WEBVTT - Don't Turn Your Back On Energy Stocks At These Prices 0:00:05.800 --> 0:00:08.320 Welcome to the Bloomberg p m L Podcast. I'm Pim 0:00:08.400 --> 0:00:11.440 Fox along with my co host Lisa Bramowitz. Each day 0:00:11.480 --> 0:00:15.000 we bring you the most important, noteworthy, and useful interviews 0:00:15.040 --> 0:00:17.520 for you and your money, whether you're at the grocery 0:00:17.520 --> 0:00:20.560 store or the trading floor. Find the Bloomberg p m 0:00:20.680 --> 0:00:27.400 L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot Com. 0:00:27.440 --> 0:00:30.720 We're broadcasting for the Bloomberg Interactor Broker Studios. I'm Kim 0:00:30.840 --> 0:00:33.640 Fox along with Romaine Bostick. I want to bring in 0:00:34.040 --> 0:00:37.879 Stephen Serge Gilfoil. He is the founder and the president 0:00:37.920 --> 0:00:42.959 of Serge nine eight six l l C. Joining us 0:00:43.000 --> 0:00:47.080 from the New York Stock Exchange. Serge always a pleasure. 0:00:47.159 --> 0:00:50.040 Happy Christmas and New Year to you and your family. 0:00:50.960 --> 0:00:53.920 What do you say to them? What do you say 0:00:54.000 --> 0:00:57.680 to your family or relatives when they ask you why 0:00:57.720 --> 0:01:02.120 does stocks go up and down? You know that answer 0:01:02.200 --> 0:01:04.720 is evolved over time. They don't say why do stocks 0:01:04.760 --> 0:01:07.480 go up and down? Now because the way they used to, 0:01:07.480 --> 0:01:09.679 Because they used to just ask the question the way 0:01:09.720 --> 0:01:11.520 you just did, and I would try to explain to 0:01:11.560 --> 0:01:15.000 them how price discovery works at a certain point of sale. 0:01:15.880 --> 0:01:18.080 Now they would ask probably wider stocks and down go 0:01:18.680 --> 0:01:21.160 Why do stocks move up and down so quickly and 0:01:21.240 --> 0:01:24.880 so violently? And now it's largely a function of electronic 0:01:24.959 --> 0:01:28.280 trading and trading in fractions of pennies. It's well, it's 0:01:28.280 --> 0:01:30.680 a kind of throwing a piece, maybe a tree trunk, 0:01:30.680 --> 0:01:33.399 into a wood chipper and just watching the spray behind 0:01:33.400 --> 0:01:36.520 the machine. That's kind of how I explained stock trading 0:01:36.560 --> 0:01:40.160 these days. And Steven, so yesterday, after the decline we 0:01:40.200 --> 0:01:42.560 had yesterday, you know, I've reached out to a lot 0:01:42.600 --> 0:01:45.319 of traders that I know, and none of them were around, 0:01:45.440 --> 0:01:48.680 none of them were working. So I'm who's trading this week? 0:01:48.840 --> 0:01:53.680 What's behind these big movements that we're having. Well, maybe 0:01:53.720 --> 0:01:56.480 they don't have to presently where they used to have 0:01:56.560 --> 0:01:58.160 to be in an office in Manhattan or on the 0:01:58.160 --> 0:02:00.640 floor of the New York Stock Exchange or or someplace 0:02:00.680 --> 0:02:02.840 close to the NASDAQ market side like they used to. 0:02:03.320 --> 0:02:05.760 They could probably be in Iowa or or out of 0:02:05.760 --> 0:02:08.880 the country and still have their their machines working for them, 0:02:08.880 --> 0:02:10.960 will even be making decisions, even if they do it 0:02:11.000 --> 0:02:14.320 in slow motion like I do, still working through a computer. 0:02:15.080 --> 0:02:18.760 I really I can't imagine taking off when the when 0:02:18.800 --> 0:02:21.120 the volumes you know are going to be light, because 0:02:21.160 --> 0:02:24.600 that's when you're at your largest risk. Really, and I 0:02:24.639 --> 0:02:26.840 think you you really have to defend yourself. I'm probably 0:02:26.880 --> 0:02:30.160 working more hours these days that I do normally. Well, 0:02:30.200 --> 0:02:32.959 you've got an assistant there, I think, who's got four legs, 0:02:33.000 --> 0:02:36.519 So that's probably adding to the energy in the office place. 0:02:37.160 --> 0:02:40.720 That's okay. So what well, what do you if an 0:02:40.720 --> 0:02:43.240 investor comes to you and says, how do you make 0:02:43.440 --> 0:02:47.640 sense of a one thousand, nearly an eleven hundred point 0:02:47.760 --> 0:02:51.600 gain in the Dow Jones Industrial Average and then the 0:02:51.840 --> 0:02:55.840 next day you see a decline Right now we're talking 0:02:55.840 --> 0:03:00.520 about a drop of over four hundred points. How do 0:03:00.560 --> 0:03:07.880 you explain in rational terms evaluation based on those changes? Well, 0:03:07.919 --> 0:03:11.799 you you you really cannot justify this through the laws 0:03:11.800 --> 0:03:13.840 of supply and demand. But what you have to do 0:03:13.880 --> 0:03:16.040 is explain to your clients or your friends, or whoever's 0:03:16.080 --> 0:03:20.440 asking you that the machines are designed to overshooting both directions, 0:03:20.520 --> 0:03:23.800 or they're almost I feel they're designed to cause instability. 0:03:24.160 --> 0:03:26.600 What you have to do as a trader, is you 0:03:26.840 --> 0:03:30.160 you even if you prefer fundamental analysis, like that's how 0:03:30.200 --> 0:03:32.720 I came into this business from a fundamental angle, on 0:03:32.760 --> 0:03:34.880 a macro angle. But now you really do have to 0:03:34.960 --> 0:03:39.600 learn technical analysis because the guys who control of the algorithms, 0:03:39.600 --> 0:03:41.520 who they hire guys like me who know how to 0:03:41.520 --> 0:03:43.720 read charts. So if you can learn how to read 0:03:43.760 --> 0:03:46.520 the charts, you're you're almost in their heads a little bit. 0:03:46.600 --> 0:03:48.800 And what you have to do as a trader is 0:03:48.920 --> 0:03:51.720 narrow your book, and you have you have to focus 0:03:51.760 --> 0:03:54.040 short term instead of long term. You've always been taught 0:03:54.080 --> 0:03:56.160 to be a long term investor. Well it's okay if 0:03:56.200 --> 0:03:58.040 you do that to some degree, but you have to 0:03:58.040 --> 0:04:00.360 be a short term trader on days like this because 0:04:00.640 --> 0:04:02.520 because technicals are the only way to get out of 0:04:02.520 --> 0:04:06.400 this without a big, big minus sign on your portfolio. Well, 0:04:06.440 --> 0:04:07.839 I mean, when you look at the drop that we've 0:04:07.840 --> 0:04:10.640 had in the market, you know, seventent or so on 0:04:10.680 --> 0:04:14.200 the SMP since the beginning of October, do you think 0:04:14.240 --> 0:04:17.480 this has been a fair repricing of some of these 0:04:17.520 --> 0:04:21.360 assets when you look at some of those fundamental measures, Uh, 0:04:21.400 --> 0:04:24.440 this is a fair repricing if indeed we are headed 0:04:24.440 --> 0:04:29.240 into a recession in late the transports, it, down commodities, 0:04:29.320 --> 0:04:32.200 down stocks have been violently devalued. I think they're about 0:04:32.240 --> 0:04:34.839 just barely fifteen times before we're looking earnings now, and 0:04:34.839 --> 0:04:37.760 that's only if those earnings are actually decent or or 0:04:37.800 --> 0:04:41.800 as expected. So yes, if we are slowing down to 0:04:41.839 --> 0:04:44.240 the point where we probably will experience a recession, maybe 0:04:44.279 --> 0:04:49.279 globally but domestically at least the then items are being 0:04:49.320 --> 0:04:51.640 fairly priced at this point, and it's probably more to go. 0:04:52.120 --> 0:04:55.480 I would think that as we move into the new year, 0:04:55.600 --> 0:04:57.760 we're gonna we might see a little seasonal bouncy. We 0:04:57.839 --> 0:04:59.560 got some of that yesterday. There's going to be a 0:04:59.560 --> 0:05:02.680 rebound going into the end of the year. So next 0:05:02.680 --> 0:05:05.440 week you might feel good about your stocks, but it's 0:05:05.480 --> 0:05:07.719 probably going to be short lived because we're going to 0:05:07.760 --> 0:05:11.440 be up against some serious headline risk regarding politics, geo politics, 0:05:11.560 --> 0:05:13.960 the trade wars. All of these are going to produce 0:05:14.440 --> 0:05:17.920 negative headlines multiple times and likely or likelihood before they 0:05:18.000 --> 0:05:21.440 produce any possibility of a positive outcome, and the market 0:05:21.440 --> 0:05:23.479 will die a thousand deaths over that time. Unless you 0:05:23.520 --> 0:05:26.880 know how to defend yourself. Sorge. Let's just assume that 0:05:26.960 --> 0:05:30.719 there's an investor out there who's willing to wait five years. 0:05:31.480 --> 0:05:34.920 What would you recommend they do. All right. I would 0:05:34.920 --> 0:05:37.960 actually tell that that investor to split his book in 0:05:38.040 --> 0:05:40.520 two ways. One, you want you want the income, so 0:05:40.560 --> 0:05:42.400 you need to go to the dividend names. Maybe not 0:05:42.560 --> 0:05:45.120 utility names, but you need you need dividend names in 0:05:45.120 --> 0:05:47.320 your book. Is you need to provide income while you wait, 0:05:47.680 --> 0:05:52.240 and you don't want to completely exclude yourself and growth. 0:05:52.320 --> 0:05:54.680 So you actually want to expose yourself a little to 0:05:54.839 --> 0:05:57.080 energy because even though it's dangerous right now, they still 0:05:57.080 --> 0:05:59.280 pay the dividend and if they're they're the only dividend 0:05:59.279 --> 0:06:01.960 payers out there that if there is growth, they're gonna 0:06:02.000 --> 0:06:04.160 grit with it. And you need the cloud. You need 0:06:04.200 --> 0:06:06.800 the cloud because that's where potential growth is going to be. 0:06:07.200 --> 0:06:09.400 And they're not exposed to China for the most part. 0:06:09.640 --> 0:06:11.720 So this is this is the part of technology that 0:06:11.760 --> 0:06:15.039 will survive much better than semi conductors because they're oversupplied 0:06:15.120 --> 0:06:17.440 right now. Yeah, I tell you about but a little 0:06:17.480 --> 0:06:19.920 bit more about the growth side of this, because I mean, 0:06:19.920 --> 0:06:22.520 obviously you know this bull market, it was easy to 0:06:22.560 --> 0:06:25.640 find growth, and now we're at a stage where even 0:06:25.640 --> 0:06:27.200 though we're not falling off a cliff, it's a lot 0:06:27.279 --> 0:06:29.880 harder to find those growth socks. Is there anywhere else 0:06:29.920 --> 0:06:32.760 other than just some of the cloud software companies where 0:06:32.839 --> 0:06:36.160 we can find that well cloud and like and like 0:06:36.200 --> 0:06:38.120 I said the energy, because I think the energy is 0:06:38.200 --> 0:06:40.000 kind of it's it's a double edged sword. You're gonna 0:06:40.000 --> 0:06:42.279 die with the commodity. But if you can wait, they're 0:06:42.279 --> 0:06:45.120 gonna pay you five six percent. So don't turn you 0:06:45.200 --> 0:06:48.279 back completely on oil right now, even though it seems difficult. 0:06:48.560 --> 0:06:50.920 I've actually been buying oil last week and this week 0:06:50.960 --> 0:06:53.159 got at these horrendous prices, and most of these names 0:06:53.160 --> 0:06:56.280 are actually against those purchases already. But I do know 0:06:56.360 --> 0:06:58.280 that I'm that Royal Dutch Shell is going to pay 0:06:58.279 --> 0:07:00.080 me six percent, that Excel is going to pay me 0:07:00.160 --> 0:07:02.800 five percent, that British Petroleum is gonna pay me five percent. 0:07:03.040 --> 0:07:04.680 So I have a little ligor room here. I can 0:07:04.680 --> 0:07:06.520 take a little bit of a lass before I'm actually 0:07:06.520 --> 0:07:10.280 in trouble. So I think I actually think at these 0:07:10.320 --> 0:07:14.480 prices that energy becomes your the best way to both 0:07:14.480 --> 0:07:17.280 provide income and a little bit of growth. Many thanks 0:07:17.480 --> 0:07:20.880 Stephen Serge Gilfoil. He is the founder of the President's 0:07:20.920 --> 0:07:24.640 Serge nine eight six LLC. The floor of the new 0:07:24.680 --> 0:07:27.560 York Stock Exchange and just taking a look right now, 0:07:27.680 --> 0:07:31.720 remain at the dividend deal the BP it is six 0:07:31.800 --> 0:07:39.440 point seven percent Romaine. You know, whatever anybody says is 0:07:39.480 --> 0:07:42.320 going to turn into a year of questioning whether the 0:07:42.400 --> 0:07:47.200 market can digest very large initial public offerings. Right. I 0:07:47.240 --> 0:07:51.560 mean we've heard about Lift, We've heard about Uber Valenteer. 0:07:52.520 --> 0:07:55.320 This is like a huge list of companies that want 0:07:55.360 --> 0:07:57.200 to go public. Yeah, and and I mean, you know, 0:07:57.240 --> 0:07:59.240 who would have thought that this is the environment they're 0:07:59.240 --> 0:08:01.240 going to try to sell into, assuming they go through 0:08:01.280 --> 0:08:03.840 with it. But you know there's an appetite out there, right, 0:08:04.160 --> 0:08:06.760 very good point. Let's find out if there is indeed 0:08:06.800 --> 0:08:09.920 an appetite. Joining us now is a Tich Davta. He 0:08:10.040 --> 0:08:13.400 is the chief executive of Equity Zen A Tich. Thanks 0:08:13.440 --> 0:08:16.800 for being here. Just give us the outlook for the 0:08:16.920 --> 0:08:21.440 kinds of companies and the characteristics that they display that 0:08:21.560 --> 0:08:25.720 you believe are going to go public in Yeah, twenty 0:08:25.840 --> 0:08:27.640 nineteen is going to be a year where we're not 0:08:27.680 --> 0:08:29.960 going to see any records being said, with the number 0:08:30.000 --> 0:08:31.880 of IPOs that we see, it's going to be nowhere 0:08:31.920 --> 0:08:35.480 near the activity we saw in teen. We might not 0:08:35.520 --> 0:08:38.439 even hit the i p o s that were slated 0:08:38.480 --> 0:08:40.840 to prices this year. What we are going to see though, 0:08:40.960 --> 0:08:43.560 are some blockbuster I p o s, those companies that 0:08:43.600 --> 0:08:46.040 are over ten years old now and it's time to 0:08:46.040 --> 0:08:48.200 move out of the parents basement, out of the private 0:08:48.240 --> 0:08:52.600 markets into the public markets. I'm talking about names like Uber, Airbnb, Slack. 0:08:53.400 --> 0:08:55.520 But you talk about moving out of the parents basement 0:08:55.960 --> 0:08:58.319 the old days of I p o s, These companies 0:08:58.360 --> 0:09:00.600 moved out of their parents basement at a pretty young age. 0:09:00.640 --> 0:09:02.520 And I feel like all of these companies you mentioned, 0:09:02.840 --> 0:09:06.600 particularly Uber for example, are are pretty weathered companies. On 0:09:06.600 --> 0:09:08.079 one hand, I guess that could be a good thing, 0:09:08.160 --> 0:09:10.880 but once you go into the public markets, particularly for 0:09:10.880 --> 0:09:13.800 the secondary investors, what are they really getting out of this? 0:09:13.840 --> 0:09:16.360 Hasn't all the growth sort of taken place with these 0:09:16.400 --> 0:09:19.440 companies that so you're absolutely right in that these companies 0:09:19.480 --> 0:09:21.560 are a lot more mature than they used to be, 0:09:21.720 --> 0:09:24.360 you know, twenty years ago when when when companies won public. 0:09:24.760 --> 0:09:28.319 You know, equisons business is that of conducting secondary transactions 0:09:28.400 --> 0:09:32.120 while these companies are still private. So, you know, with 0:09:32.360 --> 0:09:34.840 not talking about any company in particular, we've now helped 0:09:34.920 --> 0:09:38.559 well over a hundred firms conduct these secondary transactions, over 0:09:38.600 --> 0:09:40.439 a dozen of them. A couple dozen of them actually 0:09:40.480 --> 0:09:43.880 have gone public since then. And what we see is 0:09:44.120 --> 0:09:48.640 a growing appetite while these companies are still private, uh 0:09:48.720 --> 0:09:51.520 in people wanting to invest in these companies and existing 0:09:51.559 --> 0:09:56.040 shareholders wanting liquidity from these from these companies shares, and 0:09:56.200 --> 0:09:58.959 as they go public, you know, effectively you can expand 0:09:59.000 --> 0:10:01.560 the pool of people can access it outside of just 0:10:01.600 --> 0:10:05.960 accredited investors. Do you see do you see more activity 0:10:06.080 --> 0:10:10.760 uh on on your platform nowadays with some of the 0:10:10.840 --> 0:10:13.120 insiders maybe wanting to sort of you know, take some 0:10:13.200 --> 0:10:16.320 of the uh you know, whatever potential profits they've already gotten. 0:10:16.920 --> 0:10:19.240 Has that increased or is it just about the same. 0:10:19.559 --> 0:10:21.840 You know, our business has kept growing, so I wouldn't 0:10:21.880 --> 0:10:24.480 say it's specific to anyone company, and we're seeing more 0:10:24.480 --> 0:10:27.560 activity now than before. I think we're generally seeing more activity. 0:10:27.760 --> 0:10:29.320 But frankly, I think a lot of this has to 0:10:29.320 --> 0:10:32.760 do with education to the broader public that look, before, 0:10:33.120 --> 0:10:35.200 unless you had ten million dollars, there was no way 0:10:35.240 --> 0:10:38.640 you can access this asset class in the first place. Uh. 0:10:38.679 --> 0:10:40.360 You know, you could call up your broker at Goldman 0:10:40.440 --> 0:10:42.800 or private wealth manager Morgan Stanley. But outside of that, 0:10:42.840 --> 0:10:45.880 you had no options today with a business like equities, 0:10:45.880 --> 0:10:48.760 and we can allow these accredited investors to invest as 0:10:48.760 --> 0:10:52.360 little as ten thousand dollars into these late stage private companies. 0:10:52.480 --> 0:10:55.360 What we do see though, is people saying, look, exactly 0:10:55.360 --> 0:10:58.079 as you said, you know the values being created in 0:10:58.120 --> 0:11:00.520 the private market. Why am I sitting on the sidelines? 0:11:00.559 --> 0:11:02.320 Why do you have to continue to wait until this 0:11:02.360 --> 0:11:05.760 company's public? And by the way, worth potentially five times 0:11:05.760 --> 0:11:08.439 more than what I already know is a good stock today. 0:11:08.559 --> 0:11:11.400 Where's the money going to come from to buy these 0:11:11.440 --> 0:11:14.640 initial public offerings at a time when people are looking 0:11:14.679 --> 0:11:17.480 at their year to date performance. For let's say, the 0:11:17.640 --> 0:11:21.400 SMP five hundred approaching a drop of ten percent, you 0:11:21.480 --> 0:11:24.120 might have to correct that in about an hour from now. 0:11:25.040 --> 0:11:27.960 You no, Look, it's a good point. I think what 0:11:27.960 --> 0:11:31.559 we're seeing here is long term and short term minded 0:11:31.600 --> 0:11:34.600 investors coming together. And what we see is long term 0:11:34.600 --> 0:11:37.520 minded investors. Basically, the reason a lot of these companies 0:11:37.559 --> 0:11:39.360 try to go public in the first place, the reason 0:11:39.400 --> 0:11:41.400 they try to pursue the I P or route, is 0:11:41.440 --> 0:11:44.480 so that they can lock in these you know, these 0:11:44.520 --> 0:11:48.120 cornerstone investors these anchor investors, the mutual funds out there well, 0:11:48.120 --> 0:11:49.720 but also they come on to be honest, they just 0:11:49.760 --> 0:11:52.120 want to get out. I mean, if you've invested, you've 0:11:52.120 --> 0:11:55.280 been waiting, waiting, waiting, you want a big pay day, 0:11:55.960 --> 0:11:59.280 and whether it's Uber or air b and B, you 0:11:59.320 --> 0:12:01.600 want to get out. That always raises the question if 0:12:01.600 --> 0:12:05.480 it's such a great investment, why are you selling it? 0:12:06.240 --> 0:12:08.280 So you know, it definitely used to be the case 0:12:08.320 --> 0:12:11.040 that the I p O was the liquidity event for 0:12:11.080 --> 0:12:14.200 all these insiders. I think what we've what we've seen 0:12:14.240 --> 0:12:17.320 in the last five, six, seven, eight years. EQUITISN has 0:12:17.320 --> 0:12:19.040 been around for the last six years. What we've seen 0:12:19.360 --> 0:12:22.319 is not only the the c suite but also the 0:12:22.400 --> 0:12:25.480 rank and file be able to get that pay day, 0:12:25.520 --> 0:12:28.560 you know, over time in bits and piece. Because if 0:12:28.559 --> 0:12:32.040 you've got a thirty billion valuation for something like Airbnb, boy, 0:12:32.120 --> 0:12:34.600 I mean, why wait? You want to be able to 0:12:34.600 --> 0:12:37.160 take that money and run well, and you're hoping that 0:12:37.160 --> 0:12:39.920 the thirty billion dollar valuation hopefully can be even bigger, 0:12:39.960 --> 0:12:41.600 So you want to at least take a few chips 0:12:41.640 --> 0:12:44.200 off the table, right, and that liquidity we can go 0:12:44.240 --> 0:12:46.280 towards paying off your loans or buying a house or 0:12:46.280 --> 0:12:48.640 buying a second house or what have you. It certainly 0:12:48.800 --> 0:12:51.000 used to be the case that that wasn't possible before. 0:12:51.320 --> 0:12:53.760 Now it's possible even in the private markets. The I 0:12:53.840 --> 0:12:56.120 p O. Isn't this discrete event that it used to 0:12:56.120 --> 0:12:59.000 be quite as much. Uh you know, but before it 0:12:59.040 --> 0:13:00.960 was like, oh, you haven't grab duated yet, boom you've 0:13:01.040 --> 0:13:03.280 you've graduated into the public markets. Now it's a little 0:13:03.360 --> 0:13:05.520 more continuous than that. And I think what we're gonna 0:13:05.520 --> 0:13:08.439 see is, uh, you know, a lot of capital coming 0:13:08.480 --> 0:13:11.280 from individuals who are saying, well, I'm not accredited, I 0:13:11.280 --> 0:13:15.520 couldn't access this investment before. I still believe this valuation 0:13:15.600 --> 0:13:18.719 is going to increase from here. Otherwise we wouldn't have 0:13:18.760 --> 0:13:21.720 seen a lot of sophisticated investors coming too these stocks 0:13:21.720 --> 0:13:23.640 while we were still pro Are you hearing or sending 0:13:23.760 --> 0:13:26.800 hearing or seeing any issues with regards to the valuations 0:13:26.800 --> 0:13:29.960 on some of these private companies Because we've had at 0:13:30.000 --> 0:13:33.240 least some of the bigger investors that have been required 0:13:33.280 --> 0:13:35.560 to disclose their stakes and some of these private companies, 0:13:35.679 --> 0:13:38.000 we have some some of those valuations ratcheted down a 0:13:38.040 --> 0:13:39.920 little bit. What are you saying, you know, you see 0:13:40.000 --> 0:13:42.480 mutual funds. You know that after report at least quarterly, 0:13:42.480 --> 0:13:45.320 if non monthly, basically mark their book to market. What 0:13:45.360 --> 0:13:49.440 we see is they their accuracy uh leaves a little 0:13:49.480 --> 0:13:52.560 bit to be desired in terms of valuing these private companies. 0:13:52.600 --> 0:13:55.360 I mean, they're the ones that mark down Dropbox right 0:13:55.400 --> 0:13:58.120 before Drawbucks announced it was going to go public. Uh. 0:13:58.160 --> 0:14:00.320 And so there's just not a very strong know they're 0:14:00.360 --> 0:14:02.320 just not a very strong predictor. It is, of course, 0:14:02.320 --> 0:14:04.960 still a signal. And what we're seeing on the private 0:14:04.960 --> 0:14:07.520 side as far as equities on goes is as we 0:14:07.880 --> 0:14:10.360 see the order books effectively and legally it's a different 0:14:10.360 --> 0:14:12.400 structure of course, but effectively, as we see the supply 0:14:12.440 --> 0:14:14.600 and the demand on the private side start to build up, 0:14:14.880 --> 0:14:17.400 we can start to see that, you know, where the 0:14:17.440 --> 0:14:19.280 pricing is going to shake out. This happened quite a 0:14:19.280 --> 0:14:22.960 bit before Spotify went through with its direct listing, uh, 0:14:23.000 --> 0:14:24.960 and we were able to get a pretty decent price 0:14:25.200 --> 0:14:27.600 um level on that. We gotta leave it there. I 0:14:27.640 --> 0:14:30.320 want to thank you very much. A teacher doctor, chief 0:14:30.320 --> 0:14:35.920 executive equity Zen talking all about initial public offerings. This 0:14:36.160 --> 0:14:42.680 is Bloomberg. I'm Pim Fox along with Romaine Bostick, and 0:14:42.760 --> 0:14:46.880 we're broadcasting from the Bloomberg Interactor Broker's studios. You know, 0:14:46.960 --> 0:14:51.560 remain today Saudi Arabia's King Salmon. He named the former 0:14:51.760 --> 0:14:56.720 finance minister, Ibrahim Alasaf as the foreign minister. He becomes 0:14:56.760 --> 0:14:59.960 the kingdom's top diplomat. And here to tell us more 0:15:00.000 --> 0:15:03.680 about changes at the top of the governing pyramid in 0:15:03.880 --> 0:15:09.240 Saudi Arabia is Dr Ellen Wald, President of Transversal Consulting. 0:15:09.800 --> 0:15:12.840 Dr Wald is also a nonresident Senior Fellow at the 0:15:12.840 --> 0:15:17.440 Atlantic Council's Global Energy Center. Dr Wald, thank you very 0:15:17.520 --> 0:15:20.640 much for being with us. What did these changes in 0:15:20.760 --> 0:15:27.960 Saudi Arabian's leadership mean? So it's not unexpected that he 0:15:28.080 --> 0:15:30.960 was that they were going to reshuffle the Saudi cabinet um, 0:15:31.000 --> 0:15:35.280 particularly given what the Saudias have gone through this past year. UM. 0:15:35.360 --> 0:15:39.640 I think it's significant, uh that certain individuals have remained 0:15:39.840 --> 0:15:44.560 um Holida Fali, the oil minister, and um the current 0:15:44.600 --> 0:15:47.600 Finance minister, staying at their post. These are really key 0:15:47.640 --> 0:15:50.800 positions for the Saudias, and it does seem like the 0:15:50.800 --> 0:15:53.400 Saudis are very pleased with how they've been been handling 0:15:53.480 --> 0:15:57.920 them this year um UH Foreign Minister Ada al Jubert, 0:15:58.240 --> 0:16:02.400 who was used to be the ambassador to the United States, 0:16:02.480 --> 0:16:06.200 has been reappointed UM. I would I would say that 0:16:06.320 --> 0:16:10.240 this is an interesting move because he was you know, young, 0:16:10.520 --> 0:16:13.840 very well educated. Um it really able I think to 0:16:13.880 --> 0:16:18.000 connect with UM with foreigners, and he is being replaced 0:16:18.000 --> 0:16:21.400 with someone who's older, maybe more experienced, but someone who 0:16:21.560 --> 0:16:25.040 was detained in the writs for for quite some time. 0:16:25.200 --> 0:16:28.720 So it's an interesting move. I would say that perhaps 0:16:28.720 --> 0:16:32.600 they were not particularly satisfied with the way that at 0:16:32.600 --> 0:16:37.080 al Jubert handled UH the issues surrounding the Kashogi affair, 0:16:37.480 --> 0:16:40.080 although I'm not really sure he could have handled them 0:16:40.080 --> 0:16:43.440 any better than than he did, so it'll be interesting 0:16:43.520 --> 0:16:46.320 to see how this how this falls out. It also 0:16:46.320 --> 0:16:49.320 seems that they're kind of trying to separate UH and 0:16:49.320 --> 0:16:51.800 and make sure that it seems at least from the 0:16:51.840 --> 0:16:55.720 outside that King Salmon is playing a greater role, whether 0:16:55.760 --> 0:16:57.760 he really is playing a greater role, but I do 0:16:57.840 --> 0:17:01.400 think that this definitely shows the outside world that King 0:17:01.480 --> 0:17:05.840 Salmon is definitely UM taking a more prominent role in 0:17:06.560 --> 0:17:08.879 the government. Well, well, that's that was the thing that 0:17:09.080 --> 0:17:12.200 struck out struck me the most about that the motion 0:17:12.240 --> 0:17:15.240 I guess of al Gibert. Is this really a sign 0:17:15.280 --> 0:17:18.160 that maybe MBS is being reined in a little bit 0:17:18.520 --> 0:17:23.320 considering what happened with the show Gi affair. You know, frankly, 0:17:23.960 --> 0:17:27.960 I've always thought that King Salmon was really always you know, 0:17:28.040 --> 0:17:30.440 kind of behind behind the scenes, and that he shouldn't 0:17:30.440 --> 0:17:35.480 have been underestimated. But um, it does seem like this 0:17:35.640 --> 0:17:39.600 is perhaps the reaction. Perhaps they want someone who, um 0:17:39.760 --> 0:17:43.200 has maybe a longer presence, someone who's h He's been 0:17:43.240 --> 0:17:48.840 described as kind of very calm and kind of stay present, 0:17:49.080 --> 0:17:52.760 and perhaps that's what they're going for. It's definitely a 0:17:52.960 --> 0:17:56.080 change because the Saudi's traditionally kept their foreign ministers in 0:17:56.359 --> 0:17:59.160 their posts for very long time, as supposed to having 0:17:59.160 --> 0:18:02.760 these rapid change is. But we're really we're gonna have 0:18:02.840 --> 0:18:05.520 to see how this goes. Some people have said that 0:18:05.600 --> 0:18:09.320 it reflects kind of a desire to in a sense, 0:18:09.440 --> 0:18:13.600 rehabilitate the individuals who were detained in the risks. I'm 0:18:13.640 --> 0:18:17.440 not necessarily sure that that's what's really going on here. 0:18:18.119 --> 0:18:22.880 Dr Wall, can you explain the US's involvement in Saudi 0:18:22.920 --> 0:18:26.480 Arabia's war in Yemen? And how this could affect the 0:18:26.600 --> 0:18:30.920 U S. Saudi relations. Well. The War Yemen is very 0:18:30.960 --> 0:18:34.720 problematic from the US point of view because, uh, first 0:18:34.760 --> 0:18:37.800 of all, it hasn't achieved the objectives that it was 0:18:37.840 --> 0:18:42.200 supposed to achieve. The entire idea was to eliminate the 0:18:42.240 --> 0:18:47.240 Iranian backed militia type presence in Yemen. And it's well 0:18:47.320 --> 0:18:51.439 known that the Iranians are supplying the the forces in 0:18:51.520 --> 0:18:55.160 Yemen with weapons. And it just seems that this war 0:18:55.400 --> 0:18:57.360 in a sense, has been going on and on and on. 0:18:57.960 --> 0:19:02.160 I think the US perspective was they want combat Iranian 0:19:02.800 --> 0:19:06.440 expansion in this way, but they want to win actually, 0:19:06.440 --> 0:19:09.760 and the Tinies haven't necessarily been winning at this and 0:19:09.800 --> 0:19:11.840 so I think the US perspective at this point is 0:19:12.960 --> 0:19:16.119 this war needs to be wound down, even if it 0:19:16.320 --> 0:19:20.440 is not h a case of every every objective has 0:19:20.480 --> 0:19:24.439 been achieved or the um whopies have been defeated. A 0:19:24.520 --> 0:19:27.560 negotiated settlement for this point at the US would probably 0:19:27.560 --> 0:19:31.119 be preferable, given the fact that public opinion has really 0:19:31.160 --> 0:19:37.560 turned against the US involvement in this essentially humanitarian catastrophe. 0:19:37.640 --> 0:19:39.640 When you look at the landscape of the Middle East, 0:19:39.680 --> 0:19:43.240 the political landscape, the military landscape, the pullback of the 0:19:43.320 --> 0:19:45.479 US from from a lot of areas in that region, 0:19:45.880 --> 0:19:49.280 the decline and influence of Saudi Arabian OPEQ in the 0:19:49.280 --> 0:19:53.000 oil markets. Who has the most influence in terms of 0:19:53.200 --> 0:19:56.040 country leaders, Who has the most influence over that region 0:19:56.080 --> 0:19:59.760 as a whole right now? Well, right now, I think Iran. 0:20:00.720 --> 0:20:03.760 Iran is definitely playing a major role here. They in 0:20:03.760 --> 0:20:05.520 a sense, they're calling the shots, and a lot of 0:20:06.040 --> 0:20:10.760 other powers are essentially reacting to what Iran does. So 0:20:11.240 --> 0:20:13.920 there's always this threat Iran seems to like to make 0:20:14.200 --> 0:20:17.720 that oh maybe it will send its military and close 0:20:18.200 --> 0:20:20.879 the straits before moons to shipping, and that's that's really 0:20:21.440 --> 0:20:24.960 not a threat that Iran can seriously follow through on, 0:20:25.320 --> 0:20:27.119 But just the fact that it likes to make this 0:20:27.200 --> 0:20:30.920 threat and kind of send everyone into this great hubbub 0:20:30.920 --> 0:20:33.199 of oh my goodness, what are we going to do? Uh? 0:20:33.240 --> 0:20:36.760 You know, Militarily, the U. S. Navy could certainly combat 0:20:36.840 --> 0:20:38.920 that in a very short amount of time and it 0:20:38.920 --> 0:20:41.760 wouldn't cause any dislocation. But the fact that Iran likes 0:20:41.760 --> 0:20:44.400 to make these threats and everyone kind of reacts to them, 0:20:44.440 --> 0:20:47.119 I think shows that Iran certainly has the upper hand 0:20:47.359 --> 0:20:53.280 when it comes to creating um dessenter or fomenting instability 0:20:53.359 --> 0:20:56.800 in the region. Dr Wad. We've learned that the United 0:20:56.920 --> 0:21:01.600 Arab Emirates, which is a US ally has reopened its 0:21:01.720 --> 0:21:07.920 embassy in Damascus, and in a report, the U a 0:21:08.119 --> 0:21:12.160 E says that the reason that they are normalizing relations 0:21:12.240 --> 0:21:17.040 with Syria is to quote curb the risks of regional 0:21:17.240 --> 0:21:23.000 interference in Arab Syrian affairs, and that is described as 0:21:23.040 --> 0:21:29.280 a reference to Iran's expansionist policies in Syria. Do you 0:21:29.359 --> 0:21:32.280 agree with that? Well, I think that that makes a 0:21:32.280 --> 0:21:34.879 lot of sense from the U a E, UH and 0:21:35.000 --> 0:21:38.399