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Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene

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Speaker 1: Jay Ley. We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. Yeah.

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Speaker 1: Reading the press, what is clear is that everyone is

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Speaker 1: now an expert on emerging markets. So let's bring in

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Speaker 1: an expert on a merchant markets. The man who wrote

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Speaker 1: that line, Tim Ash Blue Basset Management Senior E. M.

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Speaker 1: Soft Ridge Strategist, Tim, Good morning to You're always great

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Speaker 1: to catch up with you tell us what's really going on?

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Speaker 1: Good morning, Yeah, I mean everyone is negative, you know, unfortunate.

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Speaker 1: I've only done emergant market thirty years, so so I'm

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Speaker 1: a bit of a novice and I learned every day

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Speaker 1: something new. But but the reality is that, you know,

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Speaker 1: there's a lot of lines around big em countries, you know,

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Speaker 1: the Brazil's, Argentina's, Russia, South Africa, etcetera, that have their

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Speaker 1: individual problems, but you know a lot of them is

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Speaker 1: doing fine and you know, gross holding up okay. Commodity

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Speaker 1: prices are fine, China's doing okay, and for the bulk

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Speaker 1: of the m you know, that's kind of okay, And

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Speaker 1: you know, top down, if you look at kind of

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Speaker 1: systemic problems across EM, I mean you kind of struggling.

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Speaker 1: I mean, I look at ratios that you know this

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Speaker 1: is important. I mean if you think of things like

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Speaker 1: external debt GDP, general government debt GDP come acout deficits.

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Speaker 1: I mean, just imagine this all the focus on current

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Speaker 1: account deficit countries like Turkey. Inaggregate across emerging markets, the

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Speaker 1: average current account deficit is point nine percent of GDP.

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Speaker 1: Very moderate. Right, there's a lot of e m f

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Speaker 1: X movement at the moment. Currencies are coming in on

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Speaker 1: a lot of pressure. BI course, countries do have big

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Speaker 1: external financial requirements and FX adjustment is part of that process.

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Speaker 1: But actually e m FX adjustment what should make you

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Speaker 1: concerned is countries with a lot of gross external down

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Speaker 1: And again the ratio of gross external debt to GDP

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Speaker 1: across EM in Agria, he's only that's pretty moderate. This

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Speaker 1: all sounds yeah, this all sounds great, And a lot

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Speaker 1: of people have been saying this for almost a year now,

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Speaker 1: and the route that we've seen has deepened. And you know,

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Speaker 1: I saw this interesting chart yesterday looking at the decline

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Speaker 1: in the central bank assets at the four biggest central banks,

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Speaker 1: paired with the average yield on local currency emerging markets debt,

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Speaker 1: and the sell off correlates with a decline in assets

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Speaker 1: at the big central banks. I mean, quinn't you say

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Speaker 1: that's all fine and good, but the same hand that

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Speaker 1: giveth taketh away now with the pullback of some of

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Speaker 1: the central banks. No, absolutely, I mean, look, the self

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Speaker 1: is partially driven by FED tightening. Strong dollar. Uh, you know,

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Speaker 1: em got got ahead of itself earlier in the year,

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Speaker 1: was expensive. We're seeing an adjustment. The plus for me

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Speaker 1: is that, say, unlike previous systemic crisis in the M

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Speaker 1: say Asia n to two thousand two, where you had

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Speaker 1: fixed exchange rates center of banks fighting that with using

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Speaker 1: FX reserves, burning ex reserves. Actually this time around, central

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Speaker 1: banks have been pretty orthodox, right, I mean, essentially they're

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Speaker 1: letting currencies go, that does the adjustment on current account

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Speaker 1: and external fans, and they're raising rates, which is kind

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Speaker 1: of what they should do to to to to address

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Speaker 1: the obviously the pass through that comes from from f

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Speaker 1: X weakening, So you know FX adjustments, you know, it's painful,

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Speaker 1: It grabs the headlines. Some of the moves have been

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Speaker 1: very big, but it's part of the adjustment process and

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Speaker 1: actually it's creating value and rates going how how it

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Speaker 1: means you're getting nominal and real carry again in the end,

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Speaker 1: which I think eventually will bring people back in tim

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Speaker 1: How do you draw a distinction between a crisis and

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Speaker 1: an aggressive adjustment of price? Well, you know, a christ

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Speaker 1: I mean, at the moment it looks I mean I think,

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Speaker 1: you know, you've had so many big emerging markets with

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Speaker 1: challenges as I mentioned, and you know, top down, I

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Speaker 1: don't I don't see a systemic problem in the end.

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Speaker 1: But as with Asia, you know, if you go back

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Speaker 1: to that period ninety seven to two thousand two, we

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Speaker 1: had Check, we had Highland, we had As, we had

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Speaker 1: a Russia, Turkey, Argentina, Brazil. I mean, it was over.

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Speaker 1: Everyone was passing a baton to each other. And that's

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Speaker 1: I guess the risk that said. You know, look, Argentina

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Speaker 1: has gone to the Imath, it's trying to solve its problems.

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Speaker 1: It's policy responces, pretty orthodox. Turkey hopefully finally the central

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Speaker 1: Bank concept September of thirteen will have smelled enough Turkish

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Speaker 1: coffee that they actually do what everyone has been telling

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Speaker 1: them for a year to do, which is tightened policy.

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Speaker 1: If they do that, you know, valuations on laure look

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Speaker 1: very interesting. Rebalancing is happening. So you need a couple

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Speaker 1: of these countries to turn around. If that happens, I

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Speaker 1: think the moved around the end will turn you know, Tim.

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Speaker 1: One thing that I'm struck by is some of the losses,

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Speaker 1: particularly actively managed emerging market debt funds seven eight percent,

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Speaker 1: nine percent losses in the past month. And I'm talking

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Speaker 1: about some of the biggest names out there that have

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Speaker 1: been managing this money. And I just have to wonder,

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Speaker 1: you know, retail investors looking at those who have poured

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Speaker 1: money into emerging markets. Mike, it's skittish, might withdraw You're

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Speaker 1: already seeing the to this to some extent on the peripheries.

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Speaker 1: To what extent could a tactical issue like that outflows

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Speaker 1: really drive this regardless of whatever Turkish coffee they wake

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Speaker 1: up a spell? Well, it's it's a very valid point,

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Speaker 1: you know, contagion, you know, people suffering risks in Argentina,

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Speaker 1: move on to I mean the problems in South Africa

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Speaker 1: probably are related to to Argentina. Argentina was a very

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Speaker 1: owned position. People like the story because you know, the

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Speaker 1: Argentineans are finally doing what they need to do. Uh.

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Speaker 1: And South Africa was again an own story and I

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Speaker 1: think people you know, connected the dots there. Um, what

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Speaker 1: I would say is in the end, look think about this.

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Speaker 1: In the last twenty years EM the share of EM

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Speaker 1: in global GDP has basically doubled to around right, And

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Speaker 1: I think in the end, structurally most investors are not

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Speaker 1: really invested in EM, right. I mean, it's very peripheral,

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Speaker 1: and I think you know, over the longer term, people

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Speaker 1: still need to put more money into EM. And this

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Speaker 1: is a great oportunity because currencies have just had a

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Speaker 1: big time. Remember a lot of noise around emerging markets, right,

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Speaker 1: And another the question beviously was about crisis. Actually, we

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Speaker 1: haven't had a credit events, a big EM credit events

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Speaker 1: in a m so far. It can happen, certainly, but

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Speaker 1: so far, you know, currencies are just this is part

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Speaker 1: of this, this is what should happen, and we haven't

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Speaker 1: seen a big EM rollover, right, And I think that's

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Speaker 1: really really encouraging. So Jim, I think that some people

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Speaker 1: might be listening to this, and they'll say, someone who

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Speaker 1: manages emerging markets funds is recommending the people put more

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Speaker 1: money into emerging markets funds. I'm wondering, from your perspective,

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Speaker 1: what are you buying right now and how much personal

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Speaker 1: conviction do you have that this is a good buying opportunity. Well,

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Speaker 1: you know, at the moment, we are pretty neutral because

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Speaker 1: we are waiting for some of those big countries to

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Speaker 1: turn around. I mean, we're waiting for a resolution with

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Speaker 1: Argentina in terms of the i m F. We think

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Speaker 1: that's coming. Uh. You know, we think that Turkey you know,

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Speaker 1: certainly has some very good corporate some very good banks.

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Speaker 1: They're working really really hard to turn this story around.

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Speaker 1: We need the right policy action at the top, from

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Speaker 1: the top down from central bank basically, and that I

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Speaker 1: think we'll we'll give a green signal also in Turkey. Um. Uh.

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Speaker 1: You know South Africa's you know, it's been a contagent story.

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Speaker 1: Um in the end, you know, there is a there

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Speaker 1: is a deflation rate rate story there. The growth data

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Speaker 1: came in very bad that you know currencies week, Uh,

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Speaker 1: some great opportunities in South Africa local rates now that

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Speaker 1: you know, value has been created. So I mean, look,

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Speaker 1: it's all it's selective. It's about knowing the owning these

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Speaker 1: country stories, knowing them really really well, feeling comfortable with them,

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Speaker 1: and finding the turning point. And there are some wonderful

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Speaker 1: opportunities being created this year. Remember, I mean this is

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Speaker 1: really part of the m investing, right, I mean, you know,

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Speaker 1: it's uh, it can be a volatile asset class. You know,

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Speaker 1: we've had a couple of fantastic years. We've seen a

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Speaker 1: bit of pushback. But in the end, have you got

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Speaker 1: to be an EM because it's such a big part

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Speaker 1: of the global economy. The answers, yes, right, you can't

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Speaker 1: really ignore this asset class anymore. And I guess these

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Speaker 1: are the kind of times that you know, you know,

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Speaker 1: you've got to show a bit of durability and endurance

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Speaker 1: and and opportunities are being created. Tomash, great to catch

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Speaker 1: out with you. Blue By Asset Management, senior EM sovereign strategist,

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Speaker 1: one of the experts out there in the house big

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Speaker 1: tech companies. Yesterday they were actually in the Senate and

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Speaker 1: they were answering questions. And right now I'm looking at

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Speaker 1: Nazak leading the Klehins, But Facebook and Twitter sharers largely

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Speaker 1: unchanged ahead of the open um. Do we care about

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Speaker 1: these hearings? Do I care about these hearings? And they

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Speaker 1: were interesting? Let's ask someone else, Christmas Angie Belly Funds

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Speaker 1: at CO chief investment officer, joining us here in our

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Speaker 1: eleven three studios, Chris, should we care about these? Well,

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Speaker 1: yesterday was a real three ring circus in Washington, between

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Speaker 1: the Kavanalt hearrings, the op ED and these hearings. A

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Speaker 1: normal day, a normal day. And this comes in the

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Speaker 1: context of course of Trump going after Google on Twitter

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Speaker 1: and Bernie Sanders introducing the Stop Bezos Act. So big

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Speaker 1: Tech is uh, one could say under under siege, but

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Speaker 1: it has been for a while. I mean, is there

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Speaker 1: anything that kind of came out of yesterday? No, I

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Speaker 1: don't think so. And I think the fact that Google

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Speaker 1: didn't show up and had a little placard on their

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Speaker 1: empty chair was indicative of what they think of these hearings.

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Speaker 1: But I think ultimately listen radio was regulated this medium

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Speaker 1: in nineteen four over the over the post World War

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Speaker 1: two era, lots of regulations in place to limit the

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Speaker 1: voice of any particular broadcast television network owner. And we're

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Speaker 1: just catching up now in the Internet age, and so

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Speaker 1: there will be more regulation, more requirements on the on

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Speaker 1: the part of the Internet come. But that's gonna have

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Speaker 1: a cost associated with it. Why don't we celebrate sing

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Speaker 1: the company as successful as Amazon in this country? Whant

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Speaker 1: the politicians celebrating this? This is a huge success story,

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Speaker 1: the envy of most in the world. It is, but

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Speaker 1: it's it's a big company with a lot of influence,

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Speaker 1: and um, those companies tend to be targeted by politicians. Um.

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Speaker 1: So interestingly obviously that it comes from the left, um,

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Speaker 1: and you know, and the right and the right, which

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Speaker 1: is which? Which is what makes it interesting? But you know,

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Speaker 1: you mentioned Google, you mentioned that little placard and how

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Speaker 1: they felt about the hearings. Google shares are actually down

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Speaker 1: nearly a percent ahead of the open today, Facebook and

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Speaker 1: Twitter largely flat. Do you think that that's significant or

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Speaker 1: is this just sort of noise? I think that's noise

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Speaker 1: at this point. Um. You know, clearly Google survived the

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Speaker 1: privacy regulation regime in Europe pretty well. And I think

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Speaker 1: the the the endgame here is that the companies with

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Speaker 1: scale like Google and Facebook and even Twitter are going

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Speaker 1: to be the who are best able to put in

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Speaker 1: the systems to comply with whatever Washington wants, and they're

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Speaker 1: gonna be further entrenched by regulation. Chris, you out run

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Speaker 1: Goodbelly Funds. That's a lot of money. When you look

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Speaker 1: at the tech sector right now, is there any reason

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Speaker 1: why you wouldn't allocate capital to that sector based on

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Speaker 1: a risk of regulations somewhere somehow in the future. Well, listen, yeah,

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Speaker 1: I think, uh, it is just one element of the

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Speaker 1: things that we look at. Um. You know, we invest,

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Speaker 1: we've invested for many, many years, decades in the cable sector,

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Speaker 1: and the biggest risk to the cable sector the distribution

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Speaker 1: industry has been, always will be regulation. And that's just

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Speaker 1: something that you have to digest and and see if

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Speaker 1: it's accounted for in the in the multiples. So right now,

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Speaker 1: given the fact that you have a lot of big

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Speaker 1: analysts saying things look a little heavy, maybe time to

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Speaker 1: take chips off the table. What's the biggest opportunity that

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Speaker 1: you see right now? Yeah, so listen, the the extended

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Speaker 1: fang Facebook, Amazon, Netflix, Google, Microsoft and Apple are collectively

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Speaker 1: four point four trillion. It's like the SNP. They've accounted

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Speaker 1: for about half of the games in the SNP so

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Speaker 1: far this year. Um, you know, those companies I think

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Speaker 1: in aggregate are probably a little bit ahead of themselves.

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Speaker 1: Among them, there are probably better buys, like in my view,

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Speaker 1: Google than uh than say Amazon. Um, but you know,

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Speaker 1: beyond that, we we we have other areas that we

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Speaker 1: look at. We like the cable sector. We think there's

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Speaker 1: gonna be consolidation amongst broadcast television networks. So that's an

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Speaker 1: interesting area amongst others. Chris Ma greats, can't hump with

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Speaker 1: you today, Thanks for dropping on the studio, can Bunny

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Speaker 1: Funds co c I. Oh, the big news of the

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Speaker 1: day is not in markets which are nearly flat, is

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Speaker 1: Jonathan Farrow has pointed out today on several occasions. Um,

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Speaker 1: it's really on the d C. It's on the DC

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Speaker 1: front And that editorial who done it? As you put it, John,

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Speaker 1: and Kevin's really joining us now, Chief Washington correspondent Kevin

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Speaker 1: This anonymous editorial in the New York Times, written as

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Speaker 1: sensibly by someone close to the president, saying that he

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Speaker 1: basically is on the cusp of incompetency. What's the fallout

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Speaker 1: this morning? What's the mood? Good morning? Lead of the fallout?

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Speaker 1: Just within the last hour, Vice President Mike Tent's office

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Speaker 1: releasing a statement saying that the Vice President was not

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Speaker 1: one of the people behind the New York Times bombshell.

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Speaker 1: Anonymous op ed, So the Vice President taking himself out

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Speaker 1: of the equation. Meanwhile, k Kevin hold on one second,

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Speaker 1: does that actually effectively take him out of the equation?

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Speaker 1: I mean, these are words you don't want to say.

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Speaker 1: I did not write an editorial about you, my boss,

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Speaker 1: saying that you are incompetent. Sorry, what's your question? So

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Speaker 1: my question is, does that actually take him out of

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Speaker 1: the equation? I mean, are we going to basically see

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Speaker 1: everybody in the administration just put out statements saying that

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Speaker 1: they are, uh, not the author of this work. Well,

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Speaker 1: that's really what they're facing now at this particular point,

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Speaker 1: is is that there's a lot of questions as to

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Speaker 1: who wrote it. So the Vice President felt that he

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Speaker 1: needed to put out a statement. He did within the

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Speaker 1: last hour. Meanwhile, the New York Times also confirming what

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Speaker 1: White House Press Secretary Sarah Sanders said, which is essentially,

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Speaker 1: the gender of this person is a male. So a

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Speaker 1: lot of speculation this morning, the White House doubling down

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Speaker 1: criticizing the New York Times, uh, supporters of our critics,

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Speaker 1: supporters of the Times, critics of the president, are arguing

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Speaker 1: that this is a White House on the brinks too collapse.

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Speaker 1: At the moment, Kevin, it seems to be an internal crisis.

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Speaker 1: We now, apparently, according to the writer of this opaed,

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Speaker 1: have an administration that is governed by some anonymous, unelected

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Speaker 1: officials that are trying to stop the president from doing

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Speaker 1: what he wants to do. Is that essentially what we

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Speaker 1: have now, Kevin. That's absolutely correct, And in fact, when

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Speaker 1: you talk to sources inside of the administration, they argue, hey,

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Speaker 1: wait a minute, we've been saying this all along. Just

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Speaker 1: is the Duke state type of conspiracy. On the flip

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Speaker 1: side of that, you have centrist Republicans as well as

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Speaker 1: Democrats who were absolutely concerned. Was just at the pace

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Speaker 1: in which, if it's not Bob woodwork book, it's now

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Speaker 1: an anonymous op ed in the New York Times, The

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Speaker 1: issue or the reissuing of the twenty fifth Amendment being

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Speaker 1: talked about inside of the Beltway is not something that

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Speaker 1: the administration wants to be discussing. And quite frankly, they

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Speaker 1: were caught completely flatfooted. They couldn't even get a hard

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Speaker 1: copy of Bob Woodwork's book until hours after this was

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Speaker 1: the experts were first made published. It shows a lack

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Speaker 1: of communicative strategy, and it shows that they've caught flatfooted

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Speaker 1: and completely on defense. They were brought a copy of

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Speaker 1: The New York Times the White House Press Office. Uh

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Speaker 1: oh ed, they were brought a copy of that after

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Speaker 1: a competing outlet printed it out and showed it to them.

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Speaker 1: So Kevin, going forward ten, President Trump demand an unmasking

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Speaker 1: of this person. Uh as he has so tweeted for

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Speaker 1: the New York Times. Do uh? And if not, what's

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Speaker 1: his recourse mean? What's it going to be like in

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Speaker 1: the White House over the next week or two? Well,

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Speaker 1: look in terms of the next twenty four hours. The

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Speaker 1: President has urged in New York Times to reveal it source.

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Speaker 1: I would find it hard. I highly doubt the New

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Speaker 1: York Times is going to give up this source. Republicans

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Speaker 1: on Capitol Hill and the supporters of the President have

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Speaker 1: actually been in locks death with him. They've been echoing

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Speaker 1: his criticisms at the Times and calling on the Times

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Speaker 1: to reveal its source. So you know, it's caught in

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Speaker 1: the back and forth right now, we don't have pulling

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Speaker 1: to understand whether or not UH this is going to

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Speaker 1: repose at all. The president is going to hit an

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Speaker 1: aggressive midterm campaign cycle, and and hearing is on Capitol

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Speaker 1: I mean, there were massive hearing yesterday on Capitol Hill,

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Speaker 1: but all of that equipped by the by the reports

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Speaker 1: of chaos coming out of six Pennsylvania. Kevin, I don't

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Speaker 1: want to get too deep into the journalistic weeds, but

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Speaker 1: something political wrote that I think is worth pointing out.

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Speaker 1: There is a difference between protecting a source and protecting

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Speaker 1: an anomalous author, isn't that? You know? I think that's

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Speaker 1: a really really good point, And and to be honest,

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Speaker 1: I think it's completely That political piece is really indicative Jonathan,

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Speaker 1: of a lot of the conversations that many within the

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Speaker 1: industry are having last night as well as this morning

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Speaker 1: about just how The New York Times decided UH to

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Speaker 1: to run this, and in particular the explanation or the

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Speaker 1: lack thereof that they gave. Now, since not really giving

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Speaker 1: an explanation but just posting this, they've come out with

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Speaker 1: more information about how they relied on an intermediary UH

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Speaker 1: to to bring forth this column to them, uh to

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Speaker 1: protect everything about this source. But there's a lot of

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Speaker 1: questions I think this morning that a lot of people

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Speaker 1: are going to uh, a lot of conversations that are

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Speaker 1: being had this morning and and uh and quite frankly,

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Speaker 1: it is a very unique situation. It's unique number one,

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Speaker 1: the content of the off ed and it's speak number two,

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Speaker 1: as you point out about the time decision to publish

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Speaker 1: something of this nature. Kevin's really really really important, important

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Speaker 1: insight into this. Covin's really chief Washington correspondent covering this

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Speaker 1: and everything else that's been going on in Washington, d C.

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Speaker 1: For US, Thank you. Lawmakers in the U. S. Senate

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Speaker 1: have raised the prospect of regulating social media platforms, and

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Speaker 1: of course this came as the bosses of Twitter and

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Speaker 1: Facebook testified that Russia had used their networks to interfere

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Speaker 1: in elections in the US as well as other countries.

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Speaker 1: Here are some of the highlights from yesterday's testimony. Russia

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Speaker 1: used social media as part of the I quote, a

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Speaker 1: comprehensive and multifaceted campaign too so discord undermine democratic institutions

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Speaker 1: and interfere in US elections and those of our allies.

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Speaker 1: We were too slow to spot this and too slow

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Speaker 1: to act. We believe many people you is Twitter as

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Speaker 1: a digital public square to gather from all around the

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Speaker 1: world to see what's happening and have a conversation about

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Speaker 1: what they see. Twitter cannot rightly serve as a public

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Speaker 1: square if it's constructed around the personal opinions of its makers.

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Speaker 1: We believe a key driver of a thriving public square

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Speaker 1: is the fundamental human right of freedom of opinion and expression.

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Speaker 1: If you ask whatever inauthentic accounts on Facebook, we believe

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Speaker 1: at any point in time it's three to four percent

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Speaker 1: of accounts. If we determine that people were subject to

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Speaker 1: any um falsehoods or manipulation of any sort, we do

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Speaker 1: need to provide them the full context of that. And

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Speaker 1: this is an area of improvement for us and something

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Speaker 1: that we're going to be diligent to fix. I'm deeply

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Speaker 1: disappointed the Google, one of the most influential digital platforms

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Speaker 1: in the world, chose not to send its own top

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Speaker 1: corporate leadership to engage this committee. All right, let's bring

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Speaker 1: Bloomberg Stara Fryer, usually based in San Francisco, but joining

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Speaker 1: us today from Washington. Sara seems like Twitter, Facebook committed

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Speaker 1: to trying to get better to explain how their algorithms

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Speaker 1: are automated symptoms work and block certain content. They all

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Speaker 1: agreed to work harder together. What is the next step though,

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Speaker 1: in terms of actually doing something concrete, Well, this is

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Speaker 1: this is sort of the culmination of a lot of

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Speaker 1: investigation that the Senate Intelligence Committee has done into this

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Speaker 1: issue with the companies, and I think maybe one of

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Speaker 1: the more constructive steps because now the senators are very

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Speaker 1: educated looking at this, and they're telling the tech companies,

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Speaker 1: you need to provide more transparency for your users. When

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Speaker 1: you're talking to a bot on Twitter, you should be

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Speaker 1: able to know that you're talking to a bot. When

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Speaker 1: you've been contacted by a campaign on Facebook that you

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Speaker 1: may not see is run by a Ford agent, you

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Speaker 1: should be able to know that. There should be more

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Speaker 1: immediate feedback for the user in the moment and not

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Speaker 1: months later saying we found this has happened to you.

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Speaker 1: Uh and and the companies say that that's going to

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Speaker 1: be very difficult to deliver. On Twitter even said that

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Speaker 1: it's difficult for them to know what's what the difference

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Speaker 1: between about account and a human account is they also

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Speaker 1: have to work on issues like user verification to verify

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Speaker 1: their identities. UM. They have to figure out what to

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Speaker 1: do about UM. A lot of the ways that people

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Speaker 1: interact with their service in terms of abuse and harassment

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Speaker 1: in people's reporting of that, which is a very uh

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Speaker 1: burdensome system for those people who are the victims. Yeah,

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Speaker 1: and speaking ways of that users interact with the service.

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Speaker 1: There was a recent Pew survey Sarah that found that

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Speaker 1: only nine percent of Facebook users have downloaded their personal

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Speaker 1: data from the company. But among the group those who

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Speaker 1: did deleted the Facebook gap from their phone, seventy elected

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Speaker 1: to adjust their privacy setting after downloading their data. So

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Speaker 1: users are taking action and making some changes once they

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Speaker 1: realize the extent to which Facebook has their data. We're

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Speaker 1: starting to see some of that show up in the results.

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Speaker 1: To what extent do you see the company's really coming

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Speaker 1: back with new offerings or new ways to manage this

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Speaker 1: potential exodus. Well, the company is still growing. Facebook is

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Speaker 1: still growing globally, and I really think that that's important

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Speaker 1: to keep in mind here that that Facebook is not

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Speaker 1: just the US market. Yes, it's the most lucrative market,

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Speaker 1: but it's not the company's future. And then the company

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Speaker 1: also owns these other properties like Instagram, for example, which

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Speaker 1: is popular globally, just hit a billion users. They have WhatsApp,

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Speaker 1: they have Messenger, so the company. What's concerning here for

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Speaker 1: investors is the company is going to have to figure

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Speaker 1: out ways to grow beyond its main cash cow, which

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Speaker 1: is the Facebook news feed and advertising there. One of

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Speaker 1: the reasons is because people are a little bit disenchanted

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Speaker 1: with it now, but the other reason is that it's

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Speaker 1: just so big around the world that there isn't much

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Speaker 1: more room for it to grow, all right, Sarah Fryer,

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Speaker 1: thank you so much for joining us Bloomberg Tech reporter,

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Speaker 1: usually based in San Francesco, San Francisco, with us today

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Speaker 1: from Washington. Technology companies have been driving a lot of

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Speaker 1: the dynamism that we've seen in the United States economy

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Speaker 1: over the past five years, certainly in the stock markets.

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Speaker 1: And the question I have is whether that can really

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Speaker 1: continue given the saturation of smartphones and whether uh and

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Speaker 1: the high valuations and I'm wondering whether anything and the

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Speaker 1: hearings yesterday on Capitol Hill informed investors opinion about that.

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Speaker 1: UM let's bring in someone who knows about that was

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Speaker 1: monitoring Gene Munster, who is Loop Adventures management managing director

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Speaker 1: and co founder. Gene, thank you so much for being

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Speaker 1: with us. Is there anything that you took away from

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Speaker 1: these hearings that you think uh is important are crucial

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Speaker 1: for investors going forward in terms of regulation and the

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Speaker 1: potential in the tech sector. Well, I think for Twitter investors,

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Speaker 1: they have to understand that there's going to be more

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Speaker 1: spending related to some of the governance that Facebook has

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Speaker 1: already put into place. So Facebook has talked our last

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Speaker 1: nine months about significantly increasing the like in order of

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Speaker 1: like a billion dollars related to spending on twenty new

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Speaker 1: employees and new tools to try to make the platform

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Speaker 1: more transparent. So I think that a Facebook investor, there

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Speaker 1: probably wasn't a lot of real substance from yesterday from

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Speaker 1: Twitter and Twitter shares reacted more negatively to Jack Dorsey's

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Speaker 1: endorsement that they need to spend more money on the platform.

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Speaker 1: There could be another shooting drop when they report their

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Speaker 1: September quarter when they actually give some more guidance related

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Speaker 1: to that spend. And then last Google, it's important to

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Speaker 1: kind of roll back the tape and see exactly why

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Speaker 1: they weren't there. I think that the headlines are the

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Speaker 1: Google decided not to show up. That is not not

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Speaker 1: in fact true. They offered a low level of person,

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Speaker 1: but the Senate felt snubbed by that and said lessons

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Speaker 1: Larry Page, we don't want anybody. But that's still bigs

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Speaker 1: the question for Google. They have some questions to answer

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Speaker 1: around accounts in YouTube, because remember YouTube requires accounts to

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Speaker 1: impact and there's obviously some influencing that can go on there.

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Speaker 1: So look for more to come from from Google. I

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Speaker 1: think it's really interesting what you're saying about Twitter spending

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Speaker 1: more money, and I think that that is actually the

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Speaker 1: most informative thing I've heard so far in terms of

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Speaker 1: why the shares UH saw more weakness in Facebook. That

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Speaker 1: said Facebook is facing shrinking margins Gene and there was

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Speaker 1: a there was a great story today on the Bloomberg

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Speaker 1: talking about how in general, the sentiment has been clear

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Speaker 1: they're going to have to spend more. So do you

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Speaker 1: think that investors are perhaps underestimating how much Facebook is

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Speaker 1: going to have to spend going forward. I think on

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Speaker 1: the spending side, investors generally have a good handle, in

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Speaker 1: part because the company has a history of saying they're

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Speaker 1: going to spend a certain amount and actually come in

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Speaker 1: a little bit below that. So I don't think that

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Speaker 1: there's another, um, another leg down in terms of how

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Speaker 1: much spending they're doing. I do believe there's a fundamentally

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Speaker 1: bigger question about Facebook. And keep in mind, I'm old,

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Speaker 1: I'm forty seven, so this is not my world. But

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Speaker 1: I do believe that the world is not a better

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Speaker 1: place for Facebook. And the way that that plays out

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Speaker 1: is Facebook is coming up with new products to try

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Speaker 1: to make it better, for example, groups that they announced

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Speaker 1: on May first, or dating apps, but that's at the

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Speaker 1: cost of them adding more transparency to the actual how

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Speaker 1: their users are being monetized. And as these new transparency

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Speaker 1: tools roll through, they do have a negative impact on engagement.

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Speaker 1: And so what that means is you we were just

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Speaker 1: talking about the the the expense side of the ledger,

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Speaker 1: but on the top line, the engagement side could be impacted.

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Speaker 1: My Cobar and Pim Fox in the studio with us.

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Speaker 1: You didn't take Cardie to your I'm old, I'm forty

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Speaker 1: seven line, I'm Pim foxes him. Fox is dying. What

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Speaker 1: does that mean? I mean? I don't know. I got

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Speaker 1: my horse outside. I better go right over and talk

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Speaker 1: to Gene Munster right now and see if my dial

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Speaker 1: phone still works. Don't take mine. Gotta say, I'm really

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Speaker 1: happy that Jeans with us today, and I'm really disappointed

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Speaker 1: because I've got to run away to TV. Jean's gonna

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Speaker 1: stick with us, and I'm sure you can talk about

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Speaker 1: Amazon and test Or and everything else. Yeah, there's so

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Speaker 1: much coming up with Jeene Monster of Blue Ventures Management,

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Speaker 1: managing director and co founder. Thanks for listening to the

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Speaker 1: Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud,

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Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at

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Speaker 1: Tom Keane before the podcast. You can always catch us worldwide.

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Speaker 1: I'm Bloomberg Radio a