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Morgan Stanley Could Struggle Long-Term Without An ETF Solution · Bloomberg Intelligence

• 0:01
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along
• 0:04
  Speaker 1: with my co host of Bonnie Quinn. Every business day
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  Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts,
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  Speaker 1: along with essential market moving news. Find the Bloomberg Markets
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  Speaker 1: Podcast on Apple podcast or wherever you listen to podcasts,
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  Speaker 1: and on Bloomberg dot com. I want to point out
• 0:20
  Speaker 1: that stocks are higher, they are spiking just a little
• 0:24
  Speaker 1: bit because we have word that President Trump has approved
• 0:26
  Speaker 1: a revised stimulus package. This is coming from Larry Cuddler,
• 0:31
  Speaker 1: who's speaking on Fox Business right now again. President Trump
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  Speaker 1: has approved a revised stimulus package. He spoke with Mark Meadows,
• 0:39
  Speaker 1: the chief of staff on the Treasury Secretary, Steve Manuchien.
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  Speaker 1: Of course, we all know that he is just one
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  Speaker 1: of the people involved in all of this. Right, the
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  Speaker 1: Democrats also have to sign on to anything, and obviously
• 0:50
  Speaker 1: the Republicans have to sign on, although presumably they would.
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  Speaker 1: We don't know what's in this revised Tomla's package. We'll
• 0:55
  Speaker 1: see how much comes out, but it does signal a
• 0:59
  Speaker 1: willingness for President tomp to do a U turn on
• 1:01
  Speaker 1: that idea that he was completely shutting down all stimulus
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  Speaker 1: package conversations A look a bit more of that in
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  Speaker 1: a moment, But while we are wait more details, let's
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  Speaker 1: bring in Eric maltunas senior et F analyst for Bloomberg Intelligence. Eric,
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  Speaker 1: obviously this is changing the narrative for the day, but
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  Speaker 1: do talk to us about everything that's happened this week
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  Speaker 1: in terms of Morgan Stanley buying Eating Vance and also
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  Speaker 1: you know, Vanguard returning assets to China's state funds. There's
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  Speaker 1: a lot going on in the t F space. Yeah. No,
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  Speaker 1: this is giant asset managers doing big things, starting with
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  Speaker 1: the Morgan Stanley. Um. This was a little bit of
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  Speaker 1: a shock apparently Eating Vance went to Morgan Stanley, which
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  Speaker 1: I don't blame them. If I'm running legacy mutual fund
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  Speaker 1: shop and I don't really have a strong et s
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  Speaker 1: game or passive game, I would look to go to
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  Speaker 1: merge with people get really big. That way, you have
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  Speaker 1: scale and you can lower fees and maybe compete more
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  Speaker 1: aggressively get some extra distributions. So it makes sense that bistically,
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  Speaker 1: I do think that what Morgan Stanley was after with
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  Speaker 1: eat Advance was direct indexing, which is sort of like
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  Speaker 1: separately managed accounts that are for advisors. We think that
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  Speaker 1: demand is overstated. If you look, direct indexing maybe took
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  Speaker 1: in three four or five billion this year. ETS have
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  Speaker 1: taken in about three and fifty. So you know, it's
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  Speaker 1: going to be tough for Morgan Stanley to compete against
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  Speaker 1: ets and traditional index funds with these ventures. But for now,
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  Speaker 1: it's I think a smart move by them because the
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  Speaker 1: bigger you get than it's easier to lower the fees,
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  Speaker 1: and that is really the name of the game. And
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  Speaker 1: where a lot of the flows are going is funds
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  Speaker 1: that are on the cheaper side. So that's the Morgan
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  Speaker 1: Stanley situation. So pretty good, but I think they'll struggle
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  Speaker 1: long term. But without that E t F solution. So
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  Speaker 1: you know, what is E t F solution for a
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  Speaker 1: big shop like a Morgan Stanley, d A BYDA build.
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  Speaker 1: How do you really increase your share there? Here's what
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  Speaker 1: everybody's doing. They're basically buying the end customer. And so
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  Speaker 1: if you Morgan Stam has a bunch of advisors, if
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  Speaker 1: you have access in distribution we call captive audience, then
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  Speaker 1: you can pretty much give you have some control over
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  Speaker 1: what you give them. The question is even that captive audience.
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  Speaker 1: I just don't I don't know if they're going to
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  Speaker 1: want a Calvert mutual fund. A Calvert e s G
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  Speaker 1: mutual fund charges you know, let's say seventy to eight
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  Speaker 1: basis points. You can get a Vanguard e s G
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  Speaker 1: E T S or black Rock one for ten to fifteen.
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  Speaker 1: And so the e t S is just so much cheaper.
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  Speaker 1: It's liquid there, it's tax efficient. So it's difficult even
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  Speaker 1: with the captive audience to do that. But a lot
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  Speaker 1: of the issuers, Goldman, Vanguard, Swab, what they're doing is
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  Speaker 1: they have e t s and they can use their
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  Speaker 1: captive audience get some assets and flows, and then that
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  Speaker 1: brings people outside of the captive audience to those e
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  Speaker 1: t s. So that's the new name of the game
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  Speaker 1: is it's have some investors lined up, launch y e
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  Speaker 1: t f s, get assets in there, and try to
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  Speaker 1: attract retail investors outside of that. Morgan Stanley appears to
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  Speaker 1: be doing something like that. They're just gonna try to
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  Speaker 1: use direct indexing and mutual funds to do it, and
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  Speaker 1: I just think it will be harder without the e
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  Speaker 1: t F. Yeah, it's so interesting how the landscape has
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  Speaker 1: changing I mean, I guess it always needs to change.
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  Speaker 1: We have a great story on the Bloomberg today. But
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  Speaker 1: wealthy American families being told by their advisors they need
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  Speaker 1: to act now or risk losing millions of dollars in
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  Speaker 1: case Democrats win back the White House and Senate and
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  Speaker 1: all of the loopholes that President Trump ushered in in
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  Speaker 1: terms of state tax rules get reversed. How much does
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  Speaker 1: this impact the E T F space? Eric, I mean,
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  Speaker 1: are these people that sort of buy E T F?
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  Speaker 1: Or is that not even in their sphere of vision? Um. So,
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  Speaker 1: you know Obama before he left, he had tried to
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  Speaker 1: put through the fiduciary rule. The Trunk dismantled that fiduciary
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  Speaker 1: rule if Biden were to win and reinforce that, Um,
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  Speaker 1: which we think is a pretty good rule, basically just
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  Speaker 1: says if you're a wealth manager and you're advising clients,
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  Speaker 1: you need to keep their best interests at heart. Um.
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  Speaker 1: It's really sad they need a rule for that, but anyway,
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  Speaker 1: they that's the rule. And so essentially that would mean
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  Speaker 1: that the best interest would mean cheap and you possibly
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  Speaker 1: could be sued or gailed at if you put somebody
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  Speaker 1: in say a mutual fund because you've got to you know,
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  Speaker 1: a commission on it or something. So the more that
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  Speaker 1: fiduciary rule is in play, the better it would be
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  Speaker 1: for E T F and passive. Now if they put
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  Speaker 1: taxes on trading or capital gains, um, I don't know,
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  Speaker 1: maybe that would hurt everybody at the same time, and
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  Speaker 1: ets to be part of that. The other thing is
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  Speaker 1: a Biden administration. Mike mcgloan was just writing, and I
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  Speaker 1: agree with them. Could be better for a bit poin
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  Speaker 1: ets to be launched. We think that that's ultimately positive
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  Speaker 1: too so, but Biden, unlike Bernie, is pretty moderate, so
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  Speaker 1: I don't see a ton changing. I just I think
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  Speaker 1: that d O the d L rule. Otherwise it was
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  Speaker 1: the fiduciary rule is probably the main thing to keep
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  Speaker 1: your eye on if Biden wins. Hey, Erica saw a
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  Speaker 1: story on the Bloomberg. Uh, Vanguard returning twenty one billion
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  Speaker 1: dollars in assets to China's state funds. What's going on there? Yeah,
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  Speaker 1: this is a unique Uh honestly didn't know they managed
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  Speaker 1: that much for the Chinese government. Um. You know, when
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  Speaker 1: we look at Vanguard, their international exposure is pretty weak
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  Speaker 1: compared to other issuers like black Rock, because mostly in
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  Speaker 1: other places there's a commission based system UM, and they
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  Speaker 1: haven't moved to that fee based fiduciary system, which is
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  Speaker 1: mostly happening in the US anyway. UM. For all intents
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  Speaker 1: and purposes, what happened here is they're just giving back
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  Speaker 1: a twenty one billion that they managed for institutions. That
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  Speaker 1: is a tough business. Institutions wants you to do all
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  Speaker 1: this work for like one basis point, and it's just
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  Speaker 1: a lot of efforts. So they want to give that
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  Speaker 1: back and put their focus on what I call the
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  Speaker 1: holy grail, which is the retail investor in China. You know,
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  Speaker 1: there's a billion people there. It's like three Americas. And
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  Speaker 1: what they've done is teamed up with a financial and
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  Speaker 1: a robo advisor, and they're hoping that they can do
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  Speaker 1: what they did here over there, because that would the
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  Speaker 1: robo advisors fee based right up their alley. So I
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  Speaker 1: think they're just streamlining their focus away from institutions onto retail. Interesting. Eric,
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  Speaker 1: thank you so much for joining us. We always loved
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  Speaker 1: talking about the E T F business. Nobody better on
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  Speaker 1: the street to do with an Eric Baltunus. He's been
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  Speaker 1: doing the E t S since I think the beginning
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  Speaker 1: of the E t F business for Bloomberg Intelligence, he's
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  Speaker 1: a senior et F analysts and Fannie. It's it's just
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  Speaker 1: interesting here as we think about the E t F business.
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  Speaker 1: The feed differential is so key, and it's such an
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  Speaker 1: attractive vehicle for retail investors. Yeah, for sure, and some
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  Speaker 1: of them not last very long and some of them
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  Speaker 1: are around forever. So definitely you know an area to
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  Speaker 1: study if you're again getting involved in them. But Paul,
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  Speaker 1: I just want to return to the stimulus headline. I mean,
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  Speaker 1: this changes the dynamic going into the weekend once again.
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  Speaker 1: If the President is willing for talks to go ahead,
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  Speaker 1: does suddenly Nancy Pelosi become more willing to reach a
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  Speaker 1: deal or was it was it fine that that we
• 7:57
  Speaker 1: weren't going to have a deal before the election for
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  Speaker 1: the Dems. Will see, but stocks certainly moving higher. The
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  Speaker 1: International Council of Shopping Center is this Holiday shopping Intentions
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  Speaker 1: survey is out? It's hard to believe it's coming close.
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  Speaker 1: We're already in the middle of October, and so let's
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  Speaker 1: welcome Tommy, President and Chief Executive Officer of the I C. S. C.
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  Speaker 1: And Tom. There's a lot unpacking here. You represented a
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  Speaker 1: sample of one thousand and four US respondents, but your
• 8:27
  Speaker 1: members of number over seventy thousand. So before we get
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  Speaker 1: to what seems to be rosier than you might expect, outlook,
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  Speaker 1: talk to us about how your members are faring right now,
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  Speaker 1: how many are open, how many are losing money? Well,
• 8:41
  Speaker 1: good morning, and thanks for having me on. You know,
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  Speaker 1: I think we're in a very uncertain environment. Obviously, you
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  Speaker 1: know the our industry is that the epicenter of the
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  Speaker 1: pandemic and stay at home orders and other safety requirements,
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  Speaker 1: and so I think it varies depending upon where you
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  Speaker 1: are in the country, and obviously you know the nature
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  Speaker 1: of retail um that you offer. But I think generally speaking,
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  Speaker 1: our members have done a good job of managing through
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  Speaker 1: a unprecedented period of time. We are looking forward to
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  Speaker 1: the holiday season and expected to be I would say
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  Speaker 1: solid for a variety of reasons, um most most significantly
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  Speaker 1: because I think consumers spending over the course of this
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  Speaker 1: past year has been less than you know, we would
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  Speaker 1: have hoped for given the pandemic, and people will lean
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  Speaker 1: in more significantly into the holiday as a result. So Tom,
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  Speaker 1: just give us a sense, UM's kind of mall traffic.
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  Speaker 1: I guess if you will. I'm not sure how you
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  Speaker 1: guys really measure it. Small traffic this year, how how
• 9:46
  Speaker 1: down is it? Well? I think it clearly clearly traffic
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  Speaker 1: will be down this year for obvious reasons. I mean
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  Speaker 1: there's you know, obviously occupancy restrictions. I mean, clearly consumer
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  Speaker 1: is concerned about safety and security. I think a lot
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  Speaker 1: of the malls have done a lot obviously to try
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  Speaker 1: to alleviate those concerns, everything from mass requirements to you know,
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  Speaker 1: putting up one way aisles and contact barriers, and the
• 10:12
  Speaker 1: retailers as well. But you know, this holiday season, you know,
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  Speaker 1: e commerce will continue to grow. I think the trends
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  Speaker 1: that we've seen over the course of the pandemic will
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  Speaker 1: continue to be front and center use of e commerce.
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  Speaker 1: But those retailers that really merge their e commerce platforms
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  Speaker 1: with their physical retail platforms will do the best. You
• 10:32
  Speaker 1: will see a continuation of things like curbside pick up
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  Speaker 1: and click and collect, etcetera be front and center, um,
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  Speaker 1: particularly during the holiday season, where there'll be significant you know,
• 10:44
  Speaker 1: there'll be significant tension in just the delivery system given
• 10:47
  Speaker 1: the you know, the volume that will take place, and
• 10:49
  Speaker 1: people will want the comfort of going and doing curbside
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  Speaker 1: pick up to make sure that they have the goods
• 10:55
  Speaker 1: in place. I also think I would not you know,
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  Speaker 1: I wouldn't read to my into this year as it
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  Speaker 1: relates to a future trend. I mean, it's hard to
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  Speaker 1: know how all of these things will impact, you know,
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  Speaker 1: the long term nature the way people's shop in retail.
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  Speaker 1: I do know right now, Um, you know, certainly the
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  Speaker 1: consumer is going to put safety front and center, and
• 11:17
  Speaker 1: they're much more efficient in their shopping. I mean, they're
• 11:19
  Speaker 1: much more purposeful. If you go to a store, you're
• 11:22
  Speaker 1: much more likely to know exactly what you want to purchase,
• 11:24
  Speaker 1: you're gonna go purchase it, and you're gonna leave. And
• 11:27
  Speaker 1: and that's again back to safety and a focus upon that. So, Tom,
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  Speaker 1: your outlook forecasts increased spending with a longer holiday shopping season,
• 11:36
  Speaker 1: hoping out in that regard, that's a rosy outlook. Does
• 11:40
  Speaker 1: it depend on stimulus And if we don't get stimulus,
• 11:43
  Speaker 1: will this forecast change entirely? Yeah? I think there's obviously
• 11:47
  Speaker 1: it's a very difficult year to make a forecast, and
• 11:50
  Speaker 1: so I think when we look at um at one
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  Speaker 1: point percent spending increase, you know, it assumes that things
• 11:57
  Speaker 1: like stimulus would take place that it certainly is assumes
• 12:00
  Speaker 1: that the unemployment picture remains stable. Uh. And certainly you
• 12:04
  Speaker 1: know that we've managed the pandemic has managed effectively over
• 12:08
  Speaker 1: the course of the next number of months. If government
• 12:11
  Speaker 1: stimulus does not come through, which I think is critical
• 12:13
  Speaker 1: not just for our industry but for the overall economy,
• 12:16
  Speaker 1: to be perfectly honest with you, uh. And there's significant
• 12:19
  Speaker 1: spikes in the virus, obviously that's going to have a
• 12:22
  Speaker 1: negative impact upon our forecast. You know what's driving our forecast,
• 12:26
  Speaker 1: quite frankly, is if you look at people are spending
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  Speaker 1: a lot less on things that they traditionally spent things
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  Speaker 1: it's spent money on going out to eat, for example,
• 12:35
  Speaker 1: entertainment for example. And so that we believe that some
• 12:38
  Speaker 1: of that money that would have historically been spent in
• 12:41
  Speaker 1: those things will be contributed to holiday spending. And and
• 12:44
  Speaker 1: I think you know, family uh is highly important right now.
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  Speaker 1: Uh And and parents with kids will likely invest in
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  Speaker 1: the holiday to try to help kids that are obviously
• 12:56
  Speaker 1: going through a challenging period of time. As well through
• 12:58
  Speaker 1: the pandemic. Tom, just give us a sense here. We
• 13:01
  Speaker 1: hear that the US is still way overstored that shopping uh,
• 13:06
  Speaker 1: that these retailers need to cut their store count. How
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  Speaker 1: do you view that? Yes, well, I think it's hard
• 13:14
  Speaker 1: to measure that right now, because you don't really you know, again,
• 13:17
  Speaker 1: we're in the midst of kind of an unprecedented period
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  Speaker 1: of time. I think what I would generally say is
• 13:22
  Speaker 1: that those retailers that went into the pandemic in you know,
• 13:26
  Speaker 1: relatively stable shape with a strong balance sheet, are going
• 13:30
  Speaker 1: to emerge from the pandemic um you know, Okay, those
• 13:34
  Speaker 1: retailers that went into the pandemic where they were suffering
• 13:38
  Speaker 1: from a declining, declining revenue and did not have a
• 13:42
  Speaker 1: strong balance sheet. Obviously, we've seen the ramifications of it,
• 13:46
  Speaker 1: and we've seen you know, a lot of store closures.
• 13:48
  Speaker 1: It's hard for me to predict, you know, how what
• 13:51
  Speaker 1: the long term impact of that will be once we
• 13:54
  Speaker 1: emerge in the pandemic. I'm quite confident of of really
• 13:58
  Speaker 1: two things. One, I think, you know, the industry has
• 14:01
  Speaker 1: gone through lots of shocks in the past, and I
• 14:02
  Speaker 1: think like this, but it's going through lots of shops
• 14:06
  Speaker 1: and it will emerge from this. But and I think
• 14:09
  Speaker 1: retailers are very entrepreneur in data, and I think that
• 14:13
  Speaker 1: they will they will adapt as well. Hey, Tom, thanks
• 14:17
  Speaker 1: so much for joining us. We really appreciate your thoughts.
• 14:19
  Speaker 1: Tommy Gee, President, Chief Executive Officer of the International Council
• 14:23
  Speaker 1: of Shopping Centers, giving us his thoughts about the retail
• 14:25
  Speaker 1: holiday shopping season coming up. Well, President Donald Trump is
• 14:31
  Speaker 1: planning to get back on the campaign trout. The question
• 14:34
  Speaker 1: is is that wise for someone who has recently been
• 14:36
  Speaker 1: diagnosed with COVID nineteen UH. To get the answers to
• 14:39
  Speaker 1: that and other questions, we welcome Lauren Sour, Assistant Professor
• 14:43
  Speaker 1: of Emergency Medicine the John Hopps JOHNS. Hopkins School of Medicine,
• 14:47
  Speaker 1: and should note that the Bloomberg School of Public Health
• 14:49
  Speaker 1: is supported by Michael Bloomberg, founder of Bloomberg LP and
• 14:52
  Speaker 1: Bloomberg Philanthropies, as well as this radio and TV operation.
• 14:56
  Speaker 1: Dr Sour thanks so much for joining us here. So again,
• 14:59
  Speaker 1: President Trump is itching to get back on the campaign trail,
• 15:02
  Speaker 1: potentially having a rally. I guess tomorrow is that wise
• 15:07
  Speaker 1: for someone who again has recently been diagnosed with COVID
• 15:10
  Speaker 1: nineteen no, in fact that it actually violates the CDC
• 15:15
  Speaker 1: guidelines about self isolation. And I think a lot of
• 15:18
  Speaker 1: people saw the UM interview that he had with Sean
• 15:23
  Speaker 1: Hannity where he was coughing, and we've seen him, you know,
• 15:26
  Speaker 1: having these challenging breathing processes on video in both his
• 15:31
  Speaker 1: return from Walter Reid but also in more recent videos,
• 15:35
  Speaker 1: and anyone who sees that can see that he is
• 15:37
  Speaker 1: still experiencing symptoms of COVID nineteen and should definitely be
• 15:42
  Speaker 1: self isolating for a minimum of two weeks. Is there
• 15:46
  Speaker 1: a point beyond which from de severere and x metho
• 15:49
  Speaker 1: zone and whatever else he's taking stops becoming useful. All
• 15:55
  Speaker 1: of these drugs have different periods of utility and are
• 16:00
  Speaker 1: given it at different times, and it's important to remember
• 16:03
  Speaker 1: that they're all still experimental for the treatment of COVID
• 16:06
  Speaker 1: nineteen or or infection with stars covie too, so we
• 16:09
  Speaker 1: don't actually know the full breadth of um of how
• 16:14
  Speaker 1: and when the drugs are useful. I think rem Desiviere
• 16:16
  Speaker 1: we have a lot of information on this UM, you know,
• 16:19
  Speaker 1: ten five and tender course of of them, oftentimes administered
• 16:24
  Speaker 1: in the hospital. They're almost exclusively administered in the hospital
• 16:28
  Speaker 1: with regeneron we you know, you want to see in
• 16:30
  Speaker 1: these monocola antibodies, the patients being monitored, their auntibody levels
• 16:34
  Speaker 1: routinely being checked um and and honestly, we don't often
• 16:39
  Speaker 1: discharge people so quickly with steroids like the President was
• 16:42
  Speaker 1: with deem xizone and UM. So that is a is
• 16:46
  Speaker 1: a concerning sort of development in how that drug was
• 16:49
  Speaker 1: administered and then how he's monitored post administration. So, Professor,
• 16:55
  Speaker 1: this treatment how or is that something that you think
• 17:01
  Speaker 1: is going to be widely deployed for patients. I'm just
• 17:03
  Speaker 1: wondering how the President Trump's doctors kind of zeroed in
• 17:07
  Speaker 1: on that as potential treatment. Um and it appears at
• 17:11
  Speaker 1: least to be successful in the President's case. Yeah, I
• 17:15
  Speaker 1: think we can't really know if it was successful in
• 17:17
  Speaker 1: the President's case because we don't have a lot of
• 17:20
  Speaker 1: data in a nice, well designed clinical trial. And so,
• 17:24
  Speaker 1: you know, there's so many factors that go into the
• 17:26
  Speaker 1: President's medical care. He is getting the best of the
• 17:29
  Speaker 1: best medical care, and so one of the reasons we
• 17:32
  Speaker 1: use clinical trials is to weed out some of those
• 17:35
  Speaker 1: confounding factors. Um, you know, standard of care, the other
• 17:39
  Speaker 1: things he's been given, the supportive care, he got, the fluids,
• 17:43
  Speaker 1: all of those other things when he made it his
• 17:45
  Speaker 1: way into the hospital. So while it is probably UM,
• 17:49
  Speaker 1: you know, we'll probably learn a lot more about these UH,
• 17:53
  Speaker 1: these monoclonal antibodies soon as they go through this clinical
• 17:57
  Speaker 1: trial protocol. UM, we can't really stay explicitly. We can
• 18:02
  Speaker 1: guess that they helped, but we can't say explicitly that
• 18:04
  Speaker 1: they did. UM. We use monoclonal antibodies and monoclonal antibody
• 18:08
  Speaker 1: cocktails in many other situations and they are effective. UM,
• 18:12
  Speaker 1: and we know their utility, which is I'm sure why
• 18:15
  Speaker 1: we're general and many other UH pharmaceutical companies have gone
• 18:19
  Speaker 1: down the path of creating them for COVID nineteen. But
• 18:23
  Speaker 1: until we have that good clinical trial data, we just
• 18:26
  Speaker 1: can't make any generalizations from this one very specific, very
• 18:30
  Speaker 1: high level of care case. Yeah, doctors, our is physical
• 18:34
  Speaker 1: exertion detrimental beyond a certain point. So we know the
• 18:38
  Speaker 1: doctors recommend that you stay active and that you try
• 18:40
  Speaker 1: and keep all of your bodily functions as functioning as
• 18:43
  Speaker 1: possible during this it's not really helpful to rest in
• 18:46
  Speaker 1: fact of anything, It just gives the virus a better chance.
• 18:49
  Speaker 1: But beyond a certain point, you have to ask the question,
• 18:52
  Speaker 1: if the resident is getting better, is there a chance
• 18:55
  Speaker 1: that he'll relapse by exerting himself so much, going on rallies,
• 18:59
  Speaker 1: being on TV every nice and every morning. Yes, it's
• 19:02
  Speaker 1: absolutely a risk. And you know he's on dexim foflon
• 19:05
  Speaker 1: or was when he was discharged, And so steroids can
• 19:08
  Speaker 1: make you feel better in the moment a lot better
• 19:11
  Speaker 1: in the moment um, and so he does have the
• 19:14
  Speaker 1: potential to sort of overdo it um and overexert and
• 19:17
  Speaker 1: possibly cause challenges to his breathing and his recovery UM
• 19:22
  Speaker 1: and and potentially do more harm to himself. So you know,
• 19:25
  Speaker 1: I'm not a physician, so I am, and I'm not
• 19:28
  Speaker 1: on his clinical care team, but I will say that
• 19:31
  Speaker 1: there we have seen in our data, at least from Hopkins,
• 19:34
  Speaker 1: but also I think more broadly across the globe that
• 19:37
  Speaker 1: people do have these short term recoveries and then um
• 19:41
  Speaker 1: get a lot worse. So if you overdo it in
• 19:43
  Speaker 1: that short term recovery space, you have the potential to
• 19:46
  Speaker 1: get a lot worse um and and not recover as
• 19:50
  Speaker 1: as effectively as you did that first go around. So
• 19:53
  Speaker 1: just real quickly, dr um. I think President Trump is
• 19:56
  Speaker 1: going to get a medical exam on top of Carlson
• 19:59
  Speaker 1: tonight on by the Fox Doctor. What should we be
• 20:03
  Speaker 1: looking for there? You know, I'm honestly not sure there's
• 20:07
  Speaker 1: much to look for there. I think it's seems from
• 20:10
  Speaker 1: everything I've heard like it will be a publicity stunt. Um.
• 20:14
  Speaker 1: We have seen this doctor who is going to be
• 20:17
  Speaker 1: examining him push misinformation about hydroxychloric quin and about um,
• 20:24
  Speaker 1: the the risks associated with coronavirus and how it was
• 20:28
  Speaker 1: not much difference than the flu um. So I think
• 20:32
  Speaker 1: a lot of it is going to be a narrative
• 20:34
  Speaker 1: that the President potentially is pushing, and that you know,
• 20:38
  Speaker 1: the findings are not going to actually tell us much
• 20:41
  Speaker 1: about his medical status. There's medical care certainly, um. He
• 20:45
  Speaker 1: would not let anything go out that that says that
• 20:48
  Speaker 1: anything beyond the narrative that he's controlling about his recovery
• 20:52
  Speaker 1: and his wellness. So I think that we're going to
• 20:54
  Speaker 1: get very limited information about how well he is doing.
• 20:57
  Speaker 1: And in fact, I think he's creating a false that
• 21:00
  Speaker 1: he is not infectious and safe and healthy. Um that
• 21:04
  Speaker 1: how's the potential to do some detriment to the broader
• 21:06
  Speaker 1: understanding of how we manage UM post hospital discharge. It
• 21:11
  Speaker 1: would be funny, except a lot of people will be watching,
• 21:13
  Speaker 1: and so it's not at all funny. Dr Lawrence Ours,
• 21:15
  Speaker 1: thank you very much, show Assistant Professor Emergency Medicine at
• 21:18
  Speaker 1: Johns Hopkins. Well, we have some deal activity in the
• 21:23
  Speaker 1: chips business. A M. D In talks about arrival Zilenx
• 21:28
  Speaker 1: for thirty billion dollars. To break down the details, we
• 21:32
  Speaker 1: welcome On and Trinivaston's senior semiconductor and hardware analysts for
• 21:36
  Speaker 1: Bloomberg Intelligence. He is one of the top chip analysts
• 21:40
  Speaker 1: on the street and we appreciate getting some of his time.
• 21:43
  Speaker 1: So On and big number here, thirty billion dollar deal.
• 21:46
  Speaker 1: What do you make of it? Yeah, it's hey, Paul,
• 21:49
  Speaker 1: good morning, Thank you for having me. So this is
• 21:51
  Speaker 1: in our view of both an offensive as as well
• 21:54
  Speaker 1: as a defensive deal for MD. If you look at
• 21:58
  Speaker 1: what's happening in the computing space, I mean this have
• 22:01
  Speaker 1: used this ice cream shop analogy before, which is that
• 22:04
  Speaker 1: computing has been evolving from an ice cream shop that
• 22:08
  Speaker 1: contains mostly vanilla, strawberry and chocolate into a remarkably diverse
• 22:13
  Speaker 1: ice cream shop with multiple flavors. You have general purpose
• 22:16
  Speaker 1: GPUs that m Video make, you have fp t a
• 22:19
  Speaker 1: s that xy links and Alterra make, and all of
• 22:22
  Speaker 1: these ice cream buckets if you may have been expanding
• 22:27
  Speaker 1: inside and expanding in use because of the different kinds
• 22:30
  Speaker 1: of workloads who've been seeing, which in turn is being
• 22:33
  Speaker 1: driven by the clouds. So Intel has this wide library
• 22:37
  Speaker 1: of assets um and, but they haven't been able to
• 22:40
  Speaker 1: put it together. So simply put, their ice cream machine
• 22:43
  Speaker 1: is broken. What is in video doing? In Video has
• 22:46
  Speaker 1: been able to put together specialty ice cream buckets in
• 22:49
  Speaker 1: terms of melanox and in terms of general purpose GPUs
• 22:53
  Speaker 1: very effectively, and with the ARM deo, it is now
• 22:57
  Speaker 1: gramatically expanding into the even love strawberry and chocolate main
• 23:02
  Speaker 1: mainstave flavors. So a m D was up until this
• 23:06
  Speaker 1: point doing really well in vanilla strawberry chocolate, taking share
• 23:11
  Speaker 1: from Intel, but it's specialty flavors are weak. So this
• 23:16
  Speaker 1: Zielenk steal gives them access to wider array of specialty
• 23:22
  Speaker 1: ice cream buckets as well as being able to play
• 23:25
  Speaker 1: in the mainstap flavors. So the computing market is changing,
• 23:29
  Speaker 1: and uh D is responding partially to accelerated share games
• 23:36
  Speaker 1: from Intel and partially to have an alternative to both
• 23:40
  Speaker 1: the Intel platform and the video platform for the next decade.
• 23:45
  Speaker 1: ZILENX on mixed programmable ships for wireless networks, does it
• 23:50
  Speaker 1: want to get acquired? Look, okay, at this point we've
• 23:55
  Speaker 1: talked about this in the semiconductor industry. Um is that
• 23:59
  Speaker 1: scale matter, platforms matter, Right, So if you look at
• 24:03
  Speaker 1: what Intel's capability is, it's been able to put together
• 24:08
  Speaker 1: or has attention on paper, the ability to put together
• 24:12
  Speaker 1: these different ice cream sundays for specialty workloads for cloud computing. Right. So,
• 24:18
  Speaker 1: if you were a specialty ice cream flavor and you're
• 24:21
  Speaker 1: saying I'm only going to make the topic or only
• 24:24
  Speaker 1: the sprinkles or only the hard flood said you have,
• 24:28
  Speaker 1: you run the risk of being marginalized. Versus if you
• 24:32
  Speaker 1: are a part of a big ice cream shop, then
• 24:35
  Speaker 1: your tompics are going to be my more widely used
• 24:38
  Speaker 1: your specialty ice cream flavor. He's going to be a
• 24:41
  Speaker 1: part of vast number of ice cream sundays rather be
• 24:47
  Speaker 1: ending we're talking about chips, right, Yes, but the ice
• 24:52
  Speaker 1: creamility comes in handy, don't you think. So I talked
• 24:56
  Speaker 1: to us about valuation here. I'm looking at the Bloomberg
• 24:59
  Speaker 1: Intelligence research and I see zylenx here at forty times
• 25:04
  Speaker 1: uh earnings. Seems like a big multiple to me. What's
• 25:07
  Speaker 1: that mean for m D? Yeah? So m D is
• 25:10
  Speaker 1: going to have to use a lot out of its
• 25:13
  Speaker 1: stock currency for them. So we think that you know,
• 25:16
  Speaker 1: roughly two third stock one third cash, and that will
• 25:19
  Speaker 1: maximize their leverage. We think, um, you mean, if you
• 25:22
  Speaker 1: look at what Broad comes at four times, but we
• 25:24
  Speaker 1: think that they could do this deal. Was that two
• 25:27
  Speaker 1: third two third equity one third that that that driven cash?
• 25:32
  Speaker 1: So that's the way we're thinking that the deal might
• 25:35
  Speaker 1: be structured. Either way, there's going to be a lot
• 25:36
  Speaker 1: of stock in Voltimus deal. Are they getting a better
• 25:39
  Speaker 1: price because we're in pandemic times? Or I mean, is
• 25:42
  Speaker 1: there an actual extra premium because these companies have what
• 25:45
  Speaker 1: we need right now? Yeah? So, shockingly enough, the pandemic
• 25:49
  Speaker 1: hasn't um sort of dramatically altered the vector of computing.
• 25:54
  Speaker 1: If anything, it's accelerated it. So we've heard this from
• 25:57
  Speaker 1: all the cloud services companies, all the changes that you
• 26:00
  Speaker 1: were expecting over the next few years have just been
• 26:03
  Speaker 1: dramatically accelerated as a result of the pandemic and pushed
• 26:06
  Speaker 1: or pulled forward right, And these are the building blocks
• 26:11
  Speaker 1: that tower those changes. So you resoom call that you're
• 26:15
  Speaker 1: on six hours today is being powered by these chips.
• 26:19
  Speaker 1: So the fact that there's demands there means that there's
• 26:22
  Speaker 1: landscape changes beneath the herd. If you may all right
• 26:26
  Speaker 1: on and keep us honest and not to date, you
• 26:29
  Speaker 1: know you will be following this throughout the day and
• 26:31
  Speaker 1: into next week on a swing. US and a senior
• 26:33
  Speaker 1: semiconductor and hardware analyst for Bloomware Intelligence ice cream Analysts
• 26:38
  Speaker 1: exactly have been talked to you for me. Thanks for
• 26:42
  Speaker 1: listening to the Boomberg Markets podcast. You can subscribe and
• 26:45
  Speaker 1: listen to interviews at Apple Podcasts or whatever podcast platform
• 26:49
  Speaker 1: you prefer. I'm Bonnie Quinn. I'm on Twitter at Bonny
• 26:52
  Speaker 1: Quinn and Paul Sweeney I'm on Twitter at pt Sweeney.
• 26:55
  Speaker 1: Before the podcast, you can always catch us worldwide at
• 26:58
  Speaker 1: Bloomberg Radio. H uh uh u