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Streaming, Uber, And Taiwan (Podcast) · Bloomberg Intelligence

0:00
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
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Speaker 1: my co host Matt Miller. Every business day, we bring
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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
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Speaker 1: at Bloomberg dot com slash podcast. We're kind of getting
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Speaker 1: through the meat of the tech earnings, um and you
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Speaker 1: know the stocks. I used to follow the big social
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Speaker 1: media companies and Google's and facebooks in the world, so
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Speaker 1: I always continue to keep an interest in that Pinterest.
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Speaker 1: What was the biggest deal By the way, what was
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Speaker 1: the biggest deal you did as an investment banker? A
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Speaker 1: well buying time warner? We represented a well Okay, so
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Speaker 1: that's the same wheelhouse. And I always think about the
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Speaker 1: radio I did all the radio. Those were fun. Those
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Speaker 1: were fun. That's why I love being in the radio business.
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Speaker 1: But I look at Pinterest. I'm not a user, um,
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Speaker 1: but it's a thing. I get it. They put up
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Speaker 1: some good numbers, stock up twelve percent, but I look
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Speaker 1: it around the digital advertising space and I saw some
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Speaker 1: serious hiccups here. So I want to get a sense
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Speaker 1: of what's going on out there. So fortunately we have
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Speaker 1: Mark Douglas live in our Bloomberg Interactive Broker studio, not
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Speaker 1: phoning it in like a certain interest rate analyst time.
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Speaker 1: I know, Marcus the CEO and Mountain um Mark. We've
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Speaker 1: had Google, We've had Facebook. I'm not going to use
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Speaker 1: the medicine. This is a meta free yes, so but
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Speaker 1: you know, but I see snap, I see Pinterest. Is
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Speaker 1: these is the I guess secular growth of digital advertising
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Speaker 1: because that story kind of playing out or do we
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Speaker 1: still have room to grow? Um, it's not playing out.
1:37
Speaker 1: I think the way to think about it. And this
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Speaker 1: goes for your personal finances. This goes for investing. Is
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Speaker 1: everything that's closest to the consumer. The consumer making a
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Speaker 1: purchase is going to do very well in tough times,
1:52
Speaker 1: and everything furthest Away is going to struggle. So like
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Speaker 1: in in digital advertising, Roku is furthest Away brand ads,
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Speaker 1: you know, not really at the point of purchase. Google
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Speaker 1: is close, Pinterest is actually very close to the radio
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Speaker 1: radio is closed. And so it goes also for other
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Speaker 1: categories streaming television. You know that that the first three
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Speaker 1: streaming services you like, you're gonna keep paying. If you're
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Speaker 1: number five on that list, as a consumer, you're gonna
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Speaker 1: be like, I'm cutting something right, and so you're gonna
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Speaker 1: cut that off. It goes for everything, and so digital
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Speaker 1: advertising is fine. You just have to focus on the
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Speaker 1: companies that are closest to the point of purchase and
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Speaker 1: what are you seeing in terms of the clients that
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Speaker 1: you work with, what are they doing to increase their
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Speaker 1: reach to the consumer at closer Yes, so they're generally
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Speaker 1: reevaluating where they're spending, and then the things that are
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Speaker 1: doing well for them, they actually increasing spend. So those
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Speaker 1: are those categories we all know, paid search, paid social, um,
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Speaker 1: the and then those things again there furthest away they're
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Speaker 1: they're taking spend away from that and be us they
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Speaker 1: just literally can't afford it, or at least can't afford
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Speaker 1: the risk if the economy struggles a bit more. Right,
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Speaker 1: So that's a that's a cyclical issue. It sounds to
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Speaker 1: me the secular story of just growth and digital advertising.
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Speaker 1: Are those days kind of behind us here? Or do
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Speaker 1: we Because I've got Google, I've got Facebook, and I
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Speaker 1: guess I've got Amazon as my big three digital advertisers,
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Speaker 1: can they combined continue to drive this market on Yeah,
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Speaker 1: I mean, well Google and Meta uh we agree with
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Speaker 1: a gun call of Facebook already fell off that chair.
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Speaker 1: And we also don't say alphabet, so you know, alright,
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Speaker 1: I'm on that train. Um no pun intended as in
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Speaker 1: New York. But no, they they obviously just have incredible scales.
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Speaker 1: So at that scale, at ten percent growth, those are
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Speaker 1: still really really big growth numbers. Amazon is on fire
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Speaker 1: in terms of their business, both the advertising business and
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Speaker 1: AWS which essentially almost funding that a retail business at
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Speaker 1: least from a profitability perspective, and so I think those
4:02
Speaker 1: are good. But the you know, the the area men
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Speaker 1: streaming television continuing to grow obviously fake um Netflix, I
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Speaker 1: should say obviously Netflix is you know, they have like
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Speaker 1: consumer market share in the US and it's just kind
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Speaker 1: of hard to grow from that. But I think the
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Speaker 1: overall streaming market, this transition from old school linear television
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Speaker 1: cable to streaming, that's not slowing down, that's continuing. How
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Speaker 1: many how many of streamers do you think will be
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Speaker 1: I don't know left standing at the end of this.
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Speaker 1: I mean, is it is it three, is it five?
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Speaker 1: Is it the fifty we had on cable TV or well,
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Speaker 1: there's a consolidation going on right now. When you look
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Speaker 1: at the television industry, the biggest companies are like half
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Speaker 1: the market. So I'm talking like Disney, which people forget
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Speaker 1: also owns ABC on ESPN on like, has all these properties.
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Speaker 1: And then you look at Discovering Networks and they have
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Speaker 1: merged with Time Warner I believe, right, And so the
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Speaker 1: the your have a consolidation underway. It's just kind of
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Speaker 1: happening under a bit below the surface because people are
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Speaker 1: not paying attention to it. So I think you're gonna
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Speaker 1: wind up with just a relatively small number very large players,
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Speaker 1: you know, kind of focused on that market, but in
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Speaker 1: a new way because consumers are watching TV. On the subway,
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Speaker 1: they're watching it and back at taxis they obviously still
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Speaker 1: watching it at home everywhere with the sound up. By
5:24
Speaker 1: the way, but by the way, um, okay, you can
5:28
Speaker 1: be honest with me. Here as we watch Nancy Pelosi
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Speaker 1: get off of her plane, Greg Jarrett says, it looks
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Speaker 1: like a seven two A I'm a pilot, by the way,
5:38
Speaker 1: Oh yeah, I'll try to call that way. I would
5:42
Speaker 1: agree with the seven seven from from the shot. I'm
5:45
Speaker 1: thing right now as we watch that, and I'm not
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Speaker 1: really necessarily I don't have anything to say about this
5:52
Speaker 1: because we already saw her land. It looks like she's safe,
5:54
Speaker 1: everything's cool, and the markets have breathed a side of relief.
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Speaker 1: But does news? Howse news doing? In terms of television? Obviously,
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Speaker 1: streaming news is kind of a silly thing because you
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Speaker 1: want it right away, live, right But I don't. For example,
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Speaker 1: I don't even have cable TV at all at my
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Speaker 1: house television. I mean, I watched Bloomberg on the Apple TV,
6:16
Speaker 1: but I don't watch other kinds of news. Are peeple,
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Speaker 1: do people watch CNN, MSNBC, Fox, Bloomberg? Are they? Are
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Speaker 1: they paying for that? Are we? Are we losing money
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Speaker 1: as a loss leader for for Mike over there? Ye? Also,
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Speaker 1: I think most people are watching the news via their
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Speaker 1: um Instagram account and their TikTok accounts. Scary, that's really scary.
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Speaker 1: So I think that's most people's number one news source.
6:40
Speaker 1: You know. Obviously I think you're trying to give me
6:42
Speaker 1: in trouble here. No, no, But you make a good point,
6:46
Speaker 1: you know. I remember I was talking to a barista
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Speaker 1: a couple of months ago and she hadn't gotten her vaccine.
6:52
Speaker 1: I asked her why and she said, because she saw
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Speaker 1: on the news that it can paralyze you get the vaccine.
6:59
Speaker 1: I said, what news were you watching? She said, oh,
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Speaker 1: I saw it on TikTok. That was her news, the
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Speaker 1: vaccine paralyzed. Yeah. By the way, that isn't true, right,
7:06
Speaker 1: but but but yeah, I mean obviously CNN has is
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Speaker 1: struggling right now. I think Fox knows who their audience is,
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Speaker 1: and they have a very engaged audience and and also
7:17
Speaker 1: an audience the weird news is part. Yeah. I I
7:21
Speaker 1: actually owned some land in Kentucky, so I know the
7:23
Speaker 1: middle of America, and all they want to know about
7:26
Speaker 1: is Hunter Biden and see like California man fights off
7:30
Speaker 1: store roberts Um twenty four hours of Fox coverage. Well,
7:35
Speaker 1: news is also entertainment these days, so let's leave it
7:38
Speaker 1: all right back to entertainment. Then. I have noticed lately
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Speaker 1: Amazon Prime is knocking it out of the park. I mean,
7:46
Speaker 1: they had the terminal List, which is hard for me
7:50
Speaker 1: to try and watch Chris Pratt in a serious role.
7:53
Speaker 1: But anyway, they had Jack Reacher that was killer. They
7:58
Speaker 1: had outer range, which I love with I think Josh Brolin. Um,
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Speaker 1: they're just they're just taking it over. Yeah, so they're
8:05
Speaker 1: they're obviously. You know the interesting thing, I actually talked
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Speaker 1: to someone at Amazon, very senior executive. Their biggest issue
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Speaker 1: with Prime is a lot of the people at Prime
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Speaker 1: subscriptions don't realize and includes television, includes video and so
8:21
Speaker 1: they so first they have to they need their Handmad's Tail.
8:24
Speaker 1: They need that show that everyone wants to watch, and
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Speaker 1: they're investing heavily in getting that. And then they have
8:32
Speaker 1: to remind everyone that, hey, by the way, you have
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Speaker 1: access to this as part of getting your packages delivered
8:39
Speaker 1: same day. So they're they're really in it. Um. I
8:43
Speaker 1: my company used to be based in l A since
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Speaker 1: the pandemic were fully remote right now, and when we're
8:49
Speaker 1: in l A. Amazon built a huge movie studio in
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Speaker 1: Culver City, and I mean a million square feet of
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Speaker 1: space to produce shows, to to manage all that. So
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Speaker 1: they're they're heavily investing along with all the other big
9:02
Speaker 1: They don't have the Adam Project though, no they don't.
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Speaker 1: Ryan Ryan Reynolds continues, did you get a cameo in that? Um?
9:09
Speaker 1: I have have no cameos in Ryan's movie I haven't
9:12
Speaker 1: I have a cameo in his actual life right now,
9:16
Speaker 1: just for the listeners, h Mark and Mountain. Ryan Reynolds
9:20
Speaker 1: is their chief creative officer. So is that the right title. Yeah,
9:23
Speaker 1: it's been an incredible partnership. Mark, you mentioned your folks
9:27
Speaker 1: are remote. Is that permanent? How's that working? I mean
9:31
Speaker 1: you look around here. Mike has like this phenomenal office
9:34
Speaker 1: for us. Nobody's here. Yeah. So we we at the
9:37
Speaker 1: relatively early in the pandemic. We decided when everyone scattered,
9:42
Speaker 1: including me, I went to I left l A and
9:45
Speaker 1: actually went all over the I went tot Loo, Mexico
9:47
Speaker 1: and spent nine months there. Had it very nice. I
9:50
Speaker 1: thought you gonna say back to the Bronx, but it
9:52
Speaker 1: pretty cool. France is good too, and so we just
9:56
Speaker 1: decided we're going fully remote. We decided in May of um,
10:00
Speaker 1: maybe June, we're going fully remote, and um we do
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Speaker 1: four off sites a year to bring the team together.
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Speaker 1: It's been fantastic. That's good stuff. Interesting. Every everybody's adapting.
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Speaker 1: Everybody has adapted is adapting. Mark Douglas, President CEO of Mountain,
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Speaker 1: joining us live in our Bloomberg Interactive Broker studio that
10:17
Speaker 1: is very cool. We appreciate them taking the effort to
10:20
Speaker 1: come in here. Right now, let's check in with James
10:25
Speaker 1: McCann's deputy chief economists Aberdeen Standard Investments. James, thanks so
10:30
Speaker 1: much for joining us here. Boy, tremendous amounts of news flow.
10:33
Speaker 1: We've got central bankers making statements all over the place
10:36
Speaker 1: raising interest rate, We've got earnings, we've got g DP prints,
10:40
Speaker 1: we've got geopolitical issues obviously in Europe. Uh and today
10:45
Speaker 1: there a lot of focus on Taiwan. When you step
10:48
Speaker 1: back and think about where the US economy is going,
10:53
Speaker 1: I wonder how you kind of put all those pieces together.
10:57
Speaker 1: How do you think about the US economy and maybe
11:00
Speaker 1: even you know, the global economy really over the next
11:02
Speaker 1: six or twelve months. Yeah, I mean, you're absolutely right.
11:06
Speaker 1: It's just a huge amount to unpack here. I think
11:10
Speaker 1: what's very clear from the U S data is that
11:12
Speaker 1: we're going into a very pronounced soft patch. I think
11:15
Speaker 1: the fact that we've had a huge energy price drive
11:18
Speaker 1: and commodity price drate and price shock has had a
11:21
Speaker 1: larger effect of many had expected on on consumer sentiments,
11:24
Speaker 1: on consumer spending, etcetera. So you know, definitely we see
11:28
Speaker 1: in strong signs in the data of a soft spot,
11:30
Speaker 1: of a soft patch. We're not convinced this as a recession.
11:32
Speaker 1: I know, last week after the two quarters of negative
11:35
Speaker 1: growth has been a lot of speculation and concern that
11:37
Speaker 1: we're already in recession. We're not convinced that we yet,
11:41
Speaker 1: but look, the risks are definitely increasing. And then when
11:45
Speaker 1: we look on a longer term horizon, we do think
11:47
Speaker 1: as the Fed titans policy, as financial conditions have already
11:52
Speaker 1: adjusted very very significantly, stressing markets has increased that we
11:56
Speaker 1: think the outlook as we go forward is for a
11:59
Speaker 1: further deterior ration in growth. And what we know, as
12:01
Speaker 1: I said, we don't think crim recession at the moment.
12:04
Speaker 1: We do think prospects over that sort of twelve month
12:06
Speaker 1: horizon are pretty dim. So we have a lot of
12:09
Speaker 1: concerns about where the U. S. Economy is going, and
12:12
Speaker 1: we know when where the U. S. Economy glows, that
12:14
Speaker 1: the global economy tends to follow. I mean, it's pretty
12:16
Speaker 1: hard to obviously um the technical definition normally are the
12:21
Speaker 1: rule of thumb is to quarters of contraction. But if
12:24
Speaker 1: you look at this economy with three and a half
12:26
Speaker 1: percent unemployment, and you know six or seven percent nominal growth, Um,
12:32
Speaker 1: it's difficult to see it, or more it's difficult to
12:35
Speaker 1: see it as a recession. Now. On the other hand,
12:38
Speaker 1: we had an interesting note by his old ten poser
12:40
Speaker 1: opposed are Overnight Um and our colleague are a Jersey
12:44
Speaker 1: from Bloomberg Intelligence also has said that this is a
12:48
Speaker 1: FED that wants to fight inflation and is sort of determined,
12:53
Speaker 1: um to turn this inflation around at the risk of
12:57
Speaker 1: pushing the economy into a recession or as posed our
13:00
Speaker 1: even the depression. Do you think we're gonna go to
13:03
Speaker 1: five percent? Do you think we're gonna go to six
13:05
Speaker 1: percent as the outliers are saying, or um, do you
13:08
Speaker 1: believe the market that the Fed is going to get
13:09
Speaker 1: to three and a half or four and then turn
13:11
Speaker 1: tail and run back down? By that team means sorry
13:15
Speaker 1: un employment rates, No, No, I mean the terminal rate
13:19
Speaker 1: the FED right now at the top range at two fifty, right,
13:23
Speaker 1: And even if they do seventy five again, that's only
13:26
Speaker 1: three and a quarter. And and if you look at futures,
13:30
Speaker 1: the market thinks they're gonna go to four maybe a
13:32
Speaker 1: little more, and then come back down already next year.
13:35
Speaker 1: But does that mean we're gonna already have met our
13:39
Speaker 1: two percent inflation goal by next year or are they
13:41
Speaker 1: going to go early? What do you think, um the
13:45
Speaker 1: time it's going to be? I told them, I think
13:48
Speaker 1: that the difficulty for the Fed at the moment is
13:50
Speaker 1: it's seeing signs of weakness in the growth, but it's
13:52
Speaker 1: just not comfortable and I don't think will be comfortable
13:55
Speaker 1: for a while in pivoting. And that's because it's just
13:58
Speaker 1: going to take a while to an inflation under control
14:01
Speaker 1: even if growth slow, as the economy looks just enormously
14:05
Speaker 1: in balanced stills. So I think today's jolt states were
14:07
Speaker 1: really interesting. They showed openings fell pretty significantly, but they're
14:12
Speaker 1: still from a historical style and just extraordinarily high. And
14:15
Speaker 1: it just tells me the seat has more work to
14:18
Speaker 1: do in taking some of the heat tells of this economy.
14:20
Speaker 1: So we certainly think the set has a ways to
14:22
Speaker 1: go in terms of its tightening. But we probably agree
14:25
Speaker 1: that the you know, the terminal rate looks most likely
14:28
Speaker 1: to be around we're not a half per cent, so
14:31
Speaker 1: there are still a fat dunk of tightening to come.
14:34
Speaker 1: It's not impossible that the FED has to go to
14:36
Speaker 1: go higher certainly if that inflation proves you know, more
14:40
Speaker 1: difficult to to to to do you think with that
14:42
Speaker 1: kind of terminal rate they could get down to two.
14:45
Speaker 1: We were at nine point one. I know they don't
14:47
Speaker 1: go by headline cp I, but uh, what's core PC
14:51
Speaker 1: right now? Like five? Um? Can they get back to
14:56
Speaker 1: two with a terminal rate of only four? Yeah? Sorry,
15:03
Speaker 1: the connection is a little bit poor here, but I
15:05
Speaker 1: think they can. I think they can definitely create and
15:07
Speaker 1: I think they can do so potentially quite quickly. I
15:10
Speaker 1: think that has to happen sort of late next year
15:12
Speaker 1: into twenty four potentially. But really what you need to
15:16
Speaker 1: see as an inflation for when it falls, it could
15:19
Speaker 1: for quite quite quickly. You know. Certainly the energy price
15:22
Speaker 1: dynamic I think is already going to be disinflation ry
15:24
Speaker 1: through the summer, and it growth sloans could provide further
15:27
Speaker 1: disinflation reimpetus. I think global goods prices could moderate quite
15:32
Speaker 1: quite rapidly given weakening demand and improving supply chain conditions.
15:37
Speaker 1: So it's not impossible that some aspects of their inflation
15:40
Speaker 1: picture improved quite quite rapidly. I think what they really
15:43
Speaker 1: need to see is that course services inflation moderate, and
15:46
Speaker 1: for that they need to see labor market sees and
15:49
Speaker 1: wages start to come down, and then I think they'll
15:51
Speaker 1: be more confident that the run rate, perhaps not the
15:54
Speaker 1: year on year rate, but the run rate of monthly
15:56
Speaker 1: inflation is coming in more in line with where their
15:59
Speaker 1: inflation target is. And actually, I don't think they're going
16:02
Speaker 1: to put the economy into a depression to achieve that,
16:04
Speaker 1: because I don't think inflation would be that stubborn, you know,
16:07
Speaker 1: but certainly we think that, you know, consecutively a period
16:10
Speaker 1: of very weak growth of recession will be enough to
16:12
Speaker 1: sort of shake that inflation geanie back into the bottle
16:15
Speaker 1: maybe as as a way of putting it, and that
16:17
Speaker 1: will allow them to cut as we sort of move
16:19
Speaker 1: into late twenty three and twenty twenty four. But that's
16:22
Speaker 1: a we have to get the tightening in first. I
16:24
Speaker 1: guess James about the consumer, the consumer is kind of
16:27
Speaker 1: hanging in there pretty well, and Matt mentioned the relatively strong,
16:31
Speaker 1: very strong employment position, but there are some concerns about
16:35
Speaker 1: savings rates coming down, credit card rate balance is going up.
16:39
Speaker 1: How do you view the consumer? Look, I think the
16:42
Speaker 1: consumer in aggregilities is in really good shape when we
16:46
Speaker 1: look at the balance. So if we think about debts
16:49
Speaker 1: the ratio of the to income, then that's a multi
16:51
Speaker 1: year lows. We know there's a lot of accruede saving.
16:55
Speaker 1: Even if the flow of saving, the monthly thing that
16:57
Speaker 1: they're doing sort of back to pre crisis normals, they've
17:00
Speaker 1: built up a big stock pile of saving. I guess
17:02
Speaker 1: the key question for the consumer is, you know, what
17:05
Speaker 1: do they do with that? Well? Are they happy to
17:07
Speaker 1: keep on spending it, especially as the economic outlook starts
17:11
Speaker 1: to starts to darken, especially as the labor market starts
17:14
Speaker 1: to weaken, do they switch to perhaps some more precautionary stance.
17:18
Speaker 1: I think that's what we're already seeing signs of of
17:21
Speaker 1: coming out, is that consumers, at first we're looking to
17:24
Speaker 1: spend through this inflation of the impulse. Now they seem
17:26
Speaker 1: a little bit less convinced. So, you know, I don't
17:29
Speaker 1: think the consumers in terrible shape, but I do think
17:31
Speaker 1: they'll become increasingly cautious about how they spend their money.
17:35
Speaker 1: I think that's going to be felt most acutely endurable
17:37
Speaker 1: good sector, just because they've spent so much in that
17:41
Speaker 1: in that part of the economy over the last two years.
17:43
Speaker 1: Maybe services still has a bit of insulations. People are
17:46
Speaker 1: getting back to normal to you're going back to their
17:49
Speaker 1: lives pre pre pandemic spending on holidays and and anything else,
17:52
Speaker 1: et cetera. But yeah, I do think they look to Edinburgh. Yeah, exactly,
17:58
Speaker 1: it's my next holiday, all right, James, what do they
18:01
Speaker 1: do that log throwing thing? When do they do that
18:03
Speaker 1: big Scottish Thailand Highland Games? That would that's later this
18:11
Speaker 1: year is so you should definitely get to tell. Tell well,
18:16
Speaker 1: hopefully it cools down. Tell Luke Hickmore. I'm on my way,
18:19
Speaker 1: all right, James mcinn, Deputy Chief Economist, Aberdeen Standard Investments,
18:22
Speaker 1: Thanks so much for joining. Alright, all eyes on Taiwan today,
18:30
Speaker 1: Uh speaker Ploss playing did land moments ago in Taiwan.
18:34
Speaker 1: Now there's a red headline across the Bloomberg terminal China
18:36
Speaker 1: to carry out military drills encircling Taiwan. So here we go.
18:42
Speaker 1: Let's get the latest on all things Taiwan and from
18:46
Speaker 1: the speaker. Emily Wilkins, Washington reporter with Bloomberg Government, joins
18:50
Speaker 1: us here. So Emily, here we go. The speakers in
18:53
Speaker 1: Taiwan what is the expectation in Washington, hopeful or not
19:00
Speaker 1: about how this will play out? I mean, I think
19:03
Speaker 1: the expectation in Washington. Number one, this is an absolutely
19:06
Speaker 1: historic day. It is a historic trip. This is um
19:10
Speaker 1: the first time in a quarter of a century that
19:12
Speaker 1: one of the top lawmakers in America that the third
19:16
Speaker 1: in line from the presidency is in Taiwan. We saw
19:19
Speaker 1: that Taiwan even projected um onto a building near the
19:23
Speaker 1: airfield a message welcoming Speaker Pelosi and and saying that
19:27
Speaker 1: the Taiwan and that that Taiwan loves the US. And
19:31
Speaker 1: so it is a huge trip for those reasons. But
19:34
Speaker 1: when you look at exactly what is going to be
19:36
Speaker 1: accomplished here, Pelosi already put out a statement saying that
19:40
Speaker 1: you know that this is not change how the US
19:42
Speaker 1: sees Taiwan. It does not change US and Taiwan relationships.
19:46
Speaker 1: The US is sticking with the status quo. But she
19:49
Speaker 1: also notes that at this point that the US Taiwan
19:52
Speaker 1: relationship is more important today than ever as the world
19:55
Speaker 1: faces a choice between autocracy and democracy. Those were words
20:00
Speaker 1: that the Speaker are released in a statement shortly after
20:03
Speaker 1: she landed. So she's seen a larger historical context here.
20:06
Speaker 1: I think after Russia invaded Ukraine, a lot of folks
20:09
Speaker 1: started asking could we see similar with China and Taiwan.
20:14
Speaker 1: And so even though this trip does not involved a
20:16
Speaker 1: policy shift, it is sort of a signal about where
20:19
Speaker 1: the US sees Taiwan and the allegiance that that both
20:23
Speaker 1: have with each other. Eamily, you spend a lot of
20:25
Speaker 1: time um in the halls of Congress. Is this something
20:29
Speaker 1: that you know, one of those rare issues that has
20:33
Speaker 1: support on both sides of the aisle? It does? It
20:36
Speaker 1: really does. I mean, we saw Senate Minority Leader Mitch McConnell, certainly,
20:40
Speaker 1: someone who's never been afraid to criticize Pelosi in the past,
20:43
Speaker 1: basically encouraging her to go on this trip, saying that
20:46
Speaker 1: if she didn't, she would be handing China a win.
20:48
Speaker 1: We heard very similar rhetoric from the House Republican Leader
20:52
Speaker 1: Kevin McCarthy. You've heard the same from em Pelosi's own party. Certainly,
20:57
Speaker 1: there have been security concerns that we I've heard from
21:00
Speaker 1: the Department of Defense, from the Pentagon. There's a recognition
21:03
Speaker 1: that this is a sensitive time within the relationship between
21:07
Speaker 1: Washington and Beijing. At the same point, I can't think
21:11
Speaker 1: of a single House member who has really come out
21:13
Speaker 1: and said we don't want Speaker Pelosi to be going
21:16
Speaker 1: on this trip at this time. Certainly there this is
21:20
Speaker 1: going to have to be a trip where the Speaker
21:22
Speaker 1: needs to be cautious. She needs to be careful in
21:24
Speaker 1: what words she uses in the actions that she has.
21:27
Speaker 1: At the same point, though this is not Pelosi's first rodeo.
21:30
Speaker 1: I mean, she went to Taneman Square and and protested
21:35
Speaker 1: um the killings there the previous two years, and so
21:39
Speaker 1: she understands the region, she understands the aspect, she understands
21:42
Speaker 1: the dynamics, and certainly she's been in a position of
21:45
Speaker 1: power long enough to to really understand what would and
21:48
Speaker 1: would not be considered uh in line with the current
21:51
Speaker 1: status quo. Emily, Matt and I are looking at the
21:54
Speaker 1: live go when we see a view here appears to
21:57
Speaker 1: be of a hotel in Taiwan. Looks like the press
22:00
Speaker 1: corps maybe assembling here. Do we know or what do
22:03
Speaker 1: we know of Speaker Pelosi's schedule for tomorrow in in
22:08
Speaker 1: terms of events, in terms of press availability, that type
22:11
Speaker 1: of thing, So we haven't gotten a ton of details
22:14
Speaker 1: about this trip. I mean the Speaker's office. I don't
22:17
Speaker 1: think they ever even confirmed that she was actually going
22:19
Speaker 1: to Taiwan until the plane touched down. In this statement
22:22
Speaker 1: came out, we didn't know that she has planning on
22:25
Speaker 1: meeting with officials within Taiwan, within the legislature, with Taiwan's president. UM.
22:30
Speaker 1: That those are all things on the agenda. Remember too,
22:33
Speaker 1: this is a part of a larger trip. She was
22:35
Speaker 1: in Singapore, she is still planning on going to Japan
22:38
Speaker 1: and to South Korea. UM. And so it will definitely
22:41
Speaker 1: be a very closely watched trip for Speaker Pelosi. UM.
22:46
Speaker 1: But in the in the same at the same time, UM,
22:49
Speaker 1: I think there are there's a sense that the most
22:52
Speaker 1: historic thing that she's done is today simply landing here,
22:55
Speaker 1: stepping off the plane and becoming the first Speaker in
22:57
Speaker 1: twenty five years to do So. What kind of legislation
23:03
Speaker 1: is um circulating in Washington and support of Taiwan because
23:07
Speaker 1: we used to have a mutual defense treaty until we
23:11
Speaker 1: basically quit out of it in ninety nine, Is there
23:14
Speaker 1: anything like that on the books? So at this point
23:18
Speaker 1: that hasn't been a giant focus. UM. The things that
23:21
Speaker 1: you've seen Washington be really consumed with right now. Are
23:24
Speaker 1: mostly domestic things that that reconciliation package that uh kind
23:28
Speaker 1: of rose out of the dust the other week, UH
23:30
Speaker 1: stuff for veterans are are very much on lawmakers minds
23:33
Speaker 1: at this point. But you have seen really that bipartisan
23:36
Speaker 1: willingness in Congress to pass legislation UM that would sort
23:40
Speaker 1: of you know, slap China on the risk for human
23:42
Speaker 1: rights abuses, UM, that would kind of continue to establish
23:46
Speaker 1: US dominance in the markets over China. You recently saw
23:50
Speaker 1: lawmakers take up that fifty two billion dollar deal in
23:54
Speaker 1: semiconductors with the idea that more of them now need
23:58
Speaker 1: to be made in the US so that the US
24:00
Speaker 1: does not rely as much on China and partly Taiwan,
24:03
Speaker 1: should China make some sort of move to change the
24:06
Speaker 1: status quo there. And you know, these are the things
24:10
Speaker 1: that I think lawmakers are are more focused on at
24:12
Speaker 1: this time. Emily, great stuff, Thank you very much for
24:14
Speaker 1: your reporting. Really appreciate getting the update there. Emily Wilkins,
24:18
Speaker 1: congressional reporter for Bloomberg Government based in Washington, d C.
24:22
Speaker 1: Giving us the latest, UH. Speaker Pelosi in Taiwan or
24:26
Speaker 1: playing landed just moments ago. Kind you want to bring
24:32
Speaker 1: you this interview with Uber CEO Dara kosh Roshah. He
24:35
Speaker 1: talking about the company's recent earnings with Bloomberg's Guy Johnson
24:38
Speaker 1: and Emily Chang. Certainly some very good numbers coming out
24:42
Speaker 1: of there. Let's bring you that interview right now with
24:45
Speaker 1: the CEO of Uber, Dara. Thank you so much for
24:48
Speaker 1: joining us. A happy day, I know, when the stock
24:51
Speaker 1: is that much in the green, you hit a record
24:53
Speaker 1: on Booking's revenue more than doubled. Dig into some of
24:56
Speaker 1: the trends here. What was so different about this quarter
24:59
Speaker 1: than the last few quarters when it came to supply
25:01
Speaker 1: and demand. Well, to some extent, it's a continuation of
25:06
Speaker 1: the last few quarters, but we're really hitting a scale
25:09
Speaker 1: point here, Like you said, twenty nine billion dollars in
25:13
Speaker 1: growth bookings of thirty six percent on a year on
25:16
Speaker 1: year basis. Uh as it relates on a constant currency
25:19
Speaker 1: basis are ebada three hundred sixty two million, well above
25:23
Speaker 1: our guidance range, and the guidance that we gave forward
25:26
Speaker 1: was well above street estimates, etcetera. So an indication of
25:30
Speaker 1: anticipated strength coming. And then a really important factor for
25:34
Speaker 1: US is we're a free cash flow positive three two
25:37
Speaker 1: million dollars in free cash flow, which is a big
25:41
Speaker 1: positive factor in our being self sustaining and a profitable
25:44
Speaker 1: going forward. And when we look at the environment, the
25:48
Speaker 1: marketplace is more balanced. The number of new drivers that
25:51
Speaker 1: we're adding in the US is up over seventy on
25:53
Speaker 1: a year. On your basis surges down e t A
25:57
Speaker 1: s or down. Uh So the business is really hitting
26:00
Speaker 1: on all cylinders and it's reflected in the stock price,
26:02
Speaker 1: which is great. Dara, thank you. We're looking at live
26:06
Speaker 1: pictures from Taipei where how speaker Nancy Pelosi's motorcade has
26:10
Speaker 1: just arrived at a Taiwan hotel. We're gonna keep monitoring,
26:13
Speaker 1: of course, her big visit to Taiwan. I do want
26:16
Speaker 1: to ask you a little bit about the broader environment, Dara.
26:18
Speaker 1: I still hear people say Uber is expensive, and we're
26:22
Speaker 1: seeing Uber benefiting from this. When you look at your
26:25
Speaker 1: earnings and the bottom line, how do you think about
26:27
Speaker 1: this dynamic longer term? Do you worry at all about
26:30
Speaker 1: alienating customers when they're already getting squeezed, Given that this
26:34
Speaker 1: is the worst inflationary environment in Uber's history, yeah, I
26:39
Speaker 1: think inflation is hitting all of us, whether it's grocery
26:42
Speaker 1: prices or fuel prices. And remember, uh, fuel is a
26:45
Speaker 1: big component of our driver costs, so that affects Uber
26:50
Speaker 1: prices as well, and you do see it in a result.
26:53
Speaker 1: While trips were up, which is really really healthy growth growth,
26:58
Speaker 1: bookings were up fast than that, which indicates some inflationary
27:03
Speaker 1: effect on our results. I think the good news for
27:05
Speaker 1: us is that surge levels are actually coming down, E
27:08
Speaker 1: t A s are coming down, so as the marketplace
27:11
Speaker 1: becomes more balanced, we actually see strength in terms of
27:15
Speaker 1: trip growth going forward. And we're hoping if we do
27:18
Speaker 1: our jobs and so far, so good onboarding more and
27:21
Speaker 1: word drivers that prices on Uber will ease going forward.
27:25
Speaker 1: At the same time drivers will make really strong earnings
27:29
Speaker 1: as well. At the same time, we've heard so many
27:31
Speaker 1: dire warnings about the economy. Jamie Diamond has said he's
27:34
Speaker 1: preparing for an economic hurricane. I just spoke to Apple
27:37
Speaker 1: CEO Tim Cook, who said, you know, he plans to
27:40
Speaker 1: be deliberate in Apple spending. You said in the past
27:43
Speaker 1: that you think Uber is recession resistant. Do you still
27:46
Speaker 1: believe that if we continue to see these down downward trends,
27:50
Speaker 1: and what is uber strategy to navigate continuing downward trends. Well,
27:55
Speaker 1: I think you're certainly seeing in earn results, which is uh,
27:59
Speaker 1: There's been a bunch of earnings results out there, and
28:01
Speaker 1: sometimes they've been less than great. I think Uber's earnings
28:04
Speaker 1: have been terrific in every way, top line growth, profitability
28:10
Speaker 1: growth as well. Um at the same time, we are
28:13
Speaker 1: being disciplined in terms of how we grow going forward.
28:17
Speaker 1: This is why our margins are improving so much on
28:19
Speaker 1: a year on your basis, free cash flow is now
28:22
Speaker 1: positive as well. Because of the scale that we have
28:25
Speaker 1: because we're in multiple businesses, both in mobility and delivery.
28:29
Speaker 1: I think we have a kind of business that can
28:32
Speaker 1: perform in all weather. But at the same time, we
28:35
Speaker 1: are being disciplined in terms of costs to make sure
28:38
Speaker 1: that as the environment, if it gets tougher, we are prepared.
28:43
Speaker 1: The other factor that I point out to is that
28:45
Speaker 1: you have seen, you know, during the pandemic, huge amount
28:49
Speaker 1: of spend went into retail and out of services. Now
28:52
Speaker 1: we're seeing the reversal of that money coming out of
28:55
Speaker 1: retail and into services. And Uber is an ultimate service
28:59
Speaker 1: company and we're benefiting from that, so you can expect
29:02
Speaker 1: us to perform better than the overall environment, certainly this year.
29:06
Speaker 1: When we look at next year, we have to be
29:08
Speaker 1: careful because those comps can go against us, which is
29:11
Speaker 1: why we are bringing real cost discipline into the business,
29:15
Speaker 1: growing top line and the bottom line. So tell me
29:18
Speaker 1: a little bit more about what you mean by discipline.
29:21
Speaker 1: Does that could that impact hiring? You know, any plans
29:24
Speaker 1: for layoffs or cutbacks on staff as we're seeing at
29:27
Speaker 1: other tech companies. I think the good news for us
29:30
Speaker 1: is with top line growth of thirty certainly no plans
29:34
Speaker 1: for layoffs, but we are being more disciplined in terms
29:37
Speaker 1: of headcoun growth. So we're adding headcount to key areas
29:41
Speaker 1: Let's say Uber for business salespeople that part of our
29:44
Speaker 1: business is growing very very quickly, or advertising business, which
29:49
Speaker 1: is a very very high margin business and growing as well.
29:52
Speaker 1: So we're adding heads selectively to parts of the portfolio
29:57
Speaker 1: that are growing in really strong and power a ways.
30:00
Speaker 1: Otherwise words scale already, we are going to leverage costs,
30:05
Speaker 1: both variable costs and fixed costs going forward, and I
30:08
Speaker 1: think this environment that is demanding more discipline, it's the
30:13
Speaker 1: perfect environment for Luber competitively. Dary, Good morning, it's Guy
30:19
Speaker 1: Um picking up on that point. How much of current
30:23
Speaker 1: spend do you think is discretionary? You know, we do
30:28
Speaker 1: have a fair amount of discretionary spend in terms of
30:31
Speaker 1: marketing spend or incentive spend. We continue to have drivers
30:36
Speaker 1: sign on bonuses or guarantees as as earnings are elevated, UH,
30:42
Speaker 1: to make sure that drivers feel safe on boarding onto
30:45
Speaker 1: the platform and then see their earnings the great earnings
30:49
Speaker 1: for themselves. So there's certainly some discretionary spend and you're
30:53
Speaker 1: seeing that in terms of the margin efficiency of the company.
30:56
Speaker 1: Are gross profit margins, for example, are up your on
31:00
Speaker 1: year and we are our fixed costs are growing at
31:04
Speaker 1: much slower rates than that thirty six percent gross bookings
31:07
Speaker 1: growth rates. We are speaking with Uber CEO Darrik Costra
31:13
Speaker 1: Shah He I'm joined by Bluemberg's Emily Chang on Bluemberg
31:17
Speaker 1: Television and Radio. Dar Are you talked a moment ago
31:20
Speaker 1: about growth markets. Let's talk about markets where maybe you
31:23
Speaker 1: are not seeing that growth. Where are you reevaluating right now?
31:27
Speaker 1: There's been some conversations, certainly I've heard talking about the
31:30
Speaker 1: idea that maybe you could withdraw from India. Oh, those
31:35
Speaker 1: conversations are entirely false. We've said it a bunch of
31:38
Speaker 1: times and I'll say it again. Our India business in
31:40
Speaker 1: terms of mobility is at performing at excellent excellent rates.
31:45
Speaker 1: Were very happy with that business. We did exit uh
31:50
Speaker 1: India delivery business. We didn't think we could be a
31:52
Speaker 1: top one or two player and there are certain markets
31:55
Speaker 1: Brazil for example, and delivery where we decided to get out. Essentially,
31:58
Speaker 1: if we don't think we have a chance to get
32:00
Speaker 1: to number one within a reasonable cost, UH, we will
32:05
Speaker 1: look to be disciplined in terms of our portfolio. But
32:08
Speaker 1: when you look at her portfolio, both mobility and delivery
32:11
Speaker 1: both are growing at healthy rates. Were either number one
32:14
Speaker 1: or number two in the markets that we compete in
32:17
Speaker 1: and we're very very confident going forward. And to be clear,
32:20
Speaker 1: we are staying in mobility in India. We love the market.
32:25
Speaker 1: So Dar, are you confirming there that you're selling your
32:28
Speaker 1: steak in to motto? I mean we've heard that a
32:30
Speaker 1: big shareholder is selling. This is the big food delivery
32:33
Speaker 1: company in India, and there are reports that Uber is
32:37
Speaker 1: selling at steak. Yeah, no comment on those reports. One
32:40
Speaker 1: or the other. Okay, UM, so let's talk about the
32:44
Speaker 1: markets to guys point about where Uber might not be
32:47
Speaker 1: growing as much. You mentioned on the call that West
32:49
Speaker 1: coast markets are taking a little bit longer to come back,
32:53
Speaker 1: and I'm I'm thinking about San Francisco and how it's
32:56
Speaker 1: been a struggle to get workers back to the office.
32:59
Speaker 1: How are you thinking about this and Uber's, for example,
33:01
Speaker 1: Uber's own flexible work policies. Do you see the flexibility
33:05
Speaker 1: that you're giving workers holding up into next year for example?
33:09
Speaker 1: Does it does feel like the tail of two coasts?
33:11
Speaker 1: You know, when we look at the East coast New York, Miami,
33:15
Speaker 1: even UH cities Atlanta, Austin, Dallas. Our business is coming back,
33:22
Speaker 1: is roaring back, uh at this point, and we feel
33:25
Speaker 1: great about that business. Now. The San Francisco markets, Los Angeles, Seattle,
33:30
Speaker 1: they're certainly coming back. But when you look at the
33:33
Speaker 1: absolute levels versus pre pandemic levels, UH, it's a very
33:37
Speaker 1: very different story. UM. And you know, we'll keep pushing
33:41
Speaker 1: and we will do our part to make sure that
33:43
Speaker 1: we've got ample supply in those markets. UH. And the
33:46
Speaker 1: service works very well as it relates to Uber. UH.
33:50
Speaker 1: You know, we believe in two things. One is we
33:52
Speaker 1: want people to get out and getting out means going
33:54
Speaker 1: back to the office as well. And at the same time,
33:56
Speaker 1: we believe in flexibility, so we are going with a
34:00
Speaker 1: hybrid model. We're encouraging employees who don't want to be
34:03
Speaker 1: remote only to come in fifty percent of the time.
34:06
Speaker 1: And I will tell you, when you get together with
34:09
Speaker 1: your workmates, especially in a world and an area where
34:13
Speaker 1: you're working as hard as you are, as it relates
34:15
Speaker 1: to Uber, especially as you care so much about your impact,
34:18
Speaker 1: getting together in person is a great jolt of energy.
34:21
Speaker 1: I very much believe in it. But ultimately we want
34:23
Speaker 1: we want the best of both worlds. It's gonna get
34:26
Speaker 1: more competitive out there. Um, you've got Amazon interesting in
34:29
Speaker 1: grub Hub. What do you think that means for you? Well,
34:33
Speaker 1: we're very confident of our delivery business group twelve percent
34:38
Speaker 1: on a year on year basis constant currency, and our
34:41
Speaker 1: share in the US has been very, very consistent. The
34:44
Speaker 1: focus for us is to drive profitability of our delivery business.
34:48
Speaker 1: So we had a record quarter in terms of profitability
34:50
Speaker 1: nine million in iba DA and we expect that profitability
34:54
Speaker 1: to increase going forward. In terms of Amazon and grub Hub,
34:58
Speaker 1: we've seen zero material effect on us. We work with
35:02
Speaker 1: Amazon for example in Japan, uh, and because of our
35:05
Speaker 1: global scope and scale, we have a lot of chances
35:08
Speaker 1: to work with different players. Amazon is a great company,
35:11
Speaker 1: and we'll work We'll look to work with them. However,
35:13
Speaker 1: we can now if there was an area of weakness. Uh.
35:18
Speaker 1: You could say in the report, I'm looking at delivery.
35:21
Speaker 1: Delivery bookings mixed, missed expectations by about a billion, and
35:25
Speaker 1: you're forecasting it will be flat for the current quarter.
35:28
Speaker 1: Given just how big a part of the business this
35:31
Speaker 1: has become post pandemic, do you think a slowdown in
35:35
Speaker 1: delivery could potentially drag down the rest? Well, I think
35:39
Speaker 1: that the slowdown that we're seeing in delivery is is
35:42
Speaker 1: really a measure of the comps right last year, the
35:45
Speaker 1: delivery business of growing unbelievably quickly. If you look at
35:49
Speaker 1: delivery growth in the U S Uber eat crew year
35:53
Speaker 1: on year, our overall US delivery business crew year on year, uh,
35:59
Speaker 1: the growth rate there we're seeing internationally is affected by
36:02
Speaker 1: comps the year before, and if you compare delivery to
36:05
Speaker 1: two years ago, both of the US and international or
36:08
Speaker 1: growing an annual rate of forty plus percent, which is
36:11
Speaker 1: super super healthy. So we're big believers in delivery. The
36:15
Speaker 1: focus this year is really to draw profitability. We are
36:19
Speaker 1: at scale where the number one or number two player
36:22
Speaker 1: and the vast majority of markets that we compete in,
36:25
Speaker 1: and it's time for delivery to get profitable and we
36:27
Speaker 1: are going to lead in that aspect. Wrap it up
36:31
Speaker 1: that guys, stokes up fifteen point full percent. Pretty good
36:35
Speaker 1: day at the office. That are great to catch up.
36:38
Speaker 1: Thank you very much. Indeed, lebe dark here of course,
36:42
Speaker 1: Blue Bugs Emily Chang, This is Blue Bug. Thanks for
36:49
Speaker 1: listening to the Bloomberg Markets podcast. You can subscribe and
36:53
Speaker 1: listen to interviews an Apple Podcasts or whatever podcast platform
36:57
Speaker 1: you prefer. I'm Matt Miller. I'm on Twitter at Matt
37:01
Speaker 1: Miller seventy three and on Fall Sweeney I'm on Twitter
37:04
Speaker 1: at pt sweeney. Before the podcast. You can always catch
37:07
Speaker 1: us worldwide at Bloomberg Radio