1 00:00:00,040 --> 00:00:02,640 Speaker 1: Who you put your trust in matters. Investors have put 2 00:00:02,680 --> 00:00:07,040 Speaker 1: their trust and independent registered investment advisors to the two 3 00:00:07,040 --> 00:00:10,680 Speaker 1: and four trillion dollars. Why learn more and find your 4 00:00:10,760 --> 00:00:26,360 Speaker 1: independent advisor dot com. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:26,760 --> 00:00:30,480 Speaker 1: I'm Tom Keene with David Gura. Daily we bring you 6 00:00:30,520 --> 00:00:35,560 Speaker 1: insight from the best in economics, finance, investment, and international relations. 7 00:00:35,960 --> 00:00:40,559 Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, and 8 00:00:40,640 --> 00:00:48,160 Speaker 1: of course, on the Bloomberg. David Gurry here with Tom 9 00:00:48,240 --> 00:00:51,520 Speaker 1: Keene on Bloomberg Surveillant's Good morning, everybody. It's a Thursday, 10 00:00:51,960 --> 00:00:54,160 Speaker 1: October and a lot of news, suffice to say this morning, 11 00:00:54,240 --> 00:00:56,880 Speaker 1: let's tick through some of it. Twitter expected to release 12 00:00:56,920 --> 00:00:59,280 Speaker 1: third quarter earnings this morning at seven o'clock. Wall Street 13 00:00:59,320 --> 00:01:00,800 Speaker 1: Time will bring you those numbers as they crossed the 14 00:01:00,800 --> 00:01:02,800 Speaker 1: Bloomberg and I want to bring in Paul Sweeney. He's 15 00:01:02,800 --> 00:01:05,840 Speaker 1: the head of North American research at Bloomberg Intelligence. Paul, 16 00:01:05,880 --> 00:01:07,560 Speaker 1: A lot to talk about here, but give us what 17 00:01:07,560 --> 00:01:08,840 Speaker 1: you're gonna be keeping an eye on here when the 18 00:01:08,880 --> 00:01:11,640 Speaker 1: numbers cross. Well, I think for Twitter it's um just 19 00:01:11,680 --> 00:01:14,479 Speaker 1: a question of is there any evidence whatsoever that Jack 20 00:01:14,520 --> 00:01:16,760 Speaker 1: Dorsey has been able to find the secret sauce that 21 00:01:16,800 --> 00:01:19,920 Speaker 1: will try to reinvigorate the user growth at the company, 22 00:01:19,959 --> 00:01:22,600 Speaker 1: which could give investors some lifeline to kind of hang 23 00:01:22,640 --> 00:01:24,679 Speaker 1: on too, to see about whether there will be any 24 00:01:24,760 --> 00:01:27,600 Speaker 1: kind of revenue growth in the future for this company. Really, 25 00:01:27,600 --> 00:01:30,399 Speaker 1: over the last uh several quarters, we haven't seen any 26 00:01:30,840 --> 00:01:33,920 Speaker 1: evidence that they've been able to find a product fixed, 27 00:01:34,120 --> 00:01:37,800 Speaker 1: a technology fix, a marketing fix that can reignite user 28 00:01:37,840 --> 00:01:40,679 Speaker 1: growth there. And so the really question is if they 29 00:01:40,800 --> 00:01:43,080 Speaker 1: can't do that, what does the company do? It just 30 00:01:43,120 --> 00:01:45,440 Speaker 1: went through a round of m and a speculation and 31 00:01:45,480 --> 00:01:48,040 Speaker 1: a lot of the potential buyers walked away. So investors 32 00:01:48,040 --> 00:01:49,560 Speaker 1: are really left with, you know, what what do I 33 00:01:49,640 --> 00:01:51,240 Speaker 1: do with this name? All right? Those numbers crossing the 34 00:01:51,280 --> 00:01:54,400 Speaker 1: Bloomberg now looking at third quarter revenues six and sixteen 35 00:01:54,800 --> 00:01:58,400 Speaker 1: million dollars, third quarter adjusted earnings preciere thirteen since the 36 00:01:58,480 --> 00:02:01,360 Speaker 1: estimate was nine cents, and an announcement here the Twitter 37 00:02:01,400 --> 00:02:04,120 Speaker 1: is cutting up to nine percent of jobs. Will continue 38 00:02:04,160 --> 00:02:07,160 Speaker 1: to go through those those numbers series. There's one statistic here, 39 00:02:07,240 --> 00:02:12,960 Speaker 1: David that just sticks out. In fall Sweeney advertising revenue, 40 00:02:13,160 --> 00:02:17,520 Speaker 1: an increase of six percent year over year is Twitter 41 00:02:17,560 --> 00:02:19,760 Speaker 1: and industrial company. I was gonna say that kind of 42 00:02:19,800 --> 00:02:22,640 Speaker 1: sounds like a radio company or a TV company. Uh, 43 00:02:22,800 --> 00:02:24,160 Speaker 1: you know we're used to seeing you know, you think 44 00:02:24,200 --> 00:02:27,359 Speaker 1: about it. Uh, Internet advertising in general is growing about fifteen. 45 00:02:28,400 --> 00:02:32,320 Speaker 1: Advertising on social media is growing upwards of thirty and 46 00:02:32,360 --> 00:02:35,000 Speaker 1: so you see numbers coming out across Facebook and Snapchat 47 00:02:35,080 --> 00:02:37,919 Speaker 1: just put out some more numbers in terms of and 48 00:02:37,960 --> 00:02:39,880 Speaker 1: they're putting up some huge numbers. So when you see 49 00:02:40,080 --> 00:02:42,079 Speaker 1: a six percent number out of Twitter, that just really 50 00:02:42,120 --> 00:02:45,799 Speaker 1: tells the story. What is that? What's been the fallout 51 00:02:45,840 --> 00:02:48,040 Speaker 1: from Twitter putting itself up on the block and having 52 00:02:48,080 --> 00:02:50,440 Speaker 1: all the suitors walk away here, What's what's the what's 53 00:02:50,480 --> 00:02:52,919 Speaker 1: the company's next step in light of that happening. Yeah, 54 00:02:52,960 --> 00:02:55,920 Speaker 1: that was extraordinarily disappointing for them. I mean they actually 55 00:02:56,000 --> 00:02:57,880 Speaker 1: kind of engaged in the process a little bit. They 56 00:02:57,960 --> 00:03:00,800 Speaker 1: hired some advisors. Uh, they put out a little bit 57 00:03:00,840 --> 00:03:03,200 Speaker 1: of a process out there, so a number of players 58 00:03:03,200 --> 00:03:04,880 Speaker 1: were able to look at it. So it's clearly from 59 00:03:04,880 --> 00:03:08,160 Speaker 1: their perspective disappointing that that no one really stepped up 60 00:03:08,160 --> 00:03:10,680 Speaker 1: here is interesting. When salesforce dot Com was reported to 61 00:03:10,720 --> 00:03:14,359 Speaker 1: be the leading bidder, Their stocked sank dramatically, and a 62 00:03:14,440 --> 00:03:16,840 Speaker 1: lot of their very big investors went right to the 63 00:03:16,880 --> 00:03:18,720 Speaker 1: CEO and said, this is not a transaction. We want 64 00:03:18,760 --> 00:03:21,760 Speaker 1: you to do up six right now and very early 65 00:03:21,800 --> 00:03:24,480 Speaker 1: trading post. There's a sentence in here which goes to 66 00:03:24,520 --> 00:03:28,080 Speaker 1: your decades of experience. In light of the reorganization of 67 00:03:28,120 --> 00:03:32,360 Speaker 1: the company's salesforce, the company is not providing specific revenue 68 00:03:32,360 --> 00:03:35,160 Speaker 1: guidance for the fourth quarter and for the full year 69 00:03:35,200 --> 00:03:37,920 Speaker 1: two thousand and sixteen. How does the sell side guy 70 00:03:38,000 --> 00:03:41,680 Speaker 1: do his job if he's not getting top of line guidance. Well, 71 00:03:41,720 --> 00:03:43,440 Speaker 1: they have to go back and do some roll up 72 00:03:43,440 --> 00:03:45,120 Speaker 1: to sleeves and try to figure out what's going on here. 73 00:03:45,120 --> 00:03:46,960 Speaker 1: And I suspect that you're gonna see estimates come down 74 00:03:47,000 --> 00:03:49,920 Speaker 1: on the street. Typically analysts will take the most conservative 75 00:03:50,320 --> 00:03:53,480 Speaker 1: view they can. UM, and you know so and again 76 00:03:53,480 --> 00:03:55,240 Speaker 1: it's it's it's not so much about the numbers for 77 00:03:55,240 --> 00:03:57,960 Speaker 1: this company. Almost at this point, UM, I think the 78 00:03:58,080 --> 00:04:01,080 Speaker 1: next you know question for investors and and and for 79 00:04:01,240 --> 00:04:03,440 Speaker 1: management is there is there a price, any price, that 80 00:04:03,480 --> 00:04:05,400 Speaker 1: you will sell this company. And I think when the 81 00:04:05,440 --> 00:04:07,840 Speaker 1: initial round of M and A speculation came around the 82 00:04:07,880 --> 00:04:10,680 Speaker 1: stock was much higher level UM and you know, you 83 00:04:10,680 --> 00:04:12,640 Speaker 1: could have been a twenty billion dollar price tag to 84 00:04:12,680 --> 00:04:15,120 Speaker 1: get this company. Uh. Now the stock is down around 85 00:04:15,120 --> 00:04:18,359 Speaker 1: twelve billion dollars in terms of equity valuation UM and 86 00:04:18,400 --> 00:04:20,720 Speaker 1: so I think at some point there may be a 87 00:04:20,720 --> 00:04:23,719 Speaker 1: buyer here, simply because there aren't that many social media 88 00:04:23,760 --> 00:04:27,000 Speaker 1: platforms out there that are up and running, uh and 89 00:04:27,040 --> 00:04:29,359 Speaker 1: that have the impact that Twitter does in fact have 90 00:04:29,440 --> 00:04:32,520 Speaker 1: in the marketplace. So I think it's some price this 91 00:04:32,560 --> 00:04:34,800 Speaker 1: will be of interest to either tech buyer like a 92 00:04:34,800 --> 00:04:39,159 Speaker 1: Google or you know, some somebody else. Color for us, 93 00:04:39,400 --> 00:04:42,160 Speaker 1: the hype and hyperbole with you and your team measure 94 00:04:42,240 --> 00:04:45,440 Speaker 1: every day with the fact that this company makes twenty 95 00:04:45,480 --> 00:04:48,800 Speaker 1: eight cents in the dollar adjusted EBITDAL margin off of 96 00:04:48,839 --> 00:04:53,160 Speaker 1: gap revenue to be somewhere in the vicinity of a 97 00:04:53,160 --> 00:04:55,080 Speaker 1: lot of our listeners are going, wait a minute, these 98 00:04:55,120 --> 00:04:58,880 Speaker 1: guys are coining money. Amazon isn't. Why is Twitter dog 99 00:04:58,960 --> 00:05:02,039 Speaker 1: of dogs? It's uh yeah, simply, Uh, this is a 100 00:05:02,080 --> 00:05:04,640 Speaker 1: tech company. And if you're a tech investor, uh, you're 101 00:05:04,680 --> 00:05:06,680 Speaker 1: looking for top line growth. It's as simple as that. 102 00:05:06,760 --> 00:05:09,760 Speaker 1: And and most tech investors feel like we can grow 103 00:05:09,800 --> 00:05:12,080 Speaker 1: our way into profitability. What we're looking for, and what 104 00:05:12,120 --> 00:05:15,159 Speaker 1: we're paying for is unit growth um and it's top 105 00:05:15,200 --> 00:05:18,240 Speaker 1: line revenue growth and so and you know, uh, Twitter 106 00:05:18,279 --> 00:05:19,600 Speaker 1: had this coming out of the I P O and 107 00:05:19,640 --> 00:05:21,880 Speaker 1: we saw the stock trade. Well, Facebook still has it, 108 00:05:22,000 --> 00:05:24,720 Speaker 1: Google still has it, Amazon still has it. But this 109 00:05:24,800 --> 00:05:26,240 Speaker 1: is a name that's kind of run out of steam. 110 00:05:26,800 --> 00:05:30,760 Speaker 1: Qualit Calm. Money's cheap. I think if I add eighty 111 00:05:30,800 --> 00:05:34,279 Speaker 1: billion in fifty billion, I get over a tenth of 112 00:05:34,279 --> 00:05:38,599 Speaker 1: a trillion dollars just two big mergers. I mean, it's 113 00:05:38,640 --> 00:05:41,680 Speaker 1: just chasing the low interest rates. The money's here, let's go. 114 00:05:41,760 --> 00:05:43,640 Speaker 1: Let's go to your end, isn't it. Yeah. I think 115 00:05:43,760 --> 00:05:45,480 Speaker 1: you know this qual Calm deal, the A T and 116 00:05:45,520 --> 00:05:48,080 Speaker 1: T Time Warner deal. It's interesting here. I think these 117 00:05:48,120 --> 00:05:51,960 Speaker 1: are real transactions. These are strategic transactions. Uh you know, 118 00:05:52,000 --> 00:05:54,400 Speaker 1: in the case of a T and T really recognizing 119 00:05:54,440 --> 00:05:58,040 Speaker 1: that they need to put a content uh pipe into 120 00:05:58,200 --> 00:06:00,560 Speaker 1: their distribution system. And I think in a case for Qualcom, 121 00:06:00,600 --> 00:06:02,840 Speaker 1: they're looking for distribution away from the phone market. So 122 00:06:02,880 --> 00:06:06,039 Speaker 1: these are strategic driven trip transactions. But you're right, they're 123 00:06:06,040 --> 00:06:08,840 Speaker 1: absolutely fueled in very large part by the low cost 124 00:06:08,880 --> 00:06:10,400 Speaker 1: of capital. In the case of a T and t 125 00:06:11,120 --> 00:06:13,560 Speaker 1: half of that transaction will be funded by debt. And 126 00:06:13,600 --> 00:06:16,120 Speaker 1: you know, it's just amazing that JP Morgan and Bank 127 00:06:16,120 --> 00:06:18,480 Speaker 1: of American Maryland stepped up with a forty billion dollar 128 00:06:18,560 --> 00:06:21,680 Speaker 1: bridge alone, the biggest to be done in the marketplace. 129 00:06:21,880 --> 00:06:24,200 Speaker 1: UH So they feel very confident that they can refinance 130 00:06:24,240 --> 00:06:26,880 Speaker 1: that money on that. That's you know, the bridge loans 131 00:06:26,880 --> 00:06:29,360 Speaker 1: carry very big fees because they are the banks are 132 00:06:29,360 --> 00:06:32,080 Speaker 1: assuming a lot of market risk, so they will get 133 00:06:32,120 --> 00:06:34,440 Speaker 1: paid on on the fees on the bridgeland. Plus you 134 00:06:34,480 --> 00:06:36,840 Speaker 1: know they will be part of the uh the group 135 00:06:36,839 --> 00:06:38,800 Speaker 1: that will underwrite the bonds that will put in more 136 00:06:38,800 --> 00:06:41,080 Speaker 1: permanent financing to take out. In the old days, it 137 00:06:41,160 --> 00:06:43,599 Speaker 1: was a six percent business, So you made six percent 138 00:06:43,640 --> 00:06:46,599 Speaker 1: on onether and six percent of forty gazillions a lot 139 00:06:46,640 --> 00:06:49,480 Speaker 1: of money. It's not six, but it's still do they 140 00:06:49,480 --> 00:06:53,040 Speaker 1: make a stick in the parlance, do they make I'm 141 00:06:53,040 --> 00:06:54,680 Speaker 1: not sure exactly what fees are gonna get here, but 142 00:06:54,680 --> 00:06:57,840 Speaker 1: these are very profitable instruments for the banks. When they 143 00:06:57,839 --> 00:07:00,560 Speaker 1: step up and put capital, they absolutely will get paid for, 144 00:07:00,839 --> 00:07:03,320 Speaker 1: particularly now that they have to put so much capital 145 00:07:03,320 --> 00:07:05,560 Speaker 1: side on their bouncy from a regulatory perspective, So they 146 00:07:05,560 --> 00:07:09,160 Speaker 1: will certainly price their capital accordingly. And these are still 147 00:07:09,279 --> 00:07:12,360 Speaker 1: very uh attractive deals for the banks, but because they 148 00:07:12,400 --> 00:07:13,960 Speaker 1: are assuming a lot of risk here in case of 149 00:07:14,040 --> 00:07:16,040 Speaker 1: JP Morgan to be of a but you know they 150 00:07:16,080 --> 00:07:18,720 Speaker 1: will also make fees on the back end by doing 151 00:07:18,720 --> 00:07:20,880 Speaker 1: coming to the bond market and taking out this this bridge. 152 00:07:20,920 --> 00:07:22,400 Speaker 1: So well, not a whole lot of room here for 153 00:07:22,400 --> 00:07:24,840 Speaker 1: consolidation in the social media space, as you say, the 154 00:07:24,960 --> 00:07:27,520 Speaker 1: same thing holds truing the semiconductor space and that right, yeah, 155 00:07:27,560 --> 00:07:29,640 Speaker 1: I think so. Um you know on Entrini of Austin, 156 00:07:29,680 --> 00:07:32,480 Speaker 1: who cover semis for US, has been extraordinarily busier the 157 00:07:32,520 --> 00:07:34,600 Speaker 1: past couple of years has just been a tremendous amount 158 00:07:34,600 --> 00:07:37,720 Speaker 1: of consolidation in that space. Um So, you know, again 159 00:07:37,880 --> 00:07:40,520 Speaker 1: a lot of strategic driven tran transactions here. It's not 160 00:07:40,560 --> 00:07:42,960 Speaker 1: just because of cheap money. Um So when when you 161 00:07:42,960 --> 00:07:45,040 Speaker 1: when you start to see the private equity players come 162 00:07:45,080 --> 00:07:47,440 Speaker 1: into the marketplace, that's when you know that these are 163 00:07:47,480 --> 00:07:50,720 Speaker 1: more financially driven deals versus strategic. Real quick here snap 164 00:07:50,760 --> 00:07:54,400 Speaker 1: announcing it's going public yesterday, the parent company of Snapchat. 165 00:07:54,800 --> 00:07:56,720 Speaker 1: Why now, and what do you make the numbers? Yeah, 166 00:07:56,720 --> 00:07:58,840 Speaker 1: it's the numbers over that we're seeing. Uh, you know, 167 00:07:58,840 --> 00:08:00,560 Speaker 1: there's not a lot of public numbers out on Snapchat, 168 00:08:00,560 --> 00:08:02,960 Speaker 1: but what we've seen are just some extraordinary growth rates 169 00:08:02,960 --> 00:08:04,800 Speaker 1: in terms of, you know, the kind of the metrics 170 00:08:04,840 --> 00:08:07,240 Speaker 1: that investors are used to seeing from these social sites. Uh, 171 00:08:07,400 --> 00:08:11,280 Speaker 1: user growth, daily user growth, mobile user growth, and then 172 00:08:11,360 --> 00:08:14,360 Speaker 1: top line advertising. So the valuations that Bloomberg News reported 173 00:08:14,440 --> 00:08:18,560 Speaker 1: yesterday of thirty five billion dollars huge valuations because their 174 00:08:18,680 --> 00:08:21,400 Speaker 1: last private round, I think about six months ago value 175 00:08:21,440 --> 00:08:24,160 Speaker 1: the company at eighteen billion dollars. So again the valuation 176 00:08:24,240 --> 00:08:26,400 Speaker 1: numbers in Silicon Valley, if you still are putting up 177 00:08:26,400 --> 00:08:28,800 Speaker 1: the top line growth, you can get the valuation. You're 178 00:08:28,800 --> 00:08:34,720 Speaker 1: working a strange we do. Mr Graham and Mr Dodd 179 00:08:34,720 --> 00:08:37,880 Speaker 1: and Mr Coddle wouldn't know this world. Yeah, they they 180 00:08:38,040 --> 00:08:39,640 Speaker 1: don't think they were aware of, you know, kind of 181 00:08:39,640 --> 00:08:42,120 Speaker 1: the capital that would be a massed at in Silicon 182 00:08:42,200 --> 00:08:44,679 Speaker 1: Valley searching for the next big They wouldn't be snapping 183 00:08:45,880 --> 00:08:49,800 Speaker 1: Mr Rubens starting over to Carlisle Group looking for another raise. 184 00:08:50,080 --> 00:08:52,880 Speaker 1: Here as they say, Paul Sweeney, thank you so much. 185 00:08:53,000 --> 00:09:09,559 Speaker 1: Just brilliant here with Twitter, David Gurroud's a great deal 186 00:09:09,520 --> 00:09:11,640 Speaker 1: of seth masters with us, would they be alligned spur 187 00:09:11,679 --> 00:09:14,120 Speaker 1: Instein uh in the in the idea that we've been 188 00:09:14,120 --> 00:09:17,199 Speaker 1: talking about yields and yield dynamics into two thousand seventeen, 189 00:09:17,360 --> 00:09:21,560 Speaker 1: and it's an interesting linkage of everything we talked about 190 00:09:21,600 --> 00:09:25,440 Speaker 1: in economics and over into foreign exchange and over almost 191 00:09:25,440 --> 00:09:27,840 Speaker 1: into our politics as well. Absolutely seth looking at your 192 00:09:27,880 --> 00:09:29,720 Speaker 1: most recent note ALIGNE stood out to me. You said, 193 00:09:29,720 --> 00:09:31,960 Speaker 1: you've got to have only the bond exposure you need 194 00:09:32,320 --> 00:09:35,120 Speaker 1: nothing more easier said than done. That's a pretty difficult 195 00:09:35,160 --> 00:09:37,480 Speaker 1: thing to figure out, it really is, and of course 196 00:09:37,480 --> 00:09:40,080 Speaker 1: it very much depends on exactly what your objectives might be. 197 00:09:40,600 --> 00:09:42,880 Speaker 1: I think the problem is in the past, it wasn't 198 00:09:42,920 --> 00:09:45,839 Speaker 1: such a sensitive variable. You could afford to take a 199 00:09:45,920 --> 00:09:49,000 Speaker 1: little bit more exposure and things that were safe, especially 200 00:09:49,040 --> 00:09:52,000 Speaker 1: in bonds, and still get a reasonable yield and not 201 00:09:52,160 --> 00:09:54,760 Speaker 1: have to worry a lot about risk. But today having 202 00:09:54,800 --> 00:09:57,400 Speaker 1: too much in bonds can be a big risk for people, 203 00:09:57,480 --> 00:09:59,800 Speaker 1: both because the yields are so low you're not getting 204 00:09:59,840 --> 00:10:02,560 Speaker 1: a lot there, and because with interest race likely to 205 00:10:02,640 --> 00:10:05,560 Speaker 1: rise over the next several years, you have price risk too. 206 00:10:06,160 --> 00:10:09,160 Speaker 1: Looking at these super long term bonds, fifty year bonds 207 00:10:09,200 --> 00:10:11,840 Speaker 1: in Italy hundred your bonds in Spain. What do you 208 00:10:11,880 --> 00:10:14,360 Speaker 1: make of that? Is that trend going to to continue? Well, 209 00:10:14,400 --> 00:10:17,480 Speaker 1: I think those issuers are selling those bonds now because 210 00:10:17,520 --> 00:10:20,959 Speaker 1: they can, and from their perspective it's rational. The question 211 00:10:21,000 --> 00:10:23,640 Speaker 1: is the buyers and why are they doing this. I 212 00:10:23,679 --> 00:10:26,040 Speaker 1: think in some cases their institutions that are trying to 213 00:10:26,080 --> 00:10:27,719 Speaker 1: lock in a long term mas set to match a 214 00:10:27,720 --> 00:10:30,920 Speaker 1: long term liability, or at least that's what their their 215 00:10:30,960 --> 00:10:33,800 Speaker 1: intention is. The risk of this creates for everybody else 216 00:10:33,840 --> 00:10:38,160 Speaker 1: is that those issues go into the indices. And now 217 00:10:38,200 --> 00:10:41,760 Speaker 1: if you're if you buy a bondy TF, you're getting 218 00:10:42,160 --> 00:10:45,319 Speaker 1: a decent amount of exposure to very very long duration. 219 00:10:45,559 --> 00:10:47,360 Speaker 1: The duration of all of the bonding disease has been 220 00:10:47,360 --> 00:10:49,520 Speaker 1: creeping up over the last few years, especially outside of 221 00:10:49,520 --> 00:10:51,760 Speaker 1: the US, but here in the US two at a 222 00:10:51,800 --> 00:10:54,880 Speaker 1: time when we would say it actually makes sense to 223 00:10:55,000 --> 00:10:57,559 Speaker 1: be on the shorter side a little bit of the 224 00:10:57,640 --> 00:11:00,000 Speaker 1: duration spectrum. So we think that this is a great 225 00:11:00,000 --> 00:11:02,360 Speaker 1: an example of why you don't necessarily, as an investor, 226 00:11:02,840 --> 00:11:05,839 Speaker 1: necessarily benefit just from being passive just looking at the 227 00:11:06,200 --> 00:11:08,760 Speaker 1: bond space overall. Going into the ECB meeting last week, 228 00:11:08,800 --> 00:11:11,800 Speaker 1: there was a lot of talk of bond scarcity. How's 229 00:11:11,800 --> 00:11:14,160 Speaker 1: that playing out in your world? I think that the 230 00:11:14,760 --> 00:11:16,680 Speaker 1: fact that there is bond scarcity in some parts of 231 00:11:16,679 --> 00:11:19,760 Speaker 1: the world where central banks are buying up, literally vacuuming 232 00:11:19,840 --> 00:11:24,240 Speaker 1: up almost everything that there is, especially the Eurozone and 233 00:11:24,400 --> 00:11:27,000 Speaker 1: uh in Japan, that that's one of the reasons why 234 00:11:27,040 --> 00:11:30,000 Speaker 1: yields have remained so incredibly low. There are also, I 235 00:11:30,000 --> 00:11:32,320 Speaker 1: think some investors who are still much more worried about 236 00:11:32,360 --> 00:11:36,640 Speaker 1: deflation risk than inflation risk. But when the sentiment changes, 237 00:11:37,000 --> 00:11:39,520 Speaker 1: I think that we will start to see a shift 238 00:11:39,679 --> 00:11:42,559 Speaker 1: in the investor behavior. And we know that many of 239 00:11:42,559 --> 00:11:44,360 Speaker 1: the central banks are now trying to figure out how 240 00:11:44,400 --> 00:11:48,040 Speaker 1: to extract extricate themselves from this posture. And it's interesting, 241 00:11:48,040 --> 00:11:51,160 Speaker 1: your south is not only the great bull market and 242 00:11:51,160 --> 00:11:53,920 Speaker 1: bonds price up, yield down in the extraordinary years of 243 00:11:53,920 --> 00:11:56,040 Speaker 1: ONA and in twelve, and certainly this year looks to 244 00:11:56,080 --> 00:12:00,440 Speaker 1: be the same. You look at where bonds are turning 245 00:12:00,559 --> 00:12:05,280 Speaker 1: just looking at one major bund index from the Lehman bottom, 246 00:12:05,440 --> 00:12:08,520 Speaker 1: or you look at the Bloomberg Barclays Global Aggregate Index, 247 00:12:08,720 --> 00:12:12,200 Speaker 1: you know, the old Lehman index. I mean, most people 248 00:12:12,240 --> 00:12:16,560 Speaker 1: don't realize the bullmarket in bonds is equivalent or superior 249 00:12:17,160 --> 00:12:20,640 Speaker 1: to the bullmarket inequities. Right. Well, the the total it turns, 250 00:12:20,640 --> 00:12:23,320 Speaker 1: of course to aren't as high as the bullmark in equities, 251 00:12:23,320 --> 00:12:25,360 Speaker 1: but then again you wouldn't expect that. But you're absolutely 252 00:12:25,400 --> 00:12:28,280 Speaker 1: right in terms of it's how unusual it is. Um 253 00:12:28,320 --> 00:12:30,160 Speaker 1: it is extremely unusual, and it's been going on for 254 00:12:30,160 --> 00:12:32,360 Speaker 1: a very long time. It's been if you really think 255 00:12:32,360 --> 00:12:35,280 Speaker 1: about it, it's been about a thirty five year bull market, 256 00:12:35,840 --> 00:12:39,800 Speaker 1: and it's mathematically impossible for it to continue. Because okay, 257 00:12:41,280 --> 00:12:43,920 Speaker 1: what is your advice to an institutional portfolio forget about 258 00:12:43,920 --> 00:12:47,440 Speaker 1: a retail clients and our retail listeners who are in 259 00:12:47,520 --> 00:12:50,480 Speaker 1: financial repression. What do the pros do? Do they buy 260 00:12:50,600 --> 00:12:54,559 Speaker 1: dividend paying stocks prefers? Well, I think that they that's 261 00:12:54,559 --> 00:12:57,440 Speaker 1: what they have been doing, and that's a trap because 262 00:12:58,040 --> 00:13:01,120 Speaker 1: here's the problem. If you buy a stock because it 263 00:13:01,160 --> 00:13:03,920 Speaker 1: has yield, that means you're buying a bond like stock 264 00:13:03,960 --> 00:13:07,800 Speaker 1: that tends to have more inflation interest rate sensitivity than 265 00:13:07,880 --> 00:13:10,520 Speaker 1: the average stock. And I totally understand why people might 266 00:13:10,520 --> 00:13:13,520 Speaker 1: do that because the yield on stocks today is higher 267 00:13:13,520 --> 00:13:15,880 Speaker 1: than the yield on most bonds, and there are many 268 00:13:15,880 --> 00:13:18,040 Speaker 1: stocks that have yields that are in the four four 269 00:13:18,040 --> 00:13:20,880 Speaker 1: and a half percent range. But the problem you will 270 00:13:20,920 --> 00:13:24,640 Speaker 1: have is when in fact interest rates begin to move up, 271 00:13:25,120 --> 00:13:27,560 Speaker 1: those are the stocks that will be most at risk. 272 00:13:28,280 --> 00:13:31,920 Speaker 1: And here's the way to think about that. Um. In general, 273 00:13:32,200 --> 00:13:35,640 Speaker 1: stocks have to be sensitive to interest rates because the 274 00:13:35,679 --> 00:13:39,280 Speaker 1: interest rate is essentially the way you discount future cash 275 00:13:39,280 --> 00:13:43,040 Speaker 1: flows from any investment. So in the case of a 276 00:13:43,080 --> 00:13:47,240 Speaker 1: stock that is mostly trading on its earnings and how 277 00:13:47,320 --> 00:13:51,760 Speaker 1: much you value those earnings, that effect is significant, but 278 00:13:51,840 --> 00:13:54,800 Speaker 1: not determinative. If a stock is trading on its yield, though, 279 00:13:54,840 --> 00:13:57,600 Speaker 1: how much of those are paid out, then it's all 280 00:13:57,640 --> 00:13:59,880 Speaker 1: about what that interest rate is. And if the interstrate 281 00:14:00,080 --> 00:14:03,240 Speaker 1: was even a slight it up, many of these yielding 282 00:14:03,520 --> 00:14:06,160 Speaker 1: box will get crushed. Seth, thank you so much, Seth. 283 00:14:06,160 --> 00:14:16,880 Speaker 1: Maisters who maybe this morning greatly greatly appreciated Who you 284 00:14:16,960 --> 00:14:20,400 Speaker 1: put your trust in matters. Investors have put their trust 285 00:14:20,440 --> 00:14:24,000 Speaker 1: in independent registered investment advisors to the two and of 286 00:14:24,080 --> 00:14:27,520 Speaker 1: four trillion dollars. Why they see their roles to serve, 287 00:14:27,800 --> 00:14:31,120 Speaker 1: not sell. That's why Charles Schwab is committed to the 288 00:14:31,240 --> 00:14:37,360 Speaker 1: success over seven thousand independent financial advisors who passionately dedicate 289 00:14:37,400 --> 00:14:42,200 Speaker 1: themselves to helping people achieve their financial goals. Learn more 290 00:14:42,680 --> 00:14:54,120 Speaker 1: and find your independent advisor dot com. David Bring in 291 00:14:54,920 --> 00:14:58,360 Speaker 1: Iron Jersey. He helps us out pretty much every six 292 00:14:58,360 --> 00:15:00,720 Speaker 1: weeks or so with our FED showing interest rate that's 293 00:15:00,760 --> 00:15:02,600 Speaker 1: coming up. By the way, we should say, there's a 294 00:15:02,600 --> 00:15:05,000 Speaker 1: meeting on the horizon, right, Yeah, they haven't. I don't go. 295 00:15:05,120 --> 00:15:07,080 Speaker 1: They won't let me go to the there's a meeting, 296 00:15:07,360 --> 00:15:10,000 Speaker 1: but Bloomberg doesn't let me go to the meeting meetings 297 00:15:10,040 --> 00:15:14,840 Speaker 1: to get ready for the show. Just keep the spontaneity up. Anyways, 298 00:15:14,840 --> 00:15:17,480 Speaker 1: I Jerseys here, here's a portfolio manager at Oppenheimer Funds. 299 00:15:17,440 --> 00:15:18,800 Speaker 1: As you say, we talked to him a lot about 300 00:15:19,040 --> 00:15:21,200 Speaker 1: US treasuries. He's going to talk about Brazil a little 301 00:15:21,200 --> 00:15:23,680 Speaker 1: bit to them. Excited to hear your thoughts on on 302 00:15:23,680 --> 00:15:26,080 Speaker 1: that as well. Actually, let's let's start there. Let's look 303 00:15:26,080 --> 00:15:29,240 Speaker 1: look at emerging markets. And we've had a change of 304 00:15:29,280 --> 00:15:31,720 Speaker 1: power here. We have an interim president Michelle Timmerson. He's 305 00:15:31,720 --> 00:15:34,680 Speaker 1: not going to run in two thousand and eighteen. Uh, 306 00:15:34,800 --> 00:15:37,120 Speaker 1: there's been the political crisis. They say that now they 307 00:15:37,120 --> 00:15:39,520 Speaker 1: say that. Now I was gonna say, we'll see what 308 00:15:39,560 --> 00:15:41,960 Speaker 1: happens there. But he's made a lot of promises about 309 00:15:41,960 --> 00:15:43,800 Speaker 1: cleaning things up, and there's a lot of cleaning up 310 00:15:43,840 --> 00:15:46,080 Speaker 1: to do. Are you optimistic that that's going to happen 311 00:15:46,400 --> 00:15:48,960 Speaker 1: down in Brazilian? Yeah, we are. Um. You know, one 312 00:15:48,960 --> 00:15:50,640 Speaker 1: of the things that that we look at when we 313 00:15:50,640 --> 00:15:53,240 Speaker 1: look at the politics of the situation is what's the 314 00:15:53,320 --> 00:15:56,080 Speaker 1: likelihood that you're going to have a friendlier congress where 315 00:15:56,080 --> 00:15:57,640 Speaker 1: they're going to be able to get their fiscal house 316 00:15:57,640 --> 00:16:00,080 Speaker 1: in order. Um. There is there is some optim is 317 00:16:00,120 --> 00:16:01,960 Speaker 1: hum that that that's going to happen. Some of the 318 00:16:01,960 --> 00:16:04,240 Speaker 1: promises that were made might be a little bit of 319 00:16:04,240 --> 00:16:06,440 Speaker 1: a stretch, but if they can get most of the 320 00:16:06,440 --> 00:16:09,400 Speaker 1: way there, then that's very positive for them. Um. And 321 00:16:09,400 --> 00:16:12,760 Speaker 1: And you know, from a bond market's perspective, it's things 322 00:16:12,800 --> 00:16:15,520 Speaker 1: like what's going on with inflation. Inflation is coming down there, 323 00:16:15,800 --> 00:16:17,840 Speaker 1: what's going on with bond issue once? Will they be 324 00:16:17,880 --> 00:16:19,960 Speaker 1: able to actually hit their fiscal targets? We think they'll 325 00:16:19,960 --> 00:16:22,960 Speaker 1: come close. Um. So, so all of those things make 326 00:16:23,000 --> 00:16:26,240 Speaker 1: the environment for buying bonds that are still trading at 327 00:16:26,280 --> 00:16:29,680 Speaker 1: double digits UM pretty pretty attractive. Now. It's not for 328 00:16:29,680 --> 00:16:31,400 Speaker 1: the faint of heart, you don't want to you know, 329 00:16:31,560 --> 00:16:33,880 Speaker 1: jump in with both feet, UM. So you need to 330 00:16:33,920 --> 00:16:36,040 Speaker 1: manage risks and and make it part of a larger 331 00:16:36,080 --> 00:16:41,120 Speaker 1: portfolio UM, which is uh, you know, diversified um broadly speaking. 332 00:16:41,160 --> 00:16:43,080 Speaker 1: But but we do like Brazil and we do think 333 00:16:43,080 --> 00:16:45,800 Speaker 1: that uh, you know, we're overweight in both our emerging 334 00:16:45,800 --> 00:16:49,240 Speaker 1: markets local debt fund and our and our international bond funds. Well, 335 00:16:49,320 --> 00:16:53,520 Speaker 1: let's return to the interimness of this presidency. As an investor, 336 00:16:53,560 --> 00:16:56,520 Speaker 1: does that make things easier or harder? If this guy 337 00:16:56,560 --> 00:16:58,600 Speaker 1: is able to right the ship knowing that he's gonna 338 00:16:58,600 --> 00:17:00,120 Speaker 1: be out in two thousand eighteen, doesn't that interes do 339 00:17:00,240 --> 00:17:03,000 Speaker 1: some some new uncertainty? Yeah, it does because you don't 340 00:17:03,000 --> 00:17:05,640 Speaker 1: know necessarily who's going to be the next who's gonna 341 00:17:05,640 --> 00:17:09,119 Speaker 1: be the next leader. There's no air apparent necessarily, so 342 00:17:09,119 --> 00:17:11,080 Speaker 1: so we watch those things. But you know, it is 343 00:17:11,640 --> 00:17:13,960 Speaker 1: it is the elections two years away, so we're still 344 00:17:14,000 --> 00:17:16,520 Speaker 1: looking for at least a little bit of stability in 345 00:17:16,520 --> 00:17:18,480 Speaker 1: the interim. And like I said before, you know, you 346 00:17:18,520 --> 00:17:20,760 Speaker 1: never know, if all of a sudden he becomes very popular, 347 00:17:21,160 --> 00:17:24,080 Speaker 1: there is the possibility that there could be a um, 348 00:17:24,160 --> 00:17:26,600 Speaker 1: you know, that we could know, at least one candidate 349 00:17:26,600 --> 00:17:29,639 Speaker 1: who might run for run for office, and and quite frankly, 350 00:17:29,720 --> 00:17:32,480 Speaker 1: it's you know, will we see stability in places like Congress? 351 00:17:32,720 --> 00:17:35,760 Speaker 1: Is corruption over in Brazil? You know, it's it's hard 352 00:17:35,800 --> 00:17:38,320 Speaker 1: to know that without being in the inner workings. But 353 00:17:38,320 --> 00:17:39,960 Speaker 1: but at least there are some positives. You know. One 354 00:17:40,000 --> 00:17:42,080 Speaker 1: of the things that we've always liked about Brazil is 355 00:17:42,119 --> 00:17:46,159 Speaker 1: that the governmental institutions continue to be a positive and 356 00:17:46,160 --> 00:17:48,280 Speaker 1: they continue to operate the way you're supposed to. I mean, 357 00:17:48,280 --> 00:17:51,560 Speaker 1: you don't have a president, you know, the the Justice 358 00:17:51,600 --> 00:17:56,040 Speaker 1: Department um going after a sitting president with weak institutions. 359 00:17:56,320 --> 00:17:59,480 Speaker 1: So because they're strong institutions, we think that Brazil is 360 00:17:59,480 --> 00:18:02,920 Speaker 1: likely to get through this in decent order. You mentioned inflation. 361 00:18:03,000 --> 00:18:06,760 Speaker 1: What else are central bank policymakers wrestling with in Brazil 362 00:18:06,840 --> 00:18:10,920 Speaker 1: right now? Well, well, both growth and inflation. You know, 363 00:18:10,960 --> 00:18:12,600 Speaker 1: one of the one of the issues that they had 364 00:18:12,640 --> 00:18:15,000 Speaker 1: for a while, and one of the reasons why they 365 00:18:15,000 --> 00:18:17,160 Speaker 1: had been hiking interest rates was to try and fight 366 00:18:17,200 --> 00:18:19,800 Speaker 1: inflation and get inflation down and to try and make 367 00:18:19,800 --> 00:18:23,000 Speaker 1: sure that the real which really their currency, the Brazilian real, 368 00:18:23,520 --> 00:18:26,159 Speaker 1: was the kind of the big stabilizer and really was 369 00:18:26,240 --> 00:18:29,520 Speaker 1: the instrument that was hard hardest hit by the politics 370 00:18:29,560 --> 00:18:32,399 Speaker 1: of Brazil. Um, you know now that you have a 371 00:18:32,440 --> 00:18:35,520 Speaker 1: situation where the politics is over now the central bank 372 00:18:35,560 --> 00:18:38,640 Speaker 1: and focus more on growth and inflation. Inflation is coming down. 373 00:18:38,680 --> 00:18:40,960 Speaker 1: Inflation was double digits, it's likely to be you know, 374 00:18:41,040 --> 00:18:44,399 Speaker 1: highest single digits now. But um, but that means that 375 00:18:44,440 --> 00:18:46,439 Speaker 1: you've already had one rate cut and you're likely to 376 00:18:46,440 --> 00:18:48,640 Speaker 1: get more and that should bring interest rates lower. How 377 00:18:48,680 --> 00:18:50,640 Speaker 1: do you and this is so great with your experience 378 00:18:50,640 --> 00:18:52,680 Speaker 1: a credit suite. See now you're over with a good 379 00:18:52,720 --> 00:18:57,719 Speaker 1: international people at Oppenheimer Funds. How does an investor know 380 00:18:58,080 --> 00:19:02,080 Speaker 1: that his manager is managing the currency risk? If you 381 00:19:02,119 --> 00:19:07,160 Speaker 1: look at the Brazilian equity markets, it's stunning the difference 382 00:19:07,200 --> 00:19:12,240 Speaker 1: if you're in Brazil real or in US dollars. Yeah, so, 383 00:19:12,240 --> 00:19:14,800 Speaker 1: so you know that's that's a choice and a preference. Um. 384 00:19:14,880 --> 00:19:17,880 Speaker 1: You know there are um, some investors who fully hedge 385 00:19:17,920 --> 00:19:21,080 Speaker 1: their portfolio as other investors who don't. UM. In our 386 00:19:21,720 --> 00:19:25,639 Speaker 1: in our international bond fund, we actively manage our currency exposure. 387 00:19:25,720 --> 00:19:28,359 Speaker 1: So UM, we say, okay, what is the dollar cycle? 388 00:19:28,440 --> 00:19:30,680 Speaker 1: So we first look, okay, what's the dollar broadly doing? 389 00:19:31,000 --> 00:19:32,920 Speaker 1: And then if we think that the dollar is going 390 00:19:32,920 --> 00:19:35,520 Speaker 1: to be appreciating against most currencies as it as it 391 00:19:35,600 --> 00:19:38,400 Speaker 1: quite frankly has for the last couple of years, um, 392 00:19:38,520 --> 00:19:40,840 Speaker 1: then we say, okay, well, which currencies are likely to 393 00:19:40,880 --> 00:19:42,680 Speaker 1: do the best and worst? Because one of the things 394 00:19:42,720 --> 00:19:45,880 Speaker 1: about currencies in particular is that it's a relative game. Uh. 395 00:19:45,920 --> 00:19:47,520 Speaker 1: You know, you can say, oh, the dollar is gonna 396 00:19:47,520 --> 00:19:49,720 Speaker 1: do great, but then you know, I'm you know, this 397 00:19:49,960 --> 00:19:52,280 Speaker 1: might be that one currency out there that actually does 398 00:19:52,359 --> 00:19:55,320 Speaker 1: better than against the dollar. So so you need to 399 00:19:55,359 --> 00:19:57,120 Speaker 1: make sure that you do your homework, that you look 400 00:19:57,160 --> 00:19:59,160 Speaker 1: at every country, You look at all of the crosses, 401 00:19:59,200 --> 00:20:02,119 Speaker 1: you look at you know how, um, not only is 402 00:20:02,119 --> 00:20:04,600 Speaker 1: is the U S faring, but how are the our 403 00:20:04,640 --> 00:20:07,760 Speaker 1: counterparties faring? Um? So you know, how is Europe doing 404 00:20:07,880 --> 00:20:10,560 Speaker 1: visa vi the US? You know, And and with currencies, 405 00:20:10,760 --> 00:20:12,720 Speaker 1: a big theme had been for a long time this 406 00:20:13,000 --> 00:20:15,520 Speaker 1: policy divergence idea where the FED would be hiking and 407 00:20:15,840 --> 00:20:17,800 Speaker 1: the Bank of Japan and a lot of other central 408 00:20:17,840 --> 00:20:21,440 Speaker 1: banks would be easy monetary policy. And and that's kind 409 00:20:21,440 --> 00:20:23,159 Speaker 1: of fallen a little bit by the wayside, which is 410 00:20:23,200 --> 00:20:26,000 Speaker 1: the reason why you've seen some stability actually and currency 411 00:20:26,040 --> 00:20:29,320 Speaker 1: markets for for the last six months or so after 412 00:20:29,480 --> 00:20:31,399 Speaker 1: after the dollar was very weak in the first quarter, 413 00:20:31,640 --> 00:20:34,760 Speaker 1: there was so much exuberant surrounding Argentina's returned to to 414 00:20:34,800 --> 00:20:37,560 Speaker 1: the bond markets. Do you do you share that? Are 415 00:20:37,640 --> 00:20:40,920 Speaker 1: you excited about the prospects in Argentina? Well, there's so 416 00:20:41,080 --> 00:20:43,879 Speaker 1: certainly things in Argentina have improved quite a lot. I 417 00:20:43,880 --> 00:20:45,360 Speaker 1: think one of the you know, one of the things 418 00:20:45,359 --> 00:20:47,440 Speaker 1: that we're looking at is how much issuance is they're 419 00:20:47,440 --> 00:20:49,760 Speaker 1: going to be out of not only the sovereign, but 420 00:20:49,840 --> 00:20:53,320 Speaker 1: out of prints, out of the municipalities and and out 421 00:20:53,320 --> 00:20:56,480 Speaker 1: of a lot of other government institutions there and where. 422 00:20:56,560 --> 00:20:59,160 Speaker 1: So we're a little bit worried on the supply side. Um. 423 00:20:59,520 --> 00:21:01,040 Speaker 1: You know. One of of things that is is that 424 00:21:01,119 --> 00:21:03,840 Speaker 1: you can say fundamentally we like it, um you know, 425 00:21:03,880 --> 00:21:06,440 Speaker 1: we the technicals might be a little challenge. The question 426 00:21:06,440 --> 00:21:09,359 Speaker 1: is where are things priced. Are things priced for a 427 00:21:09,400 --> 00:21:12,080 Speaker 1: heavy supply load or are they not? And you know 428 00:21:12,119 --> 00:21:14,960 Speaker 1: what's going on in Argentina and lately with with spreads 429 00:21:14,960 --> 00:21:16,800 Speaker 1: acting the way they have is we don't think it's 430 00:21:16,880 --> 00:21:19,480 Speaker 1: you know, all of the risks are exactly priced in 431 00:21:19,640 --> 00:21:22,520 Speaker 1: So there they are and probably will be some opportunities, 432 00:21:22,520 --> 00:21:25,520 Speaker 1: but we were using more caution in a place like Argentina, 433 00:21:25,760 --> 00:21:29,040 Speaker 1: somewhat more so now than we are Brazil. Bring us 434 00:21:29,040 --> 00:21:32,160 Speaker 1: back to our next section on the United States, we've 435 00:21:32,160 --> 00:21:36,600 Speaker 1: been sort of devoid of the Dutch go silliness. I mean, 436 00:21:37,119 --> 00:21:39,919 Speaker 1: any chance this November meeting, when we visit with you, 437 00:21:40,080 --> 00:21:43,280 Speaker 1: is there any chance we get the mother of all surprises? 438 00:21:44,480 --> 00:21:47,239 Speaker 1: I don't think so. Um, certainly the market doesn't think so. 439 00:21:47,280 --> 00:21:49,600 Speaker 1: We're pricing in, basically, you know, as close to a 440 00:21:49,680 --> 00:21:51,760 Speaker 1: zero percent chance as the market ever prices in for 441 00:21:51,840 --> 00:21:55,280 Speaker 1: such things. Um. You know, the motus aprandite of this 442 00:21:55,320 --> 00:21:58,000 Speaker 1: particular FED is not the surprise markets. You know. One 443 00:21:58,040 --> 00:22:00,520 Speaker 1: of the Janet Yellen's things is when she was the 444 00:22:00,600 --> 00:22:03,800 Speaker 1: chair of their communications committee for the for the Board 445 00:22:03,840 --> 00:22:06,320 Speaker 1: of Governors, was, look, we want to give the market 446 00:22:06,320 --> 00:22:08,320 Speaker 1: as much information as we can. They you know, in 447 00:22:08,359 --> 00:22:11,840 Speaker 1: some ways it's probably too much information, um, because it's 448 00:22:11,880 --> 00:22:15,000 Speaker 1: can it's confused and modeled the um, you know, moddeled 449 00:22:15,000 --> 00:22:19,400 Speaker 1: the message somewhat, I think, But um, but the chances next, 450 00:22:19,600 --> 00:22:21,879 Speaker 1: what's important about next week is how did they change 451 00:22:21,920 --> 00:22:25,119 Speaker 1: the statement in their own nuanced way that they always 452 00:22:25,119 --> 00:22:28,600 Speaker 1: do to prepare us for what might be coming in December. 453 00:22:28,640 --> 00:22:31,480 Speaker 1: So do they do they upgrade their assessment of the economy. 454 00:22:31,520 --> 00:22:34,000 Speaker 1: Do they continue on the exact same path, which probably 455 00:22:34,040 --> 00:22:36,080 Speaker 1: means that they hi in December at least I think 456 00:22:36,119 --> 00:22:39,320 Speaker 1: so um? Or do they do they downgrade the economy 457 00:22:39,320 --> 00:22:40,800 Speaker 1: and say, hey, some of the data has been a 458 00:22:40,840 --> 00:22:43,800 Speaker 1: little bit, a little bit concerning um. So so it's 459 00:22:43,840 --> 00:22:45,800 Speaker 1: that little bit of nuance that the markets are gonna 460 00:22:45,880 --> 00:22:48,280 Speaker 1: latch onto and you know they'll be you know, one sentence, 461 00:22:48,280 --> 00:22:51,000 Speaker 1: one phrase in there that can uh, that can change 462 00:22:51,520 --> 00:22:57,640 Speaker 1: market perceptions quite a lot. Here we go again, exactly 463 00:22:57,800 --> 00:23:00,840 Speaker 1: every six weeks. It's the first time Ira jar Jersey 464 00:23:00,880 --> 00:23:05,520 Speaker 1: has ever been with us for a dead meeting. It's 465 00:23:05,520 --> 00:23:07,840 Speaker 1: it's crazy, but we'll do that. Well, we're looking forward 466 00:23:07,840 --> 00:23:11,080 Speaker 1: to Michael McKee will be in Washington giving us perspective. 467 00:23:11,080 --> 00:23:14,359 Speaker 1: And I think no news conference. We should say, yeah, 468 00:23:14,400 --> 00:23:17,480 Speaker 1: no news conference. But but I would say to everyone 469 00:23:17,600 --> 00:23:21,840 Speaker 1: where whatever you're doing that afternoon of November two, right, 470 00:23:22,480 --> 00:23:26,720 Speaker 1: I would pay attention. I just never say I've been 471 00:23:26,760 --> 00:23:30,840 Speaker 1: burnt badly not paying attention to FED meetings. So I 472 00:23:30,840 --> 00:23:32,719 Speaker 1: I really do look forward to it. I aroh, One 473 00:23:32,720 --> 00:23:34,640 Speaker 1: of the things we talked to Seth Masters of ABE 474 00:23:34,680 --> 00:23:38,320 Speaker 1: about this earlier is the idea of longer duration. Everybody 475 00:23:38,359 --> 00:23:40,439 Speaker 1: is so desperate that the new five years is seven, 476 00:23:40,840 --> 00:23:44,480 Speaker 1: the new ten years is twelve or fifteen, and critically 477 00:23:44,520 --> 00:23:47,240 Speaker 1: the new thirty year piece is in the case of 478 00:23:47,280 --> 00:23:52,440 Speaker 1: Austria's seventy years, that must end ugly. It did for Napoleon. 479 00:23:52,880 --> 00:23:55,560 Speaker 1: I'm gonna suggest maybe it will for us as well well. 480 00:23:55,960 --> 00:23:59,720 Speaker 1: So I think the the underappreciated risk, particularly by individual 481 00:23:59,720 --> 00:24:03,280 Speaker 1: and is how much duration risk is out there? Um So, 482 00:24:03,560 --> 00:24:06,520 Speaker 1: to your point, like a seventy year bond actually doesn't 483 00:24:06,600 --> 00:24:08,920 Speaker 1: have that much more duration risk than a thirty year bond, 484 00:24:09,119 --> 00:24:10,639 Speaker 1: And you say, well, how can that be. It's a 485 00:24:10,800 --> 00:24:13,240 Speaker 1: it's one of the one of the magics of bond math. 486 00:24:13,680 --> 00:24:16,080 Speaker 1: But at the end of the day, um the fact 487 00:24:16,080 --> 00:24:19,639 Speaker 1: that you have a lot more people buying longer UH 488 00:24:19,880 --> 00:24:23,639 Speaker 1: maturity assets and there for longer duration assets, they're taking 489 00:24:23,640 --> 00:24:25,919 Speaker 1: more more interest rate risk. So when you buy a 490 00:24:25,920 --> 00:24:28,800 Speaker 1: ten year bond and interest rates go up one percent, 491 00:24:29,240 --> 00:24:32,280 Speaker 1: you can lose about nine percent of your money. If 492 00:24:32,320 --> 00:24:34,960 Speaker 1: you buy a thirty year bond, it's more than double that. 493 00:24:35,480 --> 00:24:38,360 Speaker 1: So you're you know, you really take a whole lot 494 00:24:38,400 --> 00:24:40,960 Speaker 1: of interest rate risk when you are buying these longer 495 00:24:41,040 --> 00:24:44,439 Speaker 1: duration assets. But but basically, the you know, central banks 496 00:24:44,480 --> 00:24:47,200 Speaker 1: are forcing you to do that because if you're yield 497 00:24:47,280 --> 00:24:49,520 Speaker 1: hungry at all and you want some income from a 498 00:24:49,560 --> 00:24:52,200 Speaker 1: fixed income investment, you need to go out there for 499 00:24:52,359 --> 00:24:54,600 Speaker 1: to find positive yields in many kinds. It was beautifully 500 00:24:54,600 --> 00:24:56,560 Speaker 1: explained why we love to have you, um, But the 501 00:24:56,960 --> 00:25:01,880 Speaker 1: distinction there is because we're so yield hungry. When new 502 00:25:01,920 --> 00:25:06,080 Speaker 1: bonds are issued that are longer maturity bonds, the yield 503 00:25:06,200 --> 00:25:09,200 Speaker 1: is much lower than it should be, right well, because 504 00:25:09,200 --> 00:25:11,840 Speaker 1: demand is so strong and high for them. And that's 505 00:25:11,920 --> 00:25:14,359 Speaker 1: and when you say should be, you know, we have 506 00:25:14,400 --> 00:25:17,120 Speaker 1: all kinds of models. We say, okay, you know, nominal 507 00:25:17,160 --> 00:25:20,600 Speaker 1: GDP should be where your tenure uh bond should be, 508 00:25:20,680 --> 00:25:23,440 Speaker 1: which means that we're still probably somewhere like a hundred 509 00:25:23,480 --> 00:25:25,760 Speaker 1: basis points or a hundred and fifty basis points rich. 510 00:25:26,160 --> 00:25:28,959 Speaker 1: My model says we're closer to forty basis points rich 511 00:25:29,000 --> 00:25:31,880 Speaker 1: on the tenure, so um, you know, not not so 512 00:25:31,880 --> 00:25:35,800 Speaker 1: so crazy far away. But but regardless, the fact is 513 00:25:35,840 --> 00:25:39,159 Speaker 1: that supplied demand dynamics or such that you know, you 514 00:25:39,160 --> 00:25:42,840 Speaker 1: you wind up having this this insatiable thirst for any 515 00:25:42,920 --> 00:25:45,760 Speaker 1: yield anywhere when you know when I always use the 516 00:25:45,880 --> 00:25:49,560 Speaker 1: WB function on Bloomberg every morning just to say, hey, 517 00:25:49,640 --> 00:25:52,720 Speaker 1: you know how things moved overnight. And when you look 518 00:25:52,720 --> 00:25:55,119 Speaker 1: at the United Kingdom with their tenure yield at one 519 00:25:55,119 --> 00:25:57,639 Speaker 1: point to two percent, and then you go down and 520 00:25:57,640 --> 00:26:00,480 Speaker 1: you say, if you're in Germany it's now four basis 521 00:26:00,480 --> 00:26:04,120 Speaker 1: points zero point one four percent. That's not very exciting. 522 00:26:04,160 --> 00:26:05,960 Speaker 1: So you have to go to thirty years if you 523 00:26:06,000 --> 00:26:08,800 Speaker 1: want any yield in Euro or take more more risk, 524 00:26:08,880 --> 00:26:12,120 Speaker 1: like by buying a peripheral bond like like Spain or Portugal. 525 00:26:12,359 --> 00:26:16,760 Speaker 1: I a Bloomberg dollars spout here. The strong dollar, how 526 00:26:16,760 --> 00:26:19,359 Speaker 1: long is it going to continue? Well? So, so we 527 00:26:19,440 --> 00:26:21,720 Speaker 1: think that the dollar might have one more run up 528 00:26:21,960 --> 00:26:24,520 Speaker 1: um as the market prices for a few more fed 529 00:26:24,600 --> 00:26:28,200 Speaker 1: hikes UM. But but generally speaking, we think we've probably 530 00:26:28,240 --> 00:26:31,360 Speaker 1: seen the end. We've probably seen the dollar highs uh 531 00:26:31,400 --> 00:26:34,960 Speaker 1: in general. UM. So we're looking for the dollar to turn. 532 00:26:35,240 --> 00:26:37,160 Speaker 1: You know, if if if the world had played out 533 00:26:37,200 --> 00:26:40,760 Speaker 1: exactly to our forecast from a year ago, we thought 534 00:26:40,760 --> 00:26:42,840 Speaker 1: that the dollar would have turned already because we'd have 535 00:26:42,880 --> 00:26:45,240 Speaker 1: some central banks that actually, instead of easing, would be 536 00:26:45,640 --> 00:26:47,840 Speaker 1: um on hold and maybe the next move would actually 537 00:26:47,880 --> 00:26:50,640 Speaker 1: be tightening. So um so, so we think we're nearing 538 00:26:50,640 --> 00:26:52,879 Speaker 1: the end. We're probably at at a plateau here, so 539 00:26:52,920 --> 00:26:55,160 Speaker 1: we don't expect a whole lot from the dollar generally 540 00:26:55,240 --> 00:26:58,560 Speaker 1: over the near term. Very quickly. Cleveland FED service sectors 541 00:26:58,560 --> 00:27:01,679 Speaker 1: three point two percent Cleveland FED as a core a 542 00:27:01,800 --> 00:27:05,119 Speaker 1: curving up on a on a log y axis, it's quadratic. 543 00:27:05,160 --> 00:27:10,359 Speaker 1: There's some acceleration to non goods inflation. Is that change 544 00:27:10,400 --> 00:27:13,000 Speaker 1: the dialogue in the next six months? So so services 545 00:27:13,040 --> 00:27:15,280 Speaker 1: inflation was that one of the things that that was 546 00:27:15,520 --> 00:27:17,920 Speaker 1: lagging for a long time, it's not known and and 547 00:27:17,960 --> 00:27:20,320 Speaker 1: now you have services inflation picking up and that can 548 00:27:20,359 --> 00:27:23,280 Speaker 1: be more sustainable and given that we are services based economy, 549 00:27:23,359 --> 00:27:25,200 Speaker 1: we think it will if you look at core inflation, 550 00:27:25,240 --> 00:27:28,160 Speaker 1: so you look at whether it's it's the feds UH 551 00:27:28,359 --> 00:27:32,720 Speaker 1: preferred measure, the core PC deflator or the or core 552 00:27:32,800 --> 00:27:35,560 Speaker 1: c P I. You're looking at at things that are 553 00:27:35,600 --> 00:27:38,720 Speaker 1: close to the Fed's target. Now the question is in 554 00:27:38,720 --> 00:27:42,160 Speaker 1: in this you know yelling's optimal control environment. Do how 555 00:27:42,160 --> 00:27:45,000 Speaker 1: long do they run that higher than their two percent 556 00:27:45,040 --> 00:27:47,600 Speaker 1: target before they say, hey, we need to hike a 557 00:27:47,600 --> 00:27:50,160 Speaker 1: little bit faster than we have been. Um. They're willing 558 00:27:50,160 --> 00:27:52,040 Speaker 1: to do it a little bit more, um, but but 559 00:27:52,160 --> 00:27:54,439 Speaker 1: it's gonna take some time. A Jersey, thank you so 560 00:27:54,520 --> 00:27:56,919 Speaker 1: much with the Oppenheimer Funds. Look forward to seeing you 561 00:27:57,000 --> 00:27:59,880 Speaker 1: here in a number of days with the dead Meat. 562 00:28:00,160 --> 00:28:16,520 Speaker 1: It'll be a live show November. David Girl, This is 563 00:28:16,520 --> 00:28:19,359 Speaker 1: a really important thing in economics. In its Old world 564 00:28:19,400 --> 00:28:22,719 Speaker 1: new world. There's level and there's growth rate. And as 565 00:28:22,760 --> 00:28:26,760 Speaker 1: a general statement, Old world England, Europe are much more 566 00:28:26,800 --> 00:28:29,560 Speaker 1: better at level analysis in the U S which looks 567 00:28:29,600 --> 00:28:32,400 Speaker 1: at the rate of change for a second, rivet etcetera, etcetera. 568 00:28:33,040 --> 00:28:36,720 Speaker 1: Ken set up lives in the same world in equity 569 00:28:36,760 --> 00:28:41,000 Speaker 1: research with ever core and Ken good morning. And what 570 00:28:41,040 --> 00:28:44,160 Speaker 1: I look at is when I look at the level 571 00:28:44,320 --> 00:28:47,400 Speaker 1: of Twitter profitability, anybody would say just shut up and 572 00:28:47,440 --> 00:28:51,520 Speaker 1: buy it. But the rate of growth of core revenue 573 00:28:51,520 --> 00:28:55,000 Speaker 1: build and I compare it to Facebook April up fifty 574 00:28:56,040 --> 00:28:59,320 Speaker 1: something like that, and that number today just stunned me. 575 00:28:59,560 --> 00:29:03,920 Speaker 1: Up percent, Twitter is basically a no growth entity, isn't 576 00:29:03,920 --> 00:29:05,800 Speaker 1: it right? And I think if you look at the 577 00:29:05,840 --> 00:29:09,080 Speaker 1: North America ad growth it actually declined to per cent, 578 00:29:09,200 --> 00:29:14,320 Speaker 1: so coming from International advertising UM, which is a smaller 579 00:29:14,320 --> 00:29:17,200 Speaker 1: base UM, as well as some of their licensing fees 580 00:29:17,240 --> 00:29:20,160 Speaker 1: and other spline. May I suggest is a heart and 581 00:29:20,200 --> 00:29:23,320 Speaker 1: I think everybody knows I'm a hardcore Twitter user. You 582 00:29:23,480 --> 00:29:25,960 Speaker 1: flood the thing with the ads like everybody else, and 583 00:29:25,960 --> 00:29:28,239 Speaker 1: then you get clowns like me to pony up an 584 00:29:28,280 --> 00:29:31,360 Speaker 1: annual subscription to make the ads go away? Is that 585 00:29:31,400 --> 00:29:35,760 Speaker 1: the dummest thing is that the dumbest things slice bread? Yeah, 586 00:29:35,760 --> 00:29:37,120 Speaker 1: I think that would be tough because I think that 587 00:29:37,160 --> 00:29:40,400 Speaker 1: what would happen is you'd leave an opportunity for Facebook 588 00:29:40,400 --> 00:29:41,760 Speaker 1: and others who are trying to do more in the 589 00:29:41,800 --> 00:29:44,440 Speaker 1: area of broadcast to say, just come over here. There's 590 00:29:44,440 --> 00:29:48,200 Speaker 1: no ads, right, and there's no subscription price. Jack Dorsey 591 00:29:48,320 --> 00:29:50,000 Speaker 1: on the call a few minutes ago, saying it's his 592 00:29:50,080 --> 00:29:53,440 Speaker 1: goal to get to GAP profitability in two thousand seventeen. 593 00:29:53,440 --> 00:29:55,240 Speaker 1: From what we've seen today, from what we've seen of 594 00:29:55,280 --> 00:29:57,320 Speaker 1: this company here over the last few quarters. How how 595 00:29:57,400 --> 00:30:00,040 Speaker 1: likely is that to happen? Do you think? UM? I 596 00:30:00,440 --> 00:30:04,000 Speaker 1: think it's I do think it's it's it's likely. UM. 597 00:30:04,000 --> 00:30:07,800 Speaker 1: They announced the nine percent restructuring um and basically saying 598 00:30:07,800 --> 00:30:09,920 Speaker 1: that they're going to narrow the number of sales channels 599 00:30:09,920 --> 00:30:12,480 Speaker 1: from three down to two. Now, maybe that sounds a 600 00:30:12,520 --> 00:30:14,800 Speaker 1: bit like Yahoo and kind of you know, past years, 601 00:30:15,320 --> 00:30:19,040 Speaker 1: but um, I think Anthony is bringing the experience that 602 00:30:19,040 --> 00:30:21,200 Speaker 1: he has, you know, from Goldman Sax and looking into 603 00:30:21,200 --> 00:30:24,800 Speaker 1: this business and saying, Okay, right now, it doesn't look 604 00:30:24,880 --> 00:30:28,160 Speaker 1: very expensive on the basis of revenues right as as 605 00:30:28,160 --> 00:30:30,880 Speaker 1: a multiple, but it does look very expensive when you're 606 00:30:31,040 --> 00:30:34,600 Speaker 1: talking about earnings, particularly because of the stock based comference involved. 607 00:30:34,960 --> 00:30:38,280 Speaker 1: So I think, um, you know, part of them going 608 00:30:38,320 --> 00:30:42,000 Speaker 1: through this process to drive that profitability I think would 609 00:30:42,040 --> 00:30:45,080 Speaker 1: potentially make Twitter more attractive to a potential suitor. Can 610 00:30:45,120 --> 00:30:47,600 Speaker 1: you bring up Anthony Noo, chief financial officer at Twitter 611 00:30:48,240 --> 00:30:51,200 Speaker 1: when you're looking at the management of Twitter right now? 612 00:30:51,720 --> 00:30:54,880 Speaker 1: He's playing an outsize role here. Of course, Jack Dorsey 613 00:30:55,000 --> 00:30:57,360 Speaker 1: doing a number of things at once, but Anthony Nodo 614 00:30:57,440 --> 00:30:59,240 Speaker 1: here is is really driving a lot of the changes 615 00:30:59,280 --> 00:31:03,480 Speaker 1: of Twitter. Um, maybe from from a you know, from 616 00:31:03,520 --> 00:31:06,320 Speaker 1: an operational standpoint, but I think in terms of the vision, 617 00:31:07,000 --> 00:31:09,040 Speaker 1: I think Jack is still very involved. He talked a 618 00:31:09,040 --> 00:31:12,040 Speaker 1: lot on this call about machine learning and artificial intelligence 619 00:31:12,400 --> 00:31:15,000 Speaker 1: and how they're applying it to notifications and home timeline 620 00:31:15,040 --> 00:31:18,920 Speaker 1: and ultimately the onboarding and dissemination of tweets. Um. You know, 621 00:31:19,000 --> 00:31:21,360 Speaker 1: they cited that as a reason why you know, their 622 00:31:21,400 --> 00:31:23,880 Speaker 1: their daily active user growth has been able to accelerate 623 00:31:23,920 --> 00:31:27,200 Speaker 1: over the last three quarters. Um and and and to 624 00:31:27,200 --> 00:31:29,280 Speaker 1: Tommy your point, you know, that's what ultimately would also 625 00:31:29,320 --> 00:31:32,560 Speaker 1: help drive better click through rate and performance of the 626 00:31:32,600 --> 00:31:35,680 Speaker 1: ads and ultimately drive what average advertisers are willing to 627 00:31:35,720 --> 00:31:37,680 Speaker 1: pay for that traffic. I mean this the ideas of 628 00:31:37,720 --> 00:31:41,560 Speaker 1: Bolton folks. Google eighty eighty billion dollars of revenue versus 629 00:31:41,600 --> 00:31:45,960 Speaker 1: three billion of Twitter. If you're rounding conveniently help me here, 630 00:31:46,400 --> 00:31:49,880 Speaker 1: Mr Sena, with a very sensitive issue, which is a 631 00:31:49,920 --> 00:31:56,120 Speaker 1: lot of people really upset with a tumbler like porn light, 632 00:31:56,280 --> 00:32:00,680 Speaker 1: porn stuff we really don't want to see, except et cetera. 633 00:32:00,800 --> 00:32:03,080 Speaker 1: What's Mr Dorse you gonna do about it? I've heard 634 00:32:03,080 --> 00:32:07,080 Speaker 1: a lot about that from people in the last six months. UM, 635 00:32:07,240 --> 00:32:11,600 Speaker 1: and it's seeing that flow into Twitter. You're saying, yeah, 636 00:32:12,200 --> 00:32:14,959 Speaker 1: I think there's been a tumbler. Yeah. I mean they 637 00:32:15,200 --> 00:32:17,440 Speaker 1: spent some time on the call talking about safety as 638 00:32:17,480 --> 00:32:20,240 Speaker 1: being a very important priority for them, and um and 639 00:32:20,240 --> 00:32:22,560 Speaker 1: they said to basically stay tuned. By the next quarter, 640 00:32:22,600 --> 00:32:24,960 Speaker 1: you're going to hear new measures if they're rolling out 641 00:32:24,960 --> 00:32:26,600 Speaker 1: to address some of that, and I'm sure that will 642 00:32:26,640 --> 00:32:30,760 Speaker 1: be included. Um. But yeah, it certainly didn't help Tumbler 643 00:32:30,960 --> 00:32:34,640 Speaker 1: um when tumbler was looking to be sold, and um, 644 00:32:35,560 --> 00:32:37,200 Speaker 1: you know, I think it's you know, yeah who still 645 00:32:37,360 --> 00:32:40,840 Speaker 1: still took the chance. Um but um but I think 646 00:32:40,840 --> 00:32:44,520 Speaker 1: it is still a state. Why I'm gonna pick on Google, 647 00:32:44,520 --> 00:32:46,720 Speaker 1: Why Google would buy Twitter. I mean, it's a it's 648 00:32:46,720 --> 00:32:50,760 Speaker 1: an inconsequential bold on except in certain industries like what 649 00:32:50,880 --> 00:32:54,040 Speaker 1: David and I do are addicted to him. Well, I think, 650 00:32:55,120 --> 00:32:58,760 Speaker 1: you know, Google would likely face certain um anti trust 651 00:32:58,800 --> 00:33:02,040 Speaker 1: hurdles because you're talking about a very large ad platform, 652 00:33:02,040 --> 00:33:04,360 Speaker 1: even though it doesn't really compare to Google and scale. 653 00:33:04,840 --> 00:33:08,120 Speaker 1: You know, you know, once you after Google and Facebook, 654 00:33:08,400 --> 00:33:10,560 Speaker 1: you know, everyone sort of drops down in scale quite 655 00:33:10,560 --> 00:33:13,280 Speaker 1: a bit. Um. Plus, you could argue that Twitter is 656 00:33:13,280 --> 00:33:15,320 Speaker 1: in some respects of search Engine because of the real 657 00:33:15,320 --> 00:33:20,080 Speaker 1: time nature of it. I think though the messaging aspect 658 00:33:20,600 --> 00:33:24,200 Speaker 1: is broadcasting messaging, all of those are sort of hard 659 00:33:24,320 --> 00:33:27,160 Speaker 1: businesses to sort of just break into and I think 660 00:33:27,200 --> 00:33:29,560 Speaker 1: Google has tried many times and has had kind of, 661 00:33:29,600 --> 00:33:32,840 Speaker 1: you know, limited success. So if you know, Twitter is 662 00:33:33,000 --> 00:33:34,880 Speaker 1: very well known. You listen, you know, you watch the 663 00:33:34,920 --> 00:33:37,320 Speaker 1: elections and people are talking about Facebook and Twitter and 664 00:33:37,320 --> 00:33:41,680 Speaker 1: Facebook and Twitter. Right to have Google, um essentially have 665 00:33:41,880 --> 00:33:45,240 Speaker 1: one of those two tools where people are essentially coming 666 00:33:45,240 --> 00:33:48,440 Speaker 1: together and understanding the content all around them, UM, would 667 00:33:48,440 --> 00:33:50,160 Speaker 1: be a good thing for for Google. UM. I just 668 00:33:50,200 --> 00:33:53,280 Speaker 1: think that there's a question about price and ultimately you know, 669 00:33:53,920 --> 00:33:56,840 Speaker 1: regulatory can Your background is in media. Let me take 670 00:33:56,880 --> 00:33:59,680 Speaker 1: advantage of that to to ask you for your reaction 671 00:33:59,760 --> 00:34:01,440 Speaker 1: to the A T and T Time Warner deal. How 672 00:34:01,480 --> 00:34:03,840 Speaker 1: much sense that makes what it says about the media 673 00:34:03,920 --> 00:34:09,040 Speaker 1: environment right now? UM, it's interesting, it's um. Yeah, when 674 00:34:09,040 --> 00:34:11,600 Speaker 1: I worked I worked at Time Warner years ago during 675 00:34:11,719 --> 00:34:15,680 Speaker 1: when they announced the AOL Time Warner merger. UM, and 676 00:34:16,360 --> 00:34:18,160 Speaker 1: you know, and I think, is you kind of fast 677 00:34:18,200 --> 00:34:23,080 Speaker 1: forward um today? Um, definitely that the industry is changing, 678 00:34:23,120 --> 00:34:25,880 Speaker 1: and I think it does require a combination of content 679 00:34:25,920 --> 00:34:29,240 Speaker 1: and distribution heft um together and to try and creating 680 00:34:29,239 --> 00:34:32,520 Speaker 1: an experience for users is less complicated, UM, you know, 681 00:34:32,640 --> 00:34:36,000 Speaker 1: less cluttered with you know, different packages that you have 682 00:34:36,080 --> 00:34:38,319 Speaker 1: to buy, etcetera. You just want to clean log in, 683 00:34:38,800 --> 00:34:40,440 Speaker 1: you watch the show that you want to watch when 684 00:34:40,440 --> 00:34:43,000 Speaker 1: you want to watch it, etcetera. I'm just not sure 685 00:34:43,280 --> 00:34:47,520 Speaker 1: that that combination will change all that much, you know, 686 00:34:47,600 --> 00:34:49,960 Speaker 1: given probably the concessions that need to be made from 687 00:34:50,000 --> 00:34:53,160 Speaker 1: a regulatory standpoint where to go through, and ultimately just 688 00:34:53,239 --> 00:34:56,040 Speaker 1: even the commercial agreements that are in place. UM, that 689 00:34:56,080 --> 00:34:58,640 Speaker 1: would mean that you probably have years before you can 690 00:34:58,840 --> 00:35:02,240 Speaker 1: enact really any real change for the consumer. Ken, Santa, 691 00:35:02,320 --> 00:35:04,520 Speaker 1: let's go to arbitrage one and one. Mr Altmon would 692 00:35:04,560 --> 00:35:06,560 Speaker 1: like you to speak about that this morning. Can you 693 00:35:06,600 --> 00:35:11,040 Speaker 1: acquire shares in Twitter for the takeout? UM? I can't 694 00:35:11,080 --> 00:35:14,560 Speaker 1: know you, no, I know you come on Ken, you're 695 00:35:14,560 --> 00:35:19,880 Speaker 1: restricted from everything including cars Indians. But should our audience 696 00:35:19,960 --> 00:35:25,040 Speaker 1: acquire shares at this giveaway price pending an acquisition managed 697 00:35:25,040 --> 00:35:28,680 Speaker 1: by ever cor? Oh? Well, you know, it's difficult for 698 00:35:28,719 --> 00:35:33,719 Speaker 1: us to speak on the acquisition element, you know, specifically, 699 00:35:33,840 --> 00:35:36,799 Speaker 1: but I would say that coming out of this call 700 00:35:36,880 --> 00:35:40,760 Speaker 1: and looking at there's results, they do feel improved versus 701 00:35:40,800 --> 00:35:43,600 Speaker 1: the prior to quarters that we've seen. UM, even though 702 00:35:43,680 --> 00:35:47,000 Speaker 1: you're seen improvement off sort of the lower expectation. Faith, 703 00:35:47,560 --> 00:35:49,600 Speaker 1: But that was a fabulous no. You don't have to 704 00:35:49,640 --> 00:35:52,960 Speaker 1: say anymore consent. Your general counsel was standing over your 705 00:35:53,040 --> 00:35:57,840 Speaker 1: left shoulder, answered that you did a really good job. 706 00:35:58,000 --> 00:36:01,479 Speaker 1: Thank you, folks. I was busting ken chops because there's 707 00:36:01,480 --> 00:36:03,719 Speaker 1: a lot of delicacies in the business about what a 708 00:36:03,800 --> 00:36:06,920 Speaker 1: securities analyst can it cannot say. Did we do a 709 00:36:06,920 --> 00:36:11,600 Speaker 1: good job there? With with Abercard on Twitter, that was 710 00:36:11,680 --> 00:36:21,880 Speaker 1: really interesting. Thanks for listening to the Bloomberg Surveillance podcast. 711 00:36:22,239 --> 00:36:27,360 Speaker 1: Subscribe and listen to interviews on iTunes, SoundCloud, or whichever 712 00:36:27,480 --> 00:36:31,920 Speaker 1: podcast platform you prefer. I'm out on Twitter at Tom Keene. 713 00:36:32,000 --> 00:36:35,799 Speaker 1: David Gura is at David Gura. Before the podcast, you 714 00:36:35,840 --> 00:36:52,000 Speaker 1: can always catch us worldwide. I'm Bloomberg Radio. Who you 715 00:36:52,040 --> 00:36:54,800 Speaker 1: put your trust in matters? Investors have put their trust 716 00:36:55,160 --> 00:36:59,080 Speaker 1: and independent registered investment advisors to the two and four 717 00:36:59,120 --> 00:37:03,560 Speaker 1: trillion dollars Why Learn more at find your Independent Advisor 718 00:37:04,120 --> 00:37:05,120 Speaker 1: dot com.