WEBVTT - Former CBS Sports' Pilson: What Everyone's Missing About NFL Deal 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.640 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:23.599 at Bloomberg dot com slash podcast. Well, the money machine 0:00:23.640 --> 0:00:26.799 that is better known as the NFL did it again. 0:00:27.240 --> 0:00:31.480 They sat down with their broadcast quote unquote partners, negotiated 0:00:31.560 --> 0:00:33.680 new deals beginning a couple of years, and they're going 0:00:33.800 --> 0:00:36.960 all the way to the bank, and that includes going 0:00:37.240 --> 0:00:39.760 digital in a big way with a Thursday Night package. 0:00:39.920 --> 0:00:41.919 Let's break it all down. We can do that with 0:00:42.240 --> 0:00:45.760 Neil Pilson. He's a founder and president of Pilson Communications, 0:00:45.880 --> 0:00:49.040 former president of CBS Sports. Neil, thanks so much for 0:00:49.120 --> 0:00:52.199 joining us here. Let's start with the Amazon aspect to 0:00:52.320 --> 0:00:55.160 this deal. Boy, it's the first time where you get 0:00:55.160 --> 0:00:58.640 a big digital player stepping up and getting a notable package, 0:00:58.680 --> 0:01:00.520 in this case Thursday Night game. What do you make 0:01:00.560 --> 0:01:05.640 of that? Well, I'm not surprised. Uh. The other networks, 0:01:05.680 --> 0:01:08.640 the broadcast networks didn't want it. They didn't have much 0:01:08.680 --> 0:01:13.160 interest in Thursday Night. It was expensive, the schedule wasn't 0:01:13.200 --> 0:01:16.720 that good. They didn't need it as long as they 0:01:17.319 --> 0:01:24.119 retained their Sunday afternoon, Sunday Night, and Monday night schedules. Uh. Frankly, Uh, 0:01:24.280 --> 0:01:28.560 the NFL didn't have interest from from those guys. So 0:01:29.240 --> 0:01:34.520 the digital components understandable, Uh, predictable. But I think, frankly, 0:01:34.600 --> 0:01:37.560 the big story you missed. The big story is the 0:01:37.959 --> 0:01:45.360 broadcast networks and ESPN reaffirmed their permanence uh in broadcast 0:01:45.400 --> 0:01:48.960 sports for the next eleven years. I think everybody was predicting, 0:01:49.400 --> 0:01:51.680 you know, the demise of the networks, the end of 0:01:51.760 --> 0:01:57.080 living your television. Uh, the networks are going to go away. Uh. No, 0:01:57.840 --> 0:02:01.640 the networks are here too, here for the next eleven years. Uh. 0:02:02.600 --> 0:02:07.560 That's the important story. I think the fact that Thursday 0:02:07.640 --> 0:02:11.960 Night went to digital is is predictable. Uh. It represents 0:02:12.000 --> 0:02:17.800 about I think thirteen of the total financial pie. But 0:02:17.880 --> 0:02:21.240 the fact is that on just about every major sport 0:02:21.400 --> 0:02:27.560 where uh there was broadcast television and digital television side 0:02:27.560 --> 0:02:33.720 by side, digital never got over five. So uh, you know, 0:02:33.960 --> 0:02:37.040 one day, yes, we probably will all be in the 0:02:37.120 --> 0:02:43.079 digital format. But right now, the broadcast networks I think 0:02:43.120 --> 0:02:47.440 got to be very pleased with their packages, Neil, I 0:02:47.480 --> 0:02:51.160 mean to that to your point, cable systems must be 0:02:51.280 --> 0:02:55.640 so happy about this, because I can't think of any 0:02:55.720 --> 0:03:01.040 other reason I would stay with an the top box 0:03:01.840 --> 0:03:05.440 other than being able to get network sports. I mean, 0:03:06.840 --> 0:03:09.600 is that the only big Isn't that a huge big 0:03:09.680 --> 0:03:14.480 draw for cable? Sure, it is very important to them. 0:03:14.720 --> 0:03:18.480 The cable folks have to be very pleased with the 0:03:18.520 --> 0:03:23.360 outcome of the NFL negotiations, no question about it. But 0:03:23.600 --> 0:03:28.880 even more pleased are the television station and the television networks, 0:03:28.960 --> 0:03:34.240 the broadcasters, because I don't think the NFL is going 0:03:34.240 --> 0:03:39.119 to be the only UH network to continue with broadcast 0:03:39.200 --> 0:03:44.120 television with its major major events. I can't see the 0:03:44.240 --> 0:03:50.200 NBA moving away. UH. The NHL just made a long 0:03:50.320 --> 0:03:55.560 term deal with ESPN, which is more UH in the 0:03:55.600 --> 0:03:59.600 broadcaster mode. UH. They're actually a hybrid because they have 0:03:59.920 --> 0:04:04.360 SPN plus, but ESPN is regarded as one of the 0:04:04.400 --> 0:04:09.160 traditional broadcasters. UH. Then you have Major League Baseball, which 0:04:09.200 --> 0:04:15.800 basically has long term agreements with with the with the broadcasters. UH. 0:04:15.960 --> 0:04:18.400 So it's a it's a statement. The Olympics are long 0:04:18.520 --> 0:04:21.760 term with the broadcasters. I'm running through in my mind. 0:04:22.360 --> 0:04:25.560 The n c A A tournament is long term with 0:04:25.720 --> 0:04:30.880 CBS and Turner. My point is that those in the 0:04:30.920 --> 0:04:36.119 media who predicted the end of linear television, they were wrong. 0:04:36.200 --> 0:04:39.960 There it's continuing. Uh, it's going to have to share 0:04:40.000 --> 0:04:44.800 the spectrum and share audience with digital, but linear television 0:04:45.200 --> 0:04:47.600 for the foreseeable future. And I think we're talking now 0:04:47.640 --> 0:04:51.400 about the next ten years is going to be a force. 0:04:51.520 --> 0:04:55.880 It's it's it's real. It's uh, it's not going away. Hey, Neil, 0:04:56.360 --> 0:04:58.120 I want to talk about the economics of some of 0:04:58.160 --> 0:05:01.080 these rights deals. It's just downs me here. Every time 0:05:01.120 --> 0:05:03.400 they come up from renewal, the fee seemed to double. 0:05:03.400 --> 0:05:06.320 And I remember your former boss, Mel Karmers and at 0:05:06.360 --> 0:05:08.880 CBS when they when CBS got its package back that 0:05:08.960 --> 0:05:12.080 it had lost years ago. He famously said that an 0:05:12.120 --> 0:05:15.520 investor conference, when asked about the profitability, we will make 0:05:15.560 --> 0:05:18.160 a dollar is what he said, basically implying that's a 0:05:18.200 --> 0:05:21.600 break even business. And obviously they look at sports playing 0:05:21.640 --> 0:05:24.320 it a little further. Okay, I was there when we 0:05:24.440 --> 0:05:31.840 lost the NFL yes with Larry Tish back in four uh, 0:05:31.920 --> 0:05:36.560 and I predicted to Larry that CBS would lose more 0:05:36.640 --> 0:05:42.039 money without the NFL then they might lose with the NFL. 0:05:43.240 --> 0:05:47.680 He didn't believe me. Well, it happened, and four years later, 0:05:47.800 --> 0:05:52.600 CBS came crawling back to the NFL saying basically, give 0:05:52.720 --> 0:05:56.320 us any package, name your price. We've got to get 0:05:56.360 --> 0:06:01.560 back with professional football. And they did. Uh. NBC went 0:06:01.600 --> 0:06:07.000 through the same discussion because NBC had a slightly stronger network. 0:06:07.040 --> 0:06:11.200 They lasted eight years without the NFL, then they came 0:06:11.279 --> 0:06:15.000 crawling back. So, uh, it's not the issue of whether 0:06:15.040 --> 0:06:17.800 you make any money or lose any money. The issue 0:06:17.920 --> 0:06:21.760 is will you lose more money if you lose the NFL. 0:06:21.880 --> 0:06:25.680 And the answer to that is yes. And that explains 0:06:25.760 --> 0:06:30.120 the current deal. Is the is the NFL completely dominant? 0:06:30.160 --> 0:06:33.279 I mean we have Neil international listeners who maybe you 0:06:33.279 --> 0:06:36.919 don't understand the importance of football, you know, American football 0:06:36.960 --> 0:06:40.320 in America. The word is completely and I think you 0:06:40.400 --> 0:06:43.839 used it. Yes, it is the dominant. Uh. You know, 0:06:43.920 --> 0:06:46.800 you look at the NFL ratings on a given weekend, 0:06:47.440 --> 0:06:54.840 if you include the pregame shows and and Thursday Friday said, Thursday, Saturday, Thursday, Sunday, Monday, 0:06:54.960 --> 0:06:58.320 the NFL is getting seventy or eighty rating points every weekend, 0:06:59.560 --> 0:07:04.480 and no other entertainment property or sports property comes close 0:07:04.520 --> 0:07:08.120 to that. Uh. And it's and it's steady, it's it's 0:07:08.120 --> 0:07:13.840 almost it is guaranteed just about. So it is totally 0:07:13.880 --> 0:07:17.400 unique property, unique to the USA. But you know, you 0:07:17.440 --> 0:07:21.000 look at World Cup ratings around the world. You look 0:07:21.040 --> 0:07:25.960 at the the ratings that the Premier League gets, the 0:07:25.960 --> 0:07:30.960 importance of European soccer, Well, this is our premier League 0:07:31.720 --> 0:07:35.440 by a larger margin than in Europe because there's so 0:07:35.520 --> 0:07:39.520 much more competition here. We have so many more professional 0:07:39.720 --> 0:07:44.000 and college sports programming in the US compared to any 0:07:44.040 --> 0:07:47.200 other country in the world. And the fact is the 0:07:47.360 --> 0:07:52.920 NFL is the dominant by far. Is anything important property 0:07:53.040 --> 0:07:56.520 entertainment property as well? Is anything? Uh do you see 0:07:56.560 --> 0:07:59.520 any big growth anywhere? I mean, I'm living over here, 0:07:59.640 --> 0:08:04.040 so I watch, you know, Formula one religiously. Everybody watches 0:08:04.080 --> 0:08:06.000 Premier League, but it doesn't seem to have picked up 0:08:06.000 --> 0:08:08.320 in the US. Is there anything that you see as 0:08:08.320 --> 0:08:10.720 a shooting star as a big growth in terms of 0:08:10.760 --> 0:08:15.520 sports properties? Well? Uh, first of all, is the major 0:08:15.560 --> 0:08:19.240 properties occupy a tremendous amount of attention so it's very 0:08:19.280 --> 0:08:24.600 hard to kind of grow into that stature. But frankly, uh, 0:08:24.800 --> 0:08:29.440 international soccer is growing in the US, it is doing better. 0:08:29.720 --> 0:08:35.040 International soccer gets much better ratings nationally than MLS. Uh. 0:08:35.360 --> 0:08:40.560 That's not widely known, but MLS has very strong local interest, 0:08:41.040 --> 0:08:45.520 but so far they have not cracked the national ratings. Uh. 0:08:46.760 --> 0:08:51.760 Very well. Um, there, No, I don't. I don't see 0:08:52.760 --> 0:08:57.319 any any new sport or any sport that currently exists 0:08:58.400 --> 0:09:02.160 growing to the point where it is comparable to not 0:09:02.280 --> 0:09:06.960 just NFL, but comparable to college football, which frankly is 0:09:07.040 --> 0:09:11.360 the second highest rated programming. And then we have nine 0:09:11.440 --> 0:09:14.240 or ten other other sports. You know, we have NASCAR, 0:09:14.960 --> 0:09:17.640 we have the we have Major League Baseball, we have hockey, 0:09:17.679 --> 0:09:21.400 we have the NBA, we have college basketball, we have 0:09:21.480 --> 0:09:26.240 tennis and golf. No other network, no other country has 0:09:26.360 --> 0:09:30.680 that level of major sports that takes up so much 0:09:30.720 --> 0:09:35.480 audience it almost prevents a new sport from from growing 0:09:35.520 --> 0:09:39.400 that quickly. It's true, It's true. I mean, Paul, you know, 0:09:40.200 --> 0:09:45.080 soccer is everything here and there really isn't a second 0:09:45.200 --> 0:09:47.959 run people watch another sport the way they do in 0:09:48.000 --> 0:09:50.480 the US. Yeah, Hey, Neil, thanks so much for joining us. 0:09:50.480 --> 0:09:52.439 I really appreciate it. Neil Pilson, founder and president of 0:09:52.480 --> 0:09:59.679 Pilson Communications. We had the diplomats from the US and 0:09:59.760 --> 0:10:03.920 China UH beginning a set of meetings yesterday in Alaska, 0:10:03.920 --> 0:10:07.440 and apparently things did not get off on the right foot. 0:10:07.760 --> 0:10:11.840 Let's see what that means for UH future discussions and 0:10:11.920 --> 0:10:15.280 relations between the US and China. There's absolutely nobody better 0:10:15.360 --> 0:10:17.080 that we like to talk to and we talk China 0:10:17.120 --> 0:10:19.360 than Leland Miller. He's the CEO of the China based 0:10:19.400 --> 0:10:24.000 book International. Leland, what should we take away from kind 0:10:24.000 --> 0:10:26.240 of what we saw yesterday? A little bit unusual about 0:10:26.280 --> 0:10:31.360 how you know, aggressive the rhetoric was on both sides. Yeah, 0:10:31.440 --> 0:10:33.559 I've got a real kick out of all the reporting 0:10:33.600 --> 0:10:36.160 from this because you know, the the reporting says that 0:10:36.160 --> 0:10:39.040 that this broke down into acrimony and that there was 0:10:39.080 --> 0:10:41.840 a tense exchange. You know, you know, look, both sides 0:10:41.960 --> 0:10:46.640 got exactly what they wanted out of this event. Now 0:10:46.679 --> 0:10:48.640 you know, there was never a chance of a reset. 0:10:48.679 --> 0:10:50.840 There was never desired by at least the Biden side, 0:10:50.880 --> 0:10:53.920 to really to move on the issues. Um, this is 0:10:53.960 --> 0:10:56.880 this is the way that tract you dialogues are typically done. 0:10:56.920 --> 0:10:59.560 So if if for anyone who hasn't participated in them. 0:10:59.600 --> 0:11:01.120 You know, you have the US on one side and 0:11:01.160 --> 0:11:03.640 they sort of look sternly across the table is saying, 0:11:03.920 --> 0:11:07.520 we are America. We love democracy, we love our allies, 0:11:07.880 --> 0:11:11.080 we love the rules based order. We are America. And 0:11:11.120 --> 0:11:12.960 then on the other side of the table, you've got 0:11:13.120 --> 0:11:16.240 the Chinese who's also have stern expressions, and they say, 0:11:16.280 --> 0:11:19.559 you know, we are China. We are strong, we also 0:11:19.600 --> 0:11:22.240 love democracy, we also love the rules based order, but 0:11:22.280 --> 0:11:24.560 not your rules. We are strong by the way you 0:11:24.559 --> 0:11:27.320 are weak. You know, we are China. And and this 0:11:27.440 --> 0:11:30.480 is how these things work on a regular basis. Now 0:11:30.520 --> 0:11:33.800 they don't have to have open, you know, sharp tones, 0:11:33.960 --> 0:11:35.760 but this is sort of the back and forth they'll 0:11:35.800 --> 0:11:38.400 be playing out for domestic audience on each side. So 0:11:38.720 --> 0:11:41.640 the fact that this didn't accomplish anything or was there 0:11:41.679 --> 0:11:43.640 was a lot of sort of loud pushback, that is 0:11:43.720 --> 0:11:45.880 exactly what should have been expected from this. There was 0:11:45.920 --> 0:11:47.960 never going to be a real accomplishment coming from this 0:11:48.040 --> 0:11:52.160 meeting other than the two sides coming at each other saying, Okay, 0:11:52.440 --> 0:11:54.840 we're tough and we're not going to give in. The 0:11:54.880 --> 0:11:57.760 one accomplishment I thought they could achieve, and maybe they 0:11:57.800 --> 0:12:01.800 still will. Is a meeting between Biden and hijin Ping, 0:12:01.960 --> 0:12:04.439 or at least that was teased as a possibility on April. 0:12:05.080 --> 0:12:07.760 Do you think it will happen. At some point, it 0:12:07.760 --> 0:12:10.120 will happen. I don't. I don't see why the Biden 0:12:10.160 --> 0:12:12.800 team would want it sooner. But you know, look on 0:12:12.800 --> 0:12:14.600 on the one side, these are these are the two 0:12:14.720 --> 0:12:17.840 most powerful nations in the world. The two leaders getting 0:12:17.840 --> 0:12:22.800 together makes some sense. It's simply how you know, what's 0:12:22.800 --> 0:12:25.840 the timing on this? If it does happen, I don't 0:12:25.840 --> 0:12:28.240 expect anything really to come of it, other than at 0:12:28.280 --> 0:12:30.719 some point in the first year. I do expect that 0:12:30.760 --> 0:12:33.280 they're going to reopen a consolate or two. They're gonna 0:12:33.360 --> 0:12:36.440 let some journalists back into China, perhaps some some some 0:12:36.559 --> 0:12:40.560 goodwill gestures, But there's no desire right now on the 0:12:40.720 --> 0:12:43.839 U S side to make serious concessions or to get 0:12:43.920 --> 0:12:46.360 They don't really need anything from from from Beijing, so 0:12:46.400 --> 0:12:48.199 there's no real desire for this for this to be 0:12:48.240 --> 0:12:50.960 a priority right now. The big priority for Biden is 0:12:51.000 --> 0:12:54.360 to not look weak on China so that his administration doesn't, 0:12:54.520 --> 0:12:57.920 you know, encounter problems in Congress dealing with its other priorities. 0:12:57.960 --> 0:13:01.160 So whether or not she in And and Biden meet 0:13:01.200 --> 0:13:04.080 in the near future, which I wouldn't expect, but who knows. 0:13:04.800 --> 0:13:07.600 I don't expect anything real to come of it anytime soon. 0:13:08.200 --> 0:13:11.880 So Leland, what is the China policy or what will 0:13:11.960 --> 0:13:14.800 be the China policy? What should be the China policy? 0:13:14.800 --> 0:13:20.160 Do you think of the Biden administration um again towards China. Well, 0:13:20.280 --> 0:13:22.840 what they're what they're saying now, and it's it's other 0:13:22.880 --> 0:13:25.240 than you know, we're reviewing everything, is that we're going 0:13:25.280 --> 0:13:29.280 to keep most elements of the Trump tough on China 0:13:29.600 --> 0:13:33.080 policy in place, but we're going to adapt it over 0:13:33.160 --> 0:13:37.120 time to our mindset, which is we need to but 0:13:37.280 --> 0:13:40.880 more priority on consensus and bringing in allies, etcetera. Now, 0:13:41.160 --> 0:13:44.600 the problem with that is it's a process, not a strategy. 0:13:44.640 --> 0:13:46.720 So yes, it makes a lot of sense to do that, 0:13:46.760 --> 0:13:48.600 But then where do you go with this? And they 0:13:48.640 --> 0:13:50.960 don't know yet, And I think that there's some big 0:13:51.040 --> 0:13:53.720 questions coming up with Taiwan, how we're gonna have how 0:13:53.760 --> 0:13:57.320 the United States is gonna handle handle uh relations with Taiwan, 0:13:57.600 --> 0:14:00.480 and and and certainly the tech company is a big 0:14:00.520 --> 0:14:03.280 one UH. And then of course the Shinjong situation is 0:14:03.320 --> 0:14:06.520 hang over everything because China is hosting the Olympics next 0:14:06.640 --> 0:14:08.880 year and so there will be a lot of pressure 0:14:08.920 --> 0:14:10.800 to back out of that. So a lot of big 0:14:10.840 --> 0:14:13.959 decisions are coming out out of you know, to come 0:14:14.000 --> 0:14:16.840 out in future months. But they don't have a set 0:14:16.880 --> 0:14:19.760 policy on this yet right now. The messages we're dealing 0:14:19.800 --> 0:14:22.840 with COVID, We're getting to that later, Leland. I've watched 0:14:22.840 --> 0:14:26.800 the car industry and a couple of things necessary to 0:14:26.840 --> 0:14:31.840 build a good ev rare earths and chips are seemingly 0:14:31.880 --> 0:14:35.040 controlled by China, or at least you know, a large 0:14:35.080 --> 0:14:37.520 portion of that industry is will we move it back 0:14:37.560 --> 0:14:39.440 to the US or will we make a deal? Has 0:14:39.480 --> 0:14:43.920 that get worked out? Yeah? I think to two issues 0:14:43.960 --> 0:14:46.200 with semi god ducts, and look, there is nothing more 0:14:46.240 --> 0:14:49.960 important than semiconductors and the semiconductor discussion right now. But 0:14:50.000 --> 0:14:51.880 I think two issues are being conflated. And the first 0:14:51.960 --> 0:14:55.520 is we've got a global semiconductor shortage, and that's due 0:14:55.520 --> 0:14:58.200 to a lot of dynamics. There are supply dynamics, UH, 0:14:58.440 --> 0:15:02.000 supply chain dynamics breaking down in COVID. There's some bad 0:15:02.080 --> 0:15:05.000 decisions by companies like car companies on the demand side 0:15:05.040 --> 0:15:08.040 not to order more. You've got some US China trade 0:15:08.160 --> 0:15:10.440 stuff that's interfering. So you've got you've got a global 0:15:10.480 --> 0:15:13.840 semi conductor shortage and that's gonna hit GDP and that's 0:15:13.880 --> 0:15:15.960 hurting companies, and so there's just sort of a panic 0:15:16.000 --> 0:15:18.320 coming out from from from different industries to do something 0:15:18.320 --> 0:15:21.320 about it. Separate from that is you at the you know, 0:15:21.440 --> 0:15:24.040 is US China competition at the very top of the 0:15:24.080 --> 0:15:27.000 food chain, which is you know, uh seven animetor chip 0:15:27.080 --> 0:15:30.640 fourteen animeter, chips seven five three going onto two in 0:15:30.640 --> 0:15:33.840 the future, and right now there's only there are very 0:15:33.880 --> 0:15:36.840 few companies that can produce is. Essentially Taiwan semi Conductor 0:15:36.880 --> 0:15:39.040 is the company producing this, and the US is ring 0:15:39.120 --> 0:15:42.520 fencing their production from going to China. So there's a 0:15:42.560 --> 0:15:44.880 big debate, you know, are we too reliant on Taiwan 0:15:44.880 --> 0:15:48.280 semi conductor? Should the US have other alternatives? Yes, this 0:15:48.360 --> 0:15:50.960 is very important to discuss, but it's totally different from 0:15:50.960 --> 0:15:54.600 the global semiconductor shortage that we're seeing right now across 0:15:54.880 --> 0:15:57.960 this affecting markets in GDP. But people in industry right 0:15:58.000 --> 0:16:00.400 now see subsidy dollars, and they're like, well, well let's 0:16:00.440 --> 0:16:03.640 just talk about panic and and everything's anti China, so 0:16:03.720 --> 0:16:06.080 let's let's get some more money findistry. The strategy is 0:16:06.080 --> 0:16:08.440 not craft out in a way where it looks like 0:16:08.520 --> 0:16:10.320 this thing is being done in a in a way 0:16:10.360 --> 0:16:15.920 to really craft out an intelligence strategy on advanced chip manufacturing. Leland, 0:16:15.960 --> 0:16:18.200 thanks so much for joining us. Really appreciate your insight. 0:16:18.240 --> 0:16:20.320 Always fun talking to you as well. Leland Miller, CEO 0:16:20.840 --> 0:16:25.080 of the China Beige Book International. All right, so Paul 0:16:25.160 --> 0:16:29.800 was just talking about FedEx. They had surging package volumes 0:16:29.920 --> 0:16:35.280 and price gains. Those two things offset increased labor costs. 0:16:35.280 --> 0:16:37.920 But you know, for the economy, increased labor costs are 0:16:37.960 --> 0:16:40.880 good too. Let's bring in UM right now, Christina Hooper, 0:16:40.920 --> 0:16:45.520 she's the chief global market strategist for Investo. Christina, is this, 0:16:45.880 --> 0:16:49.479 you know, one of the telltale signs of an economy 0:16:49.560 --> 0:16:53.360 that is booming? Well, certainly it is, and that's what 0:16:53.400 --> 0:16:57.000 we should be expecting. We are saying, UM, what is 0:16:57.120 --> 0:17:02.400 likely to be a very robust and inclusive economic recovery 0:17:03.000 --> 0:17:06.879 in and this is just part of of that kind 0:17:06.920 --> 0:17:11.359 of of robust recovery. And when you say inclusive, explain that, 0:17:11.400 --> 0:17:15.560 because that's definitely a buzzword these days. Is it really 0:17:15.640 --> 0:17:19.480 going to Are we going to see women come back 0:17:19.480 --> 0:17:21.240 in the labor force? Are we going to see people 0:17:21.280 --> 0:17:24.200 of color come back in the labor force and get 0:17:24.240 --> 0:17:28.639 pay raises? Well, I certainly think we're going to see 0:17:28.840 --> 0:17:31.919 a more re entering the labor force. So when I 0:17:31.960 --> 0:17:35.879 say inclusive, I'm thinking specifically about this being um, what 0:17:36.000 --> 0:17:39.439 I would term a job full recovery recovery as opposed 0:17:39.440 --> 0:17:42.040 to a job less recovery, which is what we saw 0:17:42.160 --> 0:17:45.160 for a number of years following the global financial crisis. 0:17:45.400 --> 0:17:47.000 I think this is going to be different because we 0:17:47.080 --> 0:17:51.119 have more fiscal stimulus UM that that has been provided, 0:17:51.560 --> 0:17:54.800 and because of the nature of this recovery. This is 0:17:54.840 --> 0:17:58.360 not a confidence game. We're not trying to rebuild confidence. 0:17:58.359 --> 0:18:01.520 We're not going to have a slow recovery. This is 0:18:01.560 --> 0:18:07.879 a situation where, um, once we get enough vaccines in people, UM, 0:18:07.960 --> 0:18:11.040 we are going to get closer to her immunity, and 0:18:11.080 --> 0:18:13.640 it's going to be off to the racist. It's going 0:18:13.720 --> 0:18:17.400 to be much more like a switch turning on. Christina, 0:18:17.440 --> 0:18:19.200 what did you make of FED chairman Pale and his 0:18:19.280 --> 0:18:22.720 comments earlier this week, he seemed to suggest that the 0:18:22.760 --> 0:18:27.200 FED is still lower for longer. What did you take away? 0:18:27.960 --> 0:18:32.080 So my takeaway is that he the Fed really means 0:18:32.160 --> 0:18:35.879 what it says in terms of the policy framework changing, 0:18:36.280 --> 0:18:40.680 and that they're really abandoning this concept of preemptive tightening. 0:18:41.119 --> 0:18:44.480 That's really really important because that means they are going 0:18:44.560 --> 0:18:49.239 to let this economy run because and if they do 0:18:49.400 --> 0:18:52.320 see some kind of increase in inflation this year, they're 0:18:52.600 --> 0:18:55.760 going to be most uh most predisposed to treat it 0:18:55.800 --> 0:18:59.560 as transitory and sit on their hands. So this is 0:18:59.680 --> 0:19:03.639 this is very exciting. It's a big departure from the past, 0:19:04.119 --> 0:19:07.040 and so I think it's a positive for the economy. Now. 0:19:07.080 --> 0:19:09.040 Of course, it can be a double edged sword for 0:19:09.119 --> 0:19:12.760 markets because markets are worrying about a rise in inflation, 0:19:13.200 --> 0:19:16.040 and of course that's causing or one of the reasons 0:19:16.040 --> 0:19:19.159 why we're seeing that rise in in treasury yields. But 0:19:19.440 --> 0:19:23.720 markets are only worried about a rising inflation, or mainly 0:19:23.760 --> 0:19:27.359 worried about rising inflation because they think that will move 0:19:27.440 --> 0:19:30.479 the FED to raise rates, thus killing the recovery. Right, 0:19:30.520 --> 0:19:33.600 So if you take the FED at its word, that 0:19:34.920 --> 0:19:37.840 they're gonna let the economy run hot because they believe 0:19:37.880 --> 0:19:40.359 it's only transitory. Then you can assume that they're not 0:19:40.400 --> 0:19:42.560 going to raise rates even if we see it, right, 0:19:44.240 --> 0:19:46.520 That's part of it. This is almost a chicken and 0:19:46.600 --> 0:19:51.560 egg conversation, right because uh, fear of inflation does have 0:19:51.680 --> 0:19:55.760 an impact on the ten year yields, and so there 0:19:55.760 --> 0:19:58.840 are concerns that if the Fed is not willing to 0:19:59.080 --> 0:20:03.200 control uh the yield curve further out, that that is 0:20:03.240 --> 0:20:06.280 going to present problems in and of itself, even if 0:20:06.320 --> 0:20:09.240 it keeps the said funds right where it is. So 0:20:09.320 --> 0:20:13.920 that can be a bit problematic, especially for the stock market, right, 0:20:13.960 --> 0:20:16.399 And that's what we're seeing on days like today and 0:20:16.720 --> 0:20:20.159 what we saw yesterday. All right, Christina, So given what 0:20:20.200 --> 0:20:23.040 we have with this backdrop, will we heard from Chairman 0:20:23.080 --> 0:20:27.600 Powell the expectations on inflation? Um, how are you you 0:20:27.640 --> 0:20:31.560 guys at invest go where are you looking for opportunities 0:20:31.680 --> 0:20:36.679 right now? So? First of all, Um, it is still 0:20:36.840 --> 0:20:40.359 an environment that favors risk assets, especially if you have 0:20:40.440 --> 0:20:43.199 a longer time horizon. But even if you have a 0:20:43.200 --> 0:20:45.680 shorter time horizon, this year, I think we are going 0:20:45.760 --> 0:20:49.560 to see stocks outperform other asset classes, but they're going 0:20:49.640 --> 0:20:54.320 to do that with significantly more volatility. That's just the 0:20:54.400 --> 0:20:57.800 nature of this recovery. We made huge gains in the 0:20:57.880 --> 0:21:00.720 last year. Uh, and now we're going to be coming 0:21:00.800 --> 0:21:03.119 up against a few headwinds. I think it's more a 0:21:03.160 --> 0:21:07.480 matter of digestion, that that at each new level that 0:21:07.520 --> 0:21:09.920 we hit with the ten year yield, that there is 0:21:09.960 --> 0:21:12.119 going to be a period of digestion. But I still 0:21:12.160 --> 0:21:14.360 think that this is going to be a positive year 0:21:14.359 --> 0:21:17.920 for stocks. Uh. We're likely to see cyclicals the more 0:21:18.080 --> 0:21:21.240 value side of the stock market outperformed growth this year, 0:21:21.480 --> 0:21:24.520 but that doesn't mean to abandon growth. I think you 0:21:24.640 --> 0:21:27.840 still want exposure there. And again, Uh, this is going 0:21:27.920 --> 0:21:31.000 to be a year that underscores the importance of diversification. 0:21:31.320 --> 0:21:33.720 To really smooth out that volatility, we need to have 0:21:33.800 --> 0:21:36.960 exposure to a variety of asset classes. Are you, I 0:21:36.960 --> 0:21:40.080 mean this conversation is focused on US assets, I guess, 0:21:40.080 --> 0:21:45.560 but European stocks have also done well, and UM analysts 0:21:45.560 --> 0:21:49.800 like European stocks, but we don't have vaccines getting into 0:21:49.880 --> 0:21:53.080 arms the same way. Is that going to be a problem. Well, 0:21:53.119 --> 0:21:55.960 I certainly think that's going to slow down the timeline 0:21:56.000 --> 0:21:59.920 for an economic recovery in Europe. Also, the effect of 0:22:00.160 --> 0:22:02.480 noss of of the vaccines being used in Europe may 0:22:02.560 --> 0:22:05.960 play a role as well. Um, But if you're a 0:22:05.960 --> 0:22:09.879 long term investor, that's not really that important. The timeline 0:22:09.960 --> 0:22:13.200 can shift a little bit, can be delayed a little bit. Um, 0:22:13.240 --> 0:22:18.000 it's more about valuations, uh, it's more about longer term 0:22:18.080 --> 0:22:20.600 prospect and so I would say this is an environment 0:22:20.640 --> 0:22:24.320 where valuations look very attractive in Europe, but they also 0:22:24.320 --> 0:22:28.200 look attractive in Asia, especially Asia e m uh. And 0:22:28.280 --> 0:22:32.120 so so that's an area as well to be looking at. Christina, 0:22:32.160 --> 0:22:34.160 thank you so much for joining us. We always appreciate 0:22:34.480 --> 0:22:37.399 getting your views on the markets on a global scale. 0:22:37.440 --> 0:22:41.359 Christina Hooper, Chief Global Market Strategies for Investo. They have 0:22:41.520 --> 0:22:45.520 one point three trillion with a T and assets under management. 0:22:45.520 --> 0:22:49.960 They're located in a plant. Let's talk a little bit 0:22:50.200 --> 0:22:53.600 more about vaccines right now. This is not just because 0:22:53.800 --> 0:22:57.360 I'm angry or bitter that, Um, the place I live 0:22:57.560 --> 0:23:00.640 is so slow. Well, you know what think the word 0:23:00.680 --> 0:23:03.679 inefficient is a great word to use when talking about 0:23:04.359 --> 0:23:08.120 Germany's vaccine delivery, and the same can be true can 0:23:08.160 --> 0:23:11.600 be said. I should say about um other European countries. 0:23:11.680 --> 0:23:15.560 Terres Raphael joins us to talk about why even Switzerland 0:23:15.880 --> 0:23:20.320 has really dropped the ball compared with the efficiency of 0:23:20.359 --> 0:23:24.800 states like West Virginia, um Terres. Normally we think of 0:23:25.440 --> 0:23:30.920 Germanic people as super efficient. I guess that's just not true. Well, 0:23:30.960 --> 0:23:33.959 in this case it seems not to be. And that's um, 0:23:34.000 --> 0:23:37.880 you know, was for me the most surprising finding when 0:23:37.880 --> 0:23:41.120 I began to question whether the problem was really all 0:23:41.160 --> 0:23:45.119 about supply, because right the narrative has been that, um, 0:23:45.240 --> 0:23:48.920 the countries that produced the vaccines and manufacturers, they're fine 0:23:48.920 --> 0:23:52.640 and vaccinating their people, um. But um. But but other 0:23:52.680 --> 0:23:55.200 places are starved to supply and therefore can't roll out 0:23:55.200 --> 0:23:57.960 the vaccine. But when you drill down a little bit deeper, 0:23:58.000 --> 0:24:01.480 it's not just the supply issue. Obvious, the supplies hugely important, 0:24:01.520 --> 0:24:04.600 but some of the most vanted health care systems in 0:24:04.600 --> 0:24:08.399 the world UH fall down on delivery. And that's for 0:24:08.440 --> 0:24:10.480 a number of reasons. But one of the big ones 0:24:10.560 --> 0:24:15.880 I found was a lack of basic electronic health records, 0:24:15.920 --> 0:24:18.240 which you know, the World Health Organization has been pushing 0:24:18.280 --> 0:24:20.720 for a long time, and only about half of developed 0:24:20.720 --> 0:24:23.840