WEBVTT - Twitter Faces Slippery Slope With Fact-Checking: SocialFlow CEO 0:00:02.680 --> 0:00:05.360 Welcome to the Bloomberg Penl Podcast. I'm Paul Swinge. You, 0:00:05.400 --> 0:00:07.720 along with my co host Lisa Brahma wits each day 0:00:07.760 --> 0:00:10.280 we bring you the most noteworthy and useful interviews for 0:00:10.320 --> 0:00:12.560 you and your money. Whether at the grocery store or 0:00:12.600 --> 0:00:15.520 the trading floor. Find a Bloomberg Penl podcast on Apple 0:00:15.560 --> 0:00:18.000 podcast or wherever you listen to podcasts, as well as 0:00:18.000 --> 0:00:22.439 at Bloomberg dot com. Well, President Donald Trump threatened to 0:00:22.480 --> 0:00:26.320 regulate or shutter social media companies, a warning apparently aimed 0:00:26.360 --> 0:00:29.880 at Twitter after it began fact checking his tweets. Lots 0:00:29.920 --> 0:00:32.440 of questions in the marketplace. That's knocking in part, knocking 0:00:32.479 --> 0:00:35.240 down the nast back off about one point eight percent today. 0:00:35.320 --> 0:00:38.960 The question is can the president do that? Jim Anderson, 0:00:39.000 --> 0:00:41.360 CEO of Social Flow, based in New York City, has 0:00:41.360 --> 0:00:44.440 some answers for social Flow and full disclosure. Social Flow 0:00:44.560 --> 0:00:48.560 is a platform used by Bloomberg for social media purposes. Jim, 0:00:48.560 --> 0:00:51.360 thanks so much for joining us here. So an interesting 0:00:51.400 --> 0:00:55.000 response by the President to the fact checking that was 0:00:55.040 --> 0:00:58.920 instituted by Twitter. I guess the basic question is what 0:00:59.200 --> 0:01:03.320 can there does it really do well? It's a great, 0:01:03.640 --> 0:01:05.400 great question, Paul, I mean there's so much to unpack 0:01:05.440 --> 0:01:07.360 in this story. I guess the first thing I'll say 0:01:07.520 --> 0:01:11.560 is that Twitter's labeled of President Trump's tweets were around 0:01:11.640 --> 0:01:15.720 the tweets about baloting by mail, not the conspiracy about 0:01:15.720 --> 0:01:18.440 that Joe Scarborough having had something to do with the 0:01:18.440 --> 0:01:21.680 death of a former staffer. And and that's an interesting distinction, 0:01:21.720 --> 0:01:25.000 because so much of the energy yesterday was around, oh goodness, 0:01:25.000 --> 0:01:27.640 this is a terrible tweet. How could President Trump do this? 0:01:27.959 --> 0:01:30.679 What's Twitter gonna do? And and notably, they did not 0:01:30.880 --> 0:01:32.800 do anything. They didn't play for that tweets, they didn't 0:01:32.840 --> 0:01:35.720 remove it, they didn't do anything. They instead focused on 0:01:35.720 --> 0:01:38.160 an area around mail and balancing, which is its own 0:01:38.200 --> 0:01:41.240 set of controversy. So that's the first thing I would notice. 0:01:41.360 --> 0:01:43.840 I think they felt like they were on more solid 0:01:43.920 --> 0:01:46.720 ground with the mail in balloting than they were about 0:01:46.720 --> 0:01:51.800 the Joe Scarborough, which I'm struggling to understand. What Twitter is. 0:01:51.800 --> 0:01:55.680 Is it a media platform? Well, it is a platform, 0:01:55.920 --> 0:01:57.920 I think, you know, you sort of wrapped up in 0:01:57.960 --> 0:01:59.800 that question is what is a media platform? What is 0:01:59.800 --> 0:02:03.960 the company? And certainly you've seen Facebook and Twitter both 0:02:04.040 --> 0:02:06.480 say they are not media companies, and they certainly don't 0:02:06.480 --> 0:02:09.840 fit the traditional definition. You know, they don't. The FCC 0:02:10.280 --> 0:02:12.640 doesn't define them as a media company. They don't print 0:02:12.639 --> 0:02:16.559 a newspaper. But that being said, those are both amazingly 0:02:16.680 --> 0:02:20.080 successful advertising sales platforms. That's not how we normally as 0:02:20.080 --> 0:02:22.360 consumers think about them. We think about the Twitter or 0:02:22.400 --> 0:02:25.840 the Facebook experience. But you know, they derive almost acent 0:02:25.880 --> 0:02:28.280 of their revenue from advertising. So if you define media 0:02:28.320 --> 0:02:31.079 platform as one that sells advertising, well then they certainly 0:02:31.080 --> 0:02:33.440 fit that definition. I think part of what we're all 0:02:33.480 --> 0:02:35.800 wrestling with is that they're not They're not like anything 0:02:35.800 --> 0:02:38.880 we've historically had when it comes to radio and television 0:02:38.960 --> 0:02:42.240 and newspapers. There's there's something really different. So I guess 0:02:42.440 --> 0:02:44.760 it kind of makes a question, what, ultimately do you 0:02:44.880 --> 0:02:48.880 think the responsibility is of the facebooks of the world 0:02:48.880 --> 0:02:50.400 and the Twitters of the world and the other social 0:02:50.440 --> 0:02:53.040 media companies who in large part just you know, it's 0:02:53.160 --> 0:02:58.079 user generated content. Do they have a responsibility to fact check? Well, 0:02:58.080 --> 0:03:01.200 they have a responsibility to society, I'll say responsibility to 0:03:01.240 --> 0:03:03.680 fact check. You know that the challenge with fact checking is, 0:03:03.720 --> 0:03:05.480 you know, we would all love to think that facts 0:03:05.480 --> 0:03:08.919 are wonderfully objective things, and in some cases they are right. 0:03:08.960 --> 0:03:11.679 It's it's Wednesday today in New York City, at least 0:03:11.720 --> 0:03:13.760 it may be a different day, and if you go 0:03:13.800 --> 0:03:16.600 across the date line, etcetera. But we're not talking about 0:03:16.600 --> 0:03:20.280 those kinds of objective facts. We're talking about conspiracy theories 0:03:20.320 --> 0:03:21.960 and in you into and all you really need to 0:03:21.960 --> 0:03:24.160 do is turn on any of the other more traditional media, 0:03:24.200 --> 0:03:26.880 turn on television, and depending on the channel in which 0:03:26.919 --> 0:03:29.480 you consume your news, you're gonna get very very different answers. 0:03:29.520 --> 0:03:32.480 So I think it's a very slippery slope for the 0:03:32.520 --> 0:03:34.880 platforms to start getting into fact checking. And I think, 0:03:34.920 --> 0:03:38.640 you know, it's it's tough to understand how yesterday's decisions 0:03:39.320 --> 0:03:42.240 by Twitter to label two of Donald Trump's tweets is 0:03:42.280 --> 0:03:43.760 going to turn out well for them. I mean, you 0:03:43.800 --> 0:03:47.240 already saw the blowback from him and from his campaign, 0:03:47.600 --> 0:03:49.640 and I suspect they're going to get a tremendous amount 0:03:49.640 --> 0:03:52.480 of criticism. Um And so it's a it's almost a 0:03:52.520 --> 0:03:55.040 no win situation for the platforms to say, hey, I'm 0:03:55.120 --> 0:03:56.480 I'm going to be the one who does the fact 0:03:56.520 --> 0:03:59.800 check and I'm going to label or or remove content 0:04:00.080 --> 0:04:03.320 doesn't meet my standards. Well, and I guess the other 0:04:03.360 --> 0:04:05.520 side of this story is Facebook, And there was a 0:04:05.560 --> 0:04:08.160 report in the Wall Street Journal yesterday about how even 0:04:08.280 --> 0:04:13.320 Facebook's own experts found that, yes, the platform has actually 0:04:13.800 --> 0:04:17.280 enhanced divisions in the country and across the world and 0:04:17.320 --> 0:04:21.160 sort of created an increased partisanship, and that the platform 0:04:21.320 --> 0:04:25.239 could do something about it, but chose not to because 0:04:25.279 --> 0:04:29.120 ultimately it drove traffic. That was a business decision, and 0:04:29.200 --> 0:04:32.960 it seems in contrast to what Twitter is doing. Should 0:04:33.240 --> 0:04:36.440 Facebook be rewarded for that, at least with respect to 0:04:36.480 --> 0:04:39.480 shares and with respect to the way that it's perceived, 0:04:39.960 --> 0:04:43.360 given the fact that it does have some social responsibility, 0:04:43.360 --> 0:04:47.359 but it also has a responsibility twits shareholders. Yeah, it's interesting. 0:04:47.400 --> 0:04:50.159 I read that same article and I've I've seen commentary 0:04:50.200 --> 0:04:53.280 about that, and you know, I think anybody objectively, you 0:04:53.320 --> 0:04:55.640 don't have to be inside of Facebook to note that 0:04:55.720 --> 0:04:58.680 it can be used for divisive topics and tends to, 0:04:58.720 --> 0:05:01.920 at least in some cases and ease polarization. Um, you know, 0:05:02.160 --> 0:05:04.320 saying that they did it curry for their business interests. Yes, 0:05:04.320 --> 0:05:06.760 they do have an obligation to their their shareholders, but 0:05:07.000 --> 0:05:09.240 I think there's a missing piece of that, which is 0:05:09.680 --> 0:05:12.360 once they start doing that, especially if they talk about 0:05:12.400 --> 0:05:16.120 how they're going to start policing speech or fact checking 0:05:16.400 --> 0:05:18.880 or uh, you know, removing contents. I mean, they's a 0:05:19.000 --> 0:05:21.760 remarkably splicy, slippery slope. And again I'm going to go 0:05:21.800 --> 0:05:24.679 back to the no win scenario. The minute they start 0:05:24.720 --> 0:05:28.120 talking about doing that, they get highlighted for being inconsistent, 0:05:28.160 --> 0:05:31.400 being unfair, manipulating elections, you know, all kinds of things 0:05:31.400 --> 0:05:33.960 like that that, yes, will hurt their business, but also 0:05:34.000 --> 0:05:36.360 I think they're just a very untenable position for them, 0:05:36.360 --> 0:05:37.839 and I think that's one of the reasons why you 0:05:37.880 --> 0:05:40.800 saw Facebook go down the route of creating effectively what 0:05:40.839 --> 0:05:43.479 they like to call their Supreme Court um, which is 0:05:43.520 --> 0:05:47.440 some a non Facebook controlled body that will help them 0:05:47.480 --> 0:05:49.920 be the sort of the arbitr of these types of decitions. 0:05:49.960 --> 0:05:52.920 But like any supreme court, like our U S. Supreme Court, 0:05:53.240 --> 0:05:56.360 these this arbitration and these decisions happen well well after 0:05:56.400 --> 0:05:58.360 the fact. I mean these we're talking years down the road, 0:05:58.400 --> 0:06:03.080 I would imagine, before these kinds of things get hashed out. So, uh, Jim, 0:06:03.080 --> 0:06:05.280 I mean TV extent, there is some movement to regulate 0:06:05.480 --> 0:06:07.200 some of the social media platforms. Is it something that 0:06:07.240 --> 0:06:11.160 would come from the Federal Communications Commission or the courts? 0:06:11.200 --> 0:06:13.479 How would it even be affected? Do you think, Yeah, 0:06:13.880 --> 0:06:16.719 it's a great question. I mean you're talking significant jurisdictional issues, 0:06:16.720 --> 0:06:19.360 but I don't immediately jump to the jurisdictional issues. I've 0:06:19.360 --> 0:06:22.760 gone to the politics of it. Right, So it's politically, uh, 0:06:23.040 --> 0:06:26.320 sort of advantageous for President Trump right now to talk 0:06:26.360 --> 0:06:30.520 about regulating the platforms. But you know, historically Republicans and 0:06:30.560 --> 0:06:33.719 Conservatives have not been heavy on regulations. So you sort 0:06:33.720 --> 0:06:36.200 of getting what the headlines are, which is, you know, 0:06:36.240 --> 0:06:38.599 somebody saying we should regulate these platforms, and then the 0:06:38.640 --> 0:06:40.600 devil is truly of the details. You know, do you 0:06:40.640 --> 0:06:45.360 really expect a Republican president of Republican control Senate, got 0:06:45.360 --> 0:06:47.840 a Democratic House. Do we expect you know, sort of 0:06:47.839 --> 0:06:51.200 bipartisan consensus to come uh, in terms of how those 0:06:51.200 --> 0:06:53.400 platforms are regulated, I will say, I mean it is 0:06:53.440 --> 0:06:55.600 interesting they get criticized from both fines. Right, You've got 0:06:55.600 --> 0:06:58.760 Democrats criticizing these platforms for sort of one set of issues, 0:06:58.800 --> 0:07:02.400 Republicans can criticizing for a related set of issues, coming 0:07:02.400 --> 0:07:04.920 at it from very different signs. So there is bipartisan 0:07:05.600 --> 0:07:08.640 um agitation, for lack of a better word, whether that 0:07:08.920 --> 0:07:12.440 emerges in consensus, in which agencies, or how that regulation 0:07:12.720 --> 0:07:14.880 will play out. I think that, you know, it's going 0:07:14.920 --> 0:07:17.520 to be years in the making, and probably antitrust is 0:07:17.560 --> 0:07:20.200 the most likely issue to really come to the four 0:07:20.240 --> 0:07:23.240 at least for facebooks, not so much for Twitter. Jim Anderson, 0:07:23.280 --> 0:07:25.640 thank you so much for weighing in. Jim Manderson, chief 0:07:25.640 --> 0:07:28.600 executive officer of Social Flow in New York and just 0:07:28.920 --> 0:07:32.520 for full disclosure of Social Flow is a platform used 0:07:32.840 --> 0:07:36.960 by Bloomberg for social media purposes. Interesting to see the 0:07:37.040 --> 0:07:43.200 reaction in shares on Twitter, the response to President Trump's request, 0:07:43.360 --> 0:07:47.320 or basically his his criticism of Twitter. Some people were saying, 0:07:47.360 --> 0:07:49.600 we'll sell Twitter shares, and then other people were saying 0:07:49.680 --> 0:07:52.360 quickly that they would buy them. It became a partisan 0:07:52.400 --> 0:07:55.080 issue whether you bought or sold Twitter shares, and I 0:07:55.120 --> 0:07:58.960 guess that the conclusion today, Paul has been self for now. 0:07:59.000 --> 0:08:01.840 I guess that's right. Yeah, interesting, it would be I 0:08:01.840 --> 0:08:04.880 think just really a can of worms here, so, uh, 0:08:04.920 --> 0:08:07.160 you know, I think it's a really difficult thing to 0:08:07.280 --> 0:08:10.520 manage and too for these social media companies free speech. 0:08:13.640 --> 0:08:17.200 We are approaching the summer and then the fall when 0:08:17.200 --> 0:08:20.640 students return to college campuses around the country, except that 0:08:20.680 --> 0:08:23.440 this year there's a high likelihood that they will not 0:08:23.600 --> 0:08:27.080 be doing so, which raises a question of whether parents 0:08:27.200 --> 0:08:29.560 really want to be paying and students themselves want to 0:08:29.600 --> 0:08:32.400 be taking out loans to pay colleges when they cannot 0:08:32.400 --> 0:08:35.920 get the full college experience. Joining us now to discuss 0:08:36.040 --> 0:08:38.360 this and what the future is for higher education in 0:08:38.440 --> 0:08:41.480 general is Robert kelch In, Associate professor of the Department 0:08:41.520 --> 0:08:45.360 of Education, Leadership, Management, and Policy at Seton Hall University, 0:08:45.400 --> 0:08:50.120 as well as Janet Lauren, Endowment's reporter for Bloomberg News. Robert, 0:08:50.160 --> 0:08:52.360 I want to start with you, how big of an 0:08:52.360 --> 0:08:57.000 existential threat is COVID nineteen and the likelihood that many 0:08:57.080 --> 0:09:00.360 campuses will not open in the fall to higher education. 0:09:02.000 --> 0:09:06.280 It's a serious risk to many college campuses because students 0:09:06.320 --> 0:09:09.320 may not pay as much intuition, and colleges that have 0:09:09.440 --> 0:09:13.800 students living on campus won't get that incredibly important revenue 0:09:13.840 --> 0:09:19.120 from room and board. So, Jennet, let's put this into 0:09:19.240 --> 0:09:21.720 maybe financial perspective a little bit. Here. A lot of 0:09:22.400 --> 0:09:25.840 this big universities with multibillion dollar downmands, they're likely to 0:09:25.880 --> 0:09:29.400 be able to weather this pandemic risk better than others. 0:09:29.400 --> 0:09:32.960 But I'm thinking about the secondary and even smaller colleges 0:09:33.000 --> 0:09:35.280 and universities. How at risk do you think they are 0:09:35.320 --> 0:09:39.040 from an economic perspective. Well, before we get to the 0:09:39.080 --> 0:09:43.120 second tier colleges, just don't forget that. Harvard also said 0:09:43.160 --> 0:09:45.600 that they all they have a one point two billion 0:09:45.600 --> 0:09:49.720 dollar budget deficit over to some two um academic years, 0:09:49.720 --> 0:09:54.439 and Northwestern also talked about its budget deficits. So it's 0:09:54.240 --> 0:09:58.719 the biggest colleges with the biggest endowments are not necessarily immune. Uh. 0:09:58.760 --> 0:10:02.360 These are the schools that quickly paid out room and 0:10:02.400 --> 0:10:05.680 board refunds. Uh. And we've also seen that colleges have 0:10:05.760 --> 0:10:09.400 had to cancel somewhat lucrative summer programs which helped fill 0:10:09.440 --> 0:10:13.079 their campuses. So that's one step. You know, most colleges 0:10:13.080 --> 0:10:15.720 are not going to be immune to anything. And certainly 0:10:15.800 --> 0:10:19.880 the second tier colleges UM, you know, they're they're having 0:10:20.200 --> 0:10:22.240 to think about who's going to be coming to fill 0:10:22.280 --> 0:10:26.280 their classes. As the top tier colleges, you know, take 0:10:26.320 --> 0:10:29.800 other kids off the waitlist, the second tier colleges may 0:10:29.840 --> 0:10:31.959 find that the kids that they thought were coming in 0:10:32.120 --> 0:10:35.720 in the fall may not be there. And certainly, tuition 0:10:35.840 --> 0:10:41.160 revenue is a huge part of most college budgets. Certainly 0:10:41.200 --> 0:10:46.040 the wealthiest colleges like a Princeton Amherst College, more than 0:10:46.080 --> 0:10:50.600 half of their budgets come from endowment um investment income. However, 0:10:50.760 --> 0:10:55.120 most schools are very reliant on tuition to make their budgets. Robert, 0:10:55.120 --> 0:10:57.800 there's a question here, how much is this going to 0:10:57.840 --> 0:11:01.000 be a temporary shock for universe these particularly the ones 0:11:01.040 --> 0:11:04.040 that have more robust endowments and are better weathered or 0:11:04.120 --> 0:11:06.200 sort of hunker down to weather this storm. And how 0:11:06.280 --> 0:11:09.760 much does this shift the whole conversation around higher education 0:11:10.080 --> 0:11:14.600 where we've seen incredible inflation of the tuition bills over time, 0:11:14.760 --> 0:11:17.120 and you mean, this is a lot of people saying 0:11:17.360 --> 0:11:19.240 maybe we need to rethink this and some of these 0:11:19.240 --> 0:11:23.880 colleges don't need to exist in the short term. This 0:11:24.000 --> 0:11:26.640 put some incredible pressure on colleges to hold a line 0:11:26.679 --> 0:11:30.520 on tuition even as they're spending more money to get 0:11:30.559 --> 0:11:34.319 college campuses ready for students in the full world. Will 0:11:34.440 --> 0:11:37.440 many colleges go out of business from this? The answer 0:11:37.480 --> 0:11:41.240 is probably not that many it'll be small private colleges 0:11:41.280 --> 0:11:46.320 serving a few hundred students, but most public colleges will 0:11:46.360 --> 0:11:49.320 go on even if they're hit hard by losses and 0:11:49.360 --> 0:11:53.480 state funding, and most midsized private colleges will find a 0:11:53.520 --> 0:11:55.800 way through, even though it would be a difficult few 0:11:55.880 --> 0:12:01.480 years to come. Jennet, we've seen some big, big universities, UM, 0:12:01.520 --> 0:12:03.880 you know, Harvard, Brown, m I, t H coming to 0:12:03.920 --> 0:12:08.319 the bond market. How how has higher education generally been 0:12:08.360 --> 0:12:10.599 received in the credit markets and kind of how's the 0:12:10.640 --> 0:12:15.560 outlook today for some of these institutions. Well, these schools 0:12:15.600 --> 0:12:18.520 are still very highly rated, they have very high demand, 0:12:18.760 --> 0:12:22.640 and they're taking advantage of low interest rates UM, and 0:12:22.679 --> 0:12:26.080 there chances are the the institutions you just named are 0:12:26.120 --> 0:12:29.600 going to continue to be around for a very long time. So, 0:12:29.800 --> 0:12:32.160 you know, I think there's still been demand for that 0:12:32.280 --> 0:12:36.880 debt um, you know, considering where their market position is. Robert, 0:12:36.960 --> 0:12:39.480 do you think that online education should cost the same 0:12:39.480 --> 0:12:44.920 amount as the in person type? Online education will end 0:12:45.000 --> 0:12:48.280 up costing about the same amount unless a college can 0:12:48.320 --> 0:12:52.840 get up to massive scale because you're still interacting with faculty. 0:12:53.400 --> 0:12:56.960 Good technology is expensive. You don't have some of the 0:12:57.000 --> 0:13:01.280 in person facilities, but the tuition price ends up typically 0:13:01.320 --> 0:13:04.480 being about the same for good online versus good in 0:13:04.559 --> 0:13:07.480 person education. That's kind of shocking to me because I 0:13:07.480 --> 0:13:11.760 would think that the classroom, the the amount of people 0:13:11.880 --> 0:13:15.320 that could potentially be a participant in the online course, 0:13:16.040 --> 0:13:18.280 the overhead seems like it would be a lot less. 0:13:18.800 --> 0:13:22.720 Why am I wrong? Most of the overhead here is people, 0:13:23.120 --> 0:13:26.600 And if you want interaction between students and professors, you 0:13:26.679 --> 0:13:31.360 need faculty to do that, and good technology for learning 0:13:31.360 --> 0:13:36.280 management systems and working with students online is also expensive. 0:13:36.600 --> 0:13:39.960 Although there are returns if you can get large class 0:13:40.160 --> 0:13:43.880 or large universities doing this, like an Arizona State, but 0:13:43.960 --> 0:13:47.160 most smaller colleges doing this for one or two semesters 0:13:47.440 --> 0:13:51.400 just won't see that economy of scale. Jenet. Can any 0:13:51.440 --> 0:13:55.160 of the I'm thinking more about the private colleges and universities. 0:13:55.240 --> 0:13:58.520 Can they expect any support in terms of fiscal support 0:13:58.800 --> 0:14:04.400 fiscal stimulus UM the government. Well, we've already seen UM 0:14:04.640 --> 0:14:08.959 universities such as you know, Harvard, Princeton, Stanford saying they 0:14:08.960 --> 0:14:13.120 were declining, you know, to accept their share of federal 0:14:13.200 --> 0:14:15.920 stimulus stimulus money early on. You know, mid a lot 0:14:15.960 --> 0:14:19.320 of criticism. UM. I also did a story about the 0:14:19.400 --> 0:14:23.680 p p P money that some uh, small colleges, we're 0:14:23.680 --> 0:14:26.000 not sure if they were allowed to apply for it 0:14:26.240 --> 0:14:30.320 because of the requirement on workers and their student student 0:14:30.360 --> 0:14:33.080 workers had been counted even though you know they had 0:14:33.080 --> 0:14:37.160 all gone home. UM. So you know, depending on if 0:14:37.320 --> 0:14:41.120 the smaller colleges um do uh you know, meet the 0:14:41.280 --> 0:14:44.000 threshold for employees, they could get some money from the 0:14:44.080 --> 0:14:47.160 p p P, you know, because they really are small businesses. 0:14:48.120 --> 0:14:50.400 Robert Kelchin, thank you so much for joining us. Robert Kelchin, 0:14:50.440 --> 0:14:54.560 Associate pressor, Professor, the Partner of Education Leadership Management Policy 0:14:54.600 --> 0:14:57.560 at Seton Hall University UH in New Jersey and China. 0:14:57.640 --> 0:15:00.000 Lauren a Downance reporter for Bloomberg News on the phone, 0:15:00.600 --> 0:15:03.840 really fascinating discussion there. I would think I kind of 0:15:03.880 --> 0:15:06.240 agree with you, Lisa. I would think just intuitively, there 0:15:06.280 --> 0:15:10.480 would be a discount for online versus being on campus. Yeah, 0:15:10.480 --> 0:15:12.280 I'm going to pray for that. I mean, it sounds 0:15:12.320 --> 0:15:14.320 like that's not going to be the case. And honestly, 0:15:14.600 --> 0:15:17.840 it's good to have people paid for what they offer. Still, 0:15:17.880 --> 0:15:20.520 as a parent, the idea of having a little bit 0:15:20.520 --> 0:15:23.640 of deflation in that intuition payments not the worst thing 0:15:23.640 --> 0:15:25.120 in the world. I do want to bring you this 0:15:25.240 --> 0:15:30.000 headline crossing that the US will not certify Hong Kong's autonomy. 0:15:30.080 --> 0:15:34.440 That's basically throws into question whether that region will continue 0:15:34.480 --> 0:15:37.360 to get special trading status, sort of first step to 0:15:37.480 --> 0:15:40.880 dessertisfying them again. Paul, though this the question in my 0:15:40.960 --> 0:15:43.960 mind is who will that hurt more? The U s 0:15:44.000 --> 0:15:47.000 for Beijing, the people in Hong Kong. Yeah, we're coming 0:15:47.040 --> 0:15:49.440 back to that discussion that that we've had prior to 0:15:49.480 --> 0:15:52.440 the pandemic. It's about the trade wars and who really 0:15:52.800 --> 0:15:55.800 gets hurt the most. Who can weather a disruption in 0:15:55.920 --> 0:15:58.920 the relationship more the US are China. Looks like we're 0:15:58.920 --> 0:16:04.680 about to find out on a bit different front. About 0:16:04.680 --> 0:16:08.080 a month ago, Paul, everyone was talking about the transformation 0:16:08.280 --> 0:16:10.440 in the way that we've viewed society on the heels 0:16:10.480 --> 0:16:14.400 of COVID nineteen, and that particularly applied to the auto industry, 0:16:14.600 --> 0:16:18.440 where sales have plunged and are expected to plunge by 0:16:18.720 --> 0:16:23.040 twenty per cent. Is that really accurate though? How much 0:16:23.120 --> 0:16:25.960 will we see permanent changes to the auto industry as 0:16:26.000 --> 0:16:28.520 a result of the pandemic? Kevin Tynan has been following 0:16:28.520 --> 0:16:32.440 the senior autos analyst for Bloomberg Intelligence, Kevin, what's your 0:16:32.480 --> 0:16:35.360 take here? Are there permanent changes they're going to take 0:16:35.400 --> 0:16:39.000 hold of the auto industry as a result of the pandemic? 0:16:40.240 --> 0:16:43.840 I think so? Um, you know, but I don't think 0:16:43.880 --> 0:16:46.800 it's structural in the way that two thousand and eight 0:16:46.840 --> 0:16:50.960 two tho nine was. I think there will be improvements 0:16:51.000 --> 0:16:55.800 to processes, and whether that's at the manufacturing level or 0:16:56.040 --> 0:16:59.640 at the retail sales level. That that I would say 0:16:59.680 --> 0:17:04.359 this crisis sort of accelerated. But but you know, in 0:17:04.480 --> 0:17:07.479 terms of a tear down and rebuild of the entire 0:17:08.400 --> 0:17:12.280 automotive process from the build to the sale, you know, 0:17:12.320 --> 0:17:15.679 I think that's a little bit overstated, So Kevin, I 0:17:15.800 --> 0:17:18.920 you know, one point before the pandemic, there was a 0:17:19.000 --> 0:17:22.840 reasonable discussion about whether we as a US society had 0:17:22.840 --> 0:17:27.880 reached peak auto, you know, with Uber another ride sharing companies, UH, 0:17:27.960 --> 0:17:29.880 the fact that more and more young people were moving 0:17:29.880 --> 0:17:33.160 to urban centers where they can depend more on mass transportation. 0:17:33.520 --> 0:17:37.240 There was really a debate about peak auto in this country. 0:17:37.240 --> 0:17:39.880 Where do you think we are as it relates to that, 0:17:40.119 --> 0:17:41.879 How do you think about long term auto demand in 0:17:41.920 --> 0:17:45.040 this country, Yeah, I think, you know, and looking at 0:17:45.080 --> 0:17:49.040 the numbers in terms of vehicle registrations by state, which 0:17:49.080 --> 0:17:51.119 is something I was just you know, I was just 0:17:51.160 --> 0:17:54.480 compiling that data, and you know, there is a definitive 0:17:54.520 --> 0:17:59.199 trend to less private vehicle ownership and that's over you know, 0:17:59.240 --> 0:18:03.280 a decade or so. Um, you know, in terms of 0:18:03.320 --> 0:18:06.960 the fear of mass transit or the fear of ride hailing. 0:18:07.720 --> 0:18:13.640 I feel like, you know, there's probably some temporary effect 0:18:13.640 --> 0:18:16.720 of that, but at the same time, I don't think 0:18:16.760 --> 0:18:22.160 you're gonna get private vehicle ownership and storage and repair 0:18:22.200 --> 0:18:27.000 and maintenance and insurance for people that live in urban areas. 0:18:27.040 --> 0:18:29.600 It just doesn't make sense, you know. And I just 0:18:29.680 --> 0:18:32.919 looked at it total cost of ownership on a new vehicle, 0:18:33.000 --> 0:18:36.680 which is roughly about thirty eight nine thou dollars over 0:18:36.760 --> 0:18:39.560 five years all in on the cost is about nineties 0:18:39.560 --> 0:18:42.760 thousand dollars. So, uh, you know, it just doesn't make 0:18:42.800 --> 0:18:46.800 sense for for that sort of structural shift to private 0:18:46.880 --> 0:18:50.440 vehicle ownership for a lot of cities, uh and people. 0:18:50.480 --> 0:18:53.000 So so maybe a little bit and maybe for a 0:18:53.119 --> 0:18:55.720 short term, but over the longer stretch, I think that 0:18:56.119 --> 0:19:00.359 move away from vehicle ownership is probably going to continue. Greg, 0:19:00.400 --> 0:19:02.800 Jared has a question for you. He wants to pick 0:19:02.880 --> 0:19:05.840 up a cheap car on the Hurts liquidation that we've 0:19:05.880 --> 0:19:09.200 all been expecting, given the fact that they've filed for bankruptcy. 0:19:09.480 --> 0:19:12.520 Are we going to see that? Yeah, you know, and 0:19:12.560 --> 0:19:14.760 I've looked at this and I don't think and I 0:19:14.800 --> 0:19:18.680 get this question a lot obviously since Friday. Um, Look, 0:19:18.720 --> 0:19:21.200 I don't think it affects the new vehicle market. Right. 0:19:21.200 --> 0:19:24.760 These are off rental vehicles, so maybe there's a little 0:19:24.800 --> 0:19:28.040 bit of an impact and residual value in the pre 0:19:28.119 --> 0:19:31.760 owned market. But I would even argue that the pre 0:19:31.880 --> 0:19:36.800 owned buyer. Uh maybe there's a small subsegment or a 0:19:36.880 --> 0:19:39.679 niche of that market that may be an off rental buyer, 0:19:39.840 --> 0:19:43.600 but pre owned buyers are probably going to gravitate more 0:19:43.680 --> 0:19:47.199 to the off lease a little bit higher quality, a 0:19:47.240 --> 0:19:51.480 little higher technology, better equipped vehicles than you know, sort 0:19:51.520 --> 0:19:54.919 of this rental car uh dump. But I see that, 0:19:55.000 --> 0:19:58.119 as you know, the lowest end of the of the 0:19:58.160 --> 0:20:00.640 pre owned market where buyers would be. So I don't 0:20:00.680 --> 0:20:03.320 see it causing a ripple all the way up to 0:20:03.359 --> 0:20:06.520 the new vehicle market. Kavin just give us a sense 0:20:06.520 --> 0:20:09.720 of the relative health from a bounce seat liquidity perspective 0:20:09.840 --> 0:20:13.439 of the big US automakers right now. Yeah, liquidity seems 0:20:13.920 --> 0:20:18.240 to be okay in terms of how long we think 0:20:18.280 --> 0:20:21.680 the downturn less and again very different than oh eight 0:20:21.680 --> 0:20:24.679 oh nine, which started as really a banking crisis and 0:20:25.240 --> 0:20:27.800 credit markets were frozen. You couldn't bet a mortgage, you 0:20:27.800 --> 0:20:29.920 couldn't get a car loan. This is not that the 0:20:30.160 --> 0:20:34.320 automo makers couldn't take down any you know, any additional liquidity. 0:20:34.359 --> 0:20:37.359 So this isn't really that And I think, you know, 0:20:37.480 --> 0:20:41.240 we're looking at you know, the consensus for May is 0:20:41.320 --> 0:20:45.119 already back to a ten, which is funny almost to say, 0:20:45.160 --> 0:20:47.480 but from you know, in eight six to a ten 0:20:47.640 --> 0:20:50.080 in a month, if that's the beginning of the trend 0:20:50.880 --> 0:20:54.159 of recovery, uh, it would seem to say that the 0:20:54.160 --> 0:20:58.800 worst is behind. So if this is the inflection point 0:20:59.440 --> 0:21:02.080 which was April, you know, then I would say that 0:21:02.080 --> 0:21:05.280 that there should be no issues going forward in terms 0:21:05.320 --> 0:21:09.560 of liquidity on the balance sheet for for the large automakers. Kevin, 0:21:09.600 --> 0:21:12.040 thanks so much for joining us. We appreciate that update 0:21:12.119 --> 0:21:15.000 on the auto industry. Kevin Tynan, He's the senior auto's 0:21:15.000 --> 0:21:17.800 analyst for Bloomberg Intelligence. He's been covering the auto industry 0:21:17.880 --> 0:21:20.000 for decades at least. It's just some anecdotal evidence. I 0:21:20.040 --> 0:21:22.959 was uh meeting with a buddy mine last weekend who 0:21:22.960 --> 0:21:25.760 manages an auto dealership, and he kind of confirmed, uh, 0:21:25.840 --> 0:21:27.840 what Kevin was saying that kind of that March April 0:21:27.880 --> 0:21:29.960 time frame was the trough there because they weren't able 0:21:30.000 --> 0:21:34.320 to even have anybody into their dealership. Now they're booking appointments. Uh, 0:21:34.320 --> 0:21:39.080 and and these said sales are running about of normal, 0:21:39.560 --> 0:21:42.560 which was a big improvement from that March April time frame, 0:21:42.640 --> 0:21:45.320 So hoping that can continue. There is some pent up 0:21:45.320 --> 0:21:49.439 demand out there. He was saying, people were buying cars, 0:21:49.440 --> 0:21:52.640 they are leasing cars, uh, just at obviously reduced rape. 0:21:52.640 --> 0:21:55.119 But in terms of the trough, it seems to have 0:21:55.160 --> 0:21:57.040 been hit in March and April. So you know, if 0:21:57.080 --> 0:21:59.400 that is in fact the case, maybe the auto industry 0:21:59.760 --> 0:22:02.119 had kind of weather the storm here and may do 0:22:02.160 --> 0:22:04.080 a little bit better than say, uh, you know, some 0:22:04.160 --> 0:22:06.639 of the cruise lines or some of the airlines of 0:22:06.720 --> 0:22:10.000 some of the other consumer facing businesses that likely will 0:22:10.240 --> 0:22:13.399 have to deal with a longer rebound than maybe some 0:22:13.440 --> 0:22:21.719 other industries. Well, do you do sports gambling? I do not. Okay, 0:22:21.880 --> 0:22:24.520