Speaker 1: Yeah, welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene
Speaker 1: Jay Lee. We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course on the Bloomberg The
Speaker 1: like move from the State Department how confidence the State
Speaker 1: Department warning against Americans traveling to China, And we've said
Speaker 1: again and again over the last week that for the economy,
Speaker 1: for markets, what will matter is the way states respond, nations, people, corporations,
Speaker 1: and right now things are throttling back even more. Yeah,
Speaker 1: it's it's it's definitely clearly spreading, both economically as well
Speaker 1: as otherwise. Almost ten cases to Our team has worked
Speaker 1: Haires Lison, with Steve Angel reporting from Hong Kong and
Speaker 1: others to bring you the best we can clear to
Speaker 1: discussion on this virus in China. UH. Jennifer Ron joined
Speaker 1: us from UCL in London the other day and we're
Speaker 1: now thrilled to bring you from Baylor University Peter Hotez.
Speaker 1: We've spoken to him many times before, of course, UH
Speaker 1: with the UH the Tropical Medicine National School at Baylor
Speaker 1: Peter Hotels. I want to use a little bit of
Speaker 1: your heritage here, and that is the moment decades ago
Speaker 1: at Rockefeller University where we really began to figure out virology,
Speaker 1: and you, of course we're part of that in the eighties.
Speaker 1: Are we that much smarter now about all this than
Speaker 1: we were in Stars or back when you were at
Speaker 1: Rockefeller University thirty years ago. We certainly are. And it's
Speaker 1: first of all, thank you for having me back. It's
Speaker 1: always good to talk to you. And I think we're
Speaker 1: in better shape now than we were back then because
Speaker 1: we have learned some lessons, although we're still not perfect.
Speaker 1: If we remember the Stars coronavirus that immerged out of
Speaker 1: the southern China, UH scared everybody shut down. This to
Speaker 1: be a Toronto back in two thousand two, two thousand
Speaker 1: three that wolf people up. And in response to the
Speaker 1: World Health Organization created a new series of international health
Speaker 1: regulations to beef up our security for health and border
Speaker 1: and virus detection, and the Global Health Security Agenda was
Speaker 1: put in place by the US government and w h
Speaker 1: O and and so things are better than they were. Um.
Speaker 1: The other good thing that's happened is that science has
Speaker 1: has really stepped up. I mean, imagine we've gone from
Speaker 1: a brand new virus agent at the end of twenty nineteen,
Speaker 1: within a few weeks, isolating the virus, having a full
Speaker 1: genetic code, knowing how it finds to and people. It's extraordinary.
Speaker 1: So um, that's the good news. The bad news is
Speaker 1: you can only accelerate vaccine so much because despite what
Speaker 1: the anti vaccine lobby says, you still have to test
Speaker 1: them for safety. And that's the one thing that you
Speaker 1: only has diffic developed a common a protein STARS vaccine
Speaker 1: the head of manufactured in sixteen that we couldn't get
Speaker 1: the support, can proceed through clinical trials. And and now
Speaker 1: we've just learned that these two viruses are actually quite
Speaker 1: similar Stars in the end coronavirus about to the same receptor,
Speaker 1: about eight percent similar. So we may be sitting out
Speaker 1: a vaccine for this end coronavirus UM. But we still
Speaker 1: have to go through all of the safety testing and
Speaker 1: everything else. And that's the one piece that's company in
Speaker 1: the blur of knowledge, in pseudo knowledge that we have.
Speaker 1: What's the compare here of this virus is it two stars?
Speaker 1: Is it to a different virus? I can't pronounce or
Speaker 1: is it to the Spanish influence of what kind of
Speaker 1: thing is this? This is it's very much closely resemble Stars.
Speaker 1: The difference is it's not quite as lethal. As far
Speaker 1: as we can tell, it's about as easily transmissible where
Speaker 1: Stars was affecting healthy people. Uh. This one of the
Speaker 1: serious cases the respiratory illness. Sear respiratory illness, mostly individuals
Speaker 1: over the age of sixty, mostly mails, mostly those with
Speaker 1: underlying diabetes hypertension, but a lot of people are getting
Speaker 1: serious deal and requiring respiratory support. Look, this, this is
Speaker 1: what's gonna happen. Um. Uh, it's the tale of two
Speaker 1: different countries in the United States. I'm actually not so worried.
Speaker 1: We've got a good team in place. We've uh we
Speaker 1: were thanks to the Chinese scientists who got a heads
Speaker 1: up on this virus, so we knew it was coming. Um.
Speaker 1: We will see an increase in the number of cases
Speaker 1: in the US, but it won't nearly resemble anything like
Speaker 1: what we're seeing in China or Central China. Such a
Speaker 1: China and China will be in free fall. Um. Although
Speaker 1: we say ten thousand cases, summer estimating is already a
Speaker 1: hundred thousands people infective because there's probably a lot of
Speaker 1: individuals with low grades UH symptoms. So this is gonna
Speaker 1: sweep unless we can get a vaccine in there. This
Speaker 1: is gonna sweep across China. It's already upt on commerce
Speaker 1: between Hong Kong and mainland. It's um it's it's calling
Speaker 1: a fallen Asian markets. I I imagine massive economic losses
Speaker 1: in China, and that's SCI markets as well. Dr hote
Speaker 1: is what's China doing wrong in their response to the
Speaker 1: virus that's leading to what you expect to be a rampant,
Speaker 1: widespread UH disease that is already perhaps hit it's a
Speaker 1: hundred thousand people. I think the Chinese leadership, unlike in
Speaker 1: two thousand to two thousand three when they were covering
Speaker 1: up things slow, on this one. They're good, but you
Speaker 1: know they're doing the best a person can with one
Speaker 1: hand tied behind their back because there's no vaccine, and
Speaker 1: when you have a contagious virus like this, ultimately in
Speaker 1: the end you need a vaccine. You can need a
Speaker 1: vaccine to stop it. So I actually think the Chinese
Speaker 1: leadershild be doing everything they can all handed that they
Speaker 1: recognize the hit not only the public health, but their
Speaker 1: their economy and political stability. But the frustrating pieces that
Speaker 1: it's been slow to yet our vaccine and the other
Speaker 1: four or five vaccine candidates out there, if you're just
Speaker 1: joining US worldwide. Peter Hotels with us is dean of
Speaker 1: the National School of Tropical Medicine at Baylor Ecology, has
Speaker 1: been with US many times on surveillance over the years.
Speaker 1: Here on the Wuhan virus, Dr Hotez, is there any
Speaker 1: sign that the virus is mutating into something that potentially
Speaker 1: is more lethal. We We don't have any evidence at
Speaker 1: this point, and I don't think we need to postulate
Speaker 1: that this is a virus that emerged out of the
Speaker 1: wet markets in in Wuhan, because there's the virus that
Speaker 1: jumps from bath to a second animal species and then
Speaker 1: two people and now it's picked up human to human
Speaker 1: transmissions going But in that sense is going by the
Speaker 1: same playbook that are two other big coronavirus epidemics that
Speaker 1: the Stars in two thousand to two thousand three and
Speaker 1: then the Mayor's coronavirus out of the Middle East in
Speaker 1: two thousand twelves um So I don't think we have to.
Speaker 1: I mean, mutatition always possible. I don't think we have
Speaker 1: to worry so much about that. But we've got to
Speaker 1: figure out how we could do everything to help China.
Speaker 1: And remember there's also a million Chinese in Africa right
Speaker 1: now through their belts and the ODA initiatives, So there's
Speaker 1: lots of commerce back and forces in China and Africa,
Speaker 1: whereas the United States has got a great health system
Speaker 1: in place to prevent the spread from with Africa's country
Speaker 1: to country, So next to China the other place I'm
Speaker 1: really worried about it such to here in Africa, and
Speaker 1: I think that's the major reason why Dr ted ros
Speaker 1: w h O had declared the public health emergency. He's
Speaker 1: probably stim early concerned. Peter, forgive me for getting a
Speaker 1: little bit ahead of things at the moment. But once
Speaker 1: we've got past this and hopefully move on from it,
Speaker 1: what measures can we put into place in the country
Speaker 1: like China to make sure these kind of things don't happen,
Speaker 1: or at least minimize the possibility of them actually happening. Well,
Speaker 1: you know, after the Stars coronavirus, the Chinese leadership committed
Speaker 1: to shutting down those wet markets these exotic animals that
Speaker 1: are all if you've ever been to one of them,
Speaker 1: they're all piled together in cages. Some are dead, some
Speaker 1: are That's just a recipe for disasters that needs to
Speaker 1: be shut down. The other two other things need to happen. One,
Speaker 1: we still need to be do a better job at
Speaker 1: building up our vaccine infrastructure. This business of waiting for
Speaker 1: a catastrophe then to start. Um. You know, we could
Speaker 1: have had this vaccine potentially ready to go back in
Speaker 1: seventeen after he came in trial. But you know we're
Speaker 1: too reactive. We we uh. We're like a little kids
Speaker 1: soccer game. If you are washing little kids play soccer,
Speaker 1: the ball goes in one direction. All everybody runs through
Speaker 1: the ball, and nobody stays behind to play defense. And
Speaker 1: we need to do better at that. I think the
Speaker 1: third thing is we uh, we have to recognize this
Speaker 1: is our third major coronavirus epidemic pandemic in the twenty
Speaker 1: one century. We'd stars and mayors. Now this we have
Speaker 1: to start building an infrastructure specifically for the virus, just
Speaker 1: like we do for flu. Given not only public health impact,
Speaker 1: but it's it's economic consequences. This is going to Peter Hotess,
Speaker 1: thank you so much with the Baylor College of Venison
Speaker 1: in Houston. Now we go right over to the authentic
Speaker 1: on the ground knowledge of Meredith Sumter of Eurasia Group. Meredith,
Speaker 1: I'm gonna cut to the chase. Most of us don't
Speaker 1: speak Mandarin. John, do you speak Man speak? I just
Speaker 1: wanted to check that out, Meredith, what do you see
Speaker 1: in the Mandarin press? I mean, how is it different
Speaker 1: from the wall to wall coverage of this Wuhuan virus
Speaker 1: in English has been morning Tom and John is great
Speaker 1: to be with you. Yeah, there's a market difference in
Speaker 1: the way that sort of statewide media press more important
Speaker 1: to a state organs of press are reporting on the
Speaker 1: the the the virus. Then the more local level media
Speaker 1: outlets are even sit as an activist journalist who are
Speaker 1: trying to get more information out to the Chinese people.
Speaker 1: And what you see here is at the central level
Speaker 1: there's really pressure. Uh, there's there's pressure there to try
Speaker 1: to to have more of a release of the public
Speaker 1: discontent with how Beijing has handled this biver so far,
Speaker 1: and the media is doing this by going after local
Speaker 1: officials who have withheld information. At the same time that
Speaker 1: there are circling wagons around President Shi j and Ping
Speaker 1: as a decisive and strong leader who is taking action
Speaker 1: and mobilizing all resources to get ahead of the crisis.
Speaker 1: And that's why, Meredith, the Major in China is just
Speaker 1: considered state propaganda. It is always blame the local government
Speaker 1: and never the leader. This is from the ft Signing.
Speaker 1: A critic said the local government in Wuhan did not
Speaker 1: have the power to act decisively because they were at
Speaker 1: the bottom of the chain of command that started with
Speaker 1: the Supreme Leader amou Era title recently bestowed on Mr.
Speaker 1: She is that a problem, Meredith, Regardless of what the
Speaker 1: Major is saying, let's talk about the structure of government.
Speaker 1: How a country this large responds to a crisis so
Speaker 1: local so early. That's exactly right, John, And it really
Speaker 1: it shines the spotlight on the limitations of China's political system.
Speaker 1: And really it's it's she's top down leadership style, the
Speaker 1: one party system, top down leadership style that contributed to
Speaker 1: the problem by making local officials fearful to act without
Speaker 1: authorization from Beijing. And what's notable here really is the
Speaker 1: Wuhan mayor Joe Hian Wam. He accepted responsibility, while subtly
Speaker 1: placing blame on the need to wait for Beijing's approval
Speaker 1: in publicizing the outbreak. Meredith, there was data overnight showing
Speaker 1: that Chinese factories were struggling even before the country shutdown
Speaker 1: for the linear New York holidays as well as the
Speaker 1: worsening coronavirus outbreak. And I'm wondering how much energy the
Speaker 1: virus is spread takes away from Beijing to address some
Speaker 1: of the economic issues that are still out there. Oh,
Speaker 1: it takes a great deal of energy. But I think
Speaker 1: in terms of a social stability issue, j and Pain
Speaker 1: is going to mobilize everything that he's got to try
Speaker 1: to focus on getting the virus contained first. And and
Speaker 1: then at the same time you see actions by UH
Speaker 1: States banking officials UH to make sure that while there
Speaker 1: are obvious economic stillover effects broadly impacting the Chinese economy,
Speaker 1: that because the way that they're mobilizing these resources, we
Speaker 1: see fairly limited risk to economic stability UH at large.
Speaker 1: You have UM, you have Chinese banks that have been
Speaker 1: instructed to extend loans to cushion the negative effects of
Speaker 1: the virus. UH and we believe that the central government
Speaker 1: will intervene to maintain fiscal stability, with with the Central
Speaker 1: Bank providing likely to provide emergency liquidity provisions to limit
Speaker 1: the stress on China's bank system merative. Just a final
Speaker 1: question on on the trade story, just quickly, where does
Speaker 1: this leave the agreement between the United States and China
Speaker 1: that was struck just a month or so ago. What
Speaker 1: is the whole issue with the coronavirus and relations with
Speaker 1: the United States and China leave things. That's a terrific question.
Speaker 1: And really the combination of Beijing's focus on crisis fighting
Speaker 1: and the economic disruption is likely to slow China's purchases
Speaker 1: of US goods under that Phase one trade deal. And
Speaker 1: let's be honest here, Jonathan, this was this was an
Speaker 1: ambitious projection of what Beijing would be able to buy
Speaker 1: even before the outbreak. So we think that the limited
Speaker 1: domestic consumption, uh the the slowing industrial activity means that
Speaker 1: China is going to be even slower to start to
Speaker 1: make those market purchases. Now, this is not going to
Speaker 1: derail Phase one, obviously, we understand and Washington would understand
Speaker 1: why it would be harder for trying to make good
Speaker 1: on those purchases right away. But the shortfall may put
Speaker 1: more pressure on Trump to defend the deal later this
Speaker 1: year of facing is slow to red regain momentum and
Speaker 1: its purchases. Thank you so much. Madith Sumpter with Eraser Group,
Speaker 1: just riving in this morning with their knowledge of China
Speaker 1: with respect to the spread of the coronavirus. And there's
Speaker 1: a question especially to Goldman's access call as you're highlighting earlier, John,
Speaker 1: which is that it will eat into second quarter GDP
Speaker 1: of US by zero point four percent to cut it
Speaker 1: down Martel, Yeah, well this quarter. Excuse me, thank you
Speaker 1: wells Capital Portfolio manage our marquis. As we look at
Speaker 1: a slight risk off feel in markets, do you think
Speaker 1: that this is actually going to eat into potential returns?
Speaker 1: Do you think that this is going to persist or
Speaker 1: do you think that this is a by the dip,
Speaker 1: very small dip moment. I would say more more body
Speaker 1: if we don't actually know what the impact on GP
Speaker 1: will be in the US, But it's really reflecting a
Speaker 1: bigger trend, which is a move away from China outsourcing
Speaker 1: and also Chinese slower growth. So those trends are intact.
Speaker 1: I think that's more important. Looking out beyond one quarter market.
Speaker 1: Looking at the commodity market move, We're down eleven and
Speaker 1: a half percent on copper on the London Medal Exchange
Speaker 1: in just two weeks. It's been a massive move in
Speaker 1: the commodity market. Are we pricing down inflation in the
Speaker 1: bond market, Margie? Is that way you're doing or you're
Speaker 1: pushing back against that move? No. I think that low inflation,
Speaker 1: zero inflation is just going to be with us for
Speaker 1: the foreseeable future. So this makes a big call for
Speaker 1: the bond market. Then, markis, if we're gonna have low inflation,
Speaker 1: how can you make a call for high yields on tens,
Speaker 1: on thirties through twenty How difficult is it to do that?
Speaker 1: You really can't. You have to lower your expectation for
Speaker 1: what fixed income can be across the board, which is
Speaker 1: low to possibly mid single digits in the high yield market,
Speaker 1: so much much less here the returns on equities. To
Speaker 1: drag you with the headline eighteen months ago or so,
Speaker 1: looking out to the end of two thousand twenty, Governor Kearney,
Speaker 1: I believe it was two days ago, Margie, looking out
Speaker 1: to the end of two thousand twenty, one is Margie
Speaker 1: Battell beginning to look at a low rate regime out
Speaker 1: farther than you thought even months ago. Have you extended
Speaker 1: your ex access out well, I've been thinking we are
Speaker 1: in unthinkably low rates for many years. I spend my fear. Yes, well,
Speaker 1: and it's been very profitable. We were aware of your
Speaker 1: excellence on that. But what now more? The same were
Speaker 1: the same? We've been in a one and a half
Speaker 1: two and a half on the tenure. If we break out,
Speaker 1: it will be a low side. Margaret, do you think
Speaker 1: that the equation changes materially if we do get a sustained,
Speaker 1: sustained inversion of the yield curve and increasing fear that
Speaker 1: we could be reaching stall speed. I'm not looking for
Speaker 1: an inverted de Old curve. I think we're basically going
Speaker 1: to be looking at a somewhat flattish yield curve. But
Speaker 1: I don't think it as an irrelevance or reflecting the economy.
Speaker 1: To be clear, we're talking about the gap between ten
Speaker 1: year and two year yields, because if you take a
Speaker 1: look at the three month tenure yield, it's already inverted
Speaker 1: in the same with a two year to five year yield.
Speaker 1: So I'm just wondering, isn't that sending a concerning signal. Well,
Speaker 1: it's been that way for quite a long time, and
Speaker 1: hasn't it any effect on the economy or on inflation
Speaker 1: or on business lending. So I really don't look at it.
Speaker 1: I just think the curve will be so low, and
Speaker 1: it is somewhat administered by the government that is irrelevant
Speaker 1: for economic activity. Margat Patel as well as capital management, Margie,
Speaker 1: you've had courage to say, look at if yields are
Speaker 1: this troubled, look into equities, look at dividend growth and
Speaker 1: share buy back with the elevated assets. Is there a
Speaker 1: distinction between new cash flow or belief in cash flow
Speaker 1: being applied to dividend or being applied to share buy back?
Speaker 1: Which makes more sense to you. I don't think it
Speaker 1: really matters what a company does with its free cash flow. Uh,
Speaker 1: it's just a matter of a company choice. But I
Speaker 1: think that the Copper down Amazon up really tells you
Speaker 1: what the trend of the market is going to be
Speaker 1: over the next few years. Marky, thank you so much,
Speaker 1: greatly appreciated with Wells Capital management and that that's her magic.
Speaker 1: I love what she said there Anthony Phillipson has not
Speaker 1: only been the High Commissioner to Singapore but also John
Speaker 1: Ferrell directly involved in the exiting process and trade and
Speaker 1: partnerships to Europe as well. And John, I go back
Speaker 1: on this historic day to the clear memories of the
Speaker 1: morning after the Brexit vote walking down the corridor at
Speaker 1: our London offices and there were there, you were doing
Speaker 1: a marathon on the desk. We had no idea where
Speaker 1: this would add on that morning after. I think the
Speaker 1: one thing people really didn't have a clue about is
Speaker 1: how long it would take. Three and a half years,
Speaker 1: and we finally stopped and make a move. Her Majesty's
Speaker 1: tried Commissioner for North America, Anthony Phillipson joined us now. Anthony,
Speaker 1: always great to catch up with you, walk us through it.
Speaker 1: Then eleven pm UK time, what actually happens, Well, good
Speaker 1: morning to all of you, and thank you very much
Speaker 1: for having me on. As you say, it's a it's
Speaker 1: a historic occasion, it's a significant momentum. At eleven pm
Speaker 1: UK time this evening six pm New York, the UK
Speaker 1: will leave the EU. We will end our almost forty
Speaker 1: seven year membership, but it will become a new chapter
Speaker 1: in our relationship with our European and our EU partners.
Speaker 1: We have an ambition to a close economic and defense
Speaker 1: and security and indeed people to people relationship. In London itself,
Speaker 1: the Prime Minister will speak to the nation around about
Speaker 1: ten pm understand or five pm New York. There will
Speaker 1: be some visual displays around London, but I think it
Speaker 1: will be a moment of significance and momentous in a
Speaker 1: momentous occasion. But it's just the beginning in a new chapter,
Speaker 1: perhaps in name only. The rules will still apply. The
Speaker 1: UK will still pay into the EU's budget as well Antony,
Speaker 1: as you well know, through the rest of this year
Speaker 1: eleven months, we have to secure a transition deal, I
Speaker 1: guess secure secure the future relationship. So we're in this
Speaker 1: transition period for the rest of What is the government
Speaker 1: looking for and if we established what the red lines
Speaker 1: are for the relationship between the UK and the EU
Speaker 1: be on I think we have to some degree The
Speaker 1: political declaration that was agreed between the government and the
Speaker 1: European the other twenty seven member states in October last
Speaker 1: year gives us a blueprint for what that future relationship looks.
Speaker 1: Like we will now be working out our own mandate
Speaker 1: and negotiating position, as will the European Commission on behalf
Speaker 1: of the member states, and we anticipate those negotiations beginning
Speaker 1: early March. And then, as you say, we have the
Speaker 1: rest of this year while we are in the implementation period.
Speaker 1: That gives this that period of transition and certainty to
Speaker 1: to work out the fine detail and that's what both
Speaker 1: sides are committed to, Anthony. Earlier this week, UK Prime
Speaker 1: Minister Boris Johnson coming out and saying that they are
Speaker 1: going to give Yahwei some of the contracts to help
Speaker 1: build out their infrastructure. How much does that complicate your
Speaker 1: job right now? That process was incredibly detailed, thought through,
Speaker 1: an incredible detail, with a very very high degree of
Speaker 1: focus on the security and resilience of our telecom system.
Speaker 1: It's it's a process be running for a long long
Speaker 1: period in terms of how we approach what we call
Speaker 1: high risk vendors, and the decision that the government took
Speaker 1: reflects the particular circumstances for the UK. It is a
Speaker 1: decision that we have explained in detail to our American colleagues,
Speaker 1: including this week when Secretary Pompeio was in London, and
Speaker 1: we will keep explaining to them why we believe this
Speaker 1: is the right decision for us, why it does not
Speaker 1: endanger our own security and resilience of our telecom's network,
Speaker 1: and why it is it should not affect the bilateral
Speaker 1: partnership between ourselves and off places security and Trade and
Speaker 1: Economic Council General. Thank you so much for joining us
Speaker 1: this morning, Anthony Phillipson with the United Kingdom on this
Speaker 1: historic date. I lean Burbage joining us now, yeah, she
Speaker 1: is an arsenal. That's not what I was gonna talk.
Speaker 1: That's great. I would leave that. I'll leave that. I'll
Speaker 1: leave that for you, Island Burbage. We're gonna talk Amazon partner,
Speaker 1: co founder of Passion Capital Investors, with years and years
Speaker 1: of experience covering this industry. I thank just how good
Speaker 1: we're Amazon's earnings. I mean, does this give you a
Speaker 1: sense that right now the guy is a limit and
Speaker 1: basically Amazon has as a lot more road to run here.
Speaker 1: It absolutely does, it really does. And by the way,
Speaker 1: we've got NFL matches now here in London, so I'm
Speaker 1: all about following the NFL again as well as the
Speaker 1: summer League too, But yeah, no, the thing about Amazon
Speaker 1: is they do such a great job of managing expectations
Speaker 1: that then when they blow it out of the water,
Speaker 1: they really do blow out of the water. Everyone was
Speaker 1: expecting that revenues would go up like they did, but
Speaker 1: everyone was a little bit, you know, worried about maybe profitability,
Speaker 1: thinking about the costs that we're going to go into
Speaker 1: fulfillment and to try and get everybody owns the day,
Speaker 1: same day or next day shipping with time. And they
Speaker 1: still blew it out of the water. So in terms
Speaker 1: of the question about how much more runway there is
Speaker 1: to go, they haven't finished all the youngers and the
Speaker 1: conversions to next day to delivery for farm so there's
Speaker 1: still a lot more to go there and they've shown
Speaker 1: they can do that while managing costs. Uh they're still
Speaker 1: growth in Amazon Web services and cloud, even though that's slowing,
Speaker 1: it's still massive, and they added ten billion dollars worth
Speaker 1: of revenue from the year before on that, and then
Speaker 1: of course they're still add so they are kind of
Speaker 1: the night and shining owners industry at these from the
Speaker 1: week gatter point of view, where they might be able
Speaker 1: to break up advertising uh D wappoly between Google and Facebook,
Speaker 1: so the little learning there too. And then the one
Speaker 1: they still haven't really given us too much data about
Speaker 1: are the devices which echo or even the use of
Speaker 1: a Lexa for example. And how's your fiquitous We know
Speaker 1: that's becoming. We don't know how much value that's bringing
Speaker 1: into the bottom line, but that's something else they can
Speaker 1: still fought of the hat. So Amazon now on track
Speaker 1: to exceed a trillion dollars in market value yet again,
Speaker 1: given the pop that we're seeing in their shares. When
Speaker 1: you talk about this growth, particularly when it comes to sales,
Speaker 1: retail sales, who are they taking business from most of
Speaker 1: all at this point, Well, this one, I think they're
Speaker 1: consolidating a lot of online sales, and obviously we know
Speaker 1: the demise is forrick and mortar retails, that's happening anyway.
Speaker 1: But in terms of share, they're clearly getting more and
Speaker 1: more share um from other online retailers and e commerce providers.
Speaker 1: The other thing I look at is that international growth
Speaker 1: was only four for them, whereas in North America there's
Speaker 1: still a lot more headway and a lot more for
Speaker 1: them to gain abroad. When it's here in the UK
Speaker 1: or another market outside of the home legion, and I
Speaker 1: want to go to your expertise. So this goes back
Speaker 1: to you. You were fifteen, you were at Sun Microsystems
Speaker 1: and you know, a long time ago, and then you
Speaker 1: dashed over to England and did Skype and all of
Speaker 1: this tech techy stuff is about network effect. And if
Speaker 1: you look at network effect, I mean Bezos has a
Speaker 1: network effect with Amazon, including the bandwagon effect, which is
Speaker 1: where everybody climbs on board. How are normal companies to
Speaker 1: defend against the massive first movers status and network effects
Speaker 1: that Amazon has wrought. Well, I think you're gonna you
Speaker 1: can't actually come out and try and beat Amazon or
Speaker 1: compete with it on its owne churp. You're gonna have
Speaker 1: to come at it from a different angle, come up
Speaker 1: with a niche satarian. We've seen more direct to consumer
Speaker 1: brands and products come out um, and you gotta hope
Speaker 1: that you build up at each other. You build up
Speaker 1: a sort of leadership position in a category that Amazon
Speaker 1: doesn't already dominate. So they're seen as a you know,
Speaker 1: a general it's kind of e commerce provider, um. But
Speaker 1: you see brands, whether it's Alberts for shoes, or even
Speaker 1: Night which continues to dominate another superfly shoes. There are
Speaker 1: going to be categories that Amazon can't compete with at
Speaker 1: the highest levels. Answer that brand value. They're just now
Speaker 1: seen as a general fulfilment providers from a retail point
Speaker 1: of view. But I really think what's what striving corporate
Speaker 1: values the enterprise side, cloud services and software that they use. So, Eileen,
Speaker 1: let's turn to politics now. Then, with that in mind,
Speaker 1: you've done a fremendous job over the last few years
Speaker 1: of working with the British government and expanding investment in tech,
Speaker 1: specifically in London over the last several years. Just looking
Speaker 1: across the Atlantic into the United States. At the moment
Speaker 1: here we have a massive company, Amazon with this huge
Speaker 1: cloud business now basically providing all the capital for the
Speaker 1: e commerce expansion, and a government a Washington, d C.
Speaker 1: Scene at the moment where a lot of these names Amazon,
Speaker 1: Facebook and the likes aren't very popular and I'm just
Speaker 1: wondering what the future looks like for them? What does
Speaker 1: it look like for them? Alene, Yeah, I think there's
Speaker 1: a reason you're seeing all these companies spend record levels
Speaker 1: on lobbying, and I think Amazon's in a really interesting position.
Speaker 1: So I mentioned earlier, they could be the hedge against
Speaker 1: the duop lee in advertising between Google and facements. But
Speaker 1: on the other hand, with the own ship of Washington
Speaker 1: Post and Bezo's personal interest and his lack of friendly
Speaker 1: nature with Donald Trump, he could be really the subject
Speaker 1: of a lot of scrutiny. And this Department of Defense
Speaker 1: deal for instance that Amazon lost for cloud services for
Speaker 1: a WS two Microsoft a year for example, is a
Speaker 1: really really prime example of that. What would you expect
Speaker 1: from Basils next? Does he just relentlessly stay with his
Speaker 1: strategic plan or can I lean Bourbage Sea a twist
Speaker 1: coming down the road? I mean, I think Bezos is
Speaker 1: pretty on top of his game, so I'm pretty sure
Speaker 1: he's got lots of continuency plans, lots of things up
Speaker 1: to sleep. And I'm not worried about this business or
Speaker 1: its potential or its ability to send from anything like
Speaker 1: that um in the York to I mean, how concerned
Speaker 1: are you about anti trust cases against Amazon given how
Speaker 1: much control they have not only over their own products
Speaker 1: and sort of their their clout there, but also with
Speaker 1: independent independent shops that are operating on their website that
Speaker 1: are not necessarily prioritized in source results. Yeah, I think
Speaker 1: that that is a concern, but it's probably I don't
Speaker 1: think antitrust is as much concerning to Amazon as it
Speaker 1: might be for Google and Facebook. Where I would be
Speaker 1: concerned if I was on the Amazon mobby inside or
Speaker 1: public policy side, is what's going to come down the
Speaker 1: pipe UM this year with respect to tax treatment and
Speaker 1: whether or not they might get hit with really severe
Speaker 1: tax bills, especially outside of North America. How much more
Speaker 1: upside is there left in Amazon shares? Do you think?
Speaker 1: I don't see UM an end insight. I really don't.
Speaker 1: I think that they have continued to demonstrate solid, consistent,
Speaker 1: responsible growth. They continue to show that they can control
Speaker 1: costs UM. They'll experiment when they need to, they'll acquire
Speaker 1: when they have to, they make strategic investments UM you know,
Speaker 1: their acquisition or investment stars to stay in delivery here
Speaker 1: in UK is UM you know, being looked at by
Speaker 1: the competition of markets authority. But they are continuing to innovate,
Speaker 1: and yet they also don't forget what really matters to
Speaker 1: retail customers in terms of fulfillment the same day or
Speaker 1: next day delivery and even things like doing their own
Speaker 1: titles for Amazon Prime to make that a more interesting
Speaker 1: composition actual media content, so I don't see a lot
Speaker 1: of feeling to come. Eileen, Thank you so much. Eileen
Speaker 1: Bourberich with us today from London. Thanks for listening to
Speaker 1: the Bloomberg Surveillance podcast. Subscribe and listen to interviews on
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