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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside

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Speaker 1: my co host Matt Miller.

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Speaker 2: Every business day, we bring you interviews from CEOs, market pros,

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Speaker 2: and Bloomberg experts, along with essential market moving news.

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Speaker 1: Find the Bloomberg Markets podcast called Apple Podcasts or wherever

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Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast.

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Speaker 1: I want to talk some cars, Matt, some German cars.

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Speaker 2: I would love to, you know, not just German cars.

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Speaker 2: You're referring to the full shory story. They're made everywhere, right,

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Speaker 2: and China is I think the real problem here.

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Speaker 1: All right, let's go to Monica raymut Auto's industry disruption report.

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Speaker 1: I didn't know we had a disruption reporter from Bloomberg

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Speaker 1: News joins us here. So Monica, let's start with Volkswagen.

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Speaker 1: What's the news coming out of our good friends from Germany?

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Speaker 3: Thanks for having me, guys. I mean, the biggest news

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Speaker 3: of the week, I would have to say is the

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Speaker 3: deal with XPANG. Basically, Volkswagen came out yesterday and said

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Speaker 3: that they're investing around seven hundred million dollars in this

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Speaker 3: EV producer in China, and it's really at first for Volkswagen,

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Speaker 3: it's basically sort of them admitting, you know, we can't

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Speaker 3: we can't really keep up on the Chinese market, so

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Speaker 3: we need to partner with with somebody who really has

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Speaker 3: their finger on the pulse of what Chinese consumers want.

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Speaker 2: It's amazing because I mean Volkswagen is usually the biggest

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Speaker 2: or the second biggest car maker in the world. Right,

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Speaker 2: how key is the Chinese market Monica to Volkswagen and

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Speaker 2: is it that important to other manufacturers?

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Speaker 4: Oh?

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Speaker 3: Yeah, I mean, I mean China is absolutely huge. I

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Speaker 3: mean it's it's basically like thirty percent of their revenues

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Speaker 3: and has and has it has been. It has played

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Speaker 3: a key role for them over the past several decades.

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Speaker 3: And I mean Volkswagen was really a star there, the

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Speaker 3: market leader for the past decades because they were banking

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Speaker 3: on that German reputation of engineering ability and you know

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Speaker 3: that Cachet as a as a foreign autumn. But now

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Speaker 3: as the tide has turned and everyone's pivoting towards electric vehicles,

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Speaker 3: you know, the local automakers, the local startups in China

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Speaker 3: are able to leverage what they're able to do when

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Speaker 3: it comes to software and technology and the consumers are

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Speaker 3: are pivoting that way, and Volkswagen has been really slow

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Speaker 3: to sort of pivot in that direction. And they've they've

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Speaker 3: really struggled on software, you know, trying to.

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Speaker 2: Now, Herbert Deese was chased out as CEO, but he

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Speaker 2: was I kept seeing headlines like spending fifty billion dollars

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Speaker 2: to build evs and he had I think ralvald wrote

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Speaker 2: a story back in the day that Deese wanted to

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Speaker 2: start a huge software company within Folkswagen and he was

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Speaker 2: spending almost thirty billion dollars on that.

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Speaker 5: What happened to all those efforts?

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Speaker 3: Oh yeah, Oh, I mean those efforts are still underway.

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Speaker 3: The software unit carried is still alive and kicking a

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Speaker 3: bit barely, not barely, I shouldn't say that, But all

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Speaker 3: of those efforts, they haven't all been for nought.

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Speaker 6: You know.

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Speaker 3: Carriod, the software unit is still creating two of the

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Speaker 3: big coming platforms for Volkswagen, the two big EV platforms,

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Speaker 3: one for the premium brands Portion and Audi, and then

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Speaker 3: one sort of like a catch all platform that can

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Speaker 3: be tailored across all of the ten brands. The problem

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Speaker 3: was Carriod, the software unit just took on too many

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Speaker 3: tasks at the same time, and they were overloaded and

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Speaker 3: they weren't able to deliver non glitchy software, especially when

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Speaker 3: it came to the ID series for Volkswagen. So basically,

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Speaker 3: Luma came in and he said, okay, hold up, we

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Speaker 3: need to clean house a bit, we need to refocus

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Speaker 3: our energies. And he's he's put in a new CEO

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Speaker 3: at Carriod. He's you know, created this five point plan

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Speaker 3: of trying to get things in order. And he's also

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Speaker 3: taken a play a page from the playbook of Portia

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Speaker 3: and sort of saying, you know, listen, compared to my predecessor,

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Speaker 3: I'm not afraid to go into third party partnerships to

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Speaker 3: get the best technology here. And he's really saying, yes,

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Speaker 3: we will stick with our software strategy with carry It.

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Speaker 3: Yes we will continue to deliver the platforms, the EV

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Speaker 3: platforms for Audi, for the for their q Q six,

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Speaker 3: for the Pasha Emacon, but also moving forward, we're not

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Speaker 3: going to be afraid to partner with other people who

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Speaker 3: who have been doing this a little bit longer or

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Speaker 3: have more expertise that we currently don't have.

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Speaker 1: So Monica, just give us the kind of a sense,

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Speaker 1: your sense of how the European automakers in general are

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Speaker 1: are pursuing this this transition to EV. Is there a

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Speaker 1: sense that they're on the cutting edge or they're lagging

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Speaker 1: kind of where are they?

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Speaker 3: Oh man, that's a that's a really tough question. I

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Speaker 3: mean Volkswagen was sort of the first European car maker

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Speaker 3: to you know, jump in feet first, uh, into the

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Speaker 3: into the EV uh you know push. I mean that

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Speaker 3: all came as a result of the diesel scandal and

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Speaker 3: they were sort of, you know, nudged a bit in

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Speaker 3: that direction, right, but they've really been you know, they

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Speaker 3: sort of started out, you know, they were the first

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Speaker 3: ones to move forward, and the you had Mercedes and

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Speaker 3: BMW sort of moving forward on that. The difference I

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Speaker 3: think there is you have Mercedes and BMW that are

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Speaker 3: more in the premium and luxury market, right, and so

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Speaker 3: they're able to It's the same thing with Portia. They're

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Speaker 3: still able to leverage their their IC sales, their combustion

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Speaker 3: engine sales as and use that to fund partially pushed

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Speaker 3: into evs.

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Speaker 7: Apparently, yess.

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Speaker 2: Indeed, Monica are the other car makers as active in China.

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Speaker 2: I remember seeing some stories about some of the Stilantis brands,

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Speaker 2: you know, pulling out. Now, maybe it just wasn't a

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Speaker 2: big enough market for those individual brands, but surely Tavares

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Speaker 2: has to be worried if it's this important to BLOOMA.

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Speaker 3: Yes, I mean some, I mean some car makers are

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Speaker 3: more active in China than other Stalantis. I think has

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Speaker 3: has your right, has moved away from China and is

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Speaker 3: focusing his efforts elsewhere. I think the concern for Tavares

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Speaker 3: more is what do the Chinese car makers mean for

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Speaker 3: Europe when they come over here? Because the Chinese makers

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Speaker 3: are focusing more on you know, sort of these small, smaller,

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Speaker 3: smaller vehicles that are maybe more affordable, and if the

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Speaker 3: European car makers can't focus on that segment, there's a

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Speaker 3: real fear among some analysts and automakers that the Chinese

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Speaker 3: makers could capture a segment of of the of the

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Speaker 3: market that the European makers are not focusing on. And

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Speaker 3: so that's why, you know, there's this drum beat, at

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Speaker 3: least from Tavares that we need to make these vehicles

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Speaker 3: more affordable. We need to get regulations, we need to

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Speaker 3: get you know, government policies on board in Europe to

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Speaker 3: make the you know, these cars more affordable in Europe.

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Speaker 3: But in terms of how other carmakers are doing in China,

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Speaker 3: I mean it's really Folks was at the top of

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Speaker 3: the list for for a long time. But you have

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Speaker 3: Uid that's, you know, really at the top now when

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Speaker 3: it comes to EV sales, and then you have Tesla

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Speaker 3: who can't certainly can't forgotten. And you know, those are

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Speaker 3: the two big players, at least to my mind.

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Speaker 1: All right, Monica, great stuff, great catching up with you,

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Speaker 1: Monica Raymuland, Auto's industry disruption reporter for Bloomberg News.

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Speaker 2: Joining us how to Berlin, joining us out of Berlin,

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Speaker 2: right in my old office, you're old.

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Speaker 5: Beat right, yeah, exactly right. Where where's your car these days?

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Speaker 1: Are your challenger?

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Speaker 8: Do we know where it is?

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Speaker 2: Well, supposedly it's scheduled for production in uh in Canada, Okay,

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Speaker 2: But they haven't sent me the actual production confirmation yet,

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Speaker 2: so I'm still waiting. And in the meantime, I'm looking

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Speaker 2: across like Auto Trader and maybe I'm thinking maybe I

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Speaker 2: should go for bright orange instead of dark green.

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Speaker 4: I'm not sure.

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Speaker 1: Yeah, so you haven't selected that even that yet?

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Speaker 6: All right?

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Speaker 1: It's just supply chain still an issue in the auto industry.

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Speaker 1: Matt's been waiting for this challenger with this scat pack

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Speaker 1: all year logic for like a year. I don't know

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Speaker 1: what's going on there.

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Speaker 6: You're listening to the team. Can's a live program Bloomberg

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Speaker 6: Markets weekdays at ten am Eastern on Bloomberg dot Com,

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Speaker 6: the iHeartRadio app and the Bloomberg Business app, or listening

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Speaker 6: on demand where however you get your podcast.

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Speaker 1: Matt Miller, Paul Sweeney here in our Bloomberg Interactive Brokers studio,

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Speaker 1: and I forgot to mention we are simulcasting on YouTube

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Speaker 1: so people see me, so people can see the MAT's

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Speaker 1: actually here. He's back after a little hiatus in the afternoon.

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Speaker 1: So you can check us out on YouTube, just search

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Speaker 1: Bloomberg Global News. All right, this has been in addition

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Speaker 1: to just a week of I think one hundred and

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Speaker 1: sixty five of the S and P five hundred companies

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Speaker 1: reporting earnings next week, and I think one hundred and

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Speaker 1: seventy two next week, So super busy in the earning season.

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Speaker 1: But we've had a lot of central bank movement over

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Speaker 1: the past couple of days, including the Fed yesterday and

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Speaker 1: the European Central Bank today. So let's kind of break

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Speaker 1: it all down and see where we are. Anika Gupta

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Speaker 1: joins us. She is the director of Macroeconomic Research, Equities

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Speaker 1: and Commodities for Wisdom treat She joins us via zoom. So, Anika, boy,

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Speaker 1: what do you make of kind of what we've seen

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Speaker 1: coming out of these central banks over the past twenty

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Speaker 1: four hours.

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Speaker 9: Yeah, it's been really interesting, Paul. You know, at one

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Speaker 9: hund we have both of these central banks, the FED

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Speaker 9: as well as the ECB. Uh, you know, keeping their

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Speaker 9: optionality open. I think they they they've they've tried to,

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Speaker 9: you know, indicate that they have they have covered quite

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Speaker 9: a bit of ground on the inflation front. The only

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Speaker 9: difference between the FED and the ECB is the FED

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Speaker 9: is facing an economy which is a lot more resilient

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Speaker 9: and stronger based on the consumer strength, whereas in the

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Speaker 9: Eurozone the ECB is faced with the situation where they

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Speaker 9: have made a lot of progress on inflation. Yet uh,

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Speaker 9: you know, the recent indicators are pointing to growth slowing down,

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Speaker 9: so we are headed for a period of stagnation before

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Speaker 9: we actually get that rebound back into a growth phase.

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Speaker 9: So I think the ECB gave out a lot today

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Speaker 9: at the at the at the meeting where you know,

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Speaker 9: some of the some of the statements that were made

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Speaker 9: when when President la guard was asked, is there still

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Speaker 9: more ground to cover? And you know, she clearly said

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Speaker 9: at this point she wouldn't say so. And I think

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Speaker 9: that that indicates this looks likely to be the last hike.

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Speaker 9: But clearly they've kept that optionality open where you know,

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Speaker 9: there's so much additional data to come out until the

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Speaker 9: September meeting that they you know, anything could influence their decision.

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Speaker 9: But as of now, I would say for both central banks,

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Speaker 9: it looks like this is the last one in their

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Speaker 9: tightening cycle.

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Speaker 2: Well, you know, Chair and Powell referenced the data points

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Speaker 2: that he was looking forward to between now and September meeting.

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Speaker 5: There are many.

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Speaker 2: We got some this morning though, that were pretty darn impressive.

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Speaker 2: GDP came out at two point four percent for the

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Speaker 2: second quarter. We were looking for one point eight percent

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Speaker 2: in our survey of economists. Personal consumption consumer spending also

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Speaker 2: higher than anticipated one point six percent, And you got

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Speaker 2: the core PCE, which is the Fed's preferred gauge of

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Speaker 2: inflation and not nearly as bad as we expected at

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Speaker 2: three point eight percent rather than four percent. So this

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Speaker 2: looks pretty darn goldilocks to me. How do you think

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Speaker 2: it looks to Chair Powell?

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Speaker 9: Well, you're absolutely right, Matt. You know, I think we've

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Speaker 9: even seen the IMF echo similar a similar viewpoint where

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Speaker 9: the US has been and is proving to be a

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Speaker 9: lot more resilient than investors expected at the at the

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Speaker 9: start of the year. And I think, you know, given

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Speaker 9: given the fact that the US economy has been that brasilient,

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Speaker 9: it does open a goldilocks environment because we have seen

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Speaker 9: progress made on inflation, and given the fact that the

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Speaker 9: growth has been quite resilient, it should put this fit

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Speaker 9: in a situation where they could hold rates at current levels,

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Speaker 9: and then that expectation of them, you know, beginning to

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Speaker 9: cut just gets postponed further down the line.

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Speaker 1: So Anka, you're based in life. And then I believe

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Speaker 1: right around one King William Street, which is just right

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Speaker 1: around the corner from Bloomberg's European headquarters at Queen Victoria Street,

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Speaker 1: talk to us about inflation, inflation in the UK, inflation

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Speaker 1: in across Europe. Christine Leguard called that out as still

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Speaker 1: higher than she would like to say. Why is inflation

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Speaker 1: across Europe maybe a little bit stickier than maybe what

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Speaker 1: we're seeing here in the US.

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Speaker 7: So I think what seems to.

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Speaker 9: Be quite different in the UK is largely due to

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Speaker 9: more structural factors. I think Brexit in a big way

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Speaker 9: has contributed to inflation being a lot stickier. That being said,

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Speaker 9: the most recent inflation report has shown you know, a

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Speaker 9: small sliver of cooling. But I think Gregsity has a

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Speaker 9: very important role to play as to why the UK

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Speaker 9: seems to be the laggard in actually bringing down that

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Speaker 9: inflation side. But for the EU Zone, you know, what

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Speaker 9: seems to be holding inflation up quite strong has been

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Speaker 9: the strength in the labor of MAK. Wages have been rising,

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Speaker 9: and I think that that has essentially, from an income standpoint,

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Speaker 9: helped your your your zone consumer you know, actually have

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Speaker 9: a better and a higher purchasing power. So you've got

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Speaker 9: wages rising, You've got inflation beginning to come down, be

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Speaker 9: it headline inflation feeding into lower core inflation, and that

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Speaker 9: is just you know, from an income standpoint, making the

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Speaker 9: uarsone consumer a lot, putting them in a much better position.

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Speaker 9: So I think those two factors really stand out, and

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Speaker 9: that's that's one of the reasons why our fight inflation

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Speaker 9: has been a bit of a laggart compared to the US.

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Speaker 2: So you were talking about how rate hikes are going

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Speaker 2: to get pushed back, but I noticed on the dot

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Speaker 2: plot that we're expecting, at least the FED itself is

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Speaker 2: forecasting a full percentage point of rate cuts over the

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Speaker 2: next year. Why do you think that the Fed's forecast

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Speaker 2: differ so much from what Jerome Powell, you know, we'll

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Speaker 2: say at any given press conference.

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Speaker 9: Well, I think it's it's, you know, purely based on

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Speaker 9: the fact that the economy has been fairly resilient. There

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Speaker 9: are also risks lurking around. You know, we've seen commodity

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Speaker 9: prices over the past few weeks actually rebound. We've seen uh,

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Speaker 9: you know, the escalation between Russia and Ukraine actually increase, uh,

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Speaker 9: you know, with Russia pulling out of the Black Sea

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Speaker 9: grain deal, and so as a consequence, we've seen agricultural

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Speaker 9: prices within the commodity spectrum also rise. U and I

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Speaker 9: think central bankers have taken note of that that these

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Speaker 9: these risks are there at the horizon and for the US,

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Speaker 9: it's quite important because you know, the we're seeing growth

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Speaker 9: quite resilient. For the Eurozone, we are seeing growth being

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Speaker 9: quite tepid. You know, forward looking indicators are saying there's

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Speaker 9: weakness ahead. So I think the ECB is right to

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Speaker 9: say that they you know, they they they've covered quite

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Speaker 9: a bit of ground. There isn't all that more left

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Speaker 9: to do so at this point in time. But for

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Speaker 9: the US, you know, as as growth seems to be

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Speaker 9: a lot stronger and the consumers appears to be a

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Speaker 9: lot more resilient, and you're also seeing a few inflationary

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Speaker 9: concerns rising on the horizon, there's always the risk that

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Speaker 9: you know, they've go on me just does better than expected,

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Speaker 9: and that gives less need for power to actually have

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Speaker 9: to invene intervene.

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Speaker 2: With k What does that mean for the FX picture?

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Speaker 2: I mean, we had seen the dollar hold strong for

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Speaker 2: so long this year against all you know, predictions, and

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Speaker 2: then it came kind of the Bloomberg Dollar Index came

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Speaker 2: tumbling down a couple of weeks ago. Now it's on

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Speaker 2: a steady climb higher. You know, in the euros trading

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Speaker 2: it less than a dollar ten right. The pound is

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Speaker 2: trading it less than a dollar thirty. What do you

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Speaker 2: think the growth differential means for the currencies?

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Speaker 9: It has, It has a very big impact. So what

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Speaker 9: we've seen is the dollar response to two important factors,

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Speaker 9: one being the growth of differential and the second being

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Speaker 9: relative interest Now. Clearly, until now, the dollar was weakening

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Speaker 9: because interest rates and the rest of the developed market

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Speaker 9: world was actually rising and interest rates expectations for the

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Speaker 9: FED were actually declining, so there were expectations for them

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Speaker 9: to pause or cut. But the way things are evolving

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Speaker 9: with the strength of the US economy, you know, we're

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Speaker 9: now seeing relative interest rates move in favor of can

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Speaker 9: continue to remove in favor of developed developed market economies

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Speaker 9: as opposed to the US. And at the same time,

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Speaker 9: we're also seeing growth prospects in UK and Eurozone actually

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Speaker 9: deteriorate compared to the US, and hence that seems to

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Speaker 9: be the dominant factor in play right now, which is

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Speaker 9: why the dollar has been strengthening.

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Speaker 1: All right, Anitka, thank you so much for joining us.

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Speaker 1: Really appreciate getting your perspective. Anika Gutta. She is the

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Speaker 1: director of me Acroeconomic Research for the Equities and Commodities

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Speaker 1: Business at Wisdom Treaty is based in London. Again, we

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Speaker 1: had the ECB this morning, fed yesterday. Rate increases. Yes,

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Speaker 1: the market's kind of reading into it that they may

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Speaker 1: be perhaps the last of the rate increases, at least

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Speaker 1: for now, when we're seeing some reaction in the market's

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Speaker 1: s and P five hundred up a half one percent.

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Speaker 6: You're listening to the tape cans our live program, Bloomberg

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Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the

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Speaker 6: tune in app, Bloomberg dot Com, and the Bloomberg Business App.

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Speaker 6: You can also listen live on Amazon Alexa from our

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Speaker 6: flagship New York station, Just say Alexa Play Bloomberg eleven thirty.

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Speaker 10: I'd like to begin with your newest rules that you

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Speaker 10: just unveiled yesterday, putting restrictions on brokerages and money managers

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Speaker 10: and their use of AI to interact with clients. What

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Speaker 10: is your primary concern with the adoption of this technology

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Speaker 10: that you're trying to address?

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Speaker 11: First, Kaylee, it's good to be with you, But talking

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Speaker 11: about this, I think that predict data analytics, including artificial intelligence,

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Speaker 11: is the transformative technology of our times, and every bit

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Speaker 11: is transformatives to the Internet or mass production of the

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Speaker 11: automobile one hundred years ago.

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Speaker 4: Now, what are we trying to address?

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Speaker 11: When an investment advisor or a broker works with you

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Speaker 11: as an investor, they're not supposed to put their interest,

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Speaker 11: the advisor's interest ahead of yours, Kayley, as an investor.

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Speaker 11: And so what we're trying to do is make sure

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Speaker 11: that the technology aligns with that standard, that the technology

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Speaker 11: that can predict about each and every one of us

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Speaker 11: so much about how we might react to a little

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Speaker 11: behavioral prompt or a little knowledge how we might react.

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Speaker 11: That they're putting our interest as an investor in the

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Speaker 11: right place and not putting themselves ahead of it.

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Speaker 10: And of course the AI move wasn't the only one

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Speaker 10: you made yesterday. You also just approved a plan to

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Speaker 10: require companies to disclose cyber breaches within a four business

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Speaker 10: day timeline.

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Speaker 12: Why is that the appropriate time break?

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Speaker 11: Well, if I could just give a little bit more,

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Speaker 11: it's about material.

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Speaker 4: Incidents.

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Speaker 11: So if a company lost a factory and that factory

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Speaker 11: is wiped out, and that factory is material to its operations,

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Speaker 11: let's say because it's lost to a hurricane. Investors need

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Speaker 11: to know when they're buying and selling the stock. In

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Speaker 11: a similar way, if you had a cyber incident that

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Speaker 11: management determines as material you know, hundreds of millions of

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Speaker 11: files lost or something or compromised.

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Speaker 4: Investors benefit from that disclosure.

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Speaker 10: But giving business is just four days to disclose that.

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Speaker 11: That's what we have in our rules today currently four

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Speaker 11: business days if you have, like if that factory you know,

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Speaker 11: was wiped out by a hurricane, to put out the

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Speaker 11: material information.

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Speaker 4: And so that's consistent with rules on the books.

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Speaker 11: And by the way, many companies have been making such disclosures,

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Speaker 11: some haven't. It's been fragmented and we thought it was

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Speaker 11: important to bring some consistency to it around these material events.

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Speaker 13: Mister chaired, Danny Berger here in London, really wonderful to

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Speaker 13: speak with you today now on some of your proposals

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Speaker 13: when it comes to equity market structural reforms. You joined

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Speaker 13: Bloomberg TV back in March. You said, of market participants,

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Speaker 13: give us your best advice, tell us what you think.

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Speaker 7: What did you get.

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Speaker 13: What was the best advice you got?

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Speaker 11: Well, we got in terms of equity market structure, thousands

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Speaker 11: of comments. So I would say that what we're about

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Speaker 11: at the SEC is trying to drive greater efficiency and

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Speaker 11: competition in those markets, so when you send an order

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Speaker 11: into a broker, that you feel that you're getting best

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Speaker 11: execution in that order, and also that the markets themselves

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Speaker 11: are competitive. So one of our rules was about sort

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Speaker 11: of leveling the playing field between the lit markets, the

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Speaker 11: so called New York Stock Exchange and NASDAK and so forth,

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Speaker 11: and the wholesalers are dark market, which at times the

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Speaker 11: dark part of the markets are between a third and

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Speaker 11: a half of the market. So it's trying to bring

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Speaker 11: some level the playing field and ensure that investors are

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Speaker 11: getting best execution in these markets.

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Speaker 13: What about in terms of the feedback you got, are

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Speaker 13: you taking any of that on board? Would you change

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Speaker 13: anything considering what you've heard so far?

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Speaker 4: Well, we do that as a regular basis.

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Speaker 11: When we make a proposal, we put it out to

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Speaker 11: public comment and get feedback. And we put out four

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Speaker 11: separate proposals for different aspects in the markets, and I

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Speaker 11: think we've gotten four to six thousand comments on each

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Speaker 11: of them. So and we naturally consider it and the

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Speaker 11: staff makes recommendations about adjustments.

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Speaker 10: Okay, I'd like to discuss another proposed rulemaking that has

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Speaker 10: received a certain degree of feedback your climate risk disclosures,

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Speaker 10: specifically as it relates to Scope three emissions. What conversations

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Speaker 10: are you having around Scope three in particular.

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Speaker 11: Well, we've heard a lot from the public on this,

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Speaker 11: but to set the stage, companies today are making disclosures

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Speaker 11: around climate risk. In fact, well over half of the

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Speaker 11: top thousand or so companies currently make climate risk disclosures,

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Speaker 11: including greenhouse gas emission disclosure. So we're trying to bring

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Speaker 11: consistency to that and yes for investors that they can

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Speaker 11: compare comparability for that. You asked about one part of

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Speaker 11: greenhouse gas missions, so called Scope three, which is about

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Speaker 11: the supply chain and where a lot of the concern lines,

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Speaker 11: and so we've heard from a lot of commenters about that,

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Speaker 11: both from issuers and investors.

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Speaker 4: We understood when we made a proposal.

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Speaker 11: That this was not as well developed so called disclosures

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Speaker 11: around supply chain emissions, and so we're taking that into consideration.

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Speaker 11: And as I just chatted with your colleague, the staff

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Speaker 11: considers what to recommend upon adoption and whether to make adjustments.

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Speaker 10: So we could see you change there potentially.

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Speaker 11: Well, just as in the equity markets that I talked about,

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Speaker 11: we do take these comments seriously, Kayley. It's a really

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Speaker 11: rigorous exercise in climate. We got sixteen thousand comments.

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Speaker 4: So it's a lot to sort of sort through. But

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Speaker 4: the Scope three issue is one that we've heard significant comments.

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Speaker 11: Interestingly, we've heard from I think forty eight or forty

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Speaker 11: nine of the state farm.

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Speaker 4: Bureaus literally about well, what is this effect? And we

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Speaker 4: only oversee.

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Speaker 11: The public companies, the six or seven thousand public companies.

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Speaker 4: That's it.

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Speaker 11: We are a disclosure based agency. I often say we're

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Speaker 11: merit neutral.

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Speaker 4: We are not. You know, we're not.

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Speaker 11: This disclosure is about something already happening between investors and issuers,

438
00:24:34,000 --> 00:24:38,119
Speaker 11: and it's an important thing to bring consistency. It's not

439
00:24:38,280 --> 00:24:42,880
Speaker 11: about those, you know, those farmers and ranchers who thoughtfully

440
00:24:42,960 --> 00:24:43,359
Speaker 11: wrote us.

441
00:24:44,000 --> 00:24:44,600
Speaker 4: So we've heard.

442
00:24:45,119 --> 00:24:47,320
Speaker 10: Okay, I'd like to move to a different topic which

443
00:24:47,600 --> 00:24:51,119
Speaker 10: has gotten a lot of attention lately, Crypto, specifically a

444
00:24:51,240 --> 00:24:53,200
Speaker 10: ruling that was made in the Ripple case that XRP

445
00:24:54,080 --> 00:24:57,320
Speaker 10: is only a security when sold to institutional investors, not

446
00:24:57,520 --> 00:25:01,280
Speaker 10: so with retail investors. I know you've previously said you

447
00:25:01,359 --> 00:25:04,080
Speaker 10: were disappointed by that ruling. The SEC has also said

448
00:25:04,520 --> 00:25:07,520
Speaker 10: that it intends to seek further review. So does that

449
00:25:07,640 --> 00:25:09,840
Speaker 10: mean you are going to appeal it? Can you elaborate

450
00:25:09,920 --> 00:25:11,600
Speaker 10: on your thoughts around that ruling.

451
00:25:11,880 --> 00:25:17,080
Speaker 11: Kayleie, great question, But the Commission, I'm one of five commissioners.

452
00:25:17,440 --> 00:25:21,399
Speaker 4: The Commission has not acted on that, and.

453
00:25:22,920 --> 00:25:28,560
Speaker 11: If the staff makes a recommendation, we'll have a discussion

454
00:25:28,640 --> 00:25:29,800
Speaker 11: of it and we'll take it up then.

455
00:25:29,880 --> 00:25:31,439
Speaker 4: But I don't really have anything more on.

456
00:25:31,560 --> 00:25:32,639
Speaker 6: You for a you for that.

457
00:25:33,800 --> 00:25:36,920
Speaker 13: In the meantime, as we wait for this, what does

458
00:25:36,960 --> 00:25:40,400
Speaker 13: it mean for your efforts around crypto, for your efforts

459
00:25:40,600 --> 00:25:43,000
Speaker 13: to try to protect the consumer in these areas?

460
00:25:43,040 --> 00:25:44,080
Speaker 7: Does it complicate it?

461
00:25:46,240 --> 00:25:55,000
Speaker 11: Look this field of crypto investing, a lot of investors

462
00:25:56,240 --> 00:26:01,080
Speaker 11: should be aware it's not only a highly speculative asset class,

463
00:26:01,760 --> 00:26:06,879
Speaker 11: it's also one that they currently should not assume that

464
00:26:07,000 --> 00:26:11,280
Speaker 11: they're getting the protections of the securities laws, even though

465
00:26:11,359 --> 00:26:14,800
Speaker 11: the securities laws apply to many of those tokens without

466
00:26:14,840 --> 00:26:20,399
Speaker 11: prejudging anyone, but you as investors are not getting the.

467
00:26:20,520 --> 00:26:23,080
Speaker 4: Full, fair and truthful disclosure.

468
00:26:23,840 --> 00:26:27,800
Speaker 11: And the platforms the intermediaries are doing things that we

469
00:26:27,880 --> 00:26:32,159
Speaker 11: would never in a day allow or think the New

470
00:26:32,240 --> 00:26:36,960
Speaker 11: York Stock Exchange or NASDAQ would do. The platforms often

471
00:26:37,440 --> 00:26:40,720
Speaker 11: are co mingling and trading against you and have market

472
00:26:40,800 --> 00:26:44,880
Speaker 11: makers that are on the other side of your trades,

473
00:26:45,119 --> 00:26:47,479
Speaker 11: and we don't allow that in the rest of our

474
00:26:47,520 --> 00:26:52,920
Speaker 11: securities markets and the securities laws are there to protect you.

475
00:26:53,680 --> 00:26:55,040
Speaker 4: And that's right now.

476
00:26:56,240 --> 00:26:59,840
Speaker 11: This is a field rife with fraud, rife with huckster

477
00:27:01,440 --> 00:27:03,919
Speaker 11: and they're good faith actors as well, but there are

478
00:27:04,280 --> 00:27:05,680
Speaker 11: far too many that aren't.

479
00:27:06,520 --> 00:27:10,280
Speaker 13: And of course you've brought cases against crypto exchanges on

480
00:27:10,440 --> 00:27:13,520
Speaker 13: this point, But do you need to change tactic? Does

481
00:27:13,600 --> 00:27:17,040
Speaker 13: it change anything for those cases? Again this XRP ruling.

482
00:27:18,520 --> 00:27:22,520
Speaker 11: Again, I'm not going to go into any one ruling,

483
00:27:23,200 --> 00:27:26,000
Speaker 11: but I think that the securities laws are clear and

484
00:27:26,119 --> 00:27:31,440
Speaker 11: if you're if the public is investing in your project

485
00:27:31,560 --> 00:27:37,400
Speaker 11: because they're anticipating profits based upon the efforts of that project,

486
00:27:37,480 --> 00:27:42,520
Speaker 11: or there's entrepreneurs congress painted with a broad brush, and

487
00:27:43,880 --> 00:27:45,920
Speaker 11: I would ask you this, It's like, when you look

488
00:27:45,960 --> 00:27:48,439
Speaker 11: at a token, you can find a website, you can

489
00:27:48,520 --> 00:27:52,120
Speaker 11: find a CEO, you can find a Twitter or x feed,

490
00:27:52,320 --> 00:27:57,879
Speaker 11: whatever it's called these days. And there are entrepreneurs behind

491
00:27:58,040 --> 00:28:01,399
Speaker 11: many of these projects. Without again prejudging any one of

492
00:28:01,440 --> 00:28:02,919
Speaker 11: them Elsewhere in.

493
00:28:02,960 --> 00:28:05,360
Speaker 10: The crypto space. I'd like to discuss the spot ETF

494
00:28:05,520 --> 00:28:09,000
Speaker 10: because we have seen a wave of filings recently recently

495
00:28:09,040 --> 00:28:12,199
Speaker 10: from Blackrock and others trying to finally achieve this one

496
00:28:12,240 --> 00:28:15,000
Speaker 10: has never been approved in the US, just a futures ETF.

497
00:28:15,680 --> 00:28:18,400
Speaker 10: It seems like everyone thinks there has been a tone shift,

498
00:28:18,440 --> 00:28:21,119
Speaker 10: that something is different this time around. What do you

499
00:28:21,280 --> 00:28:23,760
Speaker 10: make of that wave of recent filings. Has anything actually

500
00:28:23,880 --> 00:28:25,080
Speaker 10: changed for the sec.

501
00:28:25,200 --> 00:28:27,000
Speaker 4: Kayleye, Probably won't surprise you.

502
00:28:27,440 --> 00:28:30,400
Speaker 11: Those filings do ultimately come up to a five member commission,

503
00:28:30,480 --> 00:28:34,920
Speaker 11: so I can't prejudge any filing. But back to your colleague,

504
00:28:34,920 --> 00:28:40,000
Speaker 11: as I said, this is a field that there's a

505
00:28:40,120 --> 00:28:46,800
Speaker 11: lot of non compliance in this field, and that the

506
00:28:46,960 --> 00:28:51,840
Speaker 11: platforms themselves where trading is occurring of various crypto tokens.

507
00:28:54,840 --> 00:28:58,200
Speaker 11: Though some of it comes under the securities laws, currently

508
00:28:59,640 --> 00:29:03,680
Speaker 11: they're not necessarily compliant with those time test of protections

509
00:29:03,680 --> 00:29:05,000
Speaker 11: against fraud and manipulation.

510
00:29:05,600 --> 00:29:08,160
Speaker 10: Okay, on the subject of securities laws, which obviously is

511
00:29:08,280 --> 00:29:12,200
Speaker 10: your purview at the SEC. Just yesterday House Financial Services

512
00:29:12,240 --> 00:29:15,720
Speaker 10: Committee passed through committee legislation on crypto market structure that

513
00:29:15,760 --> 00:29:18,760
Speaker 10: would actually give more authority in regulating this space. To

514
00:29:18,920 --> 00:29:21,280
Speaker 10: the CFTC still has a long way to go if

515
00:29:21,320 --> 00:29:22,120
Speaker 10: it were to become law.

516
00:29:22,160 --> 00:29:24,000
Speaker 12: But what is your thought on that legislation.

517
00:29:25,360 --> 00:29:29,160
Speaker 4: I sort of share my thoughts directly with members on

518
00:29:29,240 --> 00:29:30,120
Speaker 4: the way I told them.

519
00:29:30,440 --> 00:29:33,560
Speaker 11: I understand your question, Kayley, but I think that those

520
00:29:33,640 --> 00:29:35,760
Speaker 11: members on the hill would appreciate if I continue to

521
00:29:35,800 --> 00:29:37,240
Speaker 11: share my thoughts directly with them.

522
00:29:39,400 --> 00:29:42,680
Speaker 13: Not too dissimilar, mister Tara, I wonder if there's some

523
00:29:42,920 --> 00:29:46,480
Speaker 13: degree that you would want a wider scope when it

524
00:29:46,600 --> 00:29:49,360
Speaker 13: comes handing down fines to batter actors. Do you think

525
00:29:49,400 --> 00:29:51,920
Speaker 13: it would be helpful to have higher finds again in

526
00:29:52,040 --> 00:29:54,320
Speaker 13: order to discourage certain behaviors.

527
00:29:56,480 --> 00:29:59,080
Speaker 11: I would say this, we have good tools at the

528
00:29:59,240 --> 00:30:04,680
Speaker 11: SEC around not just penalties, but also what's called discoragement,

529
00:30:05,520 --> 00:30:09,360
Speaker 11: to give back ill gotten gains and so forth. But

530
00:30:09,720 --> 00:30:15,000
Speaker 11: if you're asking whether we could use more authorities, I

531
00:30:15,080 --> 00:30:18,200
Speaker 11: would say, we need more cops on the beat, We

532
00:30:18,320 --> 00:30:21,720
Speaker 11: need more resources. Our agency is just the size we

533
00:30:21,840 --> 00:30:25,800
Speaker 11: were in twenty sixteen. We actually shrank, We've kind of

534
00:30:25,840 --> 00:30:29,720
Speaker 11: come back, and yet the markets have grown so significantly

535
00:30:30,240 --> 00:30:31,240
Speaker 11: in those seven years.

536
00:30:32,280 --> 00:30:34,280
Speaker 10: And finally, as you say you need more resources, I

537
00:30:34,360 --> 00:30:36,840
Speaker 10: wonder how you feel about the ability of you to

538
00:30:36,920 --> 00:30:39,200
Speaker 10: get those things from this Congress, in particular, when you

539
00:30:39,320 --> 00:30:41,480
Speaker 10: have certain members of Congress who have said things like

540
00:30:41,600 --> 00:30:47,040
Speaker 10: introducing legislation to remove you as chair, referring to tyrannical chairmen,

541
00:30:47,200 --> 00:30:49,880
Speaker 10: including the current one, Does it mean it more difficult

542
00:30:50,240 --> 00:30:52,200
Speaker 10: to do your job when there's that kind of political

543
00:30:52,600 --> 00:30:55,400
Speaker 10: rhetoric out there in your efforts to protect investors.

544
00:30:56,720 --> 00:31:01,600
Speaker 11: We work closely with Congress and individual members, and I

545
00:31:01,720 --> 00:31:05,200
Speaker 11: look forward to those public debates. I think that we're

546
00:31:05,280 --> 00:31:10,600
Speaker 11: really an important agency. The capital markets really wouldn't work

547
00:31:10,680 --> 00:31:13,560
Speaker 11: without cops on the beat and rules of the road.

548
00:31:14,880 --> 00:31:19,120
Speaker 11: Just you know, think if you're watching soccer matches, if

549
00:31:19,120 --> 00:31:21,120
Speaker 11: there were no refs on the field, what would that

550
00:31:21,280 --> 00:31:24,640
Speaker 11: soccer match look like? It would look first more like rugby,

551
00:31:24,880 --> 00:31:26,840
Speaker 11: and then after a while it would really look worse

552
00:31:27,280 --> 00:31:30,760
Speaker 11: and fans wouldn't come to the field anymore or well

553
00:31:31,080 --> 00:31:37,240
Speaker 11: most so, I really do think that it's important to

554
00:31:37,360 --> 00:31:42,320
Speaker 11: have this agency, and we're part of these well regulated markets.

555
00:31:44,120 --> 00:31:47,480
Speaker 6: You're listening to the Team Ken's a live program Bloomberg

556
00:31:47,560 --> 00:31:50,760
Speaker 6: Markets weekdays at ten am Eastern on Bloomberg dot com,

557
00:31:51,000 --> 00:31:54,120
Speaker 6: the iHeartRadio app, and the Bloomberg Business app or listen

558
00:31:54,240 --> 00:31:56,360
Speaker 6: on demand wherever you get your podcasts.

559
00:31:58,960 --> 00:32:02,120
Speaker 1: We're talking about A in the context of financial services,

560
00:32:02,160 --> 00:32:05,400
Speaker 1: businesses and markets. It's also a big deal basically for

561
00:32:05,480 --> 00:32:08,280
Speaker 1: every other industry out there. And what does it mean

562
00:32:08,400 --> 00:32:11,000
Speaker 1: for a lot of these industries and people that work

563
00:32:11,040 --> 00:32:14,520
Speaker 1: in the industries, think Hollywood writers. That's come up in

564
00:32:14,560 --> 00:32:17,240
Speaker 1: their discussion. Ronie A. Settholm joins us. She is a

565
00:32:17,280 --> 00:32:19,880
Speaker 1: managing partner of set Home Law Group. She joins US

566
00:32:19,920 --> 00:32:22,240
Speaker 1: life here in our Bloomberg Interactive Broker studio. Thank you

567
00:32:22,280 --> 00:32:24,960
Speaker 1: so much for joining us. So what are some of

568
00:32:25,040 --> 00:32:29,680
Speaker 1: the early thoughts within the legal community about AI. I

569
00:32:29,720 --> 00:32:30,840
Speaker 1: don't know where this thing goes.

570
00:32:31,600 --> 00:32:33,040
Speaker 7: Thank you for having me well.

571
00:32:33,120 --> 00:32:35,840
Speaker 14: AI is definitely a hotbed topic and there are so

572
00:32:36,040 --> 00:32:37,760
Speaker 14: many issues to discuss.

573
00:32:37,800 --> 00:32:38,480
Speaker 7: We don't have time.

574
00:32:38,560 --> 00:32:41,120
Speaker 14: We can speak for days. But you know, one thing

575
00:32:41,200 --> 00:32:44,400
Speaker 14: that I'm concerned about as an attorney is the use

576
00:32:44,440 --> 00:32:47,080
Speaker 14: of AI. While I don't think there's going to be

577
00:32:47,160 --> 00:32:51,320
Speaker 14: a nefarious use in this labor dispute, as the technology

578
00:32:51,440 --> 00:32:55,560
Speaker 14: becomes more prevalent and accessible, who knows what anyone will

579
00:32:55,640 --> 00:32:59,600
Speaker 14: actually be saying. Because once I've captured you know your

580
00:32:59,720 --> 00:33:03,440
Speaker 14: image and your tone using AI, I can manipulate it

581
00:33:03,520 --> 00:33:06,760
Speaker 14: to say anything, and so this is going to raise

582
00:33:06,760 --> 00:33:08,000
Speaker 14: a lot of eyebrows.

583
00:33:07,960 --> 00:33:09,680
Speaker 5: And it's going to raise I guess a lot of.

584
00:33:11,560 --> 00:33:15,320
Speaker 2: Lawsuits, right, I mean yes, for the legal industry, this

585
00:33:15,440 --> 00:33:16,680
Speaker 2: is going to be a big money maker.

586
00:33:16,960 --> 00:33:18,640
Speaker 7: It very well can be.

587
00:33:19,120 --> 00:33:22,320
Speaker 14: You know, another legal issue that we're talking about is

588
00:33:23,160 --> 00:33:27,160
Speaker 14: what kind of intellectual property rights exist when you use AI?

589
00:33:27,520 --> 00:33:28,560
Speaker 7: Right now, the answer is.

590
00:33:28,680 --> 00:33:31,520
Speaker 14: None, because it only protects original works created by a

591
00:33:31,640 --> 00:33:35,720
Speaker 14: human being. And so there's a huge discussion now as

592
00:33:35,760 --> 00:33:39,120
Speaker 14: to what is the purpose beyond making money? Of course,

593
00:33:39,280 --> 00:33:42,000
Speaker 14: right you create a television show or something else using

594
00:33:42,040 --> 00:33:44,960
Speaker 14: AI quickly and you make money when people watch it.

595
00:33:45,080 --> 00:33:47,640
Speaker 7: Okay, fine, but do you actually own it?

596
00:33:48,680 --> 00:33:48,840
Speaker 6: Yep?

597
00:33:49,120 --> 00:33:49,440
Speaker 7: Likely not.

598
00:33:49,680 --> 00:33:51,880
Speaker 1: So what are the like for example, just in this

599
00:33:52,000 --> 00:33:54,240
Speaker 1: writer's strike. Forget the actors for the moment, but just

600
00:33:54,320 --> 00:33:58,560
Speaker 1: the writer's strike. I mean, that's intellectual property that they

601
00:33:58,600 --> 00:33:59,200
Speaker 1: have created.

602
00:33:59,400 --> 00:34:00,480
Speaker 7: I guess the question is.

603
00:34:01,440 --> 00:34:02,400
Speaker 5: There are two issues there.

604
00:34:02,480 --> 00:34:04,760
Speaker 2: Right on the one hand, they don't want anyone using

605
00:34:04,840 --> 00:34:07,200
Speaker 2: the IP that they've created, Right on the other hand,

606
00:34:07,240 --> 00:34:09,680
Speaker 2: they're worried that AI is going to come in and

607
00:34:09,760 --> 00:34:12,719
Speaker 2: write new material instead of thanks it.

608
00:34:13,200 --> 00:34:18,480
Speaker 14: Yes, exactly, and depending on what their current CBA collective

609
00:34:18,480 --> 00:34:23,320
Speaker 14: Bargaining agreement says, they may have already relinquished all rights

610
00:34:23,920 --> 00:34:25,759
Speaker 14: to use of those materials you.

611
00:34:25,800 --> 00:34:27,160
Speaker 5: Know, they've already written.

612
00:34:27,239 --> 00:34:30,480
Speaker 2: I mean, for example, Sarah Silberman wrote a book and

613
00:34:31,840 --> 00:34:34,840
Speaker 2: it's been I guess accessed by open ai.

614
00:34:37,120 --> 00:34:40,080
Speaker 5: In training. I would guess, yes, that's exactly right. And

615
00:34:40,239 --> 00:34:42,680
Speaker 5: so and now she's suing what open ai.

616
00:34:43,040 --> 00:34:47,200
Speaker 14: She's suing open ai and meta and it's for copyright

617
00:34:47,280 --> 00:34:49,600
Speaker 14: infringement because one of the ways you can infringe upon

618
00:34:49,680 --> 00:34:52,960
Speaker 14: copyright is to utilize someone else's work to create a

619
00:34:53,040 --> 00:34:56,239
Speaker 14: derivative work or maybe a sequel, you know, in more

620
00:34:56,360 --> 00:34:57,239
Speaker 14: common vernacular.

621
00:34:57,480 --> 00:35:00,120
Speaker 5: So, but Ronnia, this isn't a breaking new ground. This

622
00:35:00,200 --> 00:35:00,960
Speaker 5: isn't you know.

623
00:35:01,360 --> 00:35:03,240
Speaker 2: We don't have to create any kind of new framework

624
00:35:03,320 --> 00:35:04,400
Speaker 2: to address these issues.

625
00:35:04,880 --> 00:35:08,520
Speaker 5: The law is already there and it's clear, Yes, that

626
00:35:08,760 --> 00:35:09,120
Speaker 5: is true.

627
00:35:09,280 --> 00:35:12,560
Speaker 14: I think some of what is happening now is consumers

628
00:35:12,600 --> 00:35:14,960
Speaker 14: are talking about it. Are we as consumers going to

629
00:35:15,160 --> 00:35:21,440
Speaker 14: accept these AI generated copies or movies or television shows

630
00:35:21,560 --> 00:35:25,200
Speaker 14: or not? Are we as consumer is going to accept

631
00:35:25,280 --> 00:35:29,279
Speaker 14: AI generated anything? I mean, this is really a kind

632
00:35:29,360 --> 00:35:32,920
Speaker 14: of an existential threat. Almost any job if you think

633
00:35:32,920 --> 00:35:33,200
Speaker 14: about it.

634
00:35:33,360 --> 00:35:35,520
Speaker 2: But again, those are two issues right on the issues,

635
00:35:35,600 --> 00:35:39,320
Speaker 2: We're not going to accept theft if a company uses

636
00:35:39,520 --> 00:35:44,359
Speaker 2: copyrighted material and doesn't you know, follow proper procedures there,

637
00:35:44,440 --> 00:35:48,240
Speaker 2: i e. Paying some kind of royalties to Sarah Silverman

638
00:35:48,280 --> 00:35:51,200
Speaker 2: in this case, that's not okay. On the other hand,

639
00:35:51,719 --> 00:35:56,680
Speaker 2: if open ai writes a new comedy special with without

640
00:35:56,800 --> 00:35:59,120
Speaker 2: infringing on anyone's copyright, which I don't know how that

641
00:35:59,160 --> 00:36:00,960
Speaker 2: would happen because they have to train the model.

642
00:36:01,000 --> 00:36:03,399
Speaker 14: But exactly I don't know how that would happen either,

643
00:36:03,520 --> 00:36:06,760
Speaker 14: because AI is only as smart as the information you provide.

644
00:36:08,400 --> 00:36:10,520
Speaker 5: I so I'm not just talk to myself into understanding

645
00:36:10,560 --> 00:36:11,120
Speaker 5: what you were saying.

646
00:36:11,920 --> 00:36:12,839
Speaker 7: Glad to feel of help.

647
00:36:13,719 --> 00:36:18,160
Speaker 1: So is there sense Runnie that the legal industry. I mean,

648
00:36:18,200 --> 00:36:20,400
Speaker 1: hopefully they're going to do better than our regulars in Washington,

649
00:36:20,440 --> 00:36:22,319
Speaker 1: But is there any sense that there's Is there any

650
00:36:22,760 --> 00:36:25,640
Speaker 1: academic work being done in the legal industry about how

651
00:36:25,719 --> 00:36:27,320
Speaker 1: to look at this stuff from a legal perspective?

652
00:36:28,160 --> 00:36:30,320
Speaker 7: I think it's extremely exploratory.

653
00:36:30,520 --> 00:36:34,239
Speaker 14: So, just like any technology, some use of AI will

654
00:36:34,400 --> 00:36:38,040
Speaker 14: be beneficial to all and some of it won't. And

655
00:36:38,520 --> 00:36:42,040
Speaker 14: in fact, you're likely using AI now without even knowing right,

656
00:36:42,120 --> 00:36:44,680
Speaker 14: because it's part of a lot of systems that you're

657
00:36:44,719 --> 00:36:47,640
Speaker 14: currently utilizing. And so I think there has to be

658
00:36:47,719 --> 00:36:50,600
Speaker 14: some regulation around how to use it and when not

659
00:36:50,760 --> 00:36:54,759
Speaker 14: to use it, and there should be also some contractual

660
00:36:54,840 --> 00:36:58,960
Speaker 14: provisions that attorney's right. So I represent some celebrities and

661
00:36:59,080 --> 00:37:03,920
Speaker 14: some influencer and when we are working with production companies

662
00:37:05,120 --> 00:37:09,160
Speaker 14: or others, they'll ask us to release the likeness, the tone,

663
00:37:09,520 --> 00:37:10,640
Speaker 14: the image of the.

664
00:37:10,680 --> 00:37:15,960
Speaker 7: Celebrity in perpetuity, in perpetuity and in any medium known

665
00:37:16,040 --> 00:37:17,719
Speaker 7: or unknown or soon to be known.

666
00:37:17,880 --> 00:37:18,640
Speaker 5: That's a wide scope.

667
00:37:18,760 --> 00:37:21,120
Speaker 14: It's a very wide scope. So I think the attorneys

668
00:37:21,160 --> 00:37:23,200
Speaker 14: they have a power of a pen. And when the

669
00:37:23,280 --> 00:37:25,520
Speaker 14: other side says this is a deal breaker, you should

670
00:37:25,560 --> 00:37:27,680
Speaker 14: just take a step back and ask yourself.

671
00:37:27,520 --> 00:37:29,120
Speaker 7: Is it really a deal breaker?

672
00:37:29,239 --> 00:37:33,040
Speaker 14: Or can we carve out something to keep the integrity

673
00:37:33,360 --> 00:37:34,920
Speaker 14: of the image of the person.

674
00:37:35,680 --> 00:37:38,359
Speaker 1: Any idea how this act that the writer's strike will

675
00:37:38,440 --> 00:37:41,320
Speaker 1: play out, because I'm not sure the Well, if I

676
00:37:41,360 --> 00:37:43,319
Speaker 1: were a media company, I'd be saying, hey, guys, I'd

677
00:37:43,360 --> 00:37:45,400
Speaker 1: love to give you a cut of the streaming revenues

678
00:37:45,480 --> 00:37:47,040
Speaker 1: or whatever. But I don't know what they're going to be.

679
00:37:47,680 --> 00:37:50,360
Speaker 2: You know, I don't know how the economic side is unclear.

680
00:37:50,400 --> 00:37:53,840
Speaker 2: I heard your interview yesterday with I think she was

681
00:37:53,880 --> 00:37:56,960
Speaker 2: the head of a guilt Yeah, yeah, a writer's guild,

682
00:37:57,040 --> 00:38:00,000
Speaker 2: and she I mean, her insistence is that these streams

683
00:38:00,239 --> 00:38:02,719
Speaker 2: companies are just cashing in hand over fist and making

684
00:38:02,800 --> 00:38:05,960
Speaker 2: billions and billions and billions in profits. But as we

685
00:38:06,120 --> 00:38:09,279
Speaker 2: know from watching the market move every day, investors aren't

686
00:38:09,280 --> 00:38:09,759
Speaker 2: sure about that.

687
00:38:09,920 --> 00:38:12,600
Speaker 1: No exactly, so any sense of how this might play out?

688
00:38:12,640 --> 00:38:14,279
Speaker 1: It seems like it could go on for a long time.

689
00:38:14,440 --> 00:38:16,239
Speaker 14: It can go on for a long time, but I

690
00:38:16,360 --> 00:38:19,200
Speaker 14: think as more people feel the pain, they'll have to

691
00:38:19,280 --> 00:38:22,520
Speaker 14: be some compromises. Right now, it seems like everyone has

692
00:38:22,600 --> 00:38:26,840
Speaker 14: their dukes up yea, and nobody cares about the you know, fringes.

693
00:38:27,080 --> 00:38:31,520
Speaker 14: But this strike is not only affecting writers and actors.

694
00:38:31,680 --> 00:38:35,080
Speaker 14: It's affecting so many other people in the professional Tangentially.

695
00:38:35,320 --> 00:38:39,239
Speaker 2: It reminds me tangentially of the lawsuits we saw flare

696
00:38:39,320 --> 00:38:42,799
Speaker 2: up over NFTs. Yes, and I wonder did we ever

697
00:38:42,920 --> 00:38:46,680
Speaker 2: sort that out? For example, Quentin Tarantino wanted to make

698
00:38:46,680 --> 00:38:47,280
Speaker 2: an NFT.

699
00:38:47,640 --> 00:38:49,040
Speaker 5: I think of his script for.

700
00:38:51,400 --> 00:38:53,759
Speaker 2: Paul Fiction, right, but the Studio said no, no, no, no,

701
00:38:53,880 --> 00:38:55,840
Speaker 2: Hang on a second, we own that script, you know,

702
00:38:55,920 --> 00:38:58,200
Speaker 2: even though you have the physical paper copy in his hand.

703
00:38:58,320 --> 00:39:01,960
Speaker 2: So there were similar copyright issues coming up around Crypto.

704
00:39:02,760 --> 00:39:03,360
Speaker 7: Yes, well, the.

705
00:39:03,400 --> 00:39:06,520
Speaker 14: Copyright laws are the same, they're applied across the board.

706
00:39:07,000 --> 00:39:09,120
Speaker 14: But again a lot of this can be taken care

707
00:39:09,160 --> 00:39:14,480
Speaker 14: of contractually, hence this strike. But here neither side seems

708
00:39:14,480 --> 00:39:18,120
Speaker 14: to be communicating very well, and that always ends badly.

709
00:39:18,520 --> 00:39:20,400
Speaker 1: All right, Ronnie, thank you so much for joining us.

710
00:39:20,440 --> 00:39:23,040
Speaker 1: Lots of issues out there for you guys to figure out.

711
00:39:23,080 --> 00:39:26,200
Speaker 1: Ronnie is set Home Managing Partner, set Home Lawgroup.

712
00:39:26,680 --> 00:39:29,759
Speaker 6: You're listening to the tape Cat's are live program Bloomberg

713
00:39:29,880 --> 00:39:33,440
Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the

714
00:39:33,520 --> 00:39:36,719
Speaker 6: tune in app, Bloomberg dot Com, and the Bloomberg Business App.

715
00:39:36,800 --> 00:39:39,560
Speaker 6: You can also listen live on Amazon Alexa from our

716
00:39:39,640 --> 00:39:44,000
Speaker 6: flagship New York station. Just say Alexa play Bloomberg eleven thirty.

717
00:39:46,000 --> 00:39:49,280
Speaker 1: Cam Harvey, he's professor finance down there at the Duke University.

718
00:39:49,280 --> 00:39:50,680
Speaker 1: All right, let me explain to how this works at

719
00:39:50,719 --> 00:39:53,120
Speaker 1: FUCA when I was there. Here's the grading system pass,

720
00:39:54,000 --> 00:39:57,399
Speaker 1: high pass, Superior pass, anything below pass you don't want

721
00:39:57,400 --> 00:40:00,360
Speaker 1: to talk about now. On Cam Harvey's class Futures Options.

722
00:40:00,400 --> 00:40:01,480
Speaker 1: I think I don't know what it was. It was

723
00:40:01,560 --> 00:40:04,680
Speaker 1: something very hard. I didn't say with great comments. I

724
00:40:04,760 --> 00:40:08,320
Speaker 1: probably did not get a superior pass. There's chance I

725
00:40:08,400 --> 00:40:10,839
Speaker 1: got a high pass. But if I had to put

726
00:40:10,920 --> 00:40:14,359
Speaker 1: money on it, I put it pass. Yeah, but that's okay.

727
00:40:14,360 --> 00:40:16,279
Speaker 2: Well, and you're not an economist, and what we said,

728
00:40:16,320 --> 00:40:17,359
Speaker 2: we still have questions to ask.

729
00:40:17,400 --> 00:40:18,800
Speaker 1: You still have questions. What we said back in the

730
00:40:18,880 --> 00:40:22,359
Speaker 1: day is twenty p's twenty passes equals sixty g's, which

731
00:40:22,440 --> 00:40:23,840
Speaker 1: was the going right on Wall Street for You're in

732
00:40:23,880 --> 00:40:25,920
Speaker 1: the NBA, so all you had to do is pass.

733
00:40:26,000 --> 00:40:28,800
Speaker 5: That's a really materialistic way to look at in your generation.

734
00:40:28,960 --> 00:40:31,279
Speaker 1: That's why expiration because I played golf every day. Hey,

735
00:40:31,360 --> 00:40:33,520
Speaker 1: camp professor, thanks so much for joining us here. What

736
00:40:33,600 --> 00:40:36,000
Speaker 1: did you take away from boy? We had a lot

737
00:40:36,040 --> 00:40:38,000
Speaker 1: of central bank speak over the past couple of days,

738
00:40:38,040 --> 00:40:40,440
Speaker 1: with the ECB this morning and the FED yesterday. What

739
00:40:40,520 --> 00:40:42,839
Speaker 1: are you taking away from some of these central bankers.

740
00:40:44,920 --> 00:40:51,200
Speaker 8: That they fundamentally are misjudging the inflation threat? It is

741
00:40:51,880 --> 00:40:57,120
Speaker 8: It is shocking to me that you just need to

742
00:40:57,200 --> 00:41:00,960
Speaker 8: look at the data. Look at the most recent inflation release,

743
00:41:01,480 --> 00:41:06,719
Speaker 8: which was three percent, and actually the more precise number

744
00:41:07,160 --> 00:41:12,000
Speaker 8: was two point nine seven percent. And if you look

745
00:41:12,040 --> 00:41:16,280
Speaker 8: at the drivers of inflation, the main driver is shelter.

746
00:41:17,080 --> 00:41:21,520
Speaker 8: So shelter is a little over one third of the CPI,

747
00:41:22,600 --> 00:41:27,080
Speaker 8: and shelter is running at seven point eight percent. So

748
00:41:27,360 --> 00:41:31,280
Speaker 8: let's do some really simple math. The contribution of shelter

749
00:41:31,760 --> 00:41:36,279
Speaker 8: to that three percent print is about one third of

750
00:41:36,800 --> 00:41:41,520
Speaker 8: seven point eight percent, and that comes to about two

751
00:41:41,600 --> 00:41:46,440
Speaker 8: point six percent. So almost ninety percent of the inflation

752
00:41:46,600 --> 00:41:51,800
Speaker 8: print was shelter, and shelter is not running at seven

753
00:41:51,880 --> 00:41:54,120
Speaker 8: point eight percent. So you look at the data, you

754
00:41:54,200 --> 00:41:57,280
Speaker 8: look at rents year over year, you look at housing prices,

755
00:41:57,719 --> 00:42:00,560
Speaker 8: it's close to flat or one percent or two percent,

756
00:42:01,360 --> 00:42:05,879
Speaker 8: and it's because shelter lags. So that's seven point eight

757
00:42:05,880 --> 00:42:09,160
Speaker 8: percent is reflecting stuff from six to nine months ago.

758
00:42:09,719 --> 00:42:12,560
Speaker 8: If we use the real data, the inflation is not

759
00:42:12,680 --> 00:42:17,160
Speaker 8: three percent, is one point five percent, and it seems

760
00:42:17,600 --> 00:42:21,879
Speaker 8: to give the reason that, oh, well, inflation is still there.

761
00:42:22,400 --> 00:42:25,840
Speaker 8: It's three percent, that it's not two percent. It's a

762
00:42:26,120 --> 00:42:32,120
Speaker 8: false logic, a totally false logic. So this increase that

763
00:42:32,239 --> 00:42:36,480
Speaker 8: the FED just did was completely unnecessary. It increases the

764
00:42:36,719 --> 00:42:41,880
Speaker 8: risk in many different dimensions that we are pushed into

765
00:42:42,560 --> 00:42:44,280
Speaker 8: an unnecessary recession.

766
00:42:44,920 --> 00:42:49,120
Speaker 15: So, Professor Harvey, this is Barry Ridults. Let's pretend I'm

767
00:42:49,160 --> 00:42:52,600
Speaker 15: in your class at school, and I want to argue

768
00:42:52,760 --> 00:42:58,400
Speaker 15: this proposition that the not only have we seen homes

769
00:42:58,560 --> 00:43:02,160
Speaker 15: underbuilt since the ear and the financial crisis, but the

770
00:43:02,440 --> 00:43:07,040
Speaker 15: FED raising rates as aggressively as they have are actually

771
00:43:07,880 --> 00:43:13,839
Speaker 15: making owners' equivalent rent and apartment rentals more expensive. They're

772
00:43:13,960 --> 00:43:18,279
Speaker 15: forcing people who would otherwise be home buyers into the

773
00:43:18,360 --> 00:43:21,960
Speaker 15: rental market. What's the number, Something like sixty one percent

774
00:43:22,040 --> 00:43:26,239
Speaker 15: of homeowners with mortgages are at four percent or less

775
00:43:26,800 --> 00:43:28,640
Speaker 15: and they don't want to pay seven and a half

776
00:43:28,680 --> 00:43:31,880
Speaker 15: percent more for a mortgage. Should the is the FED

777
00:43:32,080 --> 00:43:37,879
Speaker 15: two title ready? Are they accidentally driving owners equivalent rent

778
00:43:37,920 --> 00:43:39,480
Speaker 15: and CPI higher?

779
00:43:41,360 --> 00:43:41,560
Speaker 16: Yeah?

780
00:43:41,800 --> 00:43:47,399
Speaker 8: So, very great points, And you just need to look

781
00:43:47,440 --> 00:43:52,520
Speaker 8: at the data. So if you go to Zillow or

782
00:43:52,680 --> 00:43:56,560
Speaker 8: red fan, you see that rents year every year are

783
00:43:56,680 --> 00:44:01,440
Speaker 8: running at one percent, zero percent been in a negative territory.

784
00:44:01,719 --> 00:44:06,279
Speaker 8: There's a big disconnect between what people are paying and

785
00:44:06,480 --> 00:44:10,000
Speaker 8: what is in the actual SPI. And we've seen this before.

786
00:44:10,120 --> 00:44:12,960
Speaker 8: This is not new. This is the mistake the FED

787
00:44:13,080 --> 00:44:18,560
Speaker 8: made initially in thinking that inflation was transitory, that the

788
00:44:19,120 --> 00:44:23,080
Speaker 8: numbers that were using for owner's equivalent rent were really

789
00:44:23,200 --> 00:44:26,880
Speaker 8: really low, when we could observe in the market that

790
00:44:27,840 --> 00:44:31,920
Speaker 8: it was much higher. And there's a reason for these legs.

791
00:44:32,360 --> 00:44:36,240
Speaker 8: So the lag makes sense. So if there's rental inflation,

792
00:44:36,560 --> 00:44:39,960
Speaker 8: for example, it goes up by ten percent, well that

793
00:44:40,120 --> 00:44:44,600
Speaker 8: only hits you if you have to have your lease renewed,

794
00:44:45,080 --> 00:44:47,839
Speaker 8: and many people have a longer lease, so that ten

795
00:44:47,880 --> 00:44:52,720
Speaker 8: percent inflation wouldn't be realized until you actually renew your lease.

796
00:44:53,160 --> 00:44:56,400
Speaker 8: So there's a natural leg. And my point is that

797
00:44:56,719 --> 00:45:02,080
Speaker 8: this component, which is driving ninety percent of the current inflation,

798
00:45:02,800 --> 00:45:06,399
Speaker 8: that is going to head down. It just takes a while.

799
00:45:07,160 --> 00:45:10,680
Speaker 8: And again this is very similar to what we saw

800
00:45:11,719 --> 00:45:15,800
Speaker 8: with the so called transitory inflation, that that inflation is

801
00:45:15,880 --> 00:45:22,000
Speaker 8: substantially mitigated. And the other point you're making about increasing

802
00:45:22,080 --> 00:45:25,919
Speaker 8: the rates causing problems, it's like two sided. So those

803
00:45:25,960 --> 00:45:32,160
Speaker 8: that have mortgages that are already attractive, you're correct, that

804
00:45:32,400 --> 00:45:36,960
Speaker 8: is the disincentive to move, and it does put pressure

805
00:45:37,040 --> 00:45:40,279
Speaker 8: on the rental market. But again looking at the data,

806
00:45:40,440 --> 00:45:44,680
Speaker 8: we don't see that rental inflation. We saw it go up,

807
00:45:45,000 --> 00:45:48,920
Speaker 8: but now it's down and that partends the future. And

808
00:45:49,000 --> 00:45:52,880
Speaker 8: again it undercuts very substantially the fed's logic.

809
00:45:53,480 --> 00:45:57,360
Speaker 2: And yes, so, professor, does does this mean that the

810
00:45:57,440 --> 00:46:01,960
Speaker 2: FED is going to push us into asion? And I

811
00:46:02,080 --> 00:46:05,080
Speaker 2: want to bring in also your yield curve inversion to

812
00:46:05,160 --> 00:46:07,560
Speaker 2: the discussion, because I have in front of me the

813
00:46:07,680 --> 00:46:10,440
Speaker 2: three month ten year yield curve. We're looking at an

814
00:46:11,040 --> 00:46:14,320
Speaker 2: inversion of one hundred and fifty basis points basically, And

815
00:46:15,040 --> 00:46:18,040
Speaker 2: I was talking about Jeff Sherman from Double Line earlier.

816
00:46:18,160 --> 00:46:23,160
Speaker 2: He thinks that that signal signals a deep recession and he's,

817
00:46:23,480 --> 00:46:25,680
Speaker 2: you know, very concerned about it over there.

818
00:46:25,960 --> 00:46:26,520
Speaker 5: Is that fair?

819
00:46:26,680 --> 00:46:28,600
Speaker 2: Do you think when you look at the history of

820
00:46:28,680 --> 00:46:30,960
Speaker 2: this yield curve inversion does it?

821
00:46:31,200 --> 00:46:31,440
Speaker 7: Does it?

822
00:46:32,120 --> 00:46:33,600
Speaker 5: Is it a good signal for a recession?

823
00:46:34,560 --> 00:46:34,759
Speaker 6: Yeah?

824
00:46:34,880 --> 00:46:37,480
Speaker 8: So, as you know, this is my dissertation at the

825
00:46:37,560 --> 00:46:41,000
Speaker 8: University of Chicago, and at the time pretty good. It

826
00:46:41,160 --> 00:46:43,839
Speaker 8: was like four out of four. Now it's eight out

827
00:46:43,880 --> 00:46:46,200
Speaker 8: of eight without a fault signal. And we've had this

828
00:46:46,360 --> 00:46:52,800
Speaker 8: inversion that is like ten months inversion.

829
00:46:52,400 --> 00:46:53,600
Speaker 5: And without a false signal.

830
00:46:53,680 --> 00:46:56,920
Speaker 2: Is an important clause because Rick Reader was on with

831
00:46:57,040 --> 00:46:58,560
Speaker 2: us the other day from black Rock, and he said,

832
00:46:58,600 --> 00:47:01,040
Speaker 2: the yield curve inversion is forecast nine out of the

833
00:47:01,120 --> 00:47:02,759
Speaker 2: last three recessions or something like that.

834
00:47:03,200 --> 00:47:05,600
Speaker 5: But I think people look at it two.

835
00:47:06,719 --> 00:47:10,520
Speaker 8: Yeah, yeah, it's totally false, And of course you need

836
00:47:10,680 --> 00:47:14,640
Speaker 8: to There could be a part of the yell curve

837
00:47:14,920 --> 00:47:17,560
Speaker 8: that you choose that's got a lot of false signals.

838
00:47:17,840 --> 00:47:20,920
Speaker 8: I'm talking about what I chose, the ten year minus

839
00:47:20,960 --> 00:47:23,640
Speaker 8: three month, and that doesn't have any fault signals yet.

840
00:47:24,000 --> 00:47:27,520
Speaker 8: Of course it could be a false signal, but it's

841
00:47:27,600 --> 00:47:33,560
Speaker 8: too early to declare a false signal. The lead time varies,

842
00:47:34,160 --> 00:47:38,719
Speaker 8: so that's not consistent. So the lead time has been

843
00:47:38,760 --> 00:47:42,520
Speaker 8: as short as five months and as long as twenty

844
00:47:42,600 --> 00:47:47,200
Speaker 8: two months, so it's too early to tell. But again,

845
00:47:48,040 --> 00:47:50,080
Speaker 8: let's not just look at this signal, but look at

846
00:47:50,120 --> 00:47:54,840
Speaker 8: the economic logic as to what is happening when you

847
00:47:55,080 --> 00:48:00,600
Speaker 8: severely invert the ill curve, and when you averted in

848
00:48:00,880 --> 00:48:04,000
Speaker 8: a way where short rates and long rates go up,

849
00:48:04,680 --> 00:48:09,560
Speaker 8: then you were stressing the financial system. So an inverted

850
00:48:09,600 --> 00:48:12,839
Speaker 8: deal curve is bad for banks because it hits profitability

851
00:48:13,280 --> 00:48:16,880
Speaker 8: because they're paying a short term rate and kind of

852
00:48:16,920 --> 00:48:20,040
Speaker 8: receiving a long term rate. But when that longer term

853
00:48:20,120 --> 00:48:24,080
Speaker 8: rate also goes up, that hits the balance sheet also.

854
00:48:24,480 --> 00:48:28,520
Speaker 8: And we've already seen this play out in March in

855
00:48:28,680 --> 00:48:34,760
Speaker 8: terms of you know, some banks failing. So this puts

856
00:48:35,080 --> 00:48:40,320
Speaker 8: stress on the financial system and it creates other issues

857
00:48:40,760 --> 00:48:41,240
Speaker 8: in addition.

858
00:48:41,719 --> 00:48:46,120
Speaker 15: So, Professor, given how rapidly the FED has been raising rates,

859
00:48:46,600 --> 00:48:49,799
Speaker 15: and given that we've spent so much time at zero

860
00:48:50,560 --> 00:48:54,080
Speaker 15: in the last moments we have, how impactful has that

861
00:48:54,719 --> 00:48:57,000
Speaker 15: rapidity been to this inverted deal curve?

862
00:48:58,280 --> 00:49:04,520
Speaker 8: Yeah, so, the the scale of the inversion is unprecedented

863
00:49:05,400 --> 00:49:07,960
Speaker 8: in the data that I've looked at. So of all

864
00:49:08,040 --> 00:49:11,960
Speaker 8: of the inversions is number nine, this one is the

865
00:49:12,200 --> 00:49:17,239
Speaker 8: largest relative to the long term rate. So we're in

866
00:49:17,760 --> 00:49:21,440
Speaker 8: an area of the data that we've never seen before.

867
00:49:22,239 --> 00:49:26,240
Speaker 8: And on top of that, the FED is pushed very quickly.

868
00:49:27,080 --> 00:49:30,960
Speaker 8: And in January I said, given my look at the

869
00:49:31,520 --> 00:49:35,520
Speaker 8: shelter data in inflation, they should stop. They did not stop.

870
00:49:36,040 --> 00:49:39,800
Speaker 8: And what they're doing is just increasing the risk of

871
00:49:39,920 --> 00:49:43,799
Speaker 8: a hard landing. It seems there calculus is unemployment has

872
00:49:43,840 --> 00:49:46,560
Speaker 8: to increase, people have to be thrown out of their job.

873
00:49:46,800 --> 00:49:50,319
Speaker 8: That is not necessary. We don't need a reset, all.

874
00:49:50,280 --> 00:49:52,280
Speaker 1: Right, Caim, thank you so much for joining us, Campbell Harvey.

875
00:49:52,280 --> 00:49:54,120
Speaker 1: He's a professor of finance at the Fucal School of

876
00:49:54,200 --> 00:49:57,799
Speaker 1: Business at Duke University. I appreciate getting his thoughts here

877
00:49:57,880 --> 00:50:01,719
Speaker 1: on the Central Banks and on the Inverted Yield cover.

878
00:50:02,040 --> 00:50:05,120
Speaker 6: You're listening to the tape can Tour live program Bloomberg

879
00:50:05,239 --> 00:50:08,759
Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the

880
00:50:08,880 --> 00:50:12,080
Speaker 6: tune in app, Bloomberg dot Com, and the Bloomberg Business app.

881
00:50:12,160 --> 00:50:14,920
Speaker 6: You can also listen live on Amazon Alexa from our

882
00:50:15,000 --> 00:50:19,360
Speaker 6: flagship New York station Just say Alexa, play Bloomberg eleven thirty,

883
00:50:21,360 --> 00:50:21,879
Speaker 6: What a Deed?

884
00:50:22,080 --> 00:50:26,000
Speaker 17: Even deeper into metas earnings reports CEO Mark Zuckerberg, saying,

885
00:50:26,000 --> 00:50:28,400
Speaker 17: look quote, we continue to see strong engagement across our

886
00:50:28,400 --> 00:50:31,000
Speaker 17: apps with the most exciting roadmap I've seen in a while.

887
00:50:31,080 --> 00:50:34,520
Speaker 17: Our investments in AI will continue. We remain fully committed

888
00:50:34,880 --> 00:50:38,160
Speaker 17: to the metaverse vision as well. Let's again further with

889
00:50:38,400 --> 00:50:41,640
Speaker 17: Meta Chief Financial Officer Susan Lee joining us. And it's

890
00:50:41,719 --> 00:50:46,719
Speaker 17: not just Mark finding things, exciting investors, analysts, upgrading exciting

891
00:50:46,800 --> 00:50:49,759
Speaker 17: economy for the world at large. Today it feels here

892
00:50:49,800 --> 00:50:53,000
Speaker 17: in the United States, how excited Susan, are your clients

893
00:50:53,120 --> 00:50:57,319
Speaker 17: right now how resilient is this digital ad spending well?

894
00:50:57,360 --> 00:50:59,880
Speaker 18: First of all, thank you Ed Andternline for having me at.

895
00:51:00,200 --> 00:51:02,239
Speaker 18: It's a pleasure to be with you guys and with

896
00:51:02,320 --> 00:51:04,759
Speaker 18: your viewers this morning. You know you noted that we

897
00:51:04,880 --> 00:51:08,160
Speaker 18: reported really strong Q two results. We're really happy with

898
00:51:09,680 --> 00:51:12,520
Speaker 18: all of our execution efforts across our core user and

899
00:51:12,600 --> 00:51:16,239
Speaker 18: engagement metrics. Obviously, the reacceleration in our ad revenue which

900
00:51:16,239 --> 00:51:19,000
Speaker 18: we've been talking about and you know which we think

901
00:51:19,200 --> 00:51:22,600
Speaker 18: is the is the reflection both of an improvement in

902
00:51:22,640 --> 00:51:25,719
Speaker 18: the macroeconomic landscape which the digital ads market is so

903
00:51:25,960 --> 00:51:30,160
Speaker 18: closely tied to, along with our own efforts continuing to

904
00:51:30,280 --> 00:51:33,879
Speaker 18: invest in and execute on quarters and years of work

905
00:51:34,120 --> 00:51:38,080
Speaker 18: in making sure that our ad systems are performing well,

906
00:51:38,160 --> 00:51:40,840
Speaker 18: that we're delivering measurable results for our advertisers, and we

907
00:51:40,960 --> 00:51:43,759
Speaker 18: really have seen those results bear fruit.

908
00:51:44,200 --> 00:51:45,920
Speaker 12: So that's something we're really excited about.

909
00:51:45,960 --> 00:51:49,200
Speaker 18: In Q two, we also talked about how our year

910
00:51:49,239 --> 00:51:52,440
Speaker 18: of efficiency work is really setting us up for success

911
00:51:52,600 --> 00:51:53,320
Speaker 18: going forward.

912
00:51:53,800 --> 00:51:55,400
Speaker 12: I think it's put us into a place.

913
00:51:55,239 --> 00:51:57,560
Speaker 18: Where we have a leaner cost structure which will serve

914
00:51:57,640 --> 00:51:59,879
Speaker 18: us well as we plan for the future, and it's

915
00:52:00,040 --> 00:52:03,160
Speaker 18: also enabling us to move faster, to build more and

916
00:52:03,200 --> 00:52:06,719
Speaker 18: ship more quickly new products and experiences in service of

917
00:52:07,040 --> 00:52:10,320
Speaker 18: what of our customers, and so Mark talked about this

918
00:52:10,480 --> 00:52:13,280
Speaker 18: yesterday on the call. Threads is a really good example

919
00:52:13,360 --> 00:52:16,120
Speaker 18: of that. It's something that we built with a relatively

920
00:52:16,320 --> 00:52:19,360
Speaker 18: smaller team on a tighter timeline, and I think is

921
00:52:19,400 --> 00:52:23,600
Speaker 18: a good reflection of the year of efficiency paying off

922
00:52:23,680 --> 00:52:26,880
Speaker 18: for us. Finally, the last theme I'd highlight from our

923
00:52:26,920 --> 00:52:30,160
Speaker 18: earnings call is around twenty twenty four, we have I

924
00:52:30,239 --> 00:52:33,800
Speaker 18: think a lot of compelling opportunities to invest in. We

925
00:52:33,960 --> 00:52:36,759
Speaker 18: talked about our AI investments and how that will flow

926
00:52:36,840 --> 00:52:40,359
Speaker 18: through and too infrastructure costs. We talked about hiring top

927
00:52:40,440 --> 00:52:43,239
Speaker 18: tier technical talent as we evolve our workforce towards a

928
00:52:43,280 --> 00:52:46,160
Speaker 18: more technical mix, and then of course our longer term

929
00:52:46,239 --> 00:52:49,800
Speaker 18: ambitions and vision for reality labs and for the metaverse.

930
00:52:50,640 --> 00:52:54,600
Speaker 16: You know, AI also seen Susan two AI recommendations on

931
00:52:54,680 --> 00:52:59,160
Speaker 16: the timeline to have a real impact on engagement, particularly

932
00:52:59,239 --> 00:53:01,960
Speaker 16: on the core FACEOK platform. How much is that a

933
00:53:02,120 --> 00:53:05,560
Speaker 16: driver behind the forecast for the current period of thirty

934
00:53:05,600 --> 00:53:07,520
Speaker 16: four point five billion dollars in sales.

935
00:53:08,719 --> 00:53:09,640
Speaker 12: It's a great question.

936
00:53:10,280 --> 00:53:12,279
Speaker 18: First, I want to say we have been investing in

937
00:53:12,360 --> 00:53:15,560
Speaker 18: AI for a really long time. We often use the

938
00:53:15,640 --> 00:53:18,160
Speaker 18: phrase core AI to talk about the work that's been

939
00:53:18,280 --> 00:53:21,960
Speaker 18: powering our ranking and recommendations engines, which are really the

940
00:53:22,080 --> 00:53:26,120
Speaker 18: foundation of both our organic recommendations for the content that

941
00:53:26,200 --> 00:53:26,800
Speaker 18: you see.

942
00:53:26,920 --> 00:53:28,200
Speaker 12: Along with the ADS work.

943
00:53:28,800 --> 00:53:32,040
Speaker 18: And in particular, one of the big drivers of growth

944
00:53:32,600 --> 00:53:36,879
Speaker 18: that's been both strong on our platforms and increasingly incremental

945
00:53:37,320 --> 00:53:40,959
Speaker 18: is around recommending content from accounts that you don't already follow.

946
00:53:41,040 --> 00:53:44,279
Speaker 18: We often call this unconnected content, and that's been really

947
00:53:44,320 --> 00:53:47,040
Speaker 18: good for core engagement trends. And then of course the

948
00:53:47,160 --> 00:53:51,160
Speaker 18: AI investments, as we've put GPU capacity towards our ADS,

949
00:53:51,280 --> 00:53:54,400
Speaker 18: ranking and recommendation systems have really paid off. So I

950
00:53:54,480 --> 00:53:58,240
Speaker 18: think that's really translating both into the results that you've seen.

951
00:53:58,520 --> 00:54:01,120
Speaker 18: It's part of what factors and to our guidance, along

952
00:54:01,200 --> 00:54:04,640
Speaker 18: with of course a big range of possible macroeconomic outcomes.

953
00:54:05,360 --> 00:54:08,360
Speaker 18: At the same time, we're really excited about a newer

954
00:54:08,480 --> 00:54:12,279
Speaker 18: opportunity ahead of us in the GENAI space, and that's

955
00:54:12,360 --> 00:54:17,040
Speaker 18: really around building compelling new consumer experiences. Mark talked about

956
00:54:17,080 --> 00:54:19,440
Speaker 18: some of the things we're working on on the call yesterday,

957
00:54:20,360 --> 00:54:24,600
Speaker 18: making it easier for people to create better, more individualized content,

958
00:54:25,080 --> 00:54:27,480
Speaker 18: and then of course also making it easier for businesses

959
00:54:27,640 --> 00:54:30,919
Speaker 18: to communicate with the consumers that they want to reach.

960
00:54:31,560 --> 00:54:32,880
Speaker 12: That is newer for us.

961
00:54:33,320 --> 00:54:36,800
Speaker 18: That's not factored into our revenue guidance or our revenue

962
00:54:36,840 --> 00:54:40,440
Speaker 18: outlook in any meaningful way, but it's something that we're

963
00:54:40,480 --> 00:54:44,040
Speaker 18: really excited about the opportunity to build new and compelling experiences,

964
00:54:44,120 --> 00:54:46,720
Speaker 18: and we think it'll be an important part of our future.

965
00:54:47,560 --> 00:54:52,480
Speaker 16: Susan, why did Meta change its mind about charging cloud

966
00:54:52,560 --> 00:54:59,040
Speaker 16: providers for access to Lama too, I'm not.

967
00:54:59,080 --> 00:55:00,440
Speaker 12: Sure what you mean by changed.

968
00:55:00,840 --> 00:55:04,120
Speaker 18: By changing our mind, we've made Lama to free and

969
00:55:04,239 --> 00:55:08,280
Speaker 18: widely accessible. They're a small handful of really large cloud

970
00:55:08,320 --> 00:55:13,360
Speaker 18: providers that we're working on specific arrangements with, but broadly speaking,

971
00:55:13,440 --> 00:55:15,920
Speaker 18: we expect this to be free, and we want it

972
00:55:15,960 --> 00:55:19,719
Speaker 18: to be accessible to a really to a really wide

973
00:55:19,840 --> 00:55:21,400
Speaker 18: range of possible use cases.

974
00:55:21,760 --> 00:55:23,840
Speaker 17: Cloud providers, will they be charged anything.

975
00:55:27,160 --> 00:55:30,040
Speaker 18: This is a place where, again with very specific cloud

976
00:55:30,080 --> 00:55:33,200
Speaker 18: providers who have very large user bases. Again we're working

977
00:55:33,280 --> 00:55:36,200
Speaker 18: on specific arrangements with them, but it's not something that

978
00:55:36,320 --> 00:55:38,160
Speaker 18: we broadly anticipate charging.

979
00:55:37,920 --> 00:55:40,359
Speaker 17: For and of course, we're all waiting to see when

980
00:55:40,400 --> 00:55:43,800
Speaker 17: you turn on the money funnel from Threads. I'm interested

981
00:55:43,840 --> 00:55:46,960
Speaker 17: as to how much inbound you're getting from clients, how

982
00:55:47,080 --> 00:55:50,799
Speaker 17: many want the capacity to start advertising alongside Threads.

983
00:55:50,840 --> 00:55:55,640
Speaker 12: At the moment, you know, we're really very pleased with Threads.

984
00:55:55,680 --> 00:55:58,720
Speaker 18: It's a new standalone app that you know, we released

985
00:55:58,800 --> 00:56:02,439
Speaker 18: earlier this month, and we're where it is in both

986
00:56:02,960 --> 00:56:06,080
Speaker 18: user growth terms as well as engagement and retention trends.

987
00:56:06,200 --> 00:56:08,239
Speaker 18: Is certainly ahead of where we would have expected for

988
00:56:08,520 --> 00:56:11,840
Speaker 18: a brand new standalone app, but it's incredibly early in

989
00:56:11,920 --> 00:56:14,360
Speaker 18: its life cycle. This is not something that we expect

990
00:56:14,400 --> 00:56:16,800
Speaker 18: that we're going to monetize in the near term. We

991
00:56:16,960 --> 00:56:19,920
Speaker 18: know when we launch new consumer experiences that there is

992
00:56:19,960 --> 00:56:23,759
Speaker 18: a playbook around all of the product foundation work that

993
00:56:23,840 --> 00:56:26,879
Speaker 18: needs to be done, around core features that users will

994
00:56:26,920 --> 00:56:30,680
Speaker 18: ask for, being responsive to things that futures users are

995
00:56:30,719 --> 00:56:33,840
Speaker 18: looking for in the product, scaling it over time to

996
00:56:33,920 --> 00:56:38,000
Speaker 18: a much larger user base, focusing on driving increased engagement

997
00:56:38,080 --> 00:56:40,279
Speaker 18: and retention. Those are all things that we're going to

998
00:56:40,560 --> 00:56:44,360
Speaker 18: need to do in advance of thinking about monetization. But

999
00:56:44,440 --> 00:56:47,480
Speaker 18: it's a playbook that we've executed multiple times and We're

1000
00:56:47,560 --> 00:56:50,000
Speaker 18: excited for the opportunity to do that again here.

1001
00:56:51,239 --> 00:56:53,520
Speaker 16: Susan, I think I'm right in saying you a Facebook

1002
00:56:53,680 --> 00:56:57,239
Speaker 16: employee number four hundred and something, four hundred and eight.

1003
00:56:57,920 --> 00:57:03,440
Speaker 16: How has the launched a Threads compared internally to bringing

1004
00:57:03,520 --> 00:57:07,480
Speaker 16: in Instagram, WhatsApp, the launch of the hardware business and quest.

1005
00:57:09,920 --> 00:57:10,120
Speaker 4: Yeah.

1006
00:57:10,160 --> 00:57:13,520
Speaker 18: So I joined then Facebook back in two thousand and

1007
00:57:13,520 --> 00:57:15,640
Speaker 18: eight when they're around four hundred people here, and so

1008
00:57:16,120 --> 00:57:18,080
Speaker 18: I've seen us launch a lot of things over the

1009
00:57:18,160 --> 00:57:20,680
Speaker 18: course of that period. Now, some of those examples that

1010
00:57:20,760 --> 00:57:24,040
Speaker 18: you mentioned, like Instagram obviously were already popular apps when

1011
00:57:24,040 --> 00:57:26,800
Speaker 18: we acquired them. But I think that over the course

1012
00:57:26,880 --> 00:57:29,120
Speaker 18: of that time, we've learned a lot of things about

1013
00:57:29,200 --> 00:57:31,959
Speaker 18: how to bring products to market, thinking about the trade

1014
00:57:32,000 --> 00:57:36,000
Speaker 18: offs between standalone apps or features within existing apps. We've

1015
00:57:36,080 --> 00:57:38,520
Speaker 18: learned a lot in our growth playbook and how to

1016
00:57:38,640 --> 00:57:40,960
Speaker 18: drive engagement and retention, and I think we're going to

1017
00:57:41,000 --> 00:57:43,280
Speaker 18: bring a lot of those lessons to the way that

1018
00:57:43,360 --> 00:57:45,440
Speaker 18: we execute against our vision for Threads.

1019
00:57:47,240 --> 00:57:53,000
Speaker 16: Caroline asked you about the inbound interest your existing advertisers, saying, Hey, Susan,

1020
00:57:53,120 --> 00:57:55,640
Speaker 16: when can I put something on the Threads platform. I

1021
00:57:55,680 --> 00:57:59,880
Speaker 16: know you're being conservative and careful about the development, and

1022
00:58:00,080 --> 00:58:02,840
Speaker 16: that mark emphasize a lot of product work needs to

1023
00:58:02,880 --> 00:58:05,080
Speaker 16: be done as well. But how do you see the

1024
00:58:05,200 --> 00:58:08,920
Speaker 16: roadmaps for Threads going, you know, how do you change

1025
00:58:08,960 --> 00:58:10,680
Speaker 16: the product so it is monetizable.

1026
00:58:12,440 --> 00:58:16,240
Speaker 18: Well, we're excited obviously that there is interest both in Threads,

1027
00:58:16,280 --> 00:58:19,160
Speaker 18: the consumer product and of course the eventual prospect of

1028
00:58:19,240 --> 00:58:20,080
Speaker 18: advertising on it.

1029
00:58:20,520 --> 00:58:22,600
Speaker 12: But it's really just too early, i think.

1030
00:58:22,480 --> 00:58:26,080
Speaker 18: To be very specific about what the ads business on

1031
00:58:26,240 --> 00:58:29,240
Speaker 18: thread will look like in detail. We're really focused on

1032
00:58:29,400 --> 00:58:33,160
Speaker 18: executing on the consumer experience first, making it a great

1033
00:58:33,280 --> 00:58:36,960
Speaker 18: and productive and friendly place for people to have public conversations,

1034
00:58:37,520 --> 00:58:41,400
Speaker 18: growing it to scale, investing in the features that people want,

1035
00:58:41,520 --> 00:58:43,400
Speaker 18: and we'll get to monetization at the right time.

1036
00:58:44,000 --> 00:58:46,760
Speaker 17: Of course, us in the media had a field day

1037
00:58:46,800 --> 00:58:50,280
Speaker 17: thinking about the competitive force that Threads is Visa VX,

1038
00:58:50,400 --> 00:58:53,200
Speaker 17: and then we think about the competition more broadly, you

1039
00:58:53,440 --> 00:58:56,120
Speaker 17: versus TikTok, when I'm thinking of the success of reels

1040
00:58:56,120 --> 00:58:58,880
Speaker 17: of late, when we're actually more broadly thinking about how

1041
00:58:59,000 --> 00:59:02,680
Speaker 17: Meta makes it self not just the money spinner, but

1042
00:59:02,800 --> 00:59:06,280
Speaker 17: a culture spinner here where people start trends not just

1043
00:59:06,320 --> 00:59:09,440
Speaker 17: perhaps copy them from TikTok and bring them on to reels.

1044
00:59:09,760 --> 00:59:11,640
Speaker 17: Do you feel you've got that now at Meta?

1045
00:59:14,040 --> 00:59:16,600
Speaker 18: I think that we've been, over the course of the

1046
00:59:16,680 --> 00:59:20,160
Speaker 18: time that I've been here, you know, constantly focused on innovation,

1047
00:59:21,400 --> 00:59:23,040
Speaker 18: and I think that we've brought that to bear with

1048
00:59:23,280 --> 00:59:25,680
Speaker 18: a lot of the experiences in our family of apps.

1049
00:59:25,880 --> 00:59:28,240
Speaker 18: And at the same time, when there are clear secular

1050
00:59:28,360 --> 00:59:32,000
Speaker 18: trends in the industry in terms of formats or experiences

1051
00:59:32,160 --> 00:59:35,000
Speaker 18: that consumers are looking for, we look to integrate those too,

1052
00:59:35,520 --> 00:59:37,200
Speaker 18: and I think we've done a really good job at

1053
00:59:37,240 --> 00:59:40,320
Speaker 18: executing on both of those fronts. And then of course,

1054
00:59:40,800 --> 00:59:43,920
Speaker 18: looking forward, I think we're really excited about the innovation

1055
00:59:44,080 --> 00:59:48,000
Speaker 18: opportunities ahead of us. With Jenai, we think we're industry

1056
00:59:48,120 --> 00:59:51,240
Speaker 18: leading here and then of course over the very long.

1057
00:59:51,200 --> 00:59:53,640
Speaker 12: Term with our vision for reality labs and the Metaverse.

1058
00:59:54,560 --> 00:59:57,320
Speaker 17: We are of course with the Meta Chief financial Officers

1059
00:59:57,360 --> 01:00:01,040
Speaker 17: Susan Lee, We're welcome across TV and with our audiences

1060
01:00:01,120 --> 01:00:04,520
Speaker 17: and Susan, I've all started talking about everything apps now.

1061
01:00:04,560 --> 01:00:07,840
Speaker 17: I know you're about the money, not always developing the product,

1062
01:00:08,160 --> 01:00:10,600
Speaker 17: but you think about everything app as Meta as there

1063
01:00:10,640 --> 01:00:12,800
Speaker 17: a race on to ensure that we can build that

1064
01:00:12,880 --> 01:00:14,000
Speaker 17: here in the us, and you'll.

1065
01:00:13,840 --> 01:00:14,280
Speaker 7: Be part of it.

1066
01:00:16,000 --> 01:00:16,920
Speaker 12: It's a great question.

1067
01:00:17,200 --> 01:00:19,320
Speaker 18: I know that there are other regions around the world,

1068
01:00:19,360 --> 01:00:21,760
Speaker 18: in particular Asia, where there are apps that have gone

1069
01:00:21,840 --> 01:00:24,400
Speaker 18: down this model. That's not a model that we have

1070
01:00:24,640 --> 01:00:27,200
Speaker 18: right now. We haven't seen that use case to the

1071
01:00:27,240 --> 01:00:32,320
Speaker 18: same extent in North America. But you know, I would

1072
01:00:32,360 --> 01:00:35,000
Speaker 18: say that we're really invested in the opportunities that we

1073
01:00:35,160 --> 01:00:37,600
Speaker 18: have ahead of us across our family of apps right now,

1074
01:00:38,160 --> 01:00:41,640
Speaker 18: including Threads, which is the newest standalone app in our portfolio.

1075
01:00:42,240 --> 01:00:43,800
Speaker 18: And then there's just a lot that we can do

1076
01:00:44,000 --> 01:00:47,240
Speaker 18: to make the experiences across our family of apps richer

1077
01:00:47,320 --> 01:00:50,160
Speaker 18: and more engaging with the investments that we've made already

1078
01:00:50,240 --> 01:00:54,680
Speaker 18: in AI and especially recommending content that you don't already follow,

1079
01:00:54,800 --> 01:00:58,160
Speaker 18: and we know that that's brought richer content experiences to people,

1080
01:00:58,480 --> 01:01:03,560
Speaker 18: is growing engagement across the apps, and we'll release you know,

1081
01:01:03,680 --> 01:01:06,640
Speaker 18: we'll be releasing features over the course of the next years.

1082
01:01:06,640 --> 01:01:08,600
Speaker 18: But we're really excited about what we think that this

1083
01:01:08,760 --> 01:01:11,320
Speaker 18: is going to bring to bear for the consumer experience

1084
01:01:11,400 --> 01:01:14,440
Speaker 18: and of course also eventually for businesses to connect with

1085
01:01:14,520 --> 01:01:16,640
Speaker 18: consumers across the family of apps too.

1086
01:01:17,720 --> 01:01:21,000
Speaker 16: Susan investors were sanguine about the idea that expenses could

1087
01:01:21,040 --> 01:01:23,200
Speaker 16: creep up. I want if you just tell us what

1088
01:01:23,280 --> 01:01:28,000
Speaker 16: your priorities are, where you'll invest in talent in the metaverse,

1089
01:01:28,040 --> 01:01:30,440
Speaker 16: whether your investments will be on the content side or

1090
01:01:30,480 --> 01:01:31,440
Speaker 16: the hardware side.

1091
01:01:33,240 --> 01:01:33,800
Speaker 12: Great question.

1092
01:01:34,560 --> 01:01:36,360
Speaker 18: We talked about this a little bit on the call

1093
01:01:36,480 --> 01:01:38,920
Speaker 18: yesterday when we gave some coller into the twenty twenty

1094
01:01:38,960 --> 01:01:41,920
Speaker 18: four outlook. The three themes that I really want to

1095
01:01:41,960 --> 01:01:45,240
Speaker 18: talk about there are. First, we expect that our infrastructure

1096
01:01:45,280 --> 01:01:47,720
Speaker 18: costs are going to grow because of the investments we've

1097
01:01:47,760 --> 01:01:51,680
Speaker 18: made in AI, building GPU capacity, you know, that will

1098
01:01:51,720 --> 01:01:54,320
Speaker 18: go towards both the core AI work and the ranking

1099
01:01:54,400 --> 01:01:57,040
Speaker 18: and recommendation engines that I talked about, along with the

1100
01:01:57,120 --> 01:02:00,600
Speaker 18: new GENAI investments. So that's a place where we're investing

1101
01:02:00,880 --> 01:02:03,840
Speaker 18: certainly in a lot of hardware, along with the infrastructure

1102
01:02:04,440 --> 01:02:06,800
Speaker 18: such as data centers and network equipment that you need

1103
01:02:06,880 --> 01:02:09,800
Speaker 18: to support that. The second area that we talked about

1104
01:02:09,960 --> 01:02:13,240
Speaker 18: is we are evolving our workforce toward a more technical mix,

1105
01:02:13,800 --> 01:02:16,000
Speaker 18: you know, and we want to hire top tier technical

1106
01:02:16,120 --> 01:02:21,040
Speaker 18: talent where we can towards some of our most compelling opportunities,

1107
01:02:21,240 --> 01:02:25,040
Speaker 18: including AI and machine learning engineers to work on the

1108
01:02:25,120 --> 01:02:28,040
Speaker 18: AI efforts we talked about, and so that's a place

1109
01:02:28,120 --> 01:02:31,040
Speaker 18: where we are going to be investing, but we're going

1110
01:02:31,120 --> 01:02:33,680
Speaker 18: to be doing it in a very thoughtful way, making

1111
01:02:33,720 --> 01:02:36,480
Speaker 18: sure that we're really focusing on the core priorities and

1112
01:02:36,600 --> 01:02:39,440
Speaker 18: making trade offs we're appropriate. The third thing that we

1113
01:02:39,560 --> 01:02:42,280
Speaker 18: talked about is on the reality lab side. That's certainly

1114
01:02:42,360 --> 01:02:45,560
Speaker 18: a very long time horizon and ambitious vision, and we're

1115
01:02:45,600 --> 01:02:47,880
Speaker 18: going to be investing in deploying capital toward it.

1116
01:02:48,720 --> 01:02:51,840
Speaker 17: The capital coming from that you already have. Are you

1117
01:02:51,920 --> 01:02:53,800
Speaker 17: looking at the bond market, are you looking at raising

1118
01:02:53,880 --> 01:02:54,400
Speaker 17: more funds?

1119
01:02:56,680 --> 01:03:00,840
Speaker 18: You know, we certainly generate enough free cash flow right

1120
01:03:00,920 --> 01:03:04,400
Speaker 18: now for us to invest across the organic opportunities ahead

1121
01:03:04,400 --> 01:03:07,760
Speaker 18: of us that we see that are compelling. We have

1122
01:03:08,000 --> 01:03:11,760
Speaker 18: been raising that we did earlier this year, just as

1123
01:03:11,760 --> 01:03:14,800
Speaker 18: we're evolving our capital structure going forward, and that's something

1124
01:03:14,880 --> 01:03:16,760
Speaker 18: that will continue to look at and I think do

1125
01:03:16,920 --> 01:03:20,720
Speaker 18: on a measured pace going forward. But in terms of

1126
01:03:20,800 --> 01:03:23,640
Speaker 18: thinking about the capital available to us now, you know,

1127
01:03:23,720 --> 01:03:26,360
Speaker 18: we generate a lot of capital that we're always looking

1128
01:03:26,440 --> 01:03:29,720
Speaker 18: to allocate across the organic opportunities that we have, and

1129
01:03:29,800 --> 01:03:31,919
Speaker 18: we've talked about some of those and then of course

1130
01:03:32,040 --> 01:03:33,400
Speaker 18: shareholder returns.

1131
01:03:33,760 --> 01:03:36,040
Speaker 16: Susan really quickly before we lose you. How do you

1132
01:03:36,160 --> 01:03:39,120
Speaker 16: and Mark split up responsibilities at the company. What's it

1133
01:03:39,200 --> 01:03:40,080
Speaker 16: like working with Mark?

1134
01:03:41,600 --> 01:03:45,640
Speaker 18: You know, I've had the privilege of working with and

1135
01:03:45,760 --> 01:03:49,720
Speaker 18: learning from Mark for fifteen years here, obviously as CEO,

1136
01:03:50,080 --> 01:03:53,320
Speaker 18: you know, and as a product visionary. He really shepherds

1137
01:03:53,400 --> 01:03:57,160
Speaker 18: the product roadmap and has defined the long term vision

1138
01:03:57,280 --> 01:03:59,080
Speaker 18: for a lot of the things that we're investing in

1139
01:03:59,760 --> 01:04:03,200
Speaker 18: with incredibly ambitious goals, and I think that's a tremendous

1140
01:04:03,240 --> 01:04:06,200
Speaker 18: and powerful motivator for us, and I try to make

1141
01:04:06,240 --> 01:04:09,400
Speaker 18: sure that we have the financial frameworks and targets that

1142
01:04:09,480 --> 01:04:12,439
Speaker 18: are going to enable us to invest against those things.

1143
01:04:12,880 --> 01:04:16,360
Speaker 18: Innovation isn't free, and that's something that we're very mindful of,

1144
01:04:16,560 --> 01:04:19,800
Speaker 18: and we recognize that, especially against some of our longest

1145
01:04:19,880 --> 01:04:22,840
Speaker 18: time horizon ambitions, we have to earn the right to

1146
01:04:22,920 --> 01:04:25,280
Speaker 18: put capital towards those things in the way that we do.

1147
01:04:26,080 --> 01:04:27,520
Speaker 12: What I will say, having worked with.

1148
01:04:27,560 --> 01:04:30,560
Speaker 18: Mark for such a long time is he's tremendous at

1149
01:04:30,600 --> 01:04:33,800
Speaker 18: adapting to the time that we're in. And so whether

1150
01:04:33,920 --> 01:04:37,040
Speaker 18: that was leading a four hundred person startup when I joined,

1151
01:04:37,200 --> 01:04:40,320
Speaker 18: whether that was overseeing our transition to the public markets

1152
01:04:40,800 --> 01:04:43,840
Speaker 18: during the shift to mobile, or whether that was this

1153
01:04:44,200 --> 01:04:47,880
Speaker 18: past year, helping us really retool our cost structure and

1154
01:04:47,960 --> 01:04:50,720
Speaker 18: the way we operate, and leading on the Year of Efficiency.

1155
01:04:51,200 --> 01:04:54,200
Speaker 18: I think Mark is tremendously good at making hard decisions,

1156
01:04:54,680 --> 01:04:57,160
Speaker 18: at acting on them with conviction and looking forward.

1157
01:04:58,200 --> 01:05:01,120
Speaker 16: Mesa Chief financial Officer, Thank you so much.

1158
01:05:04,560 --> 01:05:07,640
Speaker 2: Thanks for listening to the Bloomberg Markets podcast. You can

1159
01:05:07,680 --> 01:05:11,720
Speaker 2: subscribe and listen to interviews on Apple Podcasts or whatever.

1160
01:05:11,560 --> 01:05:13,000
Speaker 5: Podcast platform you prefer.

1161
01:05:13,400 --> 01:05:16,680
Speaker 2: I'm Matt Miller. I'm on Twitter at Matt Miller nineteen

1162
01:05:16,760 --> 01:05:17,360
Speaker 2: seventy three.

1163
01:05:17,840 --> 01:05:20,200
Speaker 1: And I'm Faul Sweeney. I'm on Twitter at pt Sweeney.

1164
01:05:20,320 --> 01:05:23,000
Speaker 1: Before the podcast, you can always catch us worldwide at

1165
01:05:23,000 --> 01:05:23,760
Speaker 1: Bloomberg Radio.