WEBVTT - Why Massive Growth In Private Markets Will Continue 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg Penel podcast on Paul Swing You. 0:00:05.360 --> 0:00:07.680 Along with my co host Lisa Brahma Waits, each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money, whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor. Find a Bloomberg Penl podcast on Apple 0:00:15.520 --> 0:00:17.959 podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:20.480 at Bloomberg dot com. There are a number of tech 0:00:20.560 --> 0:00:23.959 dar langs expected to have initial public offerings, including Airbnb, 0:00:24.480 --> 0:00:27.639 uh and Casper, among others. But the real question is 0:00:27.880 --> 0:00:31.080 why even go public when the private market is becoming 0:00:31.080 --> 0:00:34.600 more in robust, both on the initial financing side of 0:00:34.600 --> 0:00:36.680 things as well as a trading side. Joining us now 0:00:36.760 --> 0:00:41.280 Kelly Rodriguez, chief executive officer of Forge, which helps facilitate 0:00:41.560 --> 0:00:44.880 some of that trading and activity in private markets before 0:00:44.920 --> 0:00:48.840 companies go public, or for companies who may never go public. Kelly, 0:00:48.880 --> 0:00:50.239 thank you so much for being here with us in 0:00:50.240 --> 0:00:53.080 our interactive broker studios. Can we just get started? You 0:00:53.159 --> 0:00:56.320 know why a company would want to go public at 0:00:56.320 --> 0:00:59.480 this point given what you're seeing in private markets. I 0:00:59.480 --> 0:01:02.440 think at at this point, with all of the access 0:01:02.480 --> 0:01:06.080 to liquidity that you see for a private company, the 0:01:06.160 --> 0:01:08.280 reason to go is that you've matured to the point 0:01:08.319 --> 0:01:11.280 that you want to let a retail investor around the 0:01:11.319 --> 0:01:14.319 world get access to your stock. But from the standpoint 0:01:14.360 --> 0:01:16.920 of just access to liquidity in general, there isn't a reason. 0:01:17.680 --> 0:01:20.679 So what we saw in twenty nineteen enter nineteen is 0:01:21.080 --> 0:01:23.600 boy a lot of anticipation about a lot of big 0:01:23.680 --> 0:01:27.640 unicorn and deals coming public, opportunity for investors investor really 0:01:27.680 --> 0:01:30.640 cool transformative companies like uber like Lift, like we Work. 0:01:31.000 --> 0:01:34.920 It didn't work out well for the public investors in 0:01:36.200 --> 0:01:38.000 What do you think happened for some of those big 0:01:38.040 --> 0:01:40.400 marquee deals that just didn't trade well on the public markets. 0:01:40.760 --> 0:01:42.800 A couple of things. The data that we have showed 0:01:42.959 --> 0:01:46.280 that historically, if you were going to come into an 0:01:46.319 --> 0:01:49.400 I p O as an investor, twenty nineteen was a 0:01:49.480 --> 0:01:52.000 year that marked you should have gotten in six to 0:01:52.120 --> 0:01:55.320 eighteen months before. And if you look at where these 0:01:55.320 --> 0:01:59.360 deals priced in twenty nineteen UM, we could see from 0:01:59.400 --> 0:02:03.480 the private market demand the bid ask uh that they're 0:02:03.480 --> 0:02:05.880 probably going to be pretty flat. I also think there 0:02:05.920 --> 0:02:09.000 was a there's a path to profitability question that's now 0:02:09.040 --> 0:02:12.240 central to all of these unicorns is sort of raises 0:02:12.280 --> 0:02:14.960 a key point, right. Has the dynamism in the US 0:02:15.000 --> 0:02:18.800 equity market moved from public to private? And and that's 0:02:18.840 --> 0:02:21.720 sort of implicit in what you're saying. Basically, the idea 0:02:21.720 --> 0:02:24.480 of being the real gains are to be had before 0:02:24.800 --> 0:02:27.880 the vast majority of people can get access to these companies. 0:02:28.320 --> 0:02:32.079 Is that changing? Is there better access? Yeah? I think this, 0:02:32.080 --> 0:02:34.440 This is what we're at Forge all about. And I 0:02:34.480 --> 0:02:39.200 think what we're trying to do is address the regulatory 0:02:39.240 --> 0:02:42.720 issues and the access issues for people to participate in 0:02:42.760 --> 0:02:45.200 the private markets, because look, this has been an asset class. 0:02:45.240 --> 0:02:47.760 It's been performing for twenty years. It's just most people 0:02:47.800 --> 0:02:50.440 can't get into it. Uh, and so that is shifting, 0:02:50.880 --> 0:02:55.000 all right. So of the four plus unicorns out there 0:02:55.080 --> 0:02:58.160 roughly that are still in the private markets, if I 0:02:58.200 --> 0:03:00.160 want to, how many of those companies can I, in 0:03:00.280 --> 0:03:04.200 theory buy into and as private? Yes, in theory you 0:03:04.240 --> 0:03:07.240 can get into all of them right now? Are our 0:03:07.320 --> 0:03:12.560 data suggests that of them are investable today? Okay? So 0:03:12.720 --> 0:03:15.200 I but I come to you or I go through 0:03:15.639 --> 0:03:17.200 I mean, how do how do how would I actually 0:03:17.200 --> 0:03:18.960 do that? That That I have to be an institutional investor? 0:03:19.040 --> 0:03:21.520 Can I can an your retail investor do this? This 0:03:21.600 --> 0:03:24.919 is really the emergence of the private markets at a 0:03:24.919 --> 0:03:27.800 at a broad level in the world. This is what 0:03:27.880 --> 0:03:32.000 Forge serves. Were there to help companies get access to 0:03:32.000 --> 0:03:34.640 that liquidity and help investors get access to those companies. 0:03:34.639 --> 0:03:37.440 So that's our central purpose. Outside of US, you'd have 0:03:37.520 --> 0:03:40.720 to go through a venture capital firm, become an LP, 0:03:41.000 --> 0:03:43.560 or find a way to directly contact the company. That's tough. 0:03:43.640 --> 0:03:45.440 And actually, when some of these I p o s 0:03:45.440 --> 0:03:47.720 didn't do so hot last year, one thing that was 0:03:47.760 --> 0:03:50.320 notable was you dig onto the hood of a lot 0:03:50.320 --> 0:03:53.240 of mutual funds and you actually find that mutual funds 0:03:53.680 --> 0:03:56.480 own a lot of those shares, particularly the later rounds 0:03:56.480 --> 0:03:59.520 of financing. But it does raise a question, Kelly. The 0:03:59.560 --> 0:04:03.680 idea here that private markets are becoming as liquid as 0:04:03.720 --> 0:04:07.480 public markets. They're becoming sort of dominated by companies of 0:04:07.480 --> 0:04:10.080 similar size to what you can find in public markets. 0:04:10.320 --> 0:04:13.120 What is the difference at this point between private and 0:04:13.200 --> 0:04:16.839 public equity markets. The most significant difference that we see 0:04:17.720 --> 0:04:21.440 is the way a company operates when they're private. The 0:04:21.600 --> 0:04:26.400 continue to invest and not have a quarter over quarter mentality. 0:04:26.440 --> 0:04:30.840 There's a strategic reason why that's valuable, and it's there's 0:04:30.839 --> 0:04:33.719 a reason why these companies are staying private for twelve, thirteen, 0:04:33.839 --> 0:04:37.440 fourteen years to get market dominance before they actually go 0:04:37.520 --> 0:04:40.080 out in price and start operating under that quarter over 0:04:40.160 --> 0:04:43.719 quarter basis. Another interesting development in the equity capital markets 0:04:43.720 --> 0:04:46.719 in twenty nineteen, at least to me, was direct public listings. 0:04:46.760 --> 0:04:49.719 Could you kind of help us understand what those are 0:04:49.800 --> 0:04:51.560 and are we can see more of them? Yeah, I 0:04:51.600 --> 0:04:54.599 think it's a huge trend. UM. The New York Stock Exchanges, 0:04:54.800 --> 0:04:59.000 as you have reported, is currently pushing to allow companies 0:04:59.040 --> 0:05:02.320 to raise capital these direct listings. We think they're amazingly 0:05:02.360 --> 0:05:07.640 efficient UM, and they really allow investors to come into 0:05:07.640 --> 0:05:13.560 deals UM on a market based pricing basis, meaning there 0:05:13.640 --> 0:05:16.560 isn't a cover price. They're really in the two that 0:05:16.680 --> 0:05:20.640 have been out there, we've done significant business around both 0:05:20.640 --> 0:05:23.120 Slack and Spotify, and you saw investors start to come 0:05:23.160 --> 0:05:28.880 in days before and write it through for the company itself. UM. 0:05:28.920 --> 0:05:33.960 It allows them to raise money, UM, not through this 0:05:34.120 --> 0:05:37.800 small group of investors who have been brought by an 0:05:37.800 --> 0:05:41.920 investment bank, but really to provide access broadly. The one 0:05:41.960 --> 0:05:44.279 concern that people have are one of the main concerns 0:05:44.360 --> 0:05:47.320 is that there is severe misvaluation going on in private markets, 0:05:47.320 --> 0:05:49.320 and we work as sort of heralded as the example 0:05:49.440 --> 0:05:52.919 of that. Do you think that that is accurate? I 0:05:52.920 --> 0:05:59.760 think it's becoming um more coming off from we we work. 0:05:59.800 --> 0:06:02.400 I think the focus of valuations really that's the theme 0:06:02.400 --> 0:06:05.479 of how twenty nineteen ended, and so I'd say that 0:06:05.560 --> 0:06:09.280 there have been a lot of valuation news in twenty nineteen, 0:06:09.320 --> 0:06:11.480 really on a couple of the big investors, soft Bank 0:06:11.520 --> 0:06:13.720 being one. I think when you see a broader group 0:06:13.720 --> 0:06:16.120 of people coming into these companies, you're gonna see pricing 0:06:16.160 --> 0:06:19.080 settled down. Kelly Rodriguez, thanks so much for joining us. 0:06:19.120 --> 0:06:21.919 Kelly Rodriguez is the chief executive officer of Forged, based 0:06:21.920 --> 0:06:23.960 in San Francisco, but joining us here in our Bloomberg 0:06:24.000 --> 0:06:27.520 Interactive Broker studio really fascinating part of the equity capital 0:06:27.520 --> 0:06:29.880 markets in twenty nineteen. You know, we're some of those 0:06:30.400 --> 0:06:33.360 big unicorn deals that did not trade well and maybe 0:06:33.400 --> 0:06:35.400 how that changed how investors are looking at some of 0:06:35.440 --> 0:06:37.680 these coming I think the key debate post crisis has 0:06:37.720 --> 0:06:40.640 been the evolution of private markets and how that has 0:06:40.680 --> 0:06:44.200 become increasingly dominant for a source of funding for companies 0:06:44.200 --> 0:06:47.080 of all sizes, not just the very smallest ones. And 0:06:47.080 --> 0:06:49.000 it really raises a question of some of the flaws 0:06:49.080 --> 0:06:52.240 in public markets, uh and where private markets are are 0:06:52.320 --> 0:06:55.359 sort of benefiting the public markets need to need to 0:06:55.360 --> 0:06:57.080 take on. Yeah, and we're seeing you know, we saw 0:06:57.120 --> 0:06:59.919 with Uburn Lift Company staying private longer because there is 0:07:00.120 --> 0:07:16.560 much capital. Let me know that consumers have really been 0:07:16.600 --> 0:07:19.560 the backbone of economic growth in the United States, and 0:07:19.600 --> 0:07:22.080 we got some data today that showed that the consumers 0:07:22.120 --> 0:07:24.760 still doing well. We are consumer retail sales today came 0:07:24.800 --> 0:07:28.040 in pretty strong for the month of December, indicating once 0:07:28.040 --> 0:07:31.280 again that the consumer continues to spend. It help us 0:07:31.480 --> 0:07:34.000 breakdown what's going on in all things retail. We welcome 0:07:34.000 --> 0:07:37.640 our good friend, uh Bert Flickinger, Managing director, Strategic Resource 0:07:38.320 --> 0:07:40.280 Resource Group, joining us here and I blew our interactive 0:07:40.280 --> 0:07:43.120 broker stat Studio. Bert, thanks so much for joining us. 0:07:43.360 --> 0:07:45.840 We did get those retail sales numbers today. What kind 0:07:45.880 --> 0:07:48.720 of stood out for you? What really stood out and 0:07:48.880 --> 0:07:51.720 and Lisa and Tom talked about it so well at 0:07:51.760 --> 0:07:55.320 the open, is that auto sales down shifted a little bit, 0:07:55.440 --> 0:07:59.000 and we're seeing the auto manufacturers charge real price premiums 0:07:59.240 --> 0:08:03.239 and actually making smaller cars, so the consumers uh won't 0:08:03.280 --> 0:08:05.520 pay more for less. And at the same time, on 0:08:05.560 --> 0:08:09.440 the Bloomberg terminal, you look at auto loans and auto 0:08:09.520 --> 0:08:12.720 credit is an all time high. So with consumers spending 0:08:12.800 --> 0:08:16.600 less on auto, they're spending they're spending more in restaurants 0:08:16.680 --> 0:08:20.280 and spending more on the rest of retail um importantly, 0:08:20.280 --> 0:08:23.840 what Lisa pointed out earlier, not on luxury. Well, so 0:08:24.280 --> 0:08:27.560 here's what I'm Here's what I'm struggling to understand. Its 0:08:27.600 --> 0:08:30.200 consumers are spending more in retail and clothes and stuff 0:08:30.200 --> 0:08:33.440 like that. And then it Coal's J. C. Penny even 0:08:33.520 --> 0:08:38.120 target disappointed the holiday of forecasts. How do we swear 0:08:38.160 --> 0:08:41.600 those two things? Lisa, this is a really important insight 0:08:41.679 --> 0:08:46.200 you're bringing up. And and the real idiosyncracy institutionally is 0:08:46.440 --> 0:08:49.480 how can the Bonti group of six different department stores 0:08:49.480 --> 0:08:53.600 to Barney's New York Liquid Aid and these retailers you're 0:08:53.640 --> 0:08:57.680 referencing aren't targeting those lost shoppers who are loyal to 0:08:58.280 --> 0:09:02.400 the other retailers from Herberts to Carson's to Barney's and 0:09:02.840 --> 0:09:06.160 shift them over the stores. The other thing we're seeing 0:09:06.520 --> 0:09:08.920 is the vendors are actually actually doing in some of 0:09:08.920 --> 0:09:11.120 the stores that some of the brand vendors are trying 0:09:11.160 --> 0:09:14.640 to get the shoppers to buy direct online from the 0:09:14.720 --> 0:09:17.520 brand instead of going to the store. So they're under 0:09:17.559 --> 0:09:21.319 allocating the inventory to the stores, and the stores are 0:09:21.400 --> 0:09:25.280 cutting working capital and don't don't have enough inventory in 0:09:25.280 --> 0:09:28.200 the stores themselves. How do you get the Bonton customer 0:09:28.440 --> 0:09:31.360 the Barneys customer two very different customers. Meanwhile, but how 0:09:31.360 --> 0:09:34.760 do you attract them? So, say, say with Shields and 0:09:35.040 --> 0:09:39.160 in Grand Forks, North Dakota, would part of our retail 0:09:39.280 --> 0:09:43.480 route is um go to the Shields customers and cross 0:09:43.559 --> 0:09:47.240 merchandise for the customer lists for the herburgers who are 0:09:47.280 --> 0:09:50.199 on the other side of the same shopping center. And 0:09:50.240 --> 0:09:55.760 then there's so many good means through uh am its on, 0:09:56.280 --> 0:10:01.160 uh analytics, Facebook analytics, survey monk key to find where 0:10:01.160 --> 0:10:07.080 shoppers shopped and then offer them UH discounts and coupons 0:10:07.120 --> 0:10:10.560 to convert them and all generations of their family UH 0:10:10.600 --> 0:10:16.080 from babies to pets, pet products to stuff for seniors. 0:10:16.080 --> 0:10:17.959 Just probably what if you could just clarify for me 0:10:17.960 --> 0:10:20.840 because I thought I had to handle on holiday sales 0:10:20.880 --> 0:10:24.440 that they are up three four pretty good. But then again, 0:10:24.440 --> 0:10:26.720 at least I was mentioned, we've had some retailers posts 0:10:26.720 --> 0:10:29.400 some of the holiday numbers that don't necessarily align with that. 0:10:29.440 --> 0:10:31.199 So was it is it? Clearly? Is it a game 0:10:31.640 --> 0:10:34.360 of winners and losers? It's not all retailers are lifting. 0:10:34.679 --> 0:10:37.679 It's it's just your reference, Paul. It's it's winners and losers. 0:10:37.960 --> 0:10:41.400 It's also leaders that in many of these retailers, you 0:10:41.800 --> 0:10:46.000 have a male monarchy of people who are nbas and 0:10:46.080 --> 0:10:48.000 came from hedge funds and didn't come up from the 0:10:48.040 --> 0:10:50.680 shop floors. So they're not promoting the best and the 0:10:50.760 --> 0:10:55.520 brightest women. And some of those retailers are really struggling 0:10:55.880 --> 0:11:00.240 from having older Caucasian guys that spend more time with 0:11:00.280 --> 0:11:02.800 the Wall Street analysts and they spend with their people 0:11:02.840 --> 0:11:05.280 in their own stores. So you can blame issues with 0:11:05.280 --> 0:11:07.599 with a lack of diversity in the C suite or 0:11:08.120 --> 0:11:10.040 what have you. I think that the sort of question 0:11:10.080 --> 0:11:13.280 that I have is there is this fundamental shift from 0:11:13.360 --> 0:11:17.200 the brick and mortar to online, and how much do 0:11:17.280 --> 0:11:20.440 you invest in the experience of going into brick and 0:11:20.480 --> 0:11:27.080 mortar versus invest in your online outfits to compete with Amazon, Lisa, 0:11:27.160 --> 0:11:31.200 the experience you're referencing is essential. So there's a lost 0:11:31.400 --> 0:11:35.920 magic of merchandizing. That Frozen two was the big biggest 0:11:35.960 --> 0:11:41.080 event over the holidays for children, for parents, for grandparents, 0:11:41.120 --> 0:11:45.320 and no, no retailer really tied in to Frozen two, 0:11:45.360 --> 0:11:49.360 So it was a whole merchandizing opportunity. And UH, Targets 0:11:50.160 --> 0:11:53.720 cavetching like crazy that toys sales were flat while Amazon 0:11:53.840 --> 0:11:58.040 completely eclipse Target and everybody else on toys because Amazon 0:11:58.640 --> 0:12:02.960 was the best and merchandise Frozen toys and the other toys, 0:12:03.160 --> 0:12:06.080 and the department stores and the discount stores lost that 0:12:06.320 --> 0:12:10.600 magic of merchandizing of Disney theme products and other events, 0:12:11.000 --> 0:12:15.920 and to Paul's point, just just merchandizing the entire store 0:12:15.920 --> 0:12:19.080 instead of selling out the window at Bloomingdale's across the 0:12:19.120 --> 0:12:23.439 street to LVMH, which is like imagine a line fixed fortification. 0:12:23.720 --> 0:12:27.360 The window never changes in selling all the prime real 0:12:27.520 --> 0:12:30.120 estate and the stores to the vendors who don't change 0:12:30.120 --> 0:12:32.520 the assortments and don't make it exciting and don't have 0:12:32.640 --> 0:12:35.640 themes to get shoppers out of the home, out of 0:12:35.640 --> 0:12:37.840 the apartment, out of the office to stop at the 0:12:37.880 --> 0:12:41.200 stores to shop because there's no excitement and no magic 0:12:41.240 --> 0:12:45.280 merchandising in retail. We've talked about the theme. I guess 0:12:45.480 --> 0:12:49.040 as we think about the Amazon effect on retail, of 0:12:49.080 --> 0:12:52.520 the u s still being overstored, give us your your 0:12:52.960 --> 0:12:55.400 perception of kind of that issue. How much more does 0:12:55.480 --> 0:12:58.000 the footprint need to shrink you think, Paul, you're calling 0:12:58.000 --> 0:13:02.360 out a crisis that's really underreported other than Bloomberg. As 0:13:02.360 --> 0:13:05.559 we shrank from four hundred percent overstored to two hundred 0:13:05.640 --> 0:13:09.720 percent overstored. So all these real estate property taxes and 0:13:09.800 --> 0:13:15.000 sales taxes that fund the educational systems for public schools 0:13:15.000 --> 0:13:17.400 across the country, that whole tax base is going to 0:13:17.480 --> 0:13:20.720 be wiped out. Two hundred thousand workers wiped out in 0:13:20.760 --> 0:13:23.480 the last two years, seventy percent of home or women. 0:13:23.920 --> 0:13:28.040 And as Lisa always references so well, the underfunded pension 0:13:28.080 --> 0:13:32.320 plans and all these retailers the employers have to fully fund. 0:13:32.760 --> 0:13:35.600 That's at risk as we shrink from four hundred percent 0:13:35.640 --> 0:13:39.120 to two hundred percent overstored. Burt Flickintar, thank you, thank 0:13:39.160 --> 0:13:41.840 you as always for your perspective for a Flickintar managing 0:13:41.840 --> 0:13:44.720 director for a Strategic Resource group, giving us some really 0:13:44.760 --> 0:13:48.360 important color into the retail sales that came out stronger 0:13:48.360 --> 0:13:51.000 than expected, particularly as Burt was mentioning, if you strip 0:13:51.000 --> 0:13:53.880 out autos, for example, the estimate was an increase of 0:13:53.960 --> 0:13:56.719 zero point five percent month over month, and it was 0:13:56.800 --> 0:13:59.760 zero point seven percent once you strip out autos, and 0:14:00.040 --> 0:14:02.200 it was similarly a beat. What are yousrew about autos 0:14:02.200 --> 0:14:20.360 and gas? It just on the impeachment process. We had 0:14:20.400 --> 0:14:22.960 some news out today that g A O says that 0:14:23.000 --> 0:14:26.640 the White House broke the law in aid delay. So 0:14:26.720 --> 0:14:28.800 that news is out, we will have more on that. Also. 0:14:28.920 --> 0:14:33.120 Leve Parnessey indicted associated Trump's personal lawyer Rudy Giuliani, accused 0:14:33.160 --> 0:14:36.520 Trump of lying in an interview with msnbc is Rachel 0:14:36.520 --> 0:14:38.880 Maddow last night. This is the first TV interview since 0:14:38.920 --> 0:14:42.400 the Ukraine story. Brooklet's listening. President Trump no exactly what 0:14:42.520 --> 0:14:46.520 was going on. He was aware of all my movements. Uh, 0:14:46.920 --> 0:14:50.040 he wouldn't do anything without the consent of Y Julian 0:14:50.400 --> 0:14:53.560 or the President. In terms of the President what he 0:14:53.600 --> 0:14:56.520 has said about you, Um, he said about you and 0:14:56.640 --> 0:14:59.360 Mr Freman Egor Freman, I don't know those gentlemen, I 0:14:59.360 --> 0:15:01.960 don't know about them. I don't know what they do. 0:15:02.320 --> 0:15:04.600 You're saying that was not a true statement for the president. 0:15:06.720 --> 0:15:10.200 That was Leve Partners indicted associated Trump's personal lord Rudy 0:15:10.200 --> 0:15:13.040 Giuliani on with the MSNBC's Rachel Meadow last night to 0:15:13.120 --> 0:15:16.920 dig into this developing story. Welcome Clinton Watts, Distinguished Research 0:15:16.920 --> 0:15:19.920 Fellow the Foreign Policy Research Instit who's also a Senior 0:15:19.960 --> 0:15:22.840 Fellow at the Center for Cyber and Homeland Security, George 0:15:22.840 --> 0:15:25.760 Washington University, joining us on the phone. Clint, thanks so 0:15:25.800 --> 0:15:28.440 much for joining us. I want to start with Leve 0:15:28.840 --> 0:15:33.400 partners very damning commentary last night. Is he a credible 0:15:33.400 --> 0:15:38.800 witness in your mind? He is in certain context, the 0:15:38.840 --> 0:15:42.360 context where he is undertaking actions, when he's moving from 0:15:42.360 --> 0:15:44.480 place to place, when he's in Ukraine, when he saw 0:15:44.600 --> 0:15:48.000 into Rudy Giuliani. Absolutely, he's the first person witness. He's 0:15:48.000 --> 0:15:50.560 really one of the only first person witnesses who's been 0:15:50.560 --> 0:15:52.640 involved in a lot of the actions that if you 0:15:52.840 --> 0:15:57.160 rewind all the way to that whistleblower complaint. Uh, he's 0:15:57.200 --> 0:15:59.360 at the center of the storm what was actually going 0:15:59.400 --> 0:16:03.760 on where it gets a little I think somewhat dicey 0:16:03.800 --> 0:16:06.720 is when he starts talking or referencing very high level 0:16:06.760 --> 0:16:11.120 officials across the Trump administration, how does he know those things? 0:16:11.160 --> 0:16:14.600 And he says it almost seems that he's assuming this, 0:16:14.840 --> 0:16:18.360 or he's assuming that, for example, Attorney General bar the 0:16:18.400 --> 0:16:22.120 way he referenced the Attorney General that he was part 0:16:22.120 --> 0:16:24.640 of the team or are new It seems like he 0:16:24.720 --> 0:16:26.720 wasn't a first person witness to that. He was just 0:16:26.720 --> 0:16:29.720 sort of relaying his in person, you know, his interpretation 0:16:29.720 --> 0:16:31.920 of the event. And so I think the further you 0:16:31.960 --> 0:16:34.840 get away from Rudy Giuliani and what and what Partners 0:16:34.880 --> 0:16:37.680 was actually doing, maybe the less credibility there is or 0:16:37.720 --> 0:16:40.960 he's implying or inferring things that he doesn't have you know, 0:16:41.080 --> 0:16:45.600 direct actual witness uh information to. So there's that side 0:16:45.600 --> 0:16:48.560 of it. And then to this morning, coming out the 0:16:48.560 --> 0:16:53.400 Government Accountability Office, which is a nonpartisan part that takes 0:16:53.440 --> 0:16:56.160 a look at governmental actions, say that says that he 0:16:56.280 --> 0:16:59.280 said that the White House Budget Office violated federal law 0:16:59.480 --> 0:17:02.520 by with whole thing about million dollars appropriated by Congress 0:17:02.520 --> 0:17:06.160 to the Defense Department for security aid to Ukraine. I'm 0:17:06.200 --> 0:17:08.800 just wondering right now all of this that's been going 0:17:08.840 --> 0:17:11.000 on in Washington, d C. Has been treated like a 0:17:11.080 --> 0:17:13.920 side show by markets. They have not been paying attention. 0:17:13.960 --> 0:17:16.320 It's also been treated like a side show by a 0:17:16.359 --> 0:17:19.399 significant portion of the population. At what point does it 0:17:19.480 --> 0:17:24.760 cross through? If ever? From your perspective, I'm shocked that 0:17:24.800 --> 0:17:28.600 it hasn't. Mostly from the perspective of Congress, what Congress 0:17:28.680 --> 0:17:31.840 is saying is strip out you know how you feel 0:17:31.840 --> 0:17:35.480 about the president, um, strip out how you feel about 0:17:35.520 --> 0:17:39.320 members of Congress, the idea of the constitution and that 0:17:39.400 --> 0:17:42.000 and that's clearly you know, what I think we should 0:17:42.000 --> 0:17:45.080 be worried about, long run, is that Congress has oversight 0:17:45.280 --> 0:17:49.480 there the folks that established the budget, the executive brands 0:17:49.480 --> 0:17:52.679 of the presidents, the person that executes you know, those uh, 0:17:53.280 --> 0:17:56.919 those parameters of that budget and defends the law. And 0:17:56.960 --> 0:18:00.800 what you're seeing is the sentence in this case clearly 0:18:00.840 --> 0:18:06.200 not having you know, its authority undertaken as the administer 0:18:06.359 --> 0:18:09.840 of the budget by the executive branch. And why would 0:18:09.880 --> 0:18:11.960 they not want to look into that just from a 0:18:12.000 --> 0:18:14.760 balance of powers. It really shows how politics has really 0:18:14.840 --> 0:18:20.200 shaped this entire process around impeachment to where we should 0:18:20.200 --> 0:18:23.600 be asking, I think as a nation when Congress makes 0:18:23.600 --> 0:18:27.399 a law, when Congress appropriates funds, is it being followed 0:18:27.400 --> 0:18:29.879 through with according to the law. And the answer is no, 0:18:30.119 --> 0:18:32.480 it's it's very clear. And I think that's what the 0:18:32.520 --> 0:18:36.639 announcement from the Budget Office, when you look at what 0:18:36.680 --> 0:18:39.679 they were doing, today's announcement is super critical. We're basically 0:18:39.720 --> 0:18:42.120 saying that the president can do whatever he wants with 0:18:42.440 --> 0:18:45.359 the nation's money and it doesn't matter what the law say. 0:18:45.400 --> 0:18:48.320 And I think that is a damning thing for democracy. 0:18:48.320 --> 0:18:51.720 Imagine how this plays out one or two administrations from now, 0:18:52.080 --> 0:18:54.680 where presidents see this, they take power and they say, 0:18:54.720 --> 0:18:56.840 you know what, I'm going to use all levels of 0:18:56.920 --> 0:19:01.439 financial influence to help my own political campaign or my 0:19:01.480 --> 0:19:05.000 own personal feelings about any country. That's definitely not how 0:19:05.040 --> 0:19:07.080 we want our government to run. Okay. So, just to 0:19:07.080 --> 0:19:09.200 follow upon that, Colin, how do you think the new 0:19:09.240 --> 0:19:12.080 revelations by left partners as well as the g a 0:19:12.240 --> 0:19:14.840 O finding today, how do you think that will what 0:19:14.920 --> 0:19:18.960 will mean for the impeachment trial. I sadly think it don't. 0:19:19.000 --> 0:19:21.880 It won't mean much. It just seems that we're not 0:19:21.960 --> 0:19:25.679 going to have a real trial where evidence is put forward. 0:19:26.160 --> 0:19:29.040 Maybe you will see some Republican senators. We've already seen 0:19:29.080 --> 0:19:34.080 some notions that they would like to see witnesses come forward. Um, 0:19:34.119 --> 0:19:36.679 maybe it will change that in the sense that there 0:19:36.680 --> 0:19:39.119 will be enough Republicans that will push to see witnesses 0:19:39.119 --> 0:19:42.240 come forward. But then if you only have partners come 0:19:43.760 --> 0:19:45.520 I'm not sure we'll have much of an impact. I 0:19:45.560 --> 0:19:47.879 think the key person in all of this, to be honest, 0:19:48.000 --> 0:19:50.920 is John Bolton. I mean he is a witness who 0:19:50.960 --> 0:19:54.399 was trying to seems to pursue foreign policy in a 0:19:54.960 --> 0:19:58.040 in an appropriate way led by the government, not a 0:19:59.320 --> 0:20:03.439 personal compath, asked Rudy Giuliani. As a president lawyer, he 0:20:03.560 --> 0:20:06.320 seems to understand both the budget process, He's a long 0:20:06.359 --> 0:20:10.160 time hand in the US government. I also see him 0:20:10.160 --> 0:20:12.840 as somebody who was similar to Jeff Sessions, which is 0:20:13.160 --> 0:20:16.200 not going to violate the law and may have strong 0:20:16.280 --> 0:20:18.600 personal feelings and convictions about what they want to see 0:20:18.600 --> 0:20:21.439 the United States pursue, but won't really break out of 0:20:21.480 --> 0:20:26.040 the norms uh in this case. And I think that's what. 0:20:26.560 --> 0:20:28.560 If there's any witness that I think is important is this, 0:20:28.760 --> 0:20:30.600 I think it's John Bolton. And you saw that in 0:20:30.640 --> 0:20:34.200 the testimony of Fiona Hill during the House hearing. Clint Watts, 0:20:34.240 --> 0:20:36.000 thank you so much for being with us. Clint Watts 0:20:36.040 --> 0:20:39.880 is Distinguished Research Fellow for the Foreign Policy Research Institute, 0:20:39.920 --> 0:20:42.040 also Senior Fellow at the Center for Cyber and Homeland 0:20:42.040 --> 0:20:45.520 Security at George Washington University, and author of a book 0:20:45.640 --> 0:20:48.280 Messing with the Enemy, Surviving in a social media world 0:20:48.320 --> 0:21:05.199 of hackers, terrorists, Russians and fake news. Lucky to have 0:21:05.280 --> 0:21:07.639 with us today. The director of Research at the World 0:21:07.720 --> 0:21:10.600 Gold Council a Juan Carlos Artigas, and it joins us 0:21:10.600 --> 0:21:12.640 here in our Bloomberg in our active broker studios. It's 0:21:12.640 --> 0:21:15.919 really interesting to me to see how many pro gold 0:21:15.920 --> 0:21:19.280 calls we have gotten recently, including from a top executive 0:21:19.760 --> 0:21:22.360 from Bridgewater associate saying the gold is headed to two 0:21:22.400 --> 0:21:25.359 tho dollars now it's from fifteen fifty currently. What are 0:21:25.400 --> 0:21:28.240 the main drivers of that? Yeah, and thank you so 0:21:28.320 --> 0:21:30.680 much for having me, by the way, And what's interesting 0:21:30.840 --> 0:21:33.480 is that, um, there are not only the asset managers. 0:21:33.480 --> 0:21:36.760 When you talk to investors, they are we have seen 0:21:36.880 --> 0:21:40.040 more and more awareness and willingness to to consider gold. 0:21:40.040 --> 0:21:42.080 So what is behind this movie? If you look in 0:21:42.119 --> 0:21:45.080 particular at two thousand and nineteen, and you will see 0:21:45.119 --> 0:21:49.639 something like similar progressing into twenty. I would highlight um 0:21:49.880 --> 0:21:54.960 basically three things. Number one, market risk and uncertainty are high. Yes, 0:21:55.000 --> 0:21:57.760 the stock market is going on and you have, you know, 0:21:57.880 --> 0:22:02.480 some positive developments in the global economy, but not everything 0:22:02.600 --> 0:22:05.240 is is perfect and actually some of those high valuations 0:22:05.240 --> 0:22:08.600 in the stock market are worrying investors. So that's that's one. 0:22:08.720 --> 0:22:12.080 Geopolitical risk across the world is tensions, so on and 0:22:12.119 --> 0:22:14.360 sup for that's number one. The second part, and it's 0:22:14.359 --> 0:22:20.560 somewhat related, is that interest rates have fallen monetary policies 0:22:20.680 --> 0:22:23.320 quite a commulative There is a record number of central 0:22:23.320 --> 0:22:28.919 banks scotting rates or expanding alternative monetary policies and so 0:22:28.960 --> 0:22:31.960 on and so forth, which again reduces the opportunity cost 0:22:32.000 --> 0:22:34.760 of holding gold. So risk and uncertainty and opportunity costs 0:22:34.880 --> 0:22:40.000 are supporting investment demand. And in addition, I think that 0:22:40.840 --> 0:22:42.880 one of the things that is important to understand when 0:22:42.920 --> 0:22:45.840 it comes to gold is that while a lot of 0:22:45.920 --> 0:22:49.960 investors and market participants think about gold in the context 0:22:49.960 --> 0:22:53.160 of hedging and and risk, the verification and so on, 0:22:53.560 --> 0:22:56.840 there's an additional side of gold dual nature of gold 0:22:56.960 --> 0:23:00.320