WEBVTT - Goldman Embarking on Third Major Reorganization 0:00:01.800 --> 0:00:04.440 This is Bloomberg Business Week. I'm Carol Masser and I'm 0:00:04.440 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanobek. We're here every day bringing 0:00:07.280 --> 0:00:09.840 you the latest news from the worlds of business and finance, 0:00:09.840 --> 0:00:13.640 plus technology, politics, economics, all purtnising the power of Business 0:00:13.640 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.160 --> 0:00:19.599 analyst in more than one and twenty countries. You can 0:00:19.640 --> 0:00:23.239 download Bloomberg Business Week on iTunes, SoundCloud, or Bloomberg dot Com. 0:00:23.400 --> 0:00:25.160 You can also listen to our radio show at two 0:00:25.160 --> 0:00:27.840 pm Eastern Time on Bloomberg Radio, or watch us on 0:00:27.880 --> 0:00:32.199 YouTube search Bloomberg Global News. Well as we try to 0:00:32.240 --> 0:00:34.120 figure out the new way forward when it comes to 0:00:34.120 --> 0:00:37.480 the metaverse, crypto, and so much more, there's something going 0:00:37.520 --> 0:00:40.199 on in the video game industry that may already give 0:00:40.240 --> 0:00:42.640 you a clue about the future. Brian Feldman writes all 0:00:42.640 --> 0:00:45.000 about it. He's freelance reporter for Bloomberg Business Week. He 0:00:45.080 --> 0:00:47.560 joins us on the phone from Brooklyn. Check out Brian's story. 0:00:47.560 --> 0:00:49.640 It's online right now. It's called the game Industry's n 0:00:49.680 --> 0:00:52.599 FT failures hold lessons for the metaverse. We've all we've 0:00:52.600 --> 0:00:54.560 also got with us right now Joel Weber. He is 0:00:54.600 --> 0:00:56.800 the editor of Bloomberg Business Week. He's with us right 0:00:56.840 --> 0:01:00.520 now in the Bloomberg Interactive Broker's studio. Joel all fun 0:01:00.520 --> 0:01:07.280 and games until the publisher did did until the publisher 0:01:07.280 --> 0:01:08.800 of your video game. And by the way, your video 0:01:08.800 --> 0:01:10.880 game is, you know, tied its image closely to making 0:01:10.920 --> 0:01:12.680 fun of pretty much everything when it comes to the 0:01:12.680 --> 0:01:16.399 crypto universe and everything related. UH starts selling n f 0:01:16.440 --> 0:01:18.839 T s for real money. Yeah, And you know, there's 0:01:18.880 --> 0:01:22.480 been I think a lot written about how there's a 0:01:22.520 --> 0:01:24.840 lot of potential in n f T s and what 0:01:24.959 --> 0:01:27.400 I was intrigued by and what what we were intrigued 0:01:27.400 --> 0:01:31.160 by here was that UM video game. The gaming industry 0:01:31.440 --> 0:01:35.600 was got in on this really quickly, and there's a 0:01:35.600 --> 0:01:39.040 bit of tension there, which is that the gamers themselves 0:01:39.240 --> 0:01:42.839 weren't as into it UM, and so that that piqued 0:01:42.880 --> 0:01:45.400 our interest, and Brian did a great job with the story. So, 0:01:45.400 --> 0:01:49.919 so Brian tell us more, how did video gamers beat 0:01:50.120 --> 0:01:55.160 n f T s UM. I'm trying to think of 0:01:55.240 --> 0:01:59.000 the short version of it UM. Basically, gamers for about 0:01:59.040 --> 0:02:01.160 a decade and a half have had to sort of 0:02:01.200 --> 0:02:06.960 tolerate increasingly aggressive UM pricing models for games. So where 0:02:07.000 --> 0:02:10.040 you used to pay you know, one price for one 0:02:10.080 --> 0:02:12.320 game and take the entire thing home, now you sort 0:02:12.320 --> 0:02:15.040 of have to buy a piece meal UM perpetually into 0:02:15.080 --> 0:02:18.400 the future in order to participate in online games, the 0:02:18.440 --> 0:02:21.959 types of which UM the metaverse wants to be uh. 0:02:22.000 --> 0:02:26.040 And because these games are perpetual and so susceptible to 0:02:26.040 --> 0:02:31.560 public feedback, UM gamers made themselves known. UH. They immediately 0:02:31.600 --> 0:02:36.440 registered there um annoyance with the idea of pushing n 0:02:36.480 --> 0:02:40.040 F T s UM into the space uh and sort 0:02:40.040 --> 0:02:42.240 of scared a lot of people off of their initial 0:02:42.600 --> 0:02:48.079 uh curiosity. So let's spin it forward a little bit because, 0:02:49.000 --> 0:02:51.960 as as we teased a little bit, the metaverse has 0:02:52.000 --> 0:02:57.519 some interesting uh well interesting in and of itself, right, 0:02:57.560 --> 0:03:00.680 But what does it potentially hold for for games and 0:03:00.720 --> 0:03:05.000 where the metaverse could go? UM? I mean, I think 0:03:05.720 --> 0:03:08.960 in terms of what you know, people theorize the metaverse 0:03:09.040 --> 0:03:12.240 to be UM. You can look at pre existing games 0:03:12.240 --> 0:03:15.359 and sort of get an idea. Um. You know. Fortnite 0:03:15.400 --> 0:03:17.360 is referred to as a sort of metaverse game where 0:03:17.760 --> 0:03:21.320 winning is sort of less of an objective than just 0:03:21.440 --> 0:03:24.360 like hanging out with people um and doing funny dance 0:03:24.440 --> 0:03:28.919 and stuff, um minecraft similarly, And so if you look 0:03:28.960 --> 0:03:32.559 at those as a model for like sort of prototypical 0:03:32.600 --> 0:03:36.840 metavers is that already have millions of early adopters um 0:03:37.440 --> 0:03:42.320 than trying to sort of uh push h n f 0:03:42.360 --> 0:03:45.839 t S or crypto things or experiences that people don't 0:03:45.880 --> 0:03:50.400 necessarily want UM on something they're already used to, uh, 0:03:50.760 --> 0:03:54.520 is a problem that I think a lot of companies 0:03:54.560 --> 0:03:56.800 are going to experience. Well, Brian, this this was like 0:03:56.840 --> 0:03:59.840 the one place that the metaverse was supposed to succeed, 0:04:00.520 --> 0:04:03.640 That crypto was supposed to succeed, that n f t 0:04:03.760 --> 0:04:06.720 S we're supposed to succeed. Right, it was, And many 0:04:06.720 --> 0:04:08.800 people have argued that, you know, even if they do 0:04:08.960 --> 0:04:12.080 only succeed in gaming, it's such a huge industry that 0:04:12.080 --> 0:04:16.400 that's kind of enough. Um, what is it? What does 0:04:16.400 --> 0:04:18.400 this say about a company like Facebook that's trying to 0:04:19.080 --> 0:04:21.360 you know, pivot into going all in on the metaverse 0:04:21.360 --> 0:04:23.320 and get us to do our meetings in the metaverse. 0:04:23.400 --> 0:04:26.400 If if n f t S can't take off when 0:04:26.400 --> 0:04:29.520 it comes to gaming, I mean, I think I think 0:04:29.560 --> 0:04:32.839 so it has to do with messaging. Um, you know, 0:04:33.080 --> 0:04:38.680 I think for a long time, game companies have put 0:04:38.680 --> 0:04:41.640 out you know, pre rendered trailers that show you know, 0:04:41.720 --> 0:04:44.400 fantastical ideas and like what they hopefully think that finished 0:04:44.440 --> 0:04:48.040 products will look like, and have based a lot of 0:04:48.080 --> 0:04:51.200 criticism and backlash when the finished products fall short of that. 0:04:51.839 --> 0:04:53.919 UM and So I think some of it has to 0:04:53.960 --> 0:05:00.880 do with realizing that UM possible metaverse rumors are a 0:05:00.880 --> 0:05:03.880 lot more tax tex savvy UM and a lot more 0:05:04.240 --> 0:05:08.920 uh wary of marketing material than tech companies might think. 0:05:09.480 --> 0:05:12.520 UM and so it's about, you know, making sort of 0:05:12.720 --> 0:05:16.960 a clear, uh an accurate message to them rather than 0:05:17.000 --> 0:05:19.679 just saying, well, we hope it's like this one day. UM. 0:05:19.720 --> 0:05:23.920 It's about expressing, like what the tangible benefit is currently 0:05:24.320 --> 0:05:26.920 or in the near future. Okay, so you have this 0:05:27.120 --> 0:05:29.719 great line in here. Digital horse armor may be a 0:05:29.720 --> 0:05:32.280 waste of money, but it can at least be fun. So, 0:05:32.680 --> 0:05:36.080 I mean, there could be fun, but maybe maybe n 0:05:36.120 --> 0:05:38.760 f t s aren't exactly what people are looking forward. 0:05:39.120 --> 0:05:41.440 And that gets to this idea that you know, as 0:05:41.480 --> 0:05:43.120 you read the n f t s are sort of 0:05:43.200 --> 0:05:48.360 inherently vehicles for financial speculation. So I'm curious how has 0:05:48.400 --> 0:05:51.720 this gone over within the game industry. Itself, like because 0:05:51.760 --> 0:05:54.080 they were the ones that were sort of administering the 0:05:54.160 --> 0:05:58.520 kool aid in this instance. So. Um, A lot of 0:05:59.480 --> 0:06:02.400 gaming lad NFC programs that were announced towards the end 0:06:02.440 --> 0:06:04.599 of last year and at the beginning of this year 0:06:05.000 --> 0:06:07.400 never really made it off the ground because you know, 0:06:07.520 --> 0:06:10.159 they were announced before they had actually launched, and then 0:06:10.640 --> 0:06:13.840 because of so we're backlash, like quickly backed off the 0:06:13.920 --> 0:06:17.880 sort of one example that did really be it all 0:06:17.920 --> 0:06:21.400 the way through was this ubsoft program that gave people 0:06:21.920 --> 0:06:23.800 U n f T s for playing one of their games. 0:06:23.839 --> 0:06:28.719 Goes to recoun uh break points I believe, and uh 0:06:29.040 --> 0:06:31.000 you could earn them by getting a certain number of 0:06:31.120 --> 0:06:33.799 kills or spending enough time in the game even uh 0:06:33.839 --> 0:06:36.120 and because it's all on the blockchain, you can track 0:06:36.200 --> 0:06:39.360 that activity. Um. And the numbers aren't so great, are 0:06:39.400 --> 0:06:43.000 they just quickly just got about fifty seconds? Um? No, 0:06:43.160 --> 0:06:46.560 they're not. They're they're in I believe, like the four figures. 0:06:46.560 --> 0:06:48.480 And at this point, if you exchange the crypto there 0:06:48.480 --> 0:06:51.960 into real money that includes a sense right now I'm 0:06:51.960 --> 0:06:54.440 just kidding. Um. Yeah, and you can read those numbers 0:06:54.440 --> 0:06:56.240 in the story. Hey listen, Brian, thank you so much. 0:06:56.240 --> 0:06:58.960 Brian Feldman. He's freelancer porter up Bloomberg Business. We check 0:06:58.960 --> 0:07:01.839 out this story on the up Bloomberg Business Week and 0:07:01.839 --> 0:07:05.040 our thanks to Jill Webber, editor a Bloomberg Business Week magazine. 0:07:05.400 --> 0:07:10.800 You are listening and watching Bloomberg Radio. This is Bloomberg 0:07:10.800 --> 0:07:14.480 Business Week with Carol Messer and Bloomberg Quick Takes Tim 0:07:14.520 --> 0:07:18.000 Stinovic on Bloomberg Radio. So much going on when it 0:07:18.000 --> 0:07:20.400 comes to the big banks, and of course we had 0:07:20.440 --> 0:07:23.800 some more earnings this morning. They're all on our radar again. 0:07:24.200 --> 0:07:27.200 Be of A Shares rallying his loan revenue top to estimates. 0:07:27.480 --> 0:07:30.840 Also in an interest income up to the highest level 0:07:30.840 --> 0:07:33.440 at least a decade. You've got Goldwin also higher. They're 0:07:33.480 --> 0:07:36.000 reporting earnings tomorrow. But we've got some news that's going 0:07:36.040 --> 0:07:38.200 to combine. It's investment, banking and trading business. And then 0:07:38.200 --> 0:07:40.280 there's some stuff on credit Suez. Oh my god, I'm 0:07:40.280 --> 0:07:43.000 exhausted already. Well, Fortunately we have Trina Rajin here to 0:07:43.000 --> 0:07:44.880 help us out because he can report on all that 0:07:44.920 --> 0:07:47.240 and more. He's finance reporter for Bloomberg News. He's with 0:07:47.320 --> 0:07:50.080 us right now in the Bloomberg Interactive Broker studio. Ushure 0:07:50.160 --> 0:07:52.520 I want to start with gold the Goldman's story, Goldman 0:07:52.560 --> 0:07:56.360 shaking up its leadership ranks and yet another overhaul. What's 0:07:56.400 --> 0:07:59.320 the big headline here, what's the what's the what's the 0:07:59.360 --> 0:08:02.040 re org? Who's taking who's taken over? For these divisions? 0:08:02.320 --> 0:08:04.040 I'll start with the last three words of the headline, 0:08:04.120 --> 0:08:08.120 yet another overhaul, And I feel to some extent that's 0:08:08.160 --> 0:08:10.720 more the news than actually what they're moving around. It's 0:08:10.720 --> 0:08:13.080 not the rearranging of the deck chairs, to be clear, 0:08:13.120 --> 0:08:16.240 without any Iceberg inside, but it is not about the 0:08:16.320 --> 0:08:19.840 changes itself, but the fact that it's happening again. Because 0:08:20.160 --> 0:08:23.320 David Solomon, the CEO of Goldman Sachs, is four years 0:08:23.400 --> 0:08:25.720 into the top job at the Wall Street giant, and 0:08:25.760 --> 0:08:29.560 this is this is the third major restructuring he's undertaking. 0:08:30.000 --> 0:08:33.479 Not just that with this move he will be undoing 0:08:33.520 --> 0:08:36.400 a lot of the signature moves he put in place 0:08:36.600 --> 0:08:41.120 and changes he made just two years ago. That is 0:08:41.160 --> 0:08:43.079 not a good look and that gives a little bit 0:08:43.120 --> 0:08:45.240 of whiplash to investor. So let me actually step in 0:08:45.280 --> 0:08:47.880 and tell you what the changes are. You have a 0:08:47.960 --> 0:08:53.280 Goldman Sachs with four distinct divisions trading, investment, banking, two 0:08:53.360 --> 0:08:58.080 units where their strength is it's fair to say unparalleled. 0:08:58.480 --> 0:09:01.360 Then they had this as management business, which is the 0:09:01.720 --> 0:09:05.160 Coleman Sachs asset management business, investing in public markets and 0:09:05.160 --> 0:09:08.480 behalf of other investors, as well as this merchant bank, 0:09:08.520 --> 0:09:11.320 which was sort of their in house private equity shop. 0:09:11.600 --> 0:09:13.920 And then the fourth pillar, which was actually created in 0:09:14.880 --> 0:09:18.160 was this consumer and wealth management business. Because that catered 0:09:18.160 --> 0:09:21.400 to individual money, some very very very very rich people 0:09:22.440 --> 0:09:25.280 and some averages, but those were all people that Goldman 0:09:25.320 --> 0:09:28.920 were targeting. They wiped the slate clean. They've combined banking 0:09:28.960 --> 0:09:31.000 and trading in a way to try and showcase to 0:09:31.040 --> 0:09:33.520 the market that hey, if you see banking and trading 0:09:33.559 --> 0:09:37.079 as one combined group, similar to how JP Morgan does it, 0:09:37.200 --> 0:09:39.480 similar to how Morgan Stanley does it, you may be 0:09:39.559 --> 0:09:43.240 able to appreciate how well I can't use the word 0:09:43.280 --> 0:09:46.959 so how good it is. That's one goal with c IB. 0:09:47.920 --> 0:09:50.440 Then what they did, and we've talked about for a 0:09:50.480 --> 0:09:53.600 few months now, they've had major issues with their consumer business. 0:09:53.679 --> 0:09:58.000 They're effectively dismembering that, bringing back wealth management into their 0:09:58.200 --> 0:10:01.280 asset management business, shoving a part of their direct to 0:10:01.280 --> 0:10:04.840 consumer business which operated under the Marcus brand name into 0:10:04.880 --> 0:10:09.400 that unit. And then the third is this weirdly named 0:10:09.440 --> 0:10:13.800 business called platform Solutions has such a mckensey and ring 0:10:13.920 --> 0:10:17.560 to it, but it is taking their you know, the 0:10:17.600 --> 0:10:21.000 online loans provided that they bought last a green sky, 0:10:21.320 --> 0:10:24.040 the credit card partnerships which is the ones that they 0:10:24.080 --> 0:10:26.840 have with Apple in general motors, and the transaction banking business, 0:10:26.880 --> 0:10:30.040 bringing it under one roof having it as a standalone business. 0:10:30.080 --> 0:10:32.280 Think of it somewhat like embedded finance, which a lot 0:10:32.320 --> 0:10:35.559 of people are hot on, including mckensey. Wow, I'm actually 0:10:35.559 --> 0:10:38.000 closed on this mckensey conspiracy theory. They might have been 0:10:38.000 --> 0:10:41.000 behind this name to declare. I do not know for sure. 0:10:41.040 --> 0:10:42.720 I hear some reporting a little bit later on. But 0:10:42.800 --> 0:10:44.880 it is a stand alone business and it will be 0:10:44.960 --> 0:10:48.880 interesting to watch because that business wild report losses for 0:10:48.880 --> 0:10:51.000 the first stable future for the next quarter or two 0:10:51.040 --> 0:10:53.840 or three or four or more. Not many Wall Street 0:10:53.880 --> 0:10:56.280 banks have a stand alone division that where the p 0:10:56.400 --> 0:10:58.559 m L. It will be so visible and so painful. 0:11:00.080 --> 0:11:02.680 Goldman's got to hope that investors don't pay too much 0:11:02.720 --> 0:11:05.439 scary attention to it. Are willing to cut them some 0:11:05.480 --> 0:11:08.800 slag and actually see the new, new, new narrative that 0:11:08.840 --> 0:11:13.360 they're trying to uh spread and believe in it. What 0:11:13.679 --> 0:11:21.319 prompted this shift a number of things. First off, why 0:11:21.440 --> 0:11:25.440 this shift just in January? You did a massive change 0:11:25.440 --> 0:11:28.640 of the asset management leadership in twenty We just talked 0:11:28.640 --> 0:11:32.160 about all the other changes they made, but the mumbling 0:11:32.160 --> 0:11:34.600 and grumbling outside of Goldman Sacks had been clear for 0:11:34.640 --> 0:11:38.160 the better part of the last six months. They worried 0:11:38.160 --> 0:11:40.600 about the situation mass and management group and how the 0:11:40.600 --> 0:11:43.320 new leadership is getting along. They really worried about the 0:11:43.320 --> 0:11:46.800 consumer business, which, as we've reported at mid year, they projected, 0:11:47.000 --> 0:11:50.280 would lose while more than one point two billion dollars 0:11:50.280 --> 0:11:52.439 in a year, in a year when the bank's total 0:11:52.440 --> 0:11:56.560 earnings is expected to drop from the success, the fabulous 0:11:56.559 --> 0:12:00.000 success they had in one that was just too hard 0:12:00.040 --> 0:12:02.120 USh your spotlight on that business. So it was clear 0:12:02.280 --> 0:12:04.200 something had to be done. And it's fair to say 0:12:04.240 --> 0:12:07.520 that the problems with consumer accelerated some of the discussions 0:12:07.559 --> 0:12:10.840 they had about other orcs. If you're bringing back ASCID 0:12:10.880 --> 0:12:13.720 in wealth management and making this large one unit, you 0:12:13.800 --> 0:12:17.080 probably do the c IB aspect of it. The banking 0:12:17.080 --> 0:12:19.720 and trading combination is something people had been pushing forward 0:12:19.800 --> 0:12:22.480 the film. David Solomon and his steam had been reluctant 0:12:22.520 --> 0:12:25.559 about that because they were more interested in steering investor 0:12:25.600 --> 0:12:30.560 attention towards asset management and consumer, those recurring fee businesses 0:12:30.640 --> 0:12:34.120 that they think investors will appreciate. Now that they've actually 0:12:34.200 --> 0:12:37.400 made this Combined Banking, Global Banking and Markets Group, perhaps 0:12:37.400 --> 0:12:40.760 it's an acknowledgement that maybe it is fair to shine 0:12:40.800 --> 0:12:44.120 the spotlight on their crown jewel, and maybe it will 0:12:44.160 --> 0:12:46.760 give them a boost with investors that we don't know 0:12:46.880 --> 0:12:49.400 yet and that we'll see over the coming months and quarters. 0:12:49.480 --> 0:12:51.679 All Right, Well, an incredible story and then ahead of 0:12:51.679 --> 0:12:54.440 of course, government has its earnings tomorrow. We're gonna leave 0:12:54.440 --> 0:12:57.560 it on that note. Bloomberg News Finance reporter Street daraj 0:12:57.679 --> 0:13:00.640 And in Bloomberg Interactive Brokers Studio shares a Goldman Sacks. 0:13:00.679 --> 0:13:03.640 By the way, they are up two percent in today's session. 0:13:04.000 --> 0:13:07.600 You're listening to Bloomberg Business Week with Carol Masser and 0:13:07.679 --> 0:13:12.079 Bloomberg Quick Takes. Tim Stinovic on Bloomberg Radio. Well, we've 0:13:12.080 --> 0:13:14.200 been talking about the Chinese markets. We see Chinese ad 0:13:14.440 --> 0:13:17.600 rs trading up this on news that Chinese regulators are 0:13:17.600 --> 0:13:19.960 wrapping up efforts to support the stock market. You've got 0:13:19.960 --> 0:13:21.880 a luck going on. A lot of news flow out 0:13:21.920 --> 0:13:24.560 of China generally, uh and what is one of the 0:13:24.640 --> 0:13:27.960 key economies of our time. Yeah, very busy weekend. As president, 0:13:28.040 --> 0:13:31.480 she reaffirmed policies at the center of frictions with the US. 0:13:31.480 --> 0:13:34.559 He spent two hours heading back and it was opened. 0:13:35.120 --> 0:13:37.800 In this crucial party gathering, we got Eric Shatzker with 0:13:37.840 --> 0:13:40.560 his editorial director for Bloomberg New Economy. He's with us 0:13:40.600 --> 0:13:44.040 right now in the Bloomberg Interactive Broker studio. So Eric, 0:13:44.040 --> 0:13:45.760 before we we went to we talked a little bit 0:13:45.800 --> 0:13:47.640 about what happened over the weekend in China. We also 0:13:47.679 --> 0:13:51.160 talked a little bit about um another lockdown of more 0:13:51.160 --> 0:13:55.000 than a million people in China. And I'm thinking to myself, 0:13:56.000 --> 0:13:58.320 in a in a country the size of China that 0:13:58.400 --> 0:14:00.720 has a policy for COVID's era that we already know 0:14:00.760 --> 0:14:05.920 has affected the country's economy so much, how does something 0:14:05.960 --> 0:14:07.400 like this actually end? I mean, how do we go 0:14:07.440 --> 0:14:10.160 back to a China that isn't increasingly isolating itself from 0:14:10.200 --> 0:14:12.760 the rest of the world. It's an excellent question as 0:14:12.800 --> 0:14:16.920 far as COVID goes, and you'll hear me say this 0:14:17.000 --> 0:14:20.240 word again and again and again. It's all about control, right, 0:14:20.280 --> 0:14:25.560 demonstrating that the Chinese political model is superior to the 0:14:25.600 --> 0:14:28.480 model that we practice here in the West, where we 0:14:28.520 --> 0:14:32.840 had COVID restrictions initially but eventually recognized that the economy 0:14:33.000 --> 0:14:37.800 had to reopen because we operate a democratic society where 0:14:37.960 --> 0:14:42.960 people's free will counts for something. It's consistent with what 0:14:43.000 --> 0:14:45.720 we heard from PRESIDENTI over the weekend, what he talked about. 0:14:46.560 --> 0:14:49.920 Let me say this. His commentary pointed to a China 0:14:50.000 --> 0:14:53.920 that on the one hand, is more geopolitically assertive, but 0:14:54.040 --> 0:14:57.560 on the other hand, is more economically isolated and less 0:14:57.600 --> 0:14:59.520 of a trading partner to the rest of the world. 0:15:00.360 --> 0:15:06.880 Um again, because of control. He and I'm sure you've 0:15:06.920 --> 0:15:11.360 been talking about the response. In his speech to the 0:15:11.520 --> 0:15:16.160 US ban on exports of advanced semiconductors and related equipment, 0:15:16.840 --> 0:15:19.920 he talked about winning the battle in key core technologies 0:15:19.960 --> 0:15:25.120 and moving faster and achieving technology self reliance. But the 0:15:25.240 --> 0:15:29.000 challenge for President she and for China is that he 0:15:29.160 --> 0:15:34.080 envisions this being done within a political framework that prioritizes 0:15:34.640 --> 0:15:42.040 above all ideological rectitude national security and party control. There's 0:15:42.080 --> 0:15:46.160 that control world again, This is not the China that 0:15:46.400 --> 0:15:53.720 evolved into something resembling capitalism right in the years in 0:15:53.760 --> 0:15:58.520 the you know, three decades really and plus that followed. Uh, 0:15:58.560 --> 0:16:01.800 you know, Deng Xiaoping's reform arms back in For the 0:16:01.840 --> 0:16:07.360 past at least five years, if not more. Uh, President, 0:16:07.440 --> 0:16:10.480 she has been growing suspicious of market forces and the 0:16:10.560 --> 0:16:14.560 threats that they present to political stability, and the perceived 0:16:14.720 --> 0:16:17.560 threat that he feels or felt anyway in May may 0:16:17.640 --> 0:16:19.560 no longer field because he's put them in a box 0:16:20.240 --> 0:16:24.240 from tycoons like Jackman pony mom. So how do we 0:16:24.400 --> 0:16:27.720 need to think I think about our audience, the investing audience, 0:16:27.760 --> 0:16:30.120 how do we need to think about China going forward? 0:16:30.200 --> 0:16:32.160 For so many years, right, for so long, it was 0:16:32.200 --> 0:16:36.880 all about global multinationals looking to get into China have 0:16:37.000 --> 0:16:41.480 access to that market. So what is it going forward? Well, 0:16:43.080 --> 0:16:48.040 China will be more inwardly focused, and those who were 0:16:48.160 --> 0:16:53.840 counting on Sheeta reverse course and increase access may find 0:16:53.880 --> 0:16:57.320 themselves disappointed. I will emphasize that it is awfully hard 0:16:57.400 --> 0:17:01.040 to make anything that sounds like a addiction. First of all, 0:17:01.720 --> 0:17:03.960 you know, he hasn't yet secured his third term as 0:17:04.160 --> 0:17:08.000 as president. The Communist Party Congress doesn't end until the 0:17:08.000 --> 0:17:10.080 twenty of this month, it still has a few days 0:17:10.119 --> 0:17:14.440 to run. Yes, yes, yes, it's widely baked into the cake. 0:17:14.600 --> 0:17:23.400 But if he insists that Chinese scientific advances an innovation 0:17:23.720 --> 0:17:26.960 need to fall under the umbrella of state control, which 0:17:27.000 --> 0:17:31.760 is to say, largely done by or directed by state 0:17:31.800 --> 0:17:36.560 owned enterprises, it will look very different from what we 0:17:36.640 --> 0:17:39.480 know in the West and what it China was increasingly 0:17:39.600 --> 0:17:45.040 looking like, which was a somewhat centrally planned but nevertheless 0:17:45.080 --> 0:17:48.560 still capitalist economy. And if you take that to its 0:17:48.600 --> 0:17:54.840 logical conclusion, uh to me anyway, it begins to sound 0:17:54.880 --> 0:17:59.520 a lot like the Soviet Union. And it's not to 0:17:59.600 --> 0:18:03.159 say that the Soviet Union didn't have brilliant scientists and 0:18:03.240 --> 0:18:07.960 didn't achieve great things technologically. It did. If you think 0:18:07.960 --> 0:18:10.880 about the things that the Soviets did with their space program, 0:18:10.960 --> 0:18:13.600 if you think about the things that the Soviets did militarily, 0:18:14.119 --> 0:18:16.920 like develop fighters like the Big Tent and the Big 0:18:16.960 --> 0:18:19.320 twenty nine that were every bit as competitive with what 0:18:19.560 --> 0:18:21.640 the United States and Europe could produce and in many 0:18:21.680 --> 0:18:26.960 cases better, but ultimately not sustainable. Not sustainable technologically and 0:18:27.000 --> 0:18:30.560 not sustainable politically. And I don't need to remind everybody 0:18:30.880 --> 0:18:33.960 what happened in but Eric, in the last thirty seconds 0:18:34.000 --> 0:18:37.280 that we have with you, with given that pretty much 0:18:37.280 --> 0:18:41.200 every single American company wants access to China, does that 0:18:41.400 --> 0:18:47.040 still still does that portend? Potentially a different ending? It 0:18:47.160 --> 0:18:50.800 does what they see there is one point four billion 0:18:50.840 --> 0:18:54.800 people to whom they want to sell things. You know, 0:18:54.880 --> 0:18:58.840 that's a very naked commercial instinct. But you know, if 0:18:58.840 --> 0:19:01.360 you're a shareholder of a comp let's looking to grow 0:19:01.400 --> 0:19:05.320 revenue and grow earnings. It's logical. But bit by bit 0:19:05.359 --> 0:19:07.639 by bit, you have to ask yourself, if you're the 0:19:07.680 --> 0:19:12.120 CEO or the board of that company, is this viable 0:19:12.359 --> 0:19:15.120 over the long run given what we keep hearing out 0:19:15.119 --> 0:19:17.520 of President Cheat because it does seem like they risks 0:19:17.520 --> 0:19:21.080 continue to increase. Bloomberg New Economy editorial director Eric Shatsker 0:19:21.160 --> 0:19:30.520 here in our interactive broker studio er things. I'm journal Yeah, 0:19:30.600 --> 0:19:35.040 but you let me drive? Oh no, no, no, no no, honey, 0:19:35.280 --> 0:19:41.400 Please do the riding gravels. I want to drive. It's 0:19:41.440 --> 0:19:49.919 good question. Drive this good drive to the clothes up 0:19:51.080 --> 0:19:54.280 on Bloomberg Radio. All right, folks, just under ten minutes 0:19:54.359 --> 0:19:56.560 left in today's trading session, getting ready to wrap up 0:19:56.600 --> 0:19:59.680 that Monday trade, and what a trade it is. While 0:19:59.680 --> 0:20:04.480 we have seen some movement, mostly it's game on and 0:20:04.520 --> 0:20:06.440 it's one for the bulls because we've got broad based 0:20:06.520 --> 0:20:08.520 rally under I've just heard the numbers from Charlie but 0:20:08.560 --> 0:20:10.600 Worth repeated the nastac hire by three point six, the 0:20:10.680 --> 0:20:12.760 SMP higher by two point nine, and the down higher 0:20:12.800 --> 0:20:14.760 by two percent. Right now, let's get into it with 0:20:14.800 --> 0:20:17.720 David at Damon. Isn't that Wayne's world to party on? 0:20:17.960 --> 0:20:25.240 Party on? Excellent? Sorry, I love it, Carol, uh uh. 0:20:25.320 --> 0:20:28.080 David Deets is managing Principal and senior investment strategies at 0:20:28.119 --> 0:20:30.720 Pepack of Private Wealth Management about nine point five billion 0:20:30.760 --> 0:20:33.520 dollars in assets under management. David joins us once again 0:20:33.560 --> 0:20:36.040 on the phone from Summit, New Jersey. So David is 0:20:36.040 --> 0:20:38.119 the worst behind us? Is this started turning over new 0:20:38.200 --> 0:20:41.080 leaf this week and for the remainder of the year. Well, 0:20:41.200 --> 0:20:43.920 we don't know whether we've seen the bottom in the 0:20:44.080 --> 0:20:47.000 six local downturn, but we do know that the conditions 0:20:47.200 --> 0:20:50.520 are primed for better returns going forward. I mean, we 0:20:50.600 --> 0:20:53.360 start with the fact that we're down twenty five year 0:20:53.400 --> 0:20:57.480 to date on the broad market thirty on the NASTAC 0:20:57.600 --> 0:21:01.120 That alone should with the appeta of all bargain hunters. 0:21:01.359 --> 0:21:03.560 On top of that, some of the macro factors that 0:21:03.600 --> 0:21:06.840 have really beaten down stocks, like a surging US dollar 0:21:07.200 --> 0:21:10.480 and surging interest rates reverse course today. Now the bond 0:21:10.560 --> 0:21:13.159 market has seen yields go higher for eleven weeks in 0:21:13.160 --> 0:21:15.840 a row. Well, we know that yields don't go to 0:21:15.920 --> 0:21:18.880 the sky, and so certainly the reversal today I think 0:21:19.040 --> 0:21:22.280 really help people take more confidence that there was some 0:21:22.400 --> 0:21:24.280 limit to how high yields would be. And we know 0:21:24.400 --> 0:21:29.280 that bonds compete mightily for investors attention with stocks, right, 0:21:29.440 --> 0:21:32.040 so it's always a comparison, right in terms of fixed 0:21:32.040 --> 0:21:35.040 income bonds versus what we're seeing in terms of valuations 0:21:35.040 --> 0:21:38.119 and yield on the equity side of the things. Having 0:21:38.160 --> 0:21:40.520 said that, at this point, you've got David some specific 0:21:40.600 --> 0:21:42.560 names on the equity side of things that you like, 0:21:42.760 --> 0:21:45.920 and among them is Tyson tell us about the story 0:21:45.960 --> 0:21:49.000 they're thinking behind that. Well, you know, in this part 0:21:49.080 --> 0:21:52.919 of the economic cycle, we're looking for market leaders, and 0:21:53.000 --> 0:21:56.080 when you look at the food category, we're talking chicken, 0:21:56.160 --> 0:22:00.600 we're talking beef for talking pork. Tyson is the apps leader. 0:22:00.920 --> 0:22:04.360 They have a real lock on the domestic market, pacing 0:22:04.359 --> 0:22:08.359 their competitors like Pilgrim Spride, and increasingly they're exporting to 0:22:08.440 --> 0:22:11.240 places like China, which has been battlings mind flu and 0:22:11.280 --> 0:22:13.760 so forth. But this is a stock that you know, 0:22:14.040 --> 0:22:17.399 was over about ninety dollars earlier in the year and 0:22:17.440 --> 0:22:19.400 has come back vital and now it's got a six 0:22:19.480 --> 0:22:22.240 handle um And so you know you've got a market 0:22:22.280 --> 0:22:25.840 leader that now trading at less than ten times earnings, 0:22:25.880 --> 0:22:29.320 a company that has a history of buying back stocks, 0:22:30.320 --> 0:22:32.800 buying back to stock and increasing their dividend. And this 0:22:32.840 --> 0:22:34.760 is the type of thing we think we're investors have 0:22:34.880 --> 0:22:37.639 gone to sour on the name and it's going to 0:22:37.760 --> 0:22:42.119 come back. Okay, what about Berkshire Hathaway, that's one of 0:22:42.119 --> 0:22:43.920 the companies on your list as well. Why are you 0:22:44.000 --> 0:22:48.600 bullish on Berkshire? Well, you can't look at Berkshire without 0:22:48.600 --> 0:22:50.880 thinking about Warren Buffin. Of course, you've got the most 0:22:50.920 --> 0:22:56.040 successful UH investor arguably in the world. Still on top 0:22:56.080 --> 0:22:58.320