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Brexit's Monty Python Impression Continues: Authers · Bloomberg Intelligence

0:02
Speaker 1: Welcome to the Bloomberg Penel Podcast. I'm Paul Sweeney along
0:05
Speaker 1: with my co host Lisa Brahma Wolds. Each day we
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Speaker 1: bring you the most noteworthy and useful interviews for you
0:10
Speaker 1: and your money, whether at the grocery store or the
0:12
Speaker 1: trading floor. Find a Bloomberg penl podcast on Apple podcast
0:16
Speaker 1: or wherever you listen to podcasts, as well as at
0:18
Speaker 1: Bloomberg dot com. For once the pound is not doing anything.
0:26
Speaker 1: I'm Lisa bram Woyds, Vince Ignarella, Bloomberg Macro Strategies, joining
0:30
Speaker 1: me here up Paul Sweeney out on a much deserved vacation.
0:34
Speaker 1: It has been an incredibly volatile period for the pound,
0:37
Speaker 1: for sterling uh today people are not sure what to make.
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Speaker 1: European Union leaders are planning to offer the U hate
0:44
Speaker 1: conditional Broxit extension at this week's summit in Brussels, widely
0:48
Speaker 1: expected in markets. The question is though, going forward, what
0:53
Speaker 1: this means for what kind of Brexit we're going to get?
0:55
Speaker 1: And to answer that question and tell us exactly what
0:57
Speaker 1: we can expect and look into the crystal ball is
0:59
Speaker 1: John Authors, who joins is here in our interactive Broker Studios.
1:03
Speaker 1: So John is the senior editor for Bloomberg Market, What
1:07
Speaker 1: do you think what's going on here? How much creed
1:09
Speaker 1: this do we put into a delay getting a better
1:12
Speaker 1: Brexit deal a delay? Well, there's no deal that's possible
1:18
Speaker 1: other than the one that Teresa May has already negotiated
1:21
Speaker 1: without a delay. So if you have more of a
1:27
Speaker 1: positive polyannerish attitude towards this, then plainly a delay should
1:31
Speaker 1: be able to improve the ultimate outcome. So there is
1:38
Speaker 1: that element of positivity. That said, the government's strategy throughout
1:43
Speaker 1: has been to work on the assumption that any delay
1:47
Speaker 1: is going to be seen as a betrayal. That is
1:50
Speaker 1: a big part of why it doesn't want to delay
1:52
Speaker 1: if it's all possible. Uh and adds to that that
1:57
Speaker 1: the the clear Are deadline has been used as a
2:02
Speaker 1: negotiating tactic. Now, what's interesting in the last few days
2:08
Speaker 1: is that that's deadline did appear at last to be working.
2:13
Speaker 1: We heard quite a number of very aggressively hard line
2:17
Speaker 1: pro Brexit MPs beginning to suggest that they would vote
2:21
Speaker 1: for this rather than take the risk of leaving without
2:24
Speaker 1: an odeal, or perhaps more importantly for them, taking the
2:27
Speaker 1: risk that they would end up without a Brexits at
2:30
Speaker 1: all um. So that then leads to the very intriguing
2:35
Speaker 1: UH parliamentary drama we had yesterday when the Speaker decided
2:39
Speaker 1: that we wouldn't be able to have another vote on
2:42
Speaker 1: this unless tourism you can get another deal. I think
2:47
Speaker 1: having you wanted me to answer the question, and obviously
2:50
Speaker 1: I can't, because nobody can. I think what's most I
2:54
Speaker 1: think what's most likely. I think what's most likely at
2:57
Speaker 1: this point is in the next week that Europe comes
3:02
Speaker 1: up with something that is enough of an excuse for
3:06
Speaker 1: Terisa May to ask for another vote, that we get
3:08
Speaker 1: one more vote, probably next week. I think the odds
3:14
Speaker 1: are still narrowly on that vote failing. I the Brexit
3:19
Speaker 1: deal that we've got ahead of us, which from the
3:21
Speaker 1: markets is a point of view, is a very good
3:23
Speaker 1: one because it leaves Britain basically in economic terms in
3:28
Speaker 1: Europe and from the point that brick Steers terms, it's
3:30
Speaker 1: a very bad deal, but from market terms it's a
3:32
Speaker 1: very good deal. The most likely scenario is that that
3:36
Speaker 1: still narrowly gets down and at that point we have
3:38
Speaker 1: to have a long delay. So with the delay in
3:42
Speaker 1: the potential vote next week, there's some talk that what
3:45
Speaker 1: the you will propose is making some consolation to the delay,
3:52
Speaker 1: adding that to me is deal and would that be
3:55
Speaker 1: enough to get past Barkau to give her the opportunity
3:58
Speaker 1: for a vote next week? What do you think they
3:59
Speaker 1: need to come up with something substantially different. They can't
4:03
Speaker 1: come up with something substantially different in the time available,
4:05
Speaker 1: and he won't he won't allow it anyway. I this
4:09
Speaker 1: is we're in the realm of politics. We're in We're
4:12
Speaker 1: in a country that doesn't have a constitution. Um. This
4:14
Speaker 1: is a precedent. It's an extremely strong precedent that dates
4:18
Speaker 1: back to the very early years of James the First,
4:20
Speaker 1: who came after Elizabeth the First talking about British politics.
4:25
Speaker 1: It takes its Yeah, it's fun um that. But but
4:31
Speaker 1: the constitution. Our constitution is a fluid document, which is
4:34
Speaker 1: to say, it doesn't exist, so you can you can
4:38
Speaker 1: alter it if you absolutely have to. Berko at this
4:41
Speaker 1: point is in a political situation. If it is obvious,
4:45
Speaker 1: um that there is will to have a vote, he
4:48
Speaker 1: probably will take an excuse to bend and vote. The
4:52
Speaker 1: other important points to note is that there are ways
4:55
Speaker 1: around it. If you really want a glorious British possibility
4:59
Speaker 1: to it is a make could always call an enter
5:01
Speaker 1: this parliamentary session and start a new one, the only
5:04
Speaker 1: problem there being that she has to get the Queen
5:07
Speaker 1: to agree to come and give a new speech, because
5:11
Speaker 1: this is like Alice in Wonderland. This is like literally
5:13
Speaker 1: the tea party at Alice in Wonderland. If she shakes
5:16
Speaker 1: her hand like this and says abra cadabra, they can
5:20
Speaker 1: restart it. And John Burko doesn't have like to stand
5:22
Speaker 1: on this is crazy? No, why doesn't she just do that?
5:25
Speaker 1: Be it is crazy? Well, she's the Queen is a
5:29
Speaker 1: nice old lady in her nineties. We don't really want
5:31
Speaker 1: to drag her around the streets of London and sticker
5:34
Speaker 1: in the throne. It's got to wear quite a heavy
5:37
Speaker 1: crown whilst he gives that speech. So so we've got
5:40
Speaker 1: to be polite to polite to her while we were
5:42
Speaker 1: at it. That that's that's one point. I mean. The
5:44
Speaker 1: other point is thank you, and the other point for
5:51
Speaker 1: anybody out there, thank you. The other points. The other point,
5:55
Speaker 1: which is more serious, is that you can get Parliament
5:58
Speaker 1: to vote to override the normal rule as that if
6:04
Speaker 1: a majority of Parliament can vote to override the speaker. However,
6:09
Speaker 1: they have to be sure that that that somebody has
6:13
Speaker 1: to organize them to do that, and in principle, you
6:17
Speaker 1: can only get that if you have already assured yourself
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Speaker 1: that a majority of people will actually use that vote
6:25
Speaker 1: to change their mind. I mean you're speaking about the politics.
6:28
Speaker 1: This is a rule that really hasn't been used since
6:30
Speaker 1: I understand, Um. I think that's well, yes, but that's
6:34
Speaker 1: partly because generally speaking, if you've lost once, you don't
6:38
Speaker 1: dr going back to the world. I mean, I mean
6:42
Speaker 1: you mean giving moving on from Lewis Carroll, I've I've
6:45
Speaker 1: drawn the analogy and others have to to Terisa Ma
6:48
Speaker 1: of Terisa Ma to Monty Python's Black Nighty has both
6:51
Speaker 1: his arms and both his legs cut off and still
6:53
Speaker 1: doesn't know he's beaten, and he says, come back here
6:56
Speaker 1: and I'll bite your legs. Basic just a fasturants butter
7:00
Speaker 1: scratch um. Most most British prime ministers are not gluttons
7:06
Speaker 1: for punishments and don't actually keep putting exactly the same
7:10
Speaker 1: vote to the MPs when they've lost already. So yes,
7:14
Speaker 1: it hasn't been in vote since then, but in general
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Speaker 1: is speaking people you don't it's not something you need
7:19
Speaker 1: to invoke. People don't like losing more than once on
7:21
Speaker 1: the same issue. John Authors are Monty Python correspondent U
7:26
Speaker 1: here at Bloomberg LP, joining us here in our eleven
7:30
Speaker 1: three our studios. John Author is a senior editor of
7:32
Speaker 1: Bloomberg Markets and h Brexit does draw natural comparisons to
7:38
Speaker 1: Louis Carroll and Monty Python. At this point, I was
7:42
Speaker 1: actually just trying to picture the Queen with their staff
7:44
Speaker 1: whacking Burko over the head for dragging her out in amazing.
7:49
Speaker 1: That's absolutely amazing. With her heavy crown, I actually think
7:52
Speaker 1: she would just give him the look of death. Absolutely,
7:55
Speaker 1: it would. It would be worth it would be it
7:56
Speaker 1: would be worth it. I am Lisa Bramoys, Paul Sweetie
8:15
Speaker 1: on vacation, Vince Saignarella, I'm so glad to say Bloomberg
8:19
Speaker 1: Macro Strategies joining me here in our Bloomberg Interactive Brokers studios.
8:24
Speaker 1: You know, it's really interesting when you talk about recycling,
8:27
Speaker 1: do you ever wonder where does it go? Takes it?
8:29
Speaker 1: I think this is a fascinating story. It's fascinating right
8:32
Speaker 1: and and for years it was China and they have
8:35
Speaker 1: stopped taking our trash, and there is a question is
8:38
Speaker 1: it even worth recycling anymore? And our people recycling or
8:42
Speaker 1: are frankly waste management companies just throwing the stuff away?
8:45
Speaker 1: Joining us down to discuss. Brent Bell, vice president of
8:48
Speaker 1: recycling at Waste Management based in Houston, joining us by phone. Brent,
8:53
Speaker 1: what's the answer to this? As China refuses to take
8:55
Speaker 1: our trash? Are we just throwing stuff away rather than
8:58
Speaker 1: recycling it ourselves? Now? You know we're we're still recycling
9:01
Speaker 1: a waste management We had had to find alternative markets though,
9:05
Speaker 1: because China was accepting of the material we shipped over
9:08
Speaker 1: there in historical high years. Now they're down about three percent.
9:12
Speaker 1: So we really had to look worldwide to find other
9:15
Speaker 1: markets for the mixed paper, the cardboard, and the fiber
9:18
Speaker 1: that China was consuming for so many years. And what
9:22
Speaker 1: are those markets? Are you? What are you're saying? We're
9:24
Speaker 1: still exporting globally, just not to China to other countries.
9:27
Speaker 1: That's that's right. So India some other parts of Southeast
9:30
Speaker 1: Asia have really stepped up. We developed those markets years ago,
9:35
Speaker 1: knowing that the dependence on China was was somewhat, Uh,
9:38
Speaker 1: you know something that we knew at some point we'd
9:40
Speaker 1: end you know, they talked about it for years, from
9:43
Speaker 1: environmental concerns due to high contamination levels on reducing the
9:47
Speaker 1: amount of imports that they would take. And it's it's
9:49
Speaker 1: a global issue, so it's not just us to China,
9:52
Speaker 1: it's other countries going into China. We've all had to
9:55
Speaker 1: shift and find alternative markets. And then even domestically, you're
9:58
Speaker 1: seeing a lot of new expansion domestically in paper mills,
10:01
Speaker 1: which we haven't seen in decades. Are other markets more
10:03
Speaker 1: expensive than China? So I would I would say they
10:08
Speaker 1: right now that prices are a lot lower than other
10:10
Speaker 1: than China was China is always a premium buyer for
10:12
Speaker 1: these type of materials, and other markets with it's India,
10:16
Speaker 1: Southeast Asia. Even here domestically, because of the recent oversupply
10:20
Speaker 1: situation caused by China, we haven't seen a lot lower
10:23
Speaker 1: prices on the commodity side. So that creates a definite
10:27
Speaker 1: price and balance, right if people are paying less for it,
10:30
Speaker 1: but the cost of recycling goes up, that's the conundrum
10:32
Speaker 1: you have as to what do you do with the
10:34
Speaker 1: stuff if it just costs more to recycle than effectively
10:37
Speaker 1: throwing it away. Exactly, today, are processing costs at our facilities,
10:42
Speaker 1: you know, exceed the value those commodities by by you know,
10:45
Speaker 1: ten to twin dollars per ton, which means that they, ultimately,
10:48
Speaker 1: the customers degenerates those materials, has to pay that difference.
10:52
Speaker 1: Where historically their business models, whether that's the municipality or
10:55
Speaker 1: commercial customer, relied on these commodity prices. It's somewhat you know,
11:00
Speaker 1: subsidize some of their budgets, and actually there was money
11:02
Speaker 1: coming into them for so many years. Now it's money
11:05
Speaker 1: calling out to pay for the processing costs. So, Brent,
11:08
Speaker 1: there was an article in the Atlantic magazine in the
11:10
Speaker 1: past a week or so. Is this the end of recycling?
11:15
Speaker 1: That was the title of the article, and it was
11:16
Speaker 1: talking about how Americans are throwing more and more stuff
11:19
Speaker 1: away and there are fewer countries that actually want to
11:22
Speaker 1: take this stuff. You are saying, you sound constructive that
11:25
Speaker 1: you're still recycling, but is there sort of a diminishing effect?
11:30
Speaker 1: Are people recycling less than they did, say a year
11:33
Speaker 1: ago or two? So I think the big part now
11:36
Speaker 1: is people are recycling as much or more, But some
11:39
Speaker 1: of the materials are putting in the stream is contaminated.
11:42
Speaker 1: So what we're trying to do now is go through
11:44
Speaker 1: an education program to make sure that they understand what
11:47
Speaker 1: the right materials are to put in those materials to
11:49
Speaker 1: begin with, in their in the recycling bins to begin with.
11:52
Speaker 1: But I do think that whether you're selling material or
11:55
Speaker 1: paper mills are here in the US or India, they
11:58
Speaker 1: all expect a much higher quality of the material than
12:00
Speaker 1: ever before. So it almost seems like this should be
12:03
Speaker 1: part of the conversation that everyone speaking about about green
12:06
Speaker 1: deals and and green products. It does if we're polluting,
12:10
Speaker 1: if you will, with plastics and recyclables certainly doing other
12:15
Speaker 1: things to the environment, it's it's not a trade off.
12:18
Speaker 1: It seems like we should be getting to start where
12:21
Speaker 1: the problem first started, right. That's right. And I think
12:24
Speaker 1: you hit the nail on the head a few minutes
12:25
Speaker 1: ago when you mentioned the supply and balance is so many.
12:29
Speaker 1: For so many years we've had our customers want to
12:32
Speaker 1: have higher diversion rates and produce more recycling. What we
12:35
Speaker 1: haven't focused heavily on that we need to is on
12:38
Speaker 1: the brands and the manufacturers to use more recycled content.
12:41
Speaker 1: We need to create that demand situation which has really
12:44
Speaker 1: dropped off today and that's what's caused lower prices. But
12:47
Speaker 1: if we can encourage our customers to use more recycled content,
12:51
Speaker 1: to support brands that have recycled content in their in
12:54
Speaker 1: their products and packaging, that will help create this demand.
12:57
Speaker 1: It's so needed right now. Thank you so much for
13:00
Speaker 1: being with us. UH. This is a really important issue
13:03
Speaker 1: and hopefully we will hear from you again. Brent Bell
13:06
Speaker 1: is vice president of recycling at Waste Management based in Houston, Vince.
13:11
Speaker 1: I find it fascinating because this is such a consumption
13:13
Speaker 1: based society and you have to wonder when you do
13:17
Speaker 1: spend that time sorting things into the different bins, do
13:20
Speaker 1: they just end up throwing it away? Yeah, and you
13:22
Speaker 1: know you do. That pollution issue is really important because
13:26
Speaker 1: people don't really look at all the times at what
13:29
Speaker 1: they're recycling and they said, well, if it's plastic or
13:32
Speaker 1: if it's metal, then it certainly must go in the bin,
13:34
Speaker 1: but not necessarily. And they're also is an eddication issue
13:37
Speaker 1: with respect to cleaning some of these UH plastics or
13:40
Speaker 1: other containers. Right. We have to actually it can be
13:42
Speaker 1: really difficult, right, especially that at the grease just sort
13:45
Speaker 1: of like stays in the cracks. And then if you
13:47
Speaker 1: spend a lot of time using the water, are you
13:49
Speaker 1: wasting the water and the heat? I mean, I give
13:51
Speaker 1: this way too much. You can tell on neurotic I
13:54
Speaker 1: am yeah. Vince Signerella alongside me today Bloomberg Bacross strategist
14:15
Speaker 1: Paul Sweeney on vacation. I am so happy you're here. Uh.
14:21
Speaker 1: We were talking about bitcoin a lot over the past
14:25
Speaker 1: eighteen months, or maybe eighteen months ago when the price
14:28
Speaker 1: of a bitcoin was more than four times as much
14:32
Speaker 1: as it is currently currently trading less than four thousand
14:35
Speaker 1: dollars each. But there is a question what is the
14:39
Speaker 1: future of cryptocurrencies as enthusiasm Waynes joining us now did
14:43
Speaker 1: it weigh in? Is Eric Lavek. He is chief executive
14:46
Speaker 1: of Ledger based in Paris, but he joins us here
14:48
Speaker 1: in our Bloomberg Atta Active Broker Studios. Tell us a
14:51
Speaker 1: little bit about what Ledger is and how it fits
14:54
Speaker 1: into this cryptocurrency world at a time of transition. I
14:58
Speaker 1: would argue, yeah, Ledger is a security company, technology company
15:03
Speaker 1: providing with hardware, wallets and all technologies to secure a
15:09
Speaker 1: bitcoin and crypto assets. Because it's a complex asset, you
15:12
Speaker 1: need to secure it, and so we are a global
15:14
Speaker 1: leader writing solutions for individuals and enterprises. So what has
15:18
Speaker 1: it done for your business? The fact that there has
15:23
Speaker 1: been this sort of dropped enthusiasm cbo just saying they're
15:26
Speaker 1: not going to trade futures contracts had a bit quite
15:29
Speaker 1: anymore just in the past few days. Well, we have
15:32
Speaker 1: a lot of enterprises and financial institutions working with us,
15:36
Speaker 1: and we have despite the collapse of the price in
15:39
Speaker 1: the recent months, the strategies are still very strong. So
15:43
Speaker 1: if cbo IS is stopping their futures, maybe first it
15:49
Speaker 1: can push up the price because you cannot shut it anymore.
15:52
Speaker 1: But also most of the financial institutions have a very
15:56
Speaker 1: strong strategy for the future of crypto because it's not
15:58
Speaker 1: only decentralized crypt occurrencies, it's also the chanization and basically
16:04
Speaker 1: they really want to build a new backup fees based
16:07
Speaker 1: on this technology. Yeah. I think we were just talking
16:09
Speaker 1: about that off the year that the fact that sebo
16:12
Speaker 1: stepped out is actually potentially a good opportunity for bitcoin
16:15
Speaker 1: to rise again because as soon as they came in
16:17
Speaker 1: with that future, it gave traders an opportunity to short
16:20
Speaker 1: the physical uh if you will, the technology physical, and
16:24
Speaker 1: and that is almost immediately after the price came down.
16:26
Speaker 1: Is now that they've stepped out, there is an opportunity
16:29
Speaker 1: for traders to get back in and play bitcoin the
16:32
Speaker 1: way they did before. See bow Baby Sebo stepping out.
16:35
Speaker 1: But you have firms like JP Morgan Chase stepping in
16:37
Speaker 1: and saying they want to develop their own digital currency.
16:40
Speaker 1: So this is definitely a positive for you and for
16:42
Speaker 1: the future of the company. No, yeah, clearly. Uh. We
16:45
Speaker 1: have seen a lot of ups and downs when the
16:48
Speaker 1: price shoot to the moon. The sales of our hardware
16:51
Speaker 1: while it's went through the roof as well. We were
16:53
Speaker 1: planning to sell sty thousand units we and it selling
16:56
Speaker 1: one million. So with the price going down, it's the opposite.
16:59
Speaker 1: But we see a lot of opportunities, as always saying
17:02
Speaker 1: on the enterprises because the future is really aligned with
17:06
Speaker 1: cryptocurrencies dochanization, uh, and they don't want to miss the
17:10
Speaker 1: next wave. There's an irony here that crypto assets are
17:16
Speaker 1: not physical, they are digital, and yet there is a
17:20
Speaker 1: need for a physical accessibility or or storage of a
17:26
Speaker 1: bitcoin in a way that can create security. Can you
17:29
Speaker 1: talk a little bit about that? And now it's sort
17:31
Speaker 1: of uh, it's it's challenging for people to get the
17:35
Speaker 1: same kind of security. It is cybersetting without the physical. Yeah,
17:39
Speaker 1: contrary to what we think when we say virtual currencies,
17:42
Speaker 1: or used to say virtual currencies before crypto assets, it's
17:45
Speaker 1: in fact very physical. When you own bitcoins or any
17:47
Speaker 1: crypto assets, what you really own is the private key.
17:50
Speaker 1: It's a piece of information. It's something that you can
17:52
Speaker 1: write on a piece of paper, something that you can
17:54
Speaker 1: even engrave in the plate of steel, input in a safe.
17:57
Speaker 1: So it's like cash or it's physical. It's like Beerer bones,
18:01
Speaker 1: and so you need to protect them. You cannot have
18:04
Speaker 1: them on your PC or your smartphone because then you
18:06
Speaker 1: can get hacked. That's why you need a secure device
18:10
Speaker 1: which is built on smart cards, which is going to
18:12
Speaker 1: allow security. It's like a fortress for your bitcoins. So
18:17
Speaker 1: like on that subject, because I just find the whole
18:19
Speaker 1: thing fascinating. There's been so many stories of people embezzling
18:22
Speaker 1: and and I think something that is still eight fifty
18:26
Speaker 1: million dollars goes missing every year from bitcoin wallets here,
18:29
Speaker 1: there and everywhere. If it's in your wallet, if it's
18:32
Speaker 1: in your company's wallet and somebody then does hack your
18:35
Speaker 1: phone or your computer, explain to me how that remains
18:38
Speaker 1: protected if they've they've got access to it, but they
18:41
Speaker 1: don't have access to it. Well, if you are an enterprise,
18:44
Speaker 1: you need to have governance to manage your funds. So
18:47
Speaker 1: you really when we deploy your solutions, you will have
18:50
Speaker 1: multi signature timelocks. You will have a lot of feature
18:53
Speaker 1: that will prevent a single point of failure because when
18:57
Speaker 1: you want to manage these assets as a price, you
19:00
Speaker 1: need to have rules. And this is the technology that
19:03
Speaker 1: we are providing because if you imagine that you will
19:06
Speaker 1: have only a safe with one key, then the problem
19:10
Speaker 1: is not really I t The problem is the process
19:12
Speaker 1: because to whom do you give access to the fund?
19:15
Speaker 1: I mean to the safe. What happens if there is
19:17
Speaker 1: a hostage situation, if the CFO runs with the safe itself.
19:22
Speaker 1: That's why you need you need these layers of governance.
19:26
Speaker 1: And when you have multi signature, then you can have
19:29
Speaker 1: like protections thanks to all the process you can put
19:31
Speaker 1: in place and just real quickly thirty seconds. Here this
19:35
Speaker 1: product the larger nano X, which is a Bluetooth enabled
19:39
Speaker 1: hardware wallet. You just introduced it at c e S
19:42
Speaker 1: just real quick. Was there a lot of enthusiasm? Was
19:45
Speaker 1: there more than you expected or or was there waiting
19:48
Speaker 1: because of what's going on in cryptoconomy. Yeah, it was
19:50
Speaker 1: a lot of enthusiasm, which was very good because despite
19:54
Speaker 1: the drop in price, people are still using our products,
19:57
Speaker 1: and the nano X with bluetooth lows management on the go.
20:01
Speaker 1: You can have your mobile phone, your smartphone, you Apple,
20:03
Speaker 1: you Enoid, and so people are enthusiastic because they will
20:06
Speaker 1: be able to use it much easier than before. Cryptocurrencies
20:10
Speaker 1: aren't dead yet, and people are definitely looking for ways
20:14
Speaker 1: to make sure that their assets are not stolen. Erica K,
20:19
Speaker 1: thank you so much for being with us, Chief executive
20:21
Speaker 1: officer of Ledger, normally based in Paris, but joining us
20:23
Speaker 1: here in New York. I'm Lisa Abramo. It's Vincegnarella joining
20:27
Speaker 1: me today. This is Bloomberg Paul Sweeney off today on
20:46
Speaker 1: a much deserve vacation, joining me. I'm very pleased to
20:49
Speaker 1: say Vincegnarella, Bloomberg macro strategist. Really interesting story. Instagram is
20:56
Speaker 1: getting into e commerce. If you like it, click it
20:59
Speaker 1: and buy it actually on the site. Uh, this is new.
21:02
Speaker 1: They are unveiling this. It's already moving markets, with Shopify
21:06
Speaker 1: following the most in two weeks. Uh say after RBC
21:09
Speaker 1: said the e retailer could be hurt by the launch
21:12
Speaker 1: of this program, which is called checkout on Instagram. Sarah
21:16
Speaker 1: Fryer joining us now, who covers all things tech for Bloomberg, Sarah,
21:20
Speaker 1: what exactly is Instagram checkout? Instagram checkout allows people to
21:25
Speaker 1: actually purchase products from their Instagram app and do it
21:31
Speaker 1: all there. In the past, they had a way for
21:34
Speaker 1: you to see a product, identify it, and then go
21:37
Speaker 1: to the retailer's website. Uh. Really, what checkout does is
21:41
Speaker 1: give Instagram a new line of revenue, a new line
21:44
Speaker 1: of business which is going to be incredibly important to
21:47
Speaker 1: the future of the company. So, Sarah, I'm getting the
21:50
Speaker 1: feeling there's gonna be a lot of butt buying on
21:52
Speaker 1: this app. Is there is there any sort of interface
21:57
Speaker 1: that sorry, mom, I butt bought right. Um, Look, I
22:02
Speaker 1: had a mechanic by a card in an auction by accident.
22:04
Speaker 1: He was looking at it put in his pocket and
22:06
Speaker 1: then he was stuck with well, first you have to
22:09
Speaker 1: give Facebook your credit card members. I wonder how many
22:11
Speaker 1: people will want to do that. Good point, really good points.
22:14
Speaker 1: So that I mean is that one of the is
22:16
Speaker 1: that one of the issues is that like the first
22:18
Speaker 1: thing you have to do is is turn over your well,
22:20
Speaker 1: I mean, you have to purchase something on the app.
22:23
Speaker 1: You know. Here, here's the thing. This is the most
22:27
Speaker 1: promising business besides advertising for Facebook, and advertising is what's
22:32
Speaker 1: gotten Facebook into so much trouble. And of course I
22:35
Speaker 1: should note Instagram is owned by Facebook, um and and
22:40
Speaker 1: this is this is something they can do without having
22:43
Speaker 1: to collect data or um get built up into that
22:48
Speaker 1: system that's getting so much criticism right now. So it's
22:51
Speaker 1: good for them to try something new. It's also the
22:54
Speaker 1: news feed, the Facebook news feed is losing traction with people. Well.
22:58
Speaker 1: But it does raise a question though on a broader level,
23:01
Speaker 1: because Facebook, the parent company of Instagram, getting your credit
23:05
Speaker 1: card information at a time when they're under increasing scrutiny,
23:08
Speaker 1: uh for failing on privacy concerns. Really yeah, I mean
23:15
Speaker 1: it The thing. The thing you have to remember though
23:18
Speaker 1: is consumers think of Instagram as a separate entity in
23:22
Speaker 1: their minds. I think of it as a separate brand.
23:25
Speaker 1: So While people might not trust Facebook, they certainly trust
23:29
Speaker 1: and love Instagram. So it creates this weird dichotomy where
23:32
Speaker 1: Instagram is able to launch and succeed with products that
23:36
Speaker 1: Facebook maybe couldn't. So we um we're getting in Jeff
23:39
Speaker 1: Bezos face here with the Amazon and Amazon Prime with
23:42
Speaker 1: a product like this, It's very different because what Instagram's
23:47
Speaker 1: check out product is going to be about is you're
23:49
Speaker 1: scrolling for your feed, you see something that inspires you,
23:52
Speaker 1: and then you save it, maybe you shared. One of
23:57
Speaker 1: the actions you can take is to buy it. That's
23:59
Speaker 1: very different than an Amazon where you know exactly what
24:02
Speaker 1: you want, like I want more black T shirts and
24:06
Speaker 1: you go on Amazon, you search for it and you
24:08
Speaker 1: find the best one. This is going to be about
24:10
Speaker 1: seeing things in a lifestyle setting that inspires you to
24:13
Speaker 1: look like that person. Honestly, I think it's going to
24:16
Speaker 1: be so tied to the influencer market, uh, people able
24:20
Speaker 1: to sell their own goods after they've become famous. So
24:24
Speaker 1: more of an impulse purchase. I think more of an
24:26
Speaker 1: impulse purchase more like I want to be like that
24:29
Speaker 1: person who's wearing this dress. What does this say about
24:33
Speaker 1: Facebook strategy? More broadly, to increase revenues and sort of
24:39
Speaker 1: Claude's way back into a better, better, better opinion in
24:44
Speaker 1: the public eye. Well, Facebook is in trouble because I
24:49
Speaker 1: mean not if you look at their numbers, but if
24:51
Speaker 1: you think about the future of their numbers. They're in
24:53
Speaker 1: trouble because news feed and Facebook itself is not going
24:57
Speaker 1: to grow at the rate it used to because it's
25:00
Speaker 1: already reached so much saturation around the world. So they
25:03
Speaker 1: have to come up with more in different business models
25:07
Speaker 1: in order to deliver to Wall Street the growth they're
25:10
Speaker 1: used to seeing. And e commerce is something that they've
25:13
Speaker 1: talked about, is is something that could work. They're also
25:16
Speaker 1: trying things within messaging products. They're also trying maybe they'll
25:20
Speaker 1: do some some money exchange on WhatsApp, but e commerce
25:24
Speaker 1: is the one on Instagram that's most likely to actually
25:27
Speaker 1: work in advertising. Sarah, what are the additional regulatory hurdles
25:32
Speaker 1: that Facebook faces when you start talking about financial products,
25:37
Speaker 1: when you start talking about giving you over your credit
25:40
Speaker 1: card to Facebook. Well, they've done it sort of sneakily, right.
25:45
Speaker 1: I don't know if you've ever been asked to to
25:48
Speaker 1: donate to a friends cause for their birthday on Facebook.
25:53
Speaker 1: That's a way for Facebook to get your credit card number.
25:56
Speaker 1: I mean there there's some ways that that they've tied
25:59
Speaker 1: it in to their product that seemed very unscary, but
26:03
Speaker 1: then when you step back and think about it, you
26:05
Speaker 1: realize what you're giving away, um, and so you know,
26:10
Speaker 1: I think that that is it's not going to become
26:13
Speaker 1: totally clear to people exactly what the consequences are for
26:17
Speaker 1: these kinds of products until a couple of years later,
26:20
Speaker 1: which is what we saw happen with Facebook using developers
26:24
Speaker 1: making games on their platforms, when that didn't become a
26:27
Speaker 1: problem until years after it was over. So what I
26:31
Speaker 1: guess the target market for this is like year olds. Yeah,
26:35
Speaker 1: it's everyone who tries to be inspired by products on Instagram,
26:38
Speaker 1: and I think it's the most natural place for people
26:41
Speaker 1: to be, uh thinking about what they want to buy. Already,
26:45
Speaker 1: people follow influencers so often for for recommendations on what
26:51
Speaker 1: to where, what to buy, what to eat, what to
26:53
Speaker 1: put on their faces. You know, there's so many makeup
26:56
Speaker 1: influencers out there, and so many of those high profile
27:00
Speaker 1: people now have their own product lines. If you have
27:02
Speaker 1: a famous dog that you follow on Instagram, you probably
27:05
Speaker 1: see that they have merchandise you can buy that. You know,
27:10
Speaker 1: you can buy their dog face on a mug. I mean,
27:13
Speaker 1: all these things will be so much easier to do
27:16
Speaker 1: now that that Instagram has integrated shopping into it and
27:20
Speaker 1: is taking a cut well. In other tech news, Sarah,
27:24
Speaker 1: and I'm gonna throw you a curveball, but I'm wondering
27:27
Speaker 1: if you have any opinion on this news coming out
27:31
Speaker 1: the Republican Representative Devon Juniaz of at California is suing
27:35
Speaker 1: Twitter and several of its users from more than million
27:38
Speaker 1: dollars for parity accounts of his mom, Devin uing his
27:43
Speaker 1: mom Devnu in his cow. It's just sort of interesting.
27:47
Speaker 1: It shows, I mean, let's show us how personal this is. Listen.
27:50
Speaker 1: I sat in one of these hearings. Are listened to
27:55
Speaker 1: so many of these congressional hearings on Facebook. You know,
28:00
Speaker 1: people who are members of our government who say they're
28:03
Speaker 1: trying to hold Facebook accountable, and so often the question
28:06
Speaker 1: that gets asked is why don't I get as much
28:09
Speaker 1: reach as I used to? Why are these bad things
28:12
Speaker 1: happening to me on my account? It's basically, you know,
28:15
Speaker 1: complaints and tech support and and people's support congressional hearings
28:19
Speaker 1: on tech support love it is it is. I mean
28:22
Speaker 1: it's it's like it's like, why why don't I get
28:24
Speaker 1: as many likes as I used to? And and it
28:28
Speaker 1: is really just like people don't understand how these algorithms work.
28:32
Speaker 1: They don't understand how these products are are built in
28:35
Speaker 1: this way that is so not not human. Uh, they're frustrated.
28:41
Speaker 1: Sarah Fryar, thank you so much for joining us. Sarah Fryar,
28:44
Speaker 1: technology reporter for Bloomberg News. Joining us from there Bloomberg
28:47
Speaker 1: nine sixties Studio in San Francisco. Thanks for listening to
28:51
Speaker 1: the Bloomberg P and L podcast. You can subscribe and
28:54
Speaker 1: listen to interviews at Apple Podcasts or whatever podcast platform
28:57
Speaker 1: you prefer. Paul Sweeney, I'm on Twitter at PTS. I'm
29:00
Speaker 1: Lisa abram Woods. I'm on Twitter at Lisa abramo Woods.
29:03
Speaker 1: One before the podcast, you can always catch us worldwide
29:06
Speaker 1: on Bloomberg Radio