WEBVTT - Trump’s UN Address Targets Regime Change In Iran: Cohen

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<v Speaker 1>Welcome to the Bloomberg P and L Podcast. I'm Pim

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<v Speaker 1>Let's bring Ariel Cohen back in here, senior fellow at

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<v Speaker 1>the Atlantic Council. What stuck out to you? First of all,

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<v Speaker 1>this was a very strong message against what I would

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<v Speaker 1>call the globalists. Uh, this is the world of the

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<v Speaker 1>mosaic of independent nations. I think Steve Bannon would have

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<v Speaker 1>been proud of this speech. Um. The President is strengthening

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<v Speaker 1>the sovereignty against global government. He says, the United States

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<v Speaker 1>does not recognize the International Criminal Court, we will not

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<v Speaker 1>join the International the UN Compact, and refugees, et cetera.

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<v Speaker 1>He is not against cooperating with the United Nations, He

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<v Speaker 1>just wants America to do it on our own terms.

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<v Speaker 1>Arial Other topics include OPEC and oil prices, as well

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<v Speaker 1>as China and trade negotiations. I wonder if you could

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<v Speaker 1>comment on the relationship that the President is setting out

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<v Speaker 1>between the United States and OPEC as a organization that

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<v Speaker 1>he describes as controlling oil prices. Absolutely. I had the

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<v Speaker 1>privilege to testify before the US Congress on the legislation

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<v Speaker 1>called NOPECK no opec UH and this is something that

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<v Speaker 1>is encouraged by the White House. Apparently the President you

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<v Speaker 1>OPEC for what it is, the cartel that by opening

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<v Speaker 1>or closing this spigot can regulate the prices, and OPEC

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<v Speaker 1>is now expanding. Russia and Saudi Arabia are working closely together,

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<v Speaker 1>and this was interesting because he mentioned um the Russian

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<v Speaker 1>pipeline that goes into Germany, the natural gas pipeline, but

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<v Speaker 1>he did not mention Russia. Contrasted what was going on

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<v Speaker 1>in Germany and their energy policy with the energy policy

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<v Speaker 1>that exists in Poland. He spoke about how OPEC is

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<v Speaker 1>ripping off the rest of the world. Well, let's distinguish

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<v Speaker 1>between gas and oil. Russia is corporating with ope in

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<v Speaker 1>Saudi Arabia on oil. And it was interesting that he

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<v Speaker 1>mentioned Saudi Arabia amongst very few US allies. You mentioned India,

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<v Speaker 1>you mentioned Israel. No surprises here. He mentioned Poland which

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<v Speaker 1>is an important in the election with the ethnic and

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<v Speaker 1>Polish American vote. But he did mention Saudi Arabia as

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<v Speaker 1>an ally at the same time nashing OPEC and Saudia,

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<v Speaker 1>of course is the founding member and the market maker

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<v Speaker 1>in Ope. That there was a dichotomy and a paradox

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<v Speaker 1>right there. Um I think he will push Opic not

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<v Speaker 1>to um diminish oil production. He wants oil prices lower

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<v Speaker 1>than they are now. So Ariel, I want to go

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<v Speaker 1>back to something that you said initially, that that that

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<v Speaker 1>Steven would be proud of this speech and that it

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<v Speaker 1>was rejection of globalism. And I'm just wondering if you

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<v Speaker 1>can sort of put historic perspective on u N Assembly

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<v Speaker 1>addresses by presidents. How instructive have they been about policies

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<v Speaker 1>and sort of how seminal are they in signaling sort

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<v Speaker 1>of complete see change in in in policies versus just

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<v Speaker 1>sort of pomp and circumstance. I think that in this speech,

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<v Speaker 1>in particular, we see the strongest language possible about Iran.

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<v Speaker 1>The president is hoping that on the fourth of November,

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<v Speaker 1>when the sanctions on Iran kick in the second round

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<v Speaker 1>of sanctions uh and Iran is driven to lose its

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<v Speaker 1>oil exporting opportunities. UM, we will move towards UH. Possibly.

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<v Speaker 1>I think they're not saying that, but they're thinking about it,

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<v Speaker 1>regime changing Iran because that regime will have UM will

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<v Speaker 1>run out of money, and people are already sending a

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<v Speaker 1>very strong signal to Tehran that they do not want

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<v Speaker 1>to continue like that. So that's the main message UM.

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<v Speaker 1>In terms of other things, the terror forwards China, I

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<v Speaker 1>think this was very important again in the context of

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<v Speaker 1>the elections, to the President's UM core vater base. He's saying,

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<v Speaker 1>you lost jobs, Steel industry lost one whatever jobs US

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<v Speaker 1>lost sixty seconds. So this is a core UM voter

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<v Speaker 1>based message to the American voters. Thank you so much

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<v Speaker 1>for being with us, Aero Cohen. We really appreciate your insights,

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<v Speaker 1>Aero Cohen. So you're fellow at the Atlantic Council joining us.

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<v Speaker 1>Following the speech of President Trump delivered at the UN

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<v Speaker 1>General Council, we're broadcasting live from the Bloomberg Interactor Broker's Studios.

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<v Speaker 1>I'm Pim Fox along with my co host Lisa Abramowitz.

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<v Speaker 1>Our topic now is emerging markets. Our guest Phil Taures,

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<v Speaker 1>Global co head of emerging markets at Agon Asset Management.

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<v Speaker 1>He joins us here in our eleven three oh studios.

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<v Speaker 1>Phil Tours, thank you very much for coming in. Argentina's

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<v Speaker 1>paso taking a tumble this coming after the president of

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<v Speaker 1>the country's central Bank, Luis ca Puto, resigned. They have

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<v Speaker 1>tapped a economist for a replacement. Why would you still

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<v Speaker 1>be bullish if indeed you are on Argentina. Great to

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<v Speaker 1>be here with you. UM, it's obviously breaking news. We're

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<v Speaker 1>trying to figure out exactly what the implications are at

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<v Speaker 1>the moment, but markets seem to be taking in stride

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<v Speaker 1>at least on the external credit UH and the and

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<v Speaker 1>the currency. Again, still trying to figure out exactly implications

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<v Speaker 1>and UH and the policy changes that they might come back.

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<v Speaker 1>So when you're investing Phil in this market Argentina, Brazil, UH,

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<v Speaker 1>how do you factor in the liquidity issues? Because this morning,

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<v Speaker 1>right after the announcement came out about the Argentinian Central bankhead,

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<v Speaker 1>there was zero trading in the local Argentinian peso market.

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<v Speaker 1>That's concerning It's an a liquid market in general, so

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<v Speaker 1>this is something we think is generally factored into the prices.

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<v Speaker 1>So as investors that take medium to long term, we

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<v Speaker 1>can absorb some of the liquidity in some of these markets.

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<v Speaker 1>But we try to look through a lot of the

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<v Speaker 1>the ups and downs, and this was this was a

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<v Speaker 1>steep drop that that the markets reacted. Just to go

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<v Speaker 1>back to what you talked about with Argentina, are you

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<v Speaker 1>really looking for the International Monetary Fund to come in

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<v Speaker 1>with some extra money and then that will help everybody's

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<v Speaker 1>investment thesis. No, I think what we're really looking for

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<v Speaker 1>is policy change and in a continuation of good ideas,

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<v Speaker 1>and if they can deliver on primarily getting to a

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<v Speaker 1>balanced budget in the next year, we think that goes

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<v Speaker 1>a long way to securing the investment thesis of most

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<v Speaker 1>people that like this market. So I want to talk

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<v Speaker 1>about what you're buying currently. What was the most recent

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<v Speaker 1>sort of position that you took with conviction in emerging markets?

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<v Speaker 1>So I'll just rattle off a couple of our of

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<v Speaker 1>our favorite trades UM and let's say the last month. UM,

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<v Speaker 1>we've liked Senegal, We've liked Ivory Coast, Turkey, Argentina, have

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<v Speaker 1>been some some favorites. Those those A've been buying Turkey

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<v Speaker 1>over the summer. That was that was one of our

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<v Speaker 1>our more interesting favorite traits. Yeah. Interesting. I just have

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<v Speaker 1>to wonder, as a company that over sees more than

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<v Speaker 1>a hundred billion dollars of assets and you have a

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<v Speaker 1>lot of money to deploy, how much can you really

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<v Speaker 1>go into a place like Senegal or some of the

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<v Speaker 1>countries with less dead or less you know, sort of

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<v Speaker 1>smaller markets, considering that you'll be a dominant player potentially. Well, first,

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<v Speaker 1>a hundred billion dollars is not our total allocation to

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<v Speaker 1>emerging markets, so we're not trying to deploy all of that.

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<v Speaker 1>But some of these markets have some reasonable liquidity we

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<v Speaker 1>can put We can put money to work fairly easily.

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<v Speaker 1>Just looking at, for example, one of the Senegal government bonds,

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<v Speaker 1>they are down about six and a quarter percent since

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<v Speaker 1>the beginning of the year. Are you buying these things

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<v Speaker 1>for yield or for capital appreciation? Capital appreciation, although yield

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<v Speaker 1>is going to be a big part of it. UM.

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<v Speaker 1>So we got involved in Senegal sometime late summer after

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<v Speaker 1>a lot of that, after a lot of that decline,

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<v Speaker 1>they had issued some new debt. The market did received

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<v Speaker 1>that terribly well. UM as a mix of adding new

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<v Speaker 1>debt stock and it was just an unfavorable time for

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<v Speaker 1>markets in general. Primarily, what we thought was, it's a

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<v Speaker 1>value situation, good economy, stable, kind of a model democracy,

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<v Speaker 1>and it got cheap. So I have to wonder. It

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<v Speaker 1>sounds like you're taking risk and you're somewhat optimistic about

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<v Speaker 1>emerging markets generally. How does the FED play into this,

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<v Speaker 1>especially as they prepared to raise rates possibly tomorrow. Yeah,

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<v Speaker 1>the Fed historically at least our our view on how

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<v Speaker 1>the emerging markets have reacted to FED hiking cycle. If

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<v Speaker 1>it's matched with growth, then the emerging markets can typically

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<v Speaker 1>do pretty well. If not sideways, which with high yield

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<v Speaker 1>is just a fine market. UM. To the extent that

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<v Speaker 1>the FED is hiking um too to cut growth right,

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<v Speaker 1>to put it into a recession or environment because they're

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<v Speaker 1>concerned but inflation, then that's bad. Um. We think we're

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<v Speaker 1>in the former ironment and UH and maintain a reasonably

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<v Speaker 1>optimistic feed on most of these markets. Really interesting, Phil Torres,

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<v Speaker 1>thank you so much for being with us. Philterress, Global

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<v Speaker 1>cohead of Emerging Markets and Director of Emerging Markets Research

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<v Speaker 1>at a GUN USA Asset Management with a hundred billion

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<v Speaker 1>dollars under management three hundred billion dollars under management worldwide

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<v Speaker 1>at the Global firm. We are broadcasting live from the

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<v Speaker 1>Bloomberg Interactor Broker's Studios. I'm Pim Fox along with Lisa Abramowitz.

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<v Speaker 1>Earlier today, President Donald Trump, speaking before the UN General Assembly,

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<v Speaker 1>said that China is taking advantage of the US on trade.

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<v Speaker 1>Here to tell us more about how companies are responding

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<v Speaker 1>to the situation is Richard Chambers. He is the president

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<v Speaker 1>and the chief executive of the Institute of Internal Auditors.

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<v Speaker 1>They're based in Altamont Springs, Florida. He joins us here

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<v Speaker 1>in our eleven three oh studios. Richard Chain, thank you

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<v Speaker 1>very much for being here. You've written that US corporations

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<v Speaker 1>may have as a false sense of security regarding the

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<v Speaker 1>effects of trade uh confrontation between the United States and China.

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<v Speaker 1>Explain why you believe that to be so well, you know,

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<v Speaker 1>as we've been first of all, thank you for having

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<v Speaker 1>me uh today. It's it's great to be here. As

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<v Speaker 1>we so often comment, when these risks start to emerge, UH,

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<v Speaker 1>there's a there's sort of an initial sense of of

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<v Speaker 1>denial that is, oh, this can't possibly get that bad,

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<v Speaker 1>and it's not going to create problems for us. Unfortunately,

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<v Speaker 1>sometimes that ends up happening. So as we've been surveying

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<v Speaker 1>at the heads of internal audit and publicly trading companies

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<v Speaker 1>and and other organizations, we're sort of seeing some of

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<v Speaker 1>that initial sense of denial, like, oh, well, this is

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<v Speaker 1>not going to really have a significant impact on our company,

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<v Speaker 1>so we're not gonna worry too much about it. And

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<v Speaker 1>that's the problem a lot of times is that you

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<v Speaker 1>see the storm approaching, but you don't respond until the

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<v Speaker 1>winds are picking up. What gives you confidence that the

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<v Speaker 1>storm is picking up in a way that companies are

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<v Speaker 1>not recognizing, well, I think there have been plenty of

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<v Speaker 1>There's been plenty of articles and other publications in the

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<v Speaker 1>past week that have pointed out that, particularly in consumer

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<v Speaker 1>products and retail, the the impact of the tariffs on

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<v Speaker 1>all the products that are going to be imported are

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<v Speaker 1>going to UH have an impact in terms of the

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<v Speaker 1>cost of the products. UH will likely impact demand. As

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<v Speaker 1>refrigerators get more expensive or dishwashers get more expensive, that's

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<v Speaker 1>going to have an impact on the demand. So, particularly

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<v Speaker 1>in industries like retail and consumer products, there's certainly plenty

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<v Speaker 1>of evidence that this is going to have an impact

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<v Speaker 1>and you're not seeing that reflected by the CEOs, right, Yeah.

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<v Speaker 1>What we're seeing at this point is, uh, you know,

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<v Speaker 1>when we ask chief audit executives, heads of internal audit,

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<v Speaker 1>is this a significant risk for your company, we're still

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<v Speaker 1>giving an overwhelming response, No, we don't see this as

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<v Speaker 1>a significant risk at this point. Now, when when we

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<v Speaker 1>ask what what does your company think the risk of

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<v Speaker 1>the overall economy would be, almost sixty percent of them

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<v Speaker 1>responded to a survey last week that their companies think

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<v Speaker 1>there would be a significant risk of the overall economy.

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<v Speaker 1>But it seems to be one of those yeah, but

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<v Speaker 1>it's not gonna affect me kind of denials. I think,

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<v Speaker 1>do they understand that there's a contradiction and trying to

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<v Speaker 1>hold those two positions, or do you believe that, perhaps

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<v Speaker 1>for competitive reasons, they're just not willing to disclose to

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<v Speaker 1>you how worried or concerned or prepared they are. I

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<v Speaker 1>think it may be. I think it may be the former,

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<v Speaker 1>because we see this. I think one of the last

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<v Speaker 1>times I visited with you guys, we talked about the

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<v Speaker 1>me too movement and how slow companies were to recognize

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<v Speaker 1>the risk that that presents. I see a common thread

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<v Speaker 1>here in that when risks begin to emerge, there there's

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<v Speaker 1>sort of a reluctance to look at what is the

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<v Speaker 1>downstream impact of this risk. So if if in fact

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<v Speaker 1>the tariffs are implemented to the extent that it appears

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<v Speaker 1>they are going to be, what will come next? And

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<v Speaker 1>then what could happen after that? And oh, by the way,

0:14:10.320 --> 0:14:14.240
<v Speaker 1>how could that impact our company, our workforce, our investment um.

0:14:14.280 --> 0:14:17.760
<v Speaker 1>And that's what I think happens all too often, is

0:14:17.800 --> 0:14:20.160
<v Speaker 1>that when it comes to risk management, there's a slow

0:14:20.760 --> 0:14:24.560
<v Speaker 1>reluctance to accept that a risk may be very, very detrimental.

0:14:24.840 --> 0:14:27.520
<v Speaker 1>I want to shift gears a little bit. We were

0:14:27.560 --> 0:14:30.200
<v Speaker 1>talking yesterday with the Harvard professor who said that the

0:14:30.240 --> 0:14:33.880
<v Speaker 1>current market resembles something of a bubble in terms of

0:14:33.960 --> 0:14:39.000
<v Speaker 1>sentiment anyway, that is when accounting shenanigans are more likely

0:14:39.040 --> 0:14:42.960
<v Speaker 1>to happen when capital is flowing freely. To what degree

0:14:43.080 --> 0:14:46.320
<v Speaker 1>are you concerned that that is currently going on, where

0:14:46.360 --> 0:14:49.640
<v Speaker 1>perhaps when sort of the tide rolls back and credit

0:14:49.720 --> 0:14:53.360
<v Speaker 1>isn't as free flowing, we could see some serious problems. Well,

0:14:53.360 --> 0:14:57.360
<v Speaker 1>we've seen in the past when the economy started to

0:14:58.000 --> 0:15:01.440
<v Speaker 1>show signs of some sort of upheave. Uh, that there

0:15:01.640 --> 0:15:04.960
<v Speaker 1>is a lot of pressure and analyst expectations are put

0:15:05.000 --> 0:15:08.200
<v Speaker 1>out there. Companies have to meet those analyst expectations where

0:15:08.200 --> 0:15:10.560
<v Speaker 1>they get punished in the market. That's when we see

0:15:10.600 --> 0:15:15.680
<v Speaker 1>the risks start to rise of perhaps fraudulent financial reporting.

0:15:16.040 --> 0:15:19.160
<v Speaker 1>I think since the last major round of scandals where

0:15:19.240 --> 0:15:22.200
<v Speaker 1>fraudulent financial reporting was at the route back in the

0:15:22.240 --> 0:15:26.160
<v Speaker 1>early two thousand's, we have a lot more regulation and

0:15:26.200 --> 0:15:29.520
<v Speaker 1>control in place, but I still wouldn't say that are

0:15:29.520 --> 0:15:31.600
<v Speaker 1>still wouldn't put it out of the realm of possibility.

0:15:32.000 --> 0:15:35.040
<v Speaker 1>And so once again, when likelihood starts to go up,

0:15:35.080 --> 0:15:37.520
<v Speaker 1>that's one of the components of risk assessment. That's when

0:15:37.520 --> 0:15:39.880
<v Speaker 1>you need to start getting concerned. Are you at all

0:15:39.920 --> 0:15:43.600
<v Speaker 1>concerned about the tone that is reflected by the behavior

0:15:43.680 --> 0:15:46.120
<v Speaker 1>of people in Congress? And I'm talking about the House

0:15:46.120 --> 0:15:51.120
<v Speaker 1>of Representatives as well as senators and even those people

0:15:51.120 --> 0:15:54.000
<v Speaker 1>in the government and the way that they relate to

0:15:54.040 --> 0:15:57.880
<v Speaker 1>each other and using those as examples, you know, it's

0:15:58.160 --> 0:16:01.440
<v Speaker 1>it's interesting. I posted a blog last week about civility

0:16:01.480 --> 0:16:04.120
<v Speaker 1>in the boardroom. Uh, it seems to be the only place,

0:16:04.200 --> 0:16:07.280
<v Speaker 1>perhaps where there's still a lot of civility. Maybe too much,

0:16:07.320 --> 0:16:09.640
<v Speaker 1>and that board members don't challenge each other. But the

0:16:09.680 --> 0:16:11.920
<v Speaker 1>point I made is we're living in a society today

0:16:11.960 --> 0:16:16.600
<v Speaker 1>where civility seems to be held in much less high regard.

0:16:16.640 --> 0:16:20.080
<v Speaker 1>If if, if you can um and so I do think,

0:16:20.120 --> 0:16:22.320
<v Speaker 1>and I spent quite a bit of time in Washington

0:16:22.640 --> 0:16:25.280
<v Speaker 1>during my days as a federal employee. I do think

0:16:25.320 --> 0:16:29.840
<v Speaker 1>that the tone in Washington has definitely deteriorated in the

0:16:29.880 --> 0:16:32.040
<v Speaker 1>last few years, and and that comes from all sides.

0:16:32.080 --> 0:16:35.200
<v Speaker 1>I don't think that any one party or anyone group

0:16:35.280 --> 0:16:38.440
<v Speaker 1>is to blame. I think that's part of the challenge

0:16:38.480 --> 0:16:41.880
<v Speaker 1>that we face in society. Just real quick. When you

0:16:41.920 --> 0:16:45.240
<v Speaker 1>talk to auditors who are going around and checking out corporations,

0:16:45.280 --> 0:16:47.800
<v Speaker 1>is there anything that you've been hearing from them that

0:16:47.840 --> 0:16:52.760
<v Speaker 1>we haven't discussed that surprised you ums in terms of

0:16:52.800 --> 0:16:55.280
<v Speaker 1>like reviewing companies and sort of their position and whether

0:16:55.320 --> 0:16:57.680
<v Speaker 1>they're stronger than they seem or weaker than they seem

0:16:57.840 --> 0:17:00.960
<v Speaker 1>or No. I don't think that I've I've I've gotten

0:17:01.000 --> 0:17:05.000
<v Speaker 1>any indication from the internal auditors that there's a lot

0:17:05.000 --> 0:17:08.280
<v Speaker 1>of miss there. I do think that the internal auditors

0:17:08.320 --> 0:17:11.359
<v Speaker 1>sometimes are uh, they get caught up in the culture

0:17:11.359 --> 0:17:13.960
<v Speaker 1>of their organization maybe and they're a little slower to

0:17:14.000 --> 0:17:16.520
<v Speaker 1>recognize emerging risk. And it's one of the things that

0:17:16.520 --> 0:17:18.800
<v Speaker 1>we're always coaching them is that they have to be

0:17:18.880 --> 0:17:22.560
<v Speaker 1>able to detect the thunder before the storm, because if

0:17:22.600 --> 0:17:26.480
<v Speaker 1>they don't, then once once the real risks emerge, it's

0:17:26.480 --> 0:17:29.040
<v Speaker 1>going to be well, where were the internal auditors? And

0:17:29.080 --> 0:17:30.960
<v Speaker 1>it's very, very important that they get on in front

0:17:30.960 --> 0:17:33.520
<v Speaker 1>of these risks. Richard Chambers, thank you so much for

0:17:33.520 --> 0:17:36.320
<v Speaker 1>being with us. Thank you Richard Chambers as President chief

0:17:36.320 --> 0:17:49.560
<v Speaker 1>executive of the Institute of Internal Auditors. We are broadcasting

0:17:49.640 --> 0:17:53.160
<v Speaker 1>live from the Bloomberg Interactive Studios here at Bloomberg's World

0:17:53.160 --> 0:17:57.520
<v Speaker 1>headquarters in New York City. Facebook what is going on there?

0:17:57.560 --> 0:18:01.160
<v Speaker 1>Down at three quarters of one percent today after Instagram's

0:18:01.240 --> 0:18:06.720
<v Speaker 1>founders left the firm citing disagreements, with Facebook's leader joining

0:18:06.760 --> 0:18:10.959
<v Speaker 1>us now Shara Ovid, Bloomberg opinion columnists covering all things tech, Shira,

0:18:11.240 --> 0:18:14.280
<v Speaker 1>how bad is this for Facebook? Because frankly, actually, stock

0:18:14.320 --> 0:18:17.200
<v Speaker 1>traders are taking it relatively and stride, considering the Instagram

0:18:17.200 --> 0:18:20.960
<v Speaker 1>really is a profit engine or potential one for Facebook. Yeah,

0:18:21.000 --> 0:18:24.240
<v Speaker 1>I'm a little bit surprised at the relatively modest stock

0:18:24.280 --> 0:18:27.760
<v Speaker 1>declined to be honest. The look, the truth is, it's

0:18:27.800 --> 0:18:30.040
<v Speaker 1>gonna be hard to know how big a deal this

0:18:30.200 --> 0:18:32.880
<v Speaker 1>really is because it's going to be measured in what

0:18:33.200 --> 0:18:37.440
<v Speaker 1>doesn't Instagram do or what opportunities this Instagram miss if

0:18:37.440 --> 0:18:41.000
<v Speaker 1>it's distracted for a while by this leadership vacuum, or

0:18:41.000 --> 0:18:43.919
<v Speaker 1>as in fact, it loses some of its kind of

0:18:44.040 --> 0:18:49.520
<v Speaker 1>essential essence of Instagram nous. Well, sure, what exactly is

0:18:49.600 --> 0:18:52.480
<v Speaker 1>the problem with the two founders leaving. They've been there

0:18:52.520 --> 0:18:55.600
<v Speaker 1>for six years. What do they do on a day

0:18:55.640 --> 0:18:59.280
<v Speaker 1>to day basis that someone else can't do? Yeah? Fair enough.

0:18:59.320 --> 0:19:02.879
<v Speaker 1>I mean, look it, it's not uncommon right for a

0:19:02.960 --> 0:19:06.359
<v Speaker 1>company to acquire another company and then for the CEOs

0:19:06.480 --> 0:19:10.439
<v Speaker 1>or the founders of those acquired companies to eventually leave. Um. So,

0:19:10.440 --> 0:19:12.200
<v Speaker 1>I don't want to say this is some kind of

0:19:12.720 --> 0:19:16.439
<v Speaker 1>you know, criminal matter and things like that, but um,

0:19:16.480 --> 0:19:21.120
<v Speaker 1>it's true that both Instagram founders were had leadership positions

0:19:21.160 --> 0:19:24.439
<v Speaker 1>inside of Instagram. They had set up Instagram as this

0:19:24.520 --> 0:19:28.080
<v Speaker 1>kind of semi autonomous unit inside of Facebook, which I

0:19:28.119 --> 0:19:34.359
<v Speaker 1>think was important to the product independence of Instagram. Um,

0:19:34.440 --> 0:19:38.040
<v Speaker 1>and you know, they had leadership roles in Shepherd ng

0:19:38.280 --> 0:19:41.840
<v Speaker 1>Instagram through this kind of important period of growth for

0:19:41.880 --> 0:19:44.439
<v Speaker 1>the company. So yeah, there are plenty of executives at

0:19:44.480 --> 0:19:48.280
<v Speaker 1>Facebook who can fill the void. But I don't want

0:19:48.280 --> 0:19:52.040
<v Speaker 1>to downplay the importance of of Kevin Susterman Mike Krieger,

0:19:52.080 --> 0:19:56.760
<v Speaker 1>the two founders who at least until now had important

0:19:56.800 --> 0:19:59.600
<v Speaker 1>leadership roles and Instagram as well. Him is your daughter

0:19:59.760 --> 0:20:05.320
<v Speaker 1>on Facebook? Is your daughter on Instagram? Oh? Your strike

0:20:05.359 --> 0:20:07.720
<v Speaker 1>two strike too? That means that you're a better parents.

0:20:07.800 --> 0:20:09.600
<v Speaker 1>And I I found out the other night that my

0:20:09.680 --> 0:20:12.720
<v Speaker 1>son had signed up for Instagram. Who he's nine, um,

0:20:12.960 --> 0:20:16.040
<v Speaker 1>and he is not signed up for Facebook. Um. But

0:20:16.160 --> 0:20:20.400
<v Speaker 1>he was out there liking photographs and having followers, etcetera

0:20:20.840 --> 0:20:23.159
<v Speaker 1>very alarming whole host of other issues. But Sira, it

0:20:23.240 --> 0:20:26.080
<v Speaker 1>is notable to me that he signs up for Instagram,

0:20:26.160 --> 0:20:28.639
<v Speaker 1>and that's where that's where the actions act. Can you

0:20:28.640 --> 0:20:30.360
<v Speaker 1>give as a sense of just how much faster it's

0:20:30.400 --> 0:20:33.280
<v Speaker 1>growing and how much more dominant it's becoming as far

0:20:33.320 --> 0:20:39.480
<v Speaker 1>as a revenue driver than Facebook's really uh eponymous platform. Well,

0:20:39.680 --> 0:20:42.920
<v Speaker 1>we don't exactly know how fast it's growing because Facebook

0:20:43.040 --> 0:20:48.320
<v Speaker 1>keeps that data uh private, but it's certainly growing much

0:20:48.359 --> 0:20:54.600
<v Speaker 1>faster than the main Facebook social network cap which has

0:20:54.640 --> 0:20:56.919
<v Speaker 1>more than two billion users every month. So is there

0:20:57.000 --> 0:20:59.600
<v Speaker 1>is a limit to growth when you have you know,

0:20:59.840 --> 0:21:03.760
<v Speaker 1>a significant chunk of the world's population already using Facebook.

0:21:03.760 --> 0:21:07.400
<v Speaker 1>But it's clear that Instagram is an important growth trajectory,

0:21:07.560 --> 0:21:11.040
<v Speaker 1>both in terms of users. UM. We see in North

0:21:11.080 --> 0:21:15.320
<v Speaker 1>America the number of daily users on Facebook main Facebook

0:21:15.560 --> 0:21:20.639
<v Speaker 1>has flatlined recently, and that's a dangerous development for Facebook.

0:21:20.840 --> 0:21:24.359
<v Speaker 1>North America is not where the majority of users are,

0:21:24.480 --> 0:21:26.760
<v Speaker 1>but it is where the majority of ad revenue is,

0:21:27.040 --> 0:21:30.000
<v Speaker 1>and that's important for Facebook. And we've also seen that

0:21:30.119 --> 0:21:34.960
<v Speaker 1>as Facebook Facebook has some user growth issues, Facebook has

0:21:35.080 --> 0:21:39.840
<v Speaker 1>dialed up the number of advertisements on Instagram and pointed

0:21:39.880 --> 0:21:44.680
<v Speaker 1>a lot of advertisers too, the migration of users to

0:21:44.760 --> 0:21:49.439
<v Speaker 1>Instagram and their embrace of this relative still relatively novel

0:21:49.720 --> 0:21:52.960
<v Speaker 1>format that's popular on Instagram called stories, which is this

0:21:53.560 --> 0:21:58.760
<v Speaker 1>um kind of ephemeral diaries um composed of videos, short videos,

0:21:58.760 --> 0:22:03.879
<v Speaker 1>and photos. So Facebook is enormously important to the growth

0:22:03.920 --> 0:22:08.040
<v Speaker 1>strategy at Facebook, and losing these founders is not great

0:22:08.680 --> 0:22:12.680
<v Speaker 1>for what's been the most important growth asset at Facebook. Okay,

0:22:13.080 --> 0:22:15.800
<v Speaker 1>just to set the record right, I mean the two

0:22:15.840 --> 0:22:22.120
<v Speaker 1>founders sold Instagram to Facebook six years ago. Facebook paid

0:22:22.280 --> 0:22:27.240
<v Speaker 1>seven hundred and fifteen million dollars. At the time, the

0:22:27.320 --> 0:22:31.719
<v Speaker 1>company had thirteen employees and thirty million registered users. Now

0:22:31.760 --> 0:22:35.840
<v Speaker 1>they've got a billion people using Instagram each month, and

0:22:35.920 --> 0:22:41.400
<v Speaker 1>Bloomberg Intelligence analysis said that Instagram is worth more than

0:22:41.440 --> 0:22:45.080
<v Speaker 1>a hundred billion dollars. So it's not the same company

0:22:45.119 --> 0:22:48.840
<v Speaker 1>they sold to Facebook anymore. It's definitely not the same company.

0:22:48.840 --> 0:22:53.720
<v Speaker 1>And look both sides, both Facebook and the Instagram founders

0:22:53.760 --> 0:22:57.960
<v Speaker 1>deserve credit for that huge jump in in in assumed

0:22:58.040 --> 0:23:01.680
<v Speaker 1>valuation for Instagram. There's no way. Well, I can't say

0:23:01.680 --> 0:23:04.080
<v Speaker 1>that for sure. It would have been hard, I think

0:23:04.480 --> 0:23:08.359
<v Speaker 1>for Instagram to become such a valuable company outside of

0:23:08.520 --> 0:23:12.640
<v Speaker 1>Facebook's corporate umbrella. But at the same time, it wasn't

0:23:12.640 --> 0:23:18.840
<v Speaker 1>like Facebook's credit for the growing usage and evaluation of

0:23:18.920 --> 0:23:22.560
<v Speaker 1>Instagram under its auspices. Well done. Thank you very much.

0:23:22.560 --> 0:23:25.760
<v Speaker 1>Shira over Day are Bloomberg opinion columnists for all things

0:23:25.760 --> 0:23:32.159
<v Speaker 1>related to the world of technology. Thanks for listening to

0:23:32.200 --> 0:23:35.080
<v Speaker 1>the Bloomberg P and L podcast. You can subscribe and

0:23:35.119 --> 0:23:39.080
<v Speaker 1>listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast

0:23:39.119 --> 0:23:42.640
<v Speaker 1>platform you prefer. I'm Pim Fox I'm on Twitter at

0:23:42.800 --> 0:23:46.119
<v Speaker 1>pim Fox. I'm on Twitter at Lisa Abramo. It's one

0:23:46.400 --> 0:23:49.119
<v Speaker 1>before the podcast. You can always catch us worldwide on

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<v Speaker 1>Bloomberg Radio