WEBVTT - Lyft Reports Earnings, Looking Ahead To Uber 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.600 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.680 at Bloomberg dot com slash podcast. We had Lift earnings 0:00:22.880 --> 0:00:29.680 last night, UM which had guidance that was subdued, UM 0:00:29.720 --> 0:00:33.720 eclipsing the first ever profit, sort of milestone, and now 0:00:33.720 --> 0:00:36.639 we have and the shares are down significantly, and now 0:00:36.640 --> 0:00:38.720 we have Uber coming out after the bell tonight. So 0:00:38.800 --> 0:00:41.720 let's bring in man deep seeing senior tech industry analysts 0:00:41.720 --> 0:00:44.879 for Bloomberg Intelligence, to talk about, you know, what we 0:00:44.960 --> 0:00:48.919 saw yesterday and what we expect tonight. I know that 0:00:49.080 --> 0:00:53.920 Lift had its first profit and it's popular maybe amongst 0:00:54.000 --> 0:00:57.760 the kids. For me, I'm doing like eighty dollars and 0:00:57.880 --> 0:01:00.760 Uber rides a day here and I feel like they 0:01:00.840 --> 0:01:03.960 better knock it out of the park tonight. Well, so 0:01:04.240 --> 0:01:07.319 the good thing about you know, this space is at 0:01:07.360 --> 0:01:11.839 least they're just two competitors. It's a duopoly Uber and Lift. 0:01:12.280 --> 0:01:16.000 You contrast that with food delivery where you've got you know, 0:01:16.080 --> 0:01:20.280 five or six vendors trying to compete, uh for I 0:01:20.319 --> 0:01:23.039 would say a pretty small market at this point of time. 0:01:23.120 --> 0:01:26.200 So the print we saw it Lift had, you know, 0:01:26.440 --> 0:01:28.319 it was a mixed bag in the sense that the 0:01:28.360 --> 0:01:32.560 bright spot was profitability, as we alluded to. But I 0:01:33.120 --> 0:01:36.000 think the whole pricing aspect of it is kind of 0:01:36.000 --> 0:01:38.960 worrisome because at the end of the day, how much 0:01:38.959 --> 0:01:40.960 can you pass on to the customers and then it 0:01:41.000 --> 0:01:45.120 starts to weigh on the volume growth, so especially LIFT customers. 0:01:45.240 --> 0:01:48.640 Isn't Lift kind of a discount Uber? Isn't that the idea? No? 0:01:49.000 --> 0:01:52.280 I I think these companies have sort of rationalized the 0:01:52.360 --> 0:01:56.120 pricing so they're not trying to compete on prices or 0:01:56.200 --> 0:01:59.520 undercut each other. It's and and that's why I mentioned 0:01:59.520 --> 0:02:02.680 about a police So the good thing is you can 0:02:02.880 --> 0:02:06.160 have you know, two competitors, one with sixty percent share, 0:02:06.200 --> 0:02:09.480 the other one with and still both can do well. 0:02:09.840 --> 0:02:12.120 But to your point about the food delivery space being 0:02:12.120 --> 0:02:14.960 more crowded, Uber's in that too. It has Uber Eats, 0:02:15.000 --> 0:02:17.240 and I wonder, you know if Lift it's kind of 0:02:17.280 --> 0:02:20.080 like correlated with the reopening in a positive way, and 0:02:20.160 --> 0:02:21.720 right demand going up, is that going to be bad 0:02:21.720 --> 0:02:24.560 for Uber because Uber eats demand maybe going down? Yes, 0:02:24.800 --> 0:02:28.840 Uber definitely has a tougher comp when it comes to 0:02:28.880 --> 0:02:31.480 food delivery, and you're not gonna see that sort of 0:02:31.520 --> 0:02:34.720 growth which we saw during the pandemic. So if will 0:02:34.800 --> 0:02:37.480 offset there, you know the pickup in ride sharing, and 0:02:37.560 --> 0:02:40.200 that's why they are now kind of doubling down in 0:02:40.240 --> 0:02:43.799 the freight space with this recent acquisition of Transplace. So 0:02:44.400 --> 0:02:47.680 in my mind, Uber wants to be that diversified player, 0:02:47.800 --> 0:02:52.160 the scale player. But there aren't many revenue synergies between 0:02:52.200 --> 0:02:55.480 these businesses, Like their synergy between ride sharing and food 0:02:55.480 --> 0:02:59.240 delivery is minimal. Like these are both commodity services. You know, 0:02:59.680 --> 0:03:03.600 user still gravitate towards the Lewis price options. So I 0:03:03.680 --> 0:03:07.960 just feel Uber has a tougher kind of task in 0:03:08.080 --> 0:03:11.519 terms of convincing investors that yes, the three businesses make 0:03:11.600 --> 0:03:14.160 sense under one umbrella, and you know there will be 0:03:14.200 --> 0:03:16.800 more profitable as a result of that. But we'll see. 0:03:17.080 --> 0:03:20.639 What is who takes lift rather than Uber? I take 0:03:20.680 --> 0:03:22.840 it because my credit card gives me ten times points 0:03:22.840 --> 0:03:26.440 on Lift. But that's basically my only rational Is there 0:03:26.440 --> 0:03:29.240 a lift black. Can you are you going to be 0:03:29.280 --> 0:03:31.640 able to get into an escalate or whatever with the 0:03:31.680 --> 0:03:34.200 lift or is lift because I've always thought lit was 0:03:34.280 --> 0:03:37.000 just like some dude's regular car, so I'm gonna go 0:03:37.040 --> 0:03:40.480 out and get in somebody's Corolla. Rather, they have tiered pricing, 0:03:40.560 --> 0:03:45.440 they have tiered service levels, and uh, that's the business models. 0:03:45.560 --> 0:03:48.760 So they want, you know, users who are not that 0:03:48.840 --> 0:03:52.520 price sensitive to pay up and for the service, and 0:03:52.560 --> 0:03:54.920 so they are launching and that there's not a huge 0:03:54.920 --> 0:03:59.520 differentiation to Uber when it comes to the actual core business. Yeah, 0:03:59.560 --> 0:04:02.200 I mean they are both copying each other. Anytime one 0:04:02.280 --> 0:04:04.760 comes up with a better feature of the other ones copies. 0:04:04.800 --> 0:04:07.360 But again, the point is they're just two. In food, 0:04:07.840 --> 0:04:10.800 you've gotten five or six vendors all doing the same least. 0:04:10.880 --> 0:04:12.720 We have five or six in Berlin, you know, and 0:04:12.760 --> 0:04:16.680 more specifically for pizza, I think it's called slice, Yes 0:04:16.880 --> 0:04:20.960 it is. We also have a ton of different grocery services. 0:04:20.960 --> 0:04:22.200 I don't know if you had this in New York, 0:04:22.240 --> 0:04:25.760 but I can order groceries pretty much anything you would 0:04:25.760 --> 0:04:27.400 get at the grocery store and have it at my 0:04:27.440 --> 0:04:30.960 door in ten minutes time. I mean, they are super fast, 0:04:31.360 --> 0:04:33.720 that New York is probably too trafficky for that. You 0:04:33.760 --> 0:04:35.520 can do it in two hours, I know with Amazon 0:04:35.520 --> 0:04:37.600 and Holdings, but yeah, I mean, it takes just kind 0:04:37.600 --> 0:04:40.080 of a long time to get anywhere in Manhattan and 0:04:40.160 --> 0:04:42.760 Manhattan at least, um I want to pivot from talking 0:04:42.760 --> 0:04:45.360 about groceries and food delivery to just talking about workers 0:04:45.400 --> 0:04:49.360 and finding drivers. It's incredibly difficult for these companies right now. 0:04:49.440 --> 0:04:52.560 How much of a headwind does that create for Uber 0:04:52.600 --> 0:04:55.400 and Lift going forward? Yeah, so Lift mentioned last night 0:04:55.440 --> 0:04:59.719 they spent about you know, five million on driver incentives, 0:04:59.720 --> 0:05:02.640 and that was a contra revenue to their top line. 0:05:03.480 --> 0:05:05.880 I guess at the end of the day, they're all 0:05:05.920 --> 0:05:09.839 competing for that same worker pool, so they have to 0:05:10.160 --> 0:05:13.520 you know, shell out the incentives because these are not employees. 0:05:14.160 --> 0:05:18.080 And I think right sharing is still a better business 0:05:18.200 --> 0:05:21.680 from a driver's perspective. In the case of food delivery, 0:05:22.120 --> 0:05:26.679 you're getting paid lore compared to you know, the right sharing. 0:05:26.760 --> 0:05:31.239 So from a worker perspective, I think right sharing is cleaner. 0:05:31.279 --> 0:05:33.080 But you put more on the line, don't you, because 0:05:33.080 --> 0:05:35.160 you have to actually lease a car. And I remember 0:05:35.160 --> 0:05:38.520 when Uber first started, the company was only taking ten 0:05:38.560 --> 0:05:42.600 to fifteen percent of the fair. And then you know, 0:05:42.720 --> 0:05:48.040 after you've got your GMC yukon denally XL and we're 0:05:48.080 --> 0:05:50.120 paying a thousand dollar least, all of a sudden the 0:05:50.120 --> 0:05:54.360 company said, hey, we're gonna take of your fair and 0:05:54.640 --> 0:05:57.279 it seemed incredibly unfair to me and I wouldn't as 0:05:57.320 --> 0:05:59.040 a driver, want to be put in that position. After 0:05:59.080 --> 0:06:00.560 I signed a lease, all of a sudden you tell 0:06:00.600 --> 0:06:03.200 me I'm gonna make less and less money. Yeah, so 0:06:03.400 --> 0:06:06.119 I think you're right. They can't raise the take rates 0:06:06.240 --> 0:06:08.640 and you will see a pushback. And there is that 0:06:08.720 --> 0:06:12.599 regulatory aspect that obviously it's always a wild card, you know, 0:06:12.720 --> 0:06:15.520 where you could see more regulation. But at the end 0:06:15.560 --> 0:06:18.640 of the day, they have pulled capacity and they have 0:06:18.760 --> 0:06:21.920 the demand and that is the value out of a marketplace. 0:06:21.960 --> 0:06:24.000 So you know the fact that there are just two 0:06:24.080 --> 0:06:27.800 marketplaces is good for right sharing as an industry. And 0:06:27.960 --> 0:06:30.000 if you've said two things in the past, like minute one, 0:06:30.040 --> 0:06:33.000 regulation and two, these aren't employees that we're talking about. 0:06:33.000 --> 0:06:36.080 This is the gig autonomy. But that's creating some problems 0:06:36.120 --> 0:06:38.760 for uber and lift as well. How how great is 0:06:38.800 --> 0:06:41.840 the regulatory risk on that front? That's a big risk. 0:06:42.160 --> 0:06:45.000 I mean with these companies, the fact that they weren't 0:06:45.000 --> 0:06:48.880 profitable at least now they're showing profitability. And the cost 0:06:49.000 --> 0:06:52.359 side is always kind of in focus because of the 0:06:52.440 --> 0:06:55.880 high variable costs in this business. So anytime you have 0:06:56.040 --> 0:06:59.719 the prospect of more regulation, it will increase costs and 0:06:59.800 --> 0:07:02.760 that is not good for you know, sustaining the profitability. 0:07:02.920 --> 0:07:06.320 So clearly it is a big threat. But at least, 0:07:06.360 --> 0:07:08.280 you know, as long as they can maintain the top 0:07:08.360 --> 0:07:12.800 line growth and with you know, economies opening up, demand 0:07:12.880 --> 0:07:15.680 coming back, I think they should be good at least 0:07:15.680 --> 0:07:17.640 for the next one or two years. No one knows 0:07:18.160 --> 0:07:20.520 the kind of the growth rate three or four years 0:07:20.560 --> 0:07:23.440 down the line. I think the business models will evolve. 0:07:23.520 --> 0:07:25.640 I noticed the other day I wrote down I took 0:07:25.640 --> 0:07:28.440 the subway down to Grand Central station as I was 0:07:28.480 --> 0:07:31.320 heading out to Bronxfie to look at houses, and it 0:07:31.400 --> 0:07:33.760 was empty. There was almost nobody on the subway. It 0:07:33.840 --> 0:07:36.400 was unbelievable. On the four or five six here usually 0:07:36.440 --> 0:07:39.760 it's packed. Yes, so they have taken share from a 0:07:39.760 --> 0:07:42.840 lot of the public transportation, and the use cases for 0:07:42.920 --> 0:07:46.480 these companies keep evolving. I mean, the whole aspect of 0:07:46.600 --> 0:07:49.640 right sharing, like there isn't any sharing right now. Hopefully 0:07:49.760 --> 0:07:52.600 at at some point it will come back. But you know, 0:07:52.720 --> 0:07:56.840 these companies have evolved, and I think the use cases 0:07:56.880 --> 0:08:00.960 will emerge and that should help you know, at these uh, 0:08:01.240 --> 0:08:04.119 these companies to maintain relevance. All right. Our producer Charlie 0:08:04.160 --> 0:08:06.360 Bulmer writs in that his seven train this week was 0:08:06.560 --> 0:08:09.280 more packed than it's ever been, So maybe I was 0:08:09.400 --> 0:08:12.840 just very off peak as I headed down to Grand Central. 0:08:12.840 --> 0:08:14.840 Man Deep, thanks very much for joining us. Man Deep Sing, 0:08:15.040 --> 0:08:18.760 senior tech industry analyst at Bloomberg Intelligence, talking to us 0:08:18.760 --> 0:08:26.440 about Uber out after the bell. This is Bloomberg. I 0:08:26.480 --> 0:08:28.480 am just looking forward to what we got going on 0:08:28.520 --> 0:08:30.080 today and we have a lot. Let's bring in Jennifer 0:08:30.080 --> 0:08:33.280 Epstein right now, political reporter from Bloomberg News. We've got 0:08:33.280 --> 0:08:36.920 her on the line from Washington, d C. To talk. Well, 0:08:36.920 --> 0:08:38.920 there's a lot of talk about, but I guess Jennifer. 0:08:39.120 --> 0:08:43.319 The first issue is the Biden administration. The c d 0:08:43.440 --> 0:08:47.560 C eviction moratorium. It looked like it was over, and 0:08:47.640 --> 0:08:50.199 now it looks like they're extending it until October thirteenth. 0:08:50.240 --> 0:08:53.360 Although the President himself said there's not really very strong 0:08:53.440 --> 0:08:57.920 constitutional grounds for this Yeah, it's actually October three or 0:08:58.080 --> 0:09:02.120 two months from yesterday, UM, when the CDC Director um 0:09:02.240 --> 0:09:05.360 signed this order, and it's trying to be a bit 0:09:05.400 --> 0:09:09.320 more narrow and really focused on the rise of the 0:09:09.360 --> 0:09:13.360 delta variant, and what the CDC Director says is the 0:09:13.440 --> 0:09:17.920 public health threat that comes with people potentially being evicted 0:09:17.920 --> 0:09:19.920 from their homes and then you know, ending up in 0:09:20.000 --> 0:09:23.280 shelters or on the streets, um, where there could potentially 0:09:23.360 --> 0:09:27.240 be more spread of the virus and you might see 0:09:27.679 --> 0:09:31.240 in if people were living in their own homes. But 0:09:31.280 --> 0:09:34.560 why do they care enough today and not like Saturday? Like, 0:09:34.600 --> 0:09:38.920 why not deal with this before? Yeah, well, it certainly 0:09:38.960 --> 0:09:40.720 seems like this did come up as a bit of 0:09:40.720 --> 0:09:43.000 a surprise for the administration. As much as they had 0:09:43.320 --> 0:09:46.640 known the deadline was coming, they were also very focused 0:09:46.679 --> 0:09:50.760 on on the infrastructure bill, and you know, it's really 0:09:50.800 --> 0:09:52.880 they seem to have also been caught a bit by 0:09:52.920 --> 0:09:56.400 surprise by the very rapid spread of the delta variant 0:09:56.440 --> 0:09:59.080 and all of that sort of created this pressure. And 0:09:59.120 --> 0:10:01.680 then at the same time time you had these uh 0:10:01.960 --> 0:10:06.280 small group of House Democrats really backed by the entirety 0:10:06.320 --> 0:10:09.959 of the House Democratic Caucus saying uh in the last 0:10:10.000 --> 0:10:12.080 few days at the end of last week. This is 0:10:12.120 --> 0:10:14.320 something that has to be done. You have to help 0:10:14.400 --> 0:10:18.120 these people out, um, you know. And so the administration 0:10:18.720 --> 0:10:21.240 found a way to do it. It just took them 0:10:21.240 --> 0:10:24.280 a bit longer than I think that advocates and and 0:10:24.440 --> 0:10:27.280 other outside people would have liked to have seen. And 0:10:27.360 --> 0:10:29.880 it may not be constitutional. I mean, we can always 0:10:29.920 --> 0:10:32.439 find way to do things. If it's not constitutional. It's 0:10:32.480 --> 0:10:35.840 just really not helpful, is it. Yeah. Well, the President 0:10:36.000 --> 0:10:38.800 I think is somebody who was very cautious about those things. 0:10:39.360 --> 0:10:43.600 And that's sort of why he was reluctant to just 0:10:43.760 --> 0:10:47.240 go out and announce an extension last week. Uh and 0:10:47.360 --> 0:10:50.719 kind of back in the Supreme Court, uh to it, 0:10:50.880 --> 0:10:53.520 you know. And and he he doesn't, you know, always 0:10:53.520 --> 0:10:56.160 have the best filter for things, and so he kind 0:10:56.160 --> 0:10:59.760 of said that yesterday that this is something that might 0:10:59.840 --> 0:11:02.920 not pass muster in the courts, but it's something that 0:11:02.960 --> 0:11:06.480 the administration kind of had no choice politically but to 0:11:06.600 --> 0:11:10.160 try out. At the very least, they've bought a little 0:11:10.200 --> 0:11:12.400 bit of time, a couple of days, a couple of 0:11:12.400 --> 0:11:16.080 weeks while this works its way uh in court. And 0:11:16.080 --> 0:11:18.600 and and the other issue here is really that the 0:11:18.679 --> 0:11:24.520 Treasury Department's efforts to get out over forty billion dollars 0:11:24.559 --> 0:11:28.040 in rental aid have been uh pretty slow so far 0:11:28.120 --> 0:11:31.400 because it's something where treasurism worth working with state and 0:11:31.480 --> 0:11:33.840 local governments, and that has all just taken a lot 0:11:33.920 --> 0:11:36.200 of time to get up and running. This money from 0:11:36.240 --> 0:11:38.280 the Recovery Act that passed in March, and they were 0:11:38.320 --> 0:11:40.720 only able to get one point five billion of that 0:11:40.880 --> 0:11:44.320 out uh two renters in the month of June. So 0:11:44.800 --> 0:11:47.400 you know, they're hoping that that rationale that that's taken 0:11:47.440 --> 0:11:51.000 so long, which is something uh that Justice Kavanaugh did 0:11:51.080 --> 0:11:57.280 mention when he was part of uh uh the Supreme 0:11:57.320 --> 0:12:01.839 Court uh weighing in on this. He was not actually 0:12:01.880 --> 0:12:06.240 a part of the the um major the majority ruling 0:12:06.280 --> 0:12:10.040 on this, but uh that that is something that that 0:12:10.440 --> 0:12:12.440 they are hoping that that maybe they can kind of 0:12:12.440 --> 0:12:15.960 thread the legal legal argument there and have that uh 0:12:16.200 --> 0:12:19.760 way of getting ahead of so speaking of legal arguments 0:12:19.760 --> 0:12:21.959 and what a president does or does not have power 0:12:22.000 --> 0:12:23.840 to do, obviously, at the end of the day, this 0:12:23.920 --> 0:12:26.000 issue comes back to the pandemic. That is why there 0:12:26.040 --> 0:12:29.320 are millions of people facing the potential loss of their home. 0:12:30.240 --> 0:12:32.880 Is there anything else that President Biden has it in 0:12:32.960 --> 0:12:36.319 his power to do. In terms of the vaccination front, Yes, 0:12:36.360 --> 0:12:39.480 he's finally mandated that that federal workers need to get 0:12:39.559 --> 0:12:43.160 vaccinated or be tested all the time. But is there 0:12:43.160 --> 0:12:46.880 anything else? Yeah, I think the administration is continuing to 0:12:46.920 --> 0:12:50.680 look for more things to do. Um. They're looking for 0:12:50.760 --> 0:12:53.640 other areas of the federal government besides sort of the 0:12:54.440 --> 0:12:58.640 executive branch employees um who are covered by by the 0:12:58.800 --> 0:13:03.920 order last week, to uh, potentially more public health kind 0:13:03.960 --> 0:13:06.720 of workers who are not necessarily a part of that 0:13:06.960 --> 0:13:11.760 initial order. I think the administration is also uh just 0:13:12.000 --> 0:13:17.560 looking at at the the approval process for the vaccines. 0:13:17.640 --> 0:13:20.880 You know, it seems like, uh we saw Dr Fauci 0:13:20.960 --> 0:13:23.480 last night saying that could be just two weeks away 0:13:23.520 --> 0:13:27.400 from fives or getting final approval um with with the 0:13:27.559 --> 0:13:31.240 sd A. And that's something where um, the administrative the 0:13:31.559 --> 0:13:33.920 White House is going to stay out of that because 0:13:33.960 --> 0:13:36.599 they don't want there to be any appearance of of 0:13:36.960 --> 0:13:42.320 political pressure on these public health agencies. UM. But that itself, 0:13:42.360 --> 0:13:45.079 I think would would be a pretty significant move forward 0:13:45.080 --> 0:13:47.600 because there are lots of people at least right now 0:13:47.600 --> 0:13:49.760 who are saying, I don't want to do anything until 0:13:50.040 --> 0:13:53.079 that A fully approves it, so that in of itself 0:13:53.120 --> 0:13:57.080 could be a pretty big um move forward. And then UM, 0:13:57.120 --> 0:13:58.880 you know, I think I think the administration is just 0:13:58.960 --> 0:14:02.480 gonna kind of the for any little uh, you know, 0:14:02.720 --> 0:14:05.760 pocket of people it can get to, uh to try 0:14:05.800 --> 0:14:08.520 to to try to get more people back to native Jennifer, 0:14:08.559 --> 0:14:10.920 thanks for spending some time with us. Jennifer Epstein is 0:14:10.960 --> 0:14:14.079 Bloomberg News political reporter coming to us out of Washington, 0:14:14.160 --> 0:14:18.920 d C. Now, there has been a ton of M 0:14:18.960 --> 0:14:23.080 and A activity today alone. Um, we saw a big 0:14:23.680 --> 0:14:27.920 uh deal in the telecom space with Apollo. We saw 0:14:28.560 --> 0:14:32.440 UM a big deal in soccer La Liga. Ten percent 0:14:32.480 --> 0:14:35.440 of that I went to CVC. Um we saw a 0:14:35.560 --> 0:14:40.680 huge like a seventeen billion dollar deal. What was that? 0:14:41.040 --> 0:14:46.240 We saw um VC no VC properties buying MGM Growth 0:14:46.240 --> 0:14:49.280 Properties seventeen point two billion dollars. And but you were 0:14:49.320 --> 0:14:51.760 pointing out Square and after pay started the week off 0:14:51.760 --> 0:14:53.960 with a bang on Monday, the biggest acquisition ever for 0:14:54.000 --> 0:14:57.720 an Australian company twenty nine billion dollars. And I think 0:14:57.760 --> 0:14:59.440 since the beginning of July you said more than like 0:14:59.440 --> 0:15:03.840 five billion, fifty billion dollars and deals have been done, 0:15:03.880 --> 0:15:07.080 so it's a great time to bring in uh Thad Malik. 0:15:07.120 --> 0:15:10.280 He is the chair of Global Mergers and Acquisitions, the 0:15:10.360 --> 0:15:14.160 practice Global Mergence Acquisition Practice at Paul Hastings and he 0:15:14.160 --> 0:15:16.720 can talk to us about you know, this this incredible 0:15:16.760 --> 0:15:21.080 growth that thanks for joining us. Um Is this peaking now? 0:15:21.160 --> 0:15:22.960 Is this going to slow down? Or are we just 0:15:22.960 --> 0:15:25.120 gonna look at you know, record M and A activity 0:15:25.160 --> 0:15:28.560 this year? Yeah? Thanks Matt and Kaylee. Nice to be here. 0:15:28.600 --> 0:15:32.480 Appreciate the opportunity right now. It's interesting, you've got pretty 0:15:32.560 --> 0:15:36.800 much the perfect confluence of events for continued activity. You 0:15:36.840 --> 0:15:39.920 alluded to some of it earlier in terms of rate reviews, 0:15:39.960 --> 0:15:42.000 in terms of what people are seeing in terms of rates, 0:15:42.040 --> 0:15:45.360 but more importantly, markets don't really like uncertainty when it 0:15:45.360 --> 0:15:47.800 comes to M and A and so with some of 0:15:47.800 --> 0:15:52.840 the pandemic challenges waning and with the vaccinations increasing, that's 0:15:52.840 --> 0:15:56.800 gotten people a little less uncomfortable about what's coming down 0:15:56.880 --> 0:15:59.840 the road. And it's pretty much the perfect influence of 0:15:59.840 --> 0:16:01.920 a ends. I think you're going to start to see 0:16:01.960 --> 0:16:04.600 a little bit of a shift and you're starting to 0:16:04.600 --> 0:16:07.320 see this on the anti trust side, Folks are starting 0:16:07.360 --> 0:16:09.240 to focus a little bit more than they have in 0:16:09.280 --> 0:16:12.120 the past, And just yesterday the FTC indicated that the 0:16:12.200 --> 0:16:15.080 crush of deals is so large that they're not able 0:16:15.120 --> 0:16:18.000 to get through their review in thirty days for some deals, 0:16:18.120 --> 0:16:20.000 and so that puts people in a little bit of limbo. 0:16:20.120 --> 0:16:22.680 But for now, I'd say we have a wary eye 0:16:22.720 --> 0:16:25.680 trained on horizon. But things are still trending positive. But 0:16:25.720 --> 0:16:28.440 it's not even just that the deal approval process could 0:16:28.480 --> 0:16:31.120 be slow. The Biden administration has signaled that it wants 0:16:31.120 --> 0:16:33.600 to be a lot tougher on competition in general. How 0:16:33.640 --> 0:16:35.520 how much of a headwind is that to the M 0:16:35.520 --> 0:16:38.080 and A market. I think it's going to be a 0:16:38.120 --> 0:16:40.920 particular headwind for those that are in industries that they 0:16:41.000 --> 0:16:43.720 fixed their sights on. The regulators tend to follow a 0:16:43.760 --> 0:16:46.360 pretty well worn path. They try to communicate a little 0:16:46.360 --> 0:16:48.240 bit of where they're they're coming, and you see some 0:16:48.320 --> 0:16:51.600 of that in his executive order, and particularly for the 0:16:51.680 --> 0:16:54.480 large tech companies and those that are perceived to have 0:16:54.840 --> 0:16:58.160 large market presence. I think that scrutiny is going to continue, 0:16:58.320 --> 0:16:59.640 and I think you can add on top of that 0:16:59.680 --> 0:17:01.920 prank like some of what you're seeing in terms of 0:17:01.920 --> 0:17:05.240 the sciffiest review, the foreign review of key industries and 0:17:06.040 --> 0:17:08.080 deals in that space. So I think that is going 0:17:08.080 --> 0:17:10.800 to be a continuing challenge right now, that's probably the 0:17:10.920 --> 0:17:15.760 biggest potential disruptor that folks are looking at, but more 0:17:15.840 --> 0:17:19.040 could be coming. Well. Taxes is the other right um, 0:17:19.080 --> 0:17:23.000 at least, I'm not sure which way that pushes things, 0:17:23.000 --> 0:17:26.160 because we've seen a number of deals already, some very 0:17:26.200 --> 0:17:30.359 big deals due to the fact that private ownership saw 0:17:30.800 --> 0:17:33.440 maybe a jump in capital gains coming and wanted to 0:17:33.480 --> 0:17:37.119 get out ahead of it. Absolutely, and one of the 0:17:37.160 --> 0:17:39.000 things that they've learned, I mean in the past when 0:17:39.000 --> 0:17:41.639 this has happening, in particular for the private equity sponsors, 0:17:41.640 --> 0:17:43.800 there's been a surge of activity to try to beet 0:17:43.960 --> 0:17:46.760 the increase. And one of the issues that they've been 0:17:46.800 --> 0:17:49.760 discussing is whether they make that sort of retroactive so 0:17:49.840 --> 0:17:52.159 to a certain extent that's got people a little I 0:17:52.160 --> 0:17:55.760 don't want to say destabilized, but again cautious about what 0:17:55.800 --> 0:17:58.119 they're looking at. So in particular for the sponsors, that 0:17:58.160 --> 0:18:01.919 becomes a very pressing concern. What's the hottest industry right 0:18:01.920 --> 0:18:08.240 now for murger activity? Basically anything technology related, whether you 0:18:08.280 --> 0:18:11.879 call it digitization or digitalization, however you refer to it. 0:18:12.520 --> 0:18:16.440 People are recognizing, particularly with the work from home dynamics, 0:18:16.480 --> 0:18:19.920 that they need to upgrade their systems and capabilities and 0:18:20.480 --> 0:18:24.639 anything related to technology, whether that's improving your supply chain, 0:18:24.720 --> 0:18:29.320 whether that's improving your metrics, finding new ways of generating 0:18:29.320 --> 0:18:33.960 revenue from data that your your products push off, anything 0:18:34.000 --> 0:18:37.080 that's related to that. There's a recognition that you need 0:18:37.160 --> 0:18:40.119 to be moving forward and oftentimes buying it is cheaper 0:18:40.119 --> 0:18:44.160 than building it and certainly faster. Does it help that 0:18:44.200 --> 0:18:48.600 there is no interest rate risk here? I mean not 0:18:48.760 --> 0:18:51.480 only are rates low negative to low, but they're never 0:18:51.520 --> 0:18:58.959 going up again. Well, they the cycles tend to move 0:18:59.000 --> 0:19:01.199 in cycles, so as some point there will be the 0:19:01.240 --> 0:19:03.760 inevitable sort of come up and but no, certainly right now. 0:19:04.280 --> 0:19:07.960 That's a significant driver again for the sponsors in particular 0:19:08.080 --> 0:19:11.159 with rates being low, they can reset their expectations in 0:19:11.240 --> 0:19:14.000 terms of deals. And there's a lot of activity right now. 0:19:14.040 --> 0:19:16.280 I mean, there's what we're seeing on the service provider 0:19:16.400 --> 0:19:19.160 side from the investment banks. What the FTC did, which 0:19:19.200 --> 0:19:22.159 is basically recognize what the service providers have been seeing. 0:19:22.880 --> 0:19:25.280 There's a lot of activity trying to get pushed through 0:19:25.440 --> 0:19:27.840 right now as quickly as possible, because people don't want 0:19:27.880 --> 0:19:30.159 to get caught, you know, catching the follow knife, so 0:19:30.200 --> 0:19:34.000 to speak, when the inevitable cycle turns. All right, Dad, 0:19:34.040 --> 0:19:36.639 thanks so much for joining us time to talk about 0:19:36.720 --> 0:19:38.440 and it was great having you. Hopefully get you back 0:19:38.480 --> 0:19:41.960 on soon. Daddy's Malik there is the chair of Global 0:19:42.000 --> 0:19:45.800 Mergers and Acquisitions at Paul Hastings talking to us about 0:19:45.840 --> 0:19:48.560 this m and a market which has just been incredible. 0:19:48.920 --> 0:19:50.400 You know, one of the deals I forgot to mention 0:19:50.520 --> 0:19:53.919 was Betsy Cohen did another back deal today and I 0:19:53.960 --> 0:19:57.760 think she's done at least twelve billion dollars worth of 0:19:57.920 --> 0:20:01.800 Financial Services Act deal. So when you bring spacks into it, 0:20:01.800 --> 0:20:05.520 it just is an incredible market um and the growth 0:20:05.560 --> 0:20:09.200 has been um pretty outstanding. M A go by the way, 0:20:09.240 --> 0:20:11.240 it's one of my favorite functions on the Bloomberg terminal 0:20:11.240 --> 0:20:13.600 and it's a great way to see. For example, you 0:20:13.640 --> 0:20:15.879 can click on forgo for the league table and you 0:20:15.880 --> 0:20:17.399 can see how many deals have been done year to 0:20:17.520 --> 0:20:20.040 date or in the last month of Tetra highly recommen 0:20:20.080 --> 0:20:28.359 using it. M A go. This is Bloomberg Now to 0:20:28.480 --> 0:20:32.959 bringing Kate. Hello Global chief investment officer at Russell Investments 0:20:32.960 --> 0:20:35.760 to talk a little bit about E S G investing 0:20:35.800 --> 0:20:38.680 to us Kate, it's interesting because there are a few 0:20:38.720 --> 0:20:43.320 different ways investors can go with E S G And 0:20:43.640 --> 0:20:46.240 I guess it depends. Do you have to decide if 0:20:46.240 --> 0:20:54.520 you want to UM chase returns or make a difference. Yeah. 0:20:54.560 --> 0:20:58.040 I think it's UM the blend of financial, non financial 0:20:58.320 --> 0:21:02.639 and regulatory drivers that are making people kind of go 0:21:02.680 --> 0:21:07.720 in one direction versus another. Yeah. I think increasingly the 0:21:07.760 --> 0:21:10.800 ability to kind of prove out that you leading in 0:21:10.840 --> 0:21:14.000 certain directions you can have a positive or at least 0:21:14.000 --> 0:21:17.679 not a negative impact on returns UM will start to 0:21:17.920 --> 0:21:21.639 kind of play through UM. But I do think there, 0:21:21.680 --> 0:21:24.160 you know, your needs to be kind of that balanced 0:21:24.160 --> 0:21:27.480 focus of that primary objective. What is it? Is it 0:21:27.520 --> 0:21:30.679 about having the impact or is it about returns just 0:21:30.720 --> 0:21:33.159 so you can calibrate how much you go in one 0:21:33.200 --> 0:21:36.679 direction versus the other? Do we have enough data to 0:21:36.800 --> 0:21:39.040 make E S G investments? I feel like a lot 0:21:39.080 --> 0:21:43.760 of this stuff has been pretty opaque. But is that changing? Yeah, Yeah, 0:21:43.760 --> 0:21:45.880 I think it's a great question. UM. And I think 0:21:45.920 --> 0:21:49.639 particularly on the climate side, the data availability and some 0:21:49.800 --> 0:21:53.399 of the approaches for kind of testing the impact of 0:21:53.560 --> 0:21:57.960 climate on different sectors or different types of metrics is 0:21:57.960 --> 0:22:01.040 getting a lot better and it's accelerating really quickly, and 0:22:01.080 --> 0:22:02.680 so I think a big area you know, needs to 0:22:02.720 --> 0:22:05.600