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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 inside 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. We're

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Speaker 1: begaining this morning with some earnings. Twitter first quarter revenue

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Speaker 1: coming again at six hundred and sixty four point nine

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Speaker 1: million dollars, the estimate at six hundred and five point

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Speaker 1: nine Monthly users also up by about three percent in

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Speaker 1: the pre market. The story looks like this, Twitter up

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Speaker 1: by over five and a half percent. Across over to

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Speaker 1: London quickly and catch you up with Alex web Bloomber

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Speaker 1: Gadflight columnists to get a feel for what's inside the

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Speaker 1: earnings report coming from Twitter. Alex, what are you looking at?

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Speaker 1: It's I mean, they're very impressive numbers. Clearly, they've beaten

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Speaker 1: on almost every measure apart from one which is more

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Speaker 1: or less in line, and that is active users. And

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Speaker 1: the thing that the story that tells me is that Twitter,

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Speaker 1: unlike Facebook, which really banks when growing using numbers um

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Speaker 1: they are managing to monetize the users they have It's

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Speaker 1: a story that stamped At try to tell when they

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Speaker 1: went public, but they didn't seem to manage to get

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Speaker 1: it to work. And Twitter really is ox. What's fascinating

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Speaker 1: to me is the word that is so in right

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Speaker 1: now is scale. Compare the scale of Twitter in their

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Speaker 1: opportunities of scale versus all their other compare and contrasts.

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Speaker 1: They don't have any scale compared to these others, do they?

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Speaker 1: Well no, But equally if you compare it to the

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Speaker 1: classic media company, they have a lot of scale. It's

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Speaker 1: you know, it's clearly where in a slightly different universe now,

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Speaker 1: but yes, compared to Facebook with you know, upwards the

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Speaker 1: two billion users, Twitter is nowhere near that. I guess.

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Speaker 1: If you're going to Twitter, you know you're getting sent

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Speaker 1: particular audience, namely one that has engaged live, whereas Facebook

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Speaker 1: traditionally you know, you go back and revisit Facebook at

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Speaker 1: different points of the day. The live audience element is

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Speaker 1: something that's massive now for advertisers big events and being

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Speaker 1: able to push outs in those directions. Alex Some like Facebook,

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Speaker 1: Twitters having a fantastic year. The stocks up by before

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Speaker 1: today's getting to even factored in, um, we're positive in

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Speaker 1: the pre market as well a similar model in the

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Speaker 1: sense that Facebook gets a lot of revenue from advertising,

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Speaker 1: and asked us Twitter, so why has Twitter not sort

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Speaker 1: of got caught up in the Facebook storm. Well, let's

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Speaker 1: put some context here. All truth is relative rights is

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Speaker 1: not coming off the back of some not very good years,

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Speaker 1: So um, it's really outperforming what it did before. Um.

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Speaker 1: We're always, with any of these stocks, I think, waiting

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Speaker 1: for the risk of some big event hitting in the

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Speaker 1: sense in you know, in the in the light of

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Speaker 1: a Cambridge analytic phenomenon which which sheds will cast the

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Speaker 1: company in a bad light and and can really great

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Speaker 1: problems for them. So far, there's no evidence of that Twitter,

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Speaker 1: because it is kind of an open fire hose. People

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Speaker 1: know that they're disseminating information to the public. That has

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Speaker 1: also been Twitter's problem. They don't have the same sort

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Speaker 1: of metadata on their users, who you are, what your

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Speaker 1: interests are, to the same extent that Facebook does. Um.

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Speaker 1: That has been a problem in the past. It makes

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Speaker 1: it harder to target advertising, but in this context it's

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Speaker 1: sort of a boon. Alex Webb Grant to catch up

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Speaker 1: with you decent Twitter and next Bloomberg gad Fly columnist

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Speaker 1: John us from London, and the usual disclaimer here Bloomberg Up,

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Speaker 1: of course, the parent company of Bloomberg Radio, producing a

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Speaker 1: global breaking news network for Twitter. Tomp king that that

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Speaker 1: breaking news network being TikTok. Of course. Well this Ellen

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Speaker 1: Zentner with Morgan Stanley and she joins us now and

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Speaker 1: an exceptionally important paper. I saw the paper from Morgan

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Speaker 1: Stanley on her fiscal position, and I just said, get

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Speaker 1: her on as soon as possible. You coalesced all your

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Speaker 1: teams in on our debt? Is our debt now different

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Speaker 1: than our debt of twenty and thirty Reagan years ago? Well,

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Speaker 1: I think that the certainly the interest on the debt

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Speaker 1: is different better, right, right, It's a lot better. And

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Speaker 1: so perhaps that means that we can carry such debt

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Speaker 1: burdens for longer um. But either way you do pay

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Speaker 1: the piper um. So here the two obvious things for economists.

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Speaker 1: The first obvious thing is that we've deployed all of

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Speaker 1: our fiscal muscle latent expansion when times are good. So

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Speaker 1: it's just very as Janet Yelling put it, ill timed. Uh.

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Speaker 1: And so that makes a skeptical of when we go

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Speaker 1: into the next downturn. Can we get enough fiscal support

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Speaker 1: It will be all on monetary policy, uh, with rates

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Speaker 1: that may not be very high, you know, depending on

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Speaker 1: the timing of the next downturn. So that's that's more

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Speaker 1: of the obvious, you know, medium term issue. The longer

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Speaker 1: term issue is that, uh, you know, we've we've just

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Speaker 1: raised the debt, but we didn't structurally change uh, the

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Speaker 1: tax burdens or the the incentives for doing business in

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Speaker 1: the US. UH. And so what we've done is we've

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Speaker 1: now uh basically guaranteed hampered longer term potential growth in

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Speaker 1: the economy. Uh. And that's one reason why you saw

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Speaker 1: economists revised upward near term forecasts, but we did not revise,

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Speaker 1: for the most part, longer run forecast of the economy's potential. Now,

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Speaker 1: we could all be wrong, right, we've we don't have

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Speaker 1: a perfect vision when these things go into place, and

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Speaker 1: we make our best guesses. And who's to say that

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Speaker 1: ten years down the line, we don't look back and say, oh,

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Speaker 1: we did actually structurally raise investment as a share of GDP,

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Speaker 1: we did structurally raise productivity. That absolutely could be the case,

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Speaker 1: but it doesn't look like that through my lens right now.

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Speaker 1: And what's really interesting here is what you see in

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Speaker 1: the economy. I think other people hisstonic to see in

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Speaker 1: the ELTs from from corporate earnings as well. Caterpillar was

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Speaker 1: fascinating yesterday. It blew out estimates, it beat on the

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Speaker 1: top and the bottom line, boosted their guidance as well,

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Speaker 1: and then the management came out and said this could

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Speaker 1: be the high water up for the year. And I

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Speaker 1: think there's been a sense amongst many equity investors over

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Speaker 1: the last couple of weeks that Q one might be

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Speaker 1: as good as it gets. UM. Do you see the

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Speaker 1: same parallels with with corporate earnings and the U S

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Speaker 1: economy as well, that maybe what we're seeing and what

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Speaker 1: we're about to see in the immediate future might be

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Speaker 1: as good as it gets. Well. So I think that's

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Speaker 1: really interesting because, of course, UM, one reason why it's

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Speaker 1: so important for us to collaborate with our strategies across

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Speaker 1: the firm is because markets peak earlier then the economy,

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Speaker 1: so investors are forward looking, so they're seeing that that

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Speaker 1: earnings are getting this this boost, UM, and it may

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Speaker 1: not be the the the highest quality boost because it's

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Speaker 1: coming primarily from a drop in tax rates. We're not

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Speaker 1: going to drop tax rates again. We don't do this

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Speaker 1: every year every quarter. So the as good as it

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Speaker 1: gets scenarios certainly seems reasonable for equity markets UH. And

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Speaker 1: but for the economy, we have not yet seen the

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Speaker 1: bulk of the push or the positive fiscal impulse yet UM.

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Speaker 1: And that's because economies and our economies companies and our

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Speaker 1: survey UM suggested that it's going to take them some

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Speaker 1: time UM to fully UM pull on board UM exactly

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Speaker 1: how the tax changes affect their business. And some yes,

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Speaker 1: may be hampered by uncertainty over possible possibility of tariffs

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Speaker 1: and and supply disruptions. UM. So far, capex plans are

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Speaker 1: at all time highs our other business conditions surveys remain

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Speaker 1: very very positive. UH. And so the UM UH stronger

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Speaker 1: investment is coming from the tax policy. It's not showing

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Speaker 1: up in first quarter GDP yet for a variety of reasons. UM.

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Speaker 1: But I but I think it's too early. I think

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Speaker 1: that the UM tendency to then count it out and

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Speaker 1: say we got no positive fiscal impact US at all,

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Speaker 1: I think that's the wrong call to make. It's too

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Speaker 1: early for that. But markets certainly can peaque well before

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Speaker 1: the economy well, we know for certain folks. On a Wednesday,

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Speaker 1: nineteen thousand, Bloomberg employees begin to slow down and anticipate

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Speaker 1: the real yield one pm. On Fridays, it's a two

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Speaker 1: day anticipation to get John John Farrell's show The Real

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Speaker 1: Years seen on Bloomberg Television worldwide. Al Zeer with us

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Speaker 1: of Morgan Stanley Ellen get get John out in preparation

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Speaker 1: here whither the real yield? Given all the dynamics, do

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Speaker 1: we get anywhere near normal? Do we get an excess

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Speaker 1: real yield? Or do we have an inflation of just

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Speaker 1: a yield that barely moves? Which is it? Well? I

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Speaker 1: think at this point, um, you know, with so many

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Speaker 1: moving parts and pieces, the additional supply um from funding

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Speaker 1: the deficit, the Fed's balance sheet rolling off in treasury

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Speaker 1: having to replace that, uh, and just raising rates, you know,

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Speaker 1: I think the Fed is going to find that it

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Speaker 1: can't go far into positive real rate territory. And that's

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Speaker 1: one reason why we think that they pause after that

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Speaker 1: third hike this year that we think comes in September. Now,

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Speaker 1: what will help them, of course is higher inflation. And

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Speaker 1: inflation is rising, it's rising very gradually. We're going to

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Speaker 1: print two percent on core PC next next week on Monday.

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Speaker 1: I think that that the optics of that UM the

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Speaker 1: FED will have to continue. It's it's UH diligence that

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Speaker 1: we've seen from several policymakers are trying to get out

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Speaker 1: ahead of this and say, look inflation at two not

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Speaker 1: a big deal, to to one to two, not a

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Speaker 1: big deal. What I do John wants to jump in

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Speaker 1: here because he's trying to get ready for his show

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Speaker 1: The real Yield seen it one time. It's been very

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Speaker 1: nice to me. Only once a week. UM. But but

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Speaker 1: but critically, what duration do you use to calculate the

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Speaker 1: best real yield? Is it two year, five year, ten year,

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Speaker 1: fifty year? Which is it? Well, I'm I'm I'm sure

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Speaker 1: that it's different for UM people looking for so for

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Speaker 1: for no, I was trying to think from a strategist

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Speaker 1: viewpoint versus an economist viewpoint, you know, strategist or from

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Speaker 1: Mars economists or from venus. But we we UM tend

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Speaker 1: to just look at UH positive real federal funds rate

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Speaker 1: short term. Yeah, short term. We focus on short term

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Speaker 1: there because when you're looking for the biggest bang for

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Speaker 1: market impact right now? Yeah, it's flat flat John means

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Speaker 1: near zero some Tom gets me ready for Friday. So

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Speaker 1: I don't have a clue what I'm doing. And so

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Speaker 1: I think that that that raises a host of issues, right.

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Speaker 1: It's one reason why the Fed is facing a flatter

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Speaker 1: and flatter yield curve. And as we get into that

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Speaker 1: third hike in September with a very flat yield curve, uh,

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Speaker 1: you know, we think that it's going to be more

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Speaker 1: difficult for them to go further. Um. What does help

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Speaker 1: though steep in that yield curve is inflation. Um. So

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Speaker 1: the Fed themselves can control that by of course taking

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Speaker 1: that pause after the September meeting, you could steepen out

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Speaker 1: what's become a very flat yield curve then, because you're

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Speaker 1: guaranteeing to markets that you're not going to push too

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Speaker 1: hard against inflation just because it's risen a bit above goal.

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Speaker 1: So I think the messaging here is going to be

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Speaker 1: critical as we get uh say, halfway um into the year,

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Speaker 1: but it really probably starts next week with that first

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Speaker 1: two percent print. You know, the Fed really does not

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Speaker 1: want market participants to make that big of a deal

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Speaker 1: of it. Governor Brainerd made a made a stressed in

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Speaker 1: her headwinds to tailwinds speech, remember that one, uh the

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Speaker 1: the in that speech she stressed that it wasn't about

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Speaker 1: getting to the two percent goal, is about strengthening underlying

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Speaker 1: trend inflation. To do that, you have to be at

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Speaker 1: or above the two percent goal for a time, So

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Speaker 1: don't battle against it the second we get there. Just

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Speaker 1: finally pasture distinction between what we have seen, UM in

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Speaker 1: terms of inflation expectations getting a boost over the last month,

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Speaker 1: whether it's primarily been driven by commodity prices or whether

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Speaker 1: there are serious expectations, real expectations of that wage growth

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Speaker 1: is just around the corner and it's coming. Yeah, So

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Speaker 1: I think, um, much of the belt bounce UM has

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Speaker 1: been oil and trade, right that it built into those

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Speaker 1: inflation expectations. Um. We also saw them strengthened though after

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Speaker 1: fiscal policy, because there are an expectation that faster growth

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Speaker 1: than economy would also bring higher inflation. But I'm glad

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Speaker 1: you mentioned wage growth because let's think about wage growth.

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Speaker 1: So UM, here's an equation alert TOM. Equation alert UM.

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Speaker 1: The rule of thumb for nominal wage growth if you

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Speaker 1: want to think about what level does it get inflationary

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Speaker 1: or not? Think about productivity plus inflation, and this is

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Speaker 1: how the FED looks at it. So productivity right, so

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Speaker 1: productivity one and change last year, say two percent on inflation,

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Speaker 1: So around a three percent nominal wage growth right now

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Speaker 1: would be a level that if you go beyond it,

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Speaker 1: you would see inflationary wage pressures. Those are the kind

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Speaker 1: of pressures that can spill over. We're two and a

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Speaker 1: half percent wage growth, so that is something that they

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Speaker 1: are looking very the policymakers are looking very closely at,

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Speaker 1: because if you have above goal inflation and you've got

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Speaker 1: inflationary wage pressures, that's a much different story than wage

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Speaker 1: growth that's still sluggish. From that rule of thumb sense

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Speaker 1: and and and inflation, that's a that's above goal. So

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Speaker 1: I think that helps them tolerate it. Thank you so much.

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Speaker 1: Congratulations on a superb fiscal economics report. Remember that bowing,

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Speaker 1: the biggest waiting on the down, makes up over nine

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Speaker 1: of the down in terms of member waiting, So bobbing, yeah,

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Speaker 1: bone results really mattering for the down, a big, big

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Speaker 1: white um. So the bowing numbers coming in first quarter

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Speaker 1: of core EPs at three sixty four the estimate to

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Speaker 1: fifty eight boost in the forecast as well, So bowing

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Speaker 1: up in a pre market in some decent size by

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Speaker 1: two point four percent and given a lift to the

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Speaker 1: Daw as well. Can we rip up the script? Do

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Speaker 1: you want? Jack hamblin with us from Chicago, which means

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Speaker 1: we can always rip up the script. Jack. When does

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Speaker 1: the doubt? When does dowst intergram Pards whatever, wake up

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Speaker 1: and stopped? This cap waited? I mean the price waited

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Speaker 1: Dow Jones. I mean I like the Dow. I quote

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Speaker 1: it because that's the third rail that everybody thinks off of.

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Speaker 1: But come on, it's two thou eighteen. Why don't they

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Speaker 1: go to a cap you know, like an SMP kind

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Speaker 1: of index. Yeah, it's crazy. I mean, how long has

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Speaker 1: the Dow been around since the hydred I mean they

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Speaker 1: couldn't figure it into their advocas back then. They probably

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Speaker 1: didn't know what market cap was in the eighteen hundred.

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Speaker 1: Let's go to the brilliant one, John Farrell. If Google

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Speaker 1: Alphabet joined the Dow, what would they make up like

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Speaker 1: percent of the index? Well, it depends what the prices um.

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Speaker 1: It's the cross part of you know, if you do

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Speaker 1: a stock split and you're still on the Dow, your

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Speaker 1: waiting goes down, whether whether your market cap is the

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Speaker 1: same size or not. So Apple, even though Apple has

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Speaker 1: this massive size of eight hundred and twenty seven billion dollars,

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Speaker 1: it's waiting is about half of what Boeings is um

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Speaker 1: in the Dow. Give you a sense of how ridiculous

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Speaker 1: thing exist. But I do feel like I've had this

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Speaker 1: conversation about ten times Mike McKie. I have a rule,

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Speaker 1: we only have this conversation after the second Gibson and

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Speaker 1: and I'm just conject now's the time, listen. I mean,

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Speaker 1: you know three M has a has a price of

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Speaker 1: around two hundred dollars a share. It's a big component

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Speaker 1: of the Dow. And when they disappointed the other day,

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Speaker 1: we saw it in the headlines. Are you a bull? Um?

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Speaker 1: You know what? I'm conflicted, Tom. I think near term, Um,

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Speaker 1: there are some opportunities, the upside um. If we could

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Speaker 1: strip away Twitter, Twitter and strip away some of these headlines,

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Speaker 1: I think the market should be ten higher than it

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Speaker 1: is right now. Longer term, I'm concerned. I think that

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Speaker 1: while you know the stock market didn't like three they're

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Speaker 1: gonna hate four uh, and I think fair value in

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Speaker 1: the ten years four percent sold to me about three percent.

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Speaker 1: Had a really simple question from someone I would switch

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Speaker 1: yesterday who's a pension of and just wants to understand,

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Speaker 1: what is three percent main for the equity market? Even

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Speaker 1: if it's so the world still spinning, A lot of

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Speaker 1: people were freaking out linking up to it. But the

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Speaker 1: weald still spinning and things, that's still okay. What does

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Speaker 1: three percent mean to you? Three percent means uh that Uh.

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Speaker 1: The bond market investors are looking at the ECB saying

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Speaker 1: that they're gonna end their quantitative easing programs sometime in

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Speaker 1: the fourth quarter. Uh, and that's really what's been keeping

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Speaker 1: that interest rate low longer term. Uh. The bond market

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Speaker 1: has been in this tuggo war with the stock market

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Speaker 1: over the last ten years, with one arm tied behind

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Speaker 1: its back, and so as we're result of that, the

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Speaker 1: equity market has been the only child of the asset

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Speaker 1: allocation world and has gotten a lot more capital than

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Speaker 1: it probably deserves. Any reason to believe, though, that risk

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Speaker 1: assets can't continue outperforming given their experience of three in

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Speaker 1: the past. Where equity market has been totally fine. The

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Speaker 1: more recent experience, of course an occupation. Why is it

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Speaker 1: different this time? I think because potential g d p

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Speaker 1: P is much lower than it's been in the past.

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Speaker 1: Potential GDP right now is is about two percent. If

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Speaker 1: you look at a labor force growth of zero point

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Speaker 1: seven and productivity about one point five. And so in

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Speaker 1: the context of potential GDP UM, you know that interest

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Speaker 1: rate is higher than it's been historically. I suppose Jack,

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Speaker 1: your great charm over the decadees is you've really always

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Speaker 1: taken a bigger view the word de jure. You and

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Speaker 1: I have seen endless word de jur. They come in,

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Speaker 1: they go out, they use whatever is scale. Everybody's scaling.

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Speaker 1: I know what scale means to me, What scale mean

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Speaker 1: to Jack Evelin, Yeah, I mean it means that, UM,

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Speaker 1: you have to take the infrastructure that you have and

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Speaker 1: try to apply it to as many customers as you've

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Speaker 1: got UM. And technology has been able to help companies

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Speaker 1: do that. UM. So you look at the UH, you know,

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Speaker 1: the Comcast Sky deal for example, it's all about scale.

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Speaker 1: It's all about taking the content UH and trying to

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Speaker 1: you know, voist football or the Olympics on Europeans. UH.

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Speaker 1: And so you know, it's taking all of the content

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Speaker 1: that that that Comcast has accumulated and and this you know,

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Speaker 1: distributing it to Europe, to me. And this goes back

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Speaker 1: to our terrific Avie. Thank you for the global response

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Speaker 1: yesterday to our interview in London with Marianna Mazacuto. We

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Speaker 1: got a huge response of her thoughts on how corporate

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Speaker 1: officers are incentivized. We got lesser nominal GDP you just mentioned,

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Speaker 1: we got lesser potential GDP growth. And every corporate officer

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Speaker 1: out there of every deal, Twitter, Boeing, all the companies

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Speaker 1: John's mentioning are incentivized by total returns, stock options and

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Speaker 1: all arrest for the next bull market? Is the system

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Speaker 1: broken because the officers are trying as crazy as they

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Speaker 1: can to get incentive returns. And yet does that really

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Speaker 1: benefit a company desperate for this things scale? Um? Yeah,

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Speaker 1: I think that you know what we're really what you're

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Speaker 1: talking about, at least the way I I see it

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Speaker 1: is short term is um UH, which is a maryannest right.

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Speaker 1: And and the issue here is part of the part

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Speaker 1: of the UH. The gravitational pull of the public equity

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Speaker 1: markets is this court at quarter. Short term term is UM.

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Speaker 1: For that reason, we don't see private companies going public

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Speaker 1: as quickly. We see in fact, the number of shares

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Speaker 1: outstanding in public markets has diminished over time. And for

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Speaker 1: that reason we accress it are actually focused on direct

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Speaker 1: investments in private companies. The direct investments in private companies.

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Speaker 1: How competitive is that right now? Because there is huge,

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Speaker 1: huge piles of cash sitting with private equity ready to

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Speaker 1: be deployed. How how competitive is that? Sure? So we're

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Speaker 1: not big believers in private equity funds nor private equity

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Speaker 1: fund of funds. We literally go out and place money

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Speaker 1: with individual companies and own individual companies ourselves and consider

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Speaker 1: it this way. For as expensive as private equity is,

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Speaker 1: that's say eight or nine times even DA, it's currently

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Speaker 1: trading at half the valuation of the SMP five hundred.

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Speaker 1: So what do you do with that? What's the application

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Speaker 1: where I can arbitrage that and make money? Well, it's

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Speaker 1: a getting back to our time frame. It's a long

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Speaker 1: term endeavor. UH. It forces us to be long term

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Speaker 1: investor UM and that segment of the market. We're buying

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Speaker 1: individual companies with low leverage UH, and we want to

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Speaker 1: own them forever. Uh. And so what we can do

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Speaker 1: is use the cash flow that these companies are kicking

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Speaker 1: off and rather than having to apply it to pay

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Speaker 1: down debt, we can use it for dividends for our

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Speaker 1: our our holders. Camplin, it's going to have you with us.

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Speaker 1: Thank you very much for joining us. This morning. Christent

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Speaker 1: wanth advised his chief investment officer and at founding pon

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Speaker 1: Victor Anthony with a snow that he just said, I

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Speaker 1: don't want to say, folks, that you can go into

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Speaker 1: the Bloomberg terminal and that with all but with most

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Speaker 1: analysts you could really look at their by hold cell calls.

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Speaker 1: And Victor Anthony brilliantly was skeptical. And you know there

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Speaker 1: was a new genus where he missed a little bit

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Speaker 1: and then he is absolutely nailed Twitter. From January six

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Speaker 1: this year, again, Victory Anthony joins us ages. Let's go

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Speaker 1: back Victor first, why did you shift from teens mediocrity

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Speaker 1: to the moon shot known as Twitter? Right now? What

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Speaker 1: was it the thing where you climbed on board and

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Speaker 1: said load the boat? Yeah? So, um, it's good question.

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Speaker 1: I mean, for most of the time I was negative

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Speaker 1: on Twitter. My channel checks were coming back negative. You know,

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Speaker 1: advertisers are telling me that they were shifting budget off Twitter.

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Speaker 1: Advertisers are telling me they were get in better return

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Speaker 1: on the ad dollar on other platforms, notably Facebook and Google.

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Speaker 1: But that shifted towards the back half of last year

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Speaker 1: UM and started getting more positive commentary from advertisers. UM.

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Speaker 1: That became extremely stronger in the fourth quarter, and so

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Speaker 1: much so that I was it compelled me to my

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Speaker 1: rating for my cell to a buy in uh. Um

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Speaker 1: the fourth quarter do they diminished? I mean it is

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Speaker 1: their takeout room worse here. Should they have been taken

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Speaker 1: out in January? Or are they ever more takeout candidate?

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Speaker 1: This morning? You know, the numbers were great. I mean

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Speaker 1: they beat my my estimates by about ten percent on

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Speaker 1: the top line, they beat the IBIDA. The guidance was

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Speaker 1: also above quite mentally on revenues on and on ibida

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Speaker 1: implied revenues. UM, so very very strong print. UM. They

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Speaker 1: grew uses as well. UM. Perhaps not as strongly in

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Speaker 1: the US as I was expecting. There was some you know,

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Speaker 1: kind of a one time issues there. UM, but you know,

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Speaker 1: the business has returned. I think it's a significant inflection

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Speaker 1: point for them. UM. But given that the businesses such

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Speaker 1: instylid ground, you know, I'm being you know, I think

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Speaker 1: it's somewhat continuitive, But I do believe that now I

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Speaker 1: think acquires to actually stop taking a look at Twitter.

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Speaker 1: I think it's an exceptional platform. It's open. Um, you know,

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Speaker 1: advertisers are coming back. Um, there's a lot of data

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Speaker 1: you could clean from the usage of Twitter that I

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Speaker 1: think a platform like you know, Google alphae which I'm

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Speaker 1: extremely valuable gleaning this data from Twitter. Does that ever

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Speaker 1: run a foul of federal regulators? You know, I think

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Speaker 1: given that Twitter is an open platform, you know, I

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Speaker 1: think they're less susceptible to any sort of regulatory issues

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Speaker 1: that may come down down the pipe, which I do

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Speaker 1: think will come down um some if not this year,

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Speaker 1: definitely next year. Um. I think that probably have more

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Speaker 1: of a negative impact on Facebook, even though I think

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Speaker 1: Facebook will be able to withstand it. But I think

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Speaker 1: it's a really less so for an open platform like Twitter.

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Speaker 1: Why what's being open about it that makes it less

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Speaker 1: susceptible to any kind of hacking or indeed false tweeting

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Speaker 1: or pasting or posting or false material. No, I think

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Speaker 1: you know, the quality of tweets, um, you know, whether

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Speaker 1: it be bots, I think it's an issue that Twitter

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00:24:52,800 --> 00:24:54,040
Speaker 1: has got will do it for quite some time. But

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Speaker 1: I think, you know, there are have measures in place

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Speaker 1: to actively um police in the platform and using official

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00:25:00,320 --> 00:25:04,280
Speaker 1: intelligence tools to combat that. UM. But what I was

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00:25:04,280 --> 00:25:08,000
Speaker 1: saying is that on Twitter, UM, when you post on Twitter,

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Speaker 1: most uses, most uses are probably the supermajority of them

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00:25:13,119 --> 00:25:15,919
Speaker 1: make the tweets you know, available to the public, whereas

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00:25:16,040 --> 00:25:18,959
Speaker 1: on Facebook is more of a closed platform, so when

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Speaker 1: you share that information, you share it with the intent

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00:25:22,400 --> 00:25:27,480
Speaker 1: that that information is called private. The other issue though,

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00:25:27,640 --> 00:25:29,280
Speaker 1: is whether or not you know the information could be

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00:25:29,320 --> 00:25:33,919
Speaker 1: sold and manipulated like it was during their election cycle. UM.

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00:25:34,040 --> 00:25:35,600
Speaker 1: I think that was more of an issue for Facebook

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00:25:35,600 --> 00:25:37,200
Speaker 1: than it was for Twitter, even though Twitter did have

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00:25:37,680 --> 00:25:40,480
Speaker 1: you know, some issues there as well, with particularly Russian bonds.

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00:25:41,000 --> 00:25:45,200
Speaker 1: How do you value Twitter? You know? I UM, you know.

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00:25:45,440 --> 00:25:49,719
Speaker 1: Twitter is returning back to growth. Advertising revenue is back

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00:25:49,760 --> 00:25:52,000
Speaker 1: into double digits. I think that continues throughout the next

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Speaker 1: seven quarters. I think there's a second consecutive quarter of

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00:25:55,480 --> 00:25:59,480
Speaker 1: gap profitability. I think that continuation continues, and I think

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00:25:59,520 --> 00:26:02,240
Speaker 1: they get added into the SMP if they do that

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00:26:02,280 --> 00:26:05,159
Speaker 1: for consecutive quarters. That said, though, I think the DCF

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00:26:05,240 --> 00:26:07,040
Speaker 1: is probably the best way to do it. Um. The

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00:26:07,119 --> 00:26:10,960
Speaker 1: company is cash flow positive night Netflix. Um, and you

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00:26:11,080 --> 00:26:12,920
Speaker 1: just have those cash clothes, you get a really good

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Speaker 1: um stock price. You know my evaluation in the base

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00:26:16,200 --> 00:26:19,760
Speaker 1: cases forty dollars for the stock. Okay, I get all

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00:26:19,840 --> 00:26:24,040
Speaker 1: the cf A talk about it, but the key word

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00:26:24,160 --> 00:26:30,440
Speaker 1: this era is scale. Does Twitter have scale? Listen? I

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00:26:30,480 --> 00:26:36,080
Speaker 1: mean threety six million uses? Um, you know, clearly it's

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00:26:36,400 --> 00:26:41,080
Speaker 1: subscale relative to Facebook, which has over two billion users. Um,

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00:26:41,160 --> 00:26:43,639
Speaker 1: but that number is nothing. This needs that and so um.

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00:26:44,000 --> 00:26:46,520
Speaker 1: You know, I think they'll continue to grow that at

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00:26:46,560 --> 00:26:49,159
Speaker 1: the marginal pace one or two million per quarter. It

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00:26:49,200 --> 00:26:53,320
Speaker 1: will never grow, never be the size as Twitter as Facebook.

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00:26:54,040 --> 00:26:56,359
Speaker 1: But I think it's uh, you know, it's it has

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00:26:56,400 --> 00:26:59,879
Speaker 1: a captive audience, very engage audience. And I think all

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00:26:59,920 --> 00:27:01,800
Speaker 1: the time, you know, they're finding better ways to monetize

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00:27:01,840 --> 00:27:03,920
Speaker 1: our audience. And that's what we're seeing in the numbers today.

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00:27:04,520 --> 00:27:06,280
Speaker 1: And the stock is off today. I think it's down

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00:27:06,520 --> 00:27:12,000
Speaker 1: as we began speaking, probably down Yeah, no, no, I

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00:27:12,119 --> 00:27:13,960
Speaker 1: think you know the tape is the tough tape Number one,

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00:27:14,040 --> 00:27:16,520
Speaker 1: number two. They get some questions commentary on the call

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00:27:16,600 --> 00:27:19,160
Speaker 1: about the back half in terms of the add growth

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00:27:19,200 --> 00:27:21,239
Speaker 1: in the back half, But I think that's just, uh,

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00:27:21,680 --> 00:27:27,199
Speaker 1: that's being conservative. What has the effect been of adding

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00:27:27,400 --> 00:27:30,560
Speaker 1: the feature of being able to add more comments you

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00:27:30,840 --> 00:27:35,520
Speaker 1: with lengthening the characters? Well, accord, According to the company,

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00:27:35,680 --> 00:27:40,960
Speaker 1: the engagement on Twitter has increased um meaningfully since they

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00:27:41,040 --> 00:27:44,840
Speaker 1: made that conversion over, so um it's more of a

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00:27:45,080 --> 00:27:49,960
Speaker 1: tool UM two appease the high value users of the platform.

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00:27:50,600 --> 00:27:52,240
Speaker 1: They keep them more engaged. And you know, people are

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00:27:52,280 --> 00:27:55,840
Speaker 1: spending little, slightly a bit more time clearly given the

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00:27:55,920 --> 00:27:58,600
Speaker 1: fact that you're reading a lot more content, so more

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00:27:58,680 --> 00:28:01,240
Speaker 1: time spent more hying it on the platform. Who would

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00:28:01,280 --> 00:28:03,240
Speaker 1: buy Twitter? I mean, I know we covered this earlier

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00:28:03,280 --> 00:28:08,200
Speaker 1: in the interview. Would but I just they're little That's

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00:28:08,240 --> 00:28:10,919
Speaker 1: what I keep circling back. Pimp, you ever buy anything

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00:28:11,080 --> 00:28:13,520
Speaker 1: or click on anything like an ad when you're on Twitter?

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00:28:14,520 --> 00:28:16,560
Speaker 1: And no anyone that's ever clicked on an ad or

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00:28:16,600 --> 00:28:20,320
Speaker 1: bought anything on Twitter? So why would you advertise on Twitter?

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00:28:20,400 --> 00:28:24,000
Speaker 1: Anthony victory? I beg your victory, Anthony, Why Well, have

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00:28:24,160 --> 00:28:29,960
Speaker 1: you guys bought something from Facebook? Okay? But they're generated

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00:28:30,000 --> 00:28:32,200
Speaker 1: billings and bills that as of advertising on the platform

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00:28:32,240 --> 00:28:34,920
Speaker 1: face yeah, but doesn't eventually the advertiser go, wait a minute,

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00:28:34,960 --> 00:28:39,360
Speaker 1: they're not clicking. Um. What I'm hearing from advertises is

495
00:28:39,680 --> 00:28:43,360
Speaker 1: quite the contrary. Um on both platforms. Now, you know

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00:28:43,560 --> 00:28:45,560
Speaker 1: it wasn't the case for Twitter, but now I'm having

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00:28:45,600 --> 00:28:48,440
Speaker 1: the same thing for Twitter. Um, people are clicking on

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00:28:48,520 --> 00:28:50,960
Speaker 1: the on those ads. Maybe you may not be doing it. Um.

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Speaker 1: Quite frankly, the only adds I've clicked that on who

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Speaker 1: was really on Instagram? I find that to be level

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00:28:56,040 --> 00:29:00,040
Speaker 1: relevant from my own personal taste as that we and

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00:29:00,120 --> 00:29:02,560
Speaker 1: so people people do buy, people do buy on the

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Speaker 1: platform and advatas to auding to return on this fantomy

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00:29:05,520 --> 00:29:08,280
Speaker 1: because people are clicking on the act now, Victor, thank you,

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Speaker 1: congratulations on what you've done since the middle of January,

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Speaker 1: and Twitter just superb ages Victor Anthony of Ages Capital

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Speaker 1: uh at this one. Thanks for listening to the Bloomberg

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00:29:25,080 --> 00:29:31,000
Speaker 1: Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud,

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00:29:31,400 --> 00:29:35,600
Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at

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00:29:35,680 --> 00:29:39,880
Speaker 1: Tom Keane before the podcast. You can always catch us worldwide.

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Speaker 1: I'm Bloomberg Radio