WEBVTT - Surveillance: Market Pricing with Donald

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<v Speaker 1>This is the Bloomberg Surveillance Podcast. I'm Lisa Abram Woyd's

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<v Speaker 1>along with Tom Keane and Jonathan Farrow. Join us each

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<v Speaker 1>day for insight from the best in economics, geopolitics, finance

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<v Speaker 1>and investment. Subscribe to Bloomberg Surveillance on demand on Apple,

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<v Speaker 1>Spotify and anywhere you get your podcasts, and always on

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<v Speaker 1>Bloomberg dot Com, the Bloomberg Terminal, and the Bloomberg Business app. Francis, Now, Francis,

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<v Speaker 1>do you think that dumb and welcome to the shoug

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<v Speaker 1>They might be done. No, it could be another twenty

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<v Speaker 1>five basis points or nothing. But in the great scheme

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<v Speaker 1>of things, I don't think it really matters. The market

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<v Speaker 1>already has a coin toss for this next meeting. What

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<v Speaker 1>matters and what actually shocks my economic and inflation model

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<v Speaker 1>is not another twenty five basis points or not. It's

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<v Speaker 1>how fast they cut and when they start cutting. So

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<v Speaker 1>the conversation is going to have to shift I think

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<v Speaker 1>in the next few weeks away from this next incremental meeting. Forwards,

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<v Speaker 1>what does the off to the next one to two

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<v Speaker 1>years look like? Because if the FED is going to

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<v Speaker 1>get its way, there's a significant mispricing. I suspect that

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<v Speaker 1>the market is probably going to have to price in

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<v Speaker 1>more cuts moving forward, and the FED is going to

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<v Speaker 1>follow what drives that, the economic daser or further financial

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<v Speaker 1>instability the two And this was a big difference. Li.

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<v Speaker 1>So you talked about the difference between the ECB and

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<v Speaker 1>the FED. The ECB President Le Guard told us there

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<v Speaker 1>is no tension between the price stability and financial stability mandate.

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<v Speaker 1>And even though Chirpowell implied the banking system is sound,

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<v Speaker 1>he also was very clear that they were incorporating real

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<v Speaker 1>economic impact from the banking stress through the lending channel.

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<v Speaker 1>So we know that this is going to dampen growth

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<v Speaker 1>moving forward. And indeed, anyone with an economic model the

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<v Speaker 1>day that we saw the first initial banking stress clud

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<v Speaker 1>in this is going to be a credit crunch, and

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<v Speaker 1>we have a playbook for that. It's not good. It

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<v Speaker 1>leads to recessions. It has every single time, Francis, we've

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<v Speaker 1>heard from executive after executives, this is not a credit crunch,

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<v Speaker 1>This isn't a credit problem. This is simply a liquidity mismatch.

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<v Speaker 1>How do you say to them, you're wrong, This is

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<v Speaker 1>going to become a credit problem, as it always has

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<v Speaker 1>with aquidity issues versus no, you're right, this is something

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<v Speaker 1>that could be addressed, its deposit insurance or other measures.

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<v Speaker 1>I just pull out my charts from before the banking

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<v Speaker 1>stress issues, in which we already saw senior loan officers

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<v Speaker 1>telling us that we were in a sizeable tightening. This

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<v Speaker 1>was happening before we experienced banking stress. So even if

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<v Speaker 1>you want to say the impact is nil, I could

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<v Speaker 1>still proof to you that we are actually seeing a

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<v Speaker 1>wide range of data saying that credit is pulling back.

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<v Speaker 1>And that's particularly important because the bull case for the

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<v Speaker 1>US economy has been the consumer is strong, and the

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<v Speaker 1>consumer was being driven by releveraging. If that slows or stalls,

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<v Speaker 1>then we have a momentum slowing. Is that Q one

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<v Speaker 1>Q two Probably not, But our traditional leads and eggs

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<v Speaker 1>tell us that by Q four of this here, we're

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<v Speaker 1>in a significant soft patch. So my issue is, well,

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<v Speaker 1>maybe the Fed goes twenty five base this point or not.

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<v Speaker 1>I think not at this juncture. But how quickly did

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<v Speaker 1>they choose to respond? And it's possible that the hawkish

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<v Speaker 1>shape here is not the next meaning, but that they

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<v Speaker 1>try to stay on pause as long as possible, given

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<v Speaker 1>inflation in this soft patch is probably still a little

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<v Speaker 1>uncomfortably high. From what I'm hearing, Frances, it seems like

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<v Speaker 1>the thresholds has gone way down for cutting rates, at

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<v Speaker 1>least what you expect in the upcoming months. How low

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<v Speaker 1>do you expect the Fed to be able to cut

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<v Speaker 1>rates given that there is a disinflationary effect from some

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<v Speaker 1>sort of credit contraction. Well, that's right. We have playbooks

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<v Speaker 1>for uncertainty shocks, which the banking system stress is. We

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<v Speaker 1>have playbooks for credit crunches. But it's been a very

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<v Speaker 1>long time, Leaves since we had a playbook for flow growth.

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<v Speaker 1>But inflation still around three to four percent. The most

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<v Speaker 1>important thing I heard from CHERA. Powell yesterday was actually

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<v Speaker 1>his reference to long term inflation expectations being anchored, and

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<v Speaker 1>he said it was true for households, businesses, forecasters, and markets.

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<v Speaker 1>And that may be the direction that Chair Powell and

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<v Speaker 1>the Fed chooses to tilt towards. As we still see

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<v Speaker 1>some sicklidly high inflation. So even if they come to

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<v Speaker 1>the end of the year we have three to four percent,

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<v Speaker 1>they may be able to say, listen, the long run

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<v Speaker 1>concerns about inflation expectations becoming the anchored we no longer

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<v Speaker 1>have those. We can tilt back towards the employment side

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<v Speaker 1>of our mandate because let's remember the Fed does have

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<v Speaker 1>a dual mandate. We just haven't talked about the employment

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<v Speaker 1>side in a very long time. John and I were

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<v Speaker 1>talking about this earlier. Frances, do you think that rate

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<v Speaker 1>cuts in this framework are going to be bullish, are

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<v Speaker 1>going to be positive for risk assets? Well, traditionally the

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<v Speaker 1>context around rate cuts matters, but we got to get

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<v Speaker 1>through a recession first. I mean, there is a little

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<v Speaker 1>bit of something we're seeing now where people are saying, well,

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<v Speaker 1>the leading indicators of the leading indicators, of the leading

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<v Speaker 1>indicators are positive. But that's joking the gun a bit.

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<v Speaker 1>We still have to go through a rerating of this

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<v Speaker 1>economy to a lower growth environment, which means lower earning scrowth,

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<v Speaker 1>less activity and employment. Shop maybe jumping the gun just

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<v Speaker 1>a bit more or a bit too much if we

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<v Speaker 1>get too bullish on at this juncture given the context. Francis,

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<v Speaker 1>thank you as always, Francis Downard. That just brilliant over

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<v Speaker 1>a Mandy Life Investment Management joining us nice Alessia at

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<v Speaker 1>the longest senior porfolio manager and invest go Alesia. How

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<v Speaker 1>you started the year constructive, you came into March less constructive.

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<v Speaker 1>Alessia talked to me about the change there given what

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<v Speaker 1>we've seen transparent the last couple of weeks, Lisa John,

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<v Speaker 1>thank you for having me. Yes. At the beginning of

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<v Speaker 1>the year, we had a very constructive view which panned

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<v Speaker 1>out a little too fast and too far. So when

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<v Speaker 1>we entered in March, many of our indicators started signaling

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<v Speaker 1>a little bit of an extended price action and sentiment

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<v Speaker 1>that was beginning to roll over as a result of

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<v Speaker 1>renewed positive inflation surprises. They're steepening in yield curves and

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<v Speaker 1>the repricing of additional policy hikes. That led us to

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<v Speaker 1>from a cyclical perspective to reposition again for a defensive

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<v Speaker 1>as a location posture. What happened with the bank developments

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<v Speaker 1>over the last couple of weeks has accelerated the path,

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<v Speaker 1>has validated the path, but it's important to make a distinction.

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<v Speaker 1>We have been able over the last couple of weeks

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<v Speaker 1>to rule out, thanks to the policy actions and the

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<v Speaker 1>developments in Switzerland, to rule out a systemic accident in

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<v Speaker 1>the banking sector. With that being said, the tensions in

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<v Speaker 1>the credit markets have increased from a syclical perspective, why

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<v Speaker 1>their credit spreads, why their lending stuff. More restrictive lending

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<v Speaker 1>standards and lower credit growth are necessary conditions to have

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<v Speaker 1>monetary policy titan in the future and bring inflation down. Alessia,

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<v Speaker 1>there seems to be a policy divergence driven by the

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<v Speaker 1>fact that the US financial system, and I'm talking not

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<v Speaker 1>about the big banks but the regionals that are subject

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<v Speaker 1>to some of this deposit flight. The banking system does

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<v Speaker 1>have a more pervasive issue that needs to get dealt with,

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<v Speaker 1>and some other nations, including the UK and including Europe

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<v Speaker 1>more broadly content on Europe, do you agree with that?

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<v Speaker 1>Can you trade on that? Is there something underpinning that

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<v Speaker 1>in terms of perhaps ongoing rate hikes in Europe and

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<v Speaker 1>the end of them in the US. I think the

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<v Speaker 1>cyclical divergence is there in the growth and in monetary

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<v Speaker 1>policy on the margin. From this point on, I think

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<v Speaker 1>with the Federal Reserve we're looking at marginal increases let's say,

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<v Speaker 1>another twenty five business points hike in May. But the

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<v Speaker 1>ECB and potentially the Bank of England I think have

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<v Speaker 1>more to go at least another fifty, if not more.

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<v Speaker 1>That secretical divergence can be expressed through multiple venues. Again,

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<v Speaker 1>I'm ruling out the I wouldn't say that we can

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<v Speaker 1>trade on the ass on the more structural systemic aspects

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<v Speaker 1>of potential bank regulation. I think what we should focus

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<v Speaker 1>on is trading on that cyclical divergence, trading on the

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<v Speaker 1>cyclicality of the perception, which I think has returned. The

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<v Speaker 1>last couple of weeks were more of a risk of

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<v Speaker 1>a systemic shock that would have changed that dynamic, But

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<v Speaker 1>I think now we are more comfortably back into the

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<v Speaker 1>typical end of a tightening cycle pricing dynamics. So when

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<v Speaker 1>can you go back into European banks? European banks are

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<v Speaker 1>not for now. In my mind. We favor a bias

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<v Speaker 1>away from value and away from cyclicals, of which banks

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<v Speaker 1>are one, more into quality oriented, lower vualativity and growth

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<v Speaker 1>oriented sectors. So defensive sectors such as healthcare, consumer staples,

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<v Speaker 1>and even technology, which screens now on quality characteristics, and

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<v Speaker 1>we have seen that quality pan out as soon as

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<v Speaker 1>rates began to rally again, those sectors and styles with

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<v Speaker 1>longer dated cash flows and more duration have outperformed. We

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<v Speaker 1>think this is an environment for defensive sectors. And I said,

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<v Speaker 1>just quickly, just to wrap it up, working on the assumption.

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<v Speaker 1>Now the FED is done, working on the assumption that

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<v Speaker 1>one more hike and then we are done. So secretly

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<v Speaker 1>called divergence in favor of European equities in favor of

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<v Speaker 1>the euro and a global backdrop where a policy being

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<v Speaker 1>done is not necessarily the recipe for a raally. Just yet,

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<v Speaker 1>we need to see the impact on growth. First, interesting Alesia,

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<v Speaker 1>Thank you, Lesa, the longest deep of invested joining us

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<v Speaker 1>down the secondly market John Stelfast, the chief investment strategist

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<v Speaker 1>and Oppenheimer Asset Management. Hi, John, great to catch up

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<v Speaker 1>with you, sir. I mentioned this to you in the

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<v Speaker 1>commercial break. We're going to talk about exactly this. If

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<v Speaker 1>the fedbacks away because things are breaking, are you telling me?

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<v Speaker 1>And that's bullish. It's certainly not a bad thing. Let's

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<v Speaker 1>let's put it that way. And I think the market

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<v Speaker 1>really responded to that intimation from Chair Powell, and I

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<v Speaker 1>think that you know, that was all really doing quite well.

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<v Speaker 1>Later on we had this from its Secretary of Treasury,

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<v Speaker 1>Janet Gallen, and that kind of should people up. But

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<v Speaker 1>this is not uncommon times like this. The main thing,

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<v Speaker 1>it's not so much what brings the market down is

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<v Speaker 1>how quick the response is and a recognition investors need

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<v Speaker 1>to realize not every response is going to be correct

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<v Speaker 1>or exactly what they want to hear. But it's a

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<v Speaker 1>process of working our way back out of another set

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<v Speaker 1>of wood wooded area, so to speak. They setted wooded

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<v Speaker 1>area We're going to get out of somehow with rate cuts.

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<v Speaker 1>That's what the market says, The Fed says, no, how

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<v Speaker 1>much are you counting on rate cuts? To having more

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<v Speaker 1>bullish outlook on how this emerges, how this develops, how

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<v Speaker 1>we emerge from the woods of financial systemic issues, great questions,

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<v Speaker 1>not really relying on rate cuts a heck of a

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<v Speaker 1>lot near term. I think the inflation is sticky. The

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<v Speaker 1>Fed has to do something. It's credibility is still on

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<v Speaker 1>the line. Its credibility is always on that line, whether

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<v Speaker 1>it's a rate high cycle or a cutting cycle. But

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<v Speaker 1>in this particular instance, having been behind the curve badly

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<v Speaker 1>enough so we had this inflation hit before the year

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<v Speaker 1>high as the way it had. This is an important

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<v Speaker 1>period and they've got to show that they can manage

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<v Speaker 1>both this as well as a crisis in confidence within

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<v Speaker 1>the regional banks. And I think they can and I

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<v Speaker 1>think they're very capable of doing it. But it doesn't

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<v Speaker 1>mean they are infallible. They just have to work their

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<v Speaker 1>way through a process. John, you've been a bullish investor

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<v Speaker 1>for quite a while. What does being a bull right

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<v Speaker 1>now mean? What does it mean owning? And what does

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<v Speaker 1>it mean hoping for? Well, I think the main thing

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<v Speaker 1>right now is, you know, we've just been building our

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<v Speaker 1>positions in areas that we think will be reward and

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<v Speaker 1>if if I just take a look, and I hate

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<v Speaker 1>to give the bears, you know, some some areas they

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<v Speaker 1>might hit, you know, if they get if they get

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<v Speaker 1>bugged out today at some point. But it's it's been

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<v Speaker 1>terrific where all of a sudden tech has become the

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<v Speaker 1>new value story. There was a recognition all of a sudden, indeed,

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<v Speaker 1>we're not going back to the abaccus or going uh,

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<v Speaker 1>you know, going back to the slide role. Technology is

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<v Speaker 1>alive and well, the most important thing is it's got

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<v Speaker 1>to be profitable. You know, positive cash flow. Who's a

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<v Speaker 1>good thing. But as well as that it looks good

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<v Speaker 1>for a consumer discretion area, it looks good for areas

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<v Speaker 1>communication services industrials, and this is the area where we

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<v Speaker 1>like to invest, not play a little bit longer on

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<v Speaker 1>the financials. Now, this is going to take to regain

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<v Speaker 1>trust in terms of investors who are not players but

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<v Speaker 1>are rather intermediate to long term investors. It will take

0:13:02.040 --> 0:13:05.199
<v Speaker 1>them a little while to feel more relaxed about financials.

0:13:05.200 --> 0:13:07.400
<v Speaker 1>As the steps steered up. Well, we need the consumer

0:13:07.440 --> 0:13:11.320
<v Speaker 1>to relax about financials before investors can relax about financials, John,

0:13:11.320 --> 0:13:13.760
<v Speaker 1>you need policy to act as a circuit breaker. Do

0:13:13.800 --> 0:13:18.440
<v Speaker 1>you think this financial stability instability can end without blanket

0:13:18.440 --> 0:13:23.320
<v Speaker 1>deposit insurance? Yeah, you know, I think I think that

0:13:23.559 --> 0:13:27.680
<v Speaker 1>the real definition is will all have to be perhaps

0:13:27.679 --> 0:13:33.200
<v Speaker 1>a redefining about what that maximum amount of a deposit

0:13:33.280 --> 0:13:37.920
<v Speaker 1>that gets covered and then anything over that would likely

0:13:38.240 --> 0:13:43.600
<v Speaker 1>have to be paid by the depositor in being over

0:13:43.840 --> 0:13:47.160
<v Speaker 1>and having an overage versus what the covered amount is,

0:13:47.679 --> 0:13:50.240
<v Speaker 1>so that the taxpayer is not really on the hook

0:13:50.280 --> 0:13:53.560
<v Speaker 1>for it, John Stoffers of open Him Rsset Management, John,

0:13:53.600 --> 0:14:00.520
<v Speaker 1>thank you. Mark Warner joining us, a senator from Virginia

0:14:00.559 --> 0:14:03.120
<v Speaker 1>who is leading up some of those hearings in front

0:14:03.120 --> 0:14:05.240
<v Speaker 1>of the house, in front of the Senate Committee, as

0:14:05.320 --> 0:14:08.120
<v Speaker 1>we do expect a no in situation right now for

0:14:08.320 --> 0:14:11.000
<v Speaker 1>the chief executive officer of TikTok. Can give us a

0:14:11.000 --> 0:14:12.480
<v Speaker 1>sense of what you're hoping to get out of the

0:14:12.880 --> 0:14:17.360
<v Speaker 1>out of these hearing, Senator Warner, Well, unfortunately, I'm not

0:14:17.400 --> 0:14:19.880
<v Speaker 1>going to be in the hearing. It's actually hearing today

0:14:19.920 --> 0:14:23.600
<v Speaker 1>in the House. But I've had concerns for some time

0:14:23.680 --> 0:14:26.760
<v Speaker 1>that the United States has not had any kind of

0:14:27.440 --> 0:14:31.760
<v Speaker 1>rational policy about how we deal with foreign technologies from

0:14:31.800 --> 0:14:35.400
<v Speaker 1>countries like China and Russia that pose a national security threat.

0:14:35.440 --> 0:14:38.560
<v Speaker 1>A few years back, it was the Russian software company Gaspersky.

0:14:39.360 --> 0:14:41.680
<v Speaker 1>Back in twenty nineteen, we went through a long debate

0:14:41.720 --> 0:14:45.240
<v Speaker 1>about Walway. Now we're talking about Tiptop. So I put

0:14:45.280 --> 0:14:48.920
<v Speaker 1>a bipartisan built together that's been endorsed by the administration.

0:14:48.920 --> 0:14:52.120
<v Speaker 1>I got ten Democrats, ten Republicans that said we ought

0:14:52.120 --> 0:14:56.200
<v Speaker 1>to give the Secretary Commerce the authorities and tools that could,

0:14:56.480 --> 0:15:02.760
<v Speaker 1>if there is a national security threat, allow her to

0:15:02.800 --> 0:15:06.440
<v Speaker 1>take actions up to and including divestiture and including banning.

0:15:06.520 --> 0:15:11.080
<v Speaker 1>And why TikTok Two reasons. One, TikTok is extraordinarily popular,

0:15:11.120 --> 0:15:14.400
<v Speaker 1>and we acknowledge that one hundred fifty million Americans. Some

0:15:14.440 --> 0:15:16.960
<v Speaker 1>of the data I've seen on average about ninety minutes

0:15:17.000 --> 0:15:20.480
<v Speaker 1>a day. What TikTok's genius is is it learns from

0:15:20.520 --> 0:15:23.040
<v Speaker 1>you every time you're on. So it's getting and collecting

0:15:23.160 --> 0:15:26.520
<v Speaker 1>data that is individually specific at the end of the day,

0:15:26.840 --> 0:15:31.680
<v Speaker 1>no matter what the TikTok CEO says, Chinese law made

0:15:31.720 --> 0:15:35.280
<v Speaker 1>clear in twenty seventeen that Bite Dance Chinese company that

0:15:35.320 --> 0:15:39.080
<v Speaker 1>owns TikTok, at any point the Chinese government can require

0:15:39.120 --> 0:15:43.000
<v Speaker 1>that data be turned over to the government. I think

0:15:43.040 --> 0:15:47.120
<v Speaker 1>that has the ability to harvest data that could be used.

0:15:47.320 --> 0:15:50.400
<v Speaker 1>It's already been demonstrated to be used to spy on journalists.

0:15:50.640 --> 0:15:53.600
<v Speaker 1>It could be used to target certain people in the

0:15:53.680 --> 0:15:56.920
<v Speaker 1>Chinese diaspra. It can be frankly used to ultimately target

0:15:57.000 --> 0:15:59.120
<v Speaker 1>some of our kids who are on that site on

0:15:59.200 --> 0:16:01.680
<v Speaker 1>a such a regular basis. So the data collection is

0:16:01.760 --> 0:16:04.240
<v Speaker 1>number one. The number two part is this is a

0:16:04.360 --> 0:16:08.200
<v Speaker 1>huge potential propaganda tool. Should President she decide that he

0:16:08.240 --> 0:16:10.280
<v Speaker 1>wants to go ahead and take on an invasion of

0:16:10.360 --> 0:16:14.360
<v Speaker 1>China or I'm sorry, invasion of Taiwan, TikTok could be

0:16:14.400 --> 0:16:17.560
<v Speaker 1>that site that is saying to literally hundreds of millions

0:16:17.560 --> 0:16:19.360
<v Speaker 1>of folks all around the world, one hundred and fifty

0:16:19.360 --> 0:16:23.240
<v Speaker 1>million Americans. Hey, that's not so bad in terms of

0:16:23.520 --> 0:16:26.720
<v Speaker 1>the message that is conveyed, and evidence of that in

0:16:26.760 --> 0:16:29.400
<v Speaker 1>many ways has been The Chinese leadership has said they

0:16:29.480 --> 0:16:34.360
<v Speaker 1>would rather have TikTok banned in America than give up

0:16:34.400 --> 0:16:38.320
<v Speaker 1>the source code, which is the secret sauce the algorithms

0:16:38.360 --> 0:16:43.600
<v Speaker 1>that create this wonderfully addictive tool. They would rather give

0:16:43.680 --> 0:16:45.920
<v Speaker 1>up TikTok in America than give up the source code.

0:16:46.040 --> 0:16:48.320
<v Speaker 1>And I don't know how Americans could ever be saved

0:16:48.600 --> 0:16:53.000
<v Speaker 1>without that source code and getting out of China and

0:16:53.120 --> 0:16:57.240
<v Speaker 1>into the United States. Senator just before before, I want

0:16:57.240 --> 0:16:58.920
<v Speaker 1>to make sure that we get this point clarified, just

0:16:58.920 --> 0:17:01.640
<v Speaker 1>to dig into what you're saying little bit more. You're

0:17:01.680 --> 0:17:04.560
<v Speaker 1>talking about national security concern and how this data can

0:17:04.600 --> 0:17:07.200
<v Speaker 1>be used to be a manipulative to a broad swath

0:17:07.280 --> 0:17:09.600
<v Speaker 1>of the public. But there's also this question, as you said,

0:17:09.960 --> 0:17:12.800
<v Speaker 1>of learning from you and data collection. How do you

0:17:12.880 --> 0:17:16.640
<v Speaker 1>draw the distinction between TikTok's use of this as being

0:17:16.960 --> 0:17:20.720
<v Speaker 1>a company that's owned and headquartered in China versus social

0:17:20.720 --> 0:17:24.200
<v Speaker 1>media companies in the US also collect data and also

0:17:24.359 --> 0:17:29.840
<v Speaker 1>have a lot of learning tools from their users. Great

0:17:29.920 --> 0:17:33.359
<v Speaker 1>question in and chanically. I've got some concerns about the

0:17:33.359 --> 0:17:37.240
<v Speaker 1>American companies. I think it's an embarrassment that we don't

0:17:37.280 --> 0:17:39.880
<v Speaker 1>have a national privacy law. I think it's crazy, I'm

0:17:39.920 --> 0:17:43.960
<v Speaker 1>a former telecom guy, that we don't have an ability

0:17:44.000 --> 0:17:46.800
<v Speaker 1>to have data portability and interoperability, so if you get

0:17:46.800 --> 0:17:49.199
<v Speaker 1>tired of Facebook, you can move to a new site

0:17:49.560 --> 0:17:52.280
<v Speaker 1>and basically still talk to your friends. I think it's

0:17:52.280 --> 0:17:55.960
<v Speaker 1>crazy that we've not taken on what's called Section two thirty,

0:17:56.200 --> 0:17:59.440
<v Speaker 1>which gives all these social media companies a get out

0:17:59.480 --> 0:18:02.560
<v Speaker 1>of jail free card for any of the content that

0:18:02.600 --> 0:18:05.000
<v Speaker 1>they post. We've not been able to move on it.

0:18:05.119 --> 0:18:07.800
<v Speaker 1>But all of those concerns I have about American and

0:18:08.400 --> 0:18:12.840
<v Speaker 1>British and Indian and other company companies, those concerns are

0:18:13.160 --> 0:18:16.800
<v Speaker 1>are not national security base. They are I think basic

0:18:16.840 --> 0:18:21.200
<v Speaker 1>fairness and business practice is based into the day TikTok

0:18:21.680 --> 0:18:24.919
<v Speaker 1>Bye dance. It's Chinese parent I believe has to be

0:18:24.960 --> 0:18:28.840
<v Speaker 1>obervated by Chinese law changed in twenty seventeen made very

0:18:28.880 --> 0:18:32.320
<v Speaker 1>clear that every Chinese company ultimately is not responsible to

0:18:32.320 --> 0:18:36.040
<v Speaker 1>shareholders or customers. It is responsible to the government, and

0:18:36.080 --> 0:18:38.919
<v Speaker 1>the fact that this can end up, this data or

0:18:38.920 --> 0:18:43.240
<v Speaker 1>this potential content manipulation can end up in the hands

0:18:43.240 --> 0:18:48.600
<v Speaker 1>of the communist party that moves this platform into the

0:18:48.640 --> 0:18:51.560
<v Speaker 1>realm in my mind of national security. And one of

0:18:51.640 --> 0:18:54.080
<v Speaker 1>the things that my law would also do is require

0:18:54.640 --> 0:18:59.360
<v Speaker 1>the intelligence community do to classify as much information as possible,

0:18:59.560 --> 0:19:02.120
<v Speaker 1>so it's not just a case of a trust us

0:19:02.160 --> 0:19:05.879
<v Speaker 1>that this is a security risk. And I do believe

0:19:06.359 --> 0:19:09.880
<v Speaker 1>that should this action take place, that the market will

0:19:09.920 --> 0:19:12.840
<v Speaker 1>create an alternative. All these folks are making money off

0:19:12.840 --> 0:19:16.560
<v Speaker 1>of TikTok social influencers. I believe there will be other sites.

0:19:17.040 --> 0:19:19.560
<v Speaker 1>There are already some maybe not as quite as attractive

0:19:19.600 --> 0:19:21.800
<v Speaker 1>yet as TikTok, but there will be other sites, and

0:19:21.880 --> 0:19:25.560
<v Speaker 1>that can be companies in America, in India and France,

0:19:25.680 --> 0:19:28.440
<v Speaker 1>you name it. I think the market will provide that alternative.

0:19:28.600 --> 0:19:30.560
<v Speaker 1>Senator of our corner, thank you so much for your comments,

0:19:30.600 --> 0:19:32.280
<v Speaker 1>and we look forward to catching up with you after

0:19:32.280 --> 0:19:35.160
<v Speaker 1>the House hearings and after this has developed even further.

0:19:35.600 --> 0:19:39.040
<v Speaker 1>Subscribes to the Bloomberg Surveillance podcast on Apple, Spotify and

0:19:39.119 --> 0:19:42.520
<v Speaker 1>anywhere else you get your podcasts. Listen live every weekday

0:19:42.560 --> 0:19:45.119
<v Speaker 1>starting at seven am Eastern on Bloomberg dot com, the

0:19:45.200 --> 0:19:48.960
<v Speaker 1>iHeartRadio app tune In, and the Bloomberg Business app. You

0:19:49.000 --> 0:19:52.320
<v Speaker 1>can watch us live on Bloomberg Television and always on

0:19:52.359 --> 0:19:55.760
<v Speaker 1>the Bloomberg Terminal. Thanks for listening. I'm Lisa Abramowitz, and

0:19:55.880 --> 0:19:56.760
<v Speaker 1>this is Bloomberg