Latest / Bloomberg Intelligence / Facebook's 'Zero' Data Cost Is Threatened By Regulation

Transcript

Facebook's 'Zero' Data Cost Is Threatened By Regulation · Bloomberg Intelligence

• 0:02
  Speaker 1: Welcome to the Bloomberg Penl Podcast. I'm Paul swing you
• 0:05
  Speaker 1: along with my co host Lisa Brahma Waits. Each day
• 0:07
  Speaker 1: we bring you the most noteworthy and useful interviews for
• 0:10
  Speaker 1: you and your money, whether at the grocery store or
• 0:12
  Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple
• 0:15
  Speaker 1: podcast or wherever you listen to podcasts, as well as
• 0:17
  Speaker 1: at Bloomberg dot com. The busiest week of earnings for
• 0:23
  Speaker 1: the second quarter reporting season. Meanwhile, we are getting the
• 0:28
  Speaker 1: trickle out of the big tech names. Amazon reporting after
• 0:31
  Speaker 1: the bell today, shares lower by three quarters of a
• 0:34
  Speaker 1: percent today, although a lot of people are expecting them
• 0:37
  Speaker 1: to deliver strong results on the heels of their one
• 0:40
  Speaker 1: day shipping initiative. Joining us now to discuss Dave Garritty,
• 0:43
  Speaker 1: chief market strategist for laid Law and Company and also
• 0:46
  Speaker 1: a partner at bt block. He is joining us here
• 0:50
  Speaker 1: in our eleven three oh studios. Dave, I want to
• 0:52
  Speaker 1: start with Amazon. What are you expecting in terms of
• 0:55
  Speaker 1: their earnings and and sort of the boost that they're
• 0:57
  Speaker 1: expected to get from the one day shipping initiative. I
• 1:00
  Speaker 1: think Amazon is going to be coming in with fairly
• 1:02
  Speaker 1: strong results, probably looking at revenues possible growth somewhere north
• 1:06
  Speaker 1: of fiftent year over year. UM. You know, clearly the
• 1:10
  Speaker 1: question here for Amazon isn't so much just the strength
• 1:12
  Speaker 1: of the volumes through the e commerce platform, but really
• 1:15
  Speaker 1: more what's going on with Amazon Web services and the
• 1:18
  Speaker 1: fact that they've continue to reap returns from their leading
• 1:21
  Speaker 1: return as being a cloud computing platform. So UM prime
• 1:25
  Speaker 1: is a wonderful thing. However, at the end of the day,
• 1:28
  Speaker 1: the engine for profit growth of the company is what
• 1:30
  Speaker 1: they're doing in terms of the ability to control data. So, David,
• 1:35
  Speaker 1: on the data front, you're talking before we went on
• 1:37
  Speaker 1: the air about Facebook. They had numbers last night, really
• 1:40
  Speaker 1: strong top line growth, the stocks down one and a
• 1:43
  Speaker 1: half percent. You're calling out some issues about their cost
• 1:46
  Speaker 1: of good soul. It gives a sense of what you're thinking, Yeah,
• 1:49
  Speaker 1: UM to UM you know it certainly as a monopoly
• 1:52
  Speaker 1: if you will, in terms of social media. UM, you know,
• 1:55
  Speaker 1: Facebook is realizing these monopoly rents. UM. The thing that's
• 1:58
  Speaker 1: been interesting here looking more on the regulatory front towards
• 2:02
  Speaker 1: not just the US government and what the Hill is saying,
• 2:04
  Speaker 1: but also overseas. UM. You know, clearly the fact of
• 2:07
  Speaker 1: the matter is looking at the business model for these
• 2:09
  Speaker 1: companies Facebook, Uh, you know they have they pay no
• 2:12
  Speaker 1: cost for the data that we provide. And there have
• 2:16
  Speaker 1: been estimates out there that this could be giving a
• 2:19
  Speaker 1: benefit to the company Facebook and other um monopolies within
• 2:23
  Speaker 1: social media or within tech of something in the order
• 2:27
  Speaker 1: about seventy five to a hundred billion dollars a year. Uh.
• 2:31
  Speaker 1: There are discussions taking place in the U S and
• 2:34
  Speaker 1: elsewhere of taxing this. I mean effectively, what would happen
• 2:39
  Speaker 1: if say General Motors you know, paid nothing for the
• 2:41
  Speaker 1: steel that they used to build their cars. The model
• 2:44
  Speaker 1: and the argument here is effectively the same in terms
• 2:46
  Speaker 1: of looking at Facebook. So the issue is costs potentially
• 2:50
  Speaker 1: are going to be rising as a result of this
• 2:52
  Speaker 1: regulatory inquiry and oversight with respect of the industry. UM,
• 2:56
  Speaker 1: so margins will come under pressure. Clearly, the revenue moment
• 3:00
  Speaker 1: him continues to grow, uh, and that can support many things.
• 3:03
  Speaker 1: But the fact of the matter is is that life
• 3:05
  Speaker 1: is going to become far more complicated, not just for Facebook,
• 3:08
  Speaker 1: but also potentially for Amazon and Google as a result
• 3:11
  Speaker 1: of the antitrust inquiry with the Department of Justice and
• 3:14
  Speaker 1: the Federal Trade Commission the FTC have launched. Which companies
• 3:18
  Speaker 1: of the big tech names do you think will get
• 3:20
  Speaker 1: most affected by this the d efforts. My selection here
• 3:25
  Speaker 1: would be Facebook. Um. You know, to the extent that
• 3:28
  Speaker 1: Facebook does depend upon other companies for data. Um, so
• 3:34
  Speaker 1: other companies I think will pass costs onto Facebook. And
• 3:38
  Speaker 1: I would simply say that even though Facebook on a
• 3:41
  Speaker 1: tactical basis has had a win with respect of this
• 3:44
  Speaker 1: five billion dollars settlement with the FTC because it removes
• 3:47
  Speaker 1: liability for the officers, the fact of the matter is
• 3:50
  Speaker 1: is that Mark Zuckerberg has shown himself to be brazen
• 3:53
  Speaker 1: in his dealings with regulatory authorities, both here in the
• 3:57
  Speaker 1: US and elsewhere, and I think this puts some rarely
• 4:00
  Speaker 1: in the crosshairs and there's a foreseeable future. There's also
• 4:03
  Speaker 1: a question of diversification. We were talking about Amazon, and
• 4:05
  Speaker 1: I thought it was striking that you said that the AWS,
• 4:07
  Speaker 1: the sort of cloud computing services, was really where the
• 4:10
  Speaker 1: focus needs to be, because on the actual bread motor
• 4:14
  Speaker 1: of their business is sort of market platform, it's sort
• 4:17
  Speaker 1: of increasingly utility. They just try to crept margins as
• 4:20
  Speaker 1: much as possible, or that's how they'd like to put
• 4:22
  Speaker 1: it out there as how crucial is it for big
• 4:25
  Speaker 1: tech to basically create their mainstay businesses as utilities, but
• 4:30
  Speaker 1: then have these peripheral businesses actually give them their money.
• 4:34
  Speaker 1: That's a very good point, and it's you know, and
• 4:36
  Speaker 1: in terms of looking at the monopoly that these companies
• 4:38
  Speaker 1: have within their various sectors, the argument has been put
• 4:42
  Speaker 1: forward that these are really more utilities, and as utilities
• 4:46
  Speaker 1: they should be regulated and allowed to have the returns
• 4:49
  Speaker 1: that utilities historically have enjoyed, Which means that these companies,
• 4:54
  Speaker 1: much as a T and T did some time ago,
• 4:57
  Speaker 1: have to think about setting up unread related businesses to
• 5:01
  Speaker 1: potentially drive their returns and continue to attract investor attention. Well,
• 5:06
  Speaker 1: that brings up the ultimate question of risk, regulatory risk
• 5:10
  Speaker 1: for these companies. Is there a scenario where they could
• 5:13
  Speaker 1: be broken up? That's certainly something that Senator Elizabeth Warren
• 5:16
  Speaker 1: and presidential kendidate Elizabeth Warren has suggested. Well, I mean
• 5:20
  Speaker 1: going towards a breakup, you know, is a possible solution
• 5:24
  Speaker 1: or a possible scenario, um, but one which arguably comes
• 5:29
  Speaker 1: after you've gone through this process of inquiry and very
• 5:31
  Speaker 1: likely you go past the general election. Um, you know,
• 5:36
  Speaker 1: with the solution you know doesn't get imposed with a
• 5:38
  Speaker 1: hundred and seventeen Congress when it adjourns in two thousand
• 5:42
  Speaker 1: twenty one. I think it may take a little longer
• 5:44
  Speaker 1: than that, But the fact is it's on the horizon
• 5:46
  Speaker 1: and investors and looking at the sector have to have
• 5:49
  Speaker 1: this on their radar. What's the next step for regulatory action?
• 5:53
  Speaker 1: From your point of view, you're expecting, um, I think
• 5:56
  Speaker 1: it's really more a matter of various entities, whether it's
• 6:01
  Speaker 1: the Department Justice, whether it's a Federal Trade Commission, whether
• 6:03
  Speaker 1: it's the Antitrust Subcommittee of the House Judicial Committee conducting
• 6:08
  Speaker 1: their hearings. And as these hearings and inquiries are conducted,
• 6:12
  Speaker 1: clearly there's going to be a news flow coming out
• 6:15
  Speaker 1: of these. Um. Clearly, the people who are going to
• 6:18
  Speaker 1: do well out of all this are the lobby armies
• 6:21
  Speaker 1: of K Street down in Washington, d C. It's going
• 6:24
  Speaker 1: to be a bang up year, uh for attorneys going
• 6:27
  Speaker 1: into and Paul, it already has been. It already has been.
• 6:31
  Speaker 1: It's that something has never changed. David Garretty, thank you
• 6:33
  Speaker 1: so much for joining us. David's a chief market strategist
• 6:36
  Speaker 1: at laid Long Company, also partner at bt block talking technology,
• 6:39
  Speaker 1: We've got tech earnings this week and uh, clearly investors
• 6:43
  Speaker 1: will be focusing on the operations of these companies, as
• 6:46
  Speaker 1: they should, but they will also be focusing, I think increasingly,
• 6:48
  Speaker 1: as David suggested, on the regulatory oversight that these companies
• 6:52
  Speaker 1: are now finding themselves under, which is a little bit
• 6:55
  Speaker 1: of a new issue for them. Most of these tech
• 6:57
  Speaker 1: companies historically have uh you know, you know, dealt with
• 7:01
  Speaker 1: European oversight, but not necessarily oversight coming from US regulators
• 7:06
  Speaker 1: US politicians. That appears to be changing. The question is
• 7:09
  Speaker 1: how will they deal with it and will there be
• 7:10
  Speaker 1: some winners and losers. The scores of ultra net worth
• 7:25
  Speaker 1: families haven't risen dramatically over the past few decades, and
• 7:29
  Speaker 1: a big question now for those investors is where do
• 7:33
  Speaker 1: they put their money at a time of high evaluations,
• 7:36
  Speaker 1: easing central banks, and some concerns growing about the momentum
• 7:40
  Speaker 1: in the global economy. Here to answer all of those
• 7:42
  Speaker 1: questions is Michael Son and Felt. He's chairman and founder
• 7:45
  Speaker 1: of Tiger twenty one, which is a consortium of ultra
• 7:49
  Speaker 1: net worth investors who get together and talk honestly about
• 7:54
  Speaker 1: what they're doing. If I get that correctly, Michael, um, so,
• 7:58
  Speaker 1: thank you for being here. What's the latest in terms
• 8:01
  Speaker 1: of the optimism or lack thereof among the members of
• 8:05
  Speaker 1: Tiger One. Thanks for having me uh over the last
• 8:08
  Speaker 1: six months. Sentiment is shifting slowly today. People are less
• 8:13
  Speaker 1: optimistic those who were very positive or less so, but
• 8:18
  Speaker 1: it's still smooth sailing for the moment. People have pulled
• 8:22
  Speaker 1: out of a little bit of real estate, brought it
• 8:24
  Speaker 1: down from the low thirty percent allocation to the high twenties,
• 8:28
  Speaker 1: taking profits where they could. Are members because they're all
• 8:32
  Speaker 1: former entrepreneurs, are much more comfortable in the private markets,
• 8:36
  Speaker 1: private equity, private real estate, so they only have about
• 8:39
  Speaker 1: twenty three percent allocation to the public markets. Hedge funds
• 8:43
  Speaker 1: have been very low, but the hedge funds that are
• 8:46
  Speaker 1: getting interest now are the defensive hedge funds what would
• 8:49
  Speaker 1: be called credit funds where you have distressed debts. So
• 8:53
  Speaker 1: there are a lot of distress debt funds gearing up
• 8:56
  Speaker 1: ready for the next downturn, and our members are looking
• 8:59
  Speaker 1: at that as well. So, Michael, one of the things
• 9:01
  Speaker 1: that we've noticed this was some of these tech companies
• 9:03
  Speaker 1: coming public like Uber and Lift, for example, is that
• 9:06
  Speaker 1: maybe the valuations in the private market have gotten maybe stretched,
• 9:10
  Speaker 1: so when they come to the equity public markets they
• 9:13
  Speaker 1: maybe even have a down evaluation. What are your members
• 9:16
  Speaker 1: saying about, given that they are entrepreneurs, about kind of
• 9:20
  Speaker 1: valuations in venture world, in the private equity world. So
• 9:23
  Speaker 1: the valuations are clearly high in the public markets. Um,
• 9:28
  Speaker 1: but long term people still believe that, for instance, technology
• 9:32
  Speaker 1: stocks have greater scalability. Uh So after the index funds,
• 9:38
  Speaker 1: which are members are increasingly interested in because they know
• 9:41
  Speaker 1: they can't outperform the market, tech stocks would be the
• 9:45
  Speaker 1: one subset. But even within tech stocks now you have
• 9:48
  Speaker 1: a divergence. Whereas a year ago our members thought, uh,
• 9:52
  Speaker 1: Amazon and Facebook were two tech stocks. With all the
• 9:56
  Speaker 1: challenges facing Facebook today regulatory and so forth, those are diverging.
• 10:01
  Speaker 1: I would say our members are a little less interested
• 10:03
  Speaker 1: in Facebook, although it had good earnings, it now has
• 10:06
  Speaker 1: a five billion dollar fine. Amazon doesn't have those problems today.
• 10:10
  Speaker 1: So I'm curious you said that your members were reducing
• 10:13
  Speaker 1: their allocation to real estate slightly. I'm wondering if you
• 10:17
  Speaker 1: can give me a sense or give us a sense
• 10:19
  Speaker 1: of where they're reducing those allocations. In other words, in
• 10:24
  Speaker 1: the big cities, is it and warehouses the commercial So
• 10:27
  Speaker 1: first of all, in real estate, you really have a
• 10:29
  Speaker 1: tail of two cities. You have the gateway cities where
• 10:32
  Speaker 1: prices are still very high, and outside of the gateway
• 10:36
  Speaker 1: cities you have things like the retail apocalypse where you
• 10:40
  Speaker 1: have streets that are just empty of retailers because of
• 10:43
  Speaker 1: what's going on. So retail is still real estate is
• 10:47
  Speaker 1: still our members largest allocation. That's an important thing. So
• 10:50
  Speaker 1: the fact that it came down from the high thirties
• 10:53
  Speaker 1: to tent, it's still their largest allocation. What they've done
• 10:58
  Speaker 1: is where they had an opportunit unity to take low
• 11:01
  Speaker 1: hanging fruit that was easily sold at a very high value,
• 11:05
  Speaker 1: they took those off to build cash and get ready
• 11:08
  Speaker 1: for the next downturn. So that's that was gonna be
• 11:10
  Speaker 1: my next question. What do they buy? And it sounds
• 11:13
  Speaker 1: like they bought nothing if they're buying it in the
• 11:17
  Speaker 1: real estate is more on the income producing side rather
• 11:20
  Speaker 1: than the speculative side. Unless because our members so many
• 11:25
  Speaker 1: made their money in real estate, sometimes they can see
• 11:28
  Speaker 1: a value that nobody else can see. An empty building
• 11:31
  Speaker 1: to you might be frightening, it might be an extraordinary
• 11:35
  Speaker 1: opportunity to one of our members. But generally there's a
• 11:38
  Speaker 1: lot of interest in income substitutes. So workforce housing, as
• 11:42
  Speaker 1: an example, is very stable, good cash flows or although
• 11:46
  Speaker 1: even that's gotten a little price over the last year
• 11:48
  Speaker 1: or two. So, Michael, where are you seeing with your
• 11:51
  Speaker 1: company Tiger twenty one? Where are you seeing the growth
• 11:53
  Speaker 1: in wealth? I mean, I'm assuming that you know, you
• 11:56
  Speaker 1: know there are lots of billionaires in the U s.
• 11:58
  Speaker 1: Where are you seeing the growth? Were you opening groups
• 12:01
  Speaker 1: and offices and so on? So we've identified the sixty
• 12:04
  Speaker 1: markets around the globe that members like Tiger members would
• 12:09
  Speaker 1: like to either work in, live in, invest in, or
• 12:12
  Speaker 1: connect to. We're already in over thirty of those markets,
• 12:16
  Speaker 1: so over the next five years will probably roll out
• 12:19
  Speaker 1: the next thirty. Our market, by the way, is not
• 12:22
  Speaker 1: the billionaires. Our market is from ten million to a billion.
• 12:26
  Speaker 1: People have created all the great meat and potato businesses,
• 12:29
  Speaker 1: And one way to think about it, if you're a
• 12:31
  Speaker 1: Major League football, baseball or basketball player, you're about one
• 12:35
  Speaker 1: in seventeen thousand by accomplishment. Our members are of a
• 12:39
  Speaker 1: similar scale of success within their field of entrepreneur minus
• 12:45
  Speaker 1: the all stars. We don't we don't go for the billionaires.
• 12:48
  Speaker 1: I'm wondering when you talk about building cash or getting
• 12:51
  Speaker 1: defensive or distressed debt investors trying raising capital to deploy
• 12:57
  Speaker 1: to take advantage of a downturn, why are they like
• 13:00
  Speaker 1: that's going to happen somewhat soon, given the fact that
• 13:02
  Speaker 1: you've got central banks that are easing and doing what
• 13:05
  Speaker 1: they kind of prevented. Yeah, so I think um OUR
• 13:09
  Speaker 1: members are looking for the all elusive, all weather portfolio,
• 13:14
  Speaker 1: something that will be durable. We're not traders by nature.
• 13:18
  Speaker 1: Are members are entrepreneurs who build businesses over ten, twenty
• 13:21
  Speaker 1: thirty years. So they're looking to have a portfolio that
• 13:25
  Speaker 1: will last through good times and bad. So they see
• 13:28
  Speaker 1: what happened in two thousand eight, what were the strategies
• 13:31
  Speaker 1: that did well? And the one thing they know is
• 13:34
  Speaker 1: you don't want to ever have to sell at the bottom.
• 13:36
  Speaker 1: You have to have enough cash to weather through the bottom,
• 13:39
  Speaker 1: so you're not forced to liquidate great assets at discount prices.
• 13:44
  Speaker 1: So that would be the that would be the main
• 13:47
  Speaker 1: thing is have enough cash not to be forced to
• 13:50
  Speaker 1: liquidate your great investments at the wrong time. Paul. This
• 13:53
  Speaker 1: is so fascinating to me because it's not just AlterNet
• 13:56
  Speaker 1: worth individuals. It's all the big firms still, the big
• 13:58
  Speaker 1: private equity firms, private debt firms, etcetera. And I have
• 14:01
  Speaker 1: to wonder if this will sort of cushion any blow
• 14:04
  Speaker 1: and kind of created buffer on price declines in a
• 14:07
  Speaker 1: downturn because you've got just so much cash they're waiting
• 14:11
  Speaker 1: to pick up any bargains. Yeah, And I know, I
• 14:14
  Speaker 1: mean you'd like to think so maybe we saw that
• 14:16
  Speaker 1: in December last year, you know, And we saw that
• 14:18
  Speaker 1: in December. We had that sell off in December. H
• 14:19
  Speaker 1: And then he came running back this year, Michael Son
• 14:21
  Speaker 1: and felt thanks so much for joining us. Michael is
• 14:23
  Speaker 1: a chairman and founder of Tiger twenty one but seventy
• 14:26
  Speaker 1: one billion dollars under management across all of their members.
• 14:30
  Speaker 1: Just a unique way to aggregate wealthy individuals who have
• 14:35
  Speaker 1: created companies and value and entrepreneurs. Uh. And the question
• 14:39
  Speaker 1: is when those people liquidate their investments, what do they
• 14:43
  Speaker 1: do with the cash? Well, yesterday was certainly an important
• 14:55
  Speaker 1: day for President Trump, as former Special counsel Robert Mueller
• 14:59
  Speaker 1: testified in front of two congressional committees to get a
• 15:03
  Speaker 1: post mortem on that performance. We welcome Ken nowadays. He
• 15:06
  Speaker 1: is a partner at Venable l l p H. He
• 15:09
  Speaker 1: was also a former corruption and fraud prosecutor for the U. S.
• 15:12
  Speaker 1: Attorney's Office in the Southern District of New York, Kent.
• 15:15
  Speaker 1: Thanks much for joining US. President Trump yesterday claimed that
• 15:18
  Speaker 1: it was a great day for him. Do you agree?
• 15:21
  Speaker 1: I disagree with that, um, And the reason is, the
• 15:25
  Speaker 1: report is still the report. All the facts and the
• 15:28
  Speaker 1: report are still the facts. And one thing that Bob
• 15:33
  Speaker 1: Mueller did clarify and say pretty pretty strongly was that
• 15:38
  Speaker 1: the report did not exonerate the president. So I can't
• 15:42
  Speaker 1: say you can say it was a good day. So
• 15:45
  Speaker 1: I guess that my question is going forward, what precedent
• 15:50
  Speaker 1: does this set? Because the Special prosecutor came out with
• 15:52
  Speaker 1: a report he said he could not exonerate President Trump.
• 15:55
  Speaker 1: He also said that there were some very concerning things,
• 15:58
  Speaker 1: particularly pertaining to the Wiki League section. These are the
• 16:01
  Speaker 1: things that the Democrats are sort of clinging to as
• 16:03
  Speaker 1: justification for why they did this in the first place,
• 16:06
  Speaker 1: because they're getting a bunch of criticism today. My question
• 16:09
  Speaker 1: is moving forward, where do we go from here with
• 16:13
  Speaker 1: this report? I think we're in the same place we
• 16:16
  Speaker 1: were before, which is Bob Mueller has always made it
• 16:19
  Speaker 1: clear that he's the third party narrator of a great book.
• 16:24
  Speaker 1: But he's not going to give you the last chapter.
• 16:26
  Speaker 1: The last chapter has to come from somewhere else. He's
• 16:29
  Speaker 1: going to bear witness. He's going to tell you what
• 16:32
  Speaker 1: the facts are, but he's not going to be passing judgment.
• 16:35
  Speaker 1: So I think we're in the same place where we
• 16:36
  Speaker 1: always have been up until this point after the report,
• 16:39
  Speaker 1: which is, will there be impeachment proceedings? So let's just
• 16:45
  Speaker 1: you know, looking at yesterday and so that the bare
• 16:47
  Speaker 1: bones testimony we got yesterday from Mr Mueller plus the report,
• 16:50
  Speaker 1: you think that moves the needle at all as it
• 16:52
  Speaker 1: relates to the legal jeopardy of the president Trump will
• 16:55
  Speaker 1: face either while he's in office or after office. It
• 16:59
  Speaker 1: may maybe it moves it, uh where he's in more jeopardy.
• 17:03
  Speaker 1: And the reason for that is not because Bob Muller
• 17:06
  Speaker 1: brought anything new to the table that wasn't in the report.
• 17:09
  Speaker 1: It's because the public discourse, the public vetting, the public
• 17:13
  Speaker 1: attention on the facts in that report are still being
• 17:17
  Speaker 1: discussed and focused on, and frankly, the more you look
• 17:20
  Speaker 1: at those facts in that report, the more you talk
• 17:23
  Speaker 1: about them, it's kind of hard not to look away.
• 17:26
  Speaker 1: The more that I listened to Robert Mueller yesterday and
• 17:30
  Speaker 1: his comments since the publication of the report, the brief
• 17:33
  Speaker 1: ones that he has made, the more of the contrast
• 17:36
  Speaker 1: between him and some of the politicians UH, sort of
• 17:40
  Speaker 1: remains stark in my mind. This idea that he is
• 17:42
  Speaker 1: committed to process. He wants to basically say, the institution
• 17:46
  Speaker 1: will provide justice. I am committed to it. He has
• 17:49
  Speaker 1: a commensurate marine. As a recent guest UH said, I'm
• 17:53
  Speaker 1: just wondering whether career prosecutors and career workers UH in
• 17:58
  Speaker 1: the US government our our story to change their mentality
• 18:02
  Speaker 1: about faith in the institution if they feel like it
• 18:06
  Speaker 1: isn't rewarded in the sense of, you know, actually being
• 18:10
  Speaker 1: as meaningful as they hoped. I think with that question,
• 18:13
  Speaker 1: the d o j's credibility as an institution is taking
• 18:17
  Speaker 1: a hit with these proceedings, with what's going on with
• 18:21
  Speaker 1: how everything was handled, and you know, I don't know
• 18:25
  Speaker 1: what line d o J, A U, sas and prosecutors
• 18:29
  Speaker 1: are thinking but it's got to hurt and UM it's
• 18:35
  Speaker 1: my question is whether this is a permanent shift of
• 18:40
  Speaker 1: the viewpoint of d o J and federal their place
• 18:44
  Speaker 1: in federal prosecutions and and and seeking justice, or whether
• 18:49
  Speaker 1: this will revert back to the norm. So con it's
• 18:53
  Speaker 1: not just the Muller investigations. The President Trump also is
• 18:56
  Speaker 1: facing some potential liability with investigations here in New York.
• 18:59
  Speaker 1: I think the federal there's some federal prosecutors as well
• 19:02
  Speaker 1: as a Southern District of New York looking at some
• 19:04
  Speaker 1: of the Trump organizations, for example, can give us an
• 19:07
  Speaker 1: update on where you think the statusus of some of
• 19:09
  Speaker 1: those investigations are we well, first off, I think it
• 19:12
  Speaker 1: seems pretty clear that the campaign finance fraud investigation that
• 19:17
  Speaker 1: the Southern District of New York was looking into up
• 19:20
  Speaker 1: here has been closed. And I'm basing that on the
• 19:23
  Speaker 1: unsealing letter that was submitted to Michael Cohen's uh sentencing
• 19:28
  Speaker 1: court that said that part of the investigation is done.
• 19:32
  Speaker 1: UM I don't know where the investigation stands with respect
• 19:36
  Speaker 1: to the Trump organization. I know it's been publicly reported
• 19:39
  Speaker 1: that there are those investigations going on. UM as well
• 19:43
  Speaker 1: as investigations by the New York Attorney General, who I
• 19:46
  Speaker 1: suspect UH is going to be more aggressive because they're
• 19:50
  Speaker 1: not part of the federal system. I'm wondering what do
• 19:53
  Speaker 1: you think is most discouraging for federal prosecutors and career
• 19:59
  Speaker 1: prep the government with respect to the way that the
• 20:01
  Speaker 1: Muller investigation was handled it. I think the unfairness of
• 20:10
  Speaker 1: both sides in asking UH Mueller and his team to
• 20:16
  Speaker 1: do something that they were somewhat constrained from doing. They
• 20:20
  Speaker 1: were doing their job, and having your work turned into
• 20:24
  Speaker 1: a partisan fight, I think is what is discouraging for people.
• 20:29
  Speaker 1: I think also seeing it play out in public, the tension,
• 20:32
  Speaker 1: the obvious tension between the Attorney general Attorney General Barr
• 20:37
  Speaker 1: and Mueller and his team, where it's publicly displayed that
• 20:41
  Speaker 1: they had differing views about what conclusions Mueller could reach
• 20:46
  Speaker 1: or not, and Bar took it upon himself to reach
• 20:50
  Speaker 1: a conclusion um that Mueller didn't, and seeing that play
• 20:53
  Speaker 1: out in public, it really hurts. So you know, in
• 20:57
  Speaker 1: the legal community today, do you think the mull report
• 21:01
  Speaker 1: UH serves as a basis for impeachment? Is that the
• 21:04
  Speaker 1: belief or is the belief that there's just not enough
• 21:06
  Speaker 1: there I think the Mulla report is a there is
• 21:13
  Speaker 1: a lot of there there um, and it is incumbent
• 21:18
  Speaker 1: on the fact finders, and here the fact finders are
• 21:20
  Speaker 1: ultimately going to be Congress to decide and past judgment.
• 21:24
  Speaker 1: But it's a very in depth report with a lot
• 21:28
  Speaker 1: of juicy facts, uh, inculpatory facts in there. Cod Nowaday,
• 21:34
  Speaker 1: thank you so much for being with us. Your thoughts
• 21:37
  Speaker 1: are always insightful. Can nowadays a partner at Venable L L. P.
• 21:41
  Speaker 1: He is a former prosecutor at the U. S. Attorney's
• 21:45
  Speaker 1: Office in the Southern District of New York. He spent
• 21:47
  Speaker 1: nine years. They're focusing on corruption and fraud. Time to
• 22:04
  Speaker 1: check in with the Bloomberg Opinion. We're joined by opinion
• 22:07
  Speaker 1: Commas at least, Martin Uzi at least thanks so much
• 22:10
  Speaker 1: for joining us. We had a big day for Marrier
• 22:12
  Speaker 1: drage today and the e c B let's see already
• 22:15
  Speaker 1: had to say there is surrounding euro Area growth out
• 22:19
  Speaker 1: remained tilted to the downside, reflecting the prolonged presence of
• 22:24
  Speaker 1: uncertainty is related to geopolitical factors. The rise in threat
• 22:29
  Speaker 1: of protection is and vulnerabilities in emerging markets. That was
• 22:35
  Speaker 1: ECB President Mario Draggy speaking this morning talking about the
• 22:40
  Speaker 1: slowdown in growth and some of the concern there at
• 22:43
  Speaker 1: least Martinous Bloomberg Plenty opinion columns, thanks so much for
• 22:46
  Speaker 1: joining us at least it just real quickly, What was
• 22:48
  Speaker 1: your main takeaway from what we heard this morning from
• 22:51
  Speaker 1: Mr dry Well. I think you know there's going to
• 22:54
  Speaker 1: be you know, some some stimulus on the way. Um
• 22:57
  Speaker 1: he's signally this might you know, come as as soon
• 22:59
  Speaker 1: as September. You saw banks initially rally on the back
• 23:03
  Speaker 1: of expectations that there might well be someb mitigating actions
• 23:07
  Speaker 1: for them in the way of potentially deposit tearing. Of course,
• 23:10
  Speaker 1: the banks have to pay the ECB money. Um, I
• 23:13
  Speaker 1: have to pay the ECB two part their funds, and
• 23:15
  Speaker 1: that's been hurting them and and that's where we are.
• 23:19
  Speaker 1: And yet we saw a reversal in market. So this
• 23:21
  Speaker 1: I find really interesting because initially bond yields dropped to
• 23:24
  Speaker 1: record low, certainly in Germany, and there was a rally
• 23:27
  Speaker 1: all across the fixed income world in Europe that has
• 23:30
  Speaker 1: since shifted, especially after Mario Draggy suggested that perhaps the
• 23:35
  Speaker 1: decisions were not unanimous at this point. Yes, no, that's right.
• 23:40
  Speaker 1: It seems that some some also work remains to be done,
• 23:45
  Speaker 1: for example, on on how they might relieve banks in
• 23:47
  Speaker 1: the way of deposit tearing. It seems like the analysis
• 23:49
  Speaker 1: is still underway. So yes, I think that the takeaway
• 23:52
  Speaker 1: changed as as the press conference evolved. So at Lisa
• 23:56
  Speaker 1: so Mary dragging here is stepping down as President of
• 24:00
  Speaker 1: the European Central Bank in October, but there's still some
• 24:03
  Speaker 1: questions about some of his dealings in the past and
• 24:06
  Speaker 1: some of his actions in the pascess. It relates to
• 24:09
  Speaker 1: the Banka mont Apache in Italy. I know you wrote
• 24:12
  Speaker 1: a colment about that. What are some of the key
• 24:14
  Speaker 1: issues from that that you're looking at. Well, basically, you know,
• 24:17
  Speaker 1: the ECB is a very young banking supervisor. They only
• 24:21
  Speaker 1: officially became the region's chief regulator in fourteen, and the
• 24:27
  Speaker 1: idea was that, you know, you'd have a European wide
• 24:29
  Speaker 1: regulator that wouldn't be UM there wouldn't be influenced by
• 24:33
  Speaker 1: national politics, national inclinations which have you know, sometimes led
• 24:37
  Speaker 1: to regulators locally being too permissive for example, UM. But
• 24:41
  Speaker 1: what we've seen in the case of Montepasky which is
• 24:43
  Speaker 1: potentially quite an extreme case. Is that you know, based
• 24:46
  Speaker 1: on the you know, the information that we have had.
• 24:48
  Speaker 1: You know, the ECB potentially you know bent the rules
• 24:52
  Speaker 1: a little bit um in its latest rescue of Montepasky
• 24:56
  Speaker 1: two years ago, and that is raising questions as to
• 24:58
  Speaker 1: the workings of the east be as a banking regulator. Um,
• 25:02
  Speaker 1: you know, particularly now it's the early days of it's
• 25:05
  Speaker 1: of its of this role. It's important to understand, you know,
• 25:08
  Speaker 1: how does the CB work, how does it come to
• 25:10
  Speaker 1: its conclusions, and how was it you know, what led
• 25:13
  Speaker 1: to them, um, you know, taking not taking into consideration
• 25:18
  Speaker 1: or not giving you know, considerable consideration to the fact
• 25:20
  Speaker 1: that Montapasky was probably insolvent when it was bailed out.
• 25:24
  Speaker 1: So understanding how the mechanics of that decision unfolded would
• 25:28
  Speaker 1: be helpful. So given the fact that Christine Legarde is
• 25:31
  Speaker 1: going to step in as the next ECB president, what
• 25:35
  Speaker 1: do you think she needs to do to show up
• 25:38
  Speaker 1: confidence in the mechanics of the e c B. I
• 25:42
  Speaker 1: think more transparency to begin with. Um, you know, this
• 25:44
  Speaker 1: is a very young institution, as I said, it has
• 25:47
  Speaker 1: many overlapping arms within it. As it's not entirely clear
• 25:52
  Speaker 1: sometimes her decisions are taken, and I think more transparency
• 25:56
  Speaker 1: would be helpful in that regard. And you know, the
• 25:58
  Speaker 1: European Commission has also singled out the fact that there
• 26:01
  Speaker 1: needs to be more transparencing. So I think it's very
• 26:04
  Speaker 1: important because these initial UM instances are going to set
• 26:08
  Speaker 1: important precedents for the future. Well, Lisa, what's the what's
• 26:11
  Speaker 1: the sense in the European banking community as it relates
• 26:14
  Speaker 1: to the e c B as a regulator. Has it
• 26:16
  Speaker 1: been effective? I mean it is there is there uncertaintly
• 26:19
  Speaker 1: between local regulations and e CB wide regulations. Is that
• 26:23
  Speaker 1: causing some of the issues. I think, you know, the
• 26:25
  Speaker 1: Bloomberg News around UM sort of report card about a
• 26:28
  Speaker 1: year ago on how it's done as a supervisor, and
• 26:30
  Speaker 1: I think you know they've it's great by with a
• 26:32
  Speaker 1: little bit more than a pass. I think the senses
• 26:35
  Speaker 1: that in some eras they've been a little bit too
• 26:38
  Speaker 1: slow to move, for example, UM with regards to the
• 26:42
  Speaker 1: build up of bad loans, particularly in Southern Europe. UM.
• 26:45
  Speaker 1: And you know, more decisive and swifter action would be welcomed,
• 26:50
  Speaker 1: you know, by the market. UM. I think you know,
• 26:54
  Speaker 1: I don't get the sense that there is necessarily concern
• 26:56
  Speaker 1: as to how the institution works, but it's more how
• 27:00
  Speaker 1: effective it is. A Lisa Martin Newsy, thank you so
• 27:03
  Speaker 1: much for being with us. It's always illuminating. A Lisa
• 27:05
  Speaker 1: Martin Newozi is a calumnist covering finance for Bloomberg Opinion,
• 27:08
  Speaker 1: joining us from London. You can read more on all
• 27:11
  Speaker 1: of her work and other stories from Bloomberg Opinion at
• 27:13
  Speaker 1: Bloomberg dot com, Slash Opinion on the Terminal at O
• 27:17
  Speaker 1: P I n Go. Thanks for listening to the Bloomberg
• 27:22
  Speaker 1: pen L podcast. You can subscribe and listen to interviews
• 27:24
  Speaker 1: at Apple Podcasts or whatever podcast platform you prefer. Paul Sweeney,
• 27:28
  Speaker 1: I'm on Twitter at pt Sweeney. I'm Lisa Abram Woyds.
• 27:31
  Speaker 1: I'm on Twitter at Lisa A. Bram Woyds one. Before
• 27:34
  Speaker 1: the podcast, you can always catch us worldwide. I'm Bloomberg
• 27:36
  Speaker 1: Radio