Latest / Bloomberg Intelligence / Big Media Fends Off Congress Over Content: SocialFlow CEO

Transcript

Big Media Fends Off Congress Over Content: SocialFlow CEO · Bloomberg Intelligence

• 0:01
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, along
• 0:04
  Speaker 1: with my co host of Bonnie Quinn. Every business day
• 0:06
  Speaker 1: we bring you interviews from CEOs, market pros, and Bloomberg experts,
• 0:10
  Speaker 1: along with essential market moving news. Kind of Bloomberg Markets
• 0:13
  Speaker 1: Podcast on Apple podcast or wherever you listen to podcasts,
• 0:17
  Speaker 1: and on Bloomberg dot com. There is a major, major
• 0:21
  Speaker 1: hearing on Capitol Hill right now. Some tex CEOs defending
• 0:24
  Speaker 1: section to thirty old talk about malignant information, misinformation and
• 0:29
  Speaker 1: the spread of that. Twitter CEO Jack Dorsey is talking
• 0:32
  Speaker 1: right now. Twitter has been proposing an idea where users
• 0:35
  Speaker 1: can choose from a series of algorithms supposedly created by
• 0:39
  Speaker 1: groups outside Twitter. It's just an idea right now, but
• 0:43
  Speaker 1: you can be sure that all of the CEOs will
• 0:45
  Speaker 1: be proposing some sort of ideas so that they don't
• 0:47
  Speaker 1: have ideas imposed upon them. So now to talk more
• 0:53
  Speaker 1: about what we might hear today and the reaction to it,
• 0:55
  Speaker 1: let's bring in Jim Anderson of Social Capital, and just
• 1:00
  Speaker 1: for reasons of um disclosure, we should mention that Social
• 1:05
  Speaker 1: Flow is used by Bloomberg as well. So Jim explained
• 1:08
  Speaker 1: to us, first of all, what social flow actually does. Yeah,
• 1:11
  Speaker 1: We're we're the social marketing platform that many of the
• 1:14
  Speaker 1: big media companies use to get their content out to
• 1:16
  Speaker 1: Facebook and Twitter and other social network so so we're
• 1:19
  Speaker 1: very much the conduit through which a lot of that
• 1:21
  Speaker 1: information flows. And of course, reputable media companies that you know,
• 1:24
  Speaker 1: reputable is I suppose subject to some degree of interpretation.
• 1:28
  Speaker 1: You know, your view of what is reputable may be
• 1:30
  Speaker 1: different than someone else's. Use these social platforms enormously. You know,
• 1:35
  Speaker 1: we see about fifty million posts a year go out.
• 1:38
  Speaker 1: They get more than a trillion and annual reach. So
• 1:40
  Speaker 1: these are enormously important platforms for media companies, and of
• 1:43
  Speaker 1: course they're enormously important platforms for all kinds of messaging. So,
• 1:48
  Speaker 1: you know, it's interesting, Jim, I guess one of the
• 1:50
  Speaker 1: most fundamental questions is are these companies media companies, specifically
• 1:56
  Speaker 1: Facebook and then also Twitter and Alphabet or they just
• 1:59
  Speaker 1: simply technology platforms for content. Well, they'll certainly say their
• 2:04
  Speaker 1: technology platforms, right, they don't want to be branded as
• 2:07
  Speaker 1: media companies because that comes with a whole set of obligations,
• 2:09
  Speaker 1: including perhaps not Section two thirty protection, which is what's
• 2:13
  Speaker 1: being talked about in his hearing, and so that's been
• 2:15
  Speaker 1: sort of a long running debate. And and in fairness
• 2:19
  Speaker 1: to their position, uh, you know, they don't generally create
• 2:22
  Speaker 1: the content, right, what do media companies do? They create contents.
• 2:25
  Speaker 1: They typically take a point of view, they have editorial
• 2:27
  Speaker 1: judgment those kinds of things. And what Facebook and Twitter
• 2:30
  Speaker 1: and Google will all say is we don't do that, right,
• 2:33
  Speaker 1: We largely don't create the content. We try to avoid
• 2:36
  Speaker 1: being the editorial voice. You've hurt Mark Zuckerberg say time
• 2:39
  Speaker 1: and time again, we don't want to be the arbiter
• 2:42
  Speaker 1: of truth. Now, there are certainly counter arguments to that
• 2:44
  Speaker 1: and legitimate points on the other side, but at least
• 2:46
  Speaker 1: from their positioning, they don't want to be viewed as
• 2:48
  Speaker 1: media company. Where are they in agreement? I mean obviously there,
• 2:52
  Speaker 1: but but in general when it comes to making arguments
• 2:54
  Speaker 1: before the committee, where will they all sound like they're
• 2:58
  Speaker 1: in agreements and working together pretential even and where will
• 3:01
  Speaker 1: they differ and want to be very much obviously distant
• 3:04
  Speaker 1: from each other. Well, I think where they're going to
• 3:07
  Speaker 1: be together is they all depend on section two thirty.
• 3:10
  Speaker 1: Jack Dorsey's initial statement said, you know, section two thirty
• 3:14
  Speaker 1: is incredibly important, and that removing section to thirty protections
• 3:17
  Speaker 1: will removed content from the Internet. And I think you'll
• 3:19
  Speaker 1: see variations of that same theme coming from all three.
• 3:23
  Speaker 1: I think where you may differ is in terms of
• 3:26
  Speaker 1: algorithmic seed you know. I think Twitter has the opportunity
• 3:29
  Speaker 1: to create a little bit of daylight between Facebook and Google,
• 3:32
  Speaker 1: because relatively, Twitter tends to be more in the moment, live,
• 3:35
  Speaker 1: what's happening right now, whereas Facebook and YouTube, which is
• 3:39
  Speaker 1: the most sort of relevant um part of Google to
• 3:42
  Speaker 1: this conversation, tends to be more algorithms algorithmically driven. Uh.
• 3:46
  Speaker 1: And it may not be as important that it happened
• 3:49
  Speaker 1: five minutes ago, it may have happened yesterday. But if
• 3:51
  Speaker 1: the oderithm is determined that you might like it it
• 3:53
  Speaker 1: is relevant to you, they'll surface it. So I would
• 3:56
  Speaker 1: expect Twitter to be somewhat less defensive of algorithms and
• 4:01
  Speaker 1: more willing to compromise on Hey, if you want to
• 4:03
  Speaker 1: regulate somethings, then regulate the way the algorithms surface content. So, Jim,
• 4:08
  Speaker 1: I understand why Facebook is testifying today Twitter. These are
• 4:12
  Speaker 1: social network platforms that really traffic in, you know, news
• 4:18
  Speaker 1: and content I'm a little unsure why alphabet is involved.
• 4:21
  Speaker 1: Why why do you think they're there? Yeah, I think
• 4:24
  Speaker 1: it is mostly about YouTube. You think about the way
• 4:26
  Speaker 1: people consume YouTube. You know, you you open up and
• 4:29
  Speaker 1: watch a video. However you saw it, maybe you saw
• 4:31
  Speaker 1: I don't know, social network, or somebody emails or texted
• 4:33
  Speaker 1: it to you, or you just discovered it. Well, there's
• 4:36
  Speaker 1: a very powerful you know, sort of following videos other
• 4:40
  Speaker 1: videos like this pain that shows up. And so what
• 4:43
  Speaker 1: happens is you sit down to watch one YouTube video
• 4:45
  Speaker 1: and before you know what, you've watched twelve YouTube videos, right,
• 4:48
  Speaker 1: and what those other eleven that you watched are very
• 4:51
  Speaker 1: powerfully chosen by algorithms that are incredibly similar in concept
• 4:55
  Speaker 1: and the scope to what Facebook does. Right, So so
• 4:58
  Speaker 1: that hey, if you're interested in I'll just pick something
• 5:01
  Speaker 1: law in order, then you may be interested in this
• 5:05
  Speaker 1: other type of content. And the problem that Google has
• 5:07
  Speaker 1: run into is if this other type of content is
• 5:09
  Speaker 1: the white supremacy, you know, they end up having algorithms
• 5:12
  Speaker 1: that recommend content, it's highly questionable. And the algorithms don't know, right,
• 5:16
  Speaker 1: they don't exercise editorial judgment. So the algorithm just knows
• 5:19
  Speaker 1: that you watched a piece of content like this. Other
• 5:22
  Speaker 1: people who watch content like this would be interested in
• 5:24
  Speaker 1: something related, and so they served you up something that
• 5:27
  Speaker 1: may be entirely inappropriate and that even Google may ultimately
• 5:31
  Speaker 1: decide is inappropriate and removed from YouTube. But it's pretty
• 5:33
  Speaker 1: much a cat and mouse game in terms of keeping
• 5:35
  Speaker 1: that that questionable content off of the platforms. So this
• 5:40
  Speaker 1: is hilarious, Jim. They couldn't make contact with Mark Zuckerberg,
• 5:44
  Speaker 1: so now that there's a recess in order to be
• 5:47
  Speaker 1: able to continue the hearing on bad behavior shortly. But
• 5:52
  Speaker 1: how ironic is that? I mean? How also, how will
• 5:56
  Speaker 1: I be read that the committee couldn't get in touch
• 5:58
  Speaker 1: with Mark Zuckerberg? He walln't available to speak to the committee? Right? Well,
• 6:04
  Speaker 1: I mean, so you know, we all sort of deal
• 6:07
  Speaker 1: with zoom. You know, he does run Facebook, I understand.
• 6:12
  Speaker 1: So you know, I think your question about how will
• 6:14
  Speaker 1: it also want to be perceived. Is it just a
• 6:15
  Speaker 1: technical snatt food that's quickly resolved, or is he off
• 6:18
  Speaker 1: doing something and he just decided decided to blow off,
• 6:21
  Speaker 1: you know, congressional testimony that obviously wouldn't be received. Well,
• 6:24
  Speaker 1: I would have to believe that you know, he takes
• 6:26
  Speaker 1: this seriously, understands the importance of the Senate and Congress
• 6:29
  Speaker 1: and regulations. So my my guess is at the technical issue.
• 6:32
  Speaker 1: But you know, I guess we'll have to wait and speake. Yeah, yeah,
• 6:36
  Speaker 1: he's back now. I guess they've they've rebooted and he's back,
• 6:39
  Speaker 1: so hopefully they get started again. Jiff, just wondering. You know, historically,
• 6:44
  Speaker 1: um in the United States, regulators government has taken a
• 6:48
  Speaker 1: very light touch to regulating big tech, and arguably that's
• 6:53
  Speaker 1: allowed big tech to be what it is in Silicon Valley,
• 6:56
  Speaker 1: to be what it is with all the successes. You
• 6:58
  Speaker 1: sense it that's changing. I think it's definitely changing. I
• 7:02
  Speaker 1: think it's it's true they have taken a light touch,
• 7:05
  Speaker 1: and I think it's a very fair statement to say
• 7:07
  Speaker 1: that's been allowed for enormous growth, wealth creation. You know,
• 7:11
  Speaker 1: these companies are some of the biggest companies in the
• 7:14
  Speaker 1: world now as a result in part of that might touch.
• 7:17
  Speaker 1: But you know, when a company gets to be you know,
• 7:20
  Speaker 1: near a trillion dollars in market gap or in the
• 7:23
  Speaker 1: two trillion dollars, I'll throw Apple and this mix, obviously,
• 7:25
  Speaker 1: it's a it's a different kind of company, but it's
• 7:27
  Speaker 1: sort of certainly falls into big tech. You know, when
• 7:29
  Speaker 1: you end up with market capitalizations in the trillion dollar range,
• 7:33
  Speaker 1: you know you're you're almost government size at that point.
• 7:35
  Speaker 1: And I think, you know, you get to to be
• 7:37
  Speaker 1: too big and and have too many issues and too
• 7:40
  Speaker 1: many problems and too many enemies, just lantly from a
• 7:42
  Speaker 1: political standpoint, so, I think it's clear both Democrats and
• 7:45
  Speaker 1: Republicans have a very high degree of anxiety and angst
• 7:50
  Speaker 1: and even animosity against the tech platforms. The interesting thing
• 7:53
  Speaker 1: is that they're almost diametrically opposed. Right Democrats think that
• 7:56
  Speaker 1: the tech platforms are not doing enough to combat misinformation,
• 7:59
  Speaker 1: Republicans think that the text platforms are censoring conservative content.
• 8:02
  Speaker 1: Those are almost exactly diametrically opposed. And so where you
• 8:06
  Speaker 1: get into these real interesting questions is, well, what's the remedy?
• 8:09
  Speaker 1: Right If if you want to revoke Section two thirty
• 8:11
  Speaker 1: protections and make the platforms more liable from a conservative perspective,
• 8:15
  Speaker 1: then you're more likely to get somebody like Facebook and
• 8:17
  Speaker 1: Twitter removing conservative content because they don't have any legal
• 8:20
  Speaker 1: protections if they keep it up. And so I think
• 8:23
  Speaker 1: there's a very real risk here that that somebody will
• 8:26
  Speaker 1: actually make the situation worse from their standpoint, um, if
• 8:29
  Speaker 1: they're not very fontibule about how these regulations are determined
• 8:32
  Speaker 1: and enacted. Jim, what would you imagine will be the
• 8:36
  Speaker 1: role of Twitter in public life if the presidency turns over? Well,
• 8:40
  Speaker 1: I think in Twitter will still be very important. You know,
• 8:42
  Speaker 1: I think everybody may take a breath, and the pace
• 8:47
  Speaker 1: of tweets coming from the President I would have to
• 8:49
  Speaker 1: believe be considerably lower. Um. And in some ways that's
• 8:53
  Speaker 1: a negative for Twitter, because you know, you could argue
• 8:55
  Speaker 1: that Donald Trump's presidency has done a tremendous amount to
• 8:57
  Speaker 1: keep Twitter relevant. But I think Twitter, if if you
• 9:00
  Speaker 1: sort of got an honest view from them, might actually
• 9:02
  Speaker 1: welcome the rest of it, because it comes with a
• 9:04
  Speaker 1: lot of headaches and a lot of anxiety and a
• 9:06
  Speaker 1: lot of problems. So I think Twitter will continue to
• 9:08
  Speaker 1: be very important. But I don't think you'll see, let's say,
• 9:11
  Speaker 1: for instance, President Biden if he wins uh, you know,
• 9:14
  Speaker 1: making declarations on Twitter, certainly not at a volume and
• 9:17
  Speaker 1: in the way that President Trump does. Jim. I guess
• 9:20
  Speaker 1: the ultimate concern for tech investors is perhaps some of
• 9:24
  Speaker 1: these companies get broken up. Do you think there's a
• 9:26
  Speaker 1: material risk that that could happen. Yeah, I would almost
• 9:30
  Speaker 1: call it not just the material risk, but a likelihood. Now,
• 9:33
  Speaker 1: I think the real question is how and when and
• 9:36
  Speaker 1: how how long does it take? Right that this is
• 9:38
  Speaker 1: antitrust is a year's long process. There will be plenty
• 9:42
  Speaker 1: of litigation. But going back to the size of these companies,
• 9:45
  Speaker 1: it's hard to argue Facebook, Google, certainly. Twitter maybe is
• 9:49
  Speaker 1: a little bit of a different story because you know,
• 9:51
  Speaker 1: Facebook is sixty times larger than Twitter if you want
• 9:54
  Speaker 1: to think about it from a market capitalization standpoint. The
• 9:56
  Speaker 1: lands I checked, so you know, it's it's unfair to
• 9:58
  Speaker 1: lump Twitter into the antitrust conversation the way you would Facebook, Google,
• 10:02
  Speaker 1: or even Amazon or Apple if you want to be
• 10:04
  Speaker 1: more expansive. And I think every one of those four
• 10:06
  Speaker 1: big tech companies faces a very significant risk of of
• 10:10
  Speaker 1: antitrust action and then either ultimately being broken up or
• 10:13
  Speaker 1: reaching a settlement where they voluntarily choose to diveet certain
• 10:17
  Speaker 1: components to satisfy regulatory concerns. And by the way, not
• 10:20
  Speaker 1: just in the United States. These are global companies that
• 10:22
  Speaker 1: you have to start thinking about the EU and other
• 10:25
  Speaker 1: jurisdictions as well, if you're the CEO of one of
• 10:27
  Speaker 1: these companies, and in my mind it at least to
• 10:29
  Speaker 1: some degree or another, some degree of antitrust impact is
• 10:32
  Speaker 1: inevitable on all four of those big, big giant tech platforms. Yeah,
• 10:37
  Speaker 1: I mean, the EU is way far ahead in many ways,
• 10:39
  Speaker 1: and you notice it when you you you you browse
• 10:42
  Speaker 1: around on European websites, you get asked a whole range
• 10:45
  Speaker 1: of questions about you know, what, what what? What information
• 10:48
  Speaker 1: you want to give away? How many people can you
• 10:50
  Speaker 1: know can use it and pass it on and so on.
• 10:52
  Speaker 1: So it is interesting. But so we know that Mark
• 10:54
  Speaker 1: Zuckerberg had the year of President Trump. We know he
• 10:56
  Speaker 1: wasn't going to tell us what was said in that room.
• 10:59
  Speaker 1: Would he us the same kind of relationship with a
• 11:02
  Speaker 1: different president, Uh, you know that's a great question. I'm
• 11:07
  Speaker 1: not sure he will, right, I mean, you know, President
• 11:09
  Speaker 1: Trump is a unique president at a unique moment in time.
• 11:12
  Speaker 1: I think, if nothing else, for reasons of optics, President
• 11:15
  Speaker 1: Biden isn't necessarily going to want to be perceived as
• 11:18
  Speaker 1: cozying up the big tech and and then you know,
• 11:21
  Speaker 1: never mind what the specific personal conversations were in private.
• 11:25
  Speaker 1: I think all you know, big tech platforms have given
• 11:27
  Speaker 1: the opportunity to have an audience with the president, would
• 11:29
  Speaker 1: choose to say yes, Why why would you not do that? Uh?
• 11:32
  Speaker 1: You know, I think any anytime you have the ability
• 11:34
  Speaker 1: to advance your cause and how people understand your business
• 11:37
  Speaker 1: and your position, you're probably going to want to take it.
• 11:40
  Speaker 1: So I would not be at all surprised again as
• 11:42
  Speaker 1: president if if Joe Biden does win and become president,
• 11:46
  Speaker 1: that you'll see as somewhat of a distance put between
• 11:48
  Speaker 1: him and big tech in general. And then you ultimately
• 11:51
  Speaker 1: we'll have to see how the Congress shakes out as well. Uh.
• 11:54
  Speaker 1: You know what, what their appetite is a lot of
• 11:56
  Speaker 1: you know, what we see now is certainly inflamed by
• 11:59
  Speaker 1: the election in season. Um, once the election results are
• 12:02
  Speaker 1: decided and we're past that, then we'll find out what
• 12:04
  Speaker 1: the real appetite is for for real heavy lifting of
• 12:08
  Speaker 1: legislation and regulatory reform. You know, Jim, this seems to this,
• 12:13
  Speaker 1: maybe even this hearing seems to have really come about
• 12:15
  Speaker 1: in the wake of that New York Post Hunter Biden story.
• 12:19
  Speaker 1: Why do you why do you think that got so
• 12:20
  Speaker 1: much traction. Well, I think it's a Twitter you know,
• 12:25
  Speaker 1: handled that in a very aggressive way. Some people would
• 12:28
  Speaker 1: say mishandled that, right, I mean that's a matter of perspective.
• 12:32
  Speaker 1: I think what you see, though, is that the tech
• 12:34
  Speaker 1: platforms Twitter in this case, are are super sensitive to
• 12:38
  Speaker 1: the idea that there's an October surprise that will come out,
• 12:41
  Speaker 1: there's an information dump of unverified information. Uh, there's an
• 12:45
  Speaker 1: impact on the election, and before anybody has a chance
• 12:48
  Speaker 1: to really that what was going on, you know, it's
• 12:50
  Speaker 1: affected the election, and and you know, the tech platform
• 12:53
  Speaker 1: towards the center of it. I think that's the concern
• 12:56
  Speaker 1: of what happened, at least in the view of some
• 12:58
  Speaker 1: back in two thousand sixteen, and so they were super
• 13:01
  Speaker 1: primed for this, and so they acted very quickly, but
• 13:03
  Speaker 1: in many ways they overreached, right. They they suspended the
• 13:06
  Speaker 1: Twitter account of the New York Post. And whether you
• 13:08
  Speaker 1: agree with the New York Post and editorial view or not,
• 13:11
  Speaker 1: they are the New York Post. They are generally considered
• 13:13
  Speaker 1: to be a reputable news source. And so when you
• 13:15
  Speaker 1: haven't platforms blocking the Twitter Twitter handle of a news outlet,
• 13:20
  Speaker 1: that's a pretty significant move. Yeah, Jim, We're gonna have
• 13:23
  Speaker 1: to leave there. Jim Honderson, CEO of Social Flow. Yeah,
• 13:30
  Speaker 1: markets selling off, the excelling as accelerated. We have the
• 13:33
  Speaker 1: SMP that Dow and NASAC all off about three cent.
• 13:37
  Speaker 1: Let's bring in Sarah Posic Bloomberg across asset reporters. Sarah,
• 13:40
  Speaker 1: it seems like this selling has accelerated here. Uh, we're
• 13:44
  Speaker 1: seeing bigger losses. Selling has accelerated. If you look across
• 13:47
  Speaker 1: the major averages right now towards the loads of the days,
• 13:51
  Speaker 1: a couple of technical levels that some investors are watching.
• 13:54
  Speaker 1: For example, if you were to look at the SMP
• 13:56
  Speaker 1: five hundred, take a look at its one hundred day
• 13:58
  Speaker 1: moving average. We broke through the fifty day not too
• 14:01
  Speaker 1: long ago, just a couple of days ago till today,
• 14:03
  Speaker 1: we broke through that one day moving average, which stands
• 14:05
  Speaker 1: just at thirty three oh six or so. So we're
• 14:08
  Speaker 1: still trading below it as some investors, including Matt Maillie
• 14:12
  Speaker 1: over at Miller's Havoc, are looking closer to the thirty
• 14:15
  Speaker 1: two thirty level or so, uh for support should we
• 14:19
  Speaker 1: need it. We still are a ways away from that level.
• 14:22
  Speaker 1: But if we were to break that level there would
• 14:24
  Speaker 1: be concerned because we would then break the trend line
• 14:27
  Speaker 1: since March. But as you mentioned, you look at the
• 14:29
  Speaker 1: major averages, the DOUBT, the SMP, at the NAZAC, they
• 14:31
  Speaker 1: are all down more than three at the moment. The
• 14:35
  Speaker 1: worst thing for the SMP since early September when the
• 14:38
  Speaker 1: correction really first began, which was really led by tech
• 14:41
  Speaker 1: stocks at the time. But well, equity selling has really
• 14:46
  Speaker 1: picking up. You could say, what's interesting is that we
• 14:49
  Speaker 1: still see pretty moderate gains in treasuries. We're not seeing
• 14:53
  Speaker 1: a huge rust to safety and assets. You look at
• 14:56
  Speaker 1: the tenure for example right now at seventy six basis points,
• 15:00
  Speaker 1: not flat on the day, but not seeing too much movement.
• 15:02
  Speaker 1: So at least in the bond market, you haven't seen
• 15:05
  Speaker 1: the safe haven rush pick up as we have seen
• 15:07
  Speaker 1: equity losses accelerate throughout the morning. Let's also bring in
• 15:11
  Speaker 1: Gina Martin Adams, chief equity strategist for Bloomberg Intelligence. Gina,
• 15:15
  Speaker 1: you know, we we thought that the tech hearring would
• 15:17
  Speaker 1: be the big event of the day, but it turns
• 15:19
  Speaker 1: out the markets are becoming the major event of the day.
• 15:21
  Speaker 1: Is this something that we should start getting concerned about? Well,
• 15:25
  Speaker 1: I think that they're actually related issues. I mean, the
• 15:27
  Speaker 1: market is weakest in the tech base, um, the communication
• 15:30
  Speaker 1: stocks and tech stocks sort of leading to clines along
• 15:33
  Speaker 1: with energy. So I think that the two issues are
• 15:36
  Speaker 1: somewhat related. Um. You know, as Sarah mentioned back in
• 15:40
  Speaker 1: September is the start of this correction, and it all
• 15:43
  Speaker 1: started with tech stocks starting to sell off. And we
• 15:46
  Speaker 1: have seen a tremendous amount of rotation since September. Even
• 15:49
  Speaker 1: the early October rally was certainly suspicious given that it
• 15:53
  Speaker 1: was led by utility stocks. So you know, I think
• 15:56
  Speaker 1: that what you have here is a case of tech
• 15:59
  Speaker 1: stocks losing a little bit of their luster. They're expected
• 16:02
  Speaker 1: to be relatively weak in the third quarter. Uh, You've
• 16:05
  Speaker 1: got um some serious regulatory pressures dampening the outlook for
• 16:10
  Speaker 1: some of the communications stuck, some of those big bell
• 16:13
  Speaker 1: weathers that are related to tech. And at the same time,
• 16:17
  Speaker 1: we've got a little bit of loss of macro momentum
• 16:20
  Speaker 1: that is weighing on the market, and a lot of
• 16:22
  Speaker 1: election jitters. So it's kind of a confluence of events.
• 16:24
  Speaker 1: But I do think the tech is still at the
• 16:26
  Speaker 1: center of the market weakness and has been since early
• 16:29
  Speaker 1: September Gene. How much of this is just kind of
• 16:33
  Speaker 1: the pandemic numbers globally going the wrong direction. Ah, I
• 16:38
  Speaker 1: don't know how much of it honestly is a pandemic.
• 16:41
  Speaker 1: I know that that's an easy sort of culprit to
• 16:44
  Speaker 1: point to, and certainly the fact that the pandemic is
• 16:47
  Speaker 1: re accelerating case counts re accelerating once again does have
• 16:51
  Speaker 1: some people nervous about what that may mean for the
• 16:54
  Speaker 1: economic outlook. But I do think that for the most part,
• 16:57
  Speaker 1: it's unlikely that global economy shut down like they did
• 17:00
  Speaker 1: in March. Um. Instead, there do appear to be alternative
• 17:05
  Speaker 1: measures for dealing with the virus case count load moving higher,
• 17:09
  Speaker 1: and they don't all um necessarily results in a massive
• 17:12
  Speaker 1: economic shutdown. I think instead it may be related to
• 17:16
  Speaker 1: the fact that case counts are moving higher. We don't
• 17:18
  Speaker 1: have a vaccine yet, and fiscal policy seems to have stalled,
• 17:23
  Speaker 1: so we don't have a fiscal policy package to sort
• 17:25
  Speaker 1: of back stop the economy and help us re accelerate
• 17:27
  Speaker 1: that macro momentum in the face of case counts going higher.
• 17:31
  Speaker 1: We're not likely to reopen more in the face of
• 17:34
  Speaker 1: case counts going higher so it is. It is a
• 17:36
  Speaker 1: peripheral a fact, but I think it's more about the
• 17:39
  Speaker 1: fact that, you know, the global economy did recover pretty
• 17:42
  Speaker 1: substantially from March into college September, and that recovery has
• 17:47
  Speaker 1: slowed in the weeks since um and that slowdown has
• 17:51
  Speaker 1: investors a little bit nervous, particularly without any sign of
• 17:54
  Speaker 1: support coming from the fiscal policymakers. Sarah, We're looking across said,
• 18:00
  Speaker 1: and you know it, it's pretty cost the board today.
• 18:03
  Speaker 1: It's just a general feeling of mal is you know,
• 18:06
  Speaker 1: given everything that Gena Martinas said right. I mentioned that
• 18:09
  Speaker 1: we aren't really seeing a huge shift in the bond market.
• 18:11
  Speaker 1: But if you look at currency markets, for example, we
• 18:13
  Speaker 1: see the dollar higher today, we see the Japanese yenn
• 18:16
  Speaker 1: higher today. Those are the two best performing G ten currencies,
• 18:19
  Speaker 1: and the end is the only major currency that it's
• 18:21
  Speaker 1: higher against the U S dollars. So we are seeing
• 18:24
  Speaker 1: this flock to safety across FX market's a little bit
• 18:28
  Speaker 1: more so, even if we're not seeing it completely reflected
• 18:32
  Speaker 1: in the bond market. Granted, when we look at the
• 18:34
  Speaker 1: bond market, you look at the ten year around seventy
• 18:37
  Speaker 1: six basis points or so, I mean these are still extremely,
• 18:39
  Speaker 1: extremely low bond yield. There had been some talk about
• 18:43
  Speaker 1: movement back up towards one percent just last week. So
• 18:45
  Speaker 1: it's amazing to see how quickly this narrative has really flipped,
• 18:49
  Speaker 1: how quickly it has changed. And now we just see
• 18:53
  Speaker 1: yields stuck back in the range that we've almost been
• 18:55
  Speaker 1: stuck in all year long, with uncertainty as ahead. Gina
• 18:59
  Speaker 1: laid out many of them, including the election, including the
• 19:02
  Speaker 1: macro tailwinds kind of coming to a head at the moment.
• 19:05
  Speaker 1: And when we think about rising COVID case counts, yes,
• 19:09
  Speaker 1: we likely won't see a lockdown like we saw earlier
• 19:11
  Speaker 1: in the year, but there is a question about one.
• 19:14
  Speaker 1: We think about the rebound that we saw in the
• 19:15
  Speaker 1: equity markets, how many investors were looking to one and
• 19:19
  Speaker 1: saying the market is a forward looking mechanism, things will
• 19:21
  Speaker 1: get better. Well, how much better can they get if
• 19:24
  Speaker 1: we don't see total improvement, if we don't see treatments, vaccines,
• 19:28
  Speaker 1: whatever you need or deemed necessary to see a full
• 19:32
  Speaker 1: economic recovery. And Sarah just looking at the it's not
• 19:35
  Speaker 1: just the equities here and bonds and currencies. I'm just
• 19:38
  Speaker 1: looking at oil right here, off over six percent. Today
• 19:41
  Speaker 1: w t I crew trading about thirty seven dollars and
• 19:43
  Speaker 1: ten dollars thirty seven dollars and ten cents of barrel
• 19:46
  Speaker 1: to me, I guess that suggests that that market is
• 19:48
  Speaker 1: saying future demand it's not as good as we thought. Right,
• 19:52
  Speaker 1: that's exactly right. We have seen oil just lodged around
• 19:55
  Speaker 1: that forty dollar a barrel barrel mark, not all year long,
• 19:58
  Speaker 1: but ever since that catastrophe. When we prices go negative,
• 20:01
  Speaker 1: shoot back up, and we have since kind of just
• 20:02
  Speaker 1: been hovering around that level. If you look at w
• 20:05
  Speaker 1: t I crude oil right now, down more than six
• 20:07
  Speaker 1: that's the worst day since September eight. That day we
• 20:10
  Speaker 1: did see crude oil down more than seven and a
• 20:13
  Speaker 1: half percent. But like you said, it doesn't seem as
• 20:15
  Speaker 1: though the global demand picture is improving at least and
• 20:19
  Speaker 1: on that front, for example, if you bring it back
• 20:21
  Speaker 1: to stocks that do require plenty of gasoline, for example,
• 20:26
  Speaker 1: you look at airlines, you look at cruise lines, you
• 20:28
  Speaker 1: look at Carnival for example, down ten percent at the moment,
• 20:31
  Speaker 1: Norwegian down more than eight percent. Airlines also taking a hit.
• 20:35
  Speaker 1: So big picture, like you said, that global demand picture
• 20:39
  Speaker 1: just certainly doesn't look to be improving. It's not heading
• 20:42
  Speaker 1: in the right direction. Gina. Healthcare is funny one these
• 20:46
  Speaker 1: days because I'm seeing a lot of you know, negative
• 20:49
  Speaker 1: comments about healthcare and healthcare industry, and yet we have
• 20:52
  Speaker 1: so many of these companies working so hard on things
• 20:54
  Speaker 1: like pandemic you know, uh solutions and so on. Why
• 20:59
  Speaker 1: is healthcare being so maligned? Yeah, that's a good question.
• 21:03
  Speaker 1: We actually wrote about this this week because healthcare earnings
• 21:06
  Speaker 1: are starting to roll out in healthcare fundamentally is one
• 21:09
  Speaker 1: of the best position sectors in the SMP five DRED,
• 21:12
  Speaker 1: some of the strongest revenue and earnings growth currently and
• 21:15
  Speaker 1: expected to continue to produce pretty strong fundamental growth going
• 21:18
  Speaker 1: into Yet healthcare is discounted relative to consumer staples and
• 21:23
  Speaker 1: trading at its largest discount relative to the SMP five
• 21:26
  Speaker 1: DRED since it's two thousand nine low, And I think
• 21:29
  Speaker 1: that that's reflective of policy sort of dominating um the
• 21:34
  Speaker 1: outlook for healthcare stocks. Even in the face of the pandemic,
• 21:37
  Speaker 1: Investors are very concerned about what policy is going to
• 21:40
  Speaker 1: look like. Obviously, with the changes that we've had recently
• 21:43
  Speaker 1: at the Supreme Court, there's a lot of concern about
• 21:45
  Speaker 1: a rollback of Obamacare passed years ago and the impact
• 21:50
  Speaker 1: that that may have on the insurers. There's also some
• 21:53
  Speaker 1: concern about a blue wave taking over Washington and the
• 21:56
  Speaker 1: impact that may have across the healthcare spectrum spectrum, but
• 21:59
  Speaker 1: in particular on the pharmaceutical and biotech companies, and especially
• 22:04
  Speaker 1: even more targeted there on the prices of their products.
• 22:08
  Speaker 1: So there's a tremendous amount of concern just from the
• 22:10
  Speaker 1: policy perspective, and it's not it doesn't even stop there.
• 22:13
  Speaker 1: You've got to roll into tax policy as well, because
• 22:16
  Speaker 1: healthcare companies do practice inversions, they have a ton of
• 22:19
  Speaker 1: cash held overseas, they have a lot of multinational revenue,
• 22:23
  Speaker 1: and some of the Biden proposals on tax would um
• 22:28
  Speaker 1: sort of indiscriminately dampen the outlook for health care as
• 22:30
  Speaker 1: well as technology stuck. So there's a lot of concern
• 22:34
  Speaker 1: from a policy perspective impacting healthcare, and I think that
• 22:38
  Speaker 1: that's dominating the sentiment towards that sector, resulting in tremendously
• 22:42
  Speaker 1: low valuations in comparison to the rest of the other index. A. Jena,
• 22:46
  Speaker 1: thanks so much for joining us. We appreciate it. Jina
• 22:48
  Speaker 1: Martin's Adams, she is a senior strategist for Bloomberg Intelligence,
• 22:53
  Speaker 1: and Sara Ponzic, cross asset reporter for Bloomberg News joining
• 22:56
  Speaker 1: us as well. Thank you both, We appreciate your thoughts
• 22:58
  Speaker 1: on this very difficult day in the financial Market's a
• 23:01
  Speaker 1: huge sell off across the board, equities down about three.
• 23:07
  Speaker 1: Let's take a focus in a little bit more on technology.
• 23:11
  Speaker 1: Certainly center stage here today in Washington, going to be
• 23:14
  Speaker 1: center stage tomorrow when we have over chillion dollars of
• 23:17
  Speaker 1: market cap reporting earnings. Nobody better to talk to than
• 23:20
  Speaker 1: our friend Dan Eyes, Managing director equity analyst at Wedbush Securities.
• 23:24
  Speaker 1: Dan and I are still trying to recover from Penn
• 23:26
  Speaker 1: State's loss at Indiana last week. But Dan, let's try
• 23:30
  Speaker 1: to move forward here. What are you seeing here in
• 23:33
  Speaker 1: the world of big tech and earnings. It's gonna be
• 23:36
  Speaker 1: a huge day tomorrow. It's huge, and really it's fork
• 23:41
  Speaker 1: in the road situation for tech stocks. You look at
• 23:44
  Speaker 1: Microsoft or strong number stocks selling off. There's really a
• 23:47
  Speaker 1: risk off trade and I think you're seeing it with
• 23:49
  Speaker 1: election backdrop and a lot of evaluations that have moved
• 23:52
  Speaker 1: significantly higher. Now I really view tomorrow as a seminal
• 23:56
  Speaker 1: day for Fanning stocks. I believe fundamentally we're gonna see
• 24:00
  Speaker 1: strength across the board. I believe this sell off here
• 24:03
  Speaker 1: is short lived in my opinion, as the fundamental strength
• 24:07
  Speaker 1: in tech continues to be there. That's why tomorrow is
• 24:10
  Speaker 1: really we'll call it the world Series, the super Bowl
• 24:14
  Speaker 1: for textox. Well, after last night, I guess, I guess
• 24:19
  Speaker 1: there's no harm in doing that, right done? Just were
• 24:22
  Speaker 1: you watching the hearing this morning? Is very curious as
• 24:24
  Speaker 1: lone of things stood out to you. Well, I think
• 24:27
  Speaker 1: it's a little more of a grandstanding, but to some
• 24:30
  Speaker 1: extent it really it kicks off what is going to
• 24:34
  Speaker 1: be the belt Way versus Big Tech battle, and this
• 24:37
  Speaker 1: is not gonna softened in terms of momentum. We're gonna
• 24:41
  Speaker 1: see this more and more as begin two thousand and
• 24:43
  Speaker 1: twenty one. A blue weave, you know, potentially sends anti
• 24:47
  Speaker 1: trust as well as even Section two thirty issues more
• 24:51
  Speaker 1: in the forefront, and I think it just speaks to
• 24:54
  Speaker 1: right now there's a target on the back attack. And
• 24:57
  Speaker 1: I think when you see social media players like today,
• 25:00
  Speaker 1: you're really starting to see them leaser more in on
• 25:03
  Speaker 1: two thirty as it seems reforms is clearly on the
• 25:06
  Speaker 1: horizon regardless of who gets in the White House. So, Dan,
• 25:11
  Speaker 1: assuming we go that path, what do you think the
• 25:14
  Speaker 1: risk is to the business model of some of these
• 25:18
  Speaker 1: social media platforms? And I guess we'll throw Alphabet in
• 25:22
  Speaker 1: there as well, given its YouTube product. How do you
• 25:25
  Speaker 1: kind of frame that out? I think it all depends
• 25:29
  Speaker 1: on what the reform looks like on two thirty, and
• 25:32
  Speaker 1: it's going to be a battleground, you know, depending on
• 25:35
  Speaker 1: what we see from from both aisles. But I do
• 25:38
  Speaker 1: believe it's a business model risk, and I think it's
• 25:41
  Speaker 1: something where you know, it could change from an advertising
• 25:44
  Speaker 1: perspective what you see on the social media side, and
• 25:47
  Speaker 1: from a content perspective. And I think this is something
• 25:50
  Speaker 1: that investors, you know, if you think about just the
• 25:52
  Speaker 1: overall risk against big tax, just forget fundamentals for a sect.
• 25:57
  Speaker 1: It's been viewed as contained background noise rug the shoulders.
• 26:00
  Speaker 1: I think now as we start to get in and
• 26:04
  Speaker 1: through the election two thousand twenty one, it becomes a
• 26:06
  Speaker 1: more pronounced risk potentially to the business models here at
• 26:10
  Speaker 1: social media front and center, but especially when you look
• 26:12
  Speaker 1: at Google and from the d O j Frount. They're
• 26:15
  Speaker 1: really in the eye of the storm as well as Facebook.
• 26:20
  Speaker 1: Are any of the companies more talkative because of the
• 26:22
  Speaker 1: self look, I think, you know, when you overall look
• 26:29
  Speaker 1: at sort of big tech what we're seeing here, I
• 26:32
  Speaker 1: think you a must have to put into two different
• 26:35
  Speaker 1: sort of buckets. I think there's ones with fundamental catalysts
• 26:39
  Speaker 1: and now be ones with Apple and Amazon. I think
• 26:41
  Speaker 1: you'll see that tomorrow terms of Amazon the e commerce
• 26:44
  Speaker 1: cloud as well as Apple on five G what I
• 26:47
  Speaker 1: believe is a supercycled iPhone twelve. But when it comes
• 26:50
  Speaker 1: to social media, I mean this, this right now is
• 26:53
  Speaker 1: a risk, and that's why fundamental has become even that
• 26:56
  Speaker 1: much more important to show that advertisers are you know,
• 27:00
  Speaker 1: not leaven the platform. And that's really been the tale
• 27:03
  Speaker 1: of two cities the last six to nine months. Despite
• 27:06
  Speaker 1: the headwinds and despite potential black eyes, you've really seen
• 27:11
  Speaker 1: come as a Facebook thrive. Yeah. It's it's amazing, Dan,
• 27:15
  Speaker 1: I mean, even during this pandemic um we've seen digital
• 27:19
  Speaker 1: advertising hold up pretty darn well. It almost seems like,
• 27:26
  Speaker 1: you know, this might have been accelerated some of the
• 27:28
  Speaker 1: migration from traditional media to digital media is that something
• 27:31
  Speaker 1: you've seen. Yeah, I think components of it, but no
• 27:34
  Speaker 1: doubt Google in particular has seen some headwinds, and I
• 27:38
  Speaker 1: think that has been contained relative to sang names where
• 27:41
  Speaker 1: you've seen strength across the board from Netflix to Apple
• 27:44
  Speaker 1: and Amazon and and I think right now, if you
• 27:47
  Speaker 1: look at the valuations, you've had powered on moves, so
• 27:51
  Speaker 1: you've had re ratings, but now the fundamentals can need
• 27:55
  Speaker 1: to continue to sort of see beaton maries type stories
• 27:59
  Speaker 1: going into the next year. And I'll just use Microsoft
• 28:01
  Speaker 1: as a good example. Those are about as rebustive a
• 28:04
  Speaker 1: quarter that you'll get, and they gave strong guidance and
• 28:08
  Speaker 1: stocks off because investors it's a risk off trade. Stocks
• 28:11
  Speaker 1: had a huge move and they wanted more. And I
• 28:13
  Speaker 1: think that's going into tomorrow. You know, it's really tech
• 28:17
  Speaker 1: doesn't move higher without saying and I'd say the market
• 28:19
  Speaker 1: doesn't move higher without saying hims. That's why tomorrow is
• 28:23
  Speaker 1: really almost support some of their movement between the bulls
• 28:26
  Speaker 1: and the bears. Is we go into you know, earnings
• 28:31
  Speaker 1: as well as to the selection cycle. Don where is
• 28:34
  Speaker 1: the next round of innovation going to come from? Which
• 28:37
  Speaker 1: of these companies as best positions to you know, blow
• 28:39
  Speaker 1: our minds in the coming years. Well, I think it's
• 28:42
  Speaker 1: Apple to me when I think about five G and
• 28:47
  Speaker 1: ultimately when I think about a ARE and what they're
• 28:50
  Speaker 1: doing on wearables, I think that's sort of the next
• 28:53
  Speaker 1: level of innovation when I think about what's coming out
• 28:56
  Speaker 1: of Apple, even though many would say the innovations obviously
• 28:59
  Speaker 1: the rear humor, and they continue to prove it wrong.
• 29:02
  Speaker 1: I think when I look at Apple, and of course
• 29:04
  Speaker 1: on the e V side, you know it's really been
• 29:06
  Speaker 1: just testa. Now you look at GM and others that
• 29:09
  Speaker 1: disruptive technology, I think e V you're going to continue
• 29:13
  Speaker 1: to see that is really just a massive opportunity, and
• 29:16
  Speaker 1: you're seeing more of a blurring of the lines between
• 29:20
  Speaker 1: technology and automotive and some other traditional technology players. But
• 29:25
  Speaker 1: just if you compare look at Microsoft compared to SAP
• 29:28
  Speaker 1: and Enterprise, it just shows Cloud either a winner or
• 29:31
  Speaker 1: a loser. And I think it just shows that why
• 29:33
  Speaker 1: in the sand is continuing to become just that much
• 29:38
  Speaker 1: more evident in this world. Attack Dan, given what's going
• 29:44
  Speaker 1: on here from the regulatory front as it relates to
• 29:47
  Speaker 1: advertising social media platforms, do you expect Amazon to continue
• 29:51
  Speaker 1: it's push into advertising. It's really become a big, big
• 29:55
  Speaker 1: player in digital advertising. Yeah, and I think for them
• 29:58
  Speaker 1: it's been a great strategic move, but a slippery slope
• 30:01
  Speaker 1: as well as it becomes more and more from a
• 30:05
  Speaker 1: regulatory perspective front and center. And I think it's something
• 30:09
  Speaker 1: where when you look at an Amazon, it's all about monetization.
• 30:12
  Speaker 1: They're continued to monitize their ecosystem is as really as
• 30:16
  Speaker 1: good as any company has ever done. And I think
• 30:18
  Speaker 1: that's that's really what Bezos continues to drive an Amazon.
• 30:22
  Speaker 1: But no doubt regulatory especially, we're seeing the d og side.
• 30:27
  Speaker 1: It's going to really not just women acquisitions, but really
• 30:32
  Speaker 1: women some of these coming strategic moves into other areas
• 30:36
  Speaker 1: where they've been free as a bird to go into
• 30:39
  Speaker 1: and Amazon really being a good example where I think
• 30:42
  Speaker 1: you're gonna start to see the wings equipped a bit
• 30:45
  Speaker 1: regardless of what happens in the election cycle. To ask
• 30:50
  Speaker 1: you about these insurance disruptor, I guess they're being called
• 30:54
  Speaker 1: insure text roots financial going public today? Is that an
• 30:59
  Speaker 1: area that's right for disruption and if so, why hasn't
• 31:02
  Speaker 1: it been already? I think that's a good example where
• 31:06
  Speaker 1: you're starting to see more and more technology or sort
• 31:10
  Speaker 1: of next gen we'ves what i'd say traditional industries, and
• 31:15
  Speaker 1: I think we're seeing on the fan and side of
• 31:17
  Speaker 1: renaissance of growth not just in the US, but even
• 31:20
  Speaker 1: in China with the n I, p O and others.
• 31:23
  Speaker 1: And I think this is really going to be It's
• 31:25
  Speaker 1: almost a wild wild West in terms of uh disruption
• 31:30
  Speaker 1: of business models. And you're I think you're seeing on
• 31:33
  Speaker 1: the VC side more funding, especially in this area. Why
• 31:37
  Speaker 1: the private companies going after what could be just a
• 31:40
  Speaker 1: massive opportunity on what I've used for the next gen
• 31:44
  Speaker 1: finance side. Hey, Dan, thanks so much. We always appreciate
• 31:48
  Speaker 1: your thoughts. Dan Ives, Managing director, equity analyst that would
• 31:51
  Speaker 1: Bush Security hopefully are Nittney Alliance will have a better
• 31:54
  Speaker 1: weekend at this weekend coming up. Then, thanks for listening
• 31:58
  Speaker 1: to Bloomberg Markets podcast. You and subscribe and listen to
• 32:01
  Speaker 1: interviews at Apple Podcasts or whatever a podcast platform you prefer.
• 32:05
  Speaker 1: I'm Bonnie Quinn, I'm on Twitter at Bonnie Quinn, and
• 32:08
  Speaker 1: I'm Paul Sweeney. I'm on Twitter at pt Sweeney. Before
• 32:11
  Speaker 1: the podcast, you can always catch us worldwide at Bloomberg
• 32:14
  Speaker 1: radio