1 00:00:00,240 --> 00:00:04,040 Speaker 1: Runt You by Bank of America Mary Lynch with virtual reality, 2 00:00:04,320 --> 00:00:09,719 Speaker 1: virtually everything will change. Discover opportunities in a transforming world 3 00:00:10,160 --> 00:00:14,440 Speaker 1: VI of a mL dot Com slash VR, Mary Lynch, 4 00:00:14,520 --> 00:00:29,240 Speaker 1: Pierced Fenner and Smith Incorporated. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:29,280 --> 00:00:32,760 Speaker 1: I'm Tom Keene with David Gura. Daily we bring you 6 00:00:32,840 --> 00:00:37,680 Speaker 1: insight from the best of economics, finance, investment, and international relations. 7 00:00:38,120 --> 00:00:43,640 Speaker 1: Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com, 8 00:00:43,640 --> 00:00:51,160 Speaker 1: and of course on the Bloomberg. He has been generous 9 00:00:51,200 --> 00:00:54,720 Speaker 1: of his time and joining us this morning. Mario Gabelli 10 00:00:54,800 --> 00:00:57,280 Speaker 1: for those of you not on Global Wall Street. Um, 11 00:00:57,320 --> 00:01:03,279 Speaker 1: he is an original in my value investment, and he's 12 00:01:03,320 --> 00:01:07,480 Speaker 1: an original in patience, and he's an original in shareholders 13 00:01:07,480 --> 00:01:09,800 Speaker 1: should get their fair share? Are we going to continue 14 00:01:09,800 --> 00:01:12,440 Speaker 1: to see share buy backs? Mario? As we go up 15 00:01:12,520 --> 00:01:16,160 Speaker 1: up up? Is that just an easy path? That's a 16 00:01:16,160 --> 00:01:19,200 Speaker 1: great question, and it always depends on how you allocate capital. Tom, 17 00:01:19,360 --> 00:01:21,520 Speaker 1: what is the right Now You've got almost the triple 18 00:01:21,600 --> 00:01:25,800 Speaker 1: tax on the corporate earnings, the corporate tax, the tax 19 00:01:25,840 --> 00:01:28,200 Speaker 1: on dividends, and then the surcharge on dividends. That was 20 00:01:28,240 --> 00:01:31,960 Speaker 1: a snug in at night. But if I'm a steel company, 21 00:01:32,000 --> 00:01:34,040 Speaker 1: do I want to reinvest in the steel business and 22 00:01:34,160 --> 00:01:38,320 Speaker 1: open heart? No, the answers business has changed, so keep 23 00:01:38,319 --> 00:01:42,160 Speaker 1: your powder dry, be flexible and uh obviously changed with 24 00:01:42,240 --> 00:01:43,960 Speaker 1: the world that's going on over the next ten of 25 00:01:44,000 --> 00:01:47,280 Speaker 1: twenty years. And uh, buy backs. If I'm buying back 26 00:01:47,319 --> 00:01:51,520 Speaker 1: the stock materially below intrinsic value, that helps everyone. If 27 00:01:51,520 --> 00:01:53,600 Speaker 1: it's buying it back to support the stock, it makes 28 00:01:53,640 --> 00:01:56,680 Speaker 1: no sense of you know. And so you gotta figure 29 00:01:56,680 --> 00:02:00,800 Speaker 1: out what when do yields compete with dividen ends again 30 00:02:01,000 --> 00:02:04,120 Speaker 1: in our lifetime? Well, it depends on a snapshot or 31 00:02:04,120 --> 00:02:06,840 Speaker 1: emotion picture. On emotion picture, you really want to own 32 00:02:07,080 --> 00:02:10,000 Speaker 1: up companies that are good I have corporate earnings and 33 00:02:10,040 --> 00:02:14,000 Speaker 1: are growing and can maintain purchasing power in real terms. 34 00:02:14,000 --> 00:02:15,880 Speaker 1: So if inflation picks up, which I'm at the camp 35 00:02:15,919 --> 00:02:19,079 Speaker 1: that says it will, uh, then you want to earn 36 00:02:18,840 --> 00:02:24,320 Speaker 1: a static return, tom, but a return that grows with time. Okay, 37 00:02:24,400 --> 00:02:27,520 Speaker 1: let's bring into O'Brien, who knows nothing about yours or 38 00:02:27,600 --> 00:02:31,120 Speaker 1: my world, but he's been talking with Matthew Levina Bloomberg 39 00:02:31,200 --> 00:02:34,640 Speaker 1: View all night about the Financial Markut Tim O'Brien with 40 00:02:34,680 --> 00:02:37,560 Speaker 1: Mario Gabelli. Mario is good to have you here today, 41 00:02:37,639 --> 00:02:40,280 Speaker 1: My privilege to listen to you. Thanks for tolerating me. 42 00:02:40,680 --> 00:02:45,480 Speaker 1: My actually my Bloomberg gad Fly colleagues. Stephen Gandeli Rope 43 00:02:45,800 --> 00:02:48,720 Speaker 1: had a nice piece about earnings outlooks for the S ANDP. 44 00:02:49,440 --> 00:02:52,799 Speaker 1: We obviously had a great first quarter where earnings across 45 00:02:52,800 --> 00:02:55,959 Speaker 1: the border up about four It looks in the second 46 00:02:56,040 --> 00:02:58,600 Speaker 1: quarter like they're gonna slow to about six point four percent, 47 00:02:59,120 --> 00:03:01,600 Speaker 1: and people are even a little more bearish for earnings 48 00:03:01,600 --> 00:03:05,239 Speaker 1: in the third quarter at maybe only five percent or so. 49 00:03:05,760 --> 00:03:08,400 Speaker 1: So what does that mean about valuations? Mario? If for 50 00:03:08,400 --> 00:03:10,240 Speaker 1: for the bullish out look at the market, that it 51 00:03:10,280 --> 00:03:13,440 Speaker 1: probably is more than fully valued right now. Corporate earnings 52 00:03:13,440 --> 00:03:15,720 Speaker 1: always drive that picture. So what do you think, Well, 53 00:03:15,760 --> 00:03:18,320 Speaker 1: it's a multiple, it's earnings, and the multiple to earnings. 54 00:03:18,320 --> 00:03:21,160 Speaker 1: The multiple earnings a function of interest rates and inflation 55 00:03:21,760 --> 00:03:24,560 Speaker 1: isn't as an underpinning to interest rates and so on. 56 00:03:25,840 --> 00:03:29,560 Speaker 1: From my point of view, the Euro today is one fourteen, 57 00:03:29,639 --> 00:03:32,440 Speaker 1: a year ago is one ten. So American companies are 58 00:03:32,440 --> 00:03:34,920 Speaker 1: going to get the tail wind. Thirty percent of earnings 59 00:03:34,960 --> 00:03:36,520 Speaker 1: are outside the United States, so you're gonna get a 60 00:03:36,520 --> 00:03:39,080 Speaker 1: tail whin it's opposed to the head. When on translations 61 00:03:39,160 --> 00:03:42,560 Speaker 1: Europe is doing better, Germany you're gonna think is doing better? 62 00:03:42,640 --> 00:03:45,560 Speaker 1: Is the core Well, I've been not that much earnings 63 00:03:45,560 --> 00:03:48,000 Speaker 1: in China and the financials are going to do better 64 00:03:48,040 --> 00:03:50,560 Speaker 1: if the slope of the interest rate curve goes upwards. 65 00:03:50,560 --> 00:03:52,720 Speaker 1: So those are important parts of the market. So I, 66 00:03:53,520 --> 00:03:55,960 Speaker 1: you know the macro guys, Steve is probably right. I 67 00:03:55,960 --> 00:03:59,520 Speaker 1: don't do macro. On the other side, there's always opportunities 68 00:04:00,400 --> 00:04:02,200 Speaker 1: anywhere in the world, and that's where we try to 69 00:04:02,200 --> 00:04:04,640 Speaker 1: ferret out. Jon Tucker, did you see how smart that 70 00:04:04,680 --> 00:04:07,440 Speaker 1: Tim O'Brien question was? This? Is he's like sitting in 71 00:04:07,720 --> 00:04:12,839 Speaker 1: or is this an audition? Is there's something I need 72 00:04:12,880 --> 00:04:15,360 Speaker 1: to know? I should point out to Mario that Tom 73 00:04:15,440 --> 00:04:19,920 Speaker 1: is approaching the mandatory return. Very good, could have Let's 74 00:04:19,960 --> 00:04:24,480 Speaker 1: have another mandatory question from Mr O'Brien, tim um Uh, Mario. 75 00:04:24,600 --> 00:04:26,720 Speaker 1: The other thing that sort of sneaks in on this 76 00:04:26,760 --> 00:04:30,360 Speaker 1: is how much energy companies contributed to the first quarter 77 00:04:31,080 --> 00:04:35,680 Speaker 1: earnings rises That sustainable in that sector from your perspective, Uh, 78 00:04:35,920 --> 00:04:39,200 Speaker 1: look to make the case that oil at forty five 79 00:04:39,200 --> 00:04:42,760 Speaker 1: dollars a barrel is a question mark. But if Saudi 80 00:04:42,760 --> 00:04:45,440 Speaker 1: Arabia is trying to go public with one of their companies, 81 00:04:45,680 --> 00:04:49,240 Speaker 1: will take trim back. And the other side, American technology 82 00:04:49,240 --> 00:04:52,000 Speaker 1: and a form of fracking has given us a reservoir 83 00:04:52,040 --> 00:04:55,560 Speaker 1: of energy. It is providing at the margin the incremental amount. 84 00:04:55,839 --> 00:04:57,760 Speaker 1: But at the same time you look at what happened 85 00:04:57,760 --> 00:05:01,040 Speaker 1: to Adelaide Australia where they ran out of energy because 86 00:05:01,040 --> 00:05:02,680 Speaker 1: they didn't have the right policy. So we got to 87 00:05:02,720 --> 00:05:05,280 Speaker 1: do a lot of things together. And as far as 88 00:05:05,400 --> 00:05:07,920 Speaker 1: Ernie is are concerned, we are buying some of these 89 00:05:07,920 --> 00:05:12,599 Speaker 1: stocks now. Is President Trump good for the stock market? No, 90 00:05:12,720 --> 00:05:17,200 Speaker 1: But the policies of a applaud business as opposed to 91 00:05:17,240 --> 00:05:20,640 Speaker 1: condemn them is clearly very good. The allocation of money 92 00:05:20,640 --> 00:05:23,919 Speaker 1: to capitalism as opposed to socialism is always very good. 93 00:05:24,160 --> 00:05:27,120 Speaker 1: And the free market system, which has functioned effectively since 94 00:05:27,160 --> 00:05:29,599 Speaker 1: Adam Smith came around and allocated has been one of 95 00:05:29,640 --> 00:05:31,839 Speaker 1: the great wonders of the world in terms of helping 96 00:05:32,040 --> 00:05:35,240 Speaker 1: helping mankind. You and I heard Jake Clayton, the Securities 97 00:05:35,279 --> 00:05:38,080 Speaker 1: and Exchange Commission yesterday at the Economic Club of New 98 00:05:38,160 --> 00:05:40,640 Speaker 1: York I don't believe he brought up a tea word once. 99 00:05:41,400 --> 00:05:45,479 Speaker 1: And it's interesting how government could move on even with 100 00:05:45,520 --> 00:05:47,800 Speaker 1: all the uproar about the president. Do you have an 101 00:05:47,839 --> 00:05:50,359 Speaker 1: optimism that can occur? Well if the moment can move on, 102 00:05:50,440 --> 00:05:53,360 Speaker 1: but not under Bernie Sanders? Well, well, how about on 103 00:05:53,480 --> 00:05:57,520 Speaker 1: infrastructure or great question and Tim let me go into that. 104 00:05:57,600 --> 00:06:00,920 Speaker 1: In the December fift two thousand and fifth, we as 105 00:06:00,920 --> 00:06:04,960 Speaker 1: a government passed the rules saying the fixed American surface 106 00:06:04,960 --> 00:06:09,960 Speaker 1: transportation and companies did well today inland waterway, inland waterway 107 00:06:10,120 --> 00:06:13,160 Speaker 1: things that helped the American farmer move goods Uh. The 108 00:06:13,200 --> 00:06:16,320 Speaker 1: notion of avionics infrastructure is going to do well. From 109 00:06:16,360 --> 00:06:19,600 Speaker 1: what I like is case New Holland. I like companies 110 00:06:19,640 --> 00:06:22,440 Speaker 1: that are involved in infrastructure, like Dana, which sells parts 111 00:06:22,440 --> 00:06:25,120 Speaker 1: of the Class eight trucks on a global basis, uh 112 00:06:25,160 --> 00:06:27,800 Speaker 1: and so on. So case New Holland, for example, has 113 00:06:27,880 --> 00:06:31,719 Speaker 1: farm equipment, it has construction equipment. It has a company 114 00:06:31,720 --> 00:06:34,359 Speaker 1: that has run by a guy that took Ferrari public 115 00:06:34,400 --> 00:06:36,240 Speaker 1: because he realized there wasn't a car company. But it 116 00:06:36,320 --> 00:06:39,120 Speaker 1: alloxurally good. They're gonna take a Vaco public and take 117 00:06:39,320 --> 00:06:41,240 Speaker 1: uh and do a lot so there's a lot going on. 118 00:06:41,240 --> 00:06:44,280 Speaker 1: One final question before he could before you start your day. 119 00:06:44,480 --> 00:06:47,039 Speaker 1: You were iconic on Steve Ross and Time Warner of 120 00:06:47,080 --> 00:06:50,240 Speaker 1: a long time ago. Give us an update now on 121 00:06:50,400 --> 00:06:53,200 Speaker 1: Time Warner in the media business in general. Are you 122 00:06:53,360 --> 00:06:57,600 Speaker 1: enthused well the notion of the Stevenson a T and 123 00:06:57,640 --> 00:07:00,320 Speaker 1: T putting his arms around direct TV and now putting around. 124 00:07:00,360 --> 00:07:03,200 Speaker 1: You've got to allow companies to buy what they want. 125 00:07:03,240 --> 00:07:05,240 Speaker 1: If they make mistakes, it is what it is. If 126 00:07:05,240 --> 00:07:07,720 Speaker 1: they add value, it is what it is. So I 127 00:07:07,760 --> 00:07:12,600 Speaker 1: like entertainment, I like content, I like connectivity, wireless, cable. 128 00:07:13,040 --> 00:07:15,800 Speaker 1: What am I buying? I'm buying Millcom because John Malone 129 00:07:15,840 --> 00:07:17,520 Speaker 1: is going to buy it. He just primed the pump 130 00:07:17,520 --> 00:07:20,600 Speaker 1: with Lilac a Liberty International by buying stock that he 131 00:07:20,640 --> 00:07:23,600 Speaker 1: hasn't bought before. So there's a lot going on. Tom 132 00:07:23,680 --> 00:07:25,920 Speaker 1: and I want to own wireless companies. I want to 133 00:07:25,920 --> 00:07:28,960 Speaker 1: own cable companies. Millecom is one that will be taken 134 00:07:28,960 --> 00:07:31,200 Speaker 1: over within two years. The stocks fifty five owned by 135 00:07:31,200 --> 00:07:37,000 Speaker 1: a Swedish company called Shinovic. Uh. That's clearly and everyone's 136 00:07:37,040 --> 00:07:41,120 Speaker 1: radar screen belly. Thank you so much to meet you 137 00:07:41,560 --> 00:07:48,200 Speaker 1: and use your shop elbow and move them out. Thank you, 138 00:07:50,360 --> 00:07:55,240 Speaker 1: I said, I said, t okay, belly, thank you so much. 139 00:08:07,600 --> 00:08:10,400 Speaker 1: This is just a joy this morning, Timthy O'Brien in 140 00:08:10,480 --> 00:08:12,600 Speaker 1: for us is David Gurrs in Idaho. We'll go to 141 00:08:12,720 --> 00:08:16,640 Speaker 1: Mr Gura later on and joining us now. Really in 142 00:08:16,680 --> 00:08:21,480 Speaker 1: the nexus of our nation's political science is Douglas Elmendorf. 143 00:08:21,720 --> 00:08:25,120 Speaker 1: To say he's at Kennedy out of Harvard barely describes 144 00:08:25,200 --> 00:08:31,360 Speaker 1: his public service, particularly his service with a Congressional Budget Office. Uh, 145 00:08:31,480 --> 00:08:34,679 Speaker 1: Dean Elmendorff? Do you go by Dean du Doug? I mean, 146 00:08:34,760 --> 00:08:38,000 Speaker 1: is Dean the appropriate title? You can just call me? 147 00:08:38,080 --> 00:08:39,800 Speaker 1: Do all? I one of knows do you have Red 148 00:08:39,800 --> 00:08:41,880 Speaker 1: Sox tickets? Because that's the only reason to talk to you. 149 00:08:42,240 --> 00:08:47,800 Speaker 1: But Doug, Doug, Seriously, within the CBO scoring debate is 150 00:08:48,040 --> 00:08:53,079 Speaker 1: the CBO. Mitch McConnell's friend right now, because everybody seems 151 00:08:53,120 --> 00:08:56,080 Speaker 1: to look at CBO as the evil enemy, is the 152 00:08:56,200 --> 00:09:02,960 Speaker 1: CBO Senator McConnell's friend. CBOs isn't supposed to be anybody's 153 00:09:03,000 --> 00:09:08,800 Speaker 1: friend or enemy. Their objective analysts providing their best informed 154 00:09:08,920 --> 00:09:12,280 Speaker 1: estimate of the effects of proposed policies, and at different 155 00:09:12,280 --> 00:09:14,800 Speaker 1: points in time, those estimates will turn out to help 156 00:09:14,840 --> 00:09:19,440 Speaker 1: or her certain Congressional members causes, and that's just the 157 00:09:19,440 --> 00:09:22,280 Speaker 1: way the system works. But through that system, you and I, 158 00:09:22,720 --> 00:09:25,480 Speaker 1: as well as all the members of Congress, learn what 159 00:09:25,520 --> 00:09:28,600 Speaker 1: the effects of proposals will be before the members have 160 00:09:28,679 --> 00:09:30,439 Speaker 1: to vote on them. I should point out that Dean 161 00:09:30,520 --> 00:09:34,199 Speaker 1: Almendorff was need deep been President Clinton's health care efforts 162 00:09:34,240 --> 00:09:37,080 Speaker 1: of another time in place. Timothy O'Brien with us this 163 00:09:37,120 --> 00:09:42,600 Speaker 1: morning from Bloomberg View. Tim A question for Dean Almendorff, Uh, Doug, 164 00:09:42,600 --> 00:09:45,560 Speaker 1: is do you think that this sort of backlash against 165 00:09:45,640 --> 00:09:50,920 Speaker 1: the CBO smacks of the previous backlash against the statisticians 166 00:09:50,920 --> 00:09:54,080 Speaker 1: at the BLS around labor statistics. Have we entered into 167 00:09:54,120 --> 00:09:58,800 Speaker 1: this sort of moment where people feel comfortable contending with 168 00:09:58,840 --> 00:10:04,200 Speaker 1: almost anything that he once considered to be objective facts. Yes, 169 00:10:04,360 --> 00:10:08,600 Speaker 1: I'm very concerned about that this administration is afraid of 170 00:10:08,800 --> 00:10:13,520 Speaker 1: facts and evidence and analysis, and OMB Director Mulvaney attacked 171 00:10:13,920 --> 00:10:16,400 Speaker 1: the Bureau of Labor Statistics for how it calculates the 172 00:10:16,440 --> 00:10:21,320 Speaker 1: unemployment rate. He's attacking CBO for its independent analysis. This 173 00:10:21,440 --> 00:10:24,240 Speaker 1: is very dangerous for our political system and for our country, 174 00:10:24,240 --> 00:10:28,240 Speaker 1: and I think it's important that Republican Congressional leaders stand 175 00:10:28,320 --> 00:10:31,840 Speaker 1: up for CBO and its work because this actually isn't 176 00:10:31,840 --> 00:10:35,080 Speaker 1: a partisan ideological issue. It's just about good government and 177 00:10:35,120 --> 00:10:36,720 Speaker 1: good data at the end of the day, isn't it. 178 00:10:37,520 --> 00:10:40,400 Speaker 1: That's exactly right? Um, what do you where do you 179 00:10:40,440 --> 00:10:44,559 Speaker 1: think this is springing from it its core? Well, I 180 00:10:44,920 --> 00:10:48,240 Speaker 1: understand that the administration and some Republicans and Congress are 181 00:10:48,240 --> 00:10:53,200 Speaker 1: frustrated because CBO's estimates are not helping them pass their 182 00:10:53,200 --> 00:10:57,160 Speaker 1: health legislation. But that's not cbio's fault. The Republicans are 183 00:10:57,160 --> 00:11:02,040 Speaker 1: pushing legislation that would health insurance away from tens of 184 00:11:02,120 --> 00:11:05,440 Speaker 1: millions of Americans. That's going to be a hard sell 185 00:11:05,559 --> 00:11:08,320 Speaker 1: to the American people if the American people understand it. 186 00:11:08,840 --> 00:11:12,600 Speaker 1: So naturally, the sponsors of that sort of legislation don't 187 00:11:12,679 --> 00:11:14,920 Speaker 1: want that understanding to occur, and they're going to try 188 00:11:14,960 --> 00:11:18,559 Speaker 1: to stop the people like BBO who are informing Americans. 189 00:11:18,880 --> 00:11:21,080 Speaker 1: Dinamer's one more question if we could in a brief 190 00:11:21,160 --> 00:11:23,240 Speaker 1: visit this morning. I know you read all of your 191 00:11:23,280 --> 00:11:27,280 Speaker 1: working papers at Kennedy the great Danny Roderick on Populism 192 00:11:27,400 --> 00:11:31,360 Speaker 1: in the Economics of Globalization. Is the American populism. The 193 00:11:31,480 --> 00:11:36,679 Speaker 1: same is the population of populism of Europe. There are 194 00:11:36,679 --> 00:11:40,600 Speaker 1: different strands, of course, in different places and different particular issues. 195 00:11:40,960 --> 00:11:44,600 Speaker 1: But Danny wrote twenty years ago that the great challenge 196 00:11:44,640 --> 00:11:50,680 Speaker 1: was whether global economic integration would lead to domestic social disintegration, 197 00:11:51,160 --> 00:11:55,440 Speaker 1: and he saw that coming decades away, and unfortunately we 198 00:11:55,440 --> 00:11:57,559 Speaker 1: are now seeing the fruits of that in ways that 199 00:11:57,600 --> 00:12:00,480 Speaker 1: are very damaging for our countries. Dinamo or thank you 200 00:12:00,559 --> 00:12:02,800 Speaker 1: too shut to visit this morning, We greatly appreciate it. 201 00:12:03,080 --> 00:12:07,080 Speaker 1: Douglas Almondorf is with the Comedy School at Harvard University. 202 00:12:07,120 --> 00:12:12,600 Speaker 1: We forget Tim O'Brien that these schools have entire industries 203 00:12:12,800 --> 00:12:17,439 Speaker 1: of bright people really struggling with the topics of the day, 204 00:12:17,760 --> 00:12:20,640 Speaker 1: and we're in the era where, to some extent, maybe 205 00:12:20,679 --> 00:12:23,120 Speaker 1: not a great extent, they're basically tarted and feathered on 206 00:12:23,240 --> 00:12:27,920 Speaker 1: a daily basis. There's always been an an anti academia, 207 00:12:28,280 --> 00:12:30,320 Speaker 1: but maybe it's a little harsher now that has been 208 00:12:30,640 --> 00:12:33,640 Speaker 1: And it's not just academia. It's about data and research 209 00:12:33,679 --> 00:12:35,440 Speaker 1: and facts. I think we have to be really cautious 210 00:12:35,440 --> 00:12:37,719 Speaker 1: around all this, and we try. We're working on that 211 00:12:38,400 --> 00:12:47,640 Speaker 1: as well. Runch you by Bank of America, Mary Lynch. 212 00:12:47,880 --> 00:12:53,400 Speaker 1: With virtual reality, virtually everything will change. Discover opportunities in 213 00:12:53,440 --> 00:12:58,040 Speaker 1: a transforming world. VI of a mL dot Com, slash VR, 214 00:12:58,880 --> 00:13:07,880 Speaker 1: Mary Lynch, Pierce Uner and Smith Incorporated. Good morning everyone, 215 00:13:07,960 --> 00:13:10,440 Speaker 1: David Gurr again, and I know Timothy O'Brien and Bloomberg 216 00:13:10,520 --> 00:13:12,920 Speaker 1: view that with us this morning and joining us now 217 00:13:13,320 --> 00:13:16,880 Speaker 1: Brian Weezer a pivotal research and really, Brian, I guess 218 00:13:16,880 --> 00:13:20,080 Speaker 1: what we need to focus rather, Brian, what we need 219 00:13:20,120 --> 00:13:24,160 Speaker 1: to focus on is is continued dominance of Google and Facebook. 220 00:13:24,440 --> 00:13:28,400 Speaker 1: It's such a pervasive feeling. My radars up. Do you 221 00:13:28,440 --> 00:13:31,920 Speaker 1: buy the idea that is dominant as dominant could be? Oh, 222 00:13:32,000 --> 00:13:34,320 Speaker 1: it's not just the buying an idea. Any fact out 223 00:13:34,360 --> 00:13:37,360 Speaker 1: there supports it. There're seventy of the total revenue from 224 00:13:37,400 --> 00:13:41,960 Speaker 1: digital advertising, their nine percent of the growth depending on 225 00:13:42,280 --> 00:13:46,400 Speaker 1: when you UH define the period um. Yeah, no, they're dominant, 226 00:13:46,480 --> 00:13:48,319 Speaker 1: and I think the rest of the industry is looking 227 00:13:48,400 --> 00:13:51,240 Speaker 1: for a way to prevent their dominance from expanding. Let 228 00:13:51,240 --> 00:13:54,040 Speaker 1: me bring in someone who lives as Timothy O'Brien. You've 229 00:13:54,120 --> 00:13:57,640 Speaker 1: lived this advertising change, not only the New York Times 230 00:13:57,679 --> 00:14:00,480 Speaker 1: but also at Helfington Post as well. I mean, you've 231 00:14:00,520 --> 00:14:03,560 Speaker 1: lived what Brian Weezer is talking about. It's you know, 232 00:14:04,040 --> 00:14:07,640 Speaker 1: monetization of content and platforms is the key industry for 233 00:14:07,679 --> 00:14:10,760 Speaker 1: anybody who's on the web, or key metric to consider 234 00:14:10,800 --> 00:14:13,680 Speaker 1: for anyone's on the web right now. Brian, you raised 235 00:14:13,679 --> 00:14:17,760 Speaker 1: a really interesting and crucial point obviously in your in 236 00:14:18,080 --> 00:14:20,120 Speaker 1: your in one of your notes that I read, which 237 00:14:20,200 --> 00:14:23,800 Speaker 1: is this whole issue of you ability and metrics and 238 00:14:23,840 --> 00:14:27,240 Speaker 1: weather the duopoly. But really anyone else in the industry 239 00:14:27,240 --> 00:14:30,320 Speaker 1: who's selling advertising is going to open themselves up to 240 00:14:30,440 --> 00:14:34,760 Speaker 1: third party analysts who will either validate or or have 241 00:14:34,840 --> 00:14:38,320 Speaker 1: their own point of view on monetization and advertising revenue. 242 00:14:38,480 --> 00:14:42,240 Speaker 1: Where do you think we are on the view ability issue? Uh, well, 243 00:14:42,240 --> 00:14:44,280 Speaker 1: the industry is at least to where that has got 244 00:14:44,280 --> 00:14:46,880 Speaker 1: a problem. And I think, like you know, people like me, 245 00:14:47,160 --> 00:14:51,040 Speaker 1: I'll call myself a digital truth or um that for 246 00:14:51,240 --> 00:14:54,239 Speaker 1: far too many years there's this shine on digital advertising 247 00:14:54,280 --> 00:14:58,120 Speaker 1: that it's perfect, it's targetable to dress bullets perfect, and 248 00:14:58,160 --> 00:15:01,200 Speaker 1: that was never true. Um. And so now at least 249 00:15:01,520 --> 00:15:04,560 Speaker 1: large bands are fully aware that their problems and their 250 00:15:04,640 --> 00:15:07,800 Speaker 1: finding solutions. So it's really Facebook and Google in particular 251 00:15:07,800 --> 00:15:10,880 Speaker 1: where the world garden problem is most pronounced because it's 252 00:15:10,880 --> 00:15:14,520 Speaker 1: so important, because it's so big. Um. You know. I 253 00:15:14,520 --> 00:15:17,360 Speaker 1: think Mark Pritchard from Who's Procter and Gambles chief brand officer, 254 00:15:17,440 --> 00:15:21,360 Speaker 1: has been one of the most vocal um industry players 255 00:15:21,440 --> 00:15:24,520 Speaker 1: and really is leading the charge right now by basically 256 00:15:25,280 --> 00:15:28,560 Speaker 1: indicating there they're going to move their money if Facebook 257 00:15:28,600 --> 00:15:29,840 Speaker 1: doesn't do what they need them to do. Now that 258 00:15:29,920 --> 00:15:31,680 Speaker 1: might not be enough for Facebook. Well, and where do 259 00:15:31,720 --> 00:15:35,080 Speaker 1: they move it to? They increase or spending on TV 260 00:15:35,120 --> 00:15:38,320 Speaker 1: pretty significantly, which is why they upfronts went up. So 261 00:15:38,400 --> 00:15:40,120 Speaker 1: that's part of it, you know. I mean the problem 262 00:15:40,200 --> 00:15:43,160 Speaker 1: is that Facebook. So the metrics I have seen suggests 263 00:15:43,160 --> 00:15:46,680 Speaker 1: that video views on Facebook are like two percent viewable. 264 00:15:46,760 --> 00:15:50,800 Speaker 1: In other words, two percent of the ads delivered on 265 00:15:50,840 --> 00:15:56,200 Speaker 1: Facebook get actually viewed. Then why do they get money? Uh? 266 00:15:56,240 --> 00:15:59,600 Speaker 1: That's a really good question. So in all cases, advertising 267 00:15:59,640 --> 00:16:02,480 Speaker 1: is at least battle Turner's business. Right, So, if you've 268 00:16:02,480 --> 00:16:04,560 Speaker 1: got a digital budget to spend, you've allocaed my to 269 00:16:04,560 --> 00:16:07,720 Speaker 1: spend on digital, where's the least bad place to spend it? 270 00:16:07,960 --> 00:16:10,160 Speaker 1: If you're a big brand, Facebook's the least bad place. 271 00:16:10,200 --> 00:16:11,760 Speaker 1: Do you have a single bust buy right now? Before 272 00:16:11,800 --> 00:16:13,720 Speaker 1: you run out the door. I have exactly one by 273 00:16:13,760 --> 00:16:17,400 Speaker 1: out of eighteen stocks. Isn't that shocking? Fox Fox? What 274 00:16:17,560 --> 00:16:22,360 Speaker 1: Fox Fox? Only by I have I have three cells 275 00:16:22,480 --> 00:16:26,280 Speaker 1: or two cells? Have three cells? White Fox. It's just undervalued. 276 00:16:26,280 --> 00:16:27,920 Speaker 1: I think, you know, the market is really you know, 277 00:16:28,360 --> 00:16:32,160 Speaker 1: doesn't like James Murdoch that much. I think they're concerned 278 00:16:32,200 --> 00:16:34,840 Speaker 1: about what the Fox News in particular. I think I 279 00:16:34,880 --> 00:16:36,680 Speaker 1: hear a lot of concerns that so this is a 280 00:16:36,800 --> 00:16:39,320 Speaker 1: TV Fox. This is all the uproar room. They're not 281 00:16:39,400 --> 00:16:43,280 Speaker 1: News Corp. But yeah, exactly the studio, the TV station group. Um. 282 00:16:43,320 --> 00:16:45,360 Speaker 1: I think the Sky transaction, I mean it's going to 283 00:16:45,440 --> 00:16:46,800 Speaker 1: be a bit of a rocky road to get there, 284 00:16:47,000 --> 00:16:48,760 Speaker 1: but I think it's gonna be really good if it happens. 285 00:16:49,240 --> 00:16:51,720 Speaker 1: Brian Weiser, thank you so much. I believe Tim O'Brien's 286 00:16:51,800 --> 00:16:55,160 Speaker 1: rumored to take out Seawan handy spot. Brian Weezer with 287 00:16:55,160 --> 00:16:58,560 Speaker 1: pivol as a joke, folks, Brian Weiser with a pivol 288 00:16:58,720 --> 00:17:14,760 Speaker 1: research this one. Greatly appreciate that this is a good 289 00:17:14,800 --> 00:17:17,119 Speaker 1: time and this goes to what Tim O'Brien was talking 290 00:17:17,160 --> 00:17:20,280 Speaker 1: about earlier. It is a good time and we spoof 291 00:17:20,320 --> 00:17:24,160 Speaker 1: about the words are, which has always been unfortunate. Czar 292 00:17:24,280 --> 00:17:27,719 Speaker 1: Ratner joins us this morning. Stephen Ratner, we should say, uh, 293 00:17:27,880 --> 00:17:30,760 Speaker 1: he's involved in the investment activities of our principal owner, 294 00:17:30,800 --> 00:17:34,800 Speaker 1: Michael Bloomberg. But Steve Rattner, I really want to talk 295 00:17:34,840 --> 00:17:37,520 Speaker 1: to you about what Tim O'Brien was talking about, which 296 00:17:37,560 --> 00:17:41,720 Speaker 1: is process and procedure in a given institution like the 297 00:17:41,800 --> 00:17:46,240 Speaker 1: White House. How do we assist our president towards process 298 00:17:46,240 --> 00:17:49,200 Speaker 1: and procedure in the White House? And even as Czar 299 00:17:49,320 --> 00:17:54,760 Speaker 1: could understand, look, I don't think we have a president 300 00:17:54,800 --> 00:17:59,520 Speaker 1: who's all that interested in advice or suggestions or pretty 301 00:17:59,600 --> 00:18:01,879 Speaker 1: much any thing else as to how he should operate 302 00:18:01,920 --> 00:18:03,919 Speaker 1: the White House. I did spend some time in the 303 00:18:03,920 --> 00:18:07,040 Speaker 1: White House. I've obviously observed this one from afar, as 304 00:18:07,080 --> 00:18:10,200 Speaker 1: we all have, and it is it is really quite 305 00:18:10,200 --> 00:18:13,080 Speaker 1: extraordinary to see how this White House operates relative to 306 00:18:13,119 --> 00:18:15,760 Speaker 1: any other one I've ever been around in my my 307 00:18:15,880 --> 00:18:19,880 Speaker 1: time in and out of Washington. You've you is there 308 00:18:19,920 --> 00:18:22,040 Speaker 1: nobody you could compare him to? Steve? Is he that 309 00:18:22,680 --> 00:18:25,879 Speaker 1: of of his own? I don't think there's anybody you 310 00:18:25,920 --> 00:18:29,000 Speaker 1: can compare him to. I think when Jimmy Carter, who's 311 00:18:29,080 --> 00:18:31,880 Speaker 1: White House I also covered as a reporter. I think 312 00:18:32,119 --> 00:18:34,840 Speaker 1: the chaos that existed there at the beginning when when 313 00:18:34,880 --> 00:18:37,000 Speaker 1: Carter announced he wasn't going to have a chief of staff, 314 00:18:37,040 --> 00:18:38,719 Speaker 1: he was going to have this hub and spoke approach, 315 00:18:38,720 --> 00:18:40,920 Speaker 1: and all these different people wandering in and out of 316 00:18:40,960 --> 00:18:44,160 Speaker 1: the Oval office. You could probably compare the confusion to it. 317 00:18:44,600 --> 00:18:47,080 Speaker 1: But but the the sort of the the sort of uh, 318 00:18:47,520 --> 00:18:50,199 Speaker 1: but that was sort of undesired confusion. This seems to 319 00:18:50,240 --> 00:18:53,119 Speaker 1: be desired chaos on on President Trump's part, And so 320 00:18:53,400 --> 00:18:55,439 Speaker 1: there's nobody in my lifetime you can compare him to. 321 00:18:55,880 --> 00:18:59,560 Speaker 1: Do you think it's bleeding into the rest of Washington, 322 00:18:59,640 --> 00:19:04,719 Speaker 1: the sort of trump lack of managerial focus and I 323 00:19:04,720 --> 00:19:07,520 Speaker 1: think a lack of goal orientation. I've been watching Mitch 324 00:19:07,560 --> 00:19:10,560 Speaker 1: McConnell move this bill through the Congress, and there was 325 00:19:10,600 --> 00:19:13,280 Speaker 1: this thought, after the House debacle on healthcare, that the 326 00:19:13,320 --> 00:19:15,240 Speaker 1: Senate was going to step in and be the adult 327 00:19:15,240 --> 00:19:18,480 Speaker 1: in the room and and craft more thoughtful legislation. And 328 00:19:18,560 --> 00:19:20,840 Speaker 1: yet here we are with a bill and motion that 329 00:19:20,880 --> 00:19:23,879 Speaker 1: everyone seems to hate, a process that McConnell is running 330 00:19:23,880 --> 00:19:27,200 Speaker 1: the dark, and and and and a lot of people 331 00:19:27,200 --> 00:19:29,680 Speaker 1: seeming to a qu s to the chaos of the 332 00:19:29,720 --> 00:19:33,159 Speaker 1: Trump white House. I'd say two things about that. I'd say, first, 333 00:19:34,440 --> 00:19:37,480 Speaker 1: healthcare bill, as we found during the Obama administration, is 334 00:19:37,600 --> 00:19:40,920 Speaker 1: very very difficult to pass. McConnell has an extremely difficult 335 00:19:40,960 --> 00:19:43,399 Speaker 1: job that no matter who is president, it would be 336 00:19:43,480 --> 00:19:46,280 Speaker 1: hard to bring the two ends of his party together 337 00:19:46,440 --> 00:19:49,480 Speaker 1: into and get fifty votes. And uh, let Rand Paul 338 00:19:49,520 --> 00:19:52,160 Speaker 1: and somebody else, Susan Collins go often do their thing. 339 00:19:52,560 --> 00:19:55,399 Speaker 1: It's really really hard, but it is made much harder 340 00:19:55,440 --> 00:19:57,880 Speaker 1: by the lack of leadership from the White House. There's 341 00:19:57,920 --> 00:20:00,840 Speaker 1: no rama. Manuel, as they're wondering, was during the bombed 342 00:20:00,840 --> 00:20:04,000 Speaker 1: administration going up to the hill every day talking to 343 00:20:04,040 --> 00:20:06,600 Speaker 1: people saying, come on, guys, let's just make this tweak. 344 00:20:06,640 --> 00:20:09,040 Speaker 1: Let's make that tweak. Let's get a deal done. Having 345 00:20:09,040 --> 00:20:12,120 Speaker 1: a dysfunctional White House does not make things easier for Congress. 346 00:20:12,160 --> 00:20:15,919 Speaker 1: And you are arguably more qualified than anyone we speak 347 00:20:15,920 --> 00:20:20,560 Speaker 1: to to ask this question. Does it dampen the animal spirit, 348 00:20:20,600 --> 00:20:23,800 Speaker 1: does it bring down nominal GDP? Does it bring down 349 00:20:23,800 --> 00:20:26,560 Speaker 1: inflation just a d d G d P? And does 350 00:20:26,600 --> 00:20:30,120 Speaker 1: it filter into our investment world or is the czar 351 00:20:30,280 --> 00:20:33,200 Speaker 1: world you lived in, Steve Rattner? Is it discreet and separate? 352 00:20:33,760 --> 00:20:36,240 Speaker 1: So far? It appears to be discreet and separate so 353 00:20:36,320 --> 00:20:39,159 Speaker 1: far as you look at, certainly the markets and how 354 00:20:39,200 --> 00:20:42,359 Speaker 1: they're behaving, as you look at the consumer confidence and 355 00:20:42,440 --> 00:20:47,080 Speaker 1: consumer and business confidence and business optimism indicase, UH, they 356 00:20:47,160 --> 00:20:50,280 Speaker 1: still so far seem to be riding along on the 357 00:20:50,320 --> 00:20:53,040 Speaker 1: so called Trump bump and the belief that Trump will 358 00:20:53,119 --> 00:20:57,240 Speaker 1: run a very business friendly administration, a lot of deregulation, 359 00:20:57,440 --> 00:20:59,679 Speaker 1: a lot of tax and are the benefits for the 360 00:20:59,680 --> 00:21:02,200 Speaker 1: corporate sector that will, at least in the short run 361 00:21:02,280 --> 00:21:07,080 Speaker 1: drive the economy upward. But as the dysfunctionality continues, and 362 00:21:07,119 --> 00:21:11,600 Speaker 1: as and if and when the scandal UH permeates further, 363 00:21:12,119 --> 00:21:16,439 Speaker 1: I think it certainly could affect the animal spirits. Um 364 00:21:16,480 --> 00:21:19,120 Speaker 1: are you where do you think this goes? Long term? 365 00:21:19,119 --> 00:21:23,000 Speaker 1: For the GOP as a party, how are they do they? 366 00:21:23,040 --> 00:21:27,080 Speaker 1: Are they going to be split permanently between the populist 367 00:21:27,119 --> 00:21:29,920 Speaker 1: wing and the more moderate wing. If they're not, how 368 00:21:29,960 --> 00:21:32,879 Speaker 1: does that get cured so that you can have a 369 00:21:32,960 --> 00:21:38,600 Speaker 1: party in a Congress that actually produces legislation The answers, 370 00:21:38,720 --> 00:21:42,000 Speaker 1: I don't know. I write the populist so called populist 371 00:21:42,040 --> 00:21:45,640 Speaker 1: wing is really more exists at the voting level rather 372 00:21:45,640 --> 00:21:48,960 Speaker 1: than at the UH senator and representative level. At the 373 00:21:49,000 --> 00:21:51,760 Speaker 1: senate representative level, it's a pretty it's still a pretty 374 00:21:52,320 --> 00:21:55,159 Speaker 1: uh conventional group of folks with with as it is 375 00:21:55,200 --> 00:21:58,000 Speaker 1: in the Democratic Party, with some people far out on 376 00:21:58,040 --> 00:22:00,000 Speaker 1: the edges of it in terms of their own philosop 377 00:22:00,400 --> 00:22:02,560 Speaker 1: and the concept of trying to make a have a 378 00:22:02,600 --> 00:22:05,960 Speaker 1: big tent. But I think, I think, um, I think 379 00:22:05,960 --> 00:22:08,000 Speaker 1: the question where the party goes depends a lot on 380 00:22:08,080 --> 00:22:10,280 Speaker 1: what happens to the president, whether he's able to function 381 00:22:10,359 --> 00:22:12,640 Speaker 1: as a president Steve Retner very quickly or George Will 382 00:22:12,720 --> 00:22:15,320 Speaker 1: mentioning it up in tax reform today and senator wide, 383 00:22:15,760 --> 00:22:21,960 Speaker 1: can we get tax reform under a reconciliation process? Well, 384 00:22:21,960 --> 00:22:23,879 Speaker 1: that's the only way we're gonna get tax reform is 385 00:22:23,880 --> 00:22:28,000 Speaker 1: through reconciliation. But I think tax reform is very problematic 386 00:22:28,280 --> 00:22:30,800 Speaker 1: because the border adjusted tax is not going to happen 387 00:22:31,240 --> 00:22:33,560 Speaker 1: without that. There may be some revenue from this tax 388 00:22:33,760 --> 00:22:37,200 Speaker 1: healthcare build, that's a less than fifty probability in my opinion, 389 00:22:37,440 --> 00:22:39,280 Speaker 1: So they don't have that much revenue to pay for 390 00:22:39,320 --> 00:22:41,800 Speaker 1: tax reform. And I think the deficit. Hawks are going 391 00:22:41,840 --> 00:22:43,960 Speaker 1: to keep them from just spending a lot of money 392 00:22:43,960 --> 00:22:46,600 Speaker 1: on tax reform that we don't have. Steve Retnor, thank 393 00:22:46,640 --> 00:22:49,800 Speaker 1: you so much as Willow Advisors this morning on our 394 00:22:49,840 --> 00:22:56,520 Speaker 1: perspective of Washington and economics, finance and investments as well. 395 00:23:07,880 --> 00:23:12,240 Speaker 1: Good morning everyone. Timothy O'Brien and Tom Keene were thrilled of. 396 00:23:12,400 --> 00:23:16,919 Speaker 1: Timothy O'Brien is our permanent host with Bloomberg surveillance of 397 00:23:16,920 --> 00:23:19,159 Speaker 1: course here in New York. In a minute, we'll go 398 00:23:19,200 --> 00:23:22,359 Speaker 1: to our reporter, David Gura, John Daker. David Gura, our 399 00:23:22,440 --> 00:23:25,280 Speaker 1: reporter out in Idaho, will go to him in a moment. 400 00:23:25,359 --> 00:23:27,880 Speaker 1: They found nothing but to his hat left his hunter's cat. 401 00:23:28,040 --> 00:23:31,480 Speaker 1: I know his Pilson red and plaid hunter's cap, which 402 00:23:31,480 --> 00:23:34,639 Speaker 1: will look perfect on park slope. As he tells people 403 00:23:34,920 --> 00:23:38,600 Speaker 1: about the brave tundra of Idaho. Features up to down, 404 00:23:38,640 --> 00:23:40,640 Speaker 1: features up six with a churn to the market chair 405 00:23:40,720 --> 00:23:43,240 Speaker 1: yelling speaking to the Senate, Q and A there could 406 00:23:43,280 --> 00:23:46,439 Speaker 1: be of importance as well. Right now, we go to 407 00:23:46,480 --> 00:23:49,480 Speaker 1: our reporter, Oh, our David Gura, our guest host or 408 00:23:49,520 --> 00:23:51,640 Speaker 1: our host or whatever he is. When he gets back. 409 00:23:51,720 --> 00:23:55,000 Speaker 1: David Gura and Ida David, what have you learned from 410 00:23:55,000 --> 00:23:59,720 Speaker 1: the people of Sun Valley in your first hours there? Well, 411 00:23:59,840 --> 00:24:01,720 Speaker 1: you you were talking to me yesterday about the prospect 412 00:24:01,760 --> 00:24:04,119 Speaker 1: that there being some snakes on the ground. You are 413 00:24:04,119 --> 00:24:08,440 Speaker 1: nearly stepped on one yesterday, Tom. But we're not humans, 414 00:24:09,000 --> 00:24:12,520 Speaker 1: all here with with their Martin's soil. Here the CEO 415 00:24:12,520 --> 00:24:14,800 Speaker 1: of w PP, he's joined me here on set and 416 00:24:14,800 --> 00:24:16,440 Speaker 1: it's a beautiful set. Tom. I'm sorry that you can't 417 00:24:16,480 --> 00:24:18,120 Speaker 1: see it. We're on the side of a mountain overlooking 418 00:24:18,160 --> 00:24:21,480 Speaker 1: the the resort, obviously painting a tough life for you, David, 419 00:24:21,520 --> 00:24:24,920 Speaker 1: I have my sympathy, sir. Let me start by asking 420 00:24:24,960 --> 00:24:28,000 Speaker 1: you about this conference, in particularly what with the with 421 00:24:28,040 --> 00:24:30,560 Speaker 1: the participants here, the attendees say about the state of 422 00:24:30,640 --> 00:24:35,719 Speaker 1: media today, about the media landscape, Well, the obviously there 423 00:24:35,720 --> 00:24:39,119 Speaker 1: are probably three things that we we think about. The 424 00:24:39,480 --> 00:24:44,320 Speaker 1: first is what is the role of traditional print, you know, 425 00:24:44,359 --> 00:24:47,920 Speaker 1: filling true trees and distributing newsprint. So that's one thing, 426 00:24:48,240 --> 00:24:50,600 Speaker 1: and whether the investment is at the right level or not, 427 00:24:50,680 --> 00:24:53,480 Speaker 1: whether the engagement level is higher than people give it 428 00:24:53,560 --> 00:24:56,639 Speaker 1: credit to, or whether the time spent is the right metric. 429 00:24:57,000 --> 00:25:00,240 Speaker 1: The second thing is mobile and whether they're sufficient essement. 430 00:25:00,280 --> 00:25:04,639 Speaker 1: And mobile probably Internet generally or as defined, it's probably 431 00:25:04,680 --> 00:25:08,320 Speaker 1: the right investment, but mobile is probably underinvested. And then 432 00:25:08,359 --> 00:25:12,399 Speaker 1: the third thing is probably linear TV, is whether traditional 433 00:25:12,520 --> 00:25:15,920 Speaker 1: network television is at the right level of investment, what's 434 00:25:15,920 --> 00:25:17,879 Speaker 1: going to happen in the future to that, whether it 435 00:25:17,920 --> 00:25:20,840 Speaker 1: will be maintained, whether it will come under pressure, not 436 00:25:20,920 --> 00:25:24,000 Speaker 1: to the extent that traditional print has, but that that 437 00:25:24,200 --> 00:25:27,040 Speaker 1: traditional media generally has come under more pressure. So I 438 00:25:27,080 --> 00:25:29,119 Speaker 1: think those are the three things that you see in 439 00:25:29,119 --> 00:25:32,520 Speaker 1: the US, and you see that obviously increasingly abroad. Now 440 00:25:33,119 --> 00:25:35,840 Speaker 1: related to that is the sort of pressure that we're 441 00:25:35,880 --> 00:25:41,639 Speaker 1: seeing in maybe package goods retailing from the growth of 442 00:25:41,800 --> 00:25:44,639 Speaker 1: e commerce as well. So it's it's in those areas 443 00:25:44,640 --> 00:25:46,560 Speaker 1: that people are focused time. Ask me what I've I've 444 00:25:46,640 --> 00:25:48,119 Speaker 1: learned with thus far a lot of people who are 445 00:25:48,119 --> 00:25:52,040 Speaker 1: talking about content and consolidation and what companies are gonna 446 00:25:52,040 --> 00:25:53,880 Speaker 1: be doing, how they're going to be creating more, providing more. 447 00:25:54,560 --> 00:25:56,240 Speaker 1: How are you watching that? How does that determine what 448 00:25:56,280 --> 00:25:59,040 Speaker 1: your business it does? Well, there are three things that 449 00:25:59,080 --> 00:26:01,720 Speaker 1: we're trying to do. We're trying to get our traditional businesses. 450 00:26:01,720 --> 00:26:04,679 Speaker 1: Are traditional agencies unfair to call them that because they 451 00:26:04,800 --> 00:26:08,920 Speaker 1: Morphed is not Don Draper anymore. But to become more digital, 452 00:26:09,480 --> 00:26:12,240 Speaker 1: more global, and more digital, that's one thing. Secondly, when 453 00:26:12,240 --> 00:26:14,720 Speaker 1: you have digital asses like we do with a Wonderman 454 00:26:14,760 --> 00:26:16,480 Speaker 1: and Ogilvy one and a k k o A, a 455 00:26:16,600 --> 00:26:21,040 Speaker 1: possible VML or a Mirrum, drive them faster globally. And 456 00:26:21,080 --> 00:26:24,520 Speaker 1: then thirdly, experiment moving into the continent area. So we've 457 00:26:24,560 --> 00:26:27,800 Speaker 1: made lots of investments. It started, I guess, with our 458 00:26:27,840 --> 00:26:31,159 Speaker 1: investment in Vice dot Com ten percent of that for 459 00:26:31,200 --> 00:26:33,640 Speaker 1: about six or seven years ago. But we've gone through 460 00:26:33,920 --> 00:26:39,240 Speaker 1: Brian Grazer, Ron Howard's film, Weinstein, Weinstein's how Weinstein's Howvy, 461 00:26:39,240 --> 00:26:44,600 Speaker 1: Weinstein's company. We've invested in content, Millennial Content with a 462 00:26:44,720 --> 00:26:48,680 Speaker 1: T eight rising with Refinery twenty nine, Media Rights Capital, 463 00:26:48,720 --> 00:26:54,880 Speaker 1: which brought you House of Cards, full screen one YouTube channels. 464 00:26:54,880 --> 00:26:58,159 Speaker 1: Of the investments in the continent, Yeah, sir Martin, I 465 00:26:58,200 --> 00:27:00,520 Speaker 1: want to go to your wonderful and your report, and folks, 466 00:27:00,560 --> 00:27:03,480 Speaker 1: I would suggest it's a totally twisted and different in 467 00:27:03,600 --> 00:27:06,159 Speaker 1: your report. It's something you throw at a kid in 468 00:27:06,280 --> 00:27:09,200 Speaker 1: college and say shut up and read this page one 469 00:27:09,240 --> 00:27:14,639 Speaker 1: eleven Jeremy Bullmore just because you can, doesn't mean you should, 470 00:27:14,680 --> 00:27:16,960 Speaker 1: Sir Martin. What they don't know is you're the king 471 00:27:17,000 --> 00:27:22,040 Speaker 1: and know how do you control the modern digital impulse? 472 00:27:22,480 --> 00:27:26,360 Speaker 1: How do you harness and police all the young Turks 473 00:27:26,400 --> 00:27:28,920 Speaker 1: that say we gotta do this, we gotta do this, 474 00:27:29,040 --> 00:27:33,439 Speaker 1: we gotta do that. Uh well, well the answer is 475 00:27:33,480 --> 00:27:37,080 Speaker 1: with difficulty, Tom, I mean it's not an easy, easy task. 476 00:27:37,119 --> 00:27:41,520 Speaker 1: I mean, our business at fifteen years ago was about 477 00:27:41,560 --> 00:27:44,200 Speaker 1: ten percent in the fast so called fast growth markets 478 00:27:44,200 --> 00:27:47,400 Speaker 1: of the world. It's now one third. It was virtually 479 00:27:48,040 --> 00:27:52,760 Speaker 1: negligible in digital. That's now to your to your question, 480 00:27:53,560 --> 00:27:55,880 Speaker 1: I think you probably have to give those young Turks 481 00:27:55,960 --> 00:28:00,520 Speaker 1: or those people that push you even more room. You know, 482 00:28:00,600 --> 00:28:03,359 Speaker 1: there's one thing I regret is it's probably we didn't 483 00:28:03,359 --> 00:28:08,040 Speaker 1: go faster on the technology side and on the data side. 484 00:28:08,280 --> 00:28:13,880 Speaker 1: Today s our business is in media, data and digital. 485 00:28:14,520 --> 00:28:17,439 Speaker 1: I probably regret that we didn't go harder and faster 486 00:28:17,560 --> 00:28:20,600 Speaker 1: because one of the things that people are raising, analysts 487 00:28:20,600 --> 00:28:24,919 Speaker 1: are raising, institutional invased investors are raising his weather traditional 488 00:28:24,960 --> 00:28:29,640 Speaker 1: businesses can cope with the digital disruption that we're seeing. 489 00:28:29,640 --> 00:28:31,640 Speaker 1: I mean, we have three forces, Tom, as you well 490 00:28:31,680 --> 00:28:36,520 Speaker 1: know digital disruption, zero based budgeting, and then last, but 491 00:28:36,640 --> 00:28:40,520 Speaker 1: not least, activist investors. The digital disruption is something that 492 00:28:40,560 --> 00:28:45,440 Speaker 1: affects everybody. There's a BB and the activist investors tend 493 00:28:45,480 --> 00:28:49,880 Speaker 1: to be focused around consumer staples and f MCG. Not 494 00:28:49,880 --> 00:28:52,840 Speaker 1: not exclusively, but they tend to be But so that 495 00:28:52,880 --> 00:28:56,520 Speaker 1: aut much more focused. Digital, however, affects everything. Well, what's 496 00:28:56,520 --> 00:28:59,160 Speaker 1: so important here in Terroller Chapelle kills it with Max 497 00:28:59,240 --> 00:29:02,680 Speaker 1: Neeson and Bloomberg gad fly Sir Martin today on the 498 00:29:02,840 --> 00:29:07,719 Speaker 1: mating of Verizon in Disney? Can those cultures mate in 499 00:29:07,800 --> 00:29:11,160 Speaker 1: your experience? And this is like a Sun Valley question. 500 00:29:11,520 --> 00:29:13,120 Speaker 1: I mean, you've got a grizzly bear and a black 501 00:29:13,160 --> 00:29:15,840 Speaker 1: bear and they're not supposed to get together. Can Verizon 502 00:29:15,960 --> 00:29:20,560 Speaker 1: mate with Disney? That's so that's very unfair. I mean, 503 00:29:21,160 --> 00:29:24,040 Speaker 1: I'm sure you've been peppering all the people from Verizon 504 00:29:24,080 --> 00:29:26,480 Speaker 1: and Disney or try to hear they they fend you 505 00:29:26,520 --> 00:29:29,360 Speaker 1: off here, they keep you penned out, thank goodness. But 506 00:29:30,200 --> 00:29:32,640 Speaker 1: I mean you can make the same comments. You can 507 00:29:32,680 --> 00:29:34,800 Speaker 1: make the same comments about A T and T I 508 00:29:34,840 --> 00:29:38,200 Speaker 1: guess and Time Warner. Uh, you know, companies that come 509 00:29:38,240 --> 00:29:41,680 Speaker 1: from different ends of the spectrum. But the intent is clear. 510 00:29:42,120 --> 00:29:45,680 Speaker 1: The question is the implementation. I guess Tom and what 511 00:29:45,720 --> 00:29:49,240 Speaker 1: you're getting out. And we've seen history listed with examples 512 00:29:49,240 --> 00:29:52,080 Speaker 1: of companies with different for one of a better word, 513 00:29:52,160 --> 00:29:55,640 Speaker 1: cultures trying to get together. And it's been increasingly difficult 514 00:29:55,920 --> 00:29:59,200 Speaker 1: for people to do that. But that doesn't remove the 515 00:29:59,320 --> 00:30:03,680 Speaker 1: necessa t or the sense of trying to bring these 516 00:30:03,680 --> 00:30:07,240 Speaker 1: two things or two approaches together. We've seen it in 517 00:30:07,280 --> 00:30:11,560 Speaker 1: our own industry, people trying to marry different approaches. They 518 00:30:11,680 --> 00:30:17,040 Speaker 1: take us, for example, trying to marry marry traditional creativity 519 00:30:17,040 --> 00:30:21,960 Speaker 1: with digital, with data with media. The big, the big 520 00:30:22,040 --> 00:30:25,520 Speaker 1: challenge facing us is how do we integrate the efforts 521 00:30:25,520 --> 00:30:27,880 Speaker 1: of two hundred thousand people in a hundred and thirteen 522 00:30:27,920 --> 00:30:31,000 Speaker 1: countries for the benefit of our clients. And it's actually 523 00:30:31,160 --> 00:30:34,080 Speaker 1: very similar to the challenge that you laid out. If 524 00:30:34,240 --> 00:30:37,520 Speaker 1: Verizon was to do anything with Disney, as you're suggesting, 525 00:30:37,560 --> 00:30:39,480 Speaker 1: they might. Let me ask you just one last question 526 00:30:39,480 --> 00:30:42,000 Speaker 1: here about uncertainty. Of course, we've talked about Brexit over 527 00:30:42,040 --> 00:30:44,719 Speaker 1: these last many months. How is that affecting your business? 528 00:30:44,720 --> 00:30:47,280 Speaker 1: How is the uncertainty here in the US about policy 529 00:30:47,320 --> 00:30:49,560 Speaker 1: affecting your business? Well? On the UK, first of all, 530 00:30:49,880 --> 00:30:52,720 Speaker 1: the answer is not as much as we thought, but 531 00:30:52,800 --> 00:30:55,640 Speaker 1: it will do. I think. I think that over the 532 00:30:55,680 --> 00:30:57,920 Speaker 1: next two years life is going to be very uncertain 533 00:30:58,240 --> 00:31:02,080 Speaker 1: in this Brexit negotiation we're in at the moment. So 534 00:31:02,400 --> 00:31:05,160 Speaker 1: the irony about this is that Britain might be leaving 535 00:31:05,200 --> 00:31:07,840 Speaker 1: the EU at a time when France, Germany, Italy and 536 00:31:07,880 --> 00:31:09,600 Speaker 1: Spain are on the up. We'll have to see what 537 00:31:09,680 --> 00:31:13,440 Speaker 1: happens with the Italian election which will come, which is 538 00:31:13,480 --> 00:31:16,000 Speaker 1: a really important event I think in the context of 539 00:31:16,200 --> 00:31:19,520 Speaker 1: EU politics, and also who replaces Mario drug that's an 540 00:31:19,520 --> 00:31:22,280 Speaker 1: important event from the financial side. As far as the 541 00:31:22,360 --> 00:31:25,400 Speaker 1: US is concerned, it depends really on whether President Trump 542 00:31:25,440 --> 00:31:28,800 Speaker 1: can implement his program. If he can, that's in my 543 00:31:28,960 --> 00:31:32,320 Speaker 1: view positive for the US economy. Reduction in regulation, which 544 00:31:32,360 --> 00:31:36,800 Speaker 1: is also always also happening irrespective of what's happening on 545 00:31:36,840 --> 00:31:40,920 Speaker 1: healthcare and tax but certainly if implement after healthcare, tax 546 00:31:41,000 --> 00:31:47,200 Speaker 1: reform and regulation reform and infrastructure spending, that must be 547 00:31:47,240 --> 00:31:49,600 Speaker 1: good for the economy, at least in the short term 548 00:31:49,640 --> 00:31:53,720 Speaker 1: medium term. That's what we're waiting for. I have to 549 00:31:53,800 --> 00:31:58,320 Speaker 1: say that generally the world is a low growth, low inflation, 550 00:31:59,640 --> 00:32:03,000 Speaker 1: lack of pricing, pal and therefore focus on cost world. 551 00:32:03,240 --> 00:32:05,360 Speaker 1: It's a tough worldly. We gotta leave it there, Sir Martin, 552 00:32:05,400 --> 00:32:07,640 Speaker 1: thank you very much to Martin st Tom great to 553 00:32:07,640 --> 00:32:10,840 Speaker 1: speak with you. David Growth, thank you so much of 554 00:32:11,000 --> 00:32:15,160 Speaker 1: Sir Martin. Sorrel greatly appreciated as well from Sun Valley. 555 00:32:15,480 --> 00:32:18,560 Speaker 1: I don't tim O'Brien there there's a real window into 556 00:32:18,640 --> 00:32:21,440 Speaker 1: this idea of culture in corporations. I guess it's the 557 00:32:21,480 --> 00:32:25,240 Speaker 1: same as a political world, is well. I I really 558 00:32:25,320 --> 00:32:31,040 Speaker 1: wonder about really two separate psychologies mating, whether it's this 559 00:32:31,160 --> 00:32:34,240 Speaker 1: company or company being the case of terror, it's Verizon 560 00:32:34,320 --> 00:32:37,840 Speaker 1: and Disney. But you just wonder how those boardroom meetings go. 561 00:32:38,480 --> 00:32:41,200 Speaker 1: You know, um, I think I can. I can recall 562 00:32:41,240 --> 00:32:45,400 Speaker 1: a million different instances in which Richard Plepler of HBO 563 00:32:45,520 --> 00:32:49,440 Speaker 1: he said to me, uh, culture, eat strategy for lunch. 564 00:32:49,560 --> 00:32:53,080 Speaker 1: That is no matter, you know, how should you are strategically, 565 00:32:53,120 --> 00:32:55,800 Speaker 1: how great your product is. If you don't have a 566 00:32:55,840 --> 00:32:59,480 Speaker 1: strong managerial culture that frees people up to do their 567 00:32:59,480 --> 00:33:02,800 Speaker 1: best work and guide them appropriately, you're done. And that 568 00:33:02,920 --> 00:33:05,800 Speaker 1: is well timed for season forty two of Game of 569 00:33:05,840 --> 00:33:08,920 Speaker 1: Thrones or whatever. Talk about a scary culture. It's you know, 570 00:33:08,960 --> 00:33:13,959 Speaker 1: it's congratulations to HPO and completely dominating the cultural uh 571 00:33:14,240 --> 00:33:16,880 Speaker 1: need of people to tune in. It will be what 572 00:33:16,880 --> 00:33:18,840 Speaker 1: do you throw an you think tip twenty million people 573 00:33:20,000 --> 00:33:22,160 Speaker 1: something like that. I think it's a Sunday Game of 574 00:33:22,160 --> 00:33:34,200 Speaker 1: Thrones Sunday. Thanks for listening to the Bloomberg Surveillance Podcast. 575 00:33:34,640 --> 00:33:39,880 Speaker 1: Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or 576 00:33:39,960 --> 00:33:44,280 Speaker 1: whichever podcast platform you prefer. I'm on Twitter at Tom Keene. 577 00:33:44,360 --> 00:33:48,720 Speaker 1: David Gura is at David Gura. Before the podcast, you 578 00:33:48,760 --> 00:34:00,360 Speaker 1: can always catch us worldwide. 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