1 00:00:00,120 --> 00:00:12,960 Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene 2 00:00:13,480 --> 00:00:17,560 Speaker 1: Jay Ley. We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:27,520 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg The 5 00:00:27,600 --> 00:00:31,080 Speaker 1: Discipline to maintain discipline the message from David Kelly at 6 00:00:31,120 --> 00:00:34,640 Speaker 1: JP Morgan Asset Management, the chief global strategist he joined us. Now, David, 7 00:00:34,640 --> 00:00:37,160 Speaker 1: build on that. What do you mean by that? Well, 8 00:00:37,400 --> 00:00:41,280 Speaker 1: I think that we were in a recovery, but this 9 00:00:41,320 --> 00:00:43,560 Speaker 1: recovery is about it slow down. I mean the sound 10 00:00:43,600 --> 00:00:46,680 Speaker 1: that you hear outside is screeching breaks because this V 11 00:00:46,760 --> 00:00:49,000 Speaker 1: shaped recovery is going to slow a lot in the 12 00:00:49,080 --> 00:00:52,519 Speaker 1: fourth quarter and and um early next year. I think 13 00:00:52,520 --> 00:00:55,400 Speaker 1: it's important not to just, you know, to pile into 14 00:00:55,840 --> 00:00:58,040 Speaker 1: momentum stocks. We've seen, we've seen, you know, the stock 15 00:00:58,040 --> 00:00:59,960 Speaker 1: marker do wonderfully well this year, but there are parts 16 00:01:00,000 --> 00:01:02,160 Speaker 1: of the the stock markets which are frankly done too well, 17 00:01:02,360 --> 00:01:04,360 Speaker 1: giving the amount of uncertainty out there, and given the 18 00:01:04,400 --> 00:01:06,679 Speaker 1: fact that down the road we are looking at higher 19 00:01:06,680 --> 00:01:08,800 Speaker 1: taxes and higher interest rates. So I think it's very 20 00:01:08,840 --> 00:01:11,800 Speaker 1: important for investors in this stage to be disciplined realized 21 00:01:12,040 --> 00:01:14,479 Speaker 1: that just because we've seen some good economic numbers, because 22 00:01:14,480 --> 00:01:18,119 Speaker 1: the marketers seem to be okay here, you know, don't 23 00:01:18,160 --> 00:01:20,000 Speaker 1: don't take your eye off the bull. Recognize that we've 24 00:01:20,000 --> 00:01:22,280 Speaker 1: still got a long way to go before this pandemic 25 00:01:22,360 --> 00:01:25,080 Speaker 1: is really over. Within it is the idea of what 26 00:01:25,200 --> 00:01:28,919 Speaker 1: the return will be. All the actual assumptions David Kelly 27 00:01:28,920 --> 00:01:31,480 Speaker 1: has been we're supposed to invest for single digit return. 28 00:01:32,120 --> 00:01:35,000 Speaker 1: Nobody believes that that's on these high flyers. Do we 29 00:01:35,040 --> 00:01:39,120 Speaker 1: go back to a single digit world? We have to eventually, 30 00:01:39,160 --> 00:01:42,440 Speaker 1: because in the end, it's about nominal GDP growth and 31 00:01:42,480 --> 00:01:45,679 Speaker 1: what's happened for a long time, actually for decades now, 32 00:01:45,720 --> 00:01:48,800 Speaker 1: as we've seen the value of financial assets um in 33 00:01:48,840 --> 00:01:53,040 Speaker 1: the US rise much faster than overall nominal GDP. But 34 00:01:53,160 --> 00:01:55,600 Speaker 1: ultimately it's about the growth and goods and services produced 35 00:01:55,600 --> 00:01:59,280 Speaker 1: by the U S economy. And so there is gonna 36 00:01:59,280 --> 00:02:01,640 Speaker 1: be some correctional long the way here and there are 37 00:02:01,760 --> 00:02:03,720 Speaker 1: and we are going to see a return to single 38 00:02:03,760 --> 00:02:06,960 Speaker 1: digit returns. And so it's very important for people, you know, 39 00:02:07,080 --> 00:02:09,320 Speaker 1: look at valuations carefully because the things that are most 40 00:02:09,360 --> 00:02:11,480 Speaker 1: overvalued are the things that are going to get hurt 41 00:02:11,520 --> 00:02:15,240 Speaker 1: the worst when there is a more significant correction. Well, David, 42 00:02:15,320 --> 00:02:17,760 Speaker 1: when you talk about how we could see a correction 43 00:02:17,919 --> 00:02:20,440 Speaker 1: in what in tech stocks? Because right now we're seeing 44 00:02:20,480 --> 00:02:23,520 Speaker 1: an ongoing performance at least for today. A return to 45 00:02:23,560 --> 00:02:27,440 Speaker 1: the underperformance in small caps in financials and tech is 46 00:02:27,480 --> 00:02:31,239 Speaker 1: what's recovering. Well, yeah, and and and because this market 47 00:02:31,320 --> 00:02:33,480 Speaker 1: is very momentum driven. I mean, I think this year 48 00:02:33,520 --> 00:02:37,640 Speaker 1: has been so difficult for fundamental analytics. I mean, how 49 00:02:37,639 --> 00:02:40,240 Speaker 1: do you figure out, you know, what these companies are 50 00:02:40,240 --> 00:02:42,359 Speaker 1: really worth and the sort of world we're looking at 51 00:02:42,400 --> 00:02:45,399 Speaker 1: post pandemic. So I think investors are just jumping into 52 00:02:45,400 --> 00:02:48,640 Speaker 1: the momentum trade here. But when we get through this, 53 00:02:48,680 --> 00:02:51,120 Speaker 1: when we have a more normal economy, as that begins 54 00:02:51,160 --> 00:02:54,280 Speaker 1: to shape, you know, shape as we have a sense 55 00:02:54,320 --> 00:02:57,639 Speaker 1: of it. In two, I do think that value stocks 56 00:02:57,639 --> 00:02:59,960 Speaker 1: should do better than growth. Growth is very expensive RealD 57 00:03:00,000 --> 00:03:02,160 Speaker 1: of the value. You know, it's most expensive its means 58 00:03:02,200 --> 00:03:04,639 Speaker 1: since the tech bubble. I also think that international ought 59 00:03:04,639 --> 00:03:06,560 Speaker 1: to do better than the US a very similar story. 60 00:03:06,560 --> 00:03:09,320 Speaker 1: Both em and developed country international are cheaper out in 61 00:03:09,360 --> 00:03:11,600 Speaker 1: the US, So I think you need to think about 62 00:03:11,600 --> 00:03:14,280 Speaker 1: the boring middle of the market here and try not 63 00:03:14,320 --> 00:03:18,000 Speaker 1: to be too enticed or enamored of of high tech 64 00:03:18,600 --> 00:03:22,720 Speaker 1: um large cap megacap growth stalks. David, fold your economics 65 00:03:22,760 --> 00:03:26,200 Speaker 1: in your Castman and Farola. Your economists make very clear 66 00:03:26,240 --> 00:03:29,440 Speaker 1: they have a very cautious view out. Is that conscious 67 00:03:29,480 --> 00:03:32,120 Speaker 1: view folded in the fourth quarter or is that a 68 00:03:32,200 --> 00:03:35,640 Speaker 1: conscious view for next year? It should be in the 69 00:03:35,680 --> 00:03:38,320 Speaker 1: fourth quarter. If we're looking at quarterly GDP, we saw 70 00:03:38,360 --> 00:03:42,000 Speaker 1: a GDP full by two percent in the second quarter. 71 00:03:42,200 --> 00:03:44,360 Speaker 1: We think would rise by as much as thirty percent 72 00:03:44,800 --> 00:03:47,640 Speaker 1: in the third annualize. But then when you rise by 73 00:03:47,640 --> 00:03:51,080 Speaker 1: about three percent annualized in the fourth, so there's a 74 00:03:51,200 --> 00:03:54,000 Speaker 1: very sharp deceleration growth. And you're gonna see that in jobs. 75 00:03:54,000 --> 00:03:56,200 Speaker 1: I mean if you look sequentially, Okay, we saw we 76 00:03:56,240 --> 00:03:59,640 Speaker 1: added one point four million jobs last month. That's good, 77 00:04:00,440 --> 00:04:03,320 Speaker 1: but we think that job growth will now decelerate about 78 00:04:03,480 --> 00:04:06,280 Speaker 1: less than a million per month, which sounds okay, except 79 00:04:06,320 --> 00:04:09,840 Speaker 1: we're still eleven million jobs shorter where we were in February, 80 00:04:09,960 --> 00:04:12,200 Speaker 1: So again a deceleration there. So I think in the 81 00:04:12,240 --> 00:04:15,200 Speaker 1: monthly numbers it's upon us. In the quartine numbers, we're 82 00:04:15,200 --> 00:04:16,640 Speaker 1: gonna have to wait for the fourth quarter to see 83 00:04:16,680 --> 00:04:19,720 Speaker 1: that deceleration. What's the run rate of nominal GDP that 84 00:04:19,880 --> 00:04:24,960 Speaker 1: you then fold into your forecasting of the equity markets. Um, well, 85 00:04:25,360 --> 00:04:27,039 Speaker 1: it's it's hard to talk about a run rate in 86 00:04:27,080 --> 00:04:30,680 Speaker 1: either twenty one when you get but once you get 87 00:04:30,680 --> 00:04:34,760 Speaker 1: into two, we're looking at something in the order of 88 00:04:34,839 --> 00:04:37,239 Speaker 1: four to five percent once we get back to close 89 00:04:37,279 --> 00:04:39,160 Speaker 1: to full employment. But yeah, you're gonna be you know, 90 00:04:39,240 --> 00:04:42,039 Speaker 1: we'll have to bring that unemployment rate rate down for 91 00:04:42,040 --> 00:04:44,600 Speaker 1: for a while here. But you know, we've got another problem, 92 00:04:44,600 --> 00:04:47,240 Speaker 1: which is that we've got a demographic crash going on 93 00:04:47,360 --> 00:04:49,320 Speaker 1: right now, which is also going to take something out 94 00:04:49,320 --> 00:04:53,240 Speaker 1: of GDP growth for this pandemic is Oh, it's what 95 00:04:53,320 --> 00:04:55,120 Speaker 1: you make if. What's happening in Washington at the moment, 96 00:04:56,560 --> 00:04:58,920 Speaker 1: it's all politics. I mean, I think that they I 97 00:04:59,600 --> 00:05:02,880 Speaker 1: was hoping we'd see some sort of new support package, 98 00:05:03,560 --> 00:05:06,400 Speaker 1: a Phase four deal before the conventions, because honestly, there 99 00:05:06,400 --> 00:05:08,159 Speaker 1: are a lot of unemployed people in this country who 100 00:05:08,200 --> 00:05:10,000 Speaker 1: need that. A lot of people are going to suffer 101 00:05:10,000 --> 00:05:12,320 Speaker 1: through this winter. But nobody wants to make a deal 102 00:05:12,520 --> 00:05:14,599 Speaker 1: at this stage, it seems to me before the election. 103 00:05:14,760 --> 00:05:17,640 Speaker 1: So hopefully after the election, however, it goes in that 104 00:05:17,720 --> 00:05:20,920 Speaker 1: lame duct session of Congress, we'll have something to support 105 00:05:20,920 --> 00:05:23,719 Speaker 1: people who just can't get back to work until a 106 00:05:23,720 --> 00:05:26,360 Speaker 1: pandemic is tamed, and hopefully we'll tame the pandemic in 107 00:05:26,440 --> 00:05:29,920 Speaker 1: twenty twenty one. But right now it's just partisan posturing 108 00:05:30,120 --> 00:05:33,039 Speaker 1: because everybody is focused on the election. David, is no 109 00:05:33,160 --> 00:05:36,480 Speaker 1: deal or a very skinny deal priced into the market currently. 110 00:05:37,600 --> 00:05:39,680 Speaker 1: I think it probably is. And remember we're talking about 111 00:05:39,680 --> 00:05:41,520 Speaker 1: eight weeks. I mean we're talking about that there are 112 00:05:41,880 --> 00:05:44,960 Speaker 1: perhaps ten weeks. But once the election is over, I 113 00:05:44,960 --> 00:05:47,919 Speaker 1: think there is a majority probably in Congress for some 114 00:05:47,960 --> 00:05:50,360 Speaker 1: sort of skinny deal because after all, and things like 115 00:05:50,560 --> 00:05:53,160 Speaker 1: state and local government, you can come back in January 116 00:05:53,240 --> 00:05:54,800 Speaker 1: with a new Congress and if you know, if, if, 117 00:05:55,480 --> 00:05:57,640 Speaker 1: depending on how that that shapes, that you could you 118 00:05:57,640 --> 00:06:00,320 Speaker 1: could do something then So you just need to do 119 00:06:00,400 --> 00:06:02,480 Speaker 1: something about the unemployment support. You need to do something 120 00:06:02,480 --> 00:06:05,479 Speaker 1: to try and help these small businesses. But it's you 121 00:06:05,520 --> 00:06:07,720 Speaker 1: don't need to spend a fortune right now, because you 122 00:06:07,760 --> 00:06:09,960 Speaker 1: can always come back next January and do something bigger. 123 00:06:10,920 --> 00:06:13,039 Speaker 1: It's even just a comment on the language that we're 124 00:06:13,080 --> 00:06:15,640 Speaker 1: using at the moment. A skinny deal is now something 125 00:06:15,680 --> 00:06:19,440 Speaker 1: between five hundred and seven hundred billion dollars down in Washington. 126 00:06:19,880 --> 00:06:23,200 Speaker 1: What are your thoughts on that there are no fiscal 127 00:06:23,200 --> 00:06:25,599 Speaker 1: hawks left. There's no monetary hawks left either, and the 128 00:06:25,600 --> 00:06:28,400 Speaker 1: hawks have all left Washington, which is a little worrying. 129 00:06:28,880 --> 00:06:30,760 Speaker 1: We do need to do this right now, but I 130 00:06:30,800 --> 00:06:34,000 Speaker 1: am very concerned that as the economy cover is particularly 131 00:06:34,120 --> 00:06:37,360 Speaker 1: get a good vaccine and it begins to move forward fast. 132 00:06:37,760 --> 00:06:40,159 Speaker 1: Later next year, We've got a lot of government debt, 133 00:06:40,200 --> 00:06:41,599 Speaker 1: and this is going to be a time when we 134 00:06:41,680 --> 00:06:45,680 Speaker 1: need to be really disciplined in terms of policy, just 135 00:06:45,760 --> 00:06:48,839 Speaker 1: to maintain the credibility of you know, of our you 136 00:06:48,839 --> 00:06:51,800 Speaker 1: know of treasury bonds and credibility of the currency. So 137 00:06:52,200 --> 00:06:54,800 Speaker 1: we're going to need to have some discipline down the road. 138 00:06:55,080 --> 00:06:57,240 Speaker 1: But you know, I have no problem with spending money 139 00:06:57,320 --> 00:06:58,600 Speaker 1: right now because there are a lot of people who 140 00:06:58,640 --> 00:07:01,320 Speaker 1: are really in some stress and you're not going to 141 00:07:01,400 --> 00:07:04,920 Speaker 1: create inflation in the middle of a of an economy 142 00:07:04,960 --> 00:07:08,960 Speaker 1: with the almost ten percent unemployment. David Ran to catch 143 00:07:09,040 --> 00:07:11,280 Speaker 1: up as always, stay well, send out records to the team. 144 00:07:11,320 --> 00:07:18,400 Speaker 1: David Kelly there of JP Morgan Asset Management. Let's stagger 145 00:07:18,480 --> 00:07:22,000 Speaker 1: to our guests as we can Omar regular shrub chief Investment. 146 00:07:25,600 --> 00:07:27,760 Speaker 1: You know, I can't, I can't come out after Quinneth 147 00:07:27,800 --> 00:07:31,360 Speaker 1: Peltrow Good Morning on Bloomberg Radio and Bloomberg Television. Thrilled 148 00:07:31,360 --> 00:07:34,280 Speaker 1: you with us under simulcast and Mr Aguilar will give 149 00:07:34,360 --> 00:07:38,240 Speaker 1: us some brilliance right now. What is the character of 150 00:07:38,280 --> 00:07:41,520 Speaker 1: this pullback? You have the advantage of Kathy and Lisianne 151 00:07:41,560 --> 00:07:44,560 Speaker 1: to give you perspective as well. What is the nature 152 00:07:44,800 --> 00:07:49,280 Speaker 1: of the pullback we've seen? Omar Well, good morning Town. 153 00:07:49,320 --> 00:07:52,480 Speaker 1: Definitely is that out of my range of understanding A 154 00:07:52,480 --> 00:07:55,960 Speaker 1: lot of the discussion of reline and celebrities. But I 155 00:07:56,040 --> 00:07:59,680 Speaker 1: can tell you though that um big part of what 156 00:07:59,720 --> 00:08:02,080 Speaker 1: the more it is going through now is something that 157 00:08:02,200 --> 00:08:05,040 Speaker 1: in a way, it shouldn't be coming as a surprise. 158 00:08:05,160 --> 00:08:08,080 Speaker 1: As we come out of this summer and such an 159 00:08:08,080 --> 00:08:13,040 Speaker 1: amazing run in the market, we clearly speculated what would 160 00:08:13,080 --> 00:08:16,040 Speaker 1: could be the fault look like. And if you actually 161 00:08:16,080 --> 00:08:18,560 Speaker 1: see all the sources of uncertainty we had and the 162 00:08:18,600 --> 00:08:23,000 Speaker 1: gap between the market and the economy getting bigger and bigger, 163 00:08:24,160 --> 00:08:28,120 Speaker 1: that all of a sudden created that the environment for 164 00:08:28,200 --> 00:08:31,240 Speaker 1: a you know, a potential volatility and what we're observing 165 00:08:31,320 --> 00:08:33,000 Speaker 1: right here you put it into the context of the 166 00:08:33,040 --> 00:08:35,720 Speaker 1: size of the rally that we have seen since April, 167 00:08:36,080 --> 00:08:39,400 Speaker 1: we're just seeing volatility. The size of the correction, even 168 00:08:39,400 --> 00:08:43,680 Speaker 1: though in the NASDAK has significant, is still, you know, 169 00:08:43,840 --> 00:08:47,040 Speaker 1: very small relative to the size of the bold market 170 00:08:47,120 --> 00:08:50,240 Speaker 1: we saw earlier in the year. Our really serious question, 171 00:08:50,280 --> 00:08:52,439 Speaker 1: and I don't want you to speak for the executives 172 00:08:52,440 --> 00:08:54,760 Speaker 1: A Swab and Mr Schwab as well, you can do 173 00:08:54,800 --> 00:08:59,880 Speaker 1: that firm self. Swab and others in retail electronic brokerage 174 00:09:00,240 --> 00:09:05,079 Speaker 1: have been pinatas about the sizeable retail trading we're seeing. 175 00:09:05,480 --> 00:09:09,160 Speaker 1: Do you buy that idea that there's something ill about 176 00:09:09,200 --> 00:09:14,160 Speaker 1: all that retail trading? Well, you know, the the our 177 00:09:14,520 --> 00:09:17,960 Speaker 1: job a CHUAB is always to guide retail investors to 178 00:09:18,080 --> 00:09:21,120 Speaker 1: find their best way to trade and in many cases 179 00:09:21,160 --> 00:09:24,120 Speaker 1: to find, you know, the opportunities they find in the 180 00:09:24,160 --> 00:09:26,160 Speaker 1: market so that they can use their capital in the 181 00:09:26,280 --> 00:09:29,599 Speaker 1: wise way. Of course, there's a lot of players in 182 00:09:29,640 --> 00:09:32,200 Speaker 1: the market, there's a lot of activity in the market, 183 00:09:32,280 --> 00:09:34,760 Speaker 1: and the size of the retail trading, especially the high 184 00:09:34,880 --> 00:09:38,920 Speaker 1: frequency retail trading, has had an impact in the market, 185 00:09:38,920 --> 00:09:41,120 Speaker 1: no question about it. Now. I think a big part 186 00:09:41,160 --> 00:09:43,640 Speaker 1: of the discussion of what we do at investment management 187 00:09:43,640 --> 00:09:46,719 Speaker 1: part of CHUAB, it also involves, you know, trying to 188 00:09:46,760 --> 00:09:50,360 Speaker 1: guide them in through the behavioral aspects of the market. 189 00:09:50,400 --> 00:09:52,720 Speaker 1: If you actually see a lot of the retail activity 190 00:09:53,200 --> 00:09:56,199 Speaker 1: usually tends to be very short term in age nature, 191 00:09:56,440 --> 00:09:59,480 Speaker 1: and in many cases tends to be fairly related to 192 00:09:59,520 --> 00:10:02,680 Speaker 1: behavior of economics. Um So we do a lot of 193 00:10:02,720 --> 00:10:04,719 Speaker 1: research and we provide a lot of advice to our 194 00:10:04,760 --> 00:10:07,800 Speaker 1: retail clients to try to guide them to understand what 195 00:10:08,000 --> 00:10:11,840 Speaker 1: is really the motivation be find a lot of the trading. 196 00:10:11,920 --> 00:10:14,000 Speaker 1: Is it really more for a short term trade? Is 197 00:10:14,000 --> 00:10:17,960 Speaker 1: it really more consistent with their investment objectives? Well, I am. 198 00:10:18,120 --> 00:10:20,640 Speaker 1: You mentioned two things. They're one on side the volume 199 00:10:20,679 --> 00:10:23,480 Speaker 1: clearly increased over the last six months on the retail side. 200 00:10:23,720 --> 00:10:25,920 Speaker 1: The other on the character of the trading. Can you 201 00:10:25,960 --> 00:10:27,880 Speaker 1: talk a little bit more about that, Whether you've seen 202 00:10:27,920 --> 00:10:30,760 Speaker 1: a shift to more short term than perhaps it was 203 00:10:30,760 --> 00:10:32,960 Speaker 1: twelve months ago, Whether you've seen a shift from just 204 00:10:33,200 --> 00:10:35,720 Speaker 1: the underlying stock to more options activity, which is a 205 00:10:35,720 --> 00:10:37,920 Speaker 1: big discussion in the last week or so. Can you 206 00:10:37,920 --> 00:10:40,960 Speaker 1: give us some color some clarity there. I'm a well, 207 00:10:41,080 --> 00:10:43,760 Speaker 1: you know, the the I think the market environment has 208 00:10:43,760 --> 00:10:47,880 Speaker 1: actually put you know, clients and in generally investors in 209 00:10:48,000 --> 00:10:50,840 Speaker 1: like two camps, and you can actually barely clearly see 210 00:10:50,920 --> 00:10:54,000 Speaker 1: through the activity that we see in the market. On 211 00:10:54,000 --> 00:10:56,320 Speaker 1: one hand, we have what is called in behavioral finance, 212 00:10:56,360 --> 00:10:59,920 Speaker 1: the overconfident crowd, the over confident crowd, that is a 213 00:11:00,000 --> 00:11:04,600 Speaker 1: cognitive bias that basically feels that clearly, short term trading 214 00:11:04,720 --> 00:11:08,160 Speaker 1: it is the place to go, mostly because central banks 215 00:11:08,200 --> 00:11:10,880 Speaker 1: provide that extra liquidity and backstop for the market to 216 00:11:10,920 --> 00:11:14,200 Speaker 1: continue to follow that trade. You can actually see that 217 00:11:14,320 --> 00:11:17,000 Speaker 1: more in options, you can see that more in just 218 00:11:17,160 --> 00:11:19,080 Speaker 1: the momentum trade. You can actually see it. You can 219 00:11:19,120 --> 00:11:22,760 Speaker 1: obviously think about all the different participants that are trading 220 00:11:22,880 --> 00:11:25,760 Speaker 1: on on and off regarding those short term you know 221 00:11:26,040 --> 00:11:28,760 Speaker 1: components on the other hand, and we see that more 222 00:11:28,800 --> 00:11:31,880 Speaker 1: and more often, we actually see more of the other 223 00:11:31,920 --> 00:11:34,080 Speaker 1: side of the trade, which is some of those you 224 00:11:34,120 --> 00:11:37,400 Speaker 1: know investors that tend to be more risk averse were 225 00:11:37,480 --> 00:11:39,960 Speaker 1: loss a version, which is more of an emotional bias 226 00:11:40,000 --> 00:11:43,160 Speaker 1: in behavioral economics, that tend to actually drive more and 227 00:11:43,320 --> 00:11:45,920 Speaker 1: trying to be more safe and try to put more 228 00:11:46,080 --> 00:11:49,160 Speaker 1: cash on the sidelines and looking for protections. So when 229 00:11:49,200 --> 00:11:52,160 Speaker 1: you think about options, it's it's both ways. It basically 230 00:11:52,200 --> 00:11:54,320 Speaker 1: allows for you to put money to work in the 231 00:11:54,360 --> 00:11:56,800 Speaker 1: market to try to put you know, your views, but 232 00:11:56,880 --> 00:11:59,520 Speaker 1: also to try to seek protection. So we actually see, 233 00:11:59,679 --> 00:12:02,840 Speaker 1: you know, basically a bifurcation in terms of the the 234 00:12:02,880 --> 00:12:06,160 Speaker 1: way that activity goes. One is more short term in nature, 235 00:12:06,200 --> 00:12:08,480 Speaker 1: the other one tends to be more long term in nature. 236 00:12:08,720 --> 00:12:11,080 Speaker 1: So does this all balance itself out and keep the 237 00:12:11,320 --> 00:12:15,280 Speaker 1: rotation into cyclicles intact despite the textile off or we're 238 00:12:15,280 --> 00:12:18,040 Speaker 1: gonna be basically be set back and it's not going 239 00:12:18,080 --> 00:12:20,280 Speaker 1: to regain the helm and everything else going to kind 240 00:12:20,280 --> 00:12:23,679 Speaker 1: of limp along for a while. Well, you know, I've 241 00:12:23,840 --> 00:12:26,960 Speaker 1: I've always you know, described this induced the theory of 242 00:12:27,040 --> 00:12:30,800 Speaker 1: economics that basically say, when you look at history of recessions, 243 00:12:31,400 --> 00:12:35,319 Speaker 1: normally the market takes off before the recession is finally completed. 244 00:12:36,160 --> 00:12:38,280 Speaker 1: But in one thing that has been common in all 245 00:12:38,280 --> 00:12:41,559 Speaker 1: the prior recessions is that the source of the recession 246 00:12:41,679 --> 00:12:45,520 Speaker 1: gets resolved before you start seeing the rotation from growth 247 00:12:45,520 --> 00:12:48,800 Speaker 1: to value. Even though the market can continue to go up, 248 00:12:48,840 --> 00:12:51,840 Speaker 1: you actually see the rotation you know, into value from growth, 249 00:12:51,880 --> 00:12:54,640 Speaker 1: and that's very typical and most of the recessions what 250 00:12:54,760 --> 00:12:57,760 Speaker 1: we what is unique about this one is that these 251 00:12:57,800 --> 00:13:01,160 Speaker 1: looks more as a recession that comes for a nashural 252 00:13:01,360 --> 00:13:05,440 Speaker 1: disaster more than an economic you know, driven recession, and 253 00:13:05,480 --> 00:13:09,360 Speaker 1: the reality those and the majority of the natural disaster recessions, 254 00:13:09,480 --> 00:13:12,520 Speaker 1: they are actually solved because the natural acester has gone. 255 00:13:12,720 --> 00:13:16,439 Speaker 1: In this particular one, we have not solved the source 256 00:13:16,480 --> 00:13:19,640 Speaker 1: of the recession. We're still trying to figure it out, 257 00:13:19,960 --> 00:13:22,800 Speaker 1: and therefore it's going to be very hardly to basically 258 00:13:22,800 --> 00:13:26,400 Speaker 1: think about a series of rotation until we actually have 259 00:13:26,679 --> 00:13:29,640 Speaker 1: our kids to the source of that you know, solution 260 00:13:29,720 --> 00:13:33,120 Speaker 1: for the recession source. I'm a time on time, just 261 00:13:33,120 --> 00:13:35,319 Speaker 1: a quick one from May. Clearly there's many people that 262 00:13:35,400 --> 00:13:37,560 Speaker 1: still haven't come back to the office. Have you got 263 00:13:37,600 --> 00:13:40,880 Speaker 1: any basic assumptions of what happens to volume with guys 264 00:13:40,960 --> 00:13:43,640 Speaker 1: like yourself right now once people start going back to 265 00:13:43,640 --> 00:13:48,559 Speaker 1: the office again. Well, it's actually quite interesting, you know, John, 266 00:13:48,600 --> 00:13:51,560 Speaker 1: because what we actually think is that there is a 267 00:13:51,600 --> 00:13:54,720 Speaker 1: significant amount of people that are actually more comfortable trading 268 00:13:54,760 --> 00:13:56,959 Speaker 1: from home, and in fact, a lot of the activity 269 00:13:57,240 --> 00:14:00,440 Speaker 1: in terms of day trading tends to be more often 270 00:14:00,760 --> 00:14:03,199 Speaker 1: or people that are now have more time to actually 271 00:14:03,200 --> 00:14:06,200 Speaker 1: be training at home, so we we don't necessarily anticipate 272 00:14:06,280 --> 00:14:09,320 Speaker 1: to see any significant change in terms of how the 273 00:14:09,440 --> 00:14:13,720 Speaker 1: different um you know, activity within trading will actually happen. 274 00:14:13,800 --> 00:14:16,319 Speaker 1: Of course, it's solid speculation, you know what we think 275 00:14:16,320 --> 00:14:19,160 Speaker 1: about the bigger players people obviously, like on the asset 276 00:14:19,200 --> 00:14:22,120 Speaker 1: management side, you know, we obviously all are working from 277 00:14:22,160 --> 00:14:24,560 Speaker 1: home and therefore for that is not going to make 278 00:14:24,600 --> 00:14:26,760 Speaker 1: any difference in terms of how we operate now in 279 00:14:26,840 --> 00:14:30,000 Speaker 1: terms of retail clients and in terms of others. Clearly, 280 00:14:30,120 --> 00:14:32,200 Speaker 1: you know, the advantage that they have in terms of 281 00:14:32,240 --> 00:14:36,360 Speaker 1: their technology that is provided by different providers is there. 282 00:14:36,480 --> 00:14:39,120 Speaker 1: So it is it is unclear to me that there 283 00:14:39,120 --> 00:14:41,160 Speaker 1: will be a significant change in the volume that we see, 284 00:14:41,160 --> 00:14:44,520 Speaker 1: and we see a significant pick up invalume already. I'm 285 00:14:44,520 --> 00:14:47,280 Speaker 1: not great to catch up as always, I'm Aguila from 286 00:14:47,280 --> 00:14:55,040 Speaker 1: shaf Thank you right now. In oil, we really ignored 287 00:14:55,080 --> 00:14:56,960 Speaker 1: this since it's been my fault, and we to send 288 00:14:57,400 --> 00:15:01,720 Speaker 1: join us with energy aspects, terrific micro economic analysis of 289 00:15:01,800 --> 00:15:04,880 Speaker 1: what's going on in oil, but also the broader picture 290 00:15:05,000 --> 00:15:08,160 Speaker 1: as well. How do you respond, Emriata to the certitude 291 00:15:08,160 --> 00:15:10,400 Speaker 1: of the pundits that this is just a bad and 292 00:15:10,520 --> 00:15:17,440 Speaker 1: weaker global demand a weaker global economy. Do you buy it? Well, Tom, 293 00:15:17,440 --> 00:15:20,880 Speaker 1: I said that we really never were talking about a 294 00:15:20,920 --> 00:15:24,480 Speaker 1: strong global economy, right. I think, if anything, the price 295 00:15:24,520 --> 00:15:27,320 Speaker 1: of oil is finally catching up with fundamentals. We talked 296 00:15:27,360 --> 00:15:30,520 Speaker 1: about it not that long ago. The kintango in the market, 297 00:15:30,560 --> 00:15:33,520 Speaker 1: so the futures prices was telling us that, you know, 298 00:15:33,680 --> 00:15:36,720 Speaker 1: prices in the future will be higher, um. And that 299 00:15:36,800 --> 00:15:39,720 Speaker 1: was already showing the kintango had widened. It was showing 300 00:15:39,760 --> 00:15:42,840 Speaker 1: the physical market was oversupplied when opek had started to 301 00:15:42,880 --> 00:15:46,000 Speaker 1: ease their carts and US production was coming back a 302 00:15:46,040 --> 00:15:48,680 Speaker 1: little bit. Um. But the price isn't move and that 303 00:15:48,840 --> 00:15:50,760 Speaker 1: was to do with the fact that you know, Fed's 304 00:15:50,840 --> 00:15:53,640 Speaker 1: kept the interest rate so low, sas so much money around, 305 00:15:53,960 --> 00:15:58,440 Speaker 1: and the dollar was extremely weak. Finally those factors changed, 306 00:15:58,440 --> 00:16:01,200 Speaker 1: and that's essentially what dragged price as well. This was 307 00:16:01,280 --> 00:16:04,320 Speaker 1: long over you, um. And I think what this should 308 00:16:04,360 --> 00:16:07,640 Speaker 1: help is accelerate some of those inventory drawdowns which we're 309 00:16:07,640 --> 00:16:10,480 Speaker 1: already seen. But it should get better bigger, um. And 310 00:16:10,520 --> 00:16:13,280 Speaker 1: that's the only way we will rebalance this market. Well, Okay, 311 00:16:13,320 --> 00:16:15,800 Speaker 1: I'm gonna draw the ire of some my co hosts, perhaps, 312 00:16:15,840 --> 00:16:18,239 Speaker 1: but trying to come up with a narrative to understand 313 00:16:18,640 --> 00:16:22,000 Speaker 1: whether the moves in the equity market have been consistent 314 00:16:22,040 --> 00:16:24,480 Speaker 1: with what we're seeing in oil. Oil seemed to be 315 00:16:24,480 --> 00:16:26,800 Speaker 1: moving somewhat independently of the stock cell off that we saw, 316 00:16:26,840 --> 00:16:30,280 Speaker 1: the nastac cell off in particular over the past three sessions, 317 00:16:30,320 --> 00:16:33,680 Speaker 1: particularly having to do with OPEC cutting prices and people 318 00:16:33,800 --> 00:16:37,320 Speaker 1: not increasing their orders all that much. Do you find 319 00:16:37,440 --> 00:16:39,960 Speaker 1: the price action in oil, the weak demand in oil 320 00:16:40,040 --> 00:16:42,560 Speaker 1: to be consistent with the large to the large degree 321 00:16:42,720 --> 00:16:46,680 Speaker 1: the recovery and equity prices. I would say that what 322 00:16:46,800 --> 00:16:49,440 Speaker 1: is the problematic thing with oil? Of course right now 323 00:16:49,520 --> 00:16:53,440 Speaker 1: the headwinds really is that demand is recovering, like you'd say, 324 00:16:53,480 --> 00:16:55,200 Speaker 1: I think, and you can see that in the equity market, 325 00:16:55,200 --> 00:16:57,760 Speaker 1: but also whether it be home sales data and just 326 00:16:57,840 --> 00:17:01,200 Speaker 1: generally even you know, broader mac data in China. Are 327 00:17:01,240 --> 00:17:03,680 Speaker 1: the parts of the world recovering for sure, But it's 328 00:17:03,720 --> 00:17:07,280 Speaker 1: transportation that's the weakness, right and unless and until there's 329 00:17:07,280 --> 00:17:10,160 Speaker 1: a vaccine, it is going to be hard to get 330 00:17:10,280 --> 00:17:13,679 Speaker 1: people moving in the same way. Yes, traffic data is 331 00:17:13,720 --> 00:17:17,560 Speaker 1: picking up, but you know, flying check field demands remains 332 00:17:17,640 --> 00:17:21,320 Speaker 1: at record low still and that is the issue over here, 333 00:17:21,320 --> 00:17:23,480 Speaker 1: and that that's why I think it is correct for 334 00:17:23,600 --> 00:17:27,040 Speaker 1: oil to diverge from equity is broadly. But once you 335 00:17:27,119 --> 00:17:30,240 Speaker 1: have run down the infantry, and once you do get 336 00:17:30,280 --> 00:17:32,320 Speaker 1: the demand recovery, which by the way is a good 337 00:17:32,400 --> 00:17:36,440 Speaker 1: year if not too away, then things will probably correl 338 00:17:36,480 --> 00:17:38,560 Speaker 1: it a lot better. This is crucial, this idea that 339 00:17:38,600 --> 00:17:41,840 Speaker 1: perhaps the economy can recover without keep a flying around 340 00:17:41,840 --> 00:17:44,480 Speaker 1: and traveling around to the degree that they did in 341 00:17:44,480 --> 00:17:47,400 Speaker 1: the past. How low could oil prices go in your view, 342 00:17:48,600 --> 00:17:51,520 Speaker 1: I don't think that when you're talking about the recovery 343 00:17:51,560 --> 00:17:53,480 Speaker 1: in the man we're not saying that the recovery is 344 00:17:53,480 --> 00:17:56,119 Speaker 1: going to go take us back to pre COVID levels. Right. 345 00:17:56,160 --> 00:17:58,680 Speaker 1: We should be very clear on that we are recovering. 346 00:17:58,880 --> 00:18:02,160 Speaker 1: But it's just that unlessen unt that last bit, which 347 00:18:02,200 --> 00:18:04,880 Speaker 1: is going to be very all intensive recovers, we're really 348 00:18:04,880 --> 00:18:07,719 Speaker 1: not going to be able to go back to I 349 00:18:07,760 --> 00:18:10,359 Speaker 1: don't think there's much more than a two dollar you know, 350 00:18:10,640 --> 00:18:13,360 Speaker 1: left in the corrections. We it's been very, very violent. 351 00:18:13,760 --> 00:18:16,560 Speaker 1: I think at around thirty five dollars we should find 352 00:18:16,600 --> 00:18:19,760 Speaker 1: the floor. I think us production, the recovery we were 353 00:18:19,760 --> 00:18:22,760 Speaker 1: seeing very gradual. That's going to go back down again 354 00:18:23,280 --> 00:18:25,199 Speaker 1: um and I think as a result of that, you 355 00:18:25,240 --> 00:18:29,480 Speaker 1: will probably start to see more pressure generally um on 356 00:18:29,480 --> 00:18:32,680 Speaker 1: on those supplies, which again helps in the rebalancing. Is 357 00:18:32,720 --> 00:18:39,040 Speaker 1: this pullback advantageous for Saudi Arabia to provide new discipline 358 00:18:39,119 --> 00:18:42,919 Speaker 1: to OPEC plus? I think it's not going to do 359 00:18:43,000 --> 00:18:46,480 Speaker 1: them any harm, especially given they've been trying to get 360 00:18:46,520 --> 00:18:51,000 Speaker 1: compliance up, and to be honest, Iraq and Nigerian compliance 361 00:18:51,040 --> 00:18:53,560 Speaker 1: has been picking up. It's been more of the other 362 00:18:53,640 --> 00:18:56,320 Speaker 1: GCC countries, some of them that their compliance has been 363 00:18:56,320 --> 00:18:59,240 Speaker 1: slipping off late. But yes, I think that's very much 364 00:18:59,359 --> 00:19:02,160 Speaker 1: the focused and while Saldi Arabia would of course light 365 00:19:02,240 --> 00:19:04,359 Speaker 1: pricing to be around forty dollars, they all have very 366 00:19:04,400 --> 00:19:07,359 Speaker 1: high budgetory requirements. I think this does play to their 367 00:19:07,400 --> 00:19:09,640 Speaker 1: advantage in the short term. What do you see next? 368 00:19:09,800 --> 00:19:12,320 Speaker 1: And Lisa's point, I mean on the date calendar here, 369 00:19:12,359 --> 00:19:16,439 Speaker 1: what does oil do next? I think for now it 370 00:19:16,480 --> 00:19:19,040 Speaker 1: has to consolidate, and unfortunately it's going to be pretty 371 00:19:19,040 --> 00:19:22,680 Speaker 1: boring because unless anounder, the billion barrels we built gets 372 00:19:22,760 --> 00:19:26,399 Speaker 1: kind of absorbed, um, it's really not going to get 373 00:19:26,440 --> 00:19:29,199 Speaker 1: exciting and prices can't really move higher. I think the 374 00:19:29,240 --> 00:19:31,720 Speaker 1: next big thing has to really come from the winter 375 00:19:31,800 --> 00:19:34,159 Speaker 1: demand side. So you know, that's what I think a 376 00:19:34,160 --> 00:19:37,280 Speaker 1: lot of people are focusing on because the macro picture 377 00:19:37,440 --> 00:19:40,400 Speaker 1: is gradually improving, right, but that's very gradual that are 378 00:19:40,480 --> 00:19:43,359 Speaker 1: risked around the second wave and second lockdowns around the world. 379 00:19:43,640 --> 00:19:45,840 Speaker 1: So it's really going to be about the winter demand next. 380 00:19:47,000 --> 00:19:49,200 Speaker 1: I'm rata right to catch up with you this morning. 381 00:19:49,200 --> 00:19:56,480 Speaker 1: I'm ready sad ad Energy aspects. Thank you. This is 382 00:19:56,520 --> 00:19:59,800 Speaker 1: a conversation of the day within the selection season with 383 00:20:00,280 --> 00:20:03,840 Speaker 1: question over what the wealthy the haves are doing with 384 00:20:03,880 --> 00:20:07,240 Speaker 1: their money. Providing leadership on this, including his wonderful new 385 00:20:07,280 --> 00:20:10,720 Speaker 1: book is David Rubinstein, of course, of the Carlisle Group 386 00:20:11,000 --> 00:20:14,600 Speaker 1: and his peer to peer conversations. One of them has 387 00:20:14,640 --> 00:20:17,040 Speaker 1: been with Read Hastings. David, I want to cut to 388 00:20:17,119 --> 00:20:21,440 Speaker 1: the chase Mark benny Off of Salesforce, that doubt component 389 00:20:21,920 --> 00:20:26,680 Speaker 1: in a recent conversation with Bloomberg was scathing about the 390 00:20:27,080 --> 00:20:31,879 Speaker 1: lack of philanthropy, the clumsiness of the new rich of California, 391 00:20:31,960 --> 00:20:35,439 Speaker 1: the new rich of technology. Read Hastings seems to be 392 00:20:35,480 --> 00:20:40,440 Speaker 1: providing real leadership. Here is his gift to black universities 393 00:20:40,800 --> 00:20:43,880 Speaker 1: is that enough to be a game changer, to teach 394 00:20:44,040 --> 00:20:48,360 Speaker 1: the younger crew how to give away the millions. Well, 395 00:20:48,400 --> 00:20:50,680 Speaker 1: it was a twenty million dollar gift and it got 396 00:20:50,680 --> 00:20:53,320 Speaker 1: a lot of attention, as it should have gotten. When 397 00:20:53,320 --> 00:20:55,120 Speaker 1: I asked him about it, he said, he's actually made 398 00:20:55,280 --> 00:20:58,320 Speaker 1: very other large gifts. Actually some are larger, but they 399 00:20:58,359 --> 00:21:00,679 Speaker 1: just haven't been publicized. So I think he will have 400 00:21:00,720 --> 00:21:02,960 Speaker 1: an impact. But I think Mark makes a good point. 401 00:21:03,040 --> 00:21:05,520 Speaker 1: You have people that are now worth tens and twenties 402 00:21:05,520 --> 00:21:07,800 Speaker 1: and thirties and billions of dollars, and you wonder what 403 00:21:07,800 --> 00:21:10,040 Speaker 1: they're gonna do with all that money. I'm just piling 404 00:21:10,040 --> 00:21:12,400 Speaker 1: it up. Well, what do you do with it? I mean, 405 00:21:12,440 --> 00:21:15,000 Speaker 1: this is something you with your successive face and you 406 00:21:15,000 --> 00:21:18,960 Speaker 1: know full disclosure, folks. Mr Bloomberg, the founder of Bloomberg LP, 407 00:21:19,119 --> 00:21:22,440 Speaker 1: in this radio and TV property, his face the same conundrum. 408 00:21:22,760 --> 00:21:26,000 Speaker 1: Why is it so hard for some and particularly these 409 00:21:26,040 --> 00:21:31,119 Speaker 1: young technology types to give money away. Well, typically throughout 410 00:21:31,119 --> 00:21:33,080 Speaker 1: the history of the world, people tended to give away 411 00:21:33,080 --> 00:21:35,160 Speaker 1: money towards the end of their life and they would 412 00:21:35,200 --> 00:21:37,800 Speaker 1: live at the sixties, seventies, eighties. Now a lot of 413 00:21:37,800 --> 00:21:40,480 Speaker 1: people making money in their twenties thirties and forties, and 414 00:21:40,480 --> 00:21:43,399 Speaker 1: they haven't really expected to make this much money, and 415 00:21:43,400 --> 00:21:45,160 Speaker 1: it takes a while for them to give it away. 416 00:21:45,160 --> 00:21:47,600 Speaker 1: I guess hopefully they will do some things. A number 417 00:21:47,640 --> 00:21:49,840 Speaker 1: of these people have signed a giving pledge, as Mike 418 00:21:49,880 --> 00:21:52,199 Speaker 1: Bloomberg has and as I have, But I think it 419 00:21:52,240 --> 00:21:54,119 Speaker 1: will take a while because the amount of money that 420 00:21:54,160 --> 00:21:58,359 Speaker 1: people accumulated quickly is just unbelievable. For example, the founder 421 00:21:58,400 --> 00:22:00,640 Speaker 1: of Tesla, He's now has a net worth of let's 422 00:22:00,640 --> 00:22:03,560 Speaker 1: say seventy billion or hundred billion dollars. He made it 423 00:22:03,600 --> 00:22:05,480 Speaker 1: so quickly. It just takes a while to give it 424 00:22:05,480 --> 00:22:06,959 Speaker 1: away and figure out what you want to do with it. 425 00:22:07,119 --> 00:22:09,720 Speaker 1: But more philanthropy should be done, for sure by all 426 00:22:09,720 --> 00:22:12,200 Speaker 1: the wealthy people that now have it money. So, David, 427 00:22:12,240 --> 00:22:13,920 Speaker 1: there are those who are looking to give away money, 428 00:22:13,960 --> 00:22:15,639 Speaker 1: and then there are other people who are counting on 429 00:22:15,760 --> 00:22:18,959 Speaker 1: continuing to work until they are very old because they 430 00:22:18,960 --> 00:22:22,439 Speaker 1: need to support themselves. For those individuals, uh And speaking 431 00:22:22,440 --> 00:22:25,280 Speaker 1: to your interview with read Hastings, can they expect to 432 00:22:25,320 --> 00:22:27,600 Speaker 1: go back to the office. Can you tell us what 433 00:22:27,720 --> 00:22:31,320 Speaker 1: Netflix is CEO had to say about that? Um? Well, 434 00:22:31,359 --> 00:22:33,760 Speaker 1: I think read Hastings would like people to come back 435 00:22:33,760 --> 00:22:35,359 Speaker 1: to the office, but they want to make certain that 436 00:22:35,400 --> 00:22:37,919 Speaker 1: it's safe and so forth. He's been working remotely and 437 00:22:37,960 --> 00:22:42,440 Speaker 1: actually from uh, you know, his house in California. Many 438 00:22:42,680 --> 00:22:45,680 Speaker 1: CEOs like Read Hastings recognize that people are not coming 439 00:22:45,720 --> 00:22:49,000 Speaker 1: back to work really until there's a vaccine, until there's 440 00:22:49,080 --> 00:22:52,560 Speaker 1: there's safe public transportation, and until there's a lot of 441 00:22:52,640 --> 00:22:55,280 Speaker 1: childcare for you for you people have young children. So 442 00:22:55,320 --> 00:22:57,080 Speaker 1: I think it's gonna take a while. I think you 443 00:22:57,160 --> 00:22:59,159 Speaker 1: probably aren't going to see people back to work in 444 00:22:59,240 --> 00:23:02,720 Speaker 1: full man for another six to nine months. So he 445 00:23:02,760 --> 00:23:05,239 Speaker 1: didn't ask you whether you have a Netflix subscription. And 446 00:23:05,280 --> 00:23:08,399 Speaker 1: we've learned some private information about that, David, which you 447 00:23:08,440 --> 00:23:10,840 Speaker 1: can or cannot share on this program. It's just us, 448 00:23:11,320 --> 00:23:14,159 Speaker 1: but I do want to hear what he expects going forward. 449 00:23:14,320 --> 00:23:17,199 Speaker 1: Was this a blip giving him a boon during this 450 00:23:17,320 --> 00:23:19,920 Speaker 1: work from home era or does he see the success 451 00:23:20,480 --> 00:23:24,920 Speaker 1: par laid into a longer term establishment of streaming as 452 00:23:24,960 --> 00:23:28,760 Speaker 1: the entertainment of choice. Well, when he started Netflix, people 453 00:23:28,840 --> 00:23:32,240 Speaker 1: remember he basically had a system where you you rented 454 00:23:32,240 --> 00:23:34,639 Speaker 1: a DVD and he mailed it to you overnight, you 455 00:23:34,680 --> 00:23:37,160 Speaker 1: mailed it back to him and then he eventually got 456 00:23:37,160 --> 00:23:39,639 Speaker 1: into the streaming business ahead of everybody else and caught 457 00:23:39,680 --> 00:23:42,440 Speaker 1: the rest of Hollywood by a flat footed He built 458 00:23:42,480 --> 00:23:45,480 Speaker 1: the biggest streaming business now with the market value about 459 00:23:45,480 --> 00:23:48,639 Speaker 1: two and twenty three billion dollars, And at one point 460 00:23:48,760 --> 00:23:51,920 Speaker 1: he wanted to sell the company for fifty million dollars 461 00:23:52,160 --> 00:23:55,000 Speaker 1: to then the biggest company doing this blockbuster, and they 462 00:23:55,000 --> 00:23:57,000 Speaker 1: said no, they didn't want to pay fifty million dollars 463 00:23:57,040 --> 00:23:58,639 Speaker 1: for it. That's the best thing that ever happened to 464 00:23:58,720 --> 00:24:02,359 Speaker 1: him financially, David, how do you parse the Netflix is 465 00:24:02,400 --> 00:24:06,320 Speaker 1: and how did Mr Hastings speak about the idea of 466 00:24:06,480 --> 00:24:11,680 Speaker 1: spending spending, spending spending and not really generating profits. How 467 00:24:11,720 --> 00:24:15,920 Speaker 1: do you partition companies that clearly make an income statement 468 00:24:16,000 --> 00:24:19,600 Speaker 1: profit in those where it's not smoke in mirrors but 469 00:24:19,640 --> 00:24:23,359 Speaker 1: it's a little bit mysterious. Well, people made fun of 470 00:24:23,440 --> 00:24:25,960 Speaker 1: Jeff Bezos for a while he was just building market share. 471 00:24:26,000 --> 00:24:28,360 Speaker 1: They said he'd never gonna earn any money. People made 472 00:24:28,359 --> 00:24:31,280 Speaker 1: fun of Elon Musk that that Tesla would never get anywhere, 473 00:24:31,280 --> 00:24:33,280 Speaker 1: and people made fun of Netflix spending a lot of 474 00:24:33,320 --> 00:24:36,359 Speaker 1: money on original content. Turns out that these entrepreneurs have 475 00:24:36,400 --> 00:24:38,800 Speaker 1: had the last laugh so far. Clearly, when you can 476 00:24:38,840 --> 00:24:41,520 Speaker 1: build market share, you can really get a lot of 477 00:24:41,520 --> 00:24:44,280 Speaker 1: customers and they get addicted to what you're what you're producing, 478 00:24:44,480 --> 00:24:46,680 Speaker 1: and ultimately that's what happened to Netflix. People are now 479 00:24:46,880 --> 00:24:48,840 Speaker 1: I want to say, addicted, but people really love it 480 00:24:49,080 --> 00:24:51,240 Speaker 1: and it's really unique. Nobody else is really competing with 481 00:24:51,280 --> 00:24:54,520 Speaker 1: them at the scale they're able to produce and show 482 00:24:55,000 --> 00:24:58,520 Speaker 1: their their their content. David Rubinstein one final question. This 483 00:24:58,600 --> 00:25:00,720 Speaker 1: is quite a security over to soft Bank and the 484 00:25:01,119 --> 00:25:05,520 Speaker 1: latest derivative uproar that we've seen. Could soft Bank do 485 00:25:05,720 --> 00:25:09,320 Speaker 1: what they did in investment management out of Abu Dhabi 486 00:25:09,400 --> 00:25:12,800 Speaker 1: with the ex Deutsche Bank crew. Could they have generated 487 00:25:12,840 --> 00:25:17,080 Speaker 1: these derivative strategies with call options if they were simply 488 00:25:17,160 --> 00:25:21,480 Speaker 1: registered in the United States. I think it would be tougher, 489 00:25:21,520 --> 00:25:23,120 Speaker 1: and I think a lot of people in the investment 490 00:25:23,119 --> 00:25:26,840 Speaker 1: world we're surprised by this because that's a staggering amount 491 00:25:26,840 --> 00:25:29,639 Speaker 1: of money. It appears about twenty billion dollars of call 492 00:25:29,680 --> 00:25:33,119 Speaker 1: options right now. It may be profitable, but it's a 493 00:25:33,160 --> 00:25:36,120 Speaker 1: fairly risky thing to do. David. Let's leave it there. 494 00:25:36,160 --> 00:25:38,159 Speaker 1: Thank you so much, greatly appreciate it, and this is 495 00:25:38,200 --> 00:25:42,080 Speaker 1: wonderful David Rubinstein, peer to peer conversations. This with Read 496 00:25:42,119 --> 00:25:46,879 Speaker 1: Hastings of Netflix. Look for that tonight at nine pm. 497 00:25:46,880 --> 00:25:51,120 Speaker 1: Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and 498 00:25:51,160 --> 00:25:56,480 Speaker 1: listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast 499 00:25:56,520 --> 00:26:00,760 Speaker 1: platform you prefer. I'm on Twitter at Tom Keane before 500 00:26:00,800 --> 00:26:04,639 Speaker 1: the podcast. You can always catch us worldwide. I'm Bloomberg 501 00:26:04,720 --> 00:26:05,000 Speaker 1: Radio