 00:22:39,840 Speaker 1: A German short haired pointer has one vest in show 398 00:22:39,880 --> 00:22:42,280 Speaker 1: at the Westminster Kennel Club. Dog show in New York's 399 00:22:42,280 --> 00:22:45,000 Speaker 1: Madison Square Garden. The three year old dog named c 400 00:22:45,240 --> 00:22:47,960 Speaker 1: Jade beat about twenty seven hundred entrants to win the 401 00:22:48,000 --> 00:22:50,520 Speaker 1: top prize. Global name was twenty four hours a day, 402 00:22:50,600 --> 00:22:53,840 Speaker 1: powered by our two hundred journalists more than a hundred 403 00:22:53,880 --> 00:22:57,520 Speaker 1: fifty news bureaus from around the world. Now, MICHAELA Bar Mike, Tom, 404 00:22:57,640 --> 00:22:59,679 Speaker 1: thank you, I got time Now for the Ray Katina 405 00:22:59,720 --> 00:23:04,080 Speaker 1: Auto Group, Bloomberg NBC Sports Update. Here's John Stash John alright, Mike. 406 00:23:04,119 --> 00:23:06,920 Speaker 1: Running the Brooklyn Nets not an easy job. The team's bad. 407 00:23:06,960 --> 00:23:09,040 Speaker 1: They've traded away most of their draft picks. The Nets 408 00:23:09,040 --> 00:23:11,879 Speaker 1: have reportedly offered their general manager job to sin Antonio 409 00:23:11,920 --> 00:23:15,639 Speaker 1: assistant GM Shawn Marks, and he's designed whether to accept 410 00:23:15,720 --> 00:23:18,080 Speaker 1: the gig. Marks was a journeyman player the Nets light 411 00:23:18,160 --> 00:23:20,919 Speaker 1: that he comes from the Spurs. Nets and Knicks returned 412 00:23:20,920 --> 00:23:23,439 Speaker 1: to the All Star Break to meet Friday trade deadline. Tomorrow. 413 00:23:23,560 --> 00:23:25,600 Speaker 1: Rockets said to be tough with the Charlotte Hornets about 414 00:23:25,600 --> 00:23:28,199 Speaker 1: a Dwight Howard trade NHL. At the Rock Flyers and 415 00:23:28,240 --> 00:23:31,040 Speaker 1: Devil's close game most of the way to two under 416 00:23:31,119 --> 00:23:33,119 Speaker 1: nine minutes left, he asked to hustle and two boys 417 00:23:33,160 --> 00:23:35,160 Speaker 1: and stat the act and he does, and now four 418 00:23:35,280 --> 00:23:38,159 Speaker 1: check across ice. Here's your ruin Drew swerving in the 419 00:23:38,200 --> 00:23:47,560 Speaker 1: middle off the shed on CSN. They scored again fifty 420 00:23:47,600 --> 00:23:49,399 Speaker 1: seconds later, went on to end the Devil's three game 421 00:23:49,440 --> 00:23:52,520 Speaker 1: win streak six to three. Rutgers now oh and thirteen 422 00:23:52,600 --> 00:23:54,920 Speaker 1: and the Big Ten blown out at Illinois eight two 423 00:23:55,000 --> 00:23:58,600 Speaker 1: sixty six. With the Bloomberg NBC Sports Update, I'm John Stashell. 424 00:23:59,600 --> 00:24:02,439 Speaker 1: Thank you, John, as we mentioned the possibility of an 425 00:24:02,520 --> 00:24:05,760 Speaker 1: update today. With SMP futures up fourteen points, looks like 426 00:24:05,960 --> 00:24:09,920 Speaker 1: a at least an open higher seven tenths of eight percent. 427 00:24:10,359 --> 00:24:13,159 Speaker 1: Over in Europe, the foot seas up by ninety seven 428 00:24:13,200 --> 00:24:16,200 Speaker 1: points right now, one point seven percent. To CAC forty 429 00:24:16,320 --> 00:24:20,320 Speaker 1: is up by eighty seven two point one percent. The 430 00:24:20,359 --> 00:24:24,639 Speaker 1: pound one three oh four. Hey, we'll call it unchanged. 431 00:24:24,680 --> 00:24:26,359 Speaker 1: Coming up in just a few moments, we'll talk with 432 00:24:26,640 --> 00:24:30,080 Speaker 1: Sir Martin Sorrel about the business role in the whole 433 00:24:30,080 --> 00:24:34,120 Speaker 1: Brexit debate that will have an impact on that currency. Certainly, 434 00:24:38,520 --> 00:24:42,760 Speaker 1: this is Bloomberg Surmounts. I'm Michael mckeey along with Tom Kane. 435 00:24:42,920 --> 00:24:46,320 Speaker 1: We're looking at SMP futures hied by thirteen points right now, 436 00:24:46,400 --> 00:24:49,920 Speaker 1: seven tenths of a percent. Dow futures one and one 437 00:24:50,000 --> 00:24:52,880 Speaker 1: points higher. That's six tenths of a percent of NASDAC 438 00:24:53,400 --> 00:24:55,639 Speaker 1: is your winner on the day so far, eight tenths higher, 439 00:24:55,920 --> 00:24:58,160 Speaker 1: thirty four points the stock six hundred in Europe six 440 00:24:58,200 --> 00:25:02,040 Speaker 1: points higher, one point eight per cent. Time now for 441 00:25:02,080 --> 00:25:04,840 Speaker 1: the Bloomberg n j I T STEM Report, brought to 442 00:25:04,840 --> 00:25:07,720 Speaker 1: you by New Jersey Institute of Technology, partnering with government 443 00:25:07,720 --> 00:25:11,160 Speaker 1: and industry to apply the university's world class research assets 444 00:25:11,200 --> 00:25:14,200 Speaker 1: to innovate and spur economic growth. Learn more at n 445 00:25:14,280 --> 00:25:17,760 Speaker 1: j I T dot edu. Here's Bob Michael, thank you, 446 00:25:17,840 --> 00:25:20,200 Speaker 1: And at seven thirty four on Wall Street, here's what's 447 00:25:20,240 --> 00:25:24,040 Speaker 1: making news and science, technology, engineering and math. For years, 448 00:25:24,200 --> 00:25:27,840 Speaker 1: Israel's vaunted high tech sector has been the main engine 449 00:25:27,880 --> 00:25:30,720 Speaker 1: of economic growth there, but the country's finance minister is 450 00:25:30,760 --> 00:25:33,600 Speaker 1: warning in a new report that Israel is witnessing a 451 00:25:33,720 --> 00:25:37,280 Speaker 1: slowdown that may have longstanding impact on the country's global 452 00:25:37,320 --> 00:25:40,480 Speaker 1: position as a leader in innovation. The ministry points out 453 00:25:40,520 --> 00:25:43,920 Speaker 1: that an international ranking of the percentage of GDP spent 454 00:25:44,000 --> 00:25:47,920 Speaker 1: on research and development showed South Korea knocking Israel out 455 00:25:47,920 --> 00:25:50,680 Speaker 1: of first place. That according to the Organization for Economic 456 00:25:50,680 --> 00:25:54,720 Speaker 1: Cooperation and Development, Technology, even as it slows, still accounts 457 00:25:54,760 --> 00:25:58,800 Speaker 1: fort of the country's exports, which make up about a 458 00:25:58,840 --> 00:26:01,720 Speaker 1: third of Israel's g d P according to government figures. 459 00:26:01,920 --> 00:26:06,080 Speaker 1: Alphabets Inc. Pulled Google's five year old think tank under 460 00:26:06,119 --> 00:26:09,880 Speaker 1: its corporate umbrella and renamed it Jigsaw. Jigsaw also will 461 00:26:09,920 --> 00:26:13,280 Speaker 1: become a technology incubator and will be led by Jared Cohen, 462 00:26:13,520 --> 00:26:17,720 Speaker 1: a close confidant of Alphabet chairman Eric Schmidt. And that's 463 00:26:17,760 --> 00:26:20,640 Speaker 1: this morning's Bloomberg and j I T. Stem Report. I'd 464 00:26:20,640 --> 00:26:22,840 Speaker 1: like to know the thinking behind the innovation of these 465 00:26:22,920 --> 00:26:27,520 Speaker 1: names Alphabet, Jigsaw, Google, Tom what can we call surveillance? 466 00:26:29,600 --> 00:26:33,760 Speaker 1: I'm not there, cheers something like, yeah, it's still Google 467 00:26:33,840 --> 00:26:37,920 Speaker 1: to us. Thank you much, uh joining us right now 468 00:26:38,400 --> 00:26:40,560 Speaker 1: for the for a good part. That's have our smartin swirl. 469 00:26:40,800 --> 00:26:42,880 Speaker 1: There's a million ways to go, but I want to start. 470 00:26:43,240 --> 00:26:46,359 Speaker 1: It's nice to have you here. In radio. What does 471 00:26:46,560 --> 00:26:49,600 Speaker 1: w PP do with radio? That the death of radio 472 00:26:49,680 --> 00:26:55,080 Speaker 1: has been cited, we continue to invest reasonably heavily in radio. 473 00:26:55,080 --> 00:26:58,800 Speaker 1: Actually it's one of those uh areas. Actually, interestingly, the 474 00:26:58,840 --> 00:27:01,960 Speaker 1: Mary Meek Day to you believe it you know, time 475 00:27:02,040 --> 00:27:05,119 Speaker 1: spent versus investment by the industry, it's pretty much an 476 00:27:05,119 --> 00:27:08,840 Speaker 1: equilibrium actually um and of course there is there has 477 00:27:08,880 --> 00:27:12,560 Speaker 1: been been significant developments in digital radio, so so radio 478 00:27:12,600 --> 00:27:15,879 Speaker 1: has become a a medium, which said that did to 479 00:27:16,200 --> 00:27:18,280 Speaker 1: new technology in an effective way. So I would say 480 00:27:18,880 --> 00:27:23,560 Speaker 1: radio continues to be a force, albeit on a smaller scale. Obviously, 481 00:27:23,560 --> 00:27:25,840 Speaker 1: in another it spent four minutes. We've got a lot 482 00:27:26,200 --> 00:27:27,879 Speaker 1: of other time and a lot of other themes to 483 00:27:27,920 --> 00:27:30,880 Speaker 1: talk about. But really Brexit is finally frightened center. It's 484 00:27:30,880 --> 00:27:35,480 Speaker 1: been built up, it will be un Give us a 485 00:27:35,480 --> 00:27:38,480 Speaker 1: steal gets done. Give us a primer on how the 486 00:27:38,560 --> 00:27:45,000 Speaker 1: United Kingdom people view the elites raging about this issue. Well, 487 00:27:45,040 --> 00:27:48,159 Speaker 1: you can talk about elites raging in the in the 488 00:27:48,280 --> 00:27:50,439 Speaker 1: US context as well. I mean it's sort of similar. 489 00:27:50,640 --> 00:27:53,840 Speaker 1: So there's a strong populist element to what's going on. 490 00:27:53,880 --> 00:27:57,520 Speaker 1: The rise of the UK, the UK Independence Party Nigel 491 00:27:57,600 --> 00:28:01,280 Speaker 1: Farage in terms of vote, if not in seats in Parliament, 492 00:28:01,800 --> 00:28:04,280 Speaker 1: is indicative of this popular surge that we've seen not 493 00:28:04,400 --> 00:28:06,840 Speaker 1: just in the United States, but in Italy and Spain 494 00:28:06,920 --> 00:28:11,200 Speaker 1: and Greece and Portugal and indeed the UK and France. 495 00:28:12,000 --> 00:28:14,639 Speaker 1: To the extremes, but if you look at it in 496 00:28:14,720 --> 00:28:17,920 Speaker 1: terms of the Brexit debate, we probably will have. I 497 00:28:17,960 --> 00:28:20,360 Speaker 1: think the odds are that the Prime Minister will will 498 00:28:20,480 --> 00:28:24,080 Speaker 1: come away with a deal. Seemed to get the backing 499 00:28:24,119 --> 00:28:29,000 Speaker 1: of Anglo Merkele at the dinner last week and in 500 00:28:29,040 --> 00:28:31,000 Speaker 1: the early part of this week's on the assumption that 501 00:28:31,040 --> 00:28:34,679 Speaker 1: we get some sort of deal and negotiated by by 502 00:28:34,840 --> 00:28:36,960 Speaker 1: Prime Minister, that he probably will go to the country 503 00:28:37,040 --> 00:28:40,640 Speaker 1: in June, which is a good thing. I think most 504 00:28:40,960 --> 00:28:44,680 Speaker 1: pundits thought that that having the referendum, he was committed 505 00:28:44,720 --> 00:28:47,840 Speaker 1: to a referendum either two thousand sixteen or seventeen. Having 506 00:28:47,880 --> 00:28:53,040 Speaker 1: the referendum early, the immigrant crisis continues to boil as 507 00:28:53,120 --> 00:28:56,480 Speaker 1: you as you know that all the terrible the catastrophic 508 00:28:56,560 --> 00:29:00,920 Speaker 1: events surrounding that, and if that carries on through the summer, 509 00:29:00,920 --> 00:29:03,440 Speaker 1: which it will do. To have the referendum in front 510 00:29:03,440 --> 00:29:07,080 Speaker 1: of that, I think tactically for the pro camp in 511 00:29:07,160 --> 00:29:09,240 Speaker 1: the words, staying in it is more thing as far 512 00:29:09,280 --> 00:29:11,160 Speaker 1: as the population has come from the polls, if you 513 00:29:11,240 --> 00:29:14,560 Speaker 1: believe the polls anymore. Tom Obviously they were discredited to 514 00:29:14,640 --> 00:29:18,320 Speaker 1: some extent in the last election, but if their directionally 515 00:29:18,760 --> 00:29:20,600 Speaker 1: true what we've got is about a third of the 516 00:29:20,640 --> 00:29:23,800 Speaker 1: population saying they want to stay in, the third stay out, 517 00:29:24,160 --> 00:29:26,000 Speaker 1: and a third don't know. And of the third that 518 00:29:26,040 --> 00:29:29,160 Speaker 1: don't know, very interestingly, most of them say they don't 519 00:29:29,160 --> 00:29:31,840 Speaker 1: have sufficient information. Said the campaign, which I think is 520 00:29:31,840 --> 00:29:35,080 Speaker 1: a nine week campaign in member rightly which a maximum 521 00:29:35,080 --> 00:29:37,640 Speaker 1: of seven million pounds or ten million dollars can be 522 00:29:37,680 --> 00:29:41,600 Speaker 1: spent by either side, So there's there's campaign funds limitation 523 00:29:42,120 --> 00:29:45,080 Speaker 1: means that the campaign is going to be extremely important 524 00:29:45,080 --> 00:29:46,920 Speaker 1: in swaying opinion. At the moment, I think the polls 525 00:29:46,920 --> 00:29:50,800 Speaker 1: actually showing a slight majority in favor of coming out. 526 00:29:51,840 --> 00:29:54,480 Speaker 1: But of course if we came out, that would sort 527 00:29:54,520 --> 00:29:59,480 Speaker 1: of dissemble or disaggregate the United Kingdom because Scotland, for example, 528 00:30:00,240 --> 00:30:02,479 Speaker 1: Quoth made it quite clear that they want to stay in, 529 00:30:03,200 --> 00:30:07,080 Speaker 1: as there's Whales and other parts of the United Kingdom too. 530 00:30:07,160 --> 00:30:11,360 Speaker 1: So what we have is a quite a potentially difficult situation. 531 00:30:11,720 --> 00:30:14,920 Speaker 1: To put it mildly explosive situation, I would say, if 532 00:30:15,680 --> 00:30:18,520 Speaker 1: we vote to come out, because these are these are 533 00:30:18,560 --> 00:30:22,120 Speaker 1: areas that are unplumbed that we have, we are unaware 534 00:30:22,120 --> 00:30:24,239 Speaker 1: of what the consequences will be if we came out. 535 00:30:24,280 --> 00:30:30,240 Speaker 1: For example, we'd have to negotiate tens dozens of bilateral 536 00:30:30,280 --> 00:30:33,760 Speaker 1: trade agreements which would take years to sort out, and 537 00:30:33,880 --> 00:30:35,760 Speaker 1: so in places of the UK, certainly in the short 538 00:30:35,840 --> 00:30:37,760 Speaker 1: term in a very different position, and those Premier sum 539 00:30:37,800 --> 00:30:42,760 Speaker 1: Martin sorrel or a primer on his certainly primer you 540 00:30:42,920 --> 00:30:49,240 Speaker 1: call a primer a headline. The headline Angel says they're 541 00:30:49,240 --> 00:30:53,440 Speaker 1: aiming for an anti Brexit deal as early as Thursday. 542 00:30:53,480 --> 00:30:56,880 Speaker 1: There's just crossing now, so finally heating up. And for instance, 543 00:30:56,920 --> 00:30:59,400 Speaker 1: the Quasbon on this every day are United Kingdom and 544 00:31:00,280 --> 00:31:02,680 Speaker 1: now it's become a really fun and center for everyone. 545 00:31:02,720 --> 00:31:05,160 Speaker 1: We're gonna come back with Sir Martin. Talked to him 546 00:31:05,160 --> 00:31:08,520 Speaker 1: about a number of things, maybe including European banking. Michael 547 00:31:08,560 --> 00:31:11,800 Speaker 1: McKee will lead to charge the futures up fourteen down, 548 00:31:11,840 --> 00:31:14,600 Speaker 1: Futures up one oh seven from New York with Sir 549 00:31:14,720 --> 00:31:22,320 Speaker 1: Martin Sorel Bloomberg Surveillance. Stay with us. Bloomberg Surveillance is 550 00:31:22,320 --> 00:31:24,320 Speaker 1: brought to you by s c n B, the Bank 551 00:31:24,400 --> 00:31:26,440 Speaker 1: for Business. It's on the move. Are you looking for 552 00:31:26,480 --> 00:31:28,920 Speaker 1: the right banking partner? Go to sc NB dot com 553 00:31:29,000 --> 00:31:31,120 Speaker 1: to learn more. Now open in long Island City. Get 554 00:31:31,160 --> 00:31:38,760 Speaker 1: your business moving with sc n B Global Business News 555 00:31:38,840 --> 00:31:41,720 Speaker 1: twenty four hours a day at Bloomberg dot com, the 556 00:31:41,880 --> 00:31:44,960 Speaker 1: Radio plus Mobile Act and on your radio. This is 557 00:31:45,000 --> 00:31:48,840 Speaker 1: a Bloomberg Business Flash and I'm Karin Moscow. This updates 558 00:31:48,840 --> 00:31:51,120 Speaker 1: brought to you by Sector spidery t F to why 559 00:31:51,200 --> 00:31:53,000 Speaker 1: buy a single stock when you can invest in the 560 00:31:53,160 --> 00:31:56,320 Speaker 1: entire sector? Visits sector s p d r s dot 561 00:31:56,360 --> 00:32:00,320 Speaker 1: com are called sector e t F E of stock 562 00:32:00,320 --> 00:32:03,400 Speaker 1: index futures are higher, signaling equities will extend gains into 563 00:32:03,400 --> 00:32:06,200 Speaker 1: a third day. On growing speculation that the recent sell 564 00:32:06,240 --> 00:32:09,240 Speaker 1: off was overdone, we checked the markets every fifteen minutes 565 00:32:09,280 --> 00:32:12,400 Speaker 1: throughout the trading day. On Bloomberg snp E mini futures 566 00:32:12,440 --> 00:32:15,160 Speaker 1: of fifteen points, Dowie Mini futures of a hundred twelve, 567 00:32:15,440 --> 00:32:18,400 Speaker 1: NAZ documuni futures of forty two. The decks in Germany's 568 00:32:18,400 --> 00:32:21,160 Speaker 1: of one point nine percent ten, your treasury down seven 569 00:32:21,200 --> 00:32:24,400 Speaker 1: thirty seconds, the yield one point seven nine percent. Nimex 570 00:32:24,400 --> 00:32:26,800 Speaker 1: screwed oil of two point two percent or sixty four 571 00:32:26,840 --> 00:32:29,800 Speaker 1: cents to twenty nine sixty eight barrel comex go down 572 00:32:29,840 --> 00:32:32,080 Speaker 1: to ten per cent or two dollars, ninety cents to 573 00:32:32,160 --> 00:32:34,800 Speaker 1: twelve oh five thirty an ounce the euro and dollar 574 00:32:34,840 --> 00:32:37,960 Speaker 1: eleven forty five. The N one fourteen point one one 575 00:32:38,400 --> 00:32:40,760 Speaker 1: price line group of more than ten percent this morning 576 00:32:40,760 --> 00:32:43,720 Speaker 1: after reporting fourth quarter of profit that beat analysts estimates. 577 00:32:44,000 --> 00:32:47,200 Speaker 1: T Mobile US reported rising profit and predicted as many 578 00:32:47,240 --> 00:32:50,520 Speaker 1: as three point four million new subscribers for this year 579 00:32:50,920 --> 00:32:54,200 Speaker 1: as promotions like free video streaming helped the third largest 580 00:32:54,240 --> 00:32:57,560 Speaker 1: US wireless carrier post a sixth straight quarter of adding 581 00:32:57,560 --> 00:33:00,560 Speaker 1: more than one million new monthly users. And that's a 582 00:33:00,560 --> 00:33:03,880 Speaker 1: Bloomberg business flash. Tom and Mike Karen, thanks so much. 583 00:33:03,880 --> 00:33:07,040 Speaker 1: Good morning everyone. The future is up fifteen Mike, um Craig, 584 00:33:07,600 --> 00:33:10,840 Speaker 1: Moffatt Nathanson. Quote in the journal today is the valuation 585 00:33:10,920 --> 00:33:16,440 Speaker 1: of media companies. My great South is cable valuations, my 586 00:33:16,560 --> 00:33:20,680 Speaker 1: great North. It's sort of just a whole restructuring or revaluation, 587 00:33:21,240 --> 00:33:25,640 Speaker 1: repricing within the media industry. Yeah. Well it does look 588 00:33:25,680 --> 00:33:31,440 Speaker 1: like well we're seeing the whole world of advertising and 589 00:33:31,680 --> 00:33:37,880 Speaker 1: media upended. Um chord cutting and uh, let's it's not 590 00:33:37,960 --> 00:33:41,480 Speaker 1: just three channels and Tom and Mike on the radio anymore, 591 00:33:41,560 --> 00:33:45,640 Speaker 1: young man. I remember two channels? Oh, I remember one? 592 00:33:45,880 --> 00:33:50,840 Speaker 1: John Tucker remembers one channel. There you go. This is 593 00:33:50,920 --> 00:33:55,600 Speaker 1: k d K A Pittsburgh. Uh. Well, let's start with 594 00:33:55,760 --> 00:33:59,680 Speaker 1: a board general question. Sbart advertising as a leading indicator. 595 00:33:59,720 --> 00:34:04,960 Speaker 1: What's your business telling you about the US and global 596 00:34:05,080 --> 00:34:08,640 Speaker 1: economies at this point? Yeah, we are leading into here, 597 00:34:08,680 --> 00:34:12,840 Speaker 1: we're leading indicator. I think when when people are worried 598 00:34:12,880 --> 00:34:15,680 Speaker 1: about things, so we get the worst of that world, 599 00:34:15,719 --> 00:34:17,000 Speaker 1: and then we get the worst of the other world. 600 00:34:17,040 --> 00:34:19,919 Speaker 1: When they think things are going to turn up, they 601 00:34:19,960 --> 00:34:22,440 Speaker 1: wait to increase their spending. However, I think there has 602 00:34:22,480 --> 00:34:25,239 Speaker 1: been a significant change since Layman in two thousand and eight. 603 00:34:25,320 --> 00:34:29,520 Speaker 1: I think the world, particularly since the V shaped recovery 604 00:34:29,520 --> 00:34:31,040 Speaker 1: that we saw in two thousand and ten. And if 605 00:34:31,080 --> 00:34:33,879 Speaker 1: you look at our own results, we did records in eleven, twelve, thirty, 606 00:34:33,920 --> 00:34:36,640 Speaker 1: and fourteen. We haven't announced our fifteen numbers. I can't 607 00:34:36,640 --> 00:34:40,160 Speaker 1: say much about that, but you know the portents are 608 00:34:40,200 --> 00:34:43,120 Speaker 1: good for fifteen two and if I look at sixteen, 609 00:34:43,200 --> 00:34:45,440 Speaker 1: I think what's happening in the markets is the market. 610 00:34:45,480 --> 00:34:47,719 Speaker 1: It's not about recession. I don't think that we will 611 00:34:47,719 --> 00:34:50,920 Speaker 1: see a recession. There might be some countries that technically 612 00:34:51,000 --> 00:34:53,600 Speaker 1: have a recession. A sense of two quarters of negative 613 00:34:53,640 --> 00:34:56,600 Speaker 1: GDP growth. But what I think that the markets are 614 00:34:56,600 --> 00:34:59,040 Speaker 1: doing is adjusting to the fact that that things are 615 00:34:59,040 --> 00:35:02,360 Speaker 1: going to be low alonger, and that means GDP growth 616 00:35:02,760 --> 00:35:05,040 Speaker 1: is going to be at a lower level, or continue 617 00:35:05,080 --> 00:35:07,600 Speaker 1: to be at a low lower level, both real and nominal. 618 00:35:08,280 --> 00:35:12,319 Speaker 1: Uh And of course interest rates are going to stay 619 00:35:12,400 --> 00:35:16,560 Speaker 1: lower longer than people anticipated even before Christmas. And you know, 620 00:35:16,640 --> 00:35:19,479 Speaker 1: you see the the prognostications for how many rate hikes 621 00:35:19,480 --> 00:35:21,719 Speaker 1: they will be here that this year, which used to 622 00:35:21,719 --> 00:35:24,080 Speaker 1: be about four, it's now sort of slipped maybe to 623 00:35:24,160 --> 00:35:26,919 Speaker 1: some people saying zero. So I'm saying one and very few, 624 00:35:26,960 --> 00:35:29,560 Speaker 1: a few saying more than one hike this year. Having 625 00:35:29,600 --> 00:35:32,600 Speaker 1: said that, I think overall what we see is a 626 00:35:32,640 --> 00:35:35,440 Speaker 1: slow growth world where the fast growth markets are not 627 00:35:35,480 --> 00:35:38,120 Speaker 1: growing as fast as they used to, still growing faster 628 00:35:38,200 --> 00:35:41,279 Speaker 1: than the slow growth markets. China, in my view, is 629 00:35:41,320 --> 00:35:44,920 Speaker 1: not growing at six It's probably growing at somewhere around 630 00:35:44,960 --> 00:35:47,879 Speaker 1: three or four, around four percent, I would say where 631 00:35:47,880 --> 00:35:50,320 Speaker 1: it is maybe even less. I talked to somebody's in 632 00:35:50,360 --> 00:35:53,880 Speaker 1: the primary goods industry is the natural resources industry is 633 00:35:53,920 --> 00:35:56,640 Speaker 1: a close follower of the Chinese market. Big Operations in 634 00:35:56,719 --> 00:35:59,160 Speaker 1: China thinks the market is great. GDP is growing at 635 00:35:59,160 --> 00:36:03,240 Speaker 1: two so fast growth markets slower sorry, and the mature 636 00:36:03,280 --> 00:36:06,200 Speaker 1: markets growing a little bit better but still not as 637 00:36:06,239 --> 00:36:09,960 Speaker 1: fast as there's fast growth markets no inflation and therefore 638 00:36:10,000 --> 00:36:13,120 Speaker 1: no pricing power and therefore focused on costs. So clients 639 00:36:13,239 --> 00:36:17,720 Speaker 1: are basically very and rightly in this environment to some extent, 640 00:36:18,000 --> 00:36:20,719 Speaker 1: are very cautious. You just reased an interesting question in 641 00:36:20,760 --> 00:36:23,680 Speaker 1: my mind, Do the Chinese respond to advertising the same way? Yes, 642 00:36:23,719 --> 00:36:26,560 Speaker 1: everybody else does around the world. A good question, much so. 643 00:36:26,640 --> 00:36:28,880 Speaker 1: I mean, China is our third largest market. We have 644 00:36:29,280 --> 00:36:31,840 Speaker 1: our revenue basis about twenty three billion dollars now, our 645 00:36:31,880 --> 00:36:35,840 Speaker 1: billing spaces about eighty billion dollars. China in terms of 646 00:36:35,920 --> 00:36:39,120 Speaker 1: revenues is about one point seven billion. We have sixteen 647 00:36:39,160 --> 00:36:42,520 Speaker 1: thousand people there in eighty cities in China. So the 648 00:36:42,520 --> 00:36:44,920 Speaker 1: the answer the question you just China respond to aptizes. 649 00:36:44,960 --> 00:36:48,000 Speaker 1: The answer is yes in spades. And of course China 650 00:36:48,080 --> 00:36:53,600 Speaker 1: has has missed the PC step in between going from 651 00:36:53,680 --> 00:36:57,960 Speaker 1: analog to digital. They've gone straight to smartphones. And if 652 00:36:57,960 --> 00:37:01,080 Speaker 1: you look at the growth and development of the the 653 00:37:01,200 --> 00:37:04,880 Speaker 1: native smark fans companies like jao Me or one plus 654 00:37:04,920 --> 00:37:09,160 Speaker 1: Yam challenges Samsung and Apple. In fact, our distances them, 655 00:37:09,200 --> 00:37:12,759 Speaker 1: and at many times in China you are seeing a 656 00:37:12,840 --> 00:37:15,160 Speaker 1: technology revolution. And I think the mistake that people make 657 00:37:15,239 --> 00:37:18,440 Speaker 1: is that they think that China copies and steals. Now 658 00:37:18,440 --> 00:37:20,240 Speaker 1: we used to say the same thing about the Japanese, 659 00:37:20,239 --> 00:37:22,799 Speaker 1: the South Koreans, the Hong Kong Chinese. The fact is 660 00:37:22,840 --> 00:37:26,400 Speaker 1: the Chinese are now originating. If they did copy and steal, 661 00:37:26,840 --> 00:37:29,040 Speaker 1: they're doing it much less than they used to because 662 00:37:29,040 --> 00:37:32,200 Speaker 1: they're originating a lot of technology which is superior. So 663 00:37:32,280 --> 00:37:35,279 Speaker 1: look out for companies like Huawei, lookout for companies like 664 00:37:35,400 --> 00:37:39,320 Speaker 1: Lenovo and Higher and others that are expanding increasingly abroad. 665 00:37:39,320 --> 00:37:42,640 Speaker 1: They're good of coming very significant forces. Jaw Me I've 666 00:37:42,680 --> 00:37:44,680 Speaker 1: mentioned in the handset. This is a company that only 667 00:37:44,719 --> 00:37:46,960 Speaker 1: started four or five years ago, been valued in the 668 00:37:47,040 --> 00:37:51,640 Speaker 1: last last private equity or funding round at about forty 669 00:37:51,640 --> 00:37:54,200 Speaker 1: billion US. There's so many things. I mean, every every 670 00:37:54,200 --> 00:37:56,319 Speaker 1: time you you say something, I come up with another question. 671 00:37:56,400 --> 00:37:58,360 Speaker 1: So we're gonna have to everyone for about six hours, 672 00:37:58,760 --> 00:38:03,080 Speaker 1: our records seven to be to get all these questions answered. 673 00:38:03,120 --> 00:38:07,480 Speaker 1: But I just think you've jumped. You've jumped to You've 674 00:38:07,560 --> 00:38:11,080 Speaker 1: jumped to um the smartphone era in China, and of 675 00:38:11,120 --> 00:38:15,720 Speaker 1: course we're in the smartphone era. Everywhere you did TV, 676 00:38:16,000 --> 00:38:20,880 Speaker 1: magazines and newspapers, radio for decades, you knew what worked, 677 00:38:21,120 --> 00:38:23,480 Speaker 1: you knew what didn't work. Do you have a handle 678 00:38:23,560 --> 00:38:26,799 Speaker 1: on what works in advertising now, display ads, click ads 679 00:38:26,880 --> 00:38:30,719 Speaker 1: or whatever or is that still a process of experimentation now, well, 680 00:38:30,719 --> 00:38:33,920 Speaker 1: we've gone through what we call a media tsunami here 681 00:38:33,920 --> 00:38:35,959 Speaker 1: in the US with major reviews I mean our group 682 00:38:36,000 --> 00:38:37,920 Speaker 1: as a as a whole in the in the ratings 683 00:38:37,960 --> 00:38:40,200 Speaker 1: that have just come out, and they also go clearly 684 00:38:40,360 --> 00:38:42,560 Speaker 1: you know, established the lead in terms of net wins 685 00:38:42,640 --> 00:38:46,080 Speaker 1: and retentions in that media tsunami, as we call it. 686 00:38:46,120 --> 00:38:47,680 Speaker 1: And what is the reason for that? Well, I think 687 00:38:47,680 --> 00:38:50,600 Speaker 1: the reason for that, if we can explain it, and 688 00:38:50,600 --> 00:38:52,520 Speaker 1: it is further development to go, is that we focused 689 00:38:52,520 --> 00:38:55,640 Speaker 1: on three areas and we should becoming increasingly important technology, 690 00:38:55,719 --> 00:38:58,719 Speaker 1: data and content. And the answer to your question is 691 00:38:58,960 --> 00:39:01,120 Speaker 1: that we can refine you know, the old old saying, 692 00:39:01,440 --> 00:39:04,319 Speaker 1: Lord leave humor. You know, Lever was supposed to have said, 693 00:39:04,560 --> 00:39:06,959 Speaker 1: I know, I waste half my advertising idea, in which 694 00:39:06,960 --> 00:39:09,960 Speaker 1: half I would say. Now we're sort of down to 695 00:39:10,040 --> 00:39:14,279 Speaker 1: maybe that we don't know and and in the online area, 696 00:39:14,280 --> 00:39:17,439 Speaker 1: which is of our business, almost of our business. Now 697 00:39:17,800 --> 00:39:19,920 Speaker 1: what we are now able to do, for example, in 698 00:39:19,960 --> 00:39:23,239 Speaker 1: the United States, where we have the profiles of what 699 00:39:23,560 --> 00:39:27,400 Speaker 1: two hundred million adults in the United States anonymized. We 700 00:39:27,719 --> 00:39:30,000 Speaker 1: don't know it's you, we know you as a number. 701 00:39:30,280 --> 00:39:34,920 Speaker 1: We can look at behavior, we can look at how people, 702 00:39:36,360 --> 00:39:40,319 Speaker 1: the context of how people are making commercial decisions and 703 00:39:41,120 --> 00:39:44,640 Speaker 1: media decisions, and target advertising in a way that we've 704 00:39:44,640 --> 00:39:47,400 Speaker 1: never been able to do before. Now that has its downsides. 705 00:39:47,440 --> 00:39:51,800 Speaker 1: There's obviously issues of privacy, obviously issues of context because 706 00:39:51,920 --> 00:39:55,120 Speaker 1: an ad that is served or issued at the wrong 707 00:39:55,160 --> 00:39:59,080 Speaker 1: time can be very destructive. But what we have is 708 00:39:59,120 --> 00:40:02,280 Speaker 1: the ability, for the first time, I think, to target 709 00:40:02,320 --> 00:40:05,359 Speaker 1: this in an extremely off through technology and data. This 710 00:40:05,400 --> 00:40:07,920 Speaker 1: is critical. Here's the fact, folks, I rarely put my 711 00:40:08,000 --> 00:40:10,520 Speaker 1: opinion into it, but it works here with Sir Martin Sorrel, 712 00:40:11,040 --> 00:40:15,719 Speaker 1: I'm using Facebook less. It's gotten dumber using using Snapchat. 713 00:40:15,719 --> 00:40:18,600 Speaker 1: Then no, no, I'm using Twitter mostly and I had 714 00:40:18,640 --> 00:40:22,800 Speaker 1: to dump Instagram because of security issues. Facebook I'm using 715 00:40:23,040 --> 00:40:25,080 Speaker 1: less than the less six months to a year because 716 00:40:25,200 --> 00:40:29,120 Speaker 1: they're managing my news feed. What's your advice to the 717 00:40:29,200 --> 00:40:34,440 Speaker 1: leadership of Facebook to make it the smartest thing out there, 718 00:40:34,800 --> 00:40:37,800 Speaker 1: the go to thing that links in with a huge 719 00:40:37,880 --> 00:40:42,480 Speaker 1: ad revenue windfall they're getting. Okay, so I mentioned on 720 00:40:42,600 --> 00:40:45,480 Speaker 1: media book is eight billion. So last year we invested 721 00:40:45,840 --> 00:40:48,439 Speaker 1: on behalf of our clients four billion in Google, one 722 00:40:48,480 --> 00:40:51,360 Speaker 1: billion in Facebook. The there is that going to be 723 00:40:51,400 --> 00:40:55,480 Speaker 1: in five years? Uh? Difficult to I would say Google 724 00:40:55,520 --> 00:41:00,400 Speaker 1: is rising with us somewhere around to a third early year. 725 00:41:02,760 --> 00:41:05,399 Speaker 1: Facebook whether we'll be up to five or not this year, 726 00:41:05,400 --> 00:41:07,319 Speaker 1: I think there's a good shot that we will be 727 00:41:07,560 --> 00:41:10,800 Speaker 1: Facebook probably rising. Last year it went up by about 728 00:41:10,840 --> 00:41:14,160 Speaker 1: fift Twitter to your very interesting and they went on 729 00:41:14,160 --> 00:41:16,600 Speaker 1: a smaller scale from about a hundred and fifty million. 730 00:41:17,120 --> 00:41:19,200 Speaker 1: This year, I think they'll be up or last year 731 00:41:19,200 --> 00:41:21,680 Speaker 1: they're up to two d and twenty five millions, so up. 732 00:41:21,680 --> 00:41:25,000 Speaker 1: About the interesting thing about Twitter, despite what's been happening, 733 00:41:25,280 --> 00:41:28,239 Speaker 1: the gyrations on its share price and defe despite the 734 00:41:28,280 --> 00:41:30,439 Speaker 1: fact that I think it's a pr medium. I don't 735 00:41:30,440 --> 00:41:32,400 Speaker 1: think it's so much of a branding medium. It is 736 00:41:32,520 --> 00:41:36,080 Speaker 1: very effective and it's interesting that you say you you 737 00:41:36,080 --> 00:41:38,760 Speaker 1: you use it intensively because I think it is. Facebook's 738 00:41:38,800 --> 00:41:41,000 Speaker 1: issue is the issue of size. I mean it's the 739 00:41:41,040 --> 00:41:46,360 Speaker 1: world's biggest country. Now it's it's the to do. A 740 00:41:46,360 --> 00:41:48,839 Speaker 1: guy like you with your heritage, what do you tell 741 00:41:48,880 --> 00:41:52,520 Speaker 1: the young I don't. It's not a question about telling 742 00:41:52,560 --> 00:41:54,040 Speaker 1: them what to do. Tom, I think they do an 743 00:41:54,040 --> 00:41:56,799 Speaker 1: extremely good job. I mean, for example, it is quite 744 00:41:56,800 --> 00:41:59,800 Speaker 1: clear that they have caught up with Google on video, 745 00:42:00,239 --> 00:42:04,839 Speaker 1: they have caught up with Google on mobile. Not just 746 00:42:04,880 --> 00:42:07,000 Speaker 1: think about the relative effectant as it's four to one 747 00:42:07,120 --> 00:42:10,600 Speaker 1: with us Google to Facebook, and that the power that 748 00:42:10,640 --> 00:42:14,360 Speaker 1: Google has is really around search. It's mobile search concern 749 00:42:14,680 --> 00:42:18,400 Speaker 1: that that in terms of context for the consumer is 750 00:42:18,520 --> 00:42:20,759 Speaker 1: very powerful, and you can trend that, you can track 751 00:42:20,840 --> 00:42:22,640 Speaker 1: the sales results. But I don't I think you're being 752 00:42:22,640 --> 00:42:25,040 Speaker 1: a little bit funny duddy on if I could say 753 00:42:25,040 --> 00:42:28,480 Speaker 1: this on Facebook Facebook, because I don't think it's true generally. 754 00:42:28,640 --> 00:42:33,440 Speaker 1: Although Snapchat with centennials that's people born after is very 755 00:42:33,560 --> 00:42:36,160 Speaker 1: very affect smart sort. We've got to go never enough 756 00:42:36,200 --> 00:42:40,960 Speaker 1: times with w TV. So it's like his thirtieth year 757 00:42:41,040 --> 00:42:44,200 Speaker 1: running a shot. It's like Deeters that ship Mercedes bands 758 00:42:44,600 --> 00:42:48,239 Speaker 1: forty years at Mercedes amazing. Bloomberg Surveillance