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Lyft Reports Earnings, Looking Ahead To Uber · Bloomberg Intelligence

• 0:00
  Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
• 0:04
  Speaker 1: my co host Matt Miller. Every business day we bring
• 0:06
  Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
• 0:11
  Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
• 0:15
  Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
• 0:18
  Speaker 1: at Bloomberg dot com slash podcast. We had Lift earnings
• 0:22
  Speaker 1: last night, UM which had guidance that was subdued, UM
• 0:29
  Speaker 1: eclipsing the first ever profit, sort of milestone, and now
• 0:33
  Speaker 1: we have and the shares are down significantly, and now
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  Speaker 1: we have Uber coming out after the bell tonight. So
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  Speaker 1: let's bring in man deep seeing senior tech industry analysts
• 0:41
  Speaker 1: for Bloomberg Intelligence, to talk about, you know, what we
• 0:44
  Speaker 1: saw yesterday and what we expect tonight. I know that
• 0:49
  Speaker 1: Lift had its first profit and it's popular maybe amongst
• 0:54
  Speaker 1: the kids. For me, I'm doing like eighty dollars and
• 0:57
  Speaker 1: Uber rides a day here and I feel like they
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  Speaker 1: better knock it out of the park tonight. Well, so
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  Speaker 1: the good thing about you know, this space is at
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  Speaker 1: least they're just two competitors. It's a duopoly Uber and Lift.
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  Speaker 1: You contrast that with food delivery where you've got you know,
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  Speaker 1: five or six vendors trying to compete, uh for I
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  Speaker 1: would say a pretty small market at this point of time.
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  Speaker 1: So the print we saw it Lift had, you know,
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  Speaker 1: it was a mixed bag in the sense that the
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  Speaker 1: bright spot was profitability, as we alluded to. But I
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  Speaker 1: think the whole pricing aspect of it is kind of
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  Speaker 1: worrisome because at the end of the day, how much
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  Speaker 1: can you pass on to the customers and then it
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  Speaker 1: starts to weigh on the volume growth, so especially LIFT customers.
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  Speaker 1: Isn't Lift kind of a discount Uber? Isn't that the idea? No?
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  Speaker 1: I I think these companies have sort of rationalized the
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  Speaker 1: pricing so they're not trying to compete on prices or
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  Speaker 1: undercut each other. It's and and that's why I mentioned
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  Speaker 1: about a police So the good thing is you can
• 2:02
  Speaker 1: have you know, two competitors, one with sixty percent share,
• 2:06
  Speaker 1: the other one with and still both can do well.
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  Speaker 1: But to your point about the food delivery space being
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  Speaker 1: more crowded, Uber's in that too. It has Uber Eats,
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  Speaker 1: and I wonder, you know if Lift it's kind of
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  Speaker 1: like correlated with the reopening in a positive way, and
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  Speaker 1: right demand going up, is that going to be bad
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  Speaker 1: for Uber because Uber eats demand maybe going down? Yes,
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  Speaker 1: Uber definitely has a tougher comp when it comes to
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  Speaker 1: food delivery, and you're not gonna see that sort of
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  Speaker 1: growth which we saw during the pandemic. So if will
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  Speaker 1: offset there, you know the pickup in ride sharing, and
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  Speaker 1: that's why they are now kind of doubling down in
• 2:40
  Speaker 1: the freight space with this recent acquisition of Transplace. So
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  Speaker 1: in my mind, Uber wants to be that diversified player,
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  Speaker 1: the scale player. But there aren't many revenue synergies between
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  Speaker 1: these businesses, Like their synergy between ride sharing and food
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  Speaker 1: delivery is minimal. Like these are both commodity services. You know,
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  Speaker 1: user still gravitate towards the Lewis price options. So I
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  Speaker 1: just feel Uber has a tougher kind of task in
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  Speaker 1: terms of convincing investors that yes, the three businesses make
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  Speaker 1: sense under one umbrella, and you know there will be
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  Speaker 1: more profitable as a result of that. But we'll see.
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  Speaker 1: What is who takes lift rather than Uber? I take
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  Speaker 1: it because my credit card gives me ten times points
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  Speaker 1: on Lift. But that's basically my only rational Is there
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  Speaker 1: a lift black. Can you are you going to be
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  Speaker 1: able to get into an escalate or whatever with the
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  Speaker 1: lift or is lift because I've always thought lit was
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  Speaker 1: just like some dude's regular car, so I'm gonna go
• 3:37
  Speaker 1: out and get in somebody's Corolla. Rather, they have tiered pricing,
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  Speaker 1: they have tiered service levels, and uh, that's the business models.
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  Speaker 1: So they want, you know, users who are not that
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  Speaker 1: price sensitive to pay up and for the service, and
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  Speaker 1: so they are launching and that there's not a huge
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  Speaker 1: differentiation to Uber when it comes to the actual core business. Yeah,
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  Speaker 1: I mean they are both copying each other. Anytime one
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  Speaker 1: comes up with a better feature of the other ones copies.
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  Speaker 1: But again, the point is they're just two. In food,
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  Speaker 1: you've gotten five or six vendors all doing the same least.
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  Speaker 1: We have five or six in Berlin, you know, and
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  Speaker 1: more specifically for pizza, I think it's called slice, Yes
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  Speaker 1: it is. We also have a ton of different grocery services.
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  Speaker 1: I don't know if you had this in New York,
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  Speaker 1: but I can order groceries pretty much anything you would
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  Speaker 1: get at the grocery store and have it at my
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  Speaker 1: door in ten minutes time. I mean, they are super fast,
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  Speaker 1: that New York is probably too trafficky for that. You
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  Speaker 1: can do it in two hours, I know with Amazon
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  Speaker 1: and Holdings, but yeah, I mean, it takes just kind
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  Speaker 1: of a long time to get anywhere in Manhattan and
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  Speaker 1: Manhattan at least, um I want to pivot from talking
• 4:42
  Speaker 1: about groceries and food delivery to just talking about workers
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  Speaker 1: and finding drivers. It's incredibly difficult for these companies right now.
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  Speaker 1: How much of a headwind does that create for Uber
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  Speaker 1: and Lift going forward? Yeah, so Lift mentioned last night
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  Speaker 1: they spent about you know, five million on driver incentives,
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  Speaker 1: and that was a contra revenue to their top line.
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  Speaker 1: I guess at the end of the day, they're all
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  Speaker 1: competing for that same worker pool, so they have to
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  Speaker 1: you know, shell out the incentives because these are not employees.
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  Speaker 1: And I think right sharing is still a better business
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  Speaker 1: from a driver's perspective. In the case of food delivery,
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  Speaker 1: you're getting paid lore compared to you know, the right sharing.
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  Speaker 1: So from a worker perspective, I think right sharing is cleaner.
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  Speaker 1: But you put more on the line, don't you, because
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  Speaker 1: you have to actually lease a car. And I remember
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  Speaker 1: when Uber first started, the company was only taking ten
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  Speaker 1: to fifteen percent of the fair. And then you know,
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  Speaker 1: after you've got your GMC yukon denally XL and we're
• 5:48
  Speaker 1: paying a thousand dollar least, all of a sudden the
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  Speaker 1: company said, hey, we're gonna take of your fair and
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  Speaker 1: it seemed incredibly unfair to me and I wouldn't as
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  Speaker 1: a driver, want to be put in that position. After
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  Speaker 1: I signed a lease, all of a sudden you tell
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  Speaker 1: me I'm gonna make less and less money. Yeah, so
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  Speaker 1: I think you're right. They can't raise the take rates
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  Speaker 1: and you will see a pushback. And there is that
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  Speaker 1: regulatory aspect that obviously it's always a wild card, you know,
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  Speaker 1: where you could see more regulation. But at the end
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  Speaker 1: of the day, they have pulled capacity and they have
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  Speaker 1: the demand and that is the value out of a marketplace.
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  Speaker 1: So you know the fact that there are just two
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  Speaker 1: marketplaces is good for right sharing as an industry. And
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  Speaker 1: if you've said two things in the past, like minute one,
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  Speaker 1: regulation and two, these aren't employees that we're talking about.
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  Speaker 1: This is the gig autonomy. But that's creating some problems
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  Speaker 1: for uber and lift as well. How how great is
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  Speaker 1: the regulatory risk on that front? That's a big risk.
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  Speaker 1: I mean with these companies, the fact that they weren't
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  Speaker 1: profitable at least now they're showing profitability. And the cost
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  Speaker 1: side is always kind of in focus because of the
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  Speaker 1: high variable costs in this business. So anytime you have
• 6:56
  Speaker 1: the prospect of more regulation, it will increase costs and
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  Speaker 1: that is not good for you know, sustaining the profitability.
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  Speaker 1: So clearly it is a big threat. But at least,
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  Speaker 1: you know, as long as they can maintain the top
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  Speaker 1: line growth and with you know, economies opening up, demand
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  Speaker 1: coming back, I think they should be good at least
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  Speaker 1: for the next one or two years. No one knows
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  Speaker 1: the kind of the growth rate three or four years
• 7:20
  Speaker 1: down the line. I think the business models will evolve.
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  Speaker 1: I noticed the other day I wrote down I took
• 7:25
  Speaker 1: the subway down to Grand Central station as I was
• 7:28
  Speaker 1: heading out to Bronxfie to look at houses, and it
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  Speaker 1: was empty. There was almost nobody on the subway. It
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  Speaker 1: was unbelievable. On the four or five six here usually
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  Speaker 1: it's packed. Yes, so they have taken share from a
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  Speaker 1: lot of the public transportation, and the use cases for
• 7:42
  Speaker 1: these companies keep evolving. I mean, the whole aspect of
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  Speaker 1: right sharing, like there isn't any sharing right now. Hopefully
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  Speaker 1: at at some point it will come back. But you know,
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  Speaker 1: these companies have evolved, and I think the use cases
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  Speaker 1: will emerge and that should help you know, at these uh,
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  Speaker 1: these companies to maintain relevance. All right. Our producer Charlie
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  Speaker 1: Bulmer writs in that his seven train this week was
• 8:06
  Speaker 1: more packed than it's ever been, So maybe I was
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  Speaker 1: just very off peak as I headed down to Grand Central.
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  Speaker 1: Man Deep, thanks very much for joining us. Man Deep Sing,
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  Speaker 1: senior tech industry analyst at Bloomberg Intelligence, talking to us
• 8:18
  Speaker 1: about Uber out after the bell. This is Bloomberg. I
• 8:26
  Speaker 1: am just looking forward to what we got going on
• 8:28
  Speaker 1: today and we have a lot. Let's bring in Jennifer
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  Speaker 1: Epstein right now, political reporter from Bloomberg News. We've got
• 8:33
  Speaker 1: her on the line from Washington, d C. To talk. Well,
• 8:36
  Speaker 1: there's a lot of talk about, but I guess Jennifer.
• 8:39
  Speaker 1: The first issue is the Biden administration. The c d
• 8:43
  Speaker 1: C eviction moratorium. It looked like it was over, and
• 8:47
  Speaker 1: now it looks like they're extending it until October thirteenth.
• 8:50
  Speaker 1: Although the President himself said there's not really very strong
• 8:53
  Speaker 1: constitutional grounds for this Yeah, it's actually October three or
• 8:58
  Speaker 1: two months from yesterday, UM, when the CDC Director um
• 9:02
  Speaker 1: signed this order, and it's trying to be a bit
• 9:05
  Speaker 1: more narrow and really focused on the rise of the
• 9:09
  Speaker 1: delta variant, and what the CDC Director says is the
• 9:13
  Speaker 1: public health threat that comes with people potentially being evicted
• 9:17
  Speaker 1: from their homes and then you know, ending up in
• 9:20
  Speaker 1: shelters or on the streets, um, where there could potentially
• 9:23
  Speaker 1: be more spread of the virus and you might see
• 9:27
  Speaker 1: in if people were living in their own homes. But
• 9:31
  Speaker 1: why do they care enough today and not like Saturday? Like,
• 9:34
  Speaker 1: why not deal with this before? Yeah, well, it certainly
• 9:38
  Speaker 1: seems like this did come up as a bit of
• 9:40
  Speaker 1: a surprise for the administration. As much as they had
• 9:43
  Speaker 1: known the deadline was coming, they were also very focused
• 9:46
  Speaker 1: on on the infrastructure bill, and you know, it's really
• 9:50
  Speaker 1: they seem to have also been caught a bit by
• 9:52
  Speaker 1: surprise by the very rapid spread of the delta variant
• 9:56
  Speaker 1: and all of that sort of created this pressure. And
• 9:59
  Speaker 1: then at the same time time you had these uh
• 10:01
  Speaker 1: small group of House Democrats really backed by the entirety
• 10:06
  Speaker 1: of the House Democratic Caucus saying uh in the last
• 10:10
  Speaker 1: few days at the end of last week. This is
• 10:12
  Speaker 1: something that has to be done. You have to help
• 10:14
  Speaker 1: these people out, um, you know. And so the administration
• 10:18
  Speaker 1: found a way to do it. It just took them
• 10:21
  Speaker 1: a bit longer than I think that advocates and and
• 10:24
  Speaker 1: other outside people would have liked to have seen. And
• 10:27
  Speaker 1: it may not be constitutional. I mean, we can always
• 10:29
  Speaker 1: find way to do things. If it's not constitutional. It's
• 10:32
  Speaker 1: just really not helpful, is it. Yeah. Well, the President
• 10:36
  Speaker 1: I think is somebody who was very cautious about those things.
• 10:39
  Speaker 1: And that's sort of why he was reluctant to just
• 10:43
  Speaker 1: go out and announce an extension last week. Uh and
• 10:47
  Speaker 1: kind of back in the Supreme Court, uh to it,
• 10:50
  Speaker 1: you know. And and he he doesn't, you know, always
• 10:53
  Speaker 1: have the best filter for things, and so he kind
• 10:56
  Speaker 1: of said that yesterday that this is something that might
• 10:59
  Speaker 1: not pass muster in the courts, but it's something that
• 11:02
  Speaker 1: the administration kind of had no choice politically but to
• 11:06
  Speaker 1: try out. At the very least, they've bought a little
• 11:10
  Speaker 1: bit of time, a couple of days, a couple of
• 11:12
  Speaker 1: weeks while this works its way uh in court. And
• 11:16
  Speaker 1: and and the other issue here is really that the
• 11:18
  Speaker 1: Treasury Department's efforts to get out over forty billion dollars
• 11:24
  Speaker 1: in rental aid have been uh pretty slow so far
• 11:28
  Speaker 1: because it's something where treasurism worth working with state and
• 11:31
  Speaker 1: local governments, and that has all just taken a lot
• 11:33
  Speaker 1: of time to get up and running. This money from
• 11:36
  Speaker 1: the Recovery Act that passed in March, and they were
• 11:38
  Speaker 1: only able to get one point five billion of that
• 11:40
  Speaker 1: out uh two renters in the month of June. So
• 11:44
  Speaker 1: you know, they're hoping that that rationale that that's taken
• 11:47
  Speaker 1: so long, which is something uh that Justice Kavanaugh did
• 11:51
  Speaker 1: mention when he was part of uh uh the Supreme
• 11:57
  Speaker 1: Court uh weighing in on this. He was not actually
• 12:01
  Speaker 1: a part of the the um major the majority ruling
• 12:06
  Speaker 1: on this, but uh that that is something that that
• 12:10
  Speaker 1: they are hoping that that maybe they can kind of
• 12:12
  Speaker 1: thread the legal legal argument there and have that uh
• 12:16
  Speaker 1: way of getting ahead of so speaking of legal arguments
• 12:19
  Speaker 1: and what a president does or does not have power
• 12:22
  Speaker 1: to do, obviously, at the end of the day, this
• 12:23
  Speaker 1: issue comes back to the pandemic. That is why there
• 12:26
  Speaker 1: are millions of people facing the potential loss of their home.
• 12:30
  Speaker 1: Is there anything else that President Biden has it in
• 12:32
  Speaker 1: his power to do. In terms of the vaccination front, Yes,
• 12:36
  Speaker 1: he's finally mandated that that federal workers need to get
• 12:39
  Speaker 1: vaccinated or be tested all the time. But is there
• 12:43
  Speaker 1: anything else? Yeah, I think the administration is continuing to
• 12:46
  Speaker 1: look for more things to do. Um. They're looking for
• 12:50
  Speaker 1: other areas of the federal government besides sort of the
• 12:54
  Speaker 1: executive branch employees um who are covered by by the
• 12:58
  Speaker 1: order last week, to uh, potentially more public health kind
• 13:03
  Speaker 1: of workers who are not necessarily a part of that
• 13:06
  Speaker 1: initial order. I think the administration is also uh just
• 13:12
  Speaker 1: looking at at the the approval process for the vaccines.
• 13:17
  Speaker 1: You know, it seems like, uh we saw Dr Fauci
• 13:20
  Speaker 1: last night saying that could be just two weeks away
• 13:23
  Speaker 1: from fives or getting final approval um with with the
• 13:27
  Speaker 1: sd A. And that's something where um, the administrative the
• 13:31
  Speaker 1: White House is going to stay out of that because
• 13:33
  Speaker 1: they don't want there to be any appearance of of
• 13:36
  Speaker 1: political pressure on these public health agencies. UM. But that itself,
• 13:42
  Speaker 1: I think would would be a pretty significant move forward
• 13:45
  Speaker 1: because there are lots of people at least right now
• 13:47
  Speaker 1: who are saying, I don't want to do anything until
• 13:50
  Speaker 1: that A fully approves it, so that in of itself
• 13:53
  Speaker 1: could be a pretty big um move forward. And then UM,
• 13:57
  Speaker 1: you know, I think I think the administration is just
• 13:58
  Speaker 1: gonna kind of the for any little uh, you know,
• 14:02
  Speaker 1: pocket of people it can get to, uh to try
• 14:05
  Speaker 1: to to try to get more people back to native Jennifer,
• 14:08
  Speaker 1: thanks for spending some time with us. Jennifer Epstein is
• 14:10
  Speaker 1: Bloomberg News political reporter coming to us out of Washington,
• 14:14
  Speaker 1: d C. Now, there has been a ton of M
• 14:18
  Speaker 1: and A activity today alone. Um, we saw a big
• 14:23
  Speaker 1: uh deal in the telecom space with Apollo. We saw
• 14:28
  Speaker 1: UM a big deal in soccer La Liga. Ten percent
• 14:32
  Speaker 1: of that I went to CVC. Um we saw a
• 14:35
  Speaker 1: huge like a seventeen billion dollar deal. What was that?
• 14:41
  Speaker 1: We saw um VC no VC properties buying MGM Growth
• 14:46
  Speaker 1: Properties seventeen point two billion dollars. And but you were
• 14:49
  Speaker 1: pointing out Square and after pay started the week off
• 14:51
  Speaker 1: with a bang on Monday, the biggest acquisition ever for
• 14:54
  Speaker 1: an Australian company twenty nine billion dollars. And I think
• 14:57
  Speaker 1: since the beginning of July you said more than like
• 14:59
  Speaker 1: five billion, fifty billion dollars and deals have been done,
• 15:03
  Speaker 1: so it's a great time to bring in uh Thad Malik.
• 15:07
  Speaker 1: He is the chair of Global Mergers and Acquisitions, the
• 15:10
  Speaker 1: practice Global Mergence Acquisition Practice at Paul Hastings and he
• 15:14
  Speaker 1: can talk to us about you know, this this incredible
• 15:16
  Speaker 1: growth that thanks for joining us. Um Is this peaking now?
• 15:21
  Speaker 1: Is this going to slow down? Or are we just
• 15:22
  Speaker 1: gonna look at you know, record M and A activity
• 15:25
  Speaker 1: this year? Yeah? Thanks Matt and Kaylee. Nice to be here.
• 15:28
  Speaker 1: Appreciate the opportunity right now. It's interesting, you've got pretty
• 15:32
  Speaker 1: much the perfect confluence of events for continued activity. You
• 15:36
  Speaker 1: alluded to some of it earlier in terms of rate reviews,
• 15:39
  Speaker 1: in terms of what people are seeing in terms of rates,
• 15:42
  Speaker 1: but more importantly, markets don't really like uncertainty when it
• 15:45
  Speaker 1: comes to M and A and so with some of
• 15:47
  Speaker 1: the pandemic challenges waning and with the vaccinations increasing, that's
• 15:52
  Speaker 1: gotten people a little less uncomfortable about what's coming down
• 15:56
  Speaker 1: the road. And it's pretty much the perfect influence of
• 15:59
  Speaker 1: a ends. I think you're going to start to see
• 16:01
  Speaker 1: a little bit of a shift and you're starting to
• 16:04
  Speaker 1: see this on the anti trust side, Folks are starting
• 16:07
  Speaker 1: to focus a little bit more than they have in
• 16:09
  Speaker 1: the past, And just yesterday the FTC indicated that the
• 16:12
  Speaker 1: crush of deals is so large that they're not able
• 16:15
  Speaker 1: to get through their review in thirty days for some deals,
• 16:18
  Speaker 1: and so that puts people in a little bit of limbo.
• 16:20
  Speaker 1: But for now, I'd say we have a wary eye
• 16:22
  Speaker 1: trained on horizon. But things are still trending positive. But
• 16:25
  Speaker 1: it's not even just that the deal approval process could
• 16:28
  Speaker 1: be slow. The Biden administration has signaled that it wants
• 16:31
  Speaker 1: to be a lot tougher on competition in general. How
• 16:33
  Speaker 1: how much of a headwind is that to the M
• 16:35
  Speaker 1: and A market. I think it's going to be a
• 16:38
  Speaker 1: particular headwind for those that are in industries that they
• 16:41
  Speaker 1: fixed their sights on. The regulators tend to follow a
• 16:43
  Speaker 1: pretty well worn path. They try to communicate a little
• 16:46
  Speaker 1: bit of where they're they're coming, and you see some
• 16:48
  Speaker 1: of that in his executive order, and particularly for the
• 16:51
  Speaker 1: large tech companies and those that are perceived to have
• 16:54
  Speaker 1: large market presence. I think that scrutiny is going to continue,
• 16:58
  Speaker 1: and I think you can add on top of that
• 16:59
  Speaker 1: prank like some of what you're seeing in terms of
• 17:01
  Speaker 1: the sciffiest review, the foreign review of key industries and
• 17:06
  Speaker 1: deals in that space. So I think that is going
• 17:08
  Speaker 1: to be a continuing challenge right now, that's probably the
• 17:10
  Speaker 1: biggest potential disruptor that folks are looking at, but more
• 17:15
  Speaker 1: could be coming. Well. Taxes is the other right um,
• 17:19
  Speaker 1: at least, I'm not sure which way that pushes things,
• 17:23
  Speaker 1: because we've seen a number of deals already, some very
• 17:26
  Speaker 1: big deals due to the fact that private ownership saw
• 17:30
  Speaker 1: maybe a jump in capital gains coming and wanted to
• 17:33
  Speaker 1: get out ahead of it. Absolutely, and one of the
• 17:37
  Speaker 1: things that they've learned, I mean in the past when
• 17:39
  Speaker 1: this has happening, in particular for the private equity sponsors,
• 17:41
  Speaker 1: there's been a surge of activity to try to beet
• 17:43
  Speaker 1: the increase. And one of the issues that they've been
• 17:46
  Speaker 1: discussing is whether they make that sort of retroactive so
• 17:49
  Speaker 1: to a certain extent that's got people a little I
• 17:52
  Speaker 1: don't want to say destabilized, but again cautious about what
• 17:55
  Speaker 1: they're looking at. So in particular for the sponsors, that
• 17:58
  Speaker 1: becomes a very pressing concern. What's the hottest industry right
• 18:01
  Speaker 1: now for murger activity? Basically anything technology related, whether you
• 18:08
  Speaker 1: call it digitization or digitalization, however you refer to it.
• 18:12
  Speaker 1: People are recognizing, particularly with the work from home dynamics,
• 18:16
  Speaker 1: that they need to upgrade their systems and capabilities and
• 18:20
  Speaker 1: anything related to technology, whether that's improving your supply chain,
• 18:24
  Speaker 1: whether that's improving your metrics, finding new ways of generating
• 18:29
  Speaker 1: revenue from data that your your products push off, anything
• 18:34
  Speaker 1: that's related to that. There's a recognition that you need
• 18:37
  Speaker 1: to be moving forward and oftentimes buying it is cheaper
• 18:40
  Speaker 1: than building it and certainly faster. Does it help that
• 18:44
  Speaker 1: there is no interest rate risk here? I mean not
• 18:48
  Speaker 1: only are rates low negative to low, but they're never
• 18:51
  Speaker 1: going up again. Well, they the cycles tend to move
• 18:59
  Speaker 1: in cycles, so as some point there will be the
• 19:01
  Speaker 1: inevitable sort of come up and but no, certainly right now.
• 19:04
  Speaker 1: That's a significant driver again for the sponsors in particular
• 19:08
  Speaker 1: with rates being low, they can reset their expectations in
• 19:11
  Speaker 1: terms of deals. And there's a lot of activity right now.
• 19:14
  Speaker 1: I mean, there's what we're seeing on the service provider
• 19:16
  Speaker 1: side from the investment banks. What the FTC did, which
• 19:19
  Speaker 1: is basically recognize what the service providers have been seeing.
• 19:22
  Speaker 1: There's a lot of activity trying to get pushed through
• 19:25
  Speaker 1: right now as quickly as possible, because people don't want
• 19:27
  Speaker 1: to get caught, you know, catching the follow knife, so
• 19:30
  Speaker 1: to speak, when the inevitable cycle turns. All right, Dad,
• 19:34
  Speaker 1: thanks so much for joining us time to talk about
• 19:36
  Speaker 1: and it was great having you. Hopefully get you back
• 19:38
  Speaker 1: on soon. Daddy's Malik there is the chair of Global
• 19:42
  Speaker 1: Mergers and Acquisitions at Paul Hastings talking to us about
• 19:45
  Speaker 1: this m and a market which has just been incredible.
• 19:48
  Speaker 1: You know, one of the deals I forgot to mention
• 19:50
  Speaker 1: was Betsy Cohen did another back deal today and I
• 19:53
  Speaker 1: think she's done at least twelve billion dollars worth of
• 19:57
  Speaker 1: Financial Services Act deal. So when you bring spacks into it,
• 20:01
  Speaker 1: it just is an incredible market um and the growth
• 20:05
  Speaker 1: has been um pretty outstanding. M A go by the way,
• 20:09
  Speaker 1: it's one of my favorite functions on the Bloomberg terminal
• 20:11
  Speaker 1: and it's a great way to see. For example, you
• 20:13
  Speaker 1: can click on forgo for the league table and you
• 20:15
  Speaker 1: can see how many deals have been done year to
• 20:17
  Speaker 1: date or in the last month of Tetra highly recommen
• 20:20
  Speaker 1: using it. M A go. This is Bloomberg Now to
• 20:28
  Speaker 1: bringing Kate. Hello Global chief investment officer at Russell Investments
• 20:32
  Speaker 1: to talk a little bit about E S G investing
• 20:35
  Speaker 1: to us Kate, it's interesting because there are a few
• 20:38
  Speaker 1: different ways investors can go with E S G And
• 20:43
  Speaker 1: I guess it depends. Do you have to decide if
• 20:46
  Speaker 1: you want to UM chase returns or make a difference. Yeah.
• 20:54
  Speaker 1: I think it's UM the blend of financial, non financial
• 20:58
  Speaker 1: and regulatory drivers that are making people kind of go
• 21:02
  Speaker 1: in one direction versus another. Yeah. I think increasingly the
• 21:07
  Speaker 1: ability to kind of prove out that you leading in
• 21:10
  Speaker 1: certain directions you can have a positive or at least
• 21:14
  Speaker 1: not a negative impact on returns UM will start to
• 21:17
  Speaker 1: kind of play through UM. But I do think there,
• 21:21
  Speaker 1: you know, your needs to be kind of that balanced
• 21:24
  Speaker 1: focus of that primary objective. What is it? Is it
• 21:27
  Speaker 1: about having the impact or is it about returns just
• 21:30
  Speaker 1: so you can calibrate how much you go in one
• 21:33
  Speaker 1: direction versus the other? Do we have enough data to
• 21:36
  Speaker 1: make E S G investments? I feel like a lot
• 21:39
  Speaker 1: of this stuff has been pretty opaque. But is that changing? Yeah, Yeah,
• 21:43
  Speaker 1: I think it's a great question. UM. And I think
• 21:45
  Speaker 1: particularly on the climate side, the data availability and some
• 21:49
  Speaker 1: of the approaches for kind of testing the impact of
• 21:53
  Speaker 1: climate on different sectors or different types of metrics is
• 21:57
  Speaker 1: getting a lot better and it's accelerating really quickly, and
• 22:01
  Speaker 1: so I think a big area you know, needs to
• 22:02
  Speaker 1: be to really stift through those different data options, test out,
• 22:05
  Speaker 1: you know, the impact it's having on asset pricing, because
• 22:08
  Speaker 1: we might not see that for quite some time, but
• 22:10
  Speaker 1: you can kind of scenario kind of test your way
• 22:13
  Speaker 1: into different paths that you know it could take. But
• 22:17
  Speaker 1: the data is starting to know much better quickly, particularly
• 22:21
  Speaker 1: on the climate side. Before we get it deeper there,
• 22:24
  Speaker 1: I want to understand outsourced ce io UM investment solutions.
• 22:29
  Speaker 1: What exactly is that? Yeah, so it's largely defined benefit
• 22:35
  Speaker 1: plans and diamonds and foundations and hospital the systems that
• 22:39
  Speaker 1: are looking to outsource their investment program. In most cases
• 22:44
  Speaker 1: it's because they, you know, want to focus on their
• 22:46
  Speaker 1: core competencies, maybe want to up there with mandrink game
• 22:50
  Speaker 1: and or just have a partner to help navigate the
• 22:52
  Speaker 1: market and the in terms of actually what we do
• 22:55
  Speaker 1: or what the O G I oh kind of universe says,
• 22:57
  Speaker 1: it's it's really about delivering a total solution that's customized
• 23:01
  Speaker 1: to particular outcomes, and so it's not just stout being
• 23:03
  Speaker 1: a benchmark. The often it's focused on like the fundergradition
• 23:06
  Speaker 1: for a pension or particular income needs. You know that
• 23:09
  Speaker 1: in endowment is listening to achieve or volatility requirement, and
• 23:12
  Speaker 1: so you're having some flexibility and how you try to
• 23:15
  Speaker 1: solve those problems. It's part of that kind of O
• 23:18
  Speaker 1: C I O solution. How do you approach investing with
• 23:21
  Speaker 1: climate specifically in mind, especially considering the green spending we're
• 23:26
  Speaker 1: getting out of the bipart as an infrastructure plan as
• 23:28
  Speaker 1: well as the Democratic only plan that will likely be
• 23:31
  Speaker 1: pushed through before or after at some point, how do
• 23:35
  Speaker 1: you how do you think about what may benefit the most? Yeah,
• 23:38
  Speaker 1: and I think you still need to take a fairly
• 23:41
  Speaker 1: long term view on how this is going to impact
• 23:44
  Speaker 1: capitalication and um and returns and asset pricing. But as
• 23:49
  Speaker 1: you start to see some of these policies, you know,
• 23:52
  Speaker 1: kind of shifts an actual spending linked to it, it
• 23:55
  Speaker 1: does make it easier to start to think through the
• 23:58
  Speaker 1: winners and losers, you know, with some of the bills
• 24:01
  Speaker 1: that are coming through at least in the U S side,
• 24:03
  Speaker 1: infrastructure spin and things like that that might mean a
• 24:06
  Speaker 1: little bit more E. S G. Just helps them think
• 24:08
  Speaker 1: about how you might want to allocate and where there's
• 24:10
  Speaker 1: that tackle allocation element is is starting to be decided. Um,
• 24:15
  Speaker 1: But you know, I think that there's like there's just
• 24:17
  Speaker 1: small pieces to hind the earlier point. All of this
• 24:19
  Speaker 1: is still early stages, and so you know, you still
• 24:22
  Speaker 1: need to maintain diversification in terms of how you're approaching
• 24:27
  Speaker 1: you know, toping the portfolio, because it's not clear on
• 24:29
  Speaker 1: kind of where this is going, and so having the
• 24:31
  Speaker 1: frameworks and the and the tools to really kind of
• 24:33
  Speaker 1: understand the impact and be able to measure it. I
• 24:35
  Speaker 1: think it's gonna be really important along the way speaking
• 24:37
  Speaker 1: of diversification, diversity and inclusion. I mean the idea intuitively
• 24:42
  Speaker 1: makes sense to me. Um. I was once talking to
• 24:45
  Speaker 1: Mindy Grossman, who used to be the only woman on
• 24:47
  Speaker 1: the board at Nike, and they apparently in a giant
• 24:51
  Speaker 1: board meeting all turned to her and asked, how can
• 24:53
  Speaker 1: we sell more shoes to women? And the obvious answer is, duh,
• 24:57
  Speaker 1: you need to have more women on the board. Um.
• 24:59
  Speaker 1: And and that's you know, I think it makes makes
• 25:02
  Speaker 1: sense just innately, but um, do we have enough data
• 25:05
  Speaker 1: in in asset management that shows how important diversity is
• 25:10
  Speaker 1: in returns. Yeah, there has been a good amount of
• 25:14
  Speaker 1: work done both in terms of your boards, but also
• 25:17
  Speaker 1: like investors and where you get um whether it's you know,
• 25:20
  Speaker 1: gender related or other forms of diversity. You know, more
• 25:23
  Speaker 1: kind of balanced and consistent returns um when you actually
• 25:27
  Speaker 1: have more balanced and perspectives. And so I think that
• 25:30
  Speaker 1: they're you know, still your consistently work that needs to
• 25:33
  Speaker 1: be done to prove that out. But you know, you
• 25:35
  Speaker 1: even see, you know, there's there's some work that's been
• 25:37
  Speaker 1: done multiple times. DA saying that women tend to be
• 25:41
  Speaker 1: a little bit less action oriented in a good way.
• 25:43
  Speaker 1: I they don't feel the need to overtrade the portfolio
• 25:46
  Speaker 1: and try to your stick to the thesis and stick
• 25:48
  Speaker 1: to the end of the view that they have and
• 25:51
  Speaker 1: more carefully think about making sifts. And so I do
• 25:53
  Speaker 1: think that their support in the asset management worlds for
• 25:56
  Speaker 1: having that kind of diverse idea and actually impacting and
• 25:59
  Speaker 1: be able to have more sistant and persistent returns. Kate,
• 26:02
  Speaker 1: we only have about twenty seconds left, but just to
• 26:04
  Speaker 1: get your view on the market more broadly, would you
• 26:06
  Speaker 1: want to be getting defensive or more risk on here.
• 26:10
  Speaker 1: We're so constructive over over the next twelve months. We're
• 26:13
  Speaker 1: very focused on that kind of pandemic recovery trade. We're
• 26:16
  Speaker 1: risk neutral right now, um just because of some of
• 26:18
  Speaker 1: the volatility, but we're leaning in the cyclicals. So there
• 26:21
  Speaker 1: it says a little bit more constructive on the markets overall. Right, right,
• 26:25
  Speaker 1: great to get some time with you, Kate, Thanks so
• 26:27
  Speaker 1: much for joining us. Kate al Hillou spent years at
• 26:30
  Speaker 1: JP Morgan at Goldman, success at Management, now Global Chief
• 26:33
  Speaker 1: Investment Officer at Russell Investments, giving us her insight on
• 26:38
  Speaker 1: E S G as well as diversity and inclusion, which
• 26:41
  Speaker 1: are you know, more than just buzz buzzwords now, I
• 26:43
  Speaker 1: think investors are are actually demanding these things. This is Bloomberg.
• 26:49
  Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can
• 26:52
  Speaker 1: subscribe and listen to interviews with Apple Podcasts or whatever
• 26:56
  Speaker 1: podcast platform you prefer. I'm Matt Miller. I'm on Twitter
• 27:00
  Speaker 1: at Matt Miller nineteen seventy three. On Fall Sweeney, I'm
• 27:03
  Speaker 1: on Twitter at pt Sweeney. Before the podcast, you can
• 27:06
  Speaker 1: always catch us worldwide at Bloomberg Radio.