1 00:00:06,320 --> 00:00:12,960 Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm term Keene 2 00:00:13,480 --> 00:00:17,560 Speaker 1: jay Leye. 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 --> 00:00:33,000 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. All 5 00:00:33,040 --> 00:00:36,040 Speaker 1: it took was for Larry Caudlow to remind us, of course, 6 00:00:36,120 --> 00:00:38,839 Speaker 1: to the White House any seat director, thanks the following. 7 00:00:39,080 --> 00:00:41,560 Speaker 1: Remember none of these tarists have been put in place yet. 8 00:00:41,840 --> 00:00:44,600 Speaker 1: These are all proposals. We're putting it out for comment 9 00:00:44,640 --> 00:00:47,320 Speaker 1: there at least two months before any actions are taken. China, 10 00:00:47,400 --> 00:00:49,879 Speaker 1: by the way, did not enact the tariffs. It's not 11 00:00:49,960 --> 00:00:53,960 Speaker 1: a trade war. It's a negotiating position. But since joining 12 00:00:54,040 --> 00:00:57,600 Speaker 1: us in the studio Amherst Peer Point Securities Global strategist, Bob, 13 00:00:57,600 --> 00:00:59,720 Speaker 1: why did we need Larry Cutlow to tell us that? 14 00:01:00,040 --> 00:01:02,840 Speaker 1: Wasn't it obvious this time yesterday morning? I would have 15 00:01:02,880 --> 00:01:05,240 Speaker 1: thought so. But you know it, uh, I think the 16 00:01:05,240 --> 00:01:08,240 Speaker 1: international community probably reacts to these things more than we 17 00:01:08,280 --> 00:01:11,560 Speaker 1: do here in the US. And look, this whole scenario 18 00:01:11,680 --> 00:01:14,480 Speaker 1: of taking extreme position and then and then work it 19 00:01:14,560 --> 00:01:18,040 Speaker 1: back is not unique. I mean, we're at a point 20 00:01:18,120 --> 00:01:21,720 Speaker 1: right now where NAFTA six months ago. Uh, there are 21 00:01:21,720 --> 00:01:23,760 Speaker 1: many people who thought NAFTA was going to be the 22 00:01:24,000 --> 00:01:27,399 Speaker 1: risk of two thousand and eighteen. And now we have 23 00:01:27,480 --> 00:01:31,320 Speaker 1: the President pushing for an agreement, you know, compromising auto 24 00:01:31,440 --> 00:01:35,640 Speaker 1: content and parts content and pushing toward an agreement by 25 00:01:35,720 --> 00:01:38,880 Speaker 1: a you know, an America's conference in mid April. So 26 00:01:39,319 --> 00:01:41,800 Speaker 1: so suddenly we've gone from you know, we're gonna tear 27 00:01:41,800 --> 00:01:45,080 Speaker 1: it up. Uh, this this migration that's coming towards the 28 00:01:45,240 --> 00:01:49,600 Speaker 1: US suddenly towards a compromised position, which looks like maybe 29 00:01:49,640 --> 00:01:51,640 Speaker 1: it will come to fruition. So what should the plant 30 00:01:51,640 --> 00:01:54,760 Speaker 1: book be for an investor? Because clearly investors are having 31 00:01:54,760 --> 00:01:56,880 Speaker 1: a pretty tough time in the equity market, at least 32 00:01:56,880 --> 00:01:59,200 Speaker 1: because the other asset classes yesterday morning seemed to have 33 00:01:59,640 --> 00:02:02,520 Speaker 1: got the picture that this was a proposal and negotiation 34 00:02:02,920 --> 00:02:04,760 Speaker 1: and not the end of the world. What an equity 35 00:02:04,800 --> 00:02:08,880 Speaker 1: investors need to get right next time around fundamentals? Fundamentals, fundamentals. 36 00:02:08,919 --> 00:02:11,760 Speaker 1: I think that that investors really need to look at 37 00:02:11,800 --> 00:02:16,880 Speaker 1: what's happening in terms of individual companies. Um, you know, 38 00:02:16,960 --> 00:02:18,720 Speaker 1: I think if you look at a broader picture, what 39 00:02:18,760 --> 00:02:21,880 Speaker 1: we're seeing as a US economy that's performing quite well 40 00:02:22,560 --> 00:02:25,160 Speaker 1: UM in the early part of two thousand and eighteen. 41 00:02:25,639 --> 00:02:27,720 Speaker 1: I was looking yesterday, you know that we look at 42 00:02:27,720 --> 00:02:31,760 Speaker 1: the manufacturing and the services indexes from the I s M. 43 00:02:31,800 --> 00:02:33,960 Speaker 1: They actually have a blended index, which is an all 44 00:02:34,000 --> 00:02:37,760 Speaker 1: economy p M. I waited uh p M I. The 45 00:02:37,840 --> 00:02:41,639 Speaker 1: three month average UM just hit a twenty year high. 46 00:02:41,720 --> 00:02:43,960 Speaker 1: It's the highest since it was introduced. The series was 47 00:02:44,000 --> 00:02:47,760 Speaker 1: introduced in So the economy is doing very well, and 48 00:02:47,800 --> 00:02:49,720 Speaker 1: I think part of that is a reaction to the 49 00:02:49,760 --> 00:02:53,399 Speaker 1: weaker dollar over the last year. We we normally say 50 00:02:53,440 --> 00:02:56,880 Speaker 1: there's about a twelve to eighteen month lag between movements 51 00:02:56,919 --> 00:03:00,079 Speaker 1: and the dollar and its economic impact, and guests, what 52 00:03:00,280 --> 00:03:02,639 Speaker 1: twelve months out from the peak and the dollar, We're 53 00:03:02,680 --> 00:03:07,640 Speaker 1: seeing US manufacturing start to outperform. We're seeing Eurozone manufacturing 54 00:03:07,760 --> 00:03:12,080 Speaker 1: underperforming during the first quarter. I think the part of 55 00:03:12,120 --> 00:03:15,160 Speaker 1: this UH, this adjustment process to the dollar is now 56 00:03:15,200 --> 00:03:17,960 Speaker 1: taking hold, and I think it actually boilds pretty well 57 00:03:18,000 --> 00:03:19,720 Speaker 1: for the U s economy as we go forward. So 58 00:03:19,760 --> 00:03:22,440 Speaker 1: it raises the question why we're failing to recognize the 59 00:03:22,480 --> 00:03:25,839 Speaker 1: decent fundamentals that you observe, and something that marked our 60 00:03:25,840 --> 00:03:28,079 Speaker 1: fund manager on the West Coast said last year is 61 00:03:28,120 --> 00:03:30,320 Speaker 1: really stuck with me, and I think it continues to 62 00:03:30,360 --> 00:03:33,520 Speaker 1: be something we need to think about this market. A 63 00:03:33,520 --> 00:03:36,640 Speaker 1: lot of people are struggling to divorce their political biases 64 00:03:37,000 --> 00:03:42,200 Speaker 1: from their real analysis, whether it's economic analysis or market analysis. 65 00:03:42,520 --> 00:03:45,800 Speaker 1: Why are we still struggling to do that? Quite clearly yesterday, 66 00:03:46,120 --> 00:03:48,640 Speaker 1: people's views about what is happening with trade or what 67 00:03:48,840 --> 00:03:52,880 Speaker 1: isn't happening with trade is shaped by almost exclusively their 68 00:03:52,880 --> 00:03:55,480 Speaker 1: distaste of the President of the United States, and that 69 00:03:55,640 --> 00:03:58,280 Speaker 1: is actually really sort of warping their view of what 70 00:03:58,440 --> 00:04:01,320 Speaker 1: is actually happening in terms of the negotiations of a 71 00:04:01,400 --> 00:04:04,600 Speaker 1: trite and the fundamentals of the U. S. Economy. You know, 72 00:04:04,720 --> 00:04:07,360 Speaker 1: I can't disagree the way I've described it is we 73 00:04:07,400 --> 00:04:09,480 Speaker 1: need to listen to the message and not the messenger, 74 00:04:10,240 --> 00:04:14,320 Speaker 1: right and so, Um, you know, as we know that 75 00:04:14,440 --> 00:04:18,400 Speaker 1: the president is not experienced in politics, UM, I think 76 00:04:18,400 --> 00:04:21,440 Speaker 1: he probably doesn't want to become experienced in politics. He 77 00:04:21,440 --> 00:04:24,320 Speaker 1: he wants to take his own road. Um. He put 78 00:04:24,360 --> 00:04:29,040 Speaker 1: stakes out what he thinks are rational, somewhat extreme positions 79 00:04:29,600 --> 00:04:32,479 Speaker 1: and then gets brought back within the construct of how 80 00:04:32,520 --> 00:04:35,760 Speaker 1: the government operates, how the Post Office operates how trade 81 00:04:35,800 --> 00:04:41,120 Speaker 1: negotiations operate, but in general he is pushing in a 82 00:04:41,200 --> 00:04:44,839 Speaker 1: direction um that I think, you know, makes some sense 83 00:04:44,839 --> 00:04:48,279 Speaker 1: for the economy. And I you know, having having worked 84 00:04:48,279 --> 00:04:51,800 Speaker 1: with Larry Cutlow for forty years, UM, I still believe 85 00:04:51,880 --> 00:04:55,279 Speaker 1: Larry is very much a free trader UM and I 86 00:04:55,320 --> 00:04:59,640 Speaker 1: think he believes that the way this hopefully works out 87 00:04:59,720 --> 00:05:03,760 Speaker 1: is we expand US markets into China, that that trade 88 00:05:03,800 --> 00:05:07,080 Speaker 1: and tariff and non tariff barriers come down, and then 89 00:05:07,120 --> 00:05:10,560 Speaker 1: in fact we expand the pie not contracted by you 90 00:05:10,560 --> 00:05:13,200 Speaker 1: are a cross asset. I wanted to take you away 91 00:05:13,360 --> 00:05:17,200 Speaker 1: from your hyper detailed notes at the embers Pierrepont, your 92 00:05:17,279 --> 00:05:19,440 Speaker 1: elegant charts, and I just want you to speak to 93 00:05:19,480 --> 00:05:24,200 Speaker 1: the listener whose whipsode by this every day. The only 94 00:05:24,279 --> 00:05:27,120 Speaker 1: solution is to expand your X axis, and that the 95 00:05:27,160 --> 00:05:30,160 Speaker 1: person that was investing for seven weeks has to start 96 00:05:30,200 --> 00:05:33,200 Speaker 1: thinking seven months, and the person that was investing for 97 00:05:33,279 --> 00:05:36,160 Speaker 1: eighteen months has to really start with a three or 98 00:05:36,200 --> 00:05:39,720 Speaker 1: four year view. That's the only solution, isn't it. I 99 00:05:40,240 --> 00:05:42,640 Speaker 1: think it is, and I think that you know, as 100 00:05:42,680 --> 00:05:45,039 Speaker 1: I've described, this has been a bit of a in 101 00:05:45,080 --> 00:05:47,120 Speaker 1: the last couple of months, a bit of a Shakespearean 102 00:05:47,200 --> 00:05:50,479 Speaker 1: market full of sound and fury signifying nothing. You know, 103 00:05:50,560 --> 00:05:52,400 Speaker 1: you look at the year to date. You know, you 104 00:05:52,400 --> 00:05:54,160 Speaker 1: can put up w E I what's the year to 105 00:05:54,240 --> 00:05:55,920 Speaker 1: day performance of the S and P. I think it's 106 00:05:55,960 --> 00:05:58,280 Speaker 1: down one percent year to date. So you kind of 107 00:05:58,320 --> 00:06:00,200 Speaker 1: look at the first quarter you say, what are we 108 00:06:00,279 --> 00:06:04,080 Speaker 1: getting so excited about? But in fact, we've had daily 109 00:06:04,200 --> 00:06:07,280 Speaker 1: movements that dwarf the year to date movements, which is 110 00:06:07,440 --> 00:06:09,719 Speaker 1: exactly the opposite of what we had last year. So 111 00:06:09,760 --> 00:06:13,080 Speaker 1: we're going through an adjustment process. I think the things 112 00:06:13,120 --> 00:06:17,000 Speaker 1: that we would focus on, our earnings momentum is still 113 00:06:17,000 --> 00:06:19,800 Speaker 1: good in the US. We'll see how much of a 114 00:06:19,880 --> 00:06:23,200 Speaker 1: response we get in terms of capital formation as a 115 00:06:23,200 --> 00:06:26,800 Speaker 1: result of the tax adjustments, and deal with the fact 116 00:06:26,880 --> 00:06:29,080 Speaker 1: that interest rates are probably going higher, both at the 117 00:06:29,120 --> 00:06:30,640 Speaker 1: short and the long end of the yield curve. But 118 00:06:30,760 --> 00:06:32,320 Speaker 1: I think it's really important to point out that this 119 00:06:32,400 --> 00:06:35,200 Speaker 1: isn't abnormal. What this is is it's goetting back to normal. 120 00:06:35,480 --> 00:06:38,919 Speaker 1: Last year was abnormal. This is kind of normal. And 121 00:06:38,960 --> 00:06:41,000 Speaker 1: the idea that the trait that worked, which was just 122 00:06:41,120 --> 00:06:45,000 Speaker 1: short vol and long momentum, is broken down over the 123 00:06:45,080 --> 00:06:46,760 Speaker 1: last couple of months. That's what we're seeing. And I 124 00:06:46,800 --> 00:06:48,760 Speaker 1: guess I assume, Bob, and you can correct me if 125 00:06:48,760 --> 00:06:51,119 Speaker 1: I'm wrong. That's why we're seeing it isolated to one region, 126 00:06:51,120 --> 00:06:54,880 Speaker 1: the United States, and one class US equities. Would that 127 00:06:54,920 --> 00:06:59,320 Speaker 1: be right? Yes, I think so, and I think that that. UM. 128 00:06:59,360 --> 00:07:03,200 Speaker 1: You know, part this is to a global liquidity environment 129 00:07:03,200 --> 00:07:06,839 Speaker 1: which has been extremely accommodative. Remember the beginning of the year, 130 00:07:06,880 --> 00:07:10,080 Speaker 1: the ECB cut their rate of asset purchases in half, 131 00:07:10,080 --> 00:07:12,880 Speaker 1: from sixty billion euros to thirty billion euros a month. 132 00:07:13,520 --> 00:07:16,360 Speaker 1: The b o J has shifted their target. It looks 133 00:07:16,400 --> 00:07:19,760 Speaker 1: like they're buying fewer assets as they go forward. UM. 134 00:07:19,920 --> 00:07:23,520 Speaker 1: The Fed is beginning to normalize interest rates, though UM, 135 00:07:24,040 --> 00:07:25,880 Speaker 1: I would argue that they still have a long way 136 00:07:25,880 --> 00:07:27,480 Speaker 1: to go. At the front end of the yelkerve, the 137 00:07:27,560 --> 00:07:32,240 Speaker 1: real FED funds rate is just barely creeping into positive territory. 138 00:07:32,720 --> 00:07:36,480 Speaker 1: So UM, Yes, you have uncertainty about the global growth 139 00:07:36,560 --> 00:07:40,440 Speaker 1: environment UM coming through. And I think again, particularly in Europe, 140 00:07:40,920 --> 00:07:45,240 Speaker 1: and you have a less aggressive liquidity environment UM. And 141 00:07:45,280 --> 00:07:48,280 Speaker 1: the two of those create a new level of volatility, 142 00:07:48,320 --> 00:07:52,200 Speaker 1: which which many people talked about being a characteristic of 143 00:07:52,240 --> 00:07:54,560 Speaker 1: two thousand eighteen. So, Bob, coming forward from here, I 144 00:07:54,640 --> 00:07:57,680 Speaker 1: assume there's going to be more days like yesterday, and 145 00:07:57,720 --> 00:08:00,000 Speaker 1: they're going to present a lot of opportunities for our listeners. 146 00:08:00,000 --> 00:08:01,840 Speaker 1: And can you give us a sense an idea of 147 00:08:02,080 --> 00:08:04,760 Speaker 1: how you should best take advantage of those opportunities on 148 00:08:04,880 --> 00:08:07,480 Speaker 1: days like yesterday if we want to see more as 149 00:08:07,480 --> 00:08:13,840 Speaker 1: the year progresses. You know, it's hard to to uh. 150 00:08:13,880 --> 00:08:16,640 Speaker 1: You know, I think about what I'm doing myself right 151 00:08:16,800 --> 00:08:19,800 Speaker 1: as an investor, and I think this is a year 152 00:08:19,880 --> 00:08:22,760 Speaker 1: where equity returns probably are going to be somewhere in 153 00:08:22,760 --> 00:08:26,840 Speaker 1: the five to eight percent range um. You know, if 154 00:08:26,880 --> 00:08:29,840 Speaker 1: you're up five percent year to date, it's probably time 155 00:08:29,880 --> 00:08:33,560 Speaker 1: to take some some risk off the table. Conversely, if 156 00:08:33,559 --> 00:08:35,800 Speaker 1: you get to be down five percent year to day, 157 00:08:36,480 --> 00:08:39,120 Speaker 1: that probably gives you a pretty good opportunity to increase 158 00:08:39,160 --> 00:08:42,680 Speaker 1: some risk exposure. So I think it's it's leaning against 159 00:08:42,720 --> 00:08:46,480 Speaker 1: this extreme volatility. You know, there are times where you 160 00:08:46,520 --> 00:08:49,079 Speaker 1: can take advantage of of of volatility, but I think 161 00:08:49,080 --> 00:08:51,960 Speaker 1: you have to be very disciplined about it and and 162 00:08:51,960 --> 00:08:55,120 Speaker 1: and react to the volatility in a disciplined way as 163 00:08:55,120 --> 00:08:58,480 Speaker 1: opposed to being frightened by it. Thank you so much 164 00:08:58,480 --> 00:09:02,040 Speaker 1: with the amorous Pierpine greatly shoot that uh this morning, 165 00:09:17,360 --> 00:09:19,839 Speaker 1: Richard Greenfield with us. Now you could talk for two hours. 166 00:09:19,840 --> 00:09:21,840 Speaker 1: There's so much going on in the world of media, 167 00:09:22,280 --> 00:09:25,520 Speaker 1: but let us start with I guess John Chryl Sandberg 168 00:09:25,600 --> 00:09:27,800 Speaker 1: to speak to Bloomberg today in the three o'clock hour 169 00:09:27,960 --> 00:09:30,880 Speaker 1: three pm Eastern time. Looking forward to that conversation. The 170 00:09:30,920 --> 00:09:33,040 Speaker 1: good news, the good news for investors at least, is 171 00:09:33,080 --> 00:09:36,439 Speaker 1: that Facebook is saying the recent data crisis over the 172 00:09:36,480 --> 00:09:38,680 Speaker 1: last couple of weeks hasn't hurt the business. The bad 173 00:09:38,679 --> 00:09:41,079 Speaker 1: news is that dates from most of its two bid 174 00:09:41,120 --> 00:09:43,560 Speaker 1: in news as could have been accessing properly. I want 175 00:09:43,559 --> 00:09:45,800 Speaker 1: to bring in rich Greenfeld boot t i G Media 176 00:09:45,920 --> 00:09:49,439 Speaker 1: and technology analyst. It's the good and the bad. Um, 177 00:09:49,480 --> 00:09:53,559 Speaker 1: what do you take more notice of? Rich? I mean, look, 178 00:09:53,600 --> 00:09:55,640 Speaker 1: at the end of the day, there's no doubt that 179 00:09:55,760 --> 00:09:59,320 Speaker 1: Facebook didn't have the proper controls in place, and certainly 180 00:09:59,360 --> 00:10:03,360 Speaker 1: didn't didn't give consumers probably all the information that they 181 00:10:03,400 --> 00:10:06,439 Speaker 1: clearly needed to have, or even the controls they needed 182 00:10:06,480 --> 00:10:09,680 Speaker 1: to have to manage their privacy. That being said, I 183 00:10:09,720 --> 00:10:16,120 Speaker 1: don't see users abandoning Facebook or Instagram or What's App 184 00:10:16,840 --> 00:10:19,440 Speaker 1: and I think that's the key point, right is users 185 00:10:19,440 --> 00:10:23,840 Speaker 1: aren't abandoning, advertisers aren't abandoning. Facebook's gotta gotta fix things. 186 00:10:23,880 --> 00:10:26,120 Speaker 1: I mean, look, Google head its own issues. Remember, you know, 187 00:10:26,520 --> 00:10:30,320 Speaker 1: isis videos being next to you know, you know, kind 188 00:10:30,320 --> 00:10:34,000 Speaker 1: of professional content in the US like a lot of 189 00:10:34,040 --> 00:10:36,160 Speaker 1: the Internet. I mean, the Internet is a pretty scary place. 190 00:10:36,440 --> 00:10:38,800 Speaker 1: There's a lot that these companies have to quote unquote 191 00:10:38,800 --> 00:10:42,280 Speaker 1: grow up and you know better deal with their platforms 192 00:10:42,280 --> 00:10:44,840 Speaker 1: and how they interact with consumers. But I think the 193 00:10:44,960 --> 00:10:49,840 Speaker 1: key for your listeners is these are the two dominant platforms. 194 00:10:50,360 --> 00:10:52,600 Speaker 1: If you're an advertiser, first of if you're a consumer, 195 00:10:52,840 --> 00:10:54,960 Speaker 1: what's your alternative in terms of a service. It's not 196 00:10:55,000 --> 00:10:57,839 Speaker 1: like there's an alternative to Instagram that's sitting out there 197 00:10:57,840 --> 00:11:00,679 Speaker 1: that you're switching to and from an advertising their standpoint, 198 00:11:00,800 --> 00:11:03,280 Speaker 1: and I think Facebook did twelve billion dollars of advertising 199 00:11:03,360 --> 00:11:05,600 Speaker 1: last quarter. It's not like you can take twelve billion 200 00:11:05,640 --> 00:11:08,280 Speaker 1: dollars of advertising and just move it someplace else. The 201 00:11:08,320 --> 00:11:11,720 Speaker 1: world is moving to mobile. These are the two dominant platforms. 202 00:11:11,760 --> 00:11:15,560 Speaker 1: They are certainly committing to getting better and improving and 203 00:11:15,679 --> 00:11:18,120 Speaker 1: fixing their mistakes, But I just don't. I think at 204 00:11:18,160 --> 00:11:20,560 Speaker 1: the end of the day, the pressure on the stock 205 00:11:20,679 --> 00:11:23,079 Speaker 1: is overdone because at the end of the day, these 206 00:11:23,120 --> 00:11:25,280 Speaker 1: are the platforms people want to use. These are the 207 00:11:25,280 --> 00:11:28,319 Speaker 1: platforms advertisers want to advertise on, and that's going to 208 00:11:28,400 --> 00:11:30,640 Speaker 1: make for a good stock. So in a material way 209 00:11:30,720 --> 00:11:32,960 Speaker 1: rich so far, the consumer hasn't voted with their feet 210 00:11:33,000 --> 00:11:35,600 Speaker 1: by moving away from the platform. To your point, there 211 00:11:35,640 --> 00:11:38,200 Speaker 1: is an optimistic view about the advertising base not having 212 00:11:38,200 --> 00:11:40,960 Speaker 1: anywhere to go. But Congress and the government is still 213 00:11:40,960 --> 00:11:43,360 Speaker 1: going to go after Mark Zuckerberg and grill him hard 214 00:11:43,440 --> 00:11:46,120 Speaker 1: next week. What is the area of weakness that you 215 00:11:46,240 --> 00:11:48,920 Speaker 1: see in the CEO of Facebook that leaves him quite 216 00:11:49,000 --> 00:11:51,640 Speaker 1: vulnerable as he goes in front of Congress next week. 217 00:11:55,320 --> 00:11:59,000 Speaker 1: You know, Look, I think if you listen to you know, 218 00:11:59,040 --> 00:12:01,640 Speaker 1: I listened to market an interview on Vox the other day, 219 00:12:01,640 --> 00:12:05,560 Speaker 1: and I think he was pretty pragmatic about being honest 220 00:12:05,559 --> 00:12:08,560 Speaker 1: and open about the mistakes made and how difficult it 221 00:12:08,640 --> 00:12:11,440 Speaker 1: is to fix some of the challenges. You know, talk 222 00:12:11,480 --> 00:12:13,920 Speaker 1: about fake news and the impact on elections, and these 223 00:12:13,960 --> 00:12:18,880 Speaker 1: are not easy things to handle for any company. Um. Look, 224 00:12:19,000 --> 00:12:21,800 Speaker 1: I'm sure they're gonna grill him. There's no doubt about it. 225 00:12:22,720 --> 00:12:26,319 Speaker 1: I think that is a given. I think the reality 226 00:12:26,720 --> 00:12:29,360 Speaker 1: is the threat and the pressure you're seeing on the 227 00:12:29,400 --> 00:12:33,680 Speaker 1: stock has been fear of regulation, and the question is, 228 00:12:33,720 --> 00:12:35,720 Speaker 1: I mean, look, we can't get anything done in this country. 229 00:12:35,760 --> 00:12:38,280 Speaker 1: I think you know, the real view that there's gonna 230 00:12:38,320 --> 00:12:42,480 Speaker 1: be some heavy handed internet regulation I find very hard 231 00:12:42,520 --> 00:12:44,920 Speaker 1: to believe. But but even so, even if you believe 232 00:12:44,920 --> 00:12:47,040 Speaker 1: that there's gonna be even greater walls that go up 233 00:12:47,080 --> 00:12:50,800 Speaker 1: around data and privacy, that's probably far more negative for 234 00:12:50,880 --> 00:12:54,520 Speaker 1: all of Netflix, sorry, all of Facebook and Google's competitors 235 00:12:54,720 --> 00:12:57,000 Speaker 1: than it is for Facebook and Google. The two companies 236 00:12:57,000 --> 00:12:59,840 Speaker 1: that are the strongest are actually probably gonna get stronger 237 00:13:00,160 --> 00:13:03,040 Speaker 1: if you put up high walls around data. Rich You 238 00:13:03,080 --> 00:13:06,520 Speaker 1: were courageous advantage years ago it was a busted I 239 00:13:06,679 --> 00:13:11,240 Speaker 1: p O. You lead with responsible coverage of the disaster 240 00:13:11,360 --> 00:13:15,840 Speaker 1: known advantage. Your note on Spotify was brilliant. How hard 241 00:13:15,920 --> 00:13:19,080 Speaker 1: was it to value Spotify? And what should the street 242 00:13:19,240 --> 00:13:24,480 Speaker 1: learn from this unique transaction? You know, look, I think 243 00:13:24,480 --> 00:13:26,120 Speaker 1: we're still trying to figure out. You know, there's been 244 00:13:26,160 --> 00:13:28,360 Speaker 1: a lot of trading volatility out of the out of 245 00:13:28,360 --> 00:13:31,520 Speaker 1: the box around Spotify. Um, you know, no one's ever 246 00:13:31,520 --> 00:13:34,280 Speaker 1: done a direct listing before. But I think what is 247 00:13:34,320 --> 00:13:38,280 Speaker 1: fascinating about Spotify is that there really aren't a lot 248 00:13:38,360 --> 00:13:43,640 Speaker 1: of global scaled platforms. Mobile platforms, I think is the 249 00:13:43,640 --> 00:13:45,800 Speaker 1: critical piece here. You know, if you if you were 250 00:13:45,800 --> 00:13:48,880 Speaker 1: to draw a circle around things that are on people's 251 00:13:48,920 --> 00:13:53,200 Speaker 1: home screen, meaning on mobile views, on mobile home screen, 252 00:13:53,240 --> 00:13:56,960 Speaker 1: worthy that you love using, that have a credit card 253 00:13:57,000 --> 00:14:00,240 Speaker 1: billing relationship on a monthly basis that you like paying for, 254 00:14:01,000 --> 00:14:04,520 Speaker 1: that list of companies would be an incredibly small list. 255 00:14:04,559 --> 00:14:07,120 Speaker 1: But Spotify is one of them. They hit all of 256 00:14:07,240 --> 00:14:09,800 Speaker 1: or check all of those boxes. And I think the 257 00:14:09,880 --> 00:14:15,000 Speaker 1: question that investors are struggling with is is music in 258 00:14:15,080 --> 00:14:17,800 Speaker 1: and of itself enough? Like can they really get scale 259 00:14:17,920 --> 00:14:21,160 Speaker 1: in music? You know, Netflix has proven that exclusive content 260 00:14:21,520 --> 00:14:25,400 Speaker 1: that they can differentiate themselves from HBO from network television. 261 00:14:25,600 --> 00:14:27,720 Speaker 1: If you want to watch Stranger Things, the only place 262 00:14:27,760 --> 00:14:30,840 Speaker 1: to do it on Netflix. Okay, Rich Greenfield, we gotta 263 00:14:30,880 --> 00:14:34,440 Speaker 1: leave it there, Sorry to to short today, Rich Greenfield 264 00:14:34,920 --> 00:14:36,760 Speaker 1: would b T. I G we didn't even get a 265 00:14:36,840 --> 00:14:39,160 Speaker 1: chance to get the Disney and what's going on with 266 00:14:39,240 --> 00:14:41,040 Speaker 1: Sky and of course Time Warner A T and T. 267 00:14:54,200 --> 00:14:57,920 Speaker 1: Let's talk about China, The White Houses National Economic Council 268 00:14:57,960 --> 00:15:02,360 Speaker 1: Director Larry Cudlow saying on Bloomberg having to do with 269 00:15:02,440 --> 00:15:05,760 Speaker 1: the China's response to US proposed tariffs and the sell 270 00:15:05,800 --> 00:15:08,400 Speaker 1: off in the stock market yesterday. Remember, none of the 271 00:15:08,440 --> 00:15:10,720 Speaker 1: tariffs have been put in place yet, he said. He 272 00:15:10,760 --> 00:15:13,040 Speaker 1: emphasized that it would take at least two months before 273 00:15:13,080 --> 00:15:18,120 Speaker 1: any action is taken on what are still only proposals. Well, 274 00:15:18,240 --> 00:15:20,680 Speaker 1: maybe this is the way Mr Cutlo sees it, it 275 00:15:20,720 --> 00:15:22,600 Speaker 1: may not be the way that the Chinese see it. 276 00:15:22,680 --> 00:15:26,280 Speaker 1: Here to tell us more, is Miranda car High Tongue Securities, 277 00:15:26,320 --> 00:15:30,960 Speaker 1: head of China Thematic Research, joining us from London. Miranda, 278 00:15:30,960 --> 00:15:33,120 Speaker 1: thank you very much for being with us. So is 279 00:15:33,160 --> 00:15:36,080 Speaker 1: this really just part of a negotiating tactic that is 280 00:15:36,120 --> 00:15:40,000 Speaker 1: really leading to a confrontation over intellectual property? Or is 281 00:15:40,040 --> 00:15:43,440 Speaker 1: it really a trade war? Um? I think this is 282 00:15:43,480 --> 00:15:48,360 Speaker 1: the starting um, starting round in a much wider negotiation. Um. 283 00:15:48,520 --> 00:15:51,600 Speaker 1: You've obviously had the US coming out, but then the 284 00:15:51,800 --> 00:15:55,360 Speaker 1: China came out very quickly afterwards, Um, and and quite 285 00:15:55,360 --> 00:15:59,040 Speaker 1: aggressively in order to set a sort of fairly hard 286 00:15:59,080 --> 00:16:01,440 Speaker 1: tone for the seat your negotiations. Will you say, come 287 00:16:01,440 --> 00:16:04,280 Speaker 1: out very aggressively? What do you mean by that, well, 288 00:16:04,280 --> 00:16:07,560 Speaker 1: it came out straight away with immediate tariffs, um, you know, 289 00:16:07,720 --> 00:16:12,360 Speaker 1: saying that it wouldn't go into negotiating on America's terms, 290 00:16:12,360 --> 00:16:17,240 Speaker 1: but it wanted to impose immediately its own tasks in response. 291 00:16:17,600 --> 00:16:19,720 Speaker 1: So so this means that, you know, if you compare 292 00:16:19,760 --> 00:16:24,240 Speaker 1: to how the US tackled Japan back in the es UM, 293 00:16:24,400 --> 00:16:27,760 Speaker 1: then China's arguably trying to play a stronger position here 294 00:16:28,080 --> 00:16:32,560 Speaker 1: um and not give so much ground. I I look 295 00:16:32,600 --> 00:16:34,440 Speaker 1: at this and I want to know how all the 296 00:16:34,520 --> 00:16:37,880 Speaker 1: festivities of the last forty eight hours plays in Shanghai 297 00:16:38,040 --> 00:16:41,040 Speaker 1: and in China. You're in London, But what does your 298 00:16:41,040 --> 00:16:43,680 Speaker 1: take on how this place? I mean, I understand the 299 00:16:43,720 --> 00:16:46,280 Speaker 1: government angle and that if Pim and I were having 300 00:16:46,280 --> 00:16:48,840 Speaker 1: a beverage of our choice at the jazz bar of 301 00:16:48,960 --> 00:16:51,840 Speaker 1: the Fair Amount Peace Hotel on the Bond, what would 302 00:16:51,880 --> 00:16:56,280 Speaker 1: the people next to us say? Well, they obviously they're 303 00:16:56,320 --> 00:17:01,280 Speaker 1: concerned about what the the US. It's going to hit 304 00:17:01,400 --> 00:17:05,159 Speaker 1: their markets um pretty badly. Um. But the thing is 305 00:17:05,320 --> 00:17:08,520 Speaker 1: it's it's about It's not just about dominance in the 306 00:17:08,560 --> 00:17:12,240 Speaker 1: trade um or or just about the surplus. This is 307 00:17:12,240 --> 00:17:15,880 Speaker 1: about sort of the Chinese competing on a global basis 308 00:17:16,080 --> 00:17:19,919 Speaker 1: with US manufacturers. And this is why we call it 309 00:17:19,960 --> 00:17:22,680 Speaker 1: sort of more of an intellectual property war. It's it's 310 00:17:22,680 --> 00:17:26,680 Speaker 1: about who's going to dominate the next five to twenty 311 00:17:26,760 --> 00:17:29,920 Speaker 1: years in terms of things like you know, telecommunications, five 312 00:17:30,000 --> 00:17:33,680 Speaker 1: g AI and the future sort of technology race UM. 313 00:17:33,960 --> 00:17:37,399 Speaker 1: And now China wants to be a leading part of 314 00:17:37,440 --> 00:17:40,439 Speaker 1: that is you know, hence why the US targets are 315 00:17:40,440 --> 00:17:44,520 Speaker 1: made in China twenty five sectors and not things like 316 00:17:44,960 --> 00:17:47,760 Speaker 1: widgets and some of the sort of lower end textiles 317 00:17:47,800 --> 00:17:51,119 Speaker 1: and the lower and goods. China manufacturers and are also 318 00:17:51,200 --> 00:17:55,280 Speaker 1: a key part of them the China's trade surplus. So 319 00:17:55,440 --> 00:17:57,760 Speaker 1: China knows it's in a it's in a long term 320 00:17:57,800 --> 00:18:01,520 Speaker 1: war um in terms of mobal dominance. It's not just 321 00:18:02,240 --> 00:18:04,959 Speaker 1: it's not just a little bit of arguments about you know, 322 00:18:05,080 --> 00:18:08,960 Speaker 1: soybeans and and and textiles anymore. This is a much 323 00:18:09,040 --> 00:18:13,399 Speaker 1: bigger picture, Miranda car based on your conversations with people 324 00:18:13,600 --> 00:18:18,199 Speaker 1: in China over the last several months, do you sense 325 00:18:18,400 --> 00:18:22,360 Speaker 1: a difference in the way they perceive President Donald Trump 326 00:18:22,840 --> 00:18:27,560 Speaker 1: versus former President Barack Obama. Is there a level of 327 00:18:28,160 --> 00:18:31,960 Speaker 1: response and perspective that is different now than it was 328 00:18:32,800 --> 00:18:37,200 Speaker 1: two three years ago. Well, most definitely. I mean, the 329 00:18:37,359 --> 00:18:42,560 Speaker 1: the way that Trump is dealing with China is very, 330 00:18:42,640 --> 00:18:46,280 Speaker 1: very different, and it's it's a much more adversary adversarial 331 00:18:46,359 --> 00:18:50,359 Speaker 1: to the Chinese respect hardball and what they do. But 332 00:18:50,440 --> 00:18:54,560 Speaker 1: they also in some ways taking it slightly cynically because 333 00:18:54,560 --> 00:18:57,200 Speaker 1: if you think of where instead of sort of hitting 334 00:18:57,200 --> 00:19:01,520 Speaker 1: directly back at some of the um UM the key 335 00:19:02,600 --> 00:19:06,440 Speaker 1: imports that would would affect the US, they're going after 336 00:19:06,680 --> 00:19:11,439 Speaker 1: the places where they know that the voters, the Trump voters, 337 00:19:11,480 --> 00:19:13,840 Speaker 1: will be particularly badly hit, so particularly sort of the 338 00:19:13,920 --> 00:19:16,879 Speaker 1: agricultural UM sector and the sort of the sect in 339 00:19:16,920 --> 00:19:19,320 Speaker 1: the rural area. So it's it's a it's a fairly 340 00:19:19,359 --> 00:19:24,520 Speaker 1: cynical um negotiating tactic because, to be honest, UM is 341 00:19:24,680 --> 00:19:28,679 Speaker 1: they limit um imports of soybeans. It's going to badly 342 00:19:28,720 --> 00:19:31,280 Speaker 1: affect China more than it does the US. They can't 343 00:19:31,280 --> 00:19:34,720 Speaker 1: get soybeans from anywhere else. It raises food prices UM 344 00:19:34,840 --> 00:19:37,840 Speaker 1: and and it's something they lack. So this is a 345 00:19:37,920 --> 00:19:41,760 Speaker 1: fairly sort of cynical negotiating tactic. It's not a it's 346 00:19:41,800 --> 00:19:45,640 Speaker 1: not a real a real threat, but obviously that they 347 00:19:45,680 --> 00:19:48,600 Speaker 1: don't see UM you know, we're now into a stage 348 00:19:48,600 --> 00:19:54,639 Speaker 1: where it's much more umu competitive and in terms of 349 00:19:54,840 --> 00:19:58,520 Speaker 1: because what's changed, it's not just the Trump administration's change, 350 00:19:58,520 --> 00:20:03,359 Speaker 1: but obviously she's vision for China has changed significantly as well, 351 00:20:03,840 --> 00:20:06,680 Speaker 1: and saying that China is going to reclaim it some 352 00:20:07,200 --> 00:20:10,919 Speaker 1: you know, rightful state in the global affairs means that 353 00:20:10,960 --> 00:20:13,720 Speaker 1: they're taking a much more aggressive stunt as well. So 354 00:20:13,840 --> 00:20:16,159 Speaker 1: it's changes on both sides. You have to leave with 355 00:20:16,200 --> 00:20:18,000 Speaker 1: their Miranda car thank you so much. With high Ton 356 00:20:18,080 --> 00:20:35,080 Speaker 1: Securities in London. The strength of Bloomberg Surveillance is our 357 00:20:35,080 --> 00:20:38,160 Speaker 1: effort to go out across this nation and actually find 358 00:20:38,160 --> 00:20:40,399 Speaker 1: people that know what they're talking about other than what 359 00:20:40,480 --> 00:20:43,440 Speaker 1: Pim Fox and I put up with seven and three 360 00:20:43,520 --> 00:20:45,959 Speaker 1: zip codes in New York City, and maybe we can 361 00:20:46,040 --> 00:20:48,840 Speaker 1: drag l A or San Francisco into it. Here's what 362 00:20:48,920 --> 00:20:51,880 Speaker 1: you need to know about Ames Iowa. The world ended 363 00:20:51,880 --> 00:20:58,120 Speaker 1: on February when Iowa claboard Iowa State in wrestling. That's 364 00:20:58,200 --> 00:21:03,040 Speaker 1: all that matters out in Iowa. Is Iowa crushed Iowa 365 00:21:03,119 --> 00:21:07,720 Speaker 1: State in wrestling thirty five six except for soybeans. That's 366 00:21:07,760 --> 00:21:11,000 Speaker 1: actually worse right now in wrestling, joining US truly one 367 00:21:11,000 --> 00:21:14,760 Speaker 1: of the nation's experts on the dynamics of Iowa agriculture 368 00:21:14,800 --> 00:21:19,240 Speaker 1: and soybeans. Chat Heart is at Iowa State University. Chad, 369 00:21:19,320 --> 00:21:22,000 Speaker 1: wonderful to have you with us. What will a given 370 00:21:22,080 --> 00:21:27,240 Speaker 1: farmer do eighties seven miles south of Ames, Iowa? What 371 00:21:27,240 --> 00:21:30,359 Speaker 1: would have given farmer do eighty seven miles south of me? 372 00:21:30,440 --> 00:21:32,960 Speaker 1: And aims here? Well, you're talking about their south of 373 00:21:33,000 --> 00:21:35,200 Speaker 1: Des Moines as well, and so what they're probably doing 374 00:21:35,320 --> 00:21:37,439 Speaker 1: right now is trying to figure out when is it 375 00:21:37,440 --> 00:21:40,199 Speaker 1: going to get warm enough to plant well within the 376 00:21:40,240 --> 00:21:42,919 Speaker 1: weather and the dynamic of planning. I read the Des 377 00:21:42,960 --> 00:21:45,920 Speaker 1: Moines Register. I believe it was yesterday, I can't remember exactly. 378 00:21:46,320 --> 00:21:49,879 Speaker 1: Which is the China tariff angle takes seven dollars a 379 00:21:49,960 --> 00:21:54,000 Speaker 1: pig off that pig Can you do that marginal math 380 00:21:54,119 --> 00:21:58,480 Speaker 1: to know what the various threats will cost the nation 381 00:21:58,960 --> 00:22:03,080 Speaker 1: or that farmer eighty seven miles south of Domine names Well, 382 00:22:03,080 --> 00:22:05,640 Speaker 1: what we've been working on here is we've already seen 383 00:22:05,800 --> 00:22:09,240 Speaker 1: within the lean hag futures market that with the announcement 384 00:22:09,280 --> 00:22:12,560 Speaker 1: of the Chinese tariffs there we saw those markets back 385 00:22:12,640 --> 00:22:16,400 Speaker 1: off by about six dollars per hundredweight or per hundred pounds. 386 00:22:16,720 --> 00:22:18,840 Speaker 1: They recovered about a dollar and a half that so 387 00:22:18,880 --> 00:22:22,200 Speaker 1: they're still down four dollars and fifty cents per hundred pounds. 388 00:22:22,280 --> 00:22:26,159 Speaker 1: We've also seen the soybean market react to the announced 389 00:22:26,400 --> 00:22:29,600 Speaker 1: you know, potential tariffs there. They backed off about twenty 390 00:22:29,680 --> 00:22:32,920 Speaker 1: cents from where they were pre announcement there. So we're 391 00:22:32,960 --> 00:22:37,679 Speaker 1: already watching these impacts hitting the various crops and livestock 392 00:22:37,760 --> 00:22:41,080 Speaker 1: markets where the tariffs are being announced, and it's translating 393 00:22:41,119 --> 00:22:46,640 Speaker 1: directly into the prices that producers are receiving for their products. Today, 394 00:22:47,440 --> 00:22:50,200 Speaker 1: Chad hart I was looking at the Des Moines Register 395 00:22:50,320 --> 00:22:52,560 Speaker 1: and there's a quote from the president of the American 396 00:22:52,600 --> 00:22:58,320 Speaker 1: Soybean Association and he says Mr Historfers. Dorfers says, farmers 397 00:22:58,320 --> 00:23:00,959 Speaker 1: are feeling a real pin. If we can't get these 398 00:23:01,040 --> 00:23:04,280 Speaker 1: commodity prices up, we are going to start losing farmers 399 00:23:04,400 --> 00:23:08,000 Speaker 1: and there's no way of getting around it. Is that accurate? 400 00:23:08,720 --> 00:23:11,200 Speaker 1: That is accurate. Actually what we've seen over the past 401 00:23:11,240 --> 00:23:14,880 Speaker 1: five years, and we've seen a dramatic decline in net 402 00:23:14,920 --> 00:23:18,480 Speaker 1: farm income for our nation's farmers. The pinch has been 403 00:23:18,520 --> 00:23:21,000 Speaker 1: on for some time. If you will this most recent 404 00:23:21,040 --> 00:23:23,880 Speaker 1: news just adds to the pressure that some of our 405 00:23:23,880 --> 00:23:27,040 Speaker 1: farmers facing. And I would describe, you know, the farming 406 00:23:27,080 --> 00:23:29,119 Speaker 1: community in this way. It's sort of like a double 407 00:23:29,200 --> 00:23:31,880 Speaker 1: humped camel, if you will. In the first hump, we've 408 00:23:31,880 --> 00:23:35,080 Speaker 1: got our very successful farmers. They're doing still rather well 409 00:23:35,200 --> 00:23:38,240 Speaker 1: even with relatively low prices because they've been able to 410 00:23:38,280 --> 00:23:41,280 Speaker 1: control their cost structure. But we do have a significant 411 00:23:41,280 --> 00:23:44,480 Speaker 1: segment of farmers that have struggled over the last few years, 412 00:23:44,480 --> 00:23:47,520 Speaker 1: and these low prices are beginning to drag down their 413 00:23:47,600 --> 00:23:51,359 Speaker 1: net worth and basically reduce their cash flow to next 414 00:23:51,359 --> 00:23:54,520 Speaker 1: to nothing. Do the farmers and the people that you 415 00:23:54,600 --> 00:23:58,760 Speaker 1: speak with, do they believe that the Agricultural Secretary Sonny 416 00:23:58,840 --> 00:24:03,040 Speaker 1: Perdue is doing an They believe he's trying. And when 417 00:24:03,080 --> 00:24:07,000 Speaker 1: we're looking here, everything that's coming out of Secretary Purdue 418 00:24:07,119 --> 00:24:09,280 Speaker 1: and the higher ups at U S d A says 419 00:24:09,520 --> 00:24:12,159 Speaker 1: that they're they're talking up at least. But you know, 420 00:24:12,320 --> 00:24:14,800 Speaker 1: I would say both the positive and negative aspects for 421 00:24:14,840 --> 00:24:18,040 Speaker 1: agricultural trade. But when we're looking here, for the most part, 422 00:24:18,400 --> 00:24:23,199 Speaker 1: US agriculture definitely is export dependent. When you look roughly 423 00:24:24,119 --> 00:24:28,720 Speaker 1: of our production across the entire agricultural complex is exported 424 00:24:28,800 --> 00:24:31,720 Speaker 1: out of the US. I look chead heard all of this, 425 00:24:31,800 --> 00:24:34,119 Speaker 1: and I go back to a wonderful The Atlantic article 426 00:24:34,480 --> 00:24:36,840 Speaker 1: which was on Iowa, and it was on the dynamic 427 00:24:36,880 --> 00:24:39,679 Speaker 1: twenty and thirty years ago and President g is a 428 00:24:39,760 --> 00:24:45,440 Speaker 1: minor Chinese official, visited Musketine. I believe it is slept 429 00:24:45,520 --> 00:24:48,119 Speaker 1: in a in a house in Musketine to bond with 430 00:24:48,240 --> 00:24:52,560 Speaker 1: Iowa from where you sit in the agricultural capital of 431 00:24:52,640 --> 00:24:57,600 Speaker 1: the Midwest, aims Iowa, what's that linkage of China to 432 00:24:58,040 --> 00:25:02,360 Speaker 1: your state. Well, there's a very strong linkage. As you mentioned, President, 433 00:25:02,480 --> 00:25:05,000 Speaker 1: she was here thirty some years ago, came back to 434 00:25:05,119 --> 00:25:08,040 Speaker 1: visit this just just a couple of years ago. Since then, 435 00:25:08,720 --> 00:25:11,240 Speaker 1: what he found on both trips was, you know, he 436 00:25:11,280 --> 00:25:13,960 Speaker 1: went to, if you will, the same farmhouse, found the 437 00:25:14,000 --> 00:25:16,960 Speaker 1: same farm family, and found that also Iowa had the 438 00:25:17,000 --> 00:25:21,359 Speaker 1: same governor, who is now, of course the ambassador to China. 439 00:25:21,400 --> 00:25:23,359 Speaker 1: And so when you look here, there is a very 440 00:25:23,440 --> 00:25:27,919 Speaker 1: strong linkage there. But that linkage does not prevent or 441 00:25:28,080 --> 00:25:32,760 Speaker 1: you know, preserve necessarily any relationship. This continues to evolve. 442 00:25:32,880 --> 00:25:37,639 Speaker 1: An Ambassador brand Stead advised the President on a best 443 00:25:37,720 --> 00:25:42,199 Speaker 1: practice for Midwest agriculture arguably he already is. And so 444 00:25:42,359 --> 00:25:44,840 Speaker 1: when we look at, you know, the President Trump's moves here, 445 00:25:45,320 --> 00:25:48,600 Speaker 1: I assume that he's listening to not only his agricultural advisors, 446 00:25:48,600 --> 00:25:51,200 Speaker 1: but across the entire spectrum when we look at our 447 00:25:51,440 --> 00:25:54,639 Speaker 1: general economy. And so that's got to be part of 448 00:25:54,640 --> 00:25:58,480 Speaker 1: the conversation. We're speaking with Chad Hart. He is Associate 449 00:25:58,480 --> 00:26:04,359 Speaker 1: professor of economics crop market specialist at the Iowa State University. 450 00:26:04,680 --> 00:26:06,919 Speaker 1: And it's had one other point about what's going on 451 00:26:07,000 --> 00:26:09,880 Speaker 1: with US farmers. If they're being hit by this level 452 00:26:09,920 --> 00:26:14,199 Speaker 1: of uncertainty and declining income, what does that mean about 453 00:26:14,760 --> 00:26:18,280 Speaker 1: unneeded equipment on the farm restructuring debt. It's got to 454 00:26:18,280 --> 00:26:20,639 Speaker 1: have a knock on effect, doesn't it. It does have 455 00:26:20,680 --> 00:26:22,960 Speaker 1: a knock on effect, and we have been seeing that 456 00:26:23,040 --> 00:26:25,399 Speaker 1: build over the past couple of years. As you mentioned, 457 00:26:25,440 --> 00:26:29,000 Speaker 1: the idea is that you know, news machinery, that that 458 00:26:29,040 --> 00:26:32,040 Speaker 1: market took a hit. We did see land values back 459 00:26:32,160 --> 00:26:35,520 Speaker 1: off a couple of years ago as the incomes declined, 460 00:26:36,040 --> 00:26:40,200 Speaker 1: and so we have seeing the agricultural economy shrinking even 461 00:26:40,200 --> 00:26:42,640 Speaker 1: though the general economy has been growing over the past 462 00:26:42,680 --> 00:26:47,160 Speaker 1: couple of years. Biggest issue right now politically for Iowa 463 00:26:47,359 --> 00:26:50,960 Speaker 1: is what these tariffs. These tariffs would be a front 464 00:26:51,000 --> 00:26:53,120 Speaker 1: and center as we look here, just because they hit 465 00:26:53,240 --> 00:26:56,160 Speaker 1: so hard and so fast in terms of the pricing 466 00:26:56,240 --> 00:27:00,119 Speaker 1: for the commodity today. For example, with soybeans. You even 467 00:27:00,160 --> 00:27:02,760 Speaker 1: though you know it's an announced tariff has not come 468 00:27:02,760 --> 00:27:06,399 Speaker 1: into place yet, it already is having market impacts for 469 00:27:06,560 --> 00:27:10,879 Speaker 1: our producers, not only in what they're selling today, but 470 00:27:11,040 --> 00:27:13,639 Speaker 1: if you will, what they're planning to sell over the 471 00:27:13,680 --> 00:27:16,840 Speaker 1: next year to two years. Professor, Before we let you go, 472 00:27:16,920 --> 00:27:19,000 Speaker 1: we have a we have a global audience at coast 473 00:27:19,000 --> 00:27:21,520 Speaker 1: to coast audience. We mentioned they'll pass our Texas earlier 474 00:27:21,520 --> 00:27:24,800 Speaker 1: this morning, but the fact is the large portion of 475 00:27:24,840 --> 00:27:29,840 Speaker 1: our audience is in saran wrap stores, buying perfectly agriculture 476 00:27:30,280 --> 00:27:33,800 Speaker 1: worldwide and taking advantage of it every day. If you 477 00:27:33,840 --> 00:27:38,320 Speaker 1: had one message from the trenches for Americans about our 478 00:27:38,400 --> 00:27:42,520 Speaker 1: agricultural product and our food product, what would it be. Well, 479 00:27:42,560 --> 00:27:44,879 Speaker 1: it's in this case when you think about agriculture, as 480 00:27:44,920 --> 00:27:47,320 Speaker 1: you mentioned, we are used to being able to go 481 00:27:47,400 --> 00:27:50,480 Speaker 1: to the grocery store, find whatever we want, you know, 482 00:27:50,520 --> 00:27:52,800 Speaker 1: on proper packaging, and be able to carry it home 483 00:27:52,840 --> 00:27:55,320 Speaker 1: and do what What's what we want, But the idea 484 00:27:55,359 --> 00:27:57,119 Speaker 1: is that hasn't been that way for that long, and 485 00:27:57,160 --> 00:27:59,560 Speaker 1: we don't pay that much for our food. When you 486 00:27:59,640 --> 00:28:02,320 Speaker 1: think about that dollar you spend at the grocery store, 487 00:28:03,000 --> 00:28:05,880 Speaker 1: roughly fifteen cents of it goes back to the farmer 488 00:28:06,080 --> 00:28:08,560 Speaker 1: to pay for the product that acts. If you will 489 00:28:08,600 --> 00:28:27,720 Speaker 1: create professor out of time Chad Hart, Iowa State aims Iowa. 490 00:28:28,400 --> 00:28:31,879 Speaker 1: Always with Douglas Cass of Seabreeze Partners, you rip up 491 00:28:31,880 --> 00:28:34,440 Speaker 1: the script and you really go to the news flow. 492 00:28:34,920 --> 00:28:37,360 Speaker 1: There are two items we need to talk about, and 493 00:28:37,400 --> 00:28:41,000 Speaker 1: one is the sheer excitement for our global audience in 494 00:28:41,040 --> 00:28:44,240 Speaker 1: the American sport of baseball, and that would be a 495 00:28:44,280 --> 00:28:47,040 Speaker 1: Red Sox team. It seems to be pretty good. But 496 00:28:47,160 --> 00:28:51,520 Speaker 1: the absolute unique characteristics Doug cast of your New York Yankees. 497 00:28:51,960 --> 00:28:56,960 Speaker 1: I had goose bumps yesterday. You you and I did 498 00:28:56,960 --> 00:29:01,080 Speaker 1: not live. But what's going on with the Yankees this 499 00:29:01,160 --> 00:29:04,440 Speaker 1: year is goose bump worthy for everybody that loves baseball. 500 00:29:05,000 --> 00:29:10,160 Speaker 1: They're jut I your producer asked me if I could 501 00:29:10,160 --> 00:29:13,120 Speaker 1: get Sandy on the phone um in the next interview, 502 00:29:13,120 --> 00:29:14,600 Speaker 1: and I told him yes. He says, do you mind 503 00:29:14,640 --> 00:29:18,120 Speaker 1: if you step off the phone. Well, we we would 504 00:29:18,120 --> 00:29:20,720 Speaker 1: be honored Mr Kofax, as you brought us Jim Palmer 505 00:29:20,800 --> 00:29:24,760 Speaker 1: last year, who was shockingly pressing on the Houston Astros. 506 00:29:24,880 --> 00:29:27,320 Speaker 1: As we look at the things to talk about, Doug, 507 00:29:27,800 --> 00:29:32,440 Speaker 1: I want to have a cogent and constructive conversation about 508 00:29:32,480 --> 00:29:34,959 Speaker 1: the humility in the business and of course with the 509 00:29:35,080 --> 00:29:41,040 Speaker 1: end or funds leaving Pershing UH Square Capital are Scott 510 00:29:41,120 --> 00:29:45,320 Speaker 1: Duvau publishing that on the year end note Blackstone, JP, Morgan, 511 00:29:45,440 --> 00:29:51,040 Speaker 1: Chase and others exited millions of dollars? Was was Mr 512 00:29:51,160 --> 00:29:54,440 Speaker 1: Ackman Bill Ackman with herbal life and all was he 513 00:29:54,880 --> 00:30:00,720 Speaker 1: was the undiversified where the bets too big UM. He 514 00:30:00,920 --> 00:30:07,719 Speaker 1: ran an extraordinarily concentrated portfolio and book UM, something that 515 00:30:07,760 --> 00:30:13,640 Speaker 1: Warren Buffett has um consistently cautioned about UM that coupled 516 00:30:13,680 --> 00:30:21,120 Speaker 1: with his public persona and unfortunately a large share of 517 00:30:21,160 --> 00:30:27,720 Speaker 1: EU briss have contributed to his disappointing results. But I 518 00:30:27,760 --> 00:30:35,920 Speaker 1: would also add unrelatedly that market conditions also contributed UM, 519 00:30:35,960 --> 00:30:40,880 Speaker 1: not only to Persian Squares poor results. Mr General, the 520 00:30:41,200 --> 00:30:44,520 Speaker 1: fun community and you know some brilliant people like David 521 00:30:44,520 --> 00:30:48,800 Speaker 1: Einhorn or I consider a friend, has done disappointingly poorly 522 00:30:48,880 --> 00:30:53,480 Speaker 1: as well. Um, you know, we we have this, We've 523 00:30:53,600 --> 00:30:57,240 Speaker 1: entered something I've discussed with you repeatedly, and I think 524 00:30:57,240 --> 00:31:00,400 Speaker 1: you used it as a promo. Um, we're in this 525 00:31:00,440 --> 00:31:05,120 Speaker 1: new volatility regime. We're in a market with which virtually 526 00:31:05,440 --> 00:31:10,040 Speaker 1: has no memory from day to day. So the construction 527 00:31:10,080 --> 00:31:14,720 Speaker 1: of permanent or buy and hold long term portfolios grow 528 00:31:14,800 --> 00:31:18,920 Speaker 1: increasingly more difficult in the environment. I mean, let's just 529 00:31:18,960 --> 00:31:22,960 Speaker 1: look at yesterday, um, which is a constant reminder that 530 00:31:23,040 --> 00:31:25,560 Speaker 1: either I'm an idiot or that there's an endless supply 531 00:31:25,640 --> 00:31:31,040 Speaker 1: of idiots out there. Well, maybe the two are mutually exclusive. Um. 532 00:31:30,800 --> 00:31:35,920 Speaker 1: The SMP is now rallied by a hundred SMP points, 533 00:31:35,960 --> 00:31:38,960 Speaker 1: the Dow Jones by eight hundred points from the pre 534 00:31:39,040 --> 00:31:42,240 Speaker 1: market lows yesterday. And you know, we all try to 535 00:31:42,240 --> 00:31:45,960 Speaker 1: search for reasons. Managing money in that sort of voluable 536 00:31:46,120 --> 00:31:51,320 Speaker 1: environment is really dangerous, problematic. So I like to say 537 00:31:51,320 --> 00:31:54,120 Speaker 1: that we're all traders now. I like that idea. Let 538 00:31:54,120 --> 00:31:59,240 Speaker 1: me bring the boat earlier, but let me just challenge 539 00:31:59,240 --> 00:32:01,920 Speaker 1: a little bit Doug cast because he used the word 540 00:32:02,000 --> 00:32:05,160 Speaker 1: brilliant people. And you know, when the stock market continues 541 00:32:05,200 --> 00:32:08,479 Speaker 1: to move higher and there's no volatility, everybody looks like 542 00:32:08,520 --> 00:32:12,040 Speaker 1: a hero. How come now that we have volatility, and 543 00:32:12,080 --> 00:32:15,560 Speaker 1: now that everybody has to prove their chops, you end 544 00:32:15,640 --> 00:32:18,840 Speaker 1: up with a situation where no one can explain accurately 545 00:32:19,160 --> 00:32:23,320 Speaker 1: why other investors have been dumping stocks because you never 546 00:32:23,360 --> 00:32:25,880 Speaker 1: hear anybody telling you that they're selling their own stocks. 547 00:32:26,520 --> 00:32:29,360 Speaker 1: And having said that, doesn't that call into question the 548 00:32:29,480 --> 00:32:33,320 Speaker 1: very quote brilliance that you describe and does It's a 549 00:32:33,320 --> 00:32:36,120 Speaker 1: great question, and it would probably take four hours of conversation, 550 00:32:36,200 --> 00:32:39,360 Speaker 1: but I would say to you then that, um, the 551 00:32:39,400 --> 00:32:42,240 Speaker 1: market has changed dramatically in the last decades. I mean 552 00:32:42,320 --> 00:32:46,680 Speaker 1: investors have changed the dominant investor group. You know, when 553 00:32:46,680 --> 00:32:49,880 Speaker 1: I graduate a business school Warden, in the early seventies, 554 00:32:50,520 --> 00:32:54,040 Speaker 1: it was bank trust departments that were the dominant factors 555 00:32:54,040 --> 00:32:57,960 Speaker 1: in the market. Then we had the proliferation of mutual funds, 556 00:32:58,080 --> 00:33:01,000 Speaker 1: and then tenactin years later we had the proliferation of 557 00:33:01,040 --> 00:33:05,160 Speaker 1: hedge funds. Now machines and algies dominique trading these days 558 00:33:05,200 --> 00:33:09,320 Speaker 1: and there, as you saw yesterday, they were triggered off 559 00:33:08,800 --> 00:33:14,280 Speaker 1: the fifth I can't count successful retest, So I'm sorry. 560 00:33:14,480 --> 00:33:16,160 Speaker 1: You know what I've talked about this before, and this 561 00:33:16,240 --> 00:33:18,080 Speaker 1: is the heart of the matter. For Global Wall Street 562 00:33:18,360 --> 00:33:21,760 Speaker 1: hedge funds are structured on two and twenty two fee 563 00:33:21,800 --> 00:33:25,120 Speaker 1: plus of the take, and that worked in a high yield, 564 00:33:25,240 --> 00:33:28,120 Speaker 1: high nomenal, high real yield environment where you had some 565 00:33:28,160 --> 00:33:32,600 Speaker 1: wiggle room. You have some squishiness that's gone. How can 566 00:33:32,680 --> 00:33:38,760 Speaker 1: you garner that fee structure in make the gain given 567 00:33:39,160 --> 00:33:43,000 Speaker 1: where we are in terms of rates and total return potential. 568 00:33:43,120 --> 00:33:46,000 Speaker 1: The math's not the same as it was ten years ago. 569 00:33:46,640 --> 00:33:49,880 Speaker 1: It's really difficult in a low as you said, structurally, 570 00:33:50,080 --> 00:33:52,880 Speaker 1: in a low interest rate in environment, and in the 571 00:33:52,960 --> 00:33:57,760 Speaker 1: low maybe even substandard return environment too in twenty simply 572 00:33:57,800 --> 00:34:00,560 Speaker 1: doesn't work the vague as we would say in a 573 00:34:00,560 --> 00:34:04,640 Speaker 1: baseball exactly. I mean, Pim Fox, this is something you understand. 574 00:34:04,760 --> 00:34:07,680 Speaker 1: Doug cass and I having an overpriced cup of coffee 575 00:34:07,680 --> 00:34:10,640 Speaker 1: at the Four Seasons over on fifty ninth Street, the 576 00:34:10,719 --> 00:34:14,840 Speaker 1: math worked. I see, I'm still buying my coffee on 577 00:34:14,920 --> 00:34:16,880 Speaker 1: the on the corner with the guy at the cart, 578 00:34:17,440 --> 00:34:19,759 Speaker 1: and I'm trying to understand, you know. And I think 579 00:34:19,800 --> 00:34:23,319 Speaker 1: you said something interesting, Dug there about the dominant forces 580 00:34:23,360 --> 00:34:27,880 Speaker 1: in the market. The traders now are machines. Does this 581 00:34:28,080 --> 00:34:33,680 Speaker 1: then offer an opportunity to human beings to find companies 582 00:34:33,760 --> 00:34:37,680 Speaker 1: that they believe have value and to stick with their 583 00:34:37,760 --> 00:34:41,720 Speaker 1: opinions and their perceptions in a way that machines cannot. 584 00:34:43,560 --> 00:34:47,560 Speaker 1: Great question again, if you have it's to me, it's 585 00:34:47,560 --> 00:34:51,399 Speaker 1: a function of time frames and the patients of your 586 00:34:51,440 --> 00:34:56,960 Speaker 1: investor base. If your invest investor base is impatient and 587 00:34:57,120 --> 00:35:01,799 Speaker 1: once returns quickly, you're screwed, stated simply right. But don't 588 00:35:01,800 --> 00:35:04,000 Speaker 1: you you want a long term investor base. I mean, 589 00:35:04,040 --> 00:35:07,319 Speaker 1: aren't those the ideal clients because traders, they're going to leave? 590 00:35:07,440 --> 00:35:10,320 Speaker 1: You know when what's happening to Persian square? Persian square 591 00:35:10,320 --> 00:35:13,520 Speaker 1: in the article I forwarded to Tom, he's losing a 592 00:35:13,560 --> 00:35:17,400 Speaker 1: large portion of his investors through redemptions. So it's easier 593 00:35:17,400 --> 00:35:20,960 Speaker 1: said than getting a large investor base. And a lot 594 00:35:21,000 --> 00:35:24,640 Speaker 1: of the hedge funds have moved from being active investors 595 00:35:24,640 --> 00:35:30,239 Speaker 1: to passive investors. Machine derives strategies and products. So you know, 596 00:35:30,680 --> 00:35:33,560 Speaker 1: we see what happens when everyone gets on the same 597 00:35:33,640 --> 00:35:36,560 Speaker 1: side of the boat in early February, and that's going 598 00:35:36,600 --> 00:35:39,719 Speaker 1: to occur with greater frequency, and the market will be 599 00:35:40,320 --> 00:35:44,480 Speaker 1: we'll have greater unpredictability on top of the fact that 600 00:35:44,600 --> 00:35:48,520 Speaker 1: we have more uncertainty today in the economy, in the markets, 601 00:35:48,560 --> 00:35:51,759 Speaker 1: and the political of political backdrops. So what are you 602 00:35:51,760 --> 00:35:54,360 Speaker 1: doing right We got one minute left, Doug cast tell us, please, 603 00:35:54,360 --> 00:36:00,640 Speaker 1: what you're doing right now? Given this historic volatility? Um I. 604 00:36:01,200 --> 00:36:05,560 Speaker 1: I believe that the real influence in the last half 605 00:36:05,560 --> 00:36:08,839 Speaker 1: of this year will be the administration. And I think 606 00:36:08,880 --> 00:36:11,680 Speaker 1: that Trump, with a healthy dose of the machines and 607 00:36:11,719 --> 00:36:14,560 Speaker 1: the out goals we describe, is going to make market 608 00:36:14,680 --> 00:36:19,480 Speaker 1: volatility and economic uncertainty great again. So I am fearful 609 00:36:19,640 --> 00:36:25,040 Speaker 1: that his policy will result in mistakes. Basically, we have 610 00:36:25,080 --> 00:36:29,640 Speaker 1: an untethered president who is conflating politics with economic policy, 611 00:36:30,600 --> 00:36:36,799 Speaker 1: and you can't have hastily crafted economic policy without deep analysis, 612 00:36:37,600 --> 00:36:42,200 Speaker 1: um in in a flat, networked and interconnected world which 613 00:36:42,200 --> 00:36:44,319 Speaker 1: just doesn't worry you. Gotta leave it there, Duck Cass, 614 00:36:44,400 --> 00:36:46,000 Speaker 1: thank you so much. Show up next time as you 615 00:36:46,040 --> 00:36:49,520 Speaker 1: can with the giant of the game. Mr Kofax of 616 00:36:50,040 --> 00:37:00,400 Speaker 1: Los Angeles Duck Cass Partners. Thanks for listening to the 617 00:37:00,400 --> 00:37:06,879 Speaker 1: Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, 618 00:37:07,239 --> 00:37:11,480 Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at 619 00:37:11,520 --> 00:37:15,799 Speaker 1: Tom Keane. Before the podcast, you can always catch us worldwide. 620 00:37:16,239 --> 00:37:17,320 Speaker 1: I'm Bloomberg Radio.