1 00:00:02,640 --> 00:00:05,320 Speaker 1: Welcome to the Bloomberg PENL Podcast. I'm Paul Swinge you. 2 00:00:05,360 --> 00:00:07,680 Speaker 1: Along with my co host Lisa Brahma Waits, each day 3 00:00:07,720 --> 00:00:10,240 Speaker 1: we bring you the most noteworthy and useful interviews for 4 00:00:10,280 --> 00:00:12,520 Speaker 1: you and your money. Whether at the grocery store or 5 00:00:12,560 --> 00:00:15,480 Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple 6 00:00:15,520 --> 00:00:17,959 Speaker 1: podcast or wherever you listen to podcasts, as well as 7 00:00:17,960 --> 00:00:31,800 Speaker 1: at Bloomberg dot com. This is the song that we 8 00:00:31,960 --> 00:00:35,720 Speaker 1: have for the one, the only, the Chris Almen, chief 9 00:00:35,760 --> 00:00:40,479 Speaker 1: investment officer at Holster's Investments, which is the second biggest 10 00:00:41,120 --> 00:00:44,960 Speaker 1: public pension in the United States. I love the little 11 00:00:45,280 --> 00:00:47,640 Speaker 1: bicycle bell at the end. Of course, we use that 12 00:00:47,720 --> 00:00:50,160 Speaker 1: song because you ride your bike to work every day, 13 00:00:50,640 --> 00:00:52,879 Speaker 1: uh and listen to the show while you do that, 14 00:00:52,920 --> 00:00:55,360 Speaker 1: which I absolutely love you still riding your bike. It's 15 00:00:55,400 --> 00:00:57,560 Speaker 1: been a bit too cold and way too rainy, so 16 00:00:58,080 --> 00:00:59,880 Speaker 1: but yes, I ride it at lunch as often as 17 00:00:59,920 --> 00:01:02,080 Speaker 1: I can, and I still listen to the show regularly. 18 00:01:02,280 --> 00:01:06,800 Speaker 1: All right, So talking about investments, because you do oversee 19 00:01:07,360 --> 00:01:10,120 Speaker 1: more than two or billion dollars of assets for a 20 00:01:10,200 --> 00:01:14,000 Speaker 1: number of different pensions, a number of different retired groups 21 00:01:14,040 --> 00:01:17,680 Speaker 1: in California. Where are we right now. I mean, it 22 00:01:17,760 --> 00:01:20,520 Speaker 1: seems like people are getting really pessimistic if you look 23 00:01:20,520 --> 00:01:22,480 Speaker 1: at the bond market, But if you look at stocks, 24 00:01:22,959 --> 00:01:25,720 Speaker 1: we just had an incredible first quarter. What do you 25 00:01:25,760 --> 00:01:28,120 Speaker 1: make of this? Well, and I've been very clear, I 26 00:01:28,160 --> 00:01:30,160 Speaker 1: think people need to start taking their clue from the 27 00:01:30,160 --> 00:01:32,600 Speaker 1: bond market. I don't think it should be as overly 28 00:01:32,640 --> 00:01:36,320 Speaker 1: pessimistic as it is. And your listeners are educated, they 29 00:01:36,360 --> 00:01:39,400 Speaker 1: get it. The yield curve is not inverted. Let's look 30 00:01:39,440 --> 00:01:42,520 Speaker 1: at twos to thirties. Don't bother me with twos to tens. 31 00:01:43,160 --> 00:01:45,000 Speaker 1: The fact that the curve has a slump in the 32 00:01:45,040 --> 00:01:47,039 Speaker 1: middle of it, that's too bad. But if the whole 33 00:01:47,080 --> 00:01:49,800 Speaker 1: curve got inverted, then I would be worried. I think 34 00:01:50,120 --> 00:01:52,840 Speaker 1: interest rates need to be more focused on. The economy 35 00:01:52,960 --> 00:01:55,840 Speaker 1: is okay. We just came off a very very cold winter. 36 00:01:55,960 --> 00:01:59,920 Speaker 1: People forget the the cyclone bomb and all the craziest 37 00:02:00,000 --> 00:02:03,200 Speaker 1: off that went on this last January and February. So 38 00:02:03,280 --> 00:02:05,120 Speaker 1: the economy should be a little bit slow in the 39 00:02:05,160 --> 00:02:08,040 Speaker 1: first quarter, as it has been for the last three years. Well, 40 00:02:08,040 --> 00:02:10,560 Speaker 1: the market seems to be discounting that the Fed's next 41 00:02:10,600 --> 00:02:13,360 Speaker 1: move will be a rate cut, but if you're saying 42 00:02:13,400 --> 00:02:16,040 Speaker 1: that you're you think the economy is generally in good shape, 43 00:02:16,320 --> 00:02:19,160 Speaker 1: you don't see that. I think the Fed should be 44 00:02:19,280 --> 00:02:23,160 Speaker 1: and should constantly say they are data dependent, not a headline. 45 00:02:23,160 --> 00:02:26,480 Speaker 1: They have been for decades. But Jerome Powell's got to 46 00:02:26,560 --> 00:02:28,920 Speaker 1: learn his own voice and the power of that he's 47 00:02:28,960 --> 00:02:31,520 Speaker 1: had and moving that market, and he needs to be 48 00:02:31,600 --> 00:02:34,320 Speaker 1: much more cautious and need to be data dependent. The 49 00:02:34,360 --> 00:02:37,280 Speaker 1: bomb market is kind of anticipating in ease, which I 50 00:02:37,280 --> 00:02:39,440 Speaker 1: think is a little over extending. I think they're getting 51 00:02:39,639 --> 00:02:42,519 Speaker 1: too far ahead of themselves. They're over the handlebars and 52 00:02:42,639 --> 00:02:45,560 Speaker 1: bike terms. So they need to really back up and 53 00:02:45,560 --> 00:02:47,840 Speaker 1: and look at the data. Look at data, Look at 54 00:02:47,840 --> 00:02:50,359 Speaker 1: where we are in the first quarter. The Fed may 55 00:02:50,400 --> 00:02:53,079 Speaker 1: well end up tightening at the latter half of the year, 56 00:02:53,080 --> 00:02:54,920 Speaker 1: but that's a long time from now, all right, So 57 00:02:55,000 --> 00:02:57,800 Speaker 1: let's talk about how that feeds into your investment thesis 58 00:02:57,840 --> 00:03:02,840 Speaker 1: going forward. Calister's the California State Teacher's retirement system. I 59 00:03:02,880 --> 00:03:06,920 Speaker 1: believe broke even for the fiscal year nineteen. Is that correct? 60 00:03:07,040 --> 00:03:10,560 Speaker 1: We had a small lost down three percent um on 61 00:03:10,600 --> 00:03:13,560 Speaker 1: a calendar year. But I'm looking at fiscal years and 62 00:03:13,600 --> 00:03:15,720 Speaker 1: I'm looking at a thirty year time period, so we're 63 00:03:15,760 --> 00:03:19,320 Speaker 1: doing okay over thirty years. So are you adjusting though 64 00:03:19,440 --> 00:03:25,000 Speaker 1: anything in terms of allocations for We've been very defensive 65 00:03:25,080 --> 00:03:28,320 Speaker 1: at the start of even a year ago. In in July, 66 00:03:28,480 --> 00:03:31,400 Speaker 1: we started to get too defensive, and obviously the markets 67 00:03:31,480 --> 00:03:34,840 Speaker 1: rallied in in August, but then we were positioned correctly 68 00:03:34,880 --> 00:03:37,200 Speaker 1: when you look at December. Such is life as a 69 00:03:37,240 --> 00:03:39,520 Speaker 1: long term investor in the markets. It's a roller coaster 70 00:03:39,720 --> 00:03:42,560 Speaker 1: and you never know your exact position. But right now 71 00:03:42,600 --> 00:03:46,400 Speaker 1: we're pretty neutral. So I'm not extending long in many areas, 72 00:03:46,480 --> 00:03:49,440 Speaker 1: and I'm also not being underweight in many areas. I'm 73 00:03:49,480 --> 00:03:52,680 Speaker 1: a little cautious on equities. So we're right at the 74 00:03:52,680 --> 00:03:56,720 Speaker 1: benchmark and a smidge under and we're long long maturity 75 00:03:56,720 --> 00:04:00,760 Speaker 1: assets like real estate private equity. So it's sort of 76 00:04:00,760 --> 00:04:02,000 Speaker 1: interesting that you said that that's where I was going 77 00:04:02,080 --> 00:04:04,960 Speaker 1: to go. There was a JP Morgan survey recently talking 78 00:04:05,000 --> 00:04:08,840 Speaker 1: about how you know. They basically surveyed a bunch of 79 00:04:08,840 --> 00:04:11,240 Speaker 1: institutional investors. One third of them is that they plan 80 00:04:11,360 --> 00:04:14,520 Speaker 1: to increase their allocations to hedge funds up from a 81 00:04:14,600 --> 00:04:17,960 Speaker 1: minuscule amount the prior year. Are you in that camp. 82 00:04:18,000 --> 00:04:21,320 Speaker 1: Are you increasing allocations to hedge funds. No, UM, we 83 00:04:21,360 --> 00:04:24,640 Speaker 1: don't consider hedge funds and asset class. We look at 84 00:04:24,680 --> 00:04:27,640 Speaker 1: them as as they are there twenty two very disparate 85 00:04:27,960 --> 00:04:31,239 Speaker 1: investment strategies. Keep in mind, to me, a hedge fund 86 00:04:31,279 --> 00:04:35,280 Speaker 1: is a legal contract, a structure, the vehicle underneath it is. 87 00:04:35,320 --> 00:04:37,680 Speaker 1: What you care about is what is their underlying strategy. 88 00:04:37,720 --> 00:04:40,400 Speaker 1: And I think what they're saying is it's tough to 89 00:04:40,440 --> 00:04:42,960 Speaker 1: be long and asset class right now, so they want 90 00:04:42,960 --> 00:04:45,080 Speaker 1: to be in a trading type of vehicle. They can 91 00:04:45,080 --> 00:04:47,240 Speaker 1: be a bit more nimble and a bit more reactive 92 00:04:47,240 --> 00:04:51,000 Speaker 1: to the world. Between Breggsit, what's going on here in Washington, 93 00:04:51,080 --> 00:04:55,159 Speaker 1: d C. Fast and slow economic numbers out of China, 94 00:04:55,240 --> 00:04:58,719 Speaker 1: it's tough to figure out where there should be in stocks, bonds, currencies, 95 00:04:59,120 --> 00:05:01,840 Speaker 1: and where I should be the world. It's interesting that 96 00:05:02,120 --> 00:05:04,120 Speaker 1: you talked about that this you know, the volatility we've 97 00:05:04,120 --> 00:05:05,880 Speaker 1: seen over the last you know, six months. I mean, 98 00:05:06,080 --> 00:05:08,000 Speaker 1: so if you're an equity investor looking at the sp 99 00:05:08,400 --> 00:05:12,040 Speaker 1: up this this year, you could say, well, I'm done, Okay, 100 00:05:12,040 --> 00:05:14,480 Speaker 1: I've had my performance. I'm gonna go away. However, if 101 00:05:14,480 --> 00:05:17,000 Speaker 1: you kind of look at it relatives to what happened 102 00:05:17,040 --> 00:05:19,480 Speaker 1: in December. We're just kind of getting back to almost 103 00:05:19,520 --> 00:05:22,360 Speaker 1: where we were. So there's cases for the bulls and bears, 104 00:05:22,360 --> 00:05:23,719 Speaker 1: but it sounds like you're a little bit more on 105 00:05:23,760 --> 00:05:26,680 Speaker 1: the conservative side from an equities perspective. Yeah, Paul, we're 106 00:05:27,600 --> 00:05:30,640 Speaker 1: number one. We're investors, not traders. So I wish I 107 00:05:30,720 --> 00:05:32,359 Speaker 1: could say I could get out of the market, but 108 00:05:32,440 --> 00:05:34,359 Speaker 1: that is just never gonna happen. We're going to be 109 00:05:34,400 --> 00:05:37,240 Speaker 1: invested in stocks as long as they're public school teachers 110 00:05:37,240 --> 00:05:39,880 Speaker 1: in California. That I try and say that to your people, 111 00:05:39,920 --> 00:05:42,839 Speaker 1: it's we're talking generations that will be along the US 112 00:05:42,920 --> 00:05:46,719 Speaker 1: equity market. So from our perspective, um, it really has 113 00:05:46,720 --> 00:05:49,159 Speaker 1: been a sideways market, and it's been a choppy one. 114 00:05:49,240 --> 00:05:52,320 Speaker 1: So it's tough for even the momentum strategies to make 115 00:05:52,360 --> 00:05:54,360 Speaker 1: money in this kind of a market, since you're swinging 116 00:05:54,440 --> 00:05:56,880 Speaker 1: up and down eight percent sometimes in just a two 117 00:05:56,880 --> 00:05:59,880 Speaker 1: month period. We're gonna be fairly flat to the US 118 00:06:00,000 --> 00:06:02,840 Speaker 1: equity market right on our benchmark. We're a little bit 119 00:06:02,920 --> 00:06:06,080 Speaker 1: underweight global equity because we're so worried about Brexit and 120 00:06:06,160 --> 00:06:09,480 Speaker 1: questioning Japan, and then we're gonna be looking around the world. 121 00:06:09,760 --> 00:06:13,040 Speaker 1: Emerging markets is where the value is, but it's been 122 00:06:13,160 --> 00:06:14,960 Speaker 1: so tough to go in, and it really is a 123 00:06:15,040 --> 00:06:18,200 Speaker 1: question about your confidence in China and their economy. It 124 00:06:18,240 --> 00:06:20,800 Speaker 1: looks like it's dialing back up and starting to grow, 125 00:06:20,880 --> 00:06:23,000 Speaker 1: which is a good sign for the emerging markets. But 126 00:06:23,040 --> 00:06:25,839 Speaker 1: even for a fund our size, it's tough to be long, 127 00:06:26,520 --> 00:06:29,000 Speaker 1: very far in the emerging markets. You said earlier that 128 00:06:29,040 --> 00:06:33,039 Speaker 1: you like real estate and private equity. Where in particular 129 00:06:33,040 --> 00:06:35,880 Speaker 1: are you seeing opportunities in real estate? Well, I like 130 00:06:36,000 --> 00:06:39,159 Speaker 1: real estate because I think it's gonna hold its values. UM. 131 00:06:39,200 --> 00:06:42,599 Speaker 1: I like occupied buildings that have solid lease and solid 132 00:06:42,600 --> 00:06:46,839 Speaker 1: tenants because it gives us were good cash flow. Um. 133 00:06:47,360 --> 00:06:51,000 Speaker 1: We have owned some buildings where we work actually exists. Um. 134 00:06:51,000 --> 00:06:54,120 Speaker 1: But you want diversified tenant base. That's the key, and 135 00:06:54,320 --> 00:06:58,600 Speaker 1: you look at it. Manhattan, the Gateway cities, San Francisco, 136 00:06:58,720 --> 00:07:02,839 Speaker 1: Los Angeles, Chicago, Goo, even Denver, Washington, d C have 137 00:07:03,160 --> 00:07:05,520 Speaker 1: held in there and their value. And then obviously the 138 00:07:05,560 --> 00:07:11,760 Speaker 1: bills people love to talk about Nashville. UM, talk to 139 00:07:11,800 --> 00:07:14,480 Speaker 1: the real estate people. They've got acronyms for everything. I'm sure, 140 00:07:14,560 --> 00:07:17,480 Speaker 1: but but even Austin, those kind of markets are holding 141 00:07:17,560 --> 00:07:20,160 Speaker 1: in there, and I'm not looking for a lot of 142 00:07:20,200 --> 00:07:23,280 Speaker 1: capital appreciation. But what I'm looking for is steady cash flow. 143 00:07:23,440 --> 00:07:25,160 Speaker 1: That's what we really get out of our real estate. 144 00:07:25,240 --> 00:07:28,120 Speaker 1: So I think about high yielding dividends stocks and there's 145 00:07:28,120 --> 00:07:30,880 Speaker 1: the value. And also real estate's very static. It doesn't 146 00:07:30,880 --> 00:07:33,960 Speaker 1: move in price every day like equities. Interesting, So what 147 00:07:34,440 --> 00:07:36,320 Speaker 1: is there any part of the equity market that you're 148 00:07:36,320 --> 00:07:39,600 Speaker 1: just no interest in? I just that you're really underweight 149 00:07:39,640 --> 00:07:42,760 Speaker 1: that's noticeable for you, or you've just given your size, 150 00:07:42,800 --> 00:07:46,240 Speaker 1: you're just kind of equal weight throughout the index. Paul, 151 00:07:46,320 --> 00:07:49,800 Speaker 1: We own the entire market as a solid source. Largest 152 00:07:49,840 --> 00:07:52,840 Speaker 1: the smallest um the one place that I don't have 153 00:07:52,880 --> 00:07:54,480 Speaker 1: a lot of interest, and it's not that it's a 154 00:07:54,480 --> 00:07:58,240 Speaker 1: bad segment, but it would be microcap. At my size, 155 00:07:58,320 --> 00:08:02,240 Speaker 1: it is impractical to try invest anything material in microcap 156 00:08:02,280 --> 00:08:05,200 Speaker 1: that would it matter to my fund and then also 157 00:08:05,320 --> 00:08:08,320 Speaker 1: make enough money. It's too problematic. The area that I'm 158 00:08:08,320 --> 00:08:11,160 Speaker 1: worried about in the equity markets is how extended the 159 00:08:11,160 --> 00:08:15,040 Speaker 1: tech stocks are. Um, there's a thing that I kind 160 00:08:15,040 --> 00:08:17,600 Speaker 1: of believe in called earnings. I'm not sure people have 161 00:08:17,680 --> 00:08:22,640 Speaker 1: heard of that, but earnings, net income not the lift 162 00:08:22,680 --> 00:08:26,000 Speaker 1: investors obviously. Well, but we're back to that view is 163 00:08:26,440 --> 00:08:28,520 Speaker 1: it's all about the growth. Will pay whatever we have 164 00:08:28,560 --> 00:08:30,600 Speaker 1: to to get the growth. I mean, I've been complaining 165 00:08:30,640 --> 00:08:35,280 Speaker 1: about Amazon for Okay, how's that worked out? All right? 166 00:08:35,840 --> 00:08:40,280 Speaker 1: Chris Chris al'man Chief investment officer California State Teachers Retirement System. 167 00:08:40,480 --> 00:08:44,679 Speaker 1: Two six billion dollars invested for the long term. We learned, 168 00:09:03,760 --> 00:09:07,600 Speaker 1: we did learns of information about Saudi Aramco, which is 169 00:09:07,880 --> 00:09:11,120 Speaker 1: marketing dollar bonds for the first time to purchase to 170 00:09:11,280 --> 00:09:14,240 Speaker 1: finance its purchase of Sabik. We talked. We learned that 171 00:09:14,320 --> 00:09:18,840 Speaker 1: it was the most profitable company by certain measures in 172 00:09:18,920 --> 00:09:23,320 Speaker 1: the world, earning a hundred and eleven billion dollars in 173 00:09:23,440 --> 00:09:27,240 Speaker 1: one year, dwarfing the amount of money brought in by 174 00:09:27,280 --> 00:09:29,400 Speaker 1: Apple joining us. Now, I'm very pleased to say. Dr 175 00:09:29,440 --> 00:09:33,360 Speaker 1: ellen Wald, president of Transversal Consulting, also a non resident 176 00:09:33,400 --> 00:09:36,280 Speaker 1: Senior Fellow at the Atlantic Council's Global Energy Center, a 177 00:09:36,280 --> 00:09:40,720 Speaker 1: contributor to Bloomberg Opinion, and a very wonderful guest on 178 00:09:40,760 --> 00:09:43,520 Speaker 1: this show. Dr Wall, thank you for being with us. 179 00:09:43,679 --> 00:09:47,160 Speaker 1: What stood out most to you about the financial disclosures 180 00:09:47,440 --> 00:09:51,520 Speaker 1: from Saudi Aramco? Hi, it's good to be here. What 181 00:09:51,520 --> 00:09:55,520 Speaker 1: what stood out most most significantly to me was the 182 00:09:55,640 --> 00:09:58,760 Speaker 1: number that a Ramco is paying in dividends to the 183 00:09:58,800 --> 00:10:02,280 Speaker 1: Saudi government. And we all knew that around COO was 184 00:10:02,400 --> 00:10:06,200 Speaker 1: a very profitable company, we didn't know quite how profitable. 185 00:10:06,360 --> 00:10:08,720 Speaker 1: But the fact that it is the most profitable company 186 00:10:08,720 --> 00:10:12,240 Speaker 1: in the world isn't really a surprise. But what's more 187 00:10:12,320 --> 00:10:16,160 Speaker 1: interesting is that we've learned that since the government lowered 188 00:10:16,160 --> 00:10:20,600 Speaker 1: a Ramco's income tax rate to fifty UM, they had 189 00:10:20,640 --> 00:10:24,120 Speaker 1: to be making up that money somehow, that that deficit 190 00:10:24,200 --> 00:10:28,040 Speaker 1: in money somehow, And I've always suspected that they were 191 00:10:28,040 --> 00:10:31,440 Speaker 1: getting it in dividends, but this information gives us a 192 00:10:31,480 --> 00:10:34,600 Speaker 1: sense of just how much the government is getting in dividends. 193 00:10:34,679 --> 00:10:38,240 Speaker 1: It's up fifty eight point to billion dollars in in 194 00:10:38,679 --> 00:10:42,559 Speaker 1: two thousand and eighteen, and that's a very significant number. 195 00:10:42,840 --> 00:10:45,080 Speaker 1: Uh and and has a lot to say. I think 196 00:10:45,120 --> 00:10:49,080 Speaker 1: about a ram Coosh financial future should it ever pursue 197 00:10:49,160 --> 00:10:53,080 Speaker 1: an I p O on international markets. Um, it's really 198 00:10:53,440 --> 00:10:55,360 Speaker 1: it's showing the government is still ending up with a 199 00:10:55,400 --> 00:10:59,640 Speaker 1: lot of money. And um, even though it's switched, it's 200 00:10:59,679 --> 00:11:03,880 Speaker 1: it's a come tax rate and could potentially impact an 201 00:11:03,920 --> 00:11:08,040 Speaker 1: IPO in the future, particularly if it UM perhaps does 202 00:11:08,200 --> 00:11:11,240 Speaker 1: offer this kind of dividend rate to other shareholders. Right now, 203 00:11:11,280 --> 00:11:13,800 Speaker 1: the government is the sole shareholder, But if you do 204 00:11:13,800 --> 00:11:16,240 Speaker 1: do an I p O, you've got other shareholders. Will 205 00:11:16,280 --> 00:11:20,680 Speaker 1: they offer such lucrative dividends to other shareholders? If so, 206 00:11:20,960 --> 00:11:24,800 Speaker 1: that could make a Ramco a very valuable investment. On 207 00:11:24,840 --> 00:11:27,560 Speaker 1: the other hand, they may choose to not offer that 208 00:11:27,640 --> 00:11:30,360 Speaker 1: in their share classes, which might make a Ramco not 209 00:11:30,559 --> 00:11:34,160 Speaker 1: quite as valuable in investment if they do I p O. 210 00:11:34,520 --> 00:11:36,640 Speaker 1: So so, dr Wall, do you anticipate or is it 211 00:11:36,679 --> 00:11:40,400 Speaker 1: you're thinking that maybe this dollar bond offering that they're 212 00:11:40,440 --> 00:11:42,600 Speaker 1: coming to the market with might be a precursor for 213 00:11:42,640 --> 00:11:45,680 Speaker 1: an IPO. I do think it's definitely a way to 214 00:11:45,760 --> 00:11:50,600 Speaker 1: test the waters to see what people how people respond 215 00:11:50,640 --> 00:11:53,199 Speaker 1: to this, what people make of their financial data. One 216 00:11:53,240 --> 00:11:56,800 Speaker 1: of the things that we've seen throughout kind of Ramco's 217 00:11:56,880 --> 00:11:59,280 Speaker 1: history is that it has been a very secretive company. 218 00:11:59,600 --> 00:12:02,280 Speaker 1: Um Really, it's had no reason to ever share any 219 00:12:02,320 --> 00:12:05,480 Speaker 1: financial data, which is why it's seen a secretive. But 220 00:12:05,559 --> 00:12:08,880 Speaker 1: people have taken that to believe that something nefarious was 221 00:12:08,920 --> 00:12:11,240 Speaker 1: going on. Perhaps the Ramco was bleeding money to the 222 00:12:11,280 --> 00:12:15,880 Speaker 1: government in uh social projects or uh you know, palaces 223 00:12:15,960 --> 00:12:18,120 Speaker 1: for the kings, And what we learned from this is 224 00:12:18,120 --> 00:12:20,960 Speaker 1: that that's not actually the case at all. Uh And 225 00:12:21,000 --> 00:12:23,560 Speaker 1: so Aramco maybe using this as a way to test 226 00:12:23,600 --> 00:12:27,080 Speaker 1: the water to see what the responses to to this 227 00:12:27,200 --> 00:12:30,560 Speaker 1: financial data ahead of you know, doing this this I 228 00:12:30,640 --> 00:12:33,840 Speaker 1: p O perhaps in a few years and releasing more 229 00:12:33,960 --> 00:12:37,240 Speaker 1: financial data. Well. The interesting thing is Bloomberg Oil correspondent 230 00:12:37,320 --> 00:12:39,200 Speaker 1: Javier Blast put out a piece where he said that 231 00:12:39,240 --> 00:12:42,480 Speaker 1: looking at this financial data means that the valuation of 232 00:12:42,520 --> 00:12:45,160 Speaker 1: Saudi Aramco is probably closer to one point two trillion 233 00:12:45,200 --> 00:12:47,959 Speaker 1: dollars rather than two trillion dollars. Would you agree with that. 234 00:12:49,280 --> 00:12:51,680 Speaker 1: I'm not sure i'd agree with one point too, but 235 00:12:51,840 --> 00:12:55,319 Speaker 1: I definitely think that based on this data, um the 236 00:12:55,360 --> 00:12:58,760 Speaker 1: evaluation has to be at least one trillion, because if 237 00:12:58,760 --> 00:13:01,640 Speaker 1: you're going to evaluate our bull Microsoft at about a 238 00:13:01,679 --> 00:13:05,640 Speaker 1: trillion dollars, then this company is significantly, as you said, 239 00:13:05,640 --> 00:13:08,040 Speaker 1: more profitable. So they've got to be above one trillion. 240 00:13:08,240 --> 00:13:11,240 Speaker 1: So just where they are in between one and two 241 00:13:11,320 --> 00:13:15,720 Speaker 1: trillion is questionable. And I do think that there's a 242 00:13:15,760 --> 00:13:19,280 Speaker 1: significant liability that a Ramco faces in terms of evaluation 243 00:13:19,720 --> 00:13:23,440 Speaker 1: due to their connection to the Saudi government. Well, that 244 00:13:23,480 --> 00:13:24,920 Speaker 1: was what I was going to say. I mean, how 245 00:13:25,000 --> 00:13:29,240 Speaker 1: does a company go public and be beholden to public 246 00:13:29,280 --> 00:13:33,360 Speaker 1: investors when ultimately it's still is very beholden to a 247 00:13:33,480 --> 00:13:37,520 Speaker 1: government that can wields authority over it and demand higher 248 00:13:37,640 --> 00:13:39,240 Speaker 1: you know, and tax it more, do what it needs 249 00:13:39,240 --> 00:13:42,560 Speaker 1: to do depending on its revenue streams. Yeah, and that's 250 00:13:42,600 --> 00:13:46,000 Speaker 1: and that's a significant question. Historically, a Ramco has always 251 00:13:46,040 --> 00:13:50,280 Speaker 1: had kind of a set tax rate, although at times 252 00:13:50,280 --> 00:13:52,600 Speaker 1: it was actually an industrible tax rate to make sure 253 00:13:52,640 --> 00:13:54,760 Speaker 1: that the government had enough money. So there's always a 254 00:13:54,800 --> 00:13:58,040 Speaker 1: possibility that that could happen again. There's also this issue. 255 00:13:58,160 --> 00:13:59,800 Speaker 1: I would have said, if you'd ask me that question 256 00:14:00,040 --> 00:14:02,720 Speaker 1: five years ago, I would have said, a Ramco is 257 00:14:02,720 --> 00:14:05,360 Speaker 1: a very independent company. The king really has a sense 258 00:14:05,400 --> 00:14:08,240 Speaker 1: of this, this company should be independent. They let it 259 00:14:08,320 --> 00:14:11,000 Speaker 1: run itself, and you know, they take what they can 260 00:14:11,040 --> 00:14:13,440 Speaker 1: get what they get from the company. But that's not 261 00:14:13,480 --> 00:14:16,280 Speaker 1: the case anymore. We're seeing a king and also a 262 00:14:16,280 --> 00:14:19,760 Speaker 1: crown Prince who are much more involved in the various 263 00:14:19,760 --> 00:14:22,480 Speaker 1: power centers of the kingdom, and that includes a Ramco. 264 00:14:22,640 --> 00:14:25,400 Speaker 1: And so I do think when you're looking at at 265 00:14:25,400 --> 00:14:28,240 Speaker 1: a future for a Ramco. There's really no telling what 266 00:14:28,400 --> 00:14:31,200 Speaker 1: kind of demands the Royal family may make on the 267 00:14:31,240 --> 00:14:34,520 Speaker 1: company and what the future could hold. So far, none 268 00:14:34,560 --> 00:14:37,720 Speaker 1: of this is really damaging to the core profitability of 269 00:14:37,720 --> 00:14:40,720 Speaker 1: the company. The Savag acquisition is not a significant add 270 00:14:40,760 --> 00:14:43,640 Speaker 1: a significant liability. In fact, may be more profitable for 271 00:14:43,680 --> 00:14:46,680 Speaker 1: the company in the long run, but we just don't know, 272 00:14:46,880 --> 00:14:50,400 Speaker 1: and that is a significant risk. Dr ellen Wald, thank 273 00:14:50,400 --> 00:14:53,800 Speaker 1: you so much. Dr Wald, as president of Transversal Consulting. 274 00:14:54,080 --> 00:14:57,000 Speaker 1: She's also a nonresident Senior Fellow at the Atlantic Council's 275 00:14:57,000 --> 00:15:16,880 Speaker 1: Global Energy Center and a contributor to Bloomberg Opinion. Well, 276 00:15:16,920 --> 00:15:19,480 Speaker 1: it looks like progress is being made between the U 277 00:15:19,560 --> 00:15:23,040 Speaker 1: S and China on trade negotiations UH. Chinese Vice Premier 278 00:15:23,200 --> 00:15:25,920 Speaker 1: Leo Hey is due to return to d C this week, 279 00:15:26,560 --> 00:15:30,240 Speaker 1: suggesting that the both sides are getting nearer to the 280 00:15:30,280 --> 00:15:33,480 Speaker 1: final deal. To help us break this down and all 281 00:15:33,560 --> 00:15:36,880 Speaker 1: things geopolitics, we welcome our friend Dr Sam Natapoff. He 282 00:15:36,960 --> 00:15:39,880 Speaker 1: as president of Empire Global Ventures. He joins us here 283 00:15:39,880 --> 00:15:43,080 Speaker 1: in our Bloomberg Interactive Brokers studio. Sam, thanks for joining 284 00:15:43,120 --> 00:15:45,680 Speaker 1: us once again. Let's start with China. We'll get the 285 00:15:45,720 --> 00:15:49,280 Speaker 1: Brexit later, but with China it appears like we are 286 00:15:49,400 --> 00:15:51,720 Speaker 1: moving towards a deal. Do you think anything is going 287 00:15:51,760 --> 00:15:55,880 Speaker 1: to get done? And when, um, some things are getting done, 288 00:15:55,960 --> 00:15:58,880 Speaker 1: these are generally at the tactical level. So last Friday, 289 00:15:58,960 --> 00:16:01,480 Speaker 1: JP Morgan, for the first time in ten years, was 290 00:16:01,520 --> 00:16:04,840 Speaker 1: given permission to own a majority stake in their own 291 00:16:04,920 --> 00:16:08,840 Speaker 1: financial concern inside China. It was both Nomura Securities and 292 00:16:08,920 --> 00:16:11,840 Speaker 1: JP Morgan, and that hadn't happened for a decade. So 293 00:16:12,240 --> 00:16:15,240 Speaker 1: things are moving at the tactical level because the Chinese 294 00:16:15,240 --> 00:16:18,360 Speaker 1: government wishes to show that they are being flexible with 295 00:16:18,440 --> 00:16:21,600 Speaker 1: the pressure that the U. S Government is bringing on it. Unfortunately, 296 00:16:21,680 --> 00:16:25,960 Speaker 1: at the strategic level, the important issues of intellectual property protection, UH, 297 00:16:26,040 --> 00:16:29,840 Speaker 1: some issues of majority ownership and tech transfer, those are 298 00:16:29,920 --> 00:16:34,600 Speaker 1: intractable because there's domestic political pressures on both sides. Um Um. 299 00:16:34,680 --> 00:16:37,120 Speaker 1: The president of China can't look like he's caving into 300 00:16:37,120 --> 00:16:40,840 Speaker 1: the Americans, and President Trump, as always, is looking for 301 00:16:40,920 --> 00:16:44,880 Speaker 1: a clear, definitive public win. So if you could give 302 00:16:44,920 --> 00:16:47,120 Speaker 1: the odds here, what do you think the chances are 303 00:16:47,200 --> 00:16:49,840 Speaker 1: of a deal between the US and China within the 304 00:16:49,880 --> 00:16:55,640 Speaker 1: next two months? That's that's that's not what the market 305 00:16:55,680 --> 00:16:58,720 Speaker 1: is predicting. That is out of consensus. The reason I 306 00:16:58,760 --> 00:17:01,160 Speaker 1: say that is that there will be trivial things that 307 00:17:01,200 --> 00:17:03,920 Speaker 1: will be going across and the president of China will 308 00:17:03,920 --> 00:17:06,000 Speaker 1: sign a deal that says will buy a hundred and 309 00:17:06,000 --> 00:17:09,639 Speaker 1: fifty billion dollars more of US goods, particularly soybeans and 310 00:17:09,760 --> 00:17:12,359 Speaker 1: US agricultural goods to make it look good on the 311 00:17:12,359 --> 00:17:14,600 Speaker 1: front pages of the Wall Street Journal. But the things 312 00:17:14,640 --> 00:17:17,760 Speaker 1: that matter I can't compromise on because I'm in a 313 00:17:17,840 --> 00:17:22,040 Speaker 1: sensitive position politically. That's why they remember March first was 314 00:17:22,080 --> 00:17:24,320 Speaker 1: when they when Donald Trump was supposed to raise tariffs 315 00:17:24,359 --> 00:17:26,800 Speaker 1: again from ten to twenty five. He kicked the can 316 00:17:26,840 --> 00:17:28,960 Speaker 1: down the road a couple of months, and they're gonna 317 00:17:29,000 --> 00:17:31,840 Speaker 1: they're desperately negotiating to try and make it look good enough, 318 00:17:32,040 --> 00:17:34,040 Speaker 1: but they won't get there on the big things. The 319 00:17:34,119 --> 00:17:38,040 Speaker 1: little things will be fine. It's very specific. That is 320 00:17:38,359 --> 00:17:40,560 Speaker 1: he's been thinking about that that question first. Love it 321 00:17:40,800 --> 00:17:43,960 Speaker 1: so again. Just remind us, um Sam kind of what 322 00:17:44,000 --> 00:17:48,840 Speaker 1: are really the constraints in China to agreeing to more 323 00:17:48,960 --> 00:17:54,320 Speaker 1: substantive issues. Uh, there's a great sense of a national 324 00:17:54,359 --> 00:17:57,399 Speaker 1: pride inside China. And at the rise of China as 325 00:17:57,400 --> 00:18:01,720 Speaker 1: an economic and political and geopolitical power. The obvious counterpoint 326 00:18:01,760 --> 00:18:04,600 Speaker 1: to the rise of Chinese influences US influence, and this 327 00:18:04,680 --> 00:18:10,080 Speaker 1: contest which is in both trade, economics, science, military culture. 328 00:18:10,760 --> 00:18:15,679 Speaker 1: These are areas of enormous sensitivity inside China, and Jijinping 329 00:18:15,840 --> 00:18:19,439 Speaker 1: cannot be shown to be taking a back a step 330 00:18:19,440 --> 00:18:23,399 Speaker 1: back against pressure from the Americans, with whom he's had 331 00:18:23,440 --> 00:18:28,879 Speaker 1: a complicated relationship. Furthermore, domestically, Uh Jijinping is under enormous 332 00:18:28,880 --> 00:18:32,920 Speaker 1: pressure because the Chinese economy is slowing and and internal 333 00:18:32,960 --> 00:18:36,760 Speaker 1: and domestic views of him and his government are beginning 334 00:18:36,800 --> 00:18:40,320 Speaker 1: to sway because people aren't getting wealthier, jobs aren't being 335 00:18:40,320 --> 00:18:44,520 Speaker 1: created at the same level. And at the People's Congress 336 00:18:44,560 --> 00:18:47,240 Speaker 1: two years ago he was able to pass a constitutional 337 00:18:47,280 --> 00:18:50,320 Speaker 1: resolution saying he could have another term, but that that 338 00:18:50,560 --> 00:18:52,840 Speaker 1: someone could have more than two terms in a row. 339 00:18:52,840 --> 00:18:55,960 Speaker 1: It wasn't specifically him. The moment he says I would 340 00:18:56,040 --> 00:19:00,680 Speaker 1: like another term, his political opponents in China, and there 341 00:19:00,680 --> 00:19:03,920 Speaker 1: are those powerful political opponents will turn and say, well, 342 00:19:04,000 --> 00:19:06,640 Speaker 1: let's look at your record, and it hasn't been terribly 343 00:19:06,760 --> 00:19:11,040 Speaker 1: distinguished to date, so let's shift let's move from China 344 00:19:11,240 --> 00:19:14,560 Speaker 1: to the United Kingdom where there is another vote on Brexit, 345 00:19:14,680 --> 00:19:17,359 Speaker 1: because it seems like every day there is another vote 346 00:19:17,680 --> 00:19:21,600 Speaker 1: on Brexit. And what I'm struggling to understand is that 347 00:19:21,680 --> 00:19:25,560 Speaker 1: there is a hard deadline of April twelve. It doesn't 348 00:19:25,720 --> 00:19:29,040 Speaker 1: feel like Parliament is all that much closer to some 349 00:19:29,119 --> 00:19:32,440 Speaker 1: sort of resolution here. Well, the thing to remember is 350 00:19:32,480 --> 00:19:35,480 Speaker 1: what Mark Twain said about today, which is today is 351 00:19:35,520 --> 00:19:37,720 Speaker 1: the day we remember what we are the other three 352 00:19:37,760 --> 00:19:40,840 Speaker 1: hundred and sixty four days of the year, and this 353 00:19:40,920 --> 00:19:44,159 Speaker 1: is the moment when Parliament is walking in again, and 354 00:19:44,240 --> 00:19:47,920 Speaker 1: Parliament has taken away control of the Brexit process from 355 00:19:47,920 --> 00:19:51,080 Speaker 1: the executive branch, from Prime Minister Theresa May, and now 356 00:19:51,240 --> 00:19:53,880 Speaker 1: they are desperately looking for some kind of a solution. 357 00:19:54,080 --> 00:19:58,000 Speaker 1: There are three outcomes in general order of likelihood. It's 358 00:19:58,040 --> 00:20:01,960 Speaker 1: a permanent customs union with the European Union. It's after 359 00:20:02,040 --> 00:20:06,240 Speaker 1: that a second referendum, and third it's a no deal brexit. Generally, 360 00:20:06,280 --> 00:20:09,120 Speaker 1: people want to avoid a no deal Brexit, except for 361 00:20:09,160 --> 00:20:12,120 Speaker 1: a hundred and seventy Conservative MPs who signed a letter 362 00:20:12,200 --> 00:20:14,760 Speaker 1: to that effect that they wanted it last week. But 363 00:20:15,119 --> 00:20:19,400 Speaker 1: thank goodness, it's not up to them, we'll probably Parliament 364 00:20:19,440 --> 00:20:22,359 Speaker 1: now understands that in eleven days Britain is looking at 365 00:20:22,359 --> 00:20:26,600 Speaker 1: an economic catastrophe and they can't um. The Government of 366 00:20:26,600 --> 00:20:29,480 Speaker 1: Britain and Goldman Sacks have done similar analyses saying this 367 00:20:29,560 --> 00:20:33,480 Speaker 1: has cost Britain a billion dollars a week since June. 368 00:20:33,760 --> 00:20:36,159 Speaker 1: It's cost about two point four percent of their GDP 369 00:20:36,680 --> 00:20:38,680 Speaker 1: since the referendum to say they want to leave. They 370 00:20:38,680 --> 00:20:41,280 Speaker 1: need to fix their economy. This is a real problem 371 00:20:41,480 --> 00:20:44,520 Speaker 1: and today they're going to be more indicative votes. But 372 00:20:44,640 --> 00:20:47,000 Speaker 1: they have to come to a solution. Either it's a 373 00:20:47,119 --> 00:20:50,119 Speaker 1: customs unions plus or minus, or it's a referendum, and 374 00:20:50,119 --> 00:20:52,679 Speaker 1: with the referendum comes a general election. I like the 375 00:20:52,680 --> 00:20:54,840 Speaker 1: referendum and choice myself. I've been calling for that since 376 00:20:54,920 --> 00:20:56,640 Speaker 1: day one. Let's let's just do it. Do over here. 377 00:20:57,160 --> 00:21:03,159 Speaker 1: So what are the chances of cost we referendum? What 378 00:21:03,240 --> 00:21:05,560 Speaker 1: are the chances of this referendum? And then is there 379 00:21:05,600 --> 00:21:07,679 Speaker 1: what's the polling saying that that the polling was accurate 380 00:21:07,720 --> 00:21:09,680 Speaker 1: the first time? Well, what is the polling saying about 381 00:21:09,720 --> 00:21:13,440 Speaker 1: an outcome up of a second referendum? Uh, It's enormously 382 00:21:13,440 --> 00:21:16,000 Speaker 1: difficult to know because polling is all over the place, 383 00:21:16,080 --> 00:21:18,840 Speaker 1: and it's still very difficult to tell because Britain is 384 00:21:18,920 --> 00:21:22,359 Speaker 1: very split on this topic. And the terrible irony is 385 00:21:22,400 --> 00:21:25,760 Speaker 1: that this is an entirely politically created crisis. It was 386 00:21:25,800 --> 00:21:29,880 Speaker 1: created by the Conservative Party and Benjamin Disraeli, the Prime 387 00:21:29,920 --> 00:21:32,879 Speaker 1: Minister of Great Britain in eighteen seventy four, noted novelists 388 00:21:32,880 --> 00:21:34,840 Speaker 1: said in one of his novels, there was a great 389 00:21:34,880 --> 00:21:39,080 Speaker 1: deal of shouting about Conservative principles, but the awkward question 390 00:21:39,160 --> 00:21:43,320 Speaker 1: did arise, what will you conserve? And Teresa May is 391 00:21:43,400 --> 00:21:46,680 Speaker 1: faced with the problem. She can either conserve Britain as 392 00:21:46,720 --> 00:21:49,879 Speaker 1: a functioning modern economy as part of the EU, or 393 00:21:49,920 --> 00:21:53,359 Speaker 1: she can conserve the Conservative Party. She will have to 394 00:21:53,440 --> 00:21:55,640 Speaker 1: choose between the two of them. And in the next 395 00:21:55,680 --> 00:22:00,359 Speaker 1: week Dr Sam natapaf in ten seconds, what is the 396 00:22:00,440 --> 00:22:04,200 Speaker 1: chance of a herd Brexit right now versus where we 397 00:22:04,200 --> 00:22:12,679 Speaker 1: were two months ago? Right? What about two months ago? Alright, 398 00:22:12,720 --> 00:22:16,240 Speaker 1: so we're moving closer to some sort of resolution. Maybe 399 00:22:16,240 --> 00:22:20,600 Speaker 1: perhaps Well Tom Tom Keane is over in London, he's 400 00:22:20,640 --> 00:22:23,080 Speaker 1: on the Westminster Green. Maybe he can help get some 401 00:22:23,080 --> 00:22:26,720 Speaker 1: some deal brokered. Okay, well we'll hope, Well, we'll hang 402 00:22:26,720 --> 00:22:29,960 Speaker 1: our hats for Tom Keane. Dr. Sam Nada, President of 403 00:22:30,000 --> 00:22:32,600 Speaker 1: Empire Global Ventures in New York, Joining us here in 404 00:22:32,600 --> 00:22:48,800 Speaker 1: our Bloomberg Interactive Broker Studios, Paul, I cannot wait for 405 00:22:48,840 --> 00:22:53,520 Speaker 1: this conversation. Do you have an Alexa? Uh? We have something. 406 00:22:53,960 --> 00:22:58,000 Speaker 1: My son installed, something that he installed. There's a big question, 407 00:22:58,200 --> 00:23:02,280 Speaker 1: as I think eight billle in digital voice assistants are 408 00:23:02,320 --> 00:23:05,840 Speaker 1: predicted to be in use by three, which is how 409 00:23:05,880 --> 00:23:09,320 Speaker 1: are people using these devices? Joining us now, Colin Morris, 410 00:23:09,320 --> 00:23:13,280 Speaker 1: director of Product management for Adobe Analytics Mobile, based in 411 00:23:13,359 --> 00:23:17,560 Speaker 1: San Francisco. Colin, so, how do you determine what? How 412 00:23:17,600 --> 00:23:21,159 Speaker 1: are people using these devices? Um? So right now? A 413 00:23:21,200 --> 00:23:25,359 Speaker 1: lot of the devices are over mobile smartphones, um, smart speakers, 414 00:23:25,440 --> 00:23:27,560 Speaker 1: a little bit in the car, a little bit on tablets, 415 00:23:27,560 --> 00:23:33,960 Speaker 1: but in general they're fairly rudimentary home applications. So interesting, Colins, So, 416 00:23:34,280 --> 00:23:37,679 Speaker 1: just this market is it seems like it's just you know, 417 00:23:37,880 --> 00:23:41,119 Speaker 1: exploded over the last couple of years. You've got Amazon, Echo, 418 00:23:41,320 --> 00:23:44,040 Speaker 1: Google Home. Just give us a sense of how quickly 419 00:23:44,400 --> 00:23:47,480 Speaker 1: the growth and devices has been. Yeah, definitely. I mean 420 00:23:47,520 --> 00:23:49,880 Speaker 1: in our in our last survey where we had about 421 00:23:49,920 --> 00:23:53,000 Speaker 1: thousand US consumers, let us know, seventies seven percent of 422 00:23:53,040 --> 00:23:55,680 Speaker 1: people you know reported increasing their use of voice assistance 423 00:23:55,720 --> 00:23:58,840 Speaker 1: in the last year. That's up from the year before. 424 00:23:59,480 --> 00:24:01,639 Speaker 1: So not only is it is it exploding because the 425 00:24:02,320 --> 00:24:05,320 Speaker 1: devices are obviously selling a lot, but also the applications 426 00:24:05,320 --> 00:24:07,880 Speaker 1: are getting better, right, The AI behind it is getting better, 427 00:24:07,920 --> 00:24:10,600 Speaker 1: and it's allowing a lot of brands to get into 428 00:24:10,760 --> 00:24:13,359 Speaker 1: experiences with the consumer that they haven't been able to before, 429 00:24:13,880 --> 00:24:16,480 Speaker 1: especially because voice assistants are a medium that sits on 430 00:24:16,520 --> 00:24:18,879 Speaker 1: top of a lot of different devices. So a media 431 00:24:18,880 --> 00:24:21,800 Speaker 1: and entertainment company can now provide an experience in the home, 432 00:24:22,040 --> 00:24:25,359 Speaker 1: or an automotive company can provide a continuous experience in 433 00:24:25,400 --> 00:24:27,480 Speaker 1: the home as well or on other services. But when 434 00:24:27,480 --> 00:24:29,840 Speaker 1: you talk about a continuous experience, you're talking about playing 435 00:24:29,920 --> 00:24:34,560 Speaker 1: music beyond music hopefully, but uh, imagine, for instance, if 436 00:24:34,560 --> 00:24:37,600 Speaker 1: you're using a voice assisted remote control speaker for your 437 00:24:37,640 --> 00:24:40,359 Speaker 1: cable company, right, and that cable company realizes that based 438 00:24:40,359 --> 00:24:44,480 Speaker 1: on your preferences, they can offer other reminders for shows 439 00:24:44,640 --> 00:24:48,480 Speaker 1: or promotions of other personalized content. So um, that allows 440 00:24:48,520 --> 00:24:52,080 Speaker 1: them to extend their brand beyond the confines of the 441 00:24:52,080 --> 00:24:54,800 Speaker 1: device that they're in and also provides a better customer experience, 442 00:24:54,800 --> 00:24:57,200 Speaker 1: So it can be music, it can be checking your stocks, 443 00:24:57,320 --> 00:24:59,680 Speaker 1: it can be you know, news flashes. But UM, the 444 00:25:00,000 --> 00:25:03,240 Speaker 1: ptential for voice assistance to provide a more immersive experience 445 00:25:03,440 --> 00:25:05,800 Speaker 1: UM for a lot of brands is pretty exciting. So Colin, 446 00:25:05,880 --> 00:25:09,440 Speaker 1: how quickly are these devices and the apps that are 447 00:25:09,560 --> 00:25:12,800 Speaker 1: on these devices, how quickly are they getting smarter and 448 00:25:12,880 --> 00:25:17,320 Speaker 1: doing more and more complex things for consumers? Yeah? Great question. UM. 449 00:25:17,359 --> 00:25:20,600 Speaker 1: I think now that the error rates UM have lowered 450 00:25:20,880 --> 00:25:24,920 Speaker 1: a year over year between you know, inflections and syntax, UM, 451 00:25:24,960 --> 00:25:26,359 Speaker 1: all the things that have kind of shown a poor 452 00:25:26,520 --> 00:25:29,320 Speaker 1: experience over the last few years. The AI and the 453 00:25:29,359 --> 00:25:32,679 Speaker 1: machine learning behind it is really uh, come leaps and 454 00:25:32,720 --> 00:25:35,040 Speaker 1: bounds UM. You know, think about chat boss as well. 455 00:25:35,040 --> 00:25:38,000 Speaker 1: It's not just voice assistance overall. UM. But again, because 456 00:25:38,040 --> 00:25:39,840 Speaker 1: there's so much of a test bed now because so 457 00:25:39,880 --> 00:25:42,679 Speaker 1: many consumers around the world are using it, UM, that 458 00:25:42,800 --> 00:25:45,960 Speaker 1: just helps train the models and helps better data provide 459 00:25:46,000 --> 00:25:48,439 Speaker 1: better experiences. I have a friend who won't get a 460 00:25:48,480 --> 00:25:51,480 Speaker 1: digital assistant because she doesn't want her children thinking that 461 00:25:51,560 --> 00:25:54,280 Speaker 1: they can bark commands at something and have it respond. 462 00:25:54,640 --> 00:25:57,080 Speaker 1: They think that it's really bad training. And sure enough, 463 00:25:57,119 --> 00:25:59,359 Speaker 1: when I talked to my Alexa, I do find myself 464 00:25:59,440 --> 00:26:02,879 Speaker 1: saying and Alexa volume down and it is very nice. 465 00:26:03,320 --> 00:26:06,720 Speaker 1: Is anyone focused on that and sort of promoting better 466 00:26:07,080 --> 00:26:10,359 Speaker 1: sort of verbal skills? Yeah, I mean what do they 467 00:26:10,359 --> 00:26:14,639 Speaker 1: start responding right? Um, that's not very nice. That's not 468 00:26:14,680 --> 00:26:17,560 Speaker 1: a very good inflection. Yeah. I mean one of the 469 00:26:17,600 --> 00:26:21,280 Speaker 1: interesting areas is gaming, right, because gamers are gaming app 470 00:26:21,320 --> 00:26:24,080 Speaker 1: developers are always pretty out on the forefront in terms 471 00:26:24,119 --> 00:26:26,960 Speaker 1: of what experiences they provide. Um, like the Jeopardy app 472 00:26:27,000 --> 00:26:30,560 Speaker 1: for instances by Sony is the number one Alexa gaming 473 00:26:31,000 --> 00:26:33,480 Speaker 1: app out their skill I should say, Um, so there's 474 00:26:33,480 --> 00:26:35,760 Speaker 1: a lot of AI that's coming back in terms of 475 00:26:35,800 --> 00:26:38,080 Speaker 1: responses and having more of a conversation. It's not going 476 00:26:38,119 --> 00:26:40,119 Speaker 1: to be your therapist tomorrow, but it will be more 477 00:26:40,160 --> 00:26:43,560 Speaker 1: immersive overall, and it might be who knows, right, we 478 00:26:43,600 --> 00:26:47,520 Speaker 1: see longer session times now and longer interactions over over 479 00:26:47,560 --> 00:26:50,600 Speaker 1: the medium in general. And it depends by obviously which 480 00:26:50,600 --> 00:26:53,840 Speaker 1: device it's on right now, home speaker is there, it's stationary, 481 00:26:53,920 --> 00:26:55,280 Speaker 1: you're in the home, so you're going to have a 482 00:26:55,280 --> 00:26:57,760 Speaker 1: different pattern of use than say, talking to your car, 483 00:26:58,080 --> 00:27:00,479 Speaker 1: whereby you might be a captive audience, but trips might 484 00:27:00,480 --> 00:27:03,000 Speaker 1: be shorter or longer in some cases. Yeah, so, Colin, 485 00:27:03,040 --> 00:27:05,840 Speaker 1: one of the pushbacks I know from some consumer advocates 486 00:27:05,920 --> 00:27:09,159 Speaker 1: is privacy. What is your survey telling you about, you know, 487 00:27:09,240 --> 00:27:12,400 Speaker 1: consumers and the concern about privacy. Well, the concern about 488 00:27:12,400 --> 00:27:14,440 Speaker 1: privacy is real. I think. Within the last few years, 489 00:27:14,480 --> 00:27:18,240 Speaker 1: obviously there's been a number of problematic issues um in 490 00:27:18,320 --> 00:27:21,720 Speaker 1: the tech industry in general. We had Adobe really pushed 491 00:27:21,840 --> 00:27:26,320 Speaker 1: the experiential privacy promotion to a lot of our customers 492 00:27:26,359 --> 00:27:29,960 Speaker 1: in general, meaning that you know, we we encourage brands 493 00:27:30,040 --> 00:27:33,240 Speaker 1: to let the consumers know up front exactly what they're 494 00:27:33,280 --> 00:27:35,960 Speaker 1: trying to collect and what the benefit is for the consumer, 495 00:27:36,000 --> 00:27:38,960 Speaker 1: because when it's transparent and it's open, it's much easier 496 00:27:39,000 --> 00:27:41,040 Speaker 1: for a consumer to say yes or no. If a 497 00:27:41,040 --> 00:27:42,720 Speaker 1: lot of data is being passed in the background and 498 00:27:42,760 --> 00:27:44,800 Speaker 1: the consumer doesn't know about it and then something happens, 499 00:27:44,800 --> 00:27:47,760 Speaker 1: obviously that's problematic and it erodes trust in the brand. 500 00:27:49,359 --> 00:27:51,639 Speaker 1: Colin Mars, thank you very much. Colin is a director 501 00:27:51,640 --> 00:27:54,719 Speaker 1: of product management for Adobe Analytics Mobile, joining us from 502 00:27:54,760 --> 00:27:58,400 Speaker 1: San Francisco on what is just a really interesting technology 503 00:27:58,440 --> 00:28:01,200 Speaker 1: here that just seems to have haven't really exploded really 504 00:28:01,200 --> 00:28:03,840 Speaker 1: over the last couple of years. Thanks for listening to 505 00:28:03,880 --> 00:28:06,520 Speaker 1: the Bloomberg pen L podcast. You can subscribe and listen 506 00:28:06,600 --> 00:28:09,960 Speaker 1: to interviews at Apple Podcasts or whatever podcast platform you prefer. 507 00:28:10,160 --> 00:28:12,800 Speaker 1: I'm Paul Sweeney. I'm on Twitter at pt Sweeney. I'm 508 00:28:12,840 --> 00:28:15,520 Speaker 1: Lisa Abram Woyds. I'm on Twitter at Lisa Abram woits 509 00:28:15,600 --> 00:28:18,439 Speaker 1: one Before the podcast, you can always catch us worldwide. 510 00:28:18,440 --> 00:28:19,439 Speaker 1: I'm Bloomberg Radio