Latest / Bloomberg Intelligence / 2020 Global Outlook, Six Word Market Narratives

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2020 Global Outlook, Six Word Market Narratives · Bloomberg Intelligence

0:02
Speaker 1: Welcome to the Bloomberg Penl Podcast. I'm Paul swing you,
0:05
Speaker 1: along with my co host Lisa Brahma wits. Each day
0:07
Speaker 1: we bring you the most noteworthy and useful interviews for
0:10
Speaker 1: you and your money, whether at the grocery store or
0:12
Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple
0:15
Speaker 1: podcast or wherever you listen to podcasts, as well as
0:17
Speaker 1: at Bloomberg dot com. One big question heading into since
0:24
Speaker 1: we are now there has been how much has the
0:27
Speaker 1: FED bolstered stock prices and how much will they continue
0:30
Speaker 1: to do? So we're so lucky to have tourist in
0:32
Speaker 1: stock with US chief economists and managing director at totter
0:35
Speaker 1: Bag Securities here in our interactive broker studios, Touristen puts
0:39
Speaker 1: out some of the most interesting and provocative charts that
0:43
Speaker 1: I get in my inbox. I'm very excited to have
0:45
Speaker 1: you on. Let's just first talk about how much you've
0:48
Speaker 1: found that the FED stimulus last year actually bolstered stock valuations.
0:53
Speaker 1: So what we try to do was to ask the question,
0:56
Speaker 1: when the fit basically expands that balance sheet, there various
0:59
Speaker 1: reasons why banishing could go up, and we can discuss
1:01
Speaker 1: for a long time, whether it's called qui or not.
1:03
Speaker 1: But the bottom line is when the Fed expanses balance sheet,
1:05
Speaker 1: then you can measure that on a weekly basis when
1:08
Speaker 1: the balance sheet data comes out, and then you can
1:10
Speaker 1: try to ask the question, let's try to go back
1:12
Speaker 1: since October when they started expanding the balance sheet and
1:14
Speaker 1: say for every one percent that the balance sheet expanded,
1:18
Speaker 1: how much did the stock market go up or down?
1:20
Speaker 1: And what we found in our very simple scatter diagram
1:22
Speaker 1: is that for every one percent increase in the fifth
1:24
Speaker 1: balance sheet, this in p. Five hundred has actually gone
1:26
Speaker 1: up by roughly one percent. Also, so in that sense,
1:29
Speaker 1: fit banasheat expansion has at least been correlated with the
1:32
Speaker 1: increase in the stock marget that we have seen since October.
1:35
Speaker 1: Now you can ask, looking ahead, of course, if this
1:37
Speaker 1: will continue, if the fIF balant sheat expansion is continuing,
1:39
Speaker 1: but at least for now, that has been a very
1:41
Speaker 1: tight relationship for the last several months. Has the FEDS
1:44
Speaker 1: activity as it relates to the balance sheet and growing
1:46
Speaker 1: its balance sheet? How unusual is that? You know? Kind
1:50
Speaker 1: of activity? Is it something that we should consider for
1:54
Speaker 1: so a very important part of that question is that Traditionally,
1:58
Speaker 1: when the fit has done que or quantity V saying
2:00
Speaker 1: they've been buying the long end of the yield curve
2:03
Speaker 1: with the whole intention of trying to lower long term
2:04
Speaker 1: interst rates. What's really unusual about what they're doing today
2:07
Speaker 1: is that they're buying T bills, meaning the short end
2:09
Speaker 1: of the yeld curve, And therefore we're getting a lot
2:11
Speaker 1: of questions from clients about, well, why should that be
2:13
Speaker 1: helping the stock market. It makes sense that when you
2:15
Speaker 1: shift long bunds that you could begin to buy long
2:18
Speaker 1: duration assets. But if you buy a T bill, why
2:20
Speaker 1: would that be substituted with the S and P. That's
2:22
Speaker 1: probably not many who on their own just substitute directly
2:25
Speaker 1: a four week th bill with a long term asses
2:28
Speaker 1: by S and P five. But remember money is much fungible,
2:31
Speaker 1: so in that sense, if there is a portfolio induced
2:34
Speaker 1: re balancing, you could easily to see that someone at
2:37
Speaker 1: the end of a long process would end up allocating
2:39
Speaker 1: more money to risky assets. Therefore, this in the long
2:42
Speaker 1: answer to a question Paul, is that I still think
2:45
Speaker 1: that as we look into this year, the more the
2:47
Speaker 1: fat penalty is going to expand, it will be still
2:50
Speaker 1: something that provides support to the stock market. So that's
2:53
Speaker 1: fantastic perspective as to what potentially could drive stock gains
2:58
Speaker 1: further in te thing that I love about your research
3:01
Speaker 1: is you take a more holistic approach, not just stock valuations,
3:04
Speaker 1: diving deeper into the economy. And one thing that you've
3:07
Speaker 1: highlighted increasingly is that there is a whole swath of
3:10
Speaker 1: Americans that have been left behind in the rally, whether
3:12
Speaker 1: it comes whether whether it comes to income gains, whether
3:15
Speaker 1: it comes to spending more than their bringing in every month,
3:18
Speaker 1: whether it comes to healthcare costs. Can you give us
3:20
Speaker 1: a sense of just your overarching thesis when it comes
3:23
Speaker 1: to the widening gap and what that could potentially do
3:27
Speaker 1: economically and frankly as as surprise wise, absolutely, we think
3:30
Speaker 1: a very important issue going into two thousand twenty, and
3:34
Speaker 1: of course, particularly with the election in November, continues to
3:38
Speaker 1: be inequality in all dimensions. The way we look at
3:40
Speaker 1: it is that there are four different dimensions to an equality.
3:43
Speaker 1: There's income inequality, there's wealth inequality, but there also two
3:46
Speaker 1: other very important dimensions that are often ignored, namely health inequality.
3:50
Speaker 1: Different people have different access to healthcare and finally education
3:53
Speaker 1: in equality, that education has become very expensive, which also
3:56
Speaker 1: means that different people have different access And if look
3:58
Speaker 1: at these different dimensions, it is basically things that are
4:01
Speaker 1: dominating the political conversations. So we're trying to think about
4:05
Speaker 1: and trying to figure out, as hard as it is,
4:07
Speaker 1: should we just ignore this and say, hey, I just
4:09
Speaker 1: look at the stock market, this is what I do.
4:11
Speaker 1: Or should we say, well, these are actually now indicators
4:14
Speaker 1: and data points that have become so important in the
4:17
Speaker 1: conversation politically that maybe we need to take into account.
4:21
Speaker 1: How should I think about as an investor? Should I
4:23
Speaker 1: take it into account and see this could apply something
4:25
Speaker 1: in terms of policy changes on education, healthcare, student loans, taxes.
4:30
Speaker 1: There's a lot of time mentions that become very important
4:32
Speaker 1: for the overall business environment and therefore also for the
4:35
Speaker 1: out there, for the stock market, and ultimately also for
4:36
Speaker 1: the fit and rates. So in short, this agenda is
4:40
Speaker 1: very confusing and fluffy in the sense of there's a
4:43
Speaker 1: lot of arm waving around a lot of these data points,
4:45
Speaker 1: but it still turns out in almost all our conversations
4:48
Speaker 1: to be at the end of the day, a very
4:50
Speaker 1: very critical input to how will markets actually do as
4:53
Speaker 1: we sit here on the first days of two thousand twenty,
4:55
Speaker 1: do you think some of those inequalities that you identified
4:57
Speaker 1: have had an economic impact in the US? Has it
5:00
Speaker 1: impacted g d P? There's a lot of folks, a
5:02
Speaker 1: lot of economists are saying we're gonna be slower growth
5:04
Speaker 1: for a longer, you know, kind of two percent GDP.
5:07
Speaker 1: Do you think one of the contributors of that could
5:09
Speaker 1: be some of these inequalities were seeing. Absolutely, we do
5:11
Speaker 1: think that a very important reason why this expansion was
5:13
Speaker 1: so weak for the last ten years was probably that
5:16
Speaker 1: the main boost from policy makers. Remember policy in two
5:19
Speaker 1: thousand nine and ten basically responded less with fiscal policy
5:23
Speaker 1: and mold with monetary policy. And what did mind story
5:24
Speaker 1: opposed to do. It lifted stock prices and home prices.
5:27
Speaker 1: Who benefits on that people who own stocks, people who
5:30
Speaker 1: own homes. And because there were fewer people who own homes,
5:33
Speaker 1: the home ownership rate was going down. Fewer people owning stocks.
5:36
Speaker 1: That meant that the benefits in this expansion were concentrated
5:39
Speaker 1: on a fewer hands. So in that sense, the benefits
5:41
Speaker 1: of highest stock price and high home prices were basically
5:44
Speaker 1: more concentrated in a smaller group of the population. That
5:47
Speaker 1: meant that the impact on consumer spending, the wealth effect,
5:51
Speaker 1: the impact overall on the economy turned out to be
5:53
Speaker 1: driven a lot by asset prices going up in some
5:56
Speaker 1: sexes and some people benefiting, but a significant part of
5:59
Speaker 1: the population not efiting. So we do believe that one
6:01
Speaker 1: critical reason why these expanion has been so weak is
6:04
Speaker 1: because of inequality that has continued to widen Torsen's law.
6:08
Speaker 1: Thank you so much for joining us. We really appreciate
6:09
Speaker 1: you coming into our Bloomberg Interactive Broker studio. Torsen's and
6:12
Speaker 1: chief economist at Deutsche Bank Securities hockey stick growth. That
6:30
Speaker 1: is what people are expecting for the first quarter of
6:32
Speaker 1: the first half of joining us here in our interactive
6:35
Speaker 1: broker studios. Nick Cholis, co founder of Data Track Research,
6:39
Speaker 1: and I want to talk about the consensus idea that
6:42
Speaker 1: we have here, which is that the first half of
6:45
Speaker 1: the year will be frontloaded in terms of gains in
6:48
Speaker 1: the SMP and beyond as companies report earnings that are
6:51
Speaker 1: solid and show study growth in the U S economy.
6:54
Speaker 1: Do you agree with that consensus call. I think it's
6:57
Speaker 1: a bit tough and I'll tell you why. If you
6:59
Speaker 1: look at the first half of last year, you saw
7:01
Speaker 1: that SMP five companies registered revenue growth of five percent
7:05
Speaker 1: in Q one and four percent in Q two, and
7:07
Speaker 1: that's trailed off to three and then two percent what
7:09
Speaker 1: we're expecting for the fourth quarter. And those are tough
7:12
Speaker 1: comps because the U. S economy and global economy is
7:14
Speaker 1: still growing only fairly slowly. And even though the effect
7:18
Speaker 1: of FED rate cuts and perhaps the trade US UM
7:21
Speaker 1: trade war settlements will spur business spending, it'll be in
7:24
Speaker 1: the back half of the year. So I'm not as
7:26
Speaker 1: optimistic that we'll see those really healthy comps in Q
7:29
Speaker 1: one and Q two. So Nick, I'm looking at your research,
7:31
Speaker 1: and I love your your theme here, six word market narratives.
7:35
Speaker 1: Give us your six word market narratives for nineteen and
7:38
Speaker 1: maybe how we should think about You know, the six
7:41
Speaker 1: word narrative is an exercise to try to just to
7:43
Speaker 1: steal down what happened in twenty nineteen, then what could
7:47
Speaker 1: happen this year. The summary of it was that eighteen
7:51
Speaker 1: was a year of a huge policy mistake. The FED
7:54
Speaker 1: thought that neutral rates were much higher than they were.
7:56
Speaker 1: You know, if J don't touch that. Dial's kind of
7:58
Speaker 1: the six word market narrative in we had a reversal
8:02
Speaker 1: of that. Basically, the FED came out on January four,
8:05
Speaker 1: apologize for getting it wrong, and spent the rest of
8:08
Speaker 1: the year cutting So it was okay, we know, you're sorry,
8:11
Speaker 1: it's okay. Is going to be this issue of look,
8:15
Speaker 1: there's a hundred different ways to cut this market and
8:17
Speaker 1: say you shouldn't be involved. Valuations are very high. Corporate
8:20
Speaker 1: that's very high. We talked about the earnings cops, all
8:23
Speaker 1: very real issues. But at the same time, we still
8:26
Speaker 1: have the flow through of these policy makers, both at
8:28
Speaker 1: the FED now saying they're not going to raise rates
8:31
Speaker 1: and in the White House saying, you know what, the
8:32
Speaker 1: trade war probably should be over because President Trump wants
8:35
Speaker 1: to get reelected. And it's a flow through of those
8:38
Speaker 1: two narratives that says this year might be okay. All right,
8:40
Speaker 1: let's talk about where it's going to be most okay.
8:43
Speaker 1: I was looking at the City Economic Surprise Index for
8:45
Speaker 1: both the US and Europe this morning. In the US
8:48
Speaker 1: it's going down and it is negative. In Europe, it's
8:51
Speaker 1: the highest level UH since February, basically meaning that the
8:56
Speaker 1: economic data coming out was beating expectations by the most
9:00
Speaker 1: since then, do you agree that this sort of supports
9:03
Speaker 1: the narrative that Europe will perform the US at an
9:05
Speaker 1: economic basis on a relative basis, meaning they're going to
9:08
Speaker 1: grow a little faster on a quarter of a quarters
9:10
Speaker 1: quantial basis. Absolutely. The issue with Europe as a stock
9:14
Speaker 1: market is it's so little exposed to technology. The IFA
9:17
Speaker 1: index is only seven percent technology, and that includes Japan obviously,
9:20
Speaker 1: but developed non US US. Here we're tech between tech, Amazon, Google,
9:26
Speaker 1: and Facebook. So you really have to make a very
9:28
Speaker 1: big bet on financials, which is fine. European financial has
9:31
Speaker 1: done really well in the fourth quarter and should continue
9:33
Speaker 1: to do well as bodon rates continue to rise. So
9:36
Speaker 1: it's a good story. It's just not the same kind
9:38
Speaker 1: of story as the US market. I still like the
9:40
Speaker 1: US market better, but it's for that tech exposure. So
9:43
Speaker 1: typically after a very strong year like we had in
9:48
Speaker 1: in the SMP, what is your research show to what
9:51
Speaker 1: the markets tend to do in the year after. Well,
9:54
Speaker 1: here's the good news, let's star. The good news is.
9:59
Speaker 1: The good news is you don't see markets puke the
10:02
Speaker 1: next year. The market is pretty efficient and it tends
10:05
Speaker 1: to see through. The only time we had a really
10:07
Speaker 1: bad sequential year after a bat after a great year
10:11
Speaker 1: was thirty seven. Uh yeah, nineteen thirty seven market was
10:14
Speaker 1: down thirty eight percent thirty eight um and then but
10:19
Speaker 1: on average you do about ten percent. Is a short
10:21
Speaker 1: answer to your question. You know do as well as
10:23
Speaker 1: average because there is a little bit of pull forward,
10:26
Speaker 1: but you tend to have another good year. The problem
10:28
Speaker 1: is the wind rates not as good on average S
10:30
Speaker 1: ANDP win rate since night against these years, it's more
10:35
Speaker 1: like sixt so a little bit closer to a coin toss.
10:38
Speaker 1: We had tour sence lock On earlier from Deutsche Bank
10:41
Speaker 1: and he was talking about something that you mentioned, the
10:43
Speaker 1: FED support of markets, and talking about the correlation between
10:48
Speaker 1: the increase in the Fed's balance sheet and increases in
10:51
Speaker 1: the SMP five hundred. Granted it's not a long time
10:54
Speaker 1: time set. Do you, though, believe that the expansion of
10:58
Speaker 1: the balance sheet, call it whatever you will, perhaps don't
11:00
Speaker 1: use quantitivities because it is controversial. Do you think that
11:03
Speaker 1: that is supporting a rally much more than some people
11:06
Speaker 1: are allowing. I think it is absolutely helpful. It does
11:10
Speaker 1: show that the FED put and we all hate that phrase,
11:13
Speaker 1: but it's real. The FED put applies to a whole
11:16
Speaker 1: range of things, including things like the repo market, and
11:19
Speaker 1: they want to make sure that the system can use
11:20
Speaker 1: to work as it should. So I think it's a
11:23
Speaker 1: comforting notion. I don't know how much it directly affects
11:25
Speaker 1: stock prices, but let's put it this way. It helps
11:28
Speaker 1: more than it hurts. So again, are you in the
11:31
Speaker 1: camp that like I? This is where at least And
11:34
Speaker 1: I had a little bit bund of contention before the holidays.
11:36
Speaker 1: I said, if the data was to come in, you know,
11:40
Speaker 1: strong economic data, that is there a scenario where the
11:43
Speaker 1: FED could hike raise And she quote unquote rejected that.
11:46
Speaker 1: She rejected that assertion. Is there any scenario where in
11:49
Speaker 1: an election year the FED would even consider if the
11:52
Speaker 1: data lead them there to be raised rates? Absolutely? No.
11:55
Speaker 1: It doesn't feel like if I'll tell you why, we do.
11:57
Speaker 1: Every time we see a new set of dot plots
11:59
Speaker 1: from the FED would do a standard deviation of all
12:01
Speaker 1: them participants and look at how certain they are about
12:05
Speaker 1: their future expectations. The FED is more certain now, right
12:09
Speaker 1: now about than it has ever been since the dot
12:13
Speaker 1: plots started for a future year. They are signaling very
12:16
Speaker 1: strongly that they are not going to raise rates. It's
12:19
Speaker 1: really unusual. Standard deviation is like a third of what
12:22
Speaker 1: it usually is from an end of year forward year. Look,
12:25
Speaker 1: that sounds like a rejection. He didn't reject lightly helitely
12:30
Speaker 1: rejected your assertion. I I very impolitely rejected your just
12:33
Speaker 1: we just follow the numbers. Yeah, right, I just reject
12:36
Speaker 1: things out right. I do think when you say, Jay,
12:38
Speaker 1: don't touch that dial, the idea that they will be
12:40
Speaker 1: on hold at best, uh, you know, at worst, if
12:43
Speaker 1: things do deteriorate, they will cut rates and support the
12:47
Speaker 1: economic and asset price expansion. One thing I noticed is
12:50
Speaker 1: that you came in with a prop today. Yes, the
12:52
Speaker 1: prop has to do with the fact that a hundred
12:54
Speaker 1: years ago today was the liftoff point for radio as
12:58
Speaker 1: a medium. The first broadcast news was Warren Harding winning
13:03
Speaker 1: the nineteen twenty election, and it was really what spurred
13:05
Speaker 1: radio into popular use. You know, the at the being
13:09
Speaker 1: in eighteen twenties, one percent of the population I had
13:11
Speaker 1: a radio. By nineteen thirty, it was closer. He has this, uh,
13:16
Speaker 1: the wireless age issue from April nineteen twenty two, Uh,
13:21
Speaker 1: it's got wow. It was Amazon eBay five five bucks
13:27
Speaker 1: on eBay. Wireless Age was the hobbyist magazine of the
13:30
Speaker 1: radio age in the nineteen twenties. Uh, and it looks
13:33
Speaker 1: exactly like a computer nerd magazine from the nineteen eighties
13:36
Speaker 1: and nineties. It was really you know, the industry was
13:39
Speaker 1: built by enthusiasts and only slowly commercialized. It's funny. We're
13:42
Speaker 1: just talking to Justin Fox of Bloomer talking about the
13:44
Speaker 1: evolution of media, and primarily from a news perspective, about
13:48
Speaker 1: the obviously the decline in the local newspaper and local
13:50
Speaker 1: media and how that may be contributing to the polarization
13:54
Speaker 1: of the US and you know the left and the right,
13:56
Speaker 1: and how cable television and you know, talk shows and
13:59
Speaker 1: so on and so forth may have contributed to that.
14:02
Speaker 1: So it kind of brings into context the one hundred
14:04
Speaker 1: years of it and it all started with radio, and
14:07
Speaker 1: it all started with radio. And yes, and here we are,
14:09
Speaker 1: and here we are continuing to beat that drum exactly.
14:12
Speaker 1: Thank you so much for going with us. Nick Nichole's
14:15
Speaker 1: co founder Data Track Research, joining us here on our
14:17
Speaker 1: Bloomberg Interactive Broker Studio giving us lots of perspective on
14:21
Speaker 1: the markets coming from the disappointment extraordinary performance. The question
14:27
Speaker 1: is what does what do the markets hold in store
14:31
Speaker 1: for us? With a launch of Disney Plus in November
14:50
Speaker 1: of last year, many expect to be the year that
14:53
Speaker 1: the streaming wars really heat up. To get a sense
14:56
Speaker 1: kind of where we are here in the early days,
14:57
Speaker 1: we welcome Roman Crossing, He's said, of data analytics at
15:00
Speaker 1: Eagle Alpha, joins us on the phone from Dublin, Ireland. Ronan,
15:04
Speaker 1: thanks so much for joining us. It seems like, you know,
15:07
Speaker 1: as we entered twenty nineteen, it was all pretty much
15:09
Speaker 1: a Netflix story. But it's getting pretty competitive out there,
15:13
Speaker 1: isn't it. It is absolutely yeah, no, it is getting
15:16
Speaker 1: more competitive. But what we're actually seeing is that with
15:20
Speaker 1: the launch of Disney Plus, what we've actually seen is
15:22
Speaker 1: Disney Plus have grown the market um like we around
15:26
Speaker 1: the time of the Netflix they're disappointing Q two earnings
15:30
Speaker 1: last year, we started tracking Netflix using social media data,
15:34
Speaker 1: particularly from Twitter, and what we noticed was that Netflix
15:38
Speaker 1: was continuing to gain momentum and was continuing to get
15:40
Speaker 1: stronger and stronger. Then around the time of the Disney
15:43
Speaker 1: Plus launch, in November, we saw that actually that grew
15:47
Speaker 1: the market, and Netflix continued to grow as Disney Plus did,
15:51
Speaker 1: and so we're seeing, actually, it's it's not necessarily a
15:54
Speaker 1: zero sum game. The market continues to grow overall. All Right,
15:57
Speaker 1: This is a really interesting take because I think Netflix
16:00
Speaker 1: x is one of the most compelling companies to watch
16:02
Speaker 1: in because of Disney Plus, because of this consensus that
16:06
Speaker 1: there can only be so many streaming services. What do
16:09
Speaker 1: you think will drive their profitability the fact that they
16:12
Speaker 1: might not just burn through cash. Is it going to
16:14
Speaker 1: be uh, charging subscribers more, Is it going to be
16:18
Speaker 1: expanding their subscriber base, or is it going to be
16:20
Speaker 1: monetizing things like advertising or data streams? Well, I think
16:25
Speaker 1: it always comes back to the content, right, and the
16:27
Speaker 1: Netflix has consistently invested in their content, and we actually
16:30
Speaker 1: saw that as we track the conversation online, it's the
16:34
Speaker 1: top shows that are continuing to gain momentum. And actually,
16:38
Speaker 1: what we saw in twenty eighteen was that there was
16:41
Speaker 1: somewhat of a depth of news shows coming on that
16:44
Speaker 1: we weren't seeing the same appetite and enthusiasm on one
16:48
Speaker 1: on on online for those those shows at Netflix. But
16:50
Speaker 1: actually nineteen. It feels like they got it right, particularly
16:54
Speaker 1: towards the second half of the year, and so we
16:56
Speaker 1: think they did take the higher subscription um Earlier last year,
17:02
Speaker 1: they increased their subscription prices, and we think that that,
17:05
Speaker 1: combined with the weaker content of teen was probably what
17:08
Speaker 1: led to those leaker, weaker numbers in Q two. But
17:11
Speaker 1: actually the content has got much stronger and we think
17:14
Speaker 1: we can can absorb that pricing, and we we were
17:16
Speaker 1: seeing that in terms of the momentum coming out of
17:19
Speaker 1: the year. So running as you monitor and analyze social media,
17:24
Speaker 1: you know, commentary as it relates to some of these
17:26
Speaker 1: streaming companies, are you hearing anything about some of the
17:28
Speaker 1: others out there? What are you hearing about some of
17:30
Speaker 1: the others, whether it's a an existing streaming thing, a
17:33
Speaker 1: brand like Hulu or something new like the you know,
17:37
Speaker 1: HBO max is coming out, and then I think Comcast
17:39
Speaker 1: has uh coming out with Peacock. Are you are they
17:43
Speaker 1: registering at all on social media right now? Yeah, so
17:46
Speaker 1: so no, it's a it's a great question, Paul. So
17:48
Speaker 1: what we're seeing is not with Disney Plus was definitely
17:52
Speaker 1: a breakthrough compared to see Apple TV Plus and what
17:56
Speaker 1: we've seen is that, yes, Netflix has continued to perform well,
18:00
Speaker 1: but Disney Plus is really showing strong momentum and has
18:03
Speaker 1: gone straight in there at number two if you like,
18:06
Speaker 1: within the streaming streaming universe, whereas we see someone like
18:11
Speaker 1: Hulu and Roku are continuing continuing to to to tread
18:15
Speaker 1: at a similar level, whereas Apple TV plus come out
18:18
Speaker 1: and come in at a much lower level. So we
18:20
Speaker 1: see certainly we see Disney or Netflix at number one,
18:24
Speaker 1: but Disney Plus is doing really well and that continued
18:27
Speaker 1: into the holiday season. We're seeing the Mandalorian in particular
18:30
Speaker 1: has has proven to be particular, particularly popular. All the
18:34
Speaker 1: people say that the real game changer will be live
18:37
Speaker 1: sports and whether the cable networks will lose live sports
18:41
Speaker 1: streaming to some of these services. Do you foresee that
18:45
Speaker 1: being a significant game changer that potentially creates losers and
18:50
Speaker 1: winners the results in either insolvencies or mergers. Yes, So
18:55
Speaker 1: so as a firm, Eagle also we look right across
18:58
Speaker 1: the alternative data spectrum. So we've talked a lot about
19:01
Speaker 1: the Twitter social media analysis, but as a firm, we're
19:05
Speaker 1: looking at many more data sets out there, and I
19:07
Speaker 1: think they will be really crivotal in analyzing this trend,
19:10
Speaker 1: because you're absolutely right, this is a very fluid market
19:15
Speaker 1: and I think we're going to have to you know,
19:16
Speaker 1: we're gonna have to monitor that date over time. Live
19:19
Speaker 1: sports is absolutely a hot topic. We're seeing it in
19:23
Speaker 1: terms of online conversation and there's definitely the appetite for
19:27
Speaker 1: more live live sports via the streaming platforms, and I
19:32
Speaker 1: think that it's something we're gonna have to monitor very closely,
19:34
Speaker 1: and we will be monitoring very closely. Ronan, thank you
19:37
Speaker 1: so much for being with us. Ronan Crossing, the head
19:39
Speaker 1: of data analytics with Eagle Alpha, joining us on the
19:43
Speaker 1: phone from Dublin, Ireland, talking about what I think will
19:47
Speaker 1: be one of the most fascinating fields in which is
19:50
Speaker 1: the streaming Paul. I love it when we talk about
20:07
Speaker 1: cybersecurity because it's always some iteration of why we should
20:10
Speaker 1: all be really scared and we're about to deal with
20:12
Speaker 1: something really tragic and and regret regretful based on the
20:17
Speaker 1: excess of our data out there in the mainstream. Joining
20:19
Speaker 1: us now to talk about that. Steve Grogman, he's chief
20:21
Speaker 1: technology officer at McAfee, joining us on the phone from Dallas.
20:26
Speaker 1: I want to get your son, Steve. So when we
20:27
Speaker 1: talk about why we should get scared with respect to
20:29
Speaker 1: all of the cybersecurity threats, what are the main reasons
20:32
Speaker 1: that we should be nervous right now? Sure you bet.
20:36
Speaker 1: First off, Happy New year, Lisa and Paul, and you know,
20:38
Speaker 1: cybersecurity is really one of these areas that impacts consumers,
20:43
Speaker 1: It impacts business, it could even impact the upcoming election cycle,
20:47
Speaker 1: and maybe just to kick us off, if we look
20:49
Speaker 1: at it from a consumer standpoint, the thing that consumers
20:53
Speaker 1: really need to worry about is having their accounts and
20:56
Speaker 1: account data stolen. One of the things that we seen
21:00
Speaker 1: is over two billion dollars of consumer account information with
21:06
Speaker 1: up for sale on the black market. That's eventually going
21:10
Speaker 1: to be sold to individuals that will use it for
21:12
Speaker 1: identity theft or fraudulent purposes. What's really interesting for folks
21:17
Speaker 1: to be on the lookout now is how they can
21:20
Speaker 1: be targeted because it's not just through fitting emails. We
21:24
Speaker 1: now see things like phishing texts or even robo calls,
21:28
Speaker 1: and really having consumers understand that these are all things
21:31
Speaker 1: they need to be aware of. His key, So, Steve,
21:34
Speaker 1: give us a sense of where the regulatory environment is.
21:37
Speaker 1: It just seems like they're the regulations cannot whether it's
21:41
Speaker 1: you know, robo calls or whatever, cannot stay ahead of
21:44
Speaker 1: the technology. What do you think is the best way,
21:46
Speaker 1: assuming that you know, government regulation is not there to
21:49
Speaker 1: protect us per se, what do you suggest for your
21:53
Speaker 1: corporate clients that they do sure so, so, first off,
21:57
Speaker 1: there's actually been a lot of great progress s against
22:01
Speaker 1: robocalls in both on the regulatory and technology side. On
22:08
Speaker 1: the regulatory side, the carriers have now received higher levels
22:13
Speaker 1: of empowerment to go after and block some of these robocalls,
22:17
Speaker 1: so monitor them. When they detect patterns that look like
22:21
Speaker 1: it's not legitimate, they are now authorized to block them.
22:24
Speaker 1: There's also some new technology. It has kind of an
22:27
Speaker 1: interesting name. It's called Shaken and stir uh so either
22:32
Speaker 1: Martini or James Bond reference. But a Stir is for
22:36
Speaker 1: those business systems the void systems, and Shaken is for
22:39
Speaker 1: cell and landline. And what these technologies will do is
22:43
Speaker 1: it will make it so that when you get caller
22:46
Speaker 1: I D information, it will be authenticated such that it's
22:50
Speaker 1: going to be much harder to spoof. The challenges is
22:53
Speaker 1: that it's gonna take some time to implement these new
22:57
Speaker 1: technologies across the board and in the um consumers M
23:01
Speaker 1: businesses really need to have a very heightened state of
23:04
Speaker 1: alert anytime they get a text or a or a
23:07
Speaker 1: phone call because it's very likely not coming from the
23:11
Speaker 1: source that the caller I D says that it is.
23:13
Speaker 1: So how is McAfee seeing the business spending when it
23:17
Speaker 1: comes to cybersecurity? I mean, has it been steadily accelerating
23:21
Speaker 1: at an exponential speed or they bring it back and
23:24
Speaker 1: being more selective about how they invest. So what we've
23:28
Speaker 1: seen is businesses now recognize that they need to protect
23:32
Speaker 1: all of the technologies that they're using to run their
23:35
Speaker 1: business in and we'll see the trend continue in there's
23:40
Speaker 1: a significant movement and embracing of cloud technologies, and with
23:46
Speaker 1: that move of business to the cloud, we see cyber
23:49
Speaker 1: threats now starting to target the cloud environment. So one
23:53
Speaker 1: of the things that McAfee has done is we've extended
23:57
Speaker 1: our enterprise portfolio to include both traditional environments and cloud
24:02
Speaker 1: and where we see a lot of the business investment
24:05
Speaker 1: is making sure that as they moved to the cloud
24:08
Speaker 1: to run their business, that they can protect those environments
24:12
Speaker 1: as well as their traditional environments. Steve, give us a
24:15
Speaker 1: sense of how much of the cybercrime or cymber, you know,
24:20
Speaker 1: the issues that people are dealing with, the threats, are
24:23
Speaker 1: how much of that a state sponsored versus maybe individual
24:26
Speaker 1: or criminal. Do we have a sense of kind of
24:27
Speaker 1: that breakdown these days, So we don't have very specific
24:32
Speaker 1: quantitative breakdowns, but we do see some interesting patterns. For example,
24:37
Speaker 1: last year we saw a major ransomware campaign. It was
24:41
Speaker 1: called the Sodan the Kibi campaign, and what was interesting
24:45
Speaker 1: about this was it very specifically targeted North America and
24:51
Speaker 1: Western Europe. The way that it did that is part
24:54
Speaker 1: of the code looked at what was the local language
24:58
Speaker 1: that was installed on the computer it or that got infected,
25:02
Speaker 1: and if it was one of those languages from the
25:04
Speaker 1: former Soviet Union, it would basically not run. What that
25:08
Speaker 1: essentially did is even if individuals or businesses in certain
25:13
Speaker 1: parts of the world got targeted or or were exposed
25:17
Speaker 1: to this ransomware, it was essentially benign on their environment
25:22
Speaker 1: and only selectively impacted certain parts of the world. So
25:27
Speaker 1: whether that was a cyber crime organization that was focusing
25:31
Speaker 1: on areas that they won't be prosecuted or other reasons.
25:36
Speaker 1: You know, those are typically some of the reasons we
25:38
Speaker 1: see that that sort of behavior. Hey, Steve, thanks so
25:41
Speaker 1: much for joining us. We appreciate your thoughts. Steve Groban,
25:44
Speaker 1: chief technology officer for McAfee, joining us on the phone
25:47
Speaker 1: from Dallas, Texas. Thanks for listening to the Bloomberg P
25:50
Speaker 1: and L podcast. You can subscribe and listen to interviews
25:52
Speaker 1: at Apple Podcasts or whatever podcast platform you prefer. Paul Sweeney,
25:56
Speaker 1: I'm on Twitter at pt Sweeney. And Lisa bram Woids
25:59
Speaker 1: I'm on Twitter at Lisa Abramo. It's one before the podcast.
26:02
Speaker 1: You can always catch us worldwide on Bloomberg Radiom