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CES, Boeing, and Bitcoin · Bloomberg Intelligence

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Speaker 2: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
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0:55
Speaker 2: All right, let's get out to Vegas to the Craps Table, Bellagio,
0:58
Speaker 2: the high Rollers Craft Table, which is where I tend
1:00
Speaker 2: to sit. Ed Ludlow's out there ostensibly at the CES
1:05
Speaker 2: Converence the Consumer Electronics Show. Wheres I like to call
1:08
Speaker 2: it the auto show with some gadgets around it. Edward,
1:12
Speaker 2: what's the buzz out there in Vegas this year? Is
1:16
Speaker 2: it pretty much AI driven across the board?
1:21
Speaker 3: Yeah.
1:22
Speaker 4: I put a newsletter or a column out this morning
1:24
Speaker 4: saying it's AI everywhere, and not necessarily in the ways
1:27
Speaker 4: you'd expect, just almost like you just said, there is
1:30
Speaker 4: a heavy automotive presence here, and we can get into that.
1:33
Speaker 4: But I think there are two kind of key things
1:35
Speaker 4: you're seeing. This kind of abstract conversation around AI and
1:38
Speaker 4: particularly generative AI, translate into real world things. So, for example,
1:42
Speaker 4: I spent the afternoon yesterday with Walmart, and if you
1:46
Speaker 4: are an iOS user, you have an iPhone, you bring
1:48
Speaker 4: up your Walmart app. You no longer have to search
1:50
Speaker 4: for hot dog buns or beer specifically by brand. What
1:55
Speaker 4: you can do is go into their generative AI tool
1:57
Speaker 4: and say I am hosting a Super Bowl weekend party,
2:02
Speaker 4: what should I buy? And it will list a complete
2:05
Speaker 4: shopping cart for you, ready to go. Then you have
2:07
Speaker 4: the option to click it. So that's kind of a
2:09
Speaker 4: real world manifestation of AI. I know what, who needs that? Actually?
2:12
Speaker 2: It works really well for the demo, like the Englishman
2:16
Speaker 2: the English DA hosting the Super Bowl party.
2:21
Speaker 4: Guys, as you know, I am a fair Weather forty
2:24
Speaker 4: nine have no interest, but it's an interesting experiment to do.
2:30
Speaker 4: The Other side of it as well, is that there
2:31
Speaker 4: are dozens of pieces of consumer devices or hardware where
2:35
Speaker 4: the selling point is AI and that looks different in
2:38
Speaker 4: different ways.
2:39
Speaker 5: Making it easier for us a shop and spend money.
2:43
Speaker 5: And so Paul had mentioned about how there's more car
2:47
Speaker 5: companies there. Car is a big thing. We spoke yesterday
2:50
Speaker 5: about this Goodyear tire that was released. If you could
2:53
Speaker 5: tell us a little bit more about this, because I
2:55
Speaker 5: hadn't even realized that that EVS really we're and tearing
2:58
Speaker 5: those tires a lot faster.
3:02
Speaker 6: Yeah.
3:02
Speaker 4: Something that happened just before the pandemic is that the
3:04
Speaker 4: kind of classic car shows think about the Detroit Auto
3:08
Speaker 4: Show or the munich Auto Show had kind of lost
3:10
Speaker 4: their shine, and you saw companies choose Ces to be
3:14
Speaker 4: the place that they unveiled their EVS four years later.
3:17
Speaker 4: That's not necessarily true. Honda did unveil its next generation
3:21
Speaker 4: EVS here, and Honda's important right. Many Americans driver Honda
3:25
Speaker 4: but when I spoke to the CEO about the plan,
3:27
Speaker 4: he basically told me we don't really have a plan.
3:30
Speaker 4: We just know that sometime in twenty twenty six, this
3:32
Speaker 4: ev concept we've shown you just now may or may
3:35
Speaker 4: not appear on US roads, which didn't fill me of confidence.
3:39
Speaker 4: And then away from that, it's all about automotive tech,
3:42
Speaker 4: think about advanced driver assistance, driving safety, the experience in
3:46
Speaker 4: the cockpit. Mercedes were on the show with me yesterday
3:49
Speaker 4: and they've brought a virtual assistant into the Mercedes cockpit
3:53
Speaker 4: where you literally say to Missilla, I'm driving home. Hey, Mercedes,
3:56
Speaker 4: I need to shop. Go to Walmart, put some stuff
4:00
Speaker 4: in my basket. By the way, there are other retailers
4:03
Speaker 4: and big boxes available other than the Walmart.
4:04
Speaker 2: That was just one example, right, So, Ed, I mean,
4:07
Speaker 2: it's just I know, I can see from the background
4:08
Speaker 2: you're in the exhibit hall here, what's the traffic been
4:12
Speaker 2: like there? And kind of what's the makeup of the crowd,
4:14
Speaker 2: because when I went, I was surprised at how global
4:18
Speaker 2: the attendance really is it this week of people from
4:20
Speaker 2: everywhere come to Vegas.
4:24
Speaker 4: Yeah, the data gives us a good read on post pandemic,
4:27
Speaker 4: business travel, and some insight into the economy. Right there
4:30
Speaker 4: are one hundred and thirty thousand, one to three zero
4:33
Speaker 4: attendees expected for this year's CEES. That's up from about
4:36
Speaker 4: one hundred and fifteen thousand last year, but it's still
4:40
Speaker 4: significantly below pre pandemic levels in terms of footfall and attendance.
4:44
Speaker 4: The international angle is interesting. One third of all attendees
4:47
Speaker 4: this year have come from overseas, and you know, just anecdotally,
4:51
Speaker 4: when you fly into to the airport, when you're waiting
4:54
Speaker 4: for a taxi, when you are in the casinos, there
4:57
Speaker 4: is a real sense that actually there is strong attendance
5:00
Speaker 4: this year, strong spend, and that that business travel component
5:03
Speaker 4: is back. And when I speak to sources, the reason why,
5:06
Speaker 4: it's very clear it's speed dating. And I mean that seriously.
5:09
Speaker 4: If you are the CEO of a big company, or
5:12
Speaker 4: you are trying to meet with the CEO of a company,
5:14
Speaker 4: everyone's in one place for just two days. Get it done.
5:18
Speaker 2: That's a great point. And what's the sense of you know,
5:21
Speaker 2: one of the things I think a lot of people
5:22
Speaker 2: are trying to get a hold of, particularly investors, is
5:25
Speaker 2: you know, this AI is such a new growth driver
5:29
Speaker 2: for technology. How much of it is incremental spending? Do
5:31
Speaker 2: you think, I mean, do you hear companies saying we're
5:34
Speaker 2: amping up our tech spending because of AI or is
5:37
Speaker 2: it kind of replacing other tech spending? You get any
5:40
Speaker 2: sense from the companies out.
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Speaker 4: There, Yeah, it's definitely a case of prioritizing rather than
5:47
Speaker 4: increasing overall spend. You know, we've seen this particularly on
5:50
Speaker 4: cloud spend right where a number of companies will say, okay,
5:54
Speaker 4: we have to be involved in AI, so we're adjusting
5:57
Speaker 4: the proportion that we're spending on a compute power versus
6:01
Speaker 4: data storage for example. There is really interesting ways that
6:05
Speaker 4: it manifests itself. Bear with me on this one. I
6:07
Speaker 4: spoke to Lorreal CEO Nicola Himus and they have a
6:11
Speaker 4: new device, the devices in beauty stores. It registers a
6:16
Speaker 4: reading of your skin. And that sounds abstract and silly,
6:20
Speaker 4: but the reason that AI is important that they've invested
6:23
Speaker 4: in it. They're saying that if you're a human in
6:25
Speaker 4: one in a store that's buying a loreal products and
6:27
Speaker 4: you go up to the counter and speak to another human,
6:29
Speaker 4: there is a nine percent chance that that sales rep
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Speaker 4: converts the sale. If you use this AI powered machine.
6:36
Speaker 4: Lorel thinks that this chance of a sale increases to
6:39
Speaker 4: seventy three percent. Wow, because the AI can give you
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Speaker 4: such a convincing read on your face and suggests products
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Speaker 4: directly relevant to you. So there is evidence that there's
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Speaker 4: kind of very focus spend on how AI can convert
6:53
Speaker 4: sales opportunities and boost margins.
6:55
Speaker 5: You know, I have to agree with that because if
6:58
Speaker 5: I went to a computer and it told me, I've
7:00
Speaker 5: had a lot of people in the you know, a
7:02
Speaker 5: beauty story that have told me the wrong shade.
7:04
Speaker 2: For my face, and I'm out of there looking like
7:06
Speaker 2: an orange.
7:07
Speaker 7: And and if the.
7:08
Speaker 5: Computer told me, I think I might believe it a
7:09
Speaker 5: little bit better. Ed wanted to quickly TikTok. A lot
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Speaker 5: of companies teaming up with them. Now we're hearing Google
7:16
Speaker 5: is doing it to stream those videos from your phone
7:19
Speaker 5: to TVs.
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Speaker 4: Yeah, so broadly, Google's whole Cees thing was the ability
7:25
Speaker 4: to take content from the cell phone stream it to
7:27
Speaker 4: the TV. They're taking on Apple's airplane in that respect.
7:30
Speaker 4: But the TikTok tie up, God, that's a tongue twister
7:33
Speaker 4: is an interesting one because this time a year ago,
7:35
Speaker 4: we were lamenting the fate of TikTok in this country,
7:39
Speaker 4: that it was going to face seriously regulatory and government scrutiny.
7:43
Speaker 4: Now in the space of a week, it has a
7:45
Speaker 4: deal with Peloton, and it has a deal with Google
7:47
Speaker 4: to amplify the distribution of their content and also TikTok's content,
7:53
Speaker 4: And it just shows there's a bit of traction going here.
7:55
Speaker 4: And remember, you know, there are a lot of users
7:57
Speaker 4: of TikTok in this country who don't necessarily already have
8:00
Speaker 4: any interest in that regulatory scrutiny that we reported so
8:03
Speaker 4: much on last year.
8:04
Speaker 2: Hey, thanks so much for joining us. Great color as always,
8:07
Speaker 2: from the floor of the Consumer Electronics Show out in
8:10
Speaker 2: Las Vegas, and Ed was just reporting, Boy, everybody is
8:14
Speaker 2: out there, not just tech companies, but pretty much every
8:16
Speaker 2: CEO is out there because technology impacts their companies one
8:19
Speaker 2: way or the other, and they need to be out there.
8:21
Speaker 2: Ed Ludlow, he's the host of Bloomberg Technology, is reporting
8:25
Speaker 2: live from the event space, the Event Haul out there
8:28
Speaker 2: in Las Vegas.
8:31
Speaker 8: You're listening to the team Ken's are live program Bloomberg
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Speaker 8: Markets weekdays at ten am Eastern.
8:37
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8:45
Speaker 2: All right, let's talk about Boeing here. This is really interesting.
8:48
Speaker 2: I mean, I love this company because I just to me,
8:51
Speaker 2: it's always seemed like a real symbol of American engineering
8:56
Speaker 2: ingenuity leadership. You think about the amazing fist they have
9:00
Speaker 2: out there in Seattle, when you're driving on the highway
9:04
Speaker 2: from the SeaTac Airport into Seattle, you just kind of
9:06
Speaker 2: pass it by. It's just mile after mile after mile
9:09
Speaker 2: of their facilities there and jets all over the place.
9:12
Speaker 2: Just amazing. But boy, they've had some real challenges over
9:14
Speaker 2: the last really three four five years, and the latest
9:17
Speaker 2: being with this seven three seven max jet with a
9:21
Speaker 2: side blowing out. George Ferguson, he's the senior Airspace Airline
9:24
Speaker 2: analyst for Bloomberg Intelligence. He follows this company very very closely. George,
9:28
Speaker 2: what are we hearing from the company today about where
9:31
Speaker 2: they are in terms of I guess kind of getting
9:34
Speaker 2: these birds back in the air here and maybe you
9:37
Speaker 2: know kind of what they're thinking is about what happened.
9:41
Speaker 9: So I think we're still waiting to hear from the
9:44
Speaker 9: regulator from the FAA an agreement on the inspection plan
9:49
Speaker 9: to get the airplanes back back into the air. It's
9:53
Speaker 9: a fast moving story, so I don't know that I
9:57
Speaker 9: may have missed something in the last couple of minutes,
9:58
Speaker 9: but I still don't think we've agreed on an inspection
10:02
Speaker 9: plan yet.
10:02
Speaker 6: And yesterday, what I.
10:03
Speaker 9: Think we heard was it was at all hands meeting,
10:07
Speaker 9: you know, we're CEO, Calhun told the employees that, you know,
10:10
Speaker 9: they had to sort of own up to their mistakes,
10:12
Speaker 9: I guess was what he kind of said. So sounded
10:15
Speaker 9: a little bit controit there, but I think that's the
10:19
Speaker 9: latest for us. The biggest issue is, well, this spread
10:22
Speaker 9: past the seven thirty seven Max nine. If it goes
10:25
Speaker 9: and you know, we end up having to park the
10:29
Speaker 9: Max eight fleet, that would be a major issue. Right now,
10:32
Speaker 9: we don't see that happening. It looks like it's not
10:35
Speaker 9: going to interrupt deliveries I think for twenty twenty four
10:39
Speaker 9: in the form it is right now, And that's what
10:42
Speaker 9: we're watching very closely too, right because if that impacts
10:44
Speaker 9: the potential for deliveries, well, if this started to knock
10:47
Speaker 9: those down and that changes cash flow, you know, income
10:51
Speaker 9: all those all those great audieens that we focus on in.
10:54
Speaker 5: The markets, now, George, yesterday we heard from CEO Dave Calhoun.
10:58
Speaker 5: He was basically kind of fighting back tears. He was
11:00
Speaker 5: kind of owning up to the company's shortcomings. What was
11:04
Speaker 5: the reaction to that, What did people think about his reaction?
11:07
Speaker 5: And also we haven't heard from the supplier much as well.
11:11
Speaker 9: Yeah, I mean the I guess from the supplier.
11:14
Speaker 6: This player put.
11:15
Speaker 9: Out a press release. I think it was Monday morning. Well,
11:20
Speaker 9: you know, Spirit air Systems, the supplier.
11:22
Speaker 6: We're not sure that it necessarily happened. It's Spirit Air Systems.
11:25
Speaker 9: They do make the fuselage to we do believe they
11:28
Speaker 9: put the plug in there, but Boeing may take the
11:30
Speaker 9: plug out to load the airplane. So but they seem
11:34
Speaker 9: to be much slower in doing much of anything and
11:37
Speaker 9: letting Boeing take the lead. I think that's probably fair.
11:39
Speaker 9: It's Boeing's airplane, and I think it was interesting to see. Yeah, yeah,
11:47
Speaker 9: it's a whole issue. But I think you know, at
11:49
Speaker 9: the end of the day, everybody's trying still trying to
11:52
Speaker 9: figure out where the problem is, how far it reaches,
11:56
Speaker 9: and you know, what the what the financial what the
11:59
Speaker 9: travel impact. So there wasn't a lot new in that,
12:02
Speaker 9: just that it seemed like maybe he was indicating that
12:05
Speaker 9: it was going to be Boeing's fault or Boeing supplier's
12:07
Speaker 9: fault at the end.
12:08
Speaker 2: So at the end of the day, George, this is
12:10
Speaker 2: I mean Boeing's did the name that that's on the
12:13
Speaker 2: plane here? I mean, what's the feeling within the aerospace
12:16
Speaker 2: circles that you travel in, Georgie? I mean, and no,
12:18
Speaker 2: you go to all the air shows, you talk to
12:21
Speaker 2: all these buyers, the folks that lease these planes. Does
12:25
Speaker 2: Bowling have a real fundamental engineering slash manufacturing problem? Do
12:30
Speaker 2: you think?
12:32
Speaker 9: I think that sense is in the aerospace circles that
12:36
Speaker 9: there is a fundamental problem, you know. In this case,
12:40
Speaker 9: I would say it's not so much engineering, right, engineering
12:43
Speaker 9: was really around the mcast system. In this case, it's
12:47
Speaker 9: a fundamental manufacturing problem. But I mean, those are the
12:49
Speaker 9: two most important things they do every day, right They
12:52
Speaker 9: engineer aircraft and then they build them and send them
12:56
Speaker 9: out into the fleet. But definitely we've had a number
13:00
Speaker 9: of problems in the manufacturing process, either at suppliers like Spirit,
13:05
Speaker 9: you know, or even up at Boeing we had these
13:08
Speaker 9: we had bolts loose on the back of rudders of
13:11
Speaker 9: aircraft that came out in the news over the over
13:14
Speaker 9: the holidays. It really feels like the stability isn't there
13:18
Speaker 9: in the in the build process, and it's something that
13:21
Speaker 9: going really needs to get you know it. Really it's
13:24
Speaker 9: it's arms around quickly. I mean, I thought they would
13:27
Speaker 9: have felt this way midyear last year. Right everyone talking
13:30
Speaker 9: supply chain, you'd think they've been digging into spirit air systems,
13:34
Speaker 9: digging into all their suppliers to make sure there's stability there.
13:37
Speaker 9: It's a very, very challenging process. There are lots of suppliers,
13:40
Speaker 9: there are lots of parts that get put together to
13:43
Speaker 9: make an airplane. But I think this just just re
13:46
Speaker 9: emphasizes the fact that they really have to dig into
13:49
Speaker 9: their supply chain and their suppliers and make sure they
13:52
Speaker 9: have stability in this manufacturing process if they need this,
13:56
Speaker 9: if they want this recovery to continue in the in
13:58
Speaker 9: the companies.
13:59
Speaker 6: Delivers so joy.
14:00
Speaker 5: We've been hearing about this every day, we're hearing some
14:03
Speaker 5: more information about it. What is all this bode for
14:06
Speaker 5: Boeing's earnings? I mean, how are they doing before and
14:09
Speaker 5: how do you expect them to be?
14:11
Speaker 9: Yeah, so you know, we were not ready to take
14:15
Speaker 9: down the number of deliveries we think they can make
14:18
Speaker 9: in twenty twenty four based on what we've seen so far. Again,
14:22
Speaker 9: I think if we saw the grounding stretch to the
14:25
Speaker 9: max eight that would be very, very concerning. Then I
14:29
Speaker 9: think we'd start to think about, you know, what the
14:32
Speaker 9: real potential was to get all those deliveries out the door.
14:36
Speaker 6: But right now it.
14:38
Speaker 9: Does seem to be contained to this fleet of two
14:40
Speaker 9: hundred and fifteen airplanes.
14:42
Speaker 6: We've heard a couple of.
14:43
Speaker 9: Instances where there are other loose bolts, but we haven't
14:46
Speaker 9: heard it's absolutely widespread. And the inspection that they need
14:50
Speaker 9: to do the last we heard on it was a
14:52
Speaker 9: four to eight hour inspection. That's not horrible, something that
14:56
Speaker 9: ought to be able to be done in a couple
14:58
Speaker 9: of months to get the rest of the fleet again.
15:00
Speaker 9: If it stretches from that, everyone will have to take
15:03
Speaker 9: out their pencils again and think about what delivers will
15:05
Speaker 9: be and that's going to knock down cash flows and
15:08
Speaker 9: that's going to knock down profitability and Boeing. If we've
15:10
Speaker 9: got to knock it down.
15:11
Speaker 2: George, what is our concern here among investors and just
15:15
Speaker 2: observers that the federal government, Congress from a regulatory perspective,
15:19
Speaker 2: might take a look at Boeing and put it Boeing
15:21
Speaker 2: in its sites here.
15:23
Speaker 9: I mean Boeings. Sorry, Congress has done at once already.
15:27
Speaker 9: They are they are the national aerospace champion. And if
15:31
Speaker 9: something is amiss at Boeing, I think it does not
15:34
Speaker 9: bode well for America. So I wouldn't be surprised to
15:37
Speaker 9: see Congress digging and they take a little bit of time.
15:41
Speaker 6: There's even I think even some concern.
15:42
Speaker 9: You know, the FAA has had its challenges, it's been
15:45
Speaker 9: short staffed, it's had turnover issues, and they've you know,
15:49
Speaker 9: they've been maybe a little more intense on some of
15:52
Speaker 9: these issues that I guess that's a good thing when
15:54
Speaker 9: it comes It's definitely a good thing when it comes
15:55
Speaker 9: to safety.
15:57
Speaker 6: You know.
15:58
Speaker 9: Right now they seem to be I imagine the right way
16:01
Speaker 9: to put this is they'll take this as far as
16:04
Speaker 9: they think they need to do to preserve their reputation,
16:07
Speaker 9: which got mighty to mcass, which maybe you know, which
16:10
Speaker 9: may be even further given that.
16:12
Speaker 5: History and George yesterday, the chief safety officer. He was
16:16
Speaker 5: right alongside the CEO talk about a pressure position. I
16:20
Speaker 5: mean his position was created after those two fatal crashes
16:24
Speaker 5: about five years ago. So what do you think, what's
16:27
Speaker 5: his thought process? What's going through his mind?
16:28
Speaker 6: Now?
16:31
Speaker 9: You know, I think the supply chain is it's like
16:36
Speaker 9: an octopus, and that's got to be the hardest job
16:39
Speaker 9: inside inside going right, or inside any company, especially Boeing.
16:43
Speaker 9: And I'm sure he's not getting a lot of sleep
16:45
Speaker 9: at night thinking about all the different things that can
16:48
Speaker 9: go wrong. It's it's like lack of mole, right, And
16:51
Speaker 9: my sense is that's what they've been doing. They've been
16:53
Speaker 9: finding problems fixing them. And as they do at the
16:56
Speaker 9: look they look to the right and there's another one
16:58
Speaker 9: rising up that they've got a man, it would be
17:02
Speaker 9: nice if they got some stability inside these workforces, you
17:05
Speaker 9: know that. I think the turnovers getting better. The longer
17:08
Speaker 9: you keep that better turnover, the longer folks are on
17:11
Speaker 9: the line getting trained doing the job. You know, numbers
17:15
Speaker 9: of repetitions, the better it's going to get. But right now,
17:19
Speaker 9: it just looks it looks pretty pretty rough, right, That's
17:21
Speaker 9: a really hard job.
17:22
Speaker 2: All right, George, thanks so much for joining us. We
17:24
Speaker 2: always appreciate getting your insight here on all things aerospace airlines.
17:28
Speaker 2: At George Ferguson, he covers the aerospace and airlines industry
17:30
Speaker 2: for Bloomberg Intelligence decades of experience.
17:33
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17:52
Speaker 2: So we're trying to show plan sees out in Vegas.
17:55
Speaker 2: One hundred and thirty thousand tech geeks get together out
17:59
Speaker 2: in Vegas and look at all the new gadgets and
18:00
Speaker 2: stuff like that. I've actually done it many, many times.
18:03
Speaker 2: It's a lot of fun out there. Boy, there's crowded.
18:05
Speaker 2: You got to wait long lines to get taxi.
18:08
Speaker 5: Do you go for the tech or for Vegas?
18:10
Speaker 2: I'm both, Let's be honest. You know, I go to
18:12
Speaker 2: the crafts table Blagie and they know exactly where to
18:14
Speaker 2: find me if you're looking for me. We got some
18:17
Speaker 2: smart people out there. Mark Davis, Mark Douglas, I'm sorry,
18:19
Speaker 2: the CEO of Mountain. We've talked to him a lot
18:22
Speaker 2: about the digital advertising space. He's joins us here along
18:25
Speaker 2: with Mark Penn, a president at Stagwell and a former
18:28
Speaker 2: chief strategy officer at Microsoft. Gentlemen, thanks so much for
18:31
Speaker 2: joining us from Vegas. Looks like a pretty staid place
18:35
Speaker 2: where you guys are, not typically where you would find
18:37
Speaker 2: me if we were doing a live remote. Guys, I
18:40
Speaker 2: know you guys kind of have a partnership that you
18:43
Speaker 2: recently announced. Talked to us about that.
18:47
Speaker 10: Well, I can start. So what we're focused on is
18:52
Speaker 10: essentially performance marketing for some of the world's largest brands.
18:56
Speaker 10: We've talked about performance marketing a lot, but what do
18:58
Speaker 10: you see happening is with the demise of Nielsen brands Essentially,
19:03
Speaker 10: you know, want real metrics, they want real targeting.
19:06
Speaker 3: They don't.
19:07
Speaker 10: They're not happy with just spending hundreds of millions of
19:10
Speaker 10: dollars and having no real data and no real control
19:13
Speaker 10: over it. So both of us, Mark Penn, his company
19:16
Speaker 10: is kind of the premier performance marketing holding company for agencies,
19:21
Speaker 10: and obviously you guys know mount ebented performance TV. So
19:25
Speaker 10: we're teaming up with an offering geared to directly at
19:28
Speaker 10: the world's largest brands to now enter the world of
19:31
Speaker 10: performance marketing.
19:32
Speaker 2: Hey, Mark, talk to us about Stagwell what you guys
19:35
Speaker 2: do there and how you guys can serve advertisers and
19:39
Speaker 2: the networks and you know, really kind of help out
19:43
Speaker 2: with measurement there.
19:45
Speaker 11: Sure you know Stagwell announced dec listed companies. We're uh,
19:50
Speaker 11: we manage about five billion dollars of media for our
19:53
Speaker 11: clients and so this this partnership is very important to
19:57
Speaker 11: extend you know, our performance oriented media into connected TV,
20:05
Speaker 11: where Mountain has a real specialty. And also we have
20:08
Speaker 11: a series of digital platform products and research communications and
20:13
Speaker 11: media which Mountain can take to its primarily small business market.
20:17
Speaker 11: So we think this is a win win partnership for
20:20
Speaker 11: digital marketers and for both of us in terms of
20:23
Speaker 11: the billions of dollars of media that we manage at
20:26
Speaker 11: Stague Well, I mean.
20:28
Speaker 2: That certainly seems like a solution here to a growing problem,
20:32
Speaker 2: because the growing problem is we now consume our media
20:35
Speaker 2: on so many different platforms and it's almost impossible, I
20:39
Speaker 2: would think, to measure that accurately and you mentioned it talk.
20:43
Speaker 2: It's been a huge challenge for Nielsen. So what do
20:48
Speaker 2: the brands actually need and what can you guys deliver
20:51
Speaker 2: because I got to make sure I'm reaching my audience here.
20:55
Speaker 11: Well, brands need results, right, and so the real question
20:59
Speaker 11: is how much you invest and how much you kind
21:02
Speaker 11: of get back in return. Is it a two to one,
21:05
Speaker 11: three to one, four to one, or or you're just
21:08
Speaker 11: building your brand right? And so what we have been
21:11
Speaker 11: has been more performance oriented, and the primary measurement of
21:15
Speaker 11: that is going to be sales. We do have attribution tools,
21:19
Speaker 11: We do have location data, so we generally know if
21:22
Speaker 11: you've gone to the store or not gone to the store.
21:25
Speaker 11: But by and large, Performance Media has a set of
21:28
Speaker 11: KPIs which are really rigorous. That means that of the
21:32
Speaker 11: two thousand ads that people see a day, we'll be
21:36
Speaker 11: able to track how yours do now.
21:38
Speaker 2: Mark and mark.
21:40
Speaker 5: You're making it easiest for us here the same name.
21:43
Speaker 2: You guys are out in the middle of it.
21:44
Speaker 5: Sees talked about about some of the things that you're
21:47
Speaker 5: seeing there. What are some of the hot items that
21:49
Speaker 5: catch your eye?
21:51
Speaker 10: They well, I've been on the show floor. I mean
21:54
Speaker 10: I honestly the hot topic is AI. But you know,
21:58
Speaker 10: AI is just becoming pervasive. It's like electricity one hundred
22:03
Speaker 10: years ago. Everything will be electrically powered. Everything will be
22:07
Speaker 10: AI powered. So you know, you go to the big boots.
22:11
Speaker 10: Some of these booths are like the size of large homes.
22:14
Speaker 10: And you see, I know LG had transparent televisions. You
22:18
Speaker 10: kind of see the future when you come to see us.
22:21
Speaker 10: You don't see the product they're launching today. You see
22:23
Speaker 10: what they're going to launch five years from now. And
22:26
Speaker 10: there's a lot. I mean, the transparent televisions I think
22:28
Speaker 10: are really capturing everyone's attention. Just see through the TV
22:32
Speaker 10: and watch and watch television. That's the one that What
22:36
Speaker 10: are you gonna do with that one? I know I'm
22:38
Speaker 10: not sure, so I have to buy it at.
22:42
Speaker 11: Some Uh you know, I think I think this year, Uh,
22:47
Speaker 11: I'm going to the floor more intensively this afternoon. But
22:51
Speaker 11: but really this year is a year or too early.
22:54
Speaker 11: Next year I think it's going to be amazing because
22:57
Speaker 11: next year people will have had the time to great
23:00
Speaker 11: AI with hardware, and that's where I think you're gonna
23:04
Speaker 11: see incredible advance. I think here's people talking AI showing
23:08
Speaker 11: some AI, but they haven't really had time to build
23:11
Speaker 11: the consumer products that really incorporated it. Next year, I
23:16
Speaker 11: believe we'll be spectacular.
23:17
Speaker 10: Yeah, agree with that, and I'll bring my transparent TV
23:22
Speaker 10: to witness.
23:25
Speaker 2: So Hey, Mark doug Leat's talk to us about just
23:28
Speaker 2: kind of when you're looking at at the metas of
23:30
Speaker 2: the world, the facebooks, the Googles, the Amazons, give us
23:35
Speaker 2: a state of the advertising market out there in terms
23:37
Speaker 2: of linear versus digital, because we hear the linear television
23:41
Speaker 2: is just brutal and it just seems like it's in
23:44
Speaker 2: a secular, secular decline.
23:47
Speaker 10: Yeah, I mean, I think that's true. One of the
23:52
Speaker 10: the number of people watching TV is not changing, and
23:56
Speaker 10: so it's the business models of these media companies are
24:00
Speaker 10: having to evolve. But the user, the viewers are there,
24:04
Speaker 10: the dollars are there. They're having the change how they
24:07
Speaker 10: acquire media. That actually, by the way, kind of fits
24:10
Speaker 10: right in on what Mark p and I. Penn and
24:12
Speaker 10: I are talking about in terms of the brands realize
24:16
Speaker 10: this and they're like, Okay, well I'm not going to
24:19
Speaker 10: rely on linear data anymore. I want something holistic. I
24:22
Speaker 10: think NBC made a really interesting announcement They announced this
24:25
Speaker 10: year their goal was sixty percent of all ads that
24:28
Speaker 10: they serve NBC on peacocks, CNBC, you know, like NBC Sports.
24:33
Speaker 10: They expect those to be now targeted in a digital way,
24:37
Speaker 10: in the way that like like Stagwell and Mountain are
24:40
Speaker 10: focusing on. And that's a huge announcement. I mean that's
24:43
Speaker 10: like they're basically saying, like they expect twenty billion dollars
24:47
Speaker 10: in their ad spend to now be digitally targeted across
24:50
Speaker 10: linear TV and streaming TV. That's an announcement they made
24:53
Speaker 10: this week.
24:54
Speaker 2: What is the competitive response from ac Nielsen company, the
24:58
Speaker 2: traditional measurement company, the currency for that one hundred billion
25:02
Speaker 2: dollar TV business.
25:04
Speaker 11: Yeah, people are people continue to seek the holy grail
25:08
Speaker 11: of complete measurement, which continues to be somewhat evasive in nature.
25:13
Speaker 11: But but again more of it is performance oriented. You
25:17
Speaker 11: look at the partnership that we have. The partnership is
25:20
Speaker 11: really designed to capture the expanding market in connected TV.
25:24
Speaker 11: That really what's happening is linear TV is becoming connected TV. Yeah,
25:30
Speaker 11: those people who said they would never ever do ads
25:32
Speaker 11: like Netflix, they're doing ads like Amazon. They're doing ads.
25:36
Speaker 11: So ads are back all that time which people were
25:40
Speaker 11: spending without ads, is coming back to advertise time, and
25:44
Speaker 11: that's good for us, good for companies like Stagwell.
25:47
Speaker 10: Yeah, I think this mark this year is the start
25:49
Speaker 10: of the TV pee. A lot of people don't realize
25:52
Speaker 10: the TV industry grows at one percent rate while streaming
25:56
Speaker 10: has grown obviously much fast. I think this is ticking
25:59
Speaker 10: of the year where the whole industry starts growing again.
26:03
Speaker 11: And we're gonna have a big political season. Remember there's
26:05
Speaker 11: going to be twelve billion dollars on top of regular
26:09
Speaker 11: advertising here.
26:10
Speaker 2: And does that still go to primarily local broadcast?
26:15
Speaker 6: It is now.
26:16
Speaker 11: More distributed across all platforms, but I would still say
26:19
Speaker 11: it's more. You know, it used to be about eighty
26:22
Speaker 11: percent local broadcast. I think that'll come down more like
26:27
Speaker 11: fifty sixty percent, with the forty percent going to as
26:31
Speaker 11: local as you can get your digital Yeah.
26:33
Speaker 2: All right, guys, all right, thanks so much for joining us,
26:35
Speaker 2: both of you, guys, Mark Douglas, president and CEO of
26:38
Speaker 2: Mountain and Mark Penn, president of Stagwell, they're out there
26:42
Speaker 2: at the CEES, the Consumer Electronics Show out in Las Vegas,
26:46
Speaker 2: as is seemingly everybody else in almost every any industry
26:50
Speaker 2: that has any kind of technology aspirations one way or
26:53
Speaker 2: the other.
26:54
Speaker 8: You're listening to the tape cans are live program Bloomberg
26:57
Speaker 8: Markets weekdays at ten am Eastern on bloom Radio, tune
27:01
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27:04
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27:06
Speaker 8: flagship New York station. Just say Alexa play Bloomberg eleven thirty.
27:13
Speaker 2: I'm looking at bitcoin forty five, four hundred, pretty much
27:16
Speaker 2: unchanged on the day. I think today's the day where
27:19
Speaker 2: the SEC is going to give us a thumbs up,
27:21
Speaker 2: our thumbs down on this spot. Bitcoin ETF, which people
27:27
Speaker 2: have been in, particularly the crypto space, are really really
27:29
Speaker 2: waiting for it, because that would be a real seal
27:32
Speaker 2: of credibility here in the US trading at least. Our
27:35
Speaker 2: next guest is all over this stuff, Greg Taylor. He's
27:37
Speaker 2: the CIO of Purpose Investments, whose Purpose Investments, Well, Purpose
27:41
Speaker 2: Investments launched Purpose Bitcoin ETF, the first direct custody bitcoin
27:46
Speaker 2: ETF in the world, in twenty twenty one, and they've
27:49
Speaker 2: been managing it ever since. So he knows what's happening here. Hey, Greg,
27:53
Speaker 2: I kind of we all got a head fake yesterday.
27:55
Speaker 2: First of all, thanks for joining us, Greg. We all
27:56
Speaker 2: got a head fake yesterday with the you know X
28:00
Speaker 2: whatever it is putting out a tweet that maybe they
28:02
Speaker 2: did get the approval then apparently was not. What do
28:05
Speaker 2: you expect to happen today with the SEC?
28:09
Speaker 6: Yeah, I think the excitement yesterday was kind of on
28:11
Speaker 6: brand for crypto surprising age one too much. But I
28:15
Speaker 6: think this is a space and at the end of
28:16
Speaker 6: the day, it does feel like the SEC has run
28:18
Speaker 6: out of reasons not to do this ETF. So it
28:21
Speaker 6: does feel like today was today We're going to get
28:22
Speaker 6: the approval. It seems like a long time coming. I
28:25
Speaker 6: Canada approve the ETF almost three years ago, and I
28:27
Speaker 6: think we've had a pretty good track record all the
28:29
Speaker 6: way through. So it feels like today is today. We'll
28:32
Speaker 6: get the announcement that the SEC has made the approval,
28:34
Speaker 6: and I think that's a good stamp of credibility for
28:37
Speaker 6: the entire space.
28:38
Speaker 5: Now, Greg, take us through this approval process. I mean
28:40
Speaker 5: there's a lot of moving parts for that. Can you
28:43
Speaker 5: walk us through it?
28:45
Speaker 10: Well?
28:46
Speaker 6: I think the big thing I can speak to is
28:47
Speaker 6: the way the Canadian regulators did and they were really
28:50
Speaker 6: trying to make sure that we had a good, safe ecosystem,
28:53
Speaker 6: and really when we approved, when we've initially launched it
28:57
Speaker 6: or applied for a CRYPTOETF back in that twenty sixteen
29:00
Speaker 6: the OSC, the Ontario Securities Commission, declined that at that
29:03
Speaker 6: time point in time because they thought the space was
29:05
Speaker 6: really not up and ready for it to happen. A
29:08
Speaker 6: lot has happened since then, and I think the exchanges
29:10
Speaker 6: have gotten better, the whole ecosystem has gotten stronger, and
29:14
Speaker 6: when we got our green light to go in February
29:16
Speaker 6: twenty twenty one, it was all about working with the
29:18
Speaker 6: regulators to show that this is something that you can
29:20
Speaker 6: invest in, that it's going to be a lot safer
29:23
Speaker 6: for the average investor to get access to this through
29:25
Speaker 6: in ETF versus just buying through a crypto exchange. And
29:28
Speaker 6: I think that proved out in twenty twenty two when
29:31
Speaker 6: we saw a number of exchanges fail and a lot
29:33
Speaker 6: of people lost money and had the bad experience in
29:35
Speaker 6: the whole crypto ecosystem, but those who had exposure through
29:38
Speaker 6: a regulated ETF on a good regulated exchange were able
29:42
Speaker 6: to just deal with the price volatility instead of the
29:44
Speaker 6: whole financial system claps.
29:46
Speaker 2: So Greg, you guys, again you're the ones with the
29:48
Speaker 2: experience in this, with your purpose Bitcoin ETF. Talk to
29:51
Speaker 2: us about your ETF kind of how has it evolved
29:54
Speaker 2: in terms of assets and just kind of how it
29:56
Speaker 2: trades and give us some sense of how that's been.
30:00
Speaker 6: Yeah, so we've been pretty happy with the whole trading
30:03
Speaker 6: assets through it. It's again we're getting close to three years.
30:05
Speaker 6: We pretty much traded at NAV the entire time. We
30:08
Speaker 6: pretty much traded also with a one penny bit ass spread,
30:11
Speaker 6: so keeping very much institutional style investments, and I think
30:15
Speaker 6: that's why it's gotten a lot of credibility and a
30:17
Speaker 6: lot of attention from both the retail and institutions through
30:20
Speaker 6: Canada and rust of the world that are using our product.
30:23
Speaker 6: Is a good way to get access to this. We've
30:25
Speaker 6: been trading on average around fifteen to twenty million dollars
30:28
Speaker 6: a day, but we've also had big days where we've
30:31
Speaker 6: had inflows and outflows around one hundred million. And I
30:34
Speaker 6: think the big credibility to the system that we've designed
30:36
Speaker 6: and done this is that we've not lost a single
30:38
Speaker 6: coin through this, and we've also not really impacted the
30:41
Speaker 6: market or impacted the way our nav is traded. So
30:44
Speaker 6: I think it's all about making sure that your process
30:46
Speaker 6: are up and running, and I think it's also dealing
30:49
Speaker 6: really with credible counterparties. That's the most important thing we've
30:53
Speaker 6: been focusing on is dealing with strong custodians, strong trading partners,
30:57
Speaker 6: and not really going forward to something that's easy, because
31:00
Speaker 6: this is a volatile sector and I think you really
31:03
Speaker 6: want to make sure that people are going to get
31:04
Speaker 6: access to it and not have to worry about any
31:06
Speaker 6: of the underlying volatility.
31:08
Speaker 5: Yeah, I want you to expand on that a bit, Greg,
31:10
Speaker 5: So we talked about the crypto landscape in itself. I mean,
31:13
Speaker 5: it seemed like it had a pretty good run in
31:14
Speaker 5: twenty twenty three. Where do you see it going heading
31:17
Speaker 5: into twenty twenty four.
31:19
Speaker 6: Well, well, that's the big question. And I think one
31:21
Speaker 6: of the things that people are really looking for is
31:23
Speaker 6: this bought this US etf to come because really it's
31:26
Speaker 6: tough to value bitcoin. I think everyone's trying to come
31:28
Speaker 6: up with models and trying to come up with a
31:30
Speaker 6: way to look at this versus physical gold or something else.
31:33
Speaker 6: But at the end of the day, it comes down
31:34
Speaker 6: to supply and demand and demand. We know it is
31:37
Speaker 6: really fixed, so it's going to be looking at stories.
31:39
Speaker 6: Supply is really fixed, so when you look at demand,
31:42
Speaker 6: having bringing in new investors in a US ETF is
31:45
Speaker 6: really opening this up to a whole new market. And
31:48
Speaker 6: I think when you get that more demand coming back
31:50
Speaker 6: into this and people are looking for alternative currencies and
31:54
Speaker 6: people are losing interest in US dollars some other VAT currencies,
31:58
Speaker 6: having a sleeve of their assets in something like crypto
32:01
Speaker 6: could bring in more investors. So I think that could
32:03
Speaker 6: be positive for the entire ecosystem and in particular and
32:05
Speaker 6: for bitcoin. The next big thing throughout the year is
32:08
Speaker 6: the HAVING which is going to come out probably in
32:10
Speaker 6: Q two of this year, which is really going to
32:13
Speaker 6: be something that takes down the incentive for bitcoin minors again,
32:16
Speaker 6: so that will gain the limits supplies. So we could
32:19
Speaker 6: be setting up for twenty twenty four that if we
32:21
Speaker 6: do have a risk on environment, you've got more people
32:23
Speaker 6: looking for access to crypto and also less supply out there,
32:26
Speaker 6: so could be setting up for a bulowsh here. But
32:28
Speaker 6: as we know, this is a volatile, aastic class and
32:30
Speaker 6: anything can happen.
32:32
Speaker 2: Greg what do you expect to happen when we get
32:34
Speaker 2: the big heavyweight brands like you know, Vanguard and black
32:39
Speaker 2: Rock and Kathy Woods Ark, I'm going to get the
32:42
Speaker 2: big big names coming in this ETF space. How do
32:45
Speaker 2: you think it's going to play out over the coming
32:47
Speaker 2: weeks and months.
32:49
Speaker 6: Well, at the end of the day, it is going
32:50
Speaker 6: to open it up to a whole new sleep investors.
32:53
Speaker 6: Our products has going to have been running for almost
32:55
Speaker 6: two years, but really at the end of the day,
32:58
Speaker 6: over almost three years. But at the end of the day,
33:00
Speaker 6: really want to get more US retail investors involved in
33:02
Speaker 6: this and that's something that I think this will only help.
33:05
Speaker 6: So that should bring in more buyers to the space,
33:07
Speaker 6: and that again should add more credibility to the space.
33:10
Speaker 6: I think the SEC finally getting around and more comfortable
33:13
Speaker 6: the ecosystem again will be a stamp of approval for
33:15
Speaker 6: the whole space. So this is a positive development and
33:18
Speaker 6: I think should at the end of the day lead
33:20
Speaker 6: to further advancements. Maybe the next thing we'll see is
33:24
Speaker 6: an ethereum ETF coming down the road, and I think
33:26
Speaker 6: that would be good for the space as well.
33:28
Speaker 5: Anyway, so does an approval from the sec. Does that
33:31
Speaker 5: basically mean that it's a yes for everyone else? I mean,
33:34
Speaker 5: what does that mean if they say yes to let's
33:36
Speaker 5: say one application.
33:38
Speaker 6: Well, I've hard time seeing how they'd approve one and
33:41
Speaker 6: not the others because everyone is basically using the same format,
33:44
Speaker 6: which is again very similar to where we have with
33:47
Speaker 6: similar custodians, with the Gemini and coin Base, and similar
33:50
Speaker 6: trading partners and as similar structures. So I think at
33:53
Speaker 6: the end of the day they will approve all of
33:55
Speaker 6: them versus just one offs and then it's going to
33:58
Speaker 6: be as we're seeing a competition see who's going to
34:00
Speaker 6: be the one to get into the market share. We
34:03
Speaker 6: were fortunate to be the first in Canada and that
34:05
Speaker 6: was a good advantage to go, but you really at
34:08
Speaker 6: the end of the day then have to deliver. There's
34:10
Speaker 6: one thing being first to market, but if you have
34:12
Speaker 6: investors a bad experience, then that's something where you can
34:15
Speaker 6: lose a lot of credibility and really be a mark
34:18
Speaker 6: on the whole ecosystem. So I think what we were
34:20
Speaker 6: hoping for is that this is going to be a
34:22
Speaker 6: good experience, that there aren't going to be any problems
34:24
Speaker 6: in the first day of trading and that would be
34:26
Speaker 6: at the end of the day positive for the space.
34:29
Speaker 2: At Greg Taylor, thanks so much for joining us. Really
34:30
Speaker 2: appreciate it. Greg Taylor, He's the CIO of Purpose Investments
34:33
Speaker 2: for the good folks up in Canada. They that came
34:36
Speaker 2: out with the world's first direct custody Bitcoin ETF. They
34:41
Speaker 2: did that in twenty twenty one, so Canadians ahead of
34:44
Speaker 2: the US market.
34:44
Speaker 8: Here you're listening to the tape can't our live program
34:47
Speaker 8: Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio,
34:52
Speaker 8: the tune in app, Bloomberg dot Com, and.
34:54
Speaker 3: The Bloomberg Business App.
34:55
Speaker 8: You can also listen live on Amazon Alexa from our
34:58
Speaker 8: flagship New York station Alexa playing Bloomberg eleven.
35:04
Speaker 2: Right now, let's get back out to Vegas. The high
35:08
Speaker 2: rollers table at the Bellagio. Uh Wu jin Ho. He
35:11
Speaker 2: covers all the technology stuff for Bloomberg Intelligence. Wooge. First question,
35:18
Speaker 2: what hotel you staying at?
35:20
Speaker 7: I'm at the Alara which one health and Alarau.
35:27
Speaker 2: Trouble all right? All right, Uh, I'm a Bolagio guy
35:31
Speaker 2: myself at anyway, good stuff, woo talk to us about
35:33
Speaker 2: this deal that we see with HPE and this other
35:37
Speaker 2: I mean, does this make sense for that the sector,
35:40
Speaker 2: because I know there's a lot of uncertainty out there
35:43
Speaker 2: just about you know, kind of what this deal means
35:47
Speaker 2: for the companies here.
35:50
Speaker 7: Sure. So for for HPE, they've been looking to diversify
35:55
Speaker 7: their core computing business for quite some time now. One
36:00
Speaker 7: of the things that they've done several years back and
36:02
Speaker 7: made the room of acquisition flow start. But that's one
36:05
Speaker 7: of the more probable businesses for HPE. In making this
36:10
Speaker 7: acquisition with Juniper, they've actually doubled down on networking. The
36:14
Speaker 7: networking business is as large as their compute business, and
36:18
Speaker 7: the hope over the long term is to drive better
36:21
Speaker 7: margin expansion going forward.
36:23
Speaker 2: What do you think about the price here is? And
36:25
Speaker 2: I guess the bigger issue is is this a good
36:27
Speaker 2: use of cash, good use of capital?
36:29
Speaker 7: You know, that's a really good question, and I think
36:31
Speaker 7: that's one of the reasons why you know, investors were
36:36
Speaker 7: not too happy reflected by the share price, right. I
36:39
Speaker 7: think there was an expectation of some money coming due
36:42
Speaker 7: from the H three C divestia share roughly about three
36:45
Speaker 7: billion coming back into better capital returns. Now, now that
36:50
Speaker 7: being said, you know, the question is is that you
36:55
Speaker 7: know with that fourteen billion dollars used for Juniper, will
36:59
Speaker 7: that drive multi full expansion. Let me give you a
37:02
Speaker 7: case in point. If you think about traditional Dell, HP
37:07
Speaker 7: and HPE, they trade roughly around eight to nine times
37:11
Speaker 7: forward arnings. The networking guys on average trade or for
37:15
Speaker 7: about fifteen times forward arnings fifteen sixteen times if it
37:19
Speaker 7: goes back, If if we start reverting to the mean
37:23
Speaker 7: to the two multiples, you could probably get about a
37:26
Speaker 7: thirty percent valuation bump if this deal works out for
37:30
Speaker 7: HPE's favor.
37:32
Speaker 2: Is that the sphere behind you that is very well?
37:34
Speaker 7: That is the sphere that is very well. I pick
37:36
Speaker 7: this hotel? Yeah, why I pick this hotel?
37:39
Speaker 11: Very good?
37:39
Speaker 2: I mean I gotta get out there because it looks
37:41
Speaker 2: really awesome out there. So anyway, all right, Wou Jinho,
37:44
Speaker 2: Thanks Sank for taking some time out there. I'll let
37:46
Speaker 2: you get back to the conference floor there.
37:50
Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can
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37:58
Speaker 2: I'm Matt Miller.
38:00
Speaker 1: I'm on Twitter at Matt Miller nineteen seventy three and
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Speaker 1: I'm Paul Sweeney.
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