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Berg Says Short Stock Rally May Be Followed by Long Bear Market · Bloomberg Intelligence

• 0:05
  Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm Pim Fox.
• 0:08
  Speaker 1: Along with my co host Lisa Abramowitz. Each day we
• 0:11
  Speaker 1: bring you the most important, noteworthy, and useful interviews for
• 0:15
  Speaker 1: you and your money, whether you're at the grocery store
• 0:17
  Speaker 1: or the trading floor. Find the Bloomberg p m L
• 0:20
  Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. So
• 0:32
  Speaker 1: we set the stage really for a world in which
• 0:35
  Speaker 1: investors are yield starved and they look to the stock
• 0:39
  Speaker 1: market and wonder how much further can the stock price rise?
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  Speaker 1: And here to help us understand all this is Milton Berg.
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  Speaker 1: He is the chief executive and the founder of Milton
• 0:48
  Speaker 1: Berg Advisors. Thank you very much for being here. Much
• 0:50
  Speaker 1: appreciate it. Um tell us your your thesis. I was
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  Speaker 1: reading some of your notes and I kept sort of
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  Speaker 1: shaking my head yes and saying, okay, yeah, you're sure,
• 0:59
  Speaker 1: you're Barre. That's got to be a tough position to
• 1:02
  Speaker 1: be in right now. How do you how do you
• 1:04
  Speaker 1: sort of explain that not only to your clients but
• 1:06
  Speaker 1: to yourself intellectually. The clients are doing very well, I
• 1:09
  Speaker 1: must say, we've been doing there's about three and a
• 1:11
  Speaker 1: f years, we're out form in the market by double
• 1:14
  Speaker 1: up fifteen percent peran versus seven percent for the market.
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  Speaker 1: So we're doing fine. Sam bearish, yes, and very long
• 1:19
  Speaker 1: to embarrash, but we're more trading oriented. We're more interested
• 1:23
  Speaker 1: in catching turning points. Our clients got long yesterday. For example,
• 1:27
  Speaker 1: we recommended going long yesterday for a very simple reason.
• 1:29
  Speaker 1: The sp declined all of two point nine percent. The
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  Speaker 1: VIC surged forty four point three seven percent in August tenth. Now,
• 1:36
  Speaker 1: we checked historically, when is the VIX ever surged by
• 1:38
  Speaker 1: forty percent on a single day and the nine that
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  Speaker 1: it hadn't only ten ten times in the past, and
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  Speaker 1: nine of the ten times the minimum market gains to
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  Speaker 1: the next top with seven percent only one case where
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  Speaker 1: the market continued lower two days later. It's more than
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  Speaker 1: two days later the market hasn't continued lower, which is
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  Speaker 1: suggestive that the ninety percent probabilities there. So we're looking
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  Speaker 1: for seven percent rally currently. So we were bearish, but
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  Speaker 1: we're bullish. Is okay? Um, My mind is sort of
• 2:02
  Speaker 1: blowing up a little bit. But I'm trying to understand
• 2:05
  Speaker 1: how you marry these two ideas because it actually makes
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  Speaker 1: perfect sense in a longer term perspective. You are not
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  Speaker 1: bullish necessarily on the prospect of economic growth accelerating and
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  Speaker 1: perhaps the debt overhang that we're accumulating due to quantitative easing.
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  Speaker 1: But there are opportunities day to day to get into
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  Speaker 1: the market. Is that what you're saying. We don't see
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  Speaker 1: that abolute day to day. The opportunity is generally uh
• 2:28
  Speaker 1: every quarter of a year, and or even in a
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  Speaker 1: beer market, a great beer market like tree or or
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  Speaker 1: a great beer market on a real terms nineteen sixty
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  Speaker 1: six did zero percent over the twenty nine year period.
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  Speaker 1: They're still opportunity to the market was down to be
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  Speaker 1: short and many counter trending realizes that where you can
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  Speaker 1: go along. So we're not looking for day to day trading.
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  Speaker 1: We were short for about a month and a half
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  Speaker 1: an hour, went long again yesterday. But when you say
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  Speaker 1: short and long, are you talking about the indexes? Are
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  Speaker 1: you talking about specific bonds? Uh? And how do you
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  Speaker 1: sort of gauge whether or not we're we could call
• 3:00
  Speaker 1: a macro shop. Basically, when we pick stocks, it's not
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  Speaker 1: because we like the stocks. We pick stocks as we
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  Speaker 1: like the market with short stock, not because we hate
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  Speaker 1: the stocks with short stocks as we hate the market.
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  Speaker 1: It's a totally different concept than what most people in
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  Speaker 1: this business do. So you can call the macro advisors
• 3:14
  Speaker 1: we like. We're more directional than anything else. I've worked
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  Speaker 1: with George Soros, he's also very directional type of fellow.
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  Speaker 1: Works stand Rock and will also very directional type of fellow,
• 3:22
  Speaker 1: which is what we do. Market is going gonna go up,
• 3:24
  Speaker 1: We're gonna find stocks to buy to participate marks going down.
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  Speaker 1: We're not gonna find stock is gonna do well against
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  Speaker 1: the market. We're gonna short stocks. So that's what we do.
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  Speaker 1: And currently yesterday we got long. We didn't have the
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  Speaker 1: confidence to pick stocks. We're only doing macro. We're going
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  Speaker 1: along with the queues, which is the one SP five,
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  Speaker 1: expecting a really to less maybe just a month or so,
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  Speaker 1: but probably a pretty strong rally. I wonder if you
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  Speaker 1: could just describe, based on your experience, which is extensive,
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  Speaker 1: what are some of the mistakes that people make when
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  Speaker 1: they think that they can trade momentum and follow the market.
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  Speaker 1: There's one mistake they're making right now, and everyone's making
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  Speaker 1: this mistake there looking at great the economy is worldwide
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  Speaker 1: and saying Wow, Now the time is being stocks. Forgetting
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  Speaker 1: that the time to get in stocks because now market
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  Speaker 1: is great with nine years ago when the bottom of
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  Speaker 1: the beer market, buy stock is sometime in the future.
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  Speaker 1: That kind of they're doing well. Once the economy is
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  Speaker 1: doing well, it's too late. You missed it. That's the
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  Speaker 1: basic basically mistake people and making. People can comprehend how
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  Speaker 1: could the market peak? Everything is doing so well, that's
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  Speaker 1: precisely when markets peak. Have you been building a lot
• 4:24
  Speaker 1: of cash to take advantage of a potential tip? My
• 4:28
  Speaker 1: clients are never in cash. My clients are either fully
• 4:30
  Speaker 1: either short or long, always trying to make money because
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  Speaker 1: my clients are basically the titans of the hedge fund industry.
• 4:35
  Speaker 1: We have some retail clients, we have some advisors that
• 4:38
  Speaker 1: manage their client's money. But my advice is never to
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  Speaker 1: be in cash. There to be long or short to market,
• 4:44
  Speaker 1: but individual investors should be in cash in my opinion.
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  Speaker 1: So what are the liquid securities of the liquid positions
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  Speaker 1: that you make sure to have to change positioning should
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  Speaker 1: you be wrong, Well, we just get out of whatever long,
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  Speaker 1: we get out of whatever short. We don't have any
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  Speaker 1: any qushion at a scale from once to ten. How
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  Speaker 1: how parish are you for long term? For long term? Ten?
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  Speaker 1: What's the long term for you? How long term thirty years?
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  Speaker 1: What about in the next thirty years, meaning because you know,
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  Speaker 1: with the price sales ratio levels never seen before in
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  Speaker 1: the sp five hundred, with the with no cheap groups
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  Speaker 1: of stocks, absolutely no cheap group of stocks, with the
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  Speaker 1: fact that I've mentioned we've seen long term bear marks
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  Speaker 1: in the past, but the fact that the bond market
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  Speaker 1: made it is yield low a year and a quarter ago. No,
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  Speaker 1: actually two thousand eleven, two thousand, January two thousand sixteen,
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  Speaker 1: and would July anyways, the bond markets thirty years two
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  Speaker 1: points eight percent and there's no reason to be bull
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  Speaker 1: showed a long term Miltonburg the bullish bear, the parish bull.
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  Speaker 1: I'm not sure, but it's fascinating and it shows sort
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  Speaker 1: of the conundrum of a market that is bound to
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  Speaker 1: go up in spurts in the short term, but not
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  Speaker 1: over the long term. Miltonburg, chief executive officer and founder
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  Speaker 1: of Miltenberg Advisors, LLLC, based in New York. All right,
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  Speaker 1: let's turn our attention now to the world of banking
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  Speaker 1: and bringing y'allman owner On. He is our senior writer
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  Speaker 1: for banking and finance for Bloomberg News. Great to have
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  Speaker 1: you with us here in the studio. Yamen. Your recent
• 6:20
  Speaker 1: story is that bank profits could increase twenty percent if
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  Speaker 1: there is any movement on deregulation or changes in financial rules.
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  Speaker 1: Explain how that would happen. Well, you know, um, of course,
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  Speaker 1: everybody's watching Congress and and Trump not really get along
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  Speaker 1: and not being able to do things. So one would think, well,
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  Speaker 1: then this can not happen either. But but this can
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  Speaker 1: because a lot of the changes that that I looked
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  Speaker 1: at and that we're actually detailed and highlighted in a
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  Speaker 1: Treasury report in June. UM. The Treasury report basically said, well,
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  Speaker 1: there would be great if we could actually change legislation
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  Speaker 1: through Congress, but that probably won't happen. So let's look
• 7:03
  Speaker 1: at the things we can do without changing regular legislation.
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  Speaker 1: So these are all rules that can be tweaked by
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  Speaker 1: regulators who are going to be appointed by Trump. He's
• 7:14
  Speaker 1: slowly making his appointments. He's done some SEC and c
• 7:18
  Speaker 1: FDC appointments. Um, there's you know, fed Wise chairman is
• 7:21
  Speaker 1: the name has been nominated hasn't been confirmed yet, but
• 7:24
  Speaker 1: as these appointments get in place and he replaces the
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  Speaker 1: leadership of the banking supervisory agencies, he can actually get
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  Speaker 1: these changes made. Well, let's talk. Let's talk about what
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  Speaker 1: these changes are, because they're actually, um, pretty fascinating and
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  Speaker 1: pretty wide ranging considering the fact that it won't take legislation.
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  Speaker 1: Can you walk us through. Yes. So, for example, one
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  Speaker 1: of them is changing how the supplementary leverage ratio, which
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  Speaker 1: is very crucial bossle three UM reform that came after
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  Speaker 1: the crisis UM that sort of make sure banks have
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  Speaker 1: some capital for older as it's regardless of risk UM
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  Speaker 1: and this includes even cash or government bonds US government
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  Speaker 1: bonds the safest things, but for flat capital required for
• 8:10
  Speaker 1: every asset. And this rule is just supposed to be
• 8:14
  Speaker 1: a backstop so that banks saying oh, we have no risk,
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  Speaker 1: we have no risk, end up having so little capital
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  Speaker 1: that they blow up. But so the rule change would
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  Speaker 1: be exempting treasuries and cash from the calculation of this
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  Speaker 1: leverage requirement. And then that means you can have more securities,
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  Speaker 1: more government bonds without having to worry about capital constraints.
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  Speaker 1: So they could level up their current capital and and
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  Speaker 1: buy more US treasuries. You know, this also brings in
• 8:44
  Speaker 1: the question what they end up doing with that extra money, right,
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  Speaker 1: I mean whether that goes to increased dividends for shareholders
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  Speaker 1: or stock buy backs and and that's going to happen too.
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  Speaker 1: And and you know buy backs have already buy backs
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  Speaker 1: and dividends have gone up pretty uh significantly this year. Um.
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  Speaker 1: You know that after the stress test that were just announced,
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  Speaker 1: the results were announced in June, Banks basically said they're
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  Speaker 1: gonna return of their profits to share holds in the
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  Speaker 1: coming four quarters. That's a lot, but that means they're
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  Speaker 1: not holding back anything to build capital. One reason that
• 9:17
  Speaker 1: has happened, of course, is capital has increased since the crisis.
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  Speaker 1: For many years, they couldn't return anything to shareholders. They
• 9:23
  Speaker 1: had to really retain all their profits to build capital.
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  Speaker 1: That here here has sort of ended, uh partly as
• 9:31
  Speaker 1: you know, they're accounting on the regulation. You know, I'm
• 9:34
  Speaker 1: struck by the concept of pushback, and there are some
• 9:38
  Speaker 1: officials who currently are pushing back, saying that perhaps we
• 9:42
  Speaker 1: shouldn't roll back regulations as aggressively as currently proposed. Among
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  Speaker 1: those who have raised that concern is a FED vice chair.
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  Speaker 1: Stanley Fisher, his board term runs FED chaired. Jenny Yellen
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  Speaker 1: is an ally of his. What does the fact that
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  Speaker 1: she very well may not be in office and Garry
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  Speaker 1: Cone very well maybe the next FED chair? What is
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  Speaker 1: that due to this whole calculus? Um? I mean there
• 10:08
  Speaker 1: are multiple elements of it. One is um, you know,
• 10:11
  Speaker 1: Trump can replace the leadership, so Yellen might not be there.
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  Speaker 1: But Yellen might not be there as as uh the
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  Speaker 1: head of the FED, but she can continue to serve
• 10:20
  Speaker 1: her term. Her term still has time to end as well.
• 10:23
  Speaker 1: Same with Stanley Fisher. His vice chairman position ends next year,
• 10:28
  Speaker 1: but he can stay on the board of the FED.
• 10:31
  Speaker 1: So and and the FED is not as um leader
• 10:35
  Speaker 1: driven as it used to be under Ellen Greenspan the maestro.
• 10:39
  Speaker 1: He basically made them do everything and everybody nodded. The
• 10:43
  Speaker 1: FED really now discusses and and and gets two decisions
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  Speaker 1: on these things. So if Yellen stays and and Stanley
• 10:50
  Speaker 1: Fisher stays and and you know, and there are enough
• 10:53
  Speaker 1: people who really will not just allowed the leadership to
• 10:58
  Speaker 1: to force through every we change, then it might not
• 11:02
  Speaker 1: be easy. But still the math is is tough. One
• 11:05
  Speaker 1: and you know one or two leaving is all you
• 11:08
  Speaker 1: need for Trump to sort of fill their spots with
• 11:11
  Speaker 1: people like minded and then all these things can go through. Y'allman, owner,
• 11:15
  Speaker 1: and thank you so much for joining us. It's really
• 11:17
  Speaker 1: an interesting story and sure to get the attention of
• 11:20
  Speaker 1: people who are investing in bank stocks, specifically with an
• 11:23
  Speaker 1: eye toward this potential boon. Y'allman owner and is a
• 11:26
  Speaker 1: senior banking and finance writer for Bloomberg. Speaking of fossil fuels,
• 11:43
  Speaker 1: there was another bit of news that caught our attention,
• 11:46
  Speaker 1: and it was talking about how a couple of different
• 11:48
  Speaker 1: coal companies approached the White House for assistance to stave
• 11:53
  Speaker 1: off their bankruptcies. And this was interesting because President Trump
• 11:57
  Speaker 1: has been really remarkably coal. I want to bring in Rebecca,
• 12:02
  Speaker 1: current energy policy reporter for Bloomberg NA located in Arlington, Virginia. Rebecca,
• 12:08
  Speaker 1: can you give us a sense of what these two companies,
• 12:11
  Speaker 1: Murray Energy and First Energy, we're looking for from the
• 12:15
  Speaker 1: White House and sort of the surprise that they did
• 12:17
  Speaker 1: not get it? Hi, thanks for having me. Yes, Murray
• 12:21
  Speaker 1: Energy Corp. And then uh First Energy Corp. Have reached
• 12:25
  Speaker 1: out to the Trump administration um multiple times. They say
• 12:30
  Speaker 1: in letters that were posted online yesterday, we we got
• 12:34
  Speaker 1: hold of saying they wanted a emergency order to be
• 12:39
  Speaker 1: issued by the Energy Department to allow them to basically
• 12:43
  Speaker 1: keep offering their plans and keep them running as a
• 12:47
  Speaker 1: way to prevent them from filing bankruptcy. But it's a
• 12:50
  Speaker 1: pretty rare instance for the Energy Department to grant these
• 12:55
  Speaker 1: emergency orders in the past, they've really only done them
• 12:58
  Speaker 1: for large hurricane events or other events that such as
• 13:04
  Speaker 1: like the two thousand California energy crisis, where there is
• 13:08
  Speaker 1: a real um need to keep plants running for electrical
• 13:12
  Speaker 1: liability of the grid. And it seems them those companies
• 13:15
  Speaker 1: that make the case um enough for for the grant
• 13:19
  Speaker 1: for that order to be granted. Can you explain, Rebecca,
• 13:22
  Speaker 1: how politics enters into this, Well, it is that's what's
• 13:26
  Speaker 1: so interesting. As you mentioned the Trump administration and President
• 13:30
  Speaker 1: on Trump himself has been really forthright about saying he
• 13:34
  Speaker 1: wants to keep the coal industry afloat. Apparently he mentioned
• 13:37
  Speaker 1: it in his rally last night about you know, getting
• 13:41
  Speaker 1: clean coal up and running, and we're seeing that's not
• 13:44
  Speaker 1: the case for the Kemper plant in the Southeast. They're
• 13:47
  Speaker 1: they're turning that into a gas plant. So it's a
• 13:50
  Speaker 1: disconnect between UM, this administration saying it it supports coal,
• 13:56
  Speaker 1: but then in reality, UM, there's not a lot they
• 13:59
  Speaker 1: can do. There's a lot of economic factors against the
• 14:03
  Speaker 1: coal industry right now. Well, even in this particular instance,
• 14:06
  Speaker 1: I'm kind of trying to wrap my head around what
• 14:09
  Speaker 1: an emergency stay would mean. What it just mean that
• 14:12
  Speaker 1: creditors couldn't repossess the plants and that they could keep operating,
• 14:16
  Speaker 1: or what it mean that the government would actually grant
• 14:18
  Speaker 1: these companies some kind of loan that on the cheap
• 14:22
  Speaker 1: that they could then repay when they're more financially stable. Well,
• 14:25
  Speaker 1: it's really it has to do a little more with
• 14:27
  Speaker 1: the grid and UM these regional transmission operators that decide
• 14:33
  Speaker 1: what plants go online to keep UM basically the grid
• 14:37
  Speaker 1: running reliably. So they want basically UH Energy Department to
• 14:42
  Speaker 1: issue issue this ordered basically directing these grid operators to
• 14:46
  Speaker 1: keep them, keep them alive or is an option for
• 14:50
  Speaker 1: grid reliability purposes, but it's not really used for our
• 14:54
  Speaker 1: financial UM purposes. I talked to a few Federal Energy
• 14:58
  Speaker 1: Regulatory Commission for attorney is who have worked on these
• 15:01
  Speaker 1: cases in the past. They say, this isn't a financial
• 15:05
  Speaker 1: um savior for these plans. That's not really what this
• 15:09
  Speaker 1: order has been used for in the past, and that's
• 15:11
  Speaker 1: likely why the Energy Department didn't grant it, because it's
• 15:15
  Speaker 1: really not handing money to these plants. It's really just
• 15:19
  Speaker 1: a reliability mechanism as a backup to keep the grid running.
• 15:24
  Speaker 1: It's it was kind of an odd pitch, but it
• 15:27
  Speaker 1: was seemed to be kind of a last last pitch
• 15:30
  Speaker 1: these companies are making to try to stay afloat. Yeah.
• 15:33
  Speaker 1: Rebecca Currn, thank you so much. It's interesting to see
• 15:36
  Speaker 1: the consequences of actual, real life implementation of policies versus
• 15:40
  Speaker 1: some of the rhetoric that we're hearing. Rebecca Currn is
• 15:42
  Speaker 1: energy policy reporter for Bloomberg, being a based in Arlington, Virginia.
• 15:47
  Speaker 1: I'm looking at Murray energy bonds maturing well. Today. W
• 16:03
  Speaker 1: p p p LC, which is the world's biggest advertising company,
• 16:07
  Speaker 1: reported disappointing earnings that sentence shares plummeting the most in
• 16:12
  Speaker 1: seventeen years. And among the list of various factors that
• 16:17
  Speaker 1: you can blame, perhaps why not play some blame on Amazon,
• 16:20
  Speaker 1: because that seems to be the culprit in a lot
• 16:22
  Speaker 1: of different earnings. Leila Aboud is a gadfly columnist here
• 16:26
  Speaker 1: at Bloomberg, and she wrote a terrific column talking about
• 16:29
  Speaker 1: the link between w PPS woes and the ascent of Amazon.
• 16:35
  Speaker 1: Leila joins us now, Leyla, can you give us a
• 16:37
  Speaker 1: sense of why Amazon has so specifically cannibalized w PPS
• 16:43
  Speaker 1: business model specifically? Well, I think the main thing to
• 16:47
  Speaker 1: understand is that the advertising agencies, Um, some of the
• 16:50
  Speaker 1: biggest advertising actual advertisers in the world are makers of
• 16:54
  Speaker 1: consumer and package good So the number one biggest advertiser
• 16:58
  Speaker 1: in the world is Proctoring Gamble, Number two as Unilever.
• 17:00
  Speaker 1: So companies like w PP, a lot of their business
• 17:03
  Speaker 1: and their effort and their their staffs time goes to
• 17:06
  Speaker 1: serve those customers, those customers Projecting, Gambill, Unilever, Nestley, you
• 17:10
  Speaker 1: name it. They're being disrupted by Amazon because it's Amazon
• 17:13
  Speaker 1: is now kind of one of the biggest most powerful
• 17:16
  Speaker 1: actors in retail today. UM, And I kind of use
• 17:19
  Speaker 1: in in my piece today is sort of this the
• 17:21
  Speaker 1: example of the of the Whole Foods deal, which is
• 17:24
  Speaker 1: kind of kind of I think can end up being
• 17:26
  Speaker 1: seen as a real seminal moment in the development of
• 17:28
  Speaker 1: e commerce in the US. It and it's kind of
• 17:31
  Speaker 1: even though that deal is not going to change um,
• 17:34
  Speaker 1: the advertising business or their clients business overnight, it's a
• 17:38
  Speaker 1: real kind of um symbolic saying for these businesses. Uh,
• 17:42
  Speaker 1: and everybody's worried about it. So um, you know, when
• 17:45
  Speaker 1: you're an advertising agency like WPPS, is are the biggest
• 17:47
  Speaker 1: one in the world. Uh, they have to worry about
• 17:49
  Speaker 1: whatever their clients are worrying about, and their clients are
• 17:51
  Speaker 1: worrying about Amazon. Does the scale that that WPP has,
• 17:56
  Speaker 1: as well as some of the other advertising companies that
• 17:58
  Speaker 1: you've written about in your peace, whether it's Omnicom or
• 18:01
  Speaker 1: Publicists or into public does the scale of these companies
• 18:05
  Speaker 1: work against them? Now? I think that's a really good
• 18:07
  Speaker 1: question and one that somebody like Sorrel will get really
• 18:09
  Speaker 1: irritated if you ask him, because I know I've done
• 18:12
  Speaker 1: it before. Um, basically you have to so so these
• 18:15
  Speaker 1: big holding companies, Uh, we're basically kind of built up
• 18:18
  Speaker 1: in the seventies eighties. Um. You know, Sorrel building up
• 18:23
  Speaker 1: WP was really emblematic, uh person in this regard and
• 18:27
  Speaker 1: moist they viewed the same thing at t VCS and
• 18:29
  Speaker 1: the game was roll up all these different agencies and
• 18:32
  Speaker 1: different geographies. You could have a global presence to serve these, um,
• 18:36
  Speaker 1: you know, big brands that were growing bigger and bigger.
• 18:38
  Speaker 1: I think what's interesting now is that with the rise
• 18:40
  Speaker 1: of online marketing and you know, Facebook and Google and
• 18:43
  Speaker 1: Amazon and kind of just the way that shopping and
• 18:45
  Speaker 1: media are changing, um, the value of scale, uh, may
• 18:49
  Speaker 1: not be as big as it was for these advertising agencies.
• 18:52
  Speaker 1: So you know, you have these big holding companies that
• 18:54
  Speaker 1: were built for a different era, and I think if
• 18:56
  Speaker 1: you were designing an advertising agency today, um, you probably
• 18:59
  Speaker 1: wouldn't something that looked like you wouldn't create something that
• 19:02
  Speaker 1: that looks like w p P to be honest. Yeah, Well,
• 19:05
  Speaker 1: Leyla Pi and I were talking ahead of this segment
• 19:07
  Speaker 1: about the idea of famous people or you know, well
• 19:11
  Speaker 1: known personalities just hashtagging something in their Twitter feed or
• 19:16
  Speaker 1: Instagram feed, and that that can be more effective and
• 19:20
  Speaker 1: more visible advertising for some of these companies then say
• 19:25
  Speaker 1: a thirty second spot on television and so you know,
• 19:29
  Speaker 1: w PPS CEO Martin Sorel, did he talk at all
• 19:33
  Speaker 1: about the move forward and adopting some of these more
• 19:37
  Speaker 1: modern techniques of getting the word out. Yeah, you know,
• 19:39
  Speaker 1: they actually do a lot of this stuff. To be fair,
• 19:41
  Speaker 1: I mean everyone's having the market is having a collective
• 19:43
  Speaker 1: freak out about w PP today. I actually think it's
• 19:45
  Speaker 1: a little bit overdone. If you follow advertising, UM, you
• 19:49
  Speaker 1: kind of know that all these holding companies WPP especially
• 19:53
  Speaker 1: because they're actually quite good UM at doing M and
• 19:55
  Speaker 1: A to to bring in new innovation and new technologies.
• 19:58
  Speaker 1: They understand what's going on so more than anyone UM.
• 20:01
  Speaker 1: And what they're doing is basically they're they're trying to
• 20:03
  Speaker 1: kind of spread out UM and so they have WC
• 20:06
  Speaker 1: has a very big bet on market research and data
• 20:08
  Speaker 1: and kind of data mining. They have another part of
• 20:11
  Speaker 1: their businesses is called Cantar, which advises brands on kind
• 20:14
  Speaker 1: of defect its effectiveness of their brand. So like you know,
• 20:17
  Speaker 1: is how is Tied doing among millennials, will go out
• 20:19
  Speaker 1: and study that so they know, and they even have
• 20:22
  Speaker 1: bits to do social marketing, social media marketing, so like
• 20:25
  Speaker 1: Instagram in filters, they do all this stuff. The problem
• 20:27
  Speaker 1: is that kind of as an investor, you buy into
• 20:29
  Speaker 1: w p P, which is kind of massive entity at
• 20:31
  Speaker 1: the top that does a bunch of this stuff. But
• 20:34
  Speaker 1: you know, the bottom line is if the growth is
• 20:36
  Speaker 1: going to be at um you know, revenue growth is
• 20:39
  Speaker 1: going to be at two three organic per year now
• 20:43
  Speaker 1: going forward, whereas in the past was more like five
• 20:45
  Speaker 1: to four percent. So that holding company level, if you're
• 20:47
  Speaker 1: an investor, all you really you're really just focused on that,
• 20:50
  Speaker 1: you know. Um, So the holding companies actually make things
• 20:53
  Speaker 1: probably look worse than than what's actually happening in the
• 20:56
  Speaker 1: individual agencies, whereas a lot of savvy, like you said,
• 20:58
  Speaker 1: least of kind of in in Instagram marketing and in
• 21:01
  Speaker 1: snapchat and all this stuff. Well, Leila, I'm just wondering,
• 21:04
  Speaker 1: what do you need a big advertising company for. If
• 21:08
  Speaker 1: you can go on Instagram, let's say you are I mean,
• 21:10
  Speaker 1: this is the news this week that you're the wife
• 21:13
  Speaker 1: of the Treasury secretary and you're able to hashtag all
• 21:17
  Speaker 1: of the brands that you're wearing or carrying. That doesn't
• 21:21
  Speaker 1: cost a lot of money. And now that there's a
• 21:23
  Speaker 1: six second YouTube bad So I mean, are they really
• 21:26
  Speaker 1: with it or they just say that they're with it?
• 21:28
  Speaker 1: I think slipped around. So so if you look at
• 21:30
  Speaker 1: it from the point of view of the influencer who's
• 21:32
  Speaker 1: just putting stuff on hashtags on on Instagram. Yeah, that's
• 21:35
  Speaker 1: really easy. But if I'm propter and gamble um and
• 21:38
  Speaker 1: I have the Pampers brand, so so diapers, how do
• 21:41
  Speaker 1: I make sure that people are still buying diapers? Right?
• 21:43
  Speaker 1: I have sort of I will spend money um for marketing,
• 21:47
  Speaker 1: which is like trying to spur online sales, search results, couponing,
• 21:51
  Speaker 1: loyalty programs, all this stuff. And then I will also
• 21:54
  Speaker 1: spend money on brand building, which is TV ads kind
• 21:57
  Speaker 1: of trying to make sure that people have good feelings
• 21:59
  Speaker 1: about Pampers. The addinggies were always built to do those
• 22:02
  Speaker 1: two functions totally separately, marketing versus brand building. Troubles the
• 22:06
  Speaker 1: Internet mixes all this stuff together, right, So so these
• 22:09
  Speaker 1: old categories of kind of am I doing marketing or whatever,
• 22:12
  Speaker 1: it's it's totally irrelevant, right. But P and G still
• 22:14
  Speaker 1: has one big aim, which is create brands that people
• 22:17
  Speaker 1: are going to want to buy the products of, and
• 22:19
  Speaker 1: they will use Instagram and stuff like that. But I
• 22:21
  Speaker 1: don't really know that we have the answer yet whether
• 22:23
  Speaker 1: social media networks can really build brands in the long term.
• 22:26
  Speaker 1: It's not very as mass market as you think it is. Well,
• 22:28
  Speaker 1: I want to thank you very much for enlightening us.
• 22:31
  Speaker 1: Laila A. Boot is our columnist, our gad flight columnists
• 22:34
  Speaker 1: covering European technology, media and telecoms, joining us from Paris
• 22:38
  Speaker 1: and you can follow her on Twitter at l A. B.
• 22:42
  Speaker 1: Bootles bo U d l b S. Thanks for listening
• 22:47
  Speaker 1: to the Bloomberg P and L podcast. You can subscribe
• 22:50
  Speaker 1: and listen to interviews at Apple Podcasts, SoundCloud, or whatever
• 22:54
  Speaker 1: podcast platform you prefer. I'm pim Fox. I'm on Twitter
• 22:58
  Speaker 1: at pim Fox. I'm on Twitter at Lisa Abramo. It's
• 23:01
  Speaker 1: one before the podcast. You can always catch us worldwide
• 23:04
  Speaker 1: on Bloomberg Radio