1 00:00:02,640 --> 00:00:05,320 Speaker 1: Welcome to the Bloomberg Penel Podcast. I'm Paul Swinge you, 2 00:00:05,360 --> 00:00:07,680 Speaker 1: along with my co host Lisa Brahma Waits. Each day 3 00:00:07,720 --> 00:00:10,240 Speaker 1: we bring you the most noteworthy and useful interviews for 4 00:00:10,280 --> 00:00:12,520 Speaker 1: you and your money. Whether at the grocery store or 5 00:00:12,560 --> 00:00:15,480 Speaker 1: the trading floor. Find a Bloomberg penl podcast on Apple 6 00:00:15,520 --> 00:00:17,959 Speaker 1: podcast or wherever you listen to podcasts, as well as 7 00:00:17,960 --> 00:00:23,279 Speaker 1: at Bloomberg dot com. Trade talks are continuing between the 8 00:00:23,400 --> 00:00:27,120 Speaker 1: US and China as we head closer to the March deadline. 9 00:00:27,200 --> 00:00:29,920 Speaker 1: Joining us here in our Bloomberg inactivist Broker Studios and 10 00:00:30,080 --> 00:00:34,120 Speaker 1: Stevenson Yang, co founder and research director at JA Capital Research, 11 00:00:34,440 --> 00:00:37,519 Speaker 1: also a Bloomberg Opinion contributor, and thank you so much 12 00:00:37,560 --> 00:00:41,240 Speaker 1: for being here today. Let's just start with a state 13 00:00:41,280 --> 00:00:43,960 Speaker 1: of play. Where are we in the trade negotiations between 14 00:00:44,000 --> 00:00:47,280 Speaker 1: the US and China? To be honest, it looks like 15 00:00:47,320 --> 00:00:50,640 Speaker 1: the US is just about to capitulate. Um. But we're 16 00:00:50,760 --> 00:00:55,880 Speaker 1: in the in the last last lap. It looks like 17 00:00:55,880 --> 00:01:00,400 Speaker 1: the US is about to capitulate. How so? Uh, you know, 18 00:01:00,560 --> 00:01:03,880 Speaker 1: March was the what was was the delayed date for 19 00:01:03,960 --> 00:01:07,319 Speaker 1: the implementation of the higher tariffs? Should should China not 20 00:01:07,440 --> 00:01:10,399 Speaker 1: agree to a number of conditions. The conditions that were 21 00:01:10,440 --> 00:01:14,600 Speaker 1: set for China were conditions that really could not be 22 00:01:14,800 --> 00:01:18,560 Speaker 1: made be met. They were too vague, too broad. They 23 00:01:18,600 --> 00:01:22,360 Speaker 1: meant basic restructuring of the economy and the political system. 24 00:01:22,400 --> 00:01:26,919 Speaker 1: And I think that Trump and his administration don't really 25 00:01:27,000 --> 00:01:29,959 Speaker 1: want to walk off that ledge, and so they're preparing 26 00:01:30,080 --> 00:01:32,920 Speaker 1: to de find a face saving method to back down. 27 00:01:33,200 --> 00:01:35,280 Speaker 1: What do you think that face saving method is in 28 00:01:35,400 --> 00:01:38,880 Speaker 1: terms of acudan? Who knows? Last time it was Fentinel, 29 00:01:38,959 --> 00:01:41,640 Speaker 1: which came right out of left field, so it could 30 00:01:41,680 --> 00:01:44,240 Speaker 1: be anything this time. How about some of the more 31 00:01:44,240 --> 00:01:48,600 Speaker 1: more substantive issues like technology and intellectual property or any 32 00:01:48,640 --> 00:01:52,720 Speaker 1: of those really tough topics going to be addressed. Look, 33 00:01:52,760 --> 00:01:55,200 Speaker 1: those are the issues that really need to be addressed. 34 00:01:55,200 --> 00:01:57,880 Speaker 1: The question is how so the US has been going 35 00:01:57,920 --> 00:02:01,000 Speaker 1: around to allies and asking them to you to drop 36 00:02:01,200 --> 00:02:04,600 Speaker 1: Huawei from the from the five G network construction, and 37 00:02:04,720 --> 00:02:08,200 Speaker 1: that could actually happen. There's a meeting in uh in 38 00:02:08,320 --> 00:02:11,960 Speaker 1: Spain of the EU Committee on G S M Technologies 39 00:02:12,000 --> 00:02:14,000 Speaker 1: at the end of the month where people are going 40 00:02:14,040 --> 00:02:18,560 Speaker 1: to discuss that. I'm just wondering Huawei. Huawei, we were 41 00:02:18,560 --> 00:02:23,000 Speaker 1: talking about the proscently the charges that the US levied 42 00:02:23,120 --> 00:02:27,160 Speaker 1: against Huawei UH and and how this would be read politically. 43 00:02:27,160 --> 00:02:30,560 Speaker 1: The US taking the stances is a completely separate legal 44 00:02:30,639 --> 00:02:34,080 Speaker 1: action that has nothing to do with trade negotiations. Originally, 45 00:02:34,200 --> 00:02:36,280 Speaker 1: China seemed to make noise saying that that you know, 46 00:02:36,480 --> 00:02:39,000 Speaker 1: this is absolutely part of trade negotiations. We're not buying 47 00:02:39,000 --> 00:02:42,079 Speaker 1: the U s S line. But recently they've got a 48 00:02:42,120 --> 00:02:44,960 Speaker 1: little dark on that. What's the latest there? They've gone 49 00:02:45,080 --> 00:02:47,320 Speaker 1: a little dark on that, but they're still holding in 50 00:02:47,400 --> 00:02:52,880 Speaker 1: detention three Canadians as really naked leverage against Canada in 51 00:02:52,919 --> 00:02:56,800 Speaker 1: hopes that Canada will not extradite among to the United States. 52 00:02:56,800 --> 00:02:59,239 Speaker 1: And this is so so it really is clearly viewed 53 00:02:59,280 --> 00:03:01,840 Speaker 1: in China, and all of the press coverage and Global 54 00:03:01,880 --> 00:03:04,680 Speaker 1: Times and so forth is all about how how long 55 00:03:04,840 --> 00:03:09,160 Speaker 1: is upon? So are we is the Lawwei situation? I e. 56 00:03:09,280 --> 00:03:13,400 Speaker 1: You mentioned Barcelona, maybe you know asking our European UH 57 00:03:13,560 --> 00:03:15,640 Speaker 1: countries not to use that technology. Are we creating a 58 00:03:16,600 --> 00:03:20,519 Speaker 1: kind of a bifurcated technology market where the Chinese companies 59 00:03:20,560 --> 00:03:23,200 Speaker 1: will supply Belt and Road countries and Western companies will 60 00:03:23,240 --> 00:03:26,200 Speaker 1: supply Western technologies. And the reason I asked that I'm 61 00:03:26,200 --> 00:03:29,240 Speaker 1: thinking about the global five G build out and rollouts 62 00:03:29,280 --> 00:03:31,920 Speaker 1: could be the next mega trend in text spending. I 63 00:03:31,960 --> 00:03:35,200 Speaker 1: wonder from creating kind of as a segregated market being developed. Yeah, 64 00:03:35,240 --> 00:03:38,000 Speaker 1: I think of it as sort of a bamboo technology curtain. 65 00:03:38,080 --> 00:03:40,800 Speaker 1: It's it's an interesting thing because the five G network 66 00:03:40,920 --> 00:03:45,920 Speaker 1: is the thing that will really UH manage smart appliances, 67 00:03:46,040 --> 00:03:50,960 Speaker 1: self driving cars, UH, power networks, all of those things 68 00:03:51,440 --> 00:03:54,280 Speaker 1: and um and you can imagine some of the security 69 00:03:55,000 --> 00:04:00,000 Speaker 1: uh issues that could arise from that. And so excluding UH, 70 00:04:00,040 --> 00:04:04,360 Speaker 1: Huawei and Zte and Chinese providers from that network, I 71 00:04:04,360 --> 00:04:06,760 Speaker 1: think is a key goal of the United States right 72 00:04:06,760 --> 00:04:09,120 Speaker 1: now and you can you can understand why, but it 73 00:04:09,160 --> 00:04:13,240 Speaker 1: would create a very interesting bifurcation. Yes, So we're speaking 74 00:04:13,240 --> 00:04:16,000 Speaker 1: with and Stevenson Yang, co founder and research director at 75 00:04:16,080 --> 00:04:19,799 Speaker 1: Jake Capital Research, also a Bloomberg opinion columnist. We're talking 76 00:04:19,839 --> 00:04:22,920 Speaker 1: about China and U and US relations as well as 77 00:04:22,960 --> 00:04:24,520 Speaker 1: the build out of five G, which is sort of 78 00:04:24,560 --> 00:04:27,039 Speaker 1: integral in this whole issue. As we've been talking about 79 00:04:27,600 --> 00:04:30,800 Speaker 1: for the past few weeks. How does the slowdown in 80 00:04:30,920 --> 00:04:34,680 Speaker 1: China's economy affect the five G build out plan? If 81 00:04:34,720 --> 00:04:38,320 Speaker 1: at all, well, I think what it really affects is 82 00:04:38,480 --> 00:04:44,320 Speaker 1: the is the view internationally by investors of China. Formerly, 83 00:04:44,440 --> 00:04:48,719 Speaker 1: you had companies like like Cisco which sued Huawei back 84 00:04:48,720 --> 00:04:51,919 Speaker 1: in two thousand three, Motorola with sued Huawei, and I 85 00:04:51,920 --> 00:04:56,000 Speaker 1: think it was you had them come to settlements because 86 00:04:56,000 --> 00:04:58,240 Speaker 1: they were concerned about being shut out of the market. 87 00:04:58,520 --> 00:05:00,800 Speaker 1: I think that there's much less of that concern now 88 00:05:00,839 --> 00:05:04,400 Speaker 1: and more of a more of a combative stance. So 89 00:05:04,800 --> 00:05:07,680 Speaker 1: the U S technology companies again, my my sense will 90 00:05:07,680 --> 00:05:10,760 Speaker 1: be boy, China is a huge market to sell into 91 00:05:10,800 --> 00:05:12,320 Speaker 1: on the one hand. On the other hand, we need 92 00:05:12,360 --> 00:05:14,640 Speaker 1: some protection from China. So what are we hearing from 93 00:05:14,680 --> 00:05:17,240 Speaker 1: Silicon Valley and some of the leaders about how they 94 00:05:17,240 --> 00:05:21,640 Speaker 1: would like to see policy developed. You know, they've been 95 00:05:21,720 --> 00:05:25,680 Speaker 1: surprisingly quiet. They used to be really strong supporters of 96 00:05:26,040 --> 00:05:30,680 Speaker 1: accommodation with China, trying not to uh to to to 97 00:05:30,760 --> 00:05:34,800 Speaker 1: make these issues tremendously public, trying not to embarrass China. 98 00:05:35,279 --> 00:05:38,440 Speaker 1: Now you find that they're very quiet. So you said that, 99 00:05:38,960 --> 00:05:41,880 Speaker 1: if I'm understanding you correctly, the US companies are becoming 100 00:05:41,920 --> 00:05:45,839 Speaker 1: more combative and international companies are becoming more combative when 101 00:05:45,839 --> 00:05:51,159 Speaker 1: negotiating with Chinese tech giants. First of all, how is 102 00:05:51,160 --> 00:05:54,520 Speaker 1: this manifesting and why does this slowdown give them that 103 00:05:54,800 --> 00:05:59,279 Speaker 1: sort of confidence. Well, because the slowdowns suggests that that 104 00:05:59,360 --> 00:06:02,520 Speaker 1: the market is really not quite as promising as they thought, 105 00:06:03,000 --> 00:06:06,279 Speaker 1: and that they may not after all, build billion or 106 00:06:06,279 --> 00:06:10,159 Speaker 1: two billion dollar businesses in China, and therefore they're able 107 00:06:10,200 --> 00:06:13,560 Speaker 1: to defend their interests or you know, in a more 108 00:06:13,600 --> 00:06:18,000 Speaker 1: strident manner, does does China still need our technology? Or 109 00:06:18,040 --> 00:06:21,640 Speaker 1: if they developed skills in court technology, but whether it's 110 00:06:21,680 --> 00:06:24,360 Speaker 1: chips or software or hardware, they really don't need us 111 00:06:24,440 --> 00:06:26,640 Speaker 1: or Western technology as much as I used to. Well, 112 00:06:26,680 --> 00:06:30,240 Speaker 1: apparently they do. I mean. The thing that struck me, 113 00:06:30,520 --> 00:06:33,960 Speaker 1: really bowled me over about the Huawei indictment, the Washington 114 00:06:34,040 --> 00:06:39,280 Speaker 1: State indictment for its attempt to to steal Tappy technology 115 00:06:39,320 --> 00:06:42,239 Speaker 1: from T Mobile was how, you know, the the US, 116 00:06:42,360 --> 00:06:45,280 Speaker 1: the North American market is huge for Huawei, and its 117 00:06:45,320 --> 00:06:48,600 Speaker 1: reputation in North America is also really important. So the 118 00:06:48,640 --> 00:06:51,320 Speaker 1: idea that they would risk all these things in order 119 00:06:51,400 --> 00:06:54,840 Speaker 1: to steal a technology that's really kind of hum drum, 120 00:06:54,880 --> 00:06:58,000 Speaker 1: and that that a lot of other companies had developed 121 00:06:58,000 --> 00:07:01,360 Speaker 1: in different ways um is really kind of stunning and 122 00:07:01,400 --> 00:07:04,520 Speaker 1: suggest that there that there's been some myth making about 123 00:07:04,600 --> 00:07:07,800 Speaker 1: Huawei's capabilities. Do you think there's been myth making overall 124 00:07:07,920 --> 00:07:11,720 Speaker 1: in terms of China's technological prowess? Look, I do. I 125 00:07:11,760 --> 00:07:14,400 Speaker 1: mean this is not to say at all that that 126 00:07:14,400 --> 00:07:19,480 Speaker 1: that you know, extremely extreme competence doesn't exist in China's 127 00:07:19,520 --> 00:07:22,320 Speaker 1: tech industry and that they're not inventing things all the time. 128 00:07:22,680 --> 00:07:25,200 Speaker 1: But the fact is that the companies that get to 129 00:07:25,360 --> 00:07:30,000 Speaker 1: scale and manage to uh to achieve big sales are 130 00:07:30,080 --> 00:07:32,800 Speaker 1: not the companies that are innovative. You can't do that 131 00:07:32,880 --> 00:07:35,920 Speaker 1: in China's economy. And Stevenson Yang, thank you so much 132 00:07:35,920 --> 00:07:38,360 Speaker 1: for being with us. We really appreciate it. And Stevenson 133 00:07:38,400 --> 00:07:41,680 Speaker 1: Yang co founder and research director at j Capital Research, 134 00:07:42,000 --> 00:07:46,440 Speaker 1: also a Bloomberg opinion columnist, and she is normally based 135 00:07:46,640 --> 00:07:48,920 Speaker 1: in Washington, d C. In Hong Kong, but joining us 136 00:07:48,960 --> 00:08:06,720 Speaker 1: here in our eleven three our studios. It is the 137 00:08:06,920 --> 00:08:11,080 Speaker 1: end of an era. Bill Gross, the erstwhile bond king 138 00:08:11,200 --> 00:08:14,360 Speaker 1: of PIMCO, who went to Janice, said he was retiring 139 00:08:14,600 --> 00:08:18,760 Speaker 1: after a period of mixed performance. If you want to 140 00:08:18,760 --> 00:08:20,720 Speaker 1: hear what he had to say, let's listen to Bill 141 00:08:20,760 --> 00:08:23,440 Speaker 1: Gross in his own word. Speaking with Bloomberg's Tom Keene 142 00:08:23,440 --> 00:08:26,000 Speaker 1: earlier this morning about his performance, and you know, I 143 00:08:26,040 --> 00:08:28,480 Speaker 1: look back on it um and the performance on the 144 00:08:29,200 --> 00:08:31,720 Speaker 1: constrained fund in the past four years with Jannis has 145 00:08:31,960 --> 00:08:37,680 Speaker 1: H has been unsatisfactory, no doubt, but still positively um 146 00:08:38,360 --> 00:08:42,080 Speaker 1: positive and normal and nominal terms. Joining us now in 147 00:08:42,240 --> 00:08:45,440 Speaker 1: our Bloomberg and Directive Broker Studios is Peggy Collins, investing 148 00:08:45,480 --> 00:08:49,680 Speaker 1: team leader for Bloomberg News. Uh, Peggy really interesting. He 149 00:08:49,760 --> 00:08:54,280 Speaker 1: had an amazing run at Pimco, falling out went to Janice. 150 00:08:54,640 --> 00:08:58,840 Speaker 1: Since then his performance highly underwhelming, that's right, and also 151 00:08:59,040 --> 00:09:01,600 Speaker 1: not a lot of money followed him to Janice. So 152 00:09:01,640 --> 00:09:04,920 Speaker 1: when he left, I remember the morning he left Pimco September. 153 00:09:06,040 --> 00:09:09,640 Speaker 1: People were shocked. We were scrambling around the newsroom trying 154 00:09:09,679 --> 00:09:12,719 Speaker 1: to put the story out fast, and he basically at 155 00:09:12,720 --> 00:09:15,880 Speaker 1: that time jumped to Janice, where he had been longtime 156 00:09:15,920 --> 00:09:18,120 Speaker 1: friends with Dick Wild who was running Janie at the 157 00:09:18,120 --> 00:09:21,120 Speaker 1: time out of Colorado. A couple of years later, Janice 158 00:09:21,200 --> 00:09:23,959 Speaker 1: merged with Henderson Group in London, and so now it's 159 00:09:23,960 --> 00:09:26,600 Speaker 1: a big London based firm that he's a part of. 160 00:09:26,640 --> 00:09:29,920 Speaker 1: But Bill Gross maintained kind of a solo act um 161 00:09:30,080 --> 00:09:32,880 Speaker 1: in Newport Beach for a long time over the last 162 00:09:32,880 --> 00:09:35,520 Speaker 1: few years, and we've just seen the assets in the 163 00:09:35,520 --> 00:09:38,280 Speaker 1: fund really deplete, the dip below one billion at the 164 00:09:38,360 --> 00:09:40,920 Speaker 1: end of last year, and his performance, as you said, 165 00:09:40,960 --> 00:09:44,640 Speaker 1: has really lagged about less than one percent over the 166 00:09:44,679 --> 00:09:48,000 Speaker 1: annualizes four years, so it's been it's been a struggle 167 00:09:48,080 --> 00:09:51,600 Speaker 1: since he left PIMCO. So Peggy is yet another example 168 00:09:51,880 --> 00:09:55,640 Speaker 1: in the decline of the active manager. I will say 169 00:09:55,720 --> 00:09:58,680 Speaker 1: it is it is a signal in terms of how 170 00:09:58,720 --> 00:10:01,800 Speaker 1: difficult it is to be an active manager. Um. I 171 00:10:01,800 --> 00:10:06,600 Speaker 1: think in general bond funds have had fewer outflows than 172 00:10:06,960 --> 00:10:10,080 Speaker 1: equity funds. We've really seen a lot of investors pour 173 00:10:10,280 --> 00:10:14,280 Speaker 1: into particularly US S stock funds on the passive side 174 00:10:14,360 --> 00:10:17,040 Speaker 1: rather than active, but bond fund managers, in part because 175 00:10:17,080 --> 00:10:19,280 Speaker 1: there's not as much of a delta between the expense 176 00:10:19,400 --> 00:10:22,520 Speaker 1: ratios on bond funds passive or active, they have held 177 00:10:22,600 --> 00:10:25,600 Speaker 1: up somewhat. But to your point, it is an indication 178 00:10:25,640 --> 00:10:27,439 Speaker 1: of how hard it can be to do well in 179 00:10:27,520 --> 00:10:31,480 Speaker 1: an active fund. It's interesting because he was known as 180 00:10:31,559 --> 00:10:35,600 Speaker 1: a bond king, the bond king. Is there another bond 181 00:10:35,720 --> 00:10:39,440 Speaker 1: king that has taken Bill Gross's place. You know, I 182 00:10:39,480 --> 00:10:41,480 Speaker 1: think it's hard to say right now. I mean, he 183 00:10:41,559 --> 00:10:45,440 Speaker 1: certainly was the person who built up the bond industry 184 00:10:45,440 --> 00:10:48,320 Speaker 1: in terms of the total return fund at Pimco. PIMPO 185 00:10:48,480 --> 00:10:52,439 Speaker 1: became the world's largest mutual fund manager while he was there. 186 00:10:52,520 --> 00:10:56,400 Speaker 1: It reached a three hundred billion in assets by at 187 00:10:56,400 --> 00:10:58,679 Speaker 1: the peak. So I think he really became the face 188 00:10:58,720 --> 00:11:00,920 Speaker 1: of bond funds and in testing, and he was on 189 00:11:00,960 --> 00:11:03,439 Speaker 1: TV a lot, he did investor letters. Tons of people 190 00:11:03,480 --> 00:11:05,600 Speaker 1: had the total return fund at him go in there 191 00:11:05,600 --> 00:11:07,920 Speaker 1: for oh one k plans, But I don't think we 192 00:11:08,000 --> 00:11:10,680 Speaker 1: have someone to that degree, and in part because it 193 00:11:10,760 --> 00:11:13,920 Speaker 1: was something new at the time. In hindsight, Peggy, what 194 00:11:14,400 --> 00:11:16,920 Speaker 1: is probably the call here about what happened to Bill Gross? 195 00:11:16,960 --> 00:11:18,839 Speaker 1: In terms of performance? He had such a good run there, 196 00:11:18,840 --> 00:11:21,439 Speaker 1: as you mentioned then, the most more recent performance has 197 00:11:21,480 --> 00:11:24,360 Speaker 1: been underwhelming at best. Did he just did the market 198 00:11:24,360 --> 00:11:25,760 Speaker 1: just kind of move away from him? Did he just 199 00:11:25,840 --> 00:11:28,720 Speaker 1: missed the evolution of the fixed income market. I think 200 00:11:28,800 --> 00:11:30,560 Speaker 1: one of the things that may have happened was he 201 00:11:30,640 --> 00:11:33,040 Speaker 1: changed his strategy, and he noted this today to Tom 202 00:11:33,120 --> 00:11:36,080 Speaker 1: Keane on the interview with Bloomberg Radio and TV that 203 00:11:36,360 --> 00:11:38,280 Speaker 1: he wished in some ways that he might have stuck 204 00:11:38,320 --> 00:11:41,320 Speaker 1: with his total return strategy, which he really pioneered a 205 00:11:41,360 --> 00:11:44,280 Speaker 1: bit more and Ben a little bit more constrained. Lisa, 206 00:11:44,320 --> 00:11:46,680 Speaker 1: you know these funds really well. But these unconstrained bond 207 00:11:46,720 --> 00:11:49,439 Speaker 1: funds which Bill Gross ran one at Janice, they were 208 00:11:49,480 --> 00:11:51,959 Speaker 1: really un vogue after the financial crisis, and lots of 209 00:11:52,000 --> 00:11:54,240 Speaker 1: bond managers said they're going to be the greatest thing 210 00:11:54,280 --> 00:11:56,679 Speaker 1: because we can go anywhere and when interest rate starts 211 00:11:56,679 --> 00:11:59,440 Speaker 1: to rise, we'll be able to move and groove. And well, 212 00:11:59,559 --> 00:12:01,440 Speaker 1: it turned out to be a little bit more difficult 213 00:12:01,440 --> 00:12:05,280 Speaker 1: than that. They had higher fees than other bond funds, 214 00:12:05,400 --> 00:12:08,120 Speaker 1: and the whole argument was predicated on this idea of 215 00:12:08,240 --> 00:12:11,800 Speaker 1: rising rates, of rising benchmark yields, which Bill grow subscribed to. 216 00:12:11,880 --> 00:12:14,839 Speaker 1: He thought that, you know, he shorted tenure treasuries when 217 00:12:14,840 --> 00:12:17,120 Speaker 1: the yields were three three and a half present. That 218 00:12:17,240 --> 00:12:20,080 Speaker 1: was not right. But I do have to wonder, you know, 219 00:12:20,200 --> 00:12:23,960 Speaker 1: how much of the active model is broken Bill Gross 220 00:12:24,000 --> 00:12:27,400 Speaker 1: in particular, uh, you know, homing in on hedge funds 221 00:12:27,520 --> 00:12:29,440 Speaker 1: and saying that that model is broken. Take a listen 222 00:12:29,440 --> 00:12:31,720 Speaker 1: to what he had to say. Obviously, the hedge fund 223 00:12:31,800 --> 00:12:34,800 Speaker 1: concepts suggested long and short, but it was really one 224 00:12:34,800 --> 00:12:38,920 Speaker 1: in which managers took a lot of risk. So when 225 00:12:38,920 --> 00:12:42,720 Speaker 1: you speak to diversification, you know, perhaps most of those 226 00:12:43,240 --> 00:12:46,440 Speaker 1: hedge funds were non diversified in terms of the risk 227 00:12:46,559 --> 00:12:48,760 Speaker 1: that they were taking. They were taking levered risk and 228 00:12:48,800 --> 00:12:51,880 Speaker 1: still are. So he was talking about hedge funds Bill 229 00:12:51,920 --> 00:12:55,400 Speaker 1: Gross this morning in a conversation with Bloomberg's Tom Keane. 230 00:12:55,920 --> 00:13:00,439 Speaker 1: Of course he himself also took unlevered risk, but in 231 00:13:00,559 --> 00:13:03,960 Speaker 1: mutual fun format, right and again, on this uncontrained bond fund, 232 00:13:04,000 --> 00:13:06,800 Speaker 1: they had a lot more latitude and versus the total 233 00:13:06,880 --> 00:13:09,800 Speaker 1: return fund that had a lot had to stay more 234 00:13:09,840 --> 00:13:12,679 Speaker 1: constrained and take more measured risks. So when you have 235 00:13:12,800 --> 00:13:16,240 Speaker 1: the ability to take big risks, sometimes it goes very 236 00:13:16,240 --> 00:13:19,360 Speaker 1: well and sometimes it goes very sharply down the other way. 237 00:13:19,360 --> 00:13:22,400 Speaker 1: And we saw Bill Gross's fund in the spring of 238 00:13:22,480 --> 00:13:24,520 Speaker 1: last year really take a dive on a couple of 239 00:13:24,520 --> 00:13:26,320 Speaker 1: bad bets that he had made in relation to the 240 00:13:26,360 --> 00:13:28,640 Speaker 1: German bunds. So, and I think on hedge funds, you know, 241 00:13:28,679 --> 00:13:30,439 Speaker 1: he makes a good point that a lot of we've 242 00:13:30,440 --> 00:13:32,720 Speaker 1: seen a lot of the hedge funds kind of heard 243 00:13:32,760 --> 00:13:36,360 Speaker 1: together into long bets with with the fang stocks, and 244 00:13:36,400 --> 00:13:38,480 Speaker 1: then when things turned the other way kind of they 245 00:13:38,520 --> 00:13:41,760 Speaker 1: go go in tandem downwards. So I think his point 246 00:13:41,840 --> 00:13:43,560 Speaker 1: is made. But I do think he you know, he 247 00:13:43,600 --> 00:13:45,800 Speaker 1: struggled over the last few years. We saw a lot 248 00:13:45,880 --> 00:13:49,560 Speaker 1: of investor redemptions. He did say on the interview today 249 00:13:49,600 --> 00:13:52,000 Speaker 1: on Bloomberg Radio and TV that he believes his legacy 250 00:13:52,080 --> 00:13:55,079 Speaker 1: stands because for his over his four decade more than 251 00:13:55,120 --> 00:13:58,560 Speaker 1: four decade career in the investment market, he certainly had 252 00:13:58,760 --> 00:14:02,120 Speaker 1: great returns at Pimco. Peggy cons thank you very much 253 00:14:02,160 --> 00:14:04,520 Speaker 1: for bringing us up to date on really momentous news 254 00:14:04,559 --> 00:14:06,880 Speaker 1: in the fixed income world. Here Peggy Collins, investing team 255 00:14:06,920 --> 00:14:10,080 Speaker 1: leader Bloomberg News, joining us live in a Bloomberg Interactive 256 00:14:10,120 --> 00:14:12,360 Speaker 1: broker studio. And I think I have to agree with 257 00:14:12,360 --> 00:14:14,600 Speaker 1: with Peggy that and with Bill that, you know, over 258 00:14:14,640 --> 00:14:19,440 Speaker 1: his forty year career, just outstanding performance for his investors 259 00:14:19,480 --> 00:14:22,600 Speaker 1: in the fixed income market. Uh, and he clearly was 260 00:14:22,680 --> 00:14:41,360 Speaker 1: the bond king. You know, if we want to take 261 00:14:41,440 --> 00:14:43,960 Speaker 1: a look at what's going on with the global economy, 262 00:14:44,000 --> 00:14:46,720 Speaker 1: there is no better place to look than the shipping industry. 263 00:14:46,720 --> 00:14:48,560 Speaker 1: And so we're very lucky to have Ian Webber with 264 00:14:48,640 --> 00:14:51,680 Speaker 1: us here, chief executive officer of Global ship Leaves, normally 265 00:14:51,720 --> 00:14:53,680 Speaker 1: based in London, but here with us in our New 266 00:14:53,720 --> 00:14:57,240 Speaker 1: York studios today. Global ship Leaves actually just merged with 267 00:14:57,320 --> 00:15:00,760 Speaker 1: Beside Containers late last year, now has point three billion 268 00:15:00,960 --> 00:15:05,280 Speaker 1: dollars worth of ships as well as thirty eight modern 269 00:15:06,120 --> 00:15:09,280 Speaker 1: fleet of thirty eight So, Ian, thank you so much 270 00:15:09,280 --> 00:15:12,400 Speaker 1: for being here. Do you think the concern from your 271 00:15:12,440 --> 00:15:16,080 Speaker 1: perspective of seeing ships in the water, the concern about 272 00:15:16,080 --> 00:15:20,560 Speaker 1: trade tensions has been overplayed or underblown? Firstly, thanks for 273 00:15:20,600 --> 00:15:23,800 Speaker 1: inviting me. It's good to be here again. Um. Yeah, 274 00:15:24,160 --> 00:15:28,200 Speaker 1: trade wars and tariffs and and and the uncertainty that 275 00:15:28,200 --> 00:15:32,960 Speaker 1: that creates never good for business, but it does create opportunities. Now, 276 00:15:33,040 --> 00:15:35,520 Speaker 1: for for my business, you have to take a step 277 00:15:35,560 --> 00:15:38,320 Speaker 1: back and look at the global container fleet and look 278 00:15:38,320 --> 00:15:41,120 Speaker 1: at very big ships and then the rest medium sized 279 00:15:41,160 --> 00:15:43,200 Speaker 1: and smaller. The very big ships are the ones that 280 00:15:43,240 --> 00:15:47,000 Speaker 1: are deployed on trades between China and North America and 281 00:15:47,120 --> 00:15:49,800 Speaker 1: China and Europe. They're the ones that are going to 282 00:15:49,840 --> 00:15:54,040 Speaker 1: be most affected directly by tariffs and trade wars, at 283 00:15:54,080 --> 00:15:57,280 Speaker 1: least until something is resolved. The midsize and smaller fleet 284 00:15:57,680 --> 00:16:01,400 Speaker 1: is out with that. That's global contain a trade. That's 285 00:16:01,440 --> 00:16:04,920 Speaker 1: where my company, Global Ship Leases is focused. There will 286 00:16:04,960 --> 00:16:08,480 Speaker 1: be an indirect effects, of course, but the direct effect 287 00:16:08,680 --> 00:16:12,440 Speaker 1: on global trade flows for US we expect to be negligible. 288 00:16:12,800 --> 00:16:15,480 Speaker 1: That's interesting when you raise that seventy number, because when 289 00:16:15,520 --> 00:16:17,400 Speaker 1: I think of global shipping, I think of the big 290 00:16:17,440 --> 00:16:20,680 Speaker 1: monster container ships sitting in the harbor and Singapore, you know, 291 00:16:20,680 --> 00:16:22,920 Speaker 1: in Bayo, New Jersey, getting loaded and offload of these 292 00:16:22,920 --> 00:16:26,080 Speaker 1: monster things. But global trade is with the medium and 293 00:16:26,680 --> 00:16:29,720 Speaker 1: smaller ships. As you say, what are the drivers of 294 00:16:29,760 --> 00:16:32,040 Speaker 1: that business if it isn't the global trade that we're 295 00:16:32,040 --> 00:16:35,640 Speaker 1: talking about China, Europe, China, US local local economies. These 296 00:16:35,680 --> 00:16:40,400 Speaker 1: are trade lanes that connect the Indian Subconsinan and Australasia, 297 00:16:40,800 --> 00:16:44,720 Speaker 1: Australasia and South America, North America and South America, Europe 298 00:16:44,720 --> 00:16:48,560 Speaker 1: and South America. So it's everything else, and it's it's 299 00:16:48,560 --> 00:16:52,240 Speaker 1: consumer products, it's some manufactured products, it's raw materials, it's 300 00:16:52,760 --> 00:16:56,080 Speaker 1: frozen lamb, it's butter, it's wine, it's water, it's beer, 301 00:16:56,200 --> 00:16:59,280 Speaker 1: it's shoes, it's all of these things that emerging economies, 302 00:16:59,320 --> 00:17:02,520 Speaker 1: particularly in Okay so what changes have you seen in 303 00:17:02,560 --> 00:17:06,119 Speaker 1: the past six months that sort of very indicative of 304 00:17:06,160 --> 00:17:10,400 Speaker 1: either the global economy or the changing trade routes emerging 305 00:17:10,440 --> 00:17:13,520 Speaker 1: from the tech Continued growth in demand in these non 306 00:17:13,560 --> 00:17:17,199 Speaker 1: mainline trades, so we've got three or four demand growth. 307 00:17:17,920 --> 00:17:21,040 Speaker 1: Where is it something from in particular, it's broadly spread, 308 00:17:21,400 --> 00:17:24,040 Speaker 1: so you know, it's across the whole world, which is 309 00:17:24,040 --> 00:17:26,439 Speaker 1: great because our ships are built to be able to 310 00:17:26,760 --> 00:17:29,680 Speaker 1: be deployed around the world. On the other side of 311 00:17:29,720 --> 00:17:33,199 Speaker 1: the occasion, the supply side, the order book ships that 312 00:17:33,240 --> 00:17:36,600 Speaker 1: are contracted to be built for midsize and smaller container 313 00:17:36,640 --> 00:17:39,879 Speaker 1: ships is tiny in flank. The supply of midsizing and 314 00:17:39,960 --> 00:17:42,960 Speaker 1: smaller ships has contracted over the last half a dozen years. 315 00:17:43,280 --> 00:17:47,560 Speaker 1: So we've got demand growth and supply contraction which will 316 00:17:47,920 --> 00:17:51,359 Speaker 1: lead to increase in price charter rates for US rental 317 00:17:51,400 --> 00:17:54,800 Speaker 1: income and ultimately asset values. So our ships that are 318 00:17:54,800 --> 00:17:57,000 Speaker 1: coming open in the market later this year into two 319 00:17:57,000 --> 00:17:59,960 Speaker 1: thousand and twenty, we're hoping to renew at higher rate 320 00:18:00,119 --> 00:18:02,919 Speaker 1: driven by these economic fundamentals. What are you doing with 321 00:18:02,960 --> 00:18:06,000 Speaker 1: your fleet right now? At least mentioned thirty eight ships, 322 00:18:06,000 --> 00:18:08,119 Speaker 1: I believe are you adding to the fleet? How do 323 00:18:08,119 --> 00:18:11,639 Speaker 1: you think about that capital expenditure as it related to 324 00:18:11,720 --> 00:18:16,000 Speaker 1: the maybe the visibility you may have on your upcoming business. Sure, 325 00:18:16,040 --> 00:18:17,640 Speaker 1: I mean, we've just double the size of the fleet. 326 00:18:17,640 --> 00:18:20,879 Speaker 1: You're kind enough to observe that we've reduced the average 327 00:18:20,920 --> 00:18:23,480 Speaker 1: age of the vessels. Who improve the quality of the ships. 328 00:18:23,280 --> 00:18:26,879 Speaker 1: It's it's a great transaction. More than doubling the size 329 00:18:26,920 --> 00:18:30,600 Speaker 1: of the business. Going forward, we still see opportunities to 330 00:18:30,640 --> 00:18:35,439 Speaker 1: add selectively to the fleet second hand vessels, five ten 331 00:18:35,520 --> 00:18:38,679 Speaker 1: year old vessels with a charter with a rental stream 332 00:18:38,960 --> 00:18:42,360 Speaker 1: attached to it, when asset values are still relatively low. 333 00:18:42,440 --> 00:18:44,680 Speaker 1: We're still it's a cyclical industry. We're still at the 334 00:18:44,720 --> 00:18:47,840 Speaker 1: bottom of the cycle, and therefore there are good investment 335 00:18:47,840 --> 00:18:50,520 Speaker 1: opportunities for those who have the appetite and the capital, 336 00:18:50,560 --> 00:18:53,600 Speaker 1: which which we do. How does the growth that you're 337 00:18:53,600 --> 00:18:56,840 Speaker 1: seeing right now in demand compared to the past few years, 338 00:18:57,880 --> 00:19:00,280 Speaker 1: It's it's steady and wan it flucture. It's from me 339 00:19:00,440 --> 00:19:02,639 Speaker 1: to you, we are cyclical. Not every trade lane is 340 00:19:02,640 --> 00:19:05,359 Speaker 1: going gangbusters all at the same time. There are there 341 00:19:05,400 --> 00:19:08,040 Speaker 1: are more prosperous economies and less prosperous, but on average 342 00:19:08,400 --> 00:19:11,119 Speaker 1: three or four percent. The reason why I ask is 343 00:19:11,160 --> 00:19:14,639 Speaker 1: because people are talking about this sort of global deceleration. 344 00:19:14,800 --> 00:19:18,080 Speaker 1: I'm just wondering if your empirical evidence bears that out. 345 00:19:18,440 --> 00:19:22,280 Speaker 1: Really is difficult to tell, but with no new ships 346 00:19:22,280 --> 00:19:27,360 Speaker 1: being built in our sector um and positive demand growth 347 00:19:28,080 --> 00:19:30,359 Speaker 1: even if it's three percent rather than four percent, and 348 00:19:30,400 --> 00:19:32,359 Speaker 1: that's a great position for us to be in. So 349 00:19:32,440 --> 00:19:35,240 Speaker 1: your company's interesting. You you own the ships and then 350 00:19:35,240 --> 00:19:38,200 Speaker 1: you lease them to the large, larger container ship companies 351 00:19:38,200 --> 00:19:41,800 Speaker 1: from maris them about the world. Um, so I would send, 352 00:19:41,800 --> 00:19:43,240 Speaker 1: I would get it. I would sense that you would 353 00:19:43,240 --> 00:19:46,480 Speaker 1: probably be a very you know, a high delta indicator 354 00:19:46,520 --> 00:19:48,359 Speaker 1: to what is really going on in terms of demand 355 00:19:48,359 --> 00:19:51,879 Speaker 1: in terms of global shipping. So do you have it? 356 00:19:51,920 --> 00:19:54,520 Speaker 1: What's the average tenure of your contract? You have contracts 357 00:19:54,600 --> 00:19:56,880 Speaker 1: rolling over, and what can you tell us about kind 358 00:19:56,880 --> 00:20:00,720 Speaker 1: of the renegotiation rates you're currently seeing? I'm sure. I mean, 359 00:20:00,800 --> 00:20:03,160 Speaker 1: if you were renewing a ship in today's market, you'll 360 00:20:03,200 --> 00:20:07,280 Speaker 1: be looking at a new lease, a new charter of six, nine, twelve, 361 00:20:07,400 --> 00:20:10,280 Speaker 1: maybe eighteen months, relatively short term, which is fined by 362 00:20:10,359 --> 00:20:12,879 Speaker 1: us because we expect rates to continue to rise, so 363 00:20:12,920 --> 00:20:15,560 Speaker 1: we'll then release again and an improving market but we 364 00:20:15,640 --> 00:20:18,600 Speaker 1: have a mixture of long and short term charters. We 365 00:20:18,640 --> 00:20:22,160 Speaker 1: have seven fifty million dollars of contracted revenue on average. 366 00:20:22,160 --> 00:20:24,080 Speaker 1: Our charters run for two and a half years, So 367 00:20:24,119 --> 00:20:27,359 Speaker 1: we've got a great mixture of a bedrock of of 368 00:20:27,400 --> 00:20:30,760 Speaker 1: cash flow and then some short term charters renewing soon 369 00:20:30,800 --> 00:20:33,359 Speaker 1: that we hope to be able to renew an improved market. 370 00:20:33,640 --> 00:20:36,960 Speaker 1: So the supply demand dynamic really favors you in terms 371 00:20:36,960 --> 00:20:39,439 Speaker 1: of being able to raise rates. For the marisks of 372 00:20:39,480 --> 00:20:42,399 Speaker 1: the world, how much do they push back at a 373 00:20:42,480 --> 00:20:46,119 Speaker 1: time when people all talk about margin compression, Uh, you know, 374 00:20:46,680 --> 00:20:49,960 Speaker 1: inflation around the edges and the inability to pass it 375 00:20:50,040 --> 00:20:52,760 Speaker 1: along to consumers. Oh, it's a it's a tough negotiation. 376 00:20:52,880 --> 00:20:54,359 Speaker 1: You know, you've got a buyer and a seller and 377 00:20:54,359 --> 00:20:57,280 Speaker 1: you're trying to come up with a price. Our our 378 00:20:57,359 --> 00:21:02,440 Speaker 1: industry is very liquid. However, there are professional shipbrokers out there. 379 00:21:02,440 --> 00:21:07,040 Speaker 1: Information flows extremely quickly, um and very broadly, so we 380 00:21:07,119 --> 00:21:10,200 Speaker 1: kind of know what market rates are. But there is 381 00:21:10,240 --> 00:21:13,160 Speaker 1: inevitably a bit of a tussle between owner and charter 382 00:21:13,280 --> 00:21:14,800 Speaker 1: and you end up with something that you agree in 383 00:21:14,960 --> 00:21:17,399 Speaker 1: terms of rate and duration. So who do you compete 384 00:21:17,400 --> 00:21:22,000 Speaker 1: against every other container ship that's that's that's out there, 385 00:21:21,760 --> 00:21:23,600 Speaker 1: but other people in your business that are in that 386 00:21:23,720 --> 00:21:26,640 Speaker 1: leasing business, that are kind of in the flex business 387 00:21:26,640 --> 00:21:29,280 Speaker 1: that that you're in. Yes, I mean there are just 388 00:21:29,359 --> 00:21:33,080 Speaker 1: over five thousand container ships in the world. Roughly half 389 00:21:33,119 --> 00:21:35,040 Speaker 1: of them are owned by owners like us, so two 390 00:21:35,080 --> 00:21:37,760 Speaker 1: and a half thousand broadly spread. Some are on very 391 00:21:37,760 --> 00:21:40,400 Speaker 1: long term charters, some are on short term charters. So 392 00:21:40,440 --> 00:21:43,840 Speaker 1: it's a pretty fragmented industry, hence the availability of decent 393 00:21:43,880 --> 00:21:47,280 Speaker 1: market information. So just real quick here in thirty seconds, 394 00:21:47,280 --> 00:21:49,800 Speaker 1: what are you most concerned about with respect to global 395 00:21:49,800 --> 00:21:51,800 Speaker 1: growth or do you think it's just smooth sailing ahead 396 00:21:51,920 --> 00:21:54,320 Speaker 1: so to speak. Pardon my plan. It won't be smooth 397 00:21:54,320 --> 00:21:57,320 Speaker 1: sailing for twenty years in the industry. I've known that. 398 00:21:58,560 --> 00:22:00,600 Speaker 1: But we're looking forward. We came and it's there will 399 00:22:00,640 --> 00:22:02,879 Speaker 1: be hiccups. Um you know, we're we're in a bit 400 00:22:02,920 --> 00:22:04,960 Speaker 1: of a seasonal down to now. We expect things to 401 00:22:04,960 --> 00:22:08,680 Speaker 1: pick up come come late February, early March, a seasonal 402 00:22:08,720 --> 00:22:11,800 Speaker 1: downtown in industry. Um. Interesting, Ian Weber, thank you so 403 00:22:11,920 --> 00:22:14,160 Speaker 1: much for joining us IAN as a chief executive officer 404 00:22:14,200 --> 00:22:16,720 Speaker 1: of Global Ship Lease as symbols g S l on 405 00:22:16,800 --> 00:22:18,800 Speaker 1: your Bloomberg terminal. He's based in London, but he joins 406 00:22:18,840 --> 00:22:36,199 Speaker 1: us today in our Bloomberg eleven three oh studios. So 407 00:22:36,280 --> 00:22:38,560 Speaker 1: unless you're a Patriots fan, you probably didn't find last 408 00:22:38,680 --> 00:22:42,600 Speaker 1: night's thirteen to three Patriots win over the Brams very 409 00:22:42,640 --> 00:22:46,959 Speaker 1: scintillating to television. But the real question for Madison Avenue 410 00:22:46,960 --> 00:22:48,440 Speaker 1: has how did to do in ratings and how did 411 00:22:48,440 --> 00:22:50,680 Speaker 1: the advertisers fair? So do you give us some color 412 00:22:50,800 --> 00:22:52,920 Speaker 1: on that? We bring in John Swollen. John is a 413 00:22:53,000 --> 00:22:57,000 Speaker 1: chief research officer from North America for Can'tar Media. He's 414 00:22:57,000 --> 00:22:59,359 Speaker 1: based in Euyork and joins us on the phone. So again, John, 415 00:22:59,400 --> 00:23:04,120 Speaker 1: not the most exciting of games, arguably, but what did 416 00:23:04,160 --> 00:23:06,840 Speaker 1: you think of the ads and any winners and losers 417 00:23:06,840 --> 00:23:09,600 Speaker 1: you saw? Well, you're right, it wasn't the most exciting 418 00:23:09,640 --> 00:23:11,399 Speaker 1: game on the field. But that's why we have the 419 00:23:11,440 --> 00:23:14,760 Speaker 1: Advertising Bowl as a backup. UM, and every year the 420 00:23:14,800 --> 00:23:17,879 Speaker 1: advertisers do their best to entertain fans during the breaks 421 00:23:17,880 --> 00:23:19,760 Speaker 1: in the action. So do they win? Did they do 422 00:23:19,800 --> 00:23:23,280 Speaker 1: a good job of it? I don't know. Um. Late 423 00:23:23,280 --> 00:23:25,000 Speaker 1: in the game, I heard Tony ruma I would call 424 00:23:25,040 --> 00:23:28,320 Speaker 1: Tony Roma saying it hasn't been pretty, and I think 425 00:23:28,359 --> 00:23:32,080 Speaker 1: that comment might apply to some of the advertising as well. UM. 426 00:23:32,080 --> 00:23:34,520 Speaker 1: But by and large, I mean there were a handful 427 00:23:34,560 --> 00:23:37,520 Speaker 1: of winners in the in the game. UM. Certainly Budweiser, 428 00:23:37,920 --> 00:23:40,480 Speaker 1: which was the top advertiser in the game UH spent 429 00:23:40,560 --> 00:23:43,760 Speaker 1: about sixty six million dollars to UH to run spots 430 00:23:43,760 --> 00:23:46,760 Speaker 1: in the game promoting It's it's different beer brands and 431 00:23:46,800 --> 00:23:49,639 Speaker 1: many of those. I think we're favorably received by the UM, 432 00:23:50,000 --> 00:23:54,159 Speaker 1: by the by the doing audience, by the corner, and 433 00:23:54,680 --> 00:23:59,360 Speaker 1: extending their Delly Delly franchise. Al Right, so we had 434 00:23:59,440 --> 00:24:02,920 Speaker 1: a delidilly. Although the corn lobby is pretty upset with 435 00:24:02,960 --> 00:24:05,840 Speaker 1: Budweiser today, I believe right that's right, because they were 436 00:24:05,880 --> 00:24:08,760 Speaker 1: touting that there I guess corn syrup free maybe exactly, 437 00:24:08,800 --> 00:24:12,320 Speaker 1: and people didn't realize that wasn't even aware, but most 438 00:24:12,320 --> 00:24:14,640 Speaker 1: people didn't realize that corn syrup was used to brew 439 00:24:14,720 --> 00:24:17,040 Speaker 1: beer in the first place. But you know, I gotta say, 440 00:24:17,160 --> 00:24:20,080 Speaker 1: I was looking actually at some cantorvideos of some of 441 00:24:20,119 --> 00:24:23,360 Speaker 1: your research, and I was really interested in the fact 442 00:24:23,440 --> 00:24:26,320 Speaker 1: that the ads paid for by these brands, the total 443 00:24:26,359 --> 00:24:28,480 Speaker 1: amount of time that they had was the lowest since 444 00:24:28,520 --> 00:24:31,000 Speaker 1: two thousand and ten, with the rest being taken up 445 00:24:31,000 --> 00:24:34,919 Speaker 1: by network promos and NFL promotions, etcetera. Uh, what do 446 00:24:34,960 --> 00:24:38,639 Speaker 1: you make of that? I make that, Um, it's a 447 00:24:38,640 --> 00:24:41,760 Speaker 1: supply and demand marketplace, and the fact that there was 448 00:24:42,080 --> 00:24:45,280 Speaker 1: slightly less paid commercial time to me as an indication 449 00:24:45,400 --> 00:24:49,280 Speaker 1: of a relative lack of demand. Um. I think the 450 00:24:49,320 --> 00:24:52,040 Speaker 1: game was still very well received by advertisers, and many 451 00:24:52,040 --> 00:24:54,439 Speaker 1: of them took advantage. But I think there was maybe 452 00:24:54,440 --> 00:24:56,520 Speaker 1: a swing of a minute and a half to two 453 00:24:56,520 --> 00:24:59,000 Speaker 1: minutes of commercial time that in previous years would have 454 00:24:59,000 --> 00:25:01,399 Speaker 1: been paid at this time time was used by the 455 00:25:01,440 --> 00:25:04,600 Speaker 1: network or by the NFL instead. So, John, we saw 456 00:25:04,680 --> 00:25:07,480 Speaker 1: that CBS charged I think I saw between five point 457 00:25:07,520 --> 00:25:09,920 Speaker 1: one and five point three million for their average thirty 458 00:25:10,000 --> 00:25:13,320 Speaker 1: second spot. That was I think kind of flatish. Maybe 459 00:25:13,400 --> 00:25:17,639 Speaker 1: with the prior year Super Bowl has I think thirty 460 00:25:17,640 --> 00:25:19,600 Speaker 1: second spots that they plateaued they hit a peak, do 461 00:25:19,680 --> 00:25:23,639 Speaker 1: you think, um? I think so. I mean, it certainly 462 00:25:23,680 --> 00:25:26,520 Speaker 1: gets harder to raise prices once you're above that five 463 00:25:26,560 --> 00:25:30,240 Speaker 1: million dollar threshold. The you know, the difficulty that CBS 464 00:25:30,280 --> 00:25:32,080 Speaker 1: had in selling spots in this game, and the fact 465 00:25:32,119 --> 00:25:34,280 Speaker 1: that they were still selling spots within twenty four hours 466 00:25:34,280 --> 00:25:37,600 Speaker 1: of kickoff. UM. Is an indication I think that, you know, 467 00:25:37,720 --> 00:25:41,840 Speaker 1: prices a barrier for for more and more advertisers. UM. 468 00:25:41,920 --> 00:25:43,760 Speaker 1: But at the end of the day, UM, it's still 469 00:25:43,920 --> 00:25:46,720 Speaker 1: a very large it's still a very large reviewing audience. UM. 470 00:25:46,760 --> 00:25:49,879 Speaker 1: And there's still advertisers that will gravitate towards the Super Bowl. 471 00:25:50,280 --> 00:25:52,160 Speaker 1: But I think increasingly we're going to see a fewer 472 00:25:52,200 --> 00:25:55,920 Speaker 1: and few of those small upstart brands that are used 473 00:25:55,920 --> 00:25:57,480 Speaker 1: the Super Bowl to try and break through make a 474 00:25:57,480 --> 00:26:01,320 Speaker 1: big impression. I think they are an endangered SPECEI. You know, John, 475 00:26:02,119 --> 00:26:05,080 Speaker 1: people talk about how this is the lowest scoring super 476 00:26:05,119 --> 00:26:07,640 Speaker 1: Bowl ever and that it also probably had a decline 477 00:26:07,640 --> 00:26:10,600 Speaker 1: in viewership. And I'm just wondering. You know, Paul was 478 00:26:10,680 --> 00:26:14,520 Speaker 1: asking about whether the thirty second spot is kind of 479 00:26:14,560 --> 00:26:17,199 Speaker 1: on its deathbed or have we seen the peak in 480 00:26:17,320 --> 00:26:23,119 Speaker 1: prices for Super Bowl ads? UM. I don't know that 481 00:26:23,160 --> 00:26:25,800 Speaker 1: we've seen a peak. UM. I think certainly if it 482 00:26:25,880 --> 00:26:28,040 Speaker 1: continues to increase in future years, it will be at 483 00:26:28,080 --> 00:26:31,720 Speaker 1: a very low rate. I mean, over the last ten years, 484 00:26:31,720 --> 00:26:34,560 Speaker 1: the price of the Super Bowl ad doubled. UM. We're 485 00:26:34,560 --> 00:26:36,520 Speaker 1: not gonna certainly not going to see that over the 486 00:26:36,520 --> 00:26:41,000 Speaker 1: next ten years. So, John, given that maybe you know, 487 00:26:41,040 --> 00:26:44,200 Speaker 1: these networks have kind of maybe seen some peak pricing, 488 00:26:44,400 --> 00:26:45,879 Speaker 1: or maybe the growth rates will be a little bit 489 00:26:45,880 --> 00:26:47,440 Speaker 1: lower than what they have been over the last ten years, 490 00:26:47,760 --> 00:26:50,560 Speaker 1: is it still worth it for them to be into 491 00:26:50,560 --> 00:26:54,880 Speaker 1: the Super Bowl business. It's definitely worth it for the networks. Yes, Um, 492 00:26:54,920 --> 00:26:58,000 Speaker 1: I mean, it's a tremendous promotional platform for them. Um. 493 00:26:58,000 --> 00:27:00,520 Speaker 1: It does bring in huge revenue. Even if the revenue 494 00:27:00,520 --> 00:27:03,480 Speaker 1: growth slows in future years. There's nothing else out there 495 00:27:03,520 --> 00:27:06,160 Speaker 1: that brings in nearly as much revenue as the super Bowl. 496 00:27:06,359 --> 00:27:08,680 Speaker 1: I mean to put things in perspective, Um, the super 497 00:27:08,720 --> 00:27:12,800 Speaker 1: Bowl brings in as much revenue as many small cable 498 00:27:12,840 --> 00:27:16,080 Speaker 1: networks do in a full year. The super Bowl does 499 00:27:16,119 --> 00:27:19,280 Speaker 1: it in one day. John swall and thank you so 500 00:27:19,359 --> 00:27:21,520 Speaker 1: much for being with us. We really appreciate it. John Swallen, 501 00:27:21,600 --> 00:27:25,280 Speaker 1: chief Research Officer for North America at Cantor Media, talking 502 00:27:25,359 --> 00:27:30,120 Speaker 1: about the Super Bowl and the advertisers that did spend 503 00:27:30,720 --> 00:27:34,520 Speaker 1: millions and millions of dollars getting that exposure. Thanks for 504 00:27:34,560 --> 00:27:36,760 Speaker 1: listening to the Bloomberg P and L podcast. You can 505 00:27:36,760 --> 00:27:39,600 Speaker 1: subscribe and listen to interviews at Apple Podcasts. Or whatever 506 00:27:39,640 --> 00:27:42,679 Speaker 1: podcast platform you prefer. I'm Paul Sweeney. I'm on Twitter 507 00:27:42,720 --> 00:27:45,000 Speaker 1: at pt Sweeney. I'm Lisa A. Bram Woyds. I'm on 508 00:27:45,040 --> 00:27:47,920 Speaker 1: Twitter at Lisa bramwo wits one before the podcast, you 509 00:27:47,920 --> 00:27:50,480 Speaker 1: can always catch us worldwide on Bloomberg Radio