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FX, Twitter CEO, and ESG ETFs (Podcast) · Bloomberg Intelligence

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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
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Speaker 1: my co host Matt Miller.
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Speaker 2: Every business day we bring you interviews from CEOs, market pros,
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Speaker 2: and Bloomberg experts, along with essential market moven news.
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Speaker 1: Find the Bloomberg Markets podcast called Apple Podcasts or wherever
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Speaker 1: you listen to podcasts, and at Bloomberg dot com slash podcast.
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Speaker 3: All right.
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Speaker 1: We also had some news critty this morning for I
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Speaker 1: guess Twitter, which is now owned personally by Elon Musk,
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Speaker 1: so no longer trains publicly, but Twitter is still a
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Speaker 1: big news name they pulled. I went over to the
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Speaker 1: NBC Universal and got one other senior executives, Linda Yakarino,
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Speaker 1: to be the CEO of Twitter. It's kind of some
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Speaker 1: big news in the world of advertising and digital advertising.
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Speaker 1: Mandy Sing joins us. He's a techan also Bloomberg Intelligence,
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Speaker 1: So Mandy, but I know Twitter is no longer public,
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Speaker 1: but I mean, I guess if nothing else, you could say,
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Speaker 1: Elon Musk is serious about trying to, you know, try
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Speaker 1: to rebuild Twitter as a digital advertising platform.
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Speaker 4: Yeah, and it's trusting to see him a point and executive,
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Speaker 4: you know, from a traditional media company. Obviously she's seasoned,
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Speaker 4: but I would be intrusted to know if he had
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Speaker 4: more than one candidate in mind in terms of, you know,
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Speaker 4: bringing someone for CEO role. And look, I think that's
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Speaker 4: the part that they need stability on. I mean, from
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Speaker 4: what we have read so far, Twitter has been losing
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Speaker 4: advertising dollars since the time have been private, So if
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Speaker 4: somebody can study the ship on that front, clearly engagement has.
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Speaker 5: Been stable, I think for the most part.
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Speaker 4: So it's advertising dollars that was a cost for concern
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Speaker 4: and maybe it's a good thing.
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Speaker 1: So Mandy, I know you follow Google, I know you
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Speaker 1: follow Meta and all that digital advertising space. What's the
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Speaker 1: feeling on Madison Avenue now and amongst advertisers, like do
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Speaker 1: they even want to put their dollars on Twitter? Have
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Speaker 1: they pulled their dollars off? Do we have any sense
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Speaker 1: of kind of how they're viewing Twitter these days as
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Speaker 1: an option?
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Speaker 6: Yeah?
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Speaker 5: So I think overall this earning season, the company's printed
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Speaker 5: better than expected results, even though expectations work quite low,
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Speaker 5: and my senses, even though Twitter is losing market share,
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Speaker 5: things seem to be stabilizing and generative. AI overall is
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Speaker 5: a positive for all the digital ad companies. We saw
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Speaker 5: Meta just announced AI Sandbox. I think every digital ad
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Speaker 5: company is going to try to do something similar in
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Speaker 5: terms of you know, self serve ads using generative AI
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Speaker 5: to make ads more personable, and that is where that
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Speaker 5: linear to digital shift is still going to continue. So
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Speaker 5: I think platforms like Twitter and even the smaller ones
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Speaker 5: will benefit from that trend. Obviously, things are still kind
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Speaker 5: of quite slow in terms of the ad growth, but
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Speaker 5: my sense is we probably are close to a bottom
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Speaker 5: in terms of the ad pricing headwinds over the last
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Speaker 5: few quarters.
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Speaker 7: Well, of course, we're seeing that Twitter is a private
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Speaker 7: company now, so we can't necessarily see a stock reaction there,
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Speaker 7: but you can in Tesla, Bailey walk us through the
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Speaker 7: logic there.
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Speaker 8: Yeah, right now, the stock over the past few days
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Speaker 8: up more than three percent, sharply outperforming the Nasdaq, which
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Speaker 8: is flat. And the big focus right now for investors
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Speaker 8: is that Elon can now refocus his attention on Tesla
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Speaker 8: with a new CEO overseeing Twitter or ex Corp, whatever
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Speaker 8: you want to call it, and that would free him up.
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Speaker 8: And that's been kind of the main thesis or one
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Speaker 8: of the big question marks around Tesla's path forward was
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Speaker 8: how distracted Cannelon must be and continue to deliver results
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Speaker 8: and to continue to deliver growth. And that seems to
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Speaker 8: be why you're seeing investors already rewarding Tesla just because
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Speaker 8: now it does seem like he can recenter that attention.
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Speaker 1: All right, Bailly Lipschultz, thank you so much for joining us.
3:48
Speaker 1: Billy Lipschialt he covers all the markets for Bloomberg News
3:52
Speaker 1: and man Deep Singh. He's a tech analyst, senior tech
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Speaker 1: dude over at Bloomberg Intelligence.
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Speaker 6: You're listening to the Team Kensher live program Bloomberg Markets
4:01
Speaker 6: weekdays at ten am Eastern on Bloomberg dot Com, the
4:04
Speaker 6: iHeartRadio app, and the Bloomberg Business app, or listen on
4:08
Speaker 6: demand wherever you get your podcast.
4:11
Speaker 1: Jane Foley also doing the work she's had of FX
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Speaker 1: Strategy a robobank.
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Speaker 9: So Jane, let's just start there.
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Speaker 1: I mean, you see some economic data there that is
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Speaker 1: just really disappointing in the near term and then kind
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Speaker 1: of inflationary looking out five to ten years. You know,
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Speaker 1: from your perspective in the currency markets, what do.
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Speaker 9: You make of that data?
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Speaker 10: Well, I mean that's a bit of a worry isn't it.
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Speaker 10: And certainly the inflation expectations number does lend itself to
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Speaker 10: the higher for longer interest rates story. Now, clearly consumer
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Speaker 10: sentiment is down, and you know that that could be
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Speaker 10: a reaction to the concerns about that the debt ceiling,
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Speaker 10: and maybe that would be something that would respond if
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Speaker 10: these debt ceiling issues were sorted out. But at the
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Speaker 10: same time, you know it, with inflation higher, you know,
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Speaker 10: you've you've got to assume that the Fed will keep
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Speaker 10: on pressing to get that down to its two percent target.
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Speaker 10: And therefore, you know, at what cost to the economy
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Speaker 10: are we going to see? You know, that recession in
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Speaker 10: the latter half of this year and no let up
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Speaker 10: and interest rates And I think that's quite likely this
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Speaker 10: scenario that we are going to see.
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Speaker 7: Jane, what is the bear case here for the dollar?
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Speaker 7: It feels like, if you're talking about a recession, you
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Speaker 7: buy the dollar. If you're talking about a US debt default,
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Speaker 7: you go to safety in buy the dollar. What is
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Speaker 7: the bare case for the green back?
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Speaker 10: Well, to be honest, you know, for those reasons that
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Speaker 10: we do think that the dollar will come back in
5:32
Speaker 10: the second half of the year. We think you're a
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Speaker 10: dollar you know, could slip to it to one oh
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Speaker 10: six in the second half of the year, and as
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Speaker 10: the market prices out interest rate hikes, and as safe
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Speaker 10: haven bids get stuck in. Because let's face it, if
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Speaker 10: the US economy does hit recession at a time when
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Speaker 10: we might have just stagnation for the Eurozone and where
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Speaker 10: the Chinese economy is or the Chinese recovery is disappointing,
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Speaker 10: you know many forecasters who really wants to move into
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Speaker 10: to high risk and I certainly thinking in that environment
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Speaker 10: that you would buy the dollar. So that is our forecast.
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Speaker 10: But your question is what would turn it, you know,
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Speaker 10: what would make the dollar you know, sell off and
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Speaker 10: go stronger. And I think in that scenario, we would
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Speaker 10: have to have a scenario where the global economy is
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Speaker 10: looking really good, where the market wants to buy on
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Speaker 10: pile more into the high risk because that is generally
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Speaker 10: what happens, that the dollar has a pretty good inverted
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Speaker 10: correlation with risky assets, and when the global economic outlook
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Speaker 10: has been good and people piling to risk assets, the
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Speaker 10: dollar does it poorly. And I don't think that's what
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Speaker 10: we're going to see in the second half of this year.
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Speaker 7: So, but it does sound like, ultimately, when we're talking
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Speaker 7: about even the ball case for the dollar, which you
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Speaker 7: have beautifully laid out, the idea of interest rate differentials,
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Speaker 7: the idea of a hawkish ECB or a hawkish BOE
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Speaker 7: kind of driving the euro and pound strength, that doesn't
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Speaker 7: seem to be what's driving the narrative for the dollar anymore.
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Speaker 7: It's no longer about interest rates as much as it was,
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Speaker 7: say a year ago.
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Speaker 9: Would you agree with that?
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Speaker 10: Well, you know what, I think we can actually look
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Speaker 10: and see what is in the price and the market
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Speaker 10: has already got more ECB interest rate hikes priced in,
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Speaker 10: it's already got more Bank of England interust rates priced in.
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Speaker 10: And I think if we take the euro, for instance,
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Speaker 10: over and above what is already priced in, can the
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Speaker 10: market make an even better call for buying the euro?
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Speaker 10: And I think at this stage probably not, because what
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Speaker 10: we've had for the Euro since the start of the
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Speaker 10: year is relief, better than expected news. Because we had
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Speaker 10: in mid winter here in Europe, guess prices have come down.
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Speaker 10: We didn't have the recession in Germany, and we've seen
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Speaker 10: a hawky GCB. But now that that's all priced in
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Speaker 10: what are we facing when we're facing probably stagnation in
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Speaker 10: H two and so is that a reason to buy
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Speaker 10: the euro world? Probably not. And the market's already long
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Speaker 10: and so I think interest rate differentials are still very
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Speaker 10: much at play, but we've got to compare them to
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Speaker 10: what's already in the price.
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Speaker 1: And Jane, I'm just looking at the pounds sterling. You know,
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Speaker 1: it's up seventeen eighteen percent off of that low. What's
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Speaker 1: going on there?
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Speaker 10: Well, you know it has had a good run, but
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Speaker 10: actually in the last twenty four hours or so, it's
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Speaker 10: it's really beginning to fail. And again, you know, similar
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Speaker 10: to the Euro, there's a lot of better news in
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Speaker 10: the price. If we look back in March, Sterning was
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Speaker 10: the best performing G ten currency in March and that
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Speaker 10: reflected a slow or better than expected data which we're
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Speaker 10: coming through there. So you could argue that although the
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Speaker 10: Bank of England increased its forecast for GDP yesterday and
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Speaker 10: also for inflation, when the markets sort of already knew that,
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Speaker 10: it was already perhaps prepared for more interstrate hikes or
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Speaker 10: another interstrate hike care from the Bank of England before
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Speaker 10: you know, before the peak, and so from that point
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Speaker 10: of view, because sterling failed or cable failed to hold
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Speaker 10: its higher levels. And let's say also the dollar was
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Speaker 10: on the front foot yesterday because it failed to go higher.
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Speaker 10: Well you know, the technicals began to sour and it
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Speaker 10: went lower instead. And I think we are at the
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Speaker 10: point now whereby it's we've had enough better news for
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Speaker 10: the UK for the market to close its short positions.
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Speaker 10: But have we got the sort of news that the
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Speaker 10: market wants to build long stirling positions from this point?
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Speaker 10: And I think probably not, because although these GDP numbers
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Speaker 10: were revised up, they've been revised up to a stagnationary
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Speaker 10: or even a statulationary environment, and a better outlook for
9:26
Speaker 10: the UK economy is what we've got. That doesn't mean
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Speaker 10: to say it's good, certainly not well, how how what.
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Speaker 9: Is it like in in London? Says in England these days?
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Speaker 1: What's just kind of the feeling for the average brit
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Speaker 1: right now as it relates to the economy, the outlook?
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Speaker 9: What can you what can you share with us?
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Speaker 10: Well, you know, you know, the first thing I would
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Speaker 10: share is that the feeling in London is usually very
9:50
Speaker 10: different to other The economy London and the Southeast tends
9:53
Speaker 10: to be a lot more prosperous, but you know, I
9:56
Speaker 10: do know that around the country as a whole. You know,
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Speaker 10: over the last year or so, there has been a
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Speaker 10: real streep rise in food banks and the amount of
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Speaker 10: people using food banks. So because of living crisis on
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Speaker 10: an individual basis has been extremely painful for an awful
10:10
Speaker 10: lot of people. That's said, because the labor market is
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Speaker 10: tight and because most people you know who want a
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Speaker 10: job have got a job. What we have seen is
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Speaker 10: aggregate demand has been stronger than expected and that's what's
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Speaker 10: led to this improved GDP outlook and actually improved level
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Speaker 10: for the government coffers even because there's been more taxes
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Speaker 10: being paid. So we've had this better than expected outcome
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Speaker 10: on an aggregate basis, But on an individual basis, there's
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Speaker 10: an awful lot of people really feeling the pinch because
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Speaker 10: of higher inflation and higher interest rates.
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Speaker 7: Well, speaking of really feeling the pinch, there's a fun
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Speaker 7: fact I think from the I'm of Spring meetings that
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Speaker 7: I just can't let go of the idea that is
10:51
Speaker 7: going to take years for the British economy to climb
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Speaker 7: their way out of this kind of recessionary period. What
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Speaker 7: does that do to the currency? I mean, we're looking
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Speaker 7: at one twenty four on the cable rate right now.
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Speaker 7: How much upside, how much downside is there?
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Speaker 10: Well, you know, but perhaps a better example of that is,
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Speaker 10: you know, I can tell you that that Sterling has
11:13
Speaker 10: still not recovered to its levels against the Euro that
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Speaker 10: were there before the Brexit referendum in twenty sixty. So
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Speaker 10: from that point of view, I think that reflects perhaps
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Speaker 10: also the weakness of business investment, for instance in the UK,
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Speaker 10: a lot of the political uncertainty that we've had in
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Speaker 10: recent years, and that has certainly over the last year
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Speaker 10: or two and before that created this this theory of doubt,
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Speaker 10: this sentiment of doubt and uncertainty surrounding the UK economy
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Speaker 10: and also sterling. Now with respect to cable, obviously that's
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Speaker 10: governed quite a lot about what the dollar does, and
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Speaker 10: I think in the second half of the year cable's
11:55
Speaker 10: going to be more about the dollar perhaps than about sterling.
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Speaker 10: But even though sterling has covered a lot against the
12:01
Speaker 10: dollars in say much historically, it's still below its medium levels.
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Speaker 1: Jane Fowley, thank you so much for joining us. We
12:10
Speaker 1: always appreciate getting your perspective. Jane Foley, head of FX
12:13
Speaker 1: strategy at Robobanks. She is based in London. I always
12:17
Speaker 1: appreciate getting that view as well. So again the currency markets.
12:21
Speaker 1: Looking at the Bloomberg Dollar Index, it's up three tenths
12:24
Speaker 1: of one percent today.
12:25
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12:28
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12:32
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12:35
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12:42
Speaker 1: Thirty going on again that you mission data.
12:46
Speaker 9: I mean, it's just ugly any way.
12:48
Speaker 1: You look at current conditions, worse than people than we
12:51
Speaker 1: had thought, inflation going to be higher than we had thought.
12:54
Speaker 1: There's just not a good way to spin that. Robert
12:56
Speaker 1: Teeter joins us. He's head of investment policy and the
12:58
Speaker 1: Strategy Group at Silvercrest Asset Management CRETY.
13:01
Speaker 9: It's interesting to note that he joins us in studio.
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Speaker 5: Yeah.
13:04
Speaker 9: Yeah, Bloomberg employees aren't even in the building.
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Speaker 7: I was ordinarily that would get a gold star from Paul. Yeah,
13:09
Speaker 7: on like a day like today, it's like three gold stars,
13:12
Speaker 7: maybe a trophy.
13:13
Speaker 1: I don't know exactly, So Robert, let's just start with
13:15
Speaker 1: some ego data that you missed.
13:16
Speaker 9: Data came out. I don't know, man, it just doesn't
13:19
Speaker 9: look good anyway, Slice, what did you make of it?
13:22
Speaker 11: Yeah, So, I think the two things I focused on
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Speaker 11: the most were the sentiment side, which looks, you know,
13:26
Speaker 11: very negative. Most sentiment indicators have been very negative. It's
13:29
Speaker 11: quite an interesting disconnect between the relatively strong job market
13:32
Speaker 11: and just continued persistent negative sentiment. So I think that's
13:36
Speaker 11: an interesting disconnect that will resolve at some point one
13:38
Speaker 11: way or the other. I think more towards sentiment improving.
13:42
Speaker 11: You look at the component of it related to inflation
13:44
Speaker 11: expectations ticking up, that's not that much of a surprise
13:47
Speaker 11: to me. While it was better than, you know, higher, hotter,
13:49
Speaker 11: worse than expectations, it is something that we've been hearing
13:53
Speaker 11: for months and months now that inflation's going to be
13:55
Speaker 11: sticky and persistent, and so I'm not that surprised to
13:57
Speaker 11: see it show up in the survey data. The number
14:00
Speaker 11: that it's at, it's a bit elevated but not terrible
14:02
Speaker 11: in my opinion.
14:03
Speaker 7: Let's talk about the dead ceiling.
14:05
Speaker 9: Sharlotte, Oh, that's fun.
14:06
Speaker 8: Yeah.
14:06
Speaker 7: Always it feels like there is a concern about just
14:10
Speaker 7: how bad it'll get. Talk to us about the layers
14:13
Speaker 7: of messy mess here.
14:14
Speaker 11: Yeah, I think that's a great way to think of it.
14:16
Speaker 11: I do think like most people that in the end,
14:19
Speaker 11: cooler heads will prevail and we will get a solution.
14:22
Speaker 11: The question is what's the path look like from here
14:24
Speaker 11: to there? And I think the path could get a
14:25
Speaker 11: bit messy, and I think that sets the stage for
14:28
Speaker 11: you know how we have to think about the state
14:30
Speaker 11: of politics in the US going forward being a risk
14:32
Speaker 11: factor in the economy. And so I do think we'll
14:34
Speaker 11: get resolution. I think that's a good thing, but it
14:36
Speaker 11: could get a little bit.
14:37
Speaker 9: Messy because what are the options here?
14:39
Speaker 5: Though?
14:39
Speaker 6: Yeah.
14:39
Speaker 11: So I think one of the things is that whenever
14:41
Speaker 11: you saw the release from Secretary Yellen talking about the
14:44
Speaker 11: X state, you know, making it June first and trying
14:46
Speaker 11: to get everyone focused in on June first as a deadline,
14:49
Speaker 11: there was also some language in there that indicated the
14:51
Speaker 11: fact that, well, it could be several weeks after that,
14:53
Speaker 11: and so you could have this rolling crisis situation where
14:56
Speaker 11: where you push and push and push into June one,
14:58
Speaker 11: don't get a resolution, and glide another couple of weeks,
15:01
Speaker 11: and then hope that, you know, we get to those
15:02
Speaker 11: dates where more money comes in the door and the
15:04
Speaker 11: X date gets pushed out further. I think that's a
15:07
Speaker 11: pretty tough situation for markets, because you'll just be looking
15:09
Speaker 11: at a rolling series of crises overcoming weeks. So I
15:11
Speaker 11: think if we don't get that resolution by June one,
15:14
Speaker 11: we could be in for some real choppiness after that.
15:16
Speaker 9: All right, So I don't know what do you do here?
15:18
Speaker 1: I mean, it's there's a lot of what ifs out there,
15:20
Speaker 1: and most notably I guess I guess this. You know
15:25
Speaker 1: this stuff about the debt ceiling, but there's a lot
15:27
Speaker 1: of cross currents out there. How are you when you
15:28
Speaker 1: talk to clients, what are you kind of how you
15:31
Speaker 1: kind of framing out the next six to twelve months?
15:33
Speaker 11: Yeah, So I sort of start with the economy and
15:35
Speaker 11: where we are today, and I think we're running at
15:37
Speaker 11: about one and a half percent growth. So I look
15:39
Speaker 11: at the real time models, I look at mobility indicators,
15:41
Speaker 11: spending and things like that. I think we're a little
15:43
Speaker 11: north of one percent. We have a pretty strong job market,
15:46
Speaker 11: and so that's consistent with that sort of stability as
15:48
Speaker 11: far as the economy is concerned. When you look out
15:50
Speaker 11: in the near term, though, you know, we're certainly going
15:52
Speaker 11: to have some continued drag from the from the credit
15:54
Speaker 11: crunch and from the things going on in the banking sector.
15:57
Speaker 11: So there we've modeled that out. We looked at the
15:59
Speaker 11: eighties and nineties SNL crisis very different, similar in terms
16:03
Speaker 11: of dollar amounts, but very dissimilar in terms of the
16:05
Speaker 11: eighties nineties. You had hundreds of banks failing every year,
16:07
Speaker 11: and so we estimate something like thirty percent of stress
16:11
Speaker 11: of the eighties today and to us that leads to
16:14
Speaker 11: about a one percent GDP decline, So that gets us
16:16
Speaker 11: pretty close to that flat line of you know, flat
16:19
Speaker 11: growth for coming quarters.
16:21
Speaker 7: Oh my gosh, thirty percent of the pain in the eighties,
16:23
Speaker 7: that's not that's that's something.
16:25
Speaker 9: The eighties were pretty good to me, So I know.
16:27
Speaker 7: We always talk about we always talk about the.
16:29
Speaker 5: Eighties with me and Paul.
16:30
Speaker 7: I was not around in the eighties, surprise, surprise, but
16:33
Speaker 7: I always refer to the eighties, especially to talk about
16:35
Speaker 7: inflation and you know, Reagan and defense and all that
16:37
Speaker 7: fun stuff, and he's like, you know what I was
16:39
Speaker 7: doing in the eighties, having a great time, And I
16:41
Speaker 7: was like, yeah, same. Let's talk about the trade here, though,
16:43
Speaker 7: because it is a pretty doomsday scenario that thirty percent
16:46
Speaker 7: of the pain in the eighties is still quite a
16:48
Speaker 7: lot of pain. Is it as simple as you just
16:51
Speaker 7: liquidate your treasury holdings? Is that the trade?
16:54
Speaker 11: I don't think so. I think your bride through there
16:57
Speaker 11: is quite a premium there looking at the you know,
16:59
Speaker 11: the spread in terms of the treasuries maturing around the
17:02
Speaker 11: debt ceiling, so that's certainly a risk factor there. On
17:04
Speaker 11: the banking side, I think that I look at it
17:06
Speaker 11: across three different levels, So I think from a depositor standpoint,
17:09
Speaker 11: the crisis has basically been solved. And I think that
17:12
Speaker 11: you know, the fad, the FDIC and Treasury have been
17:14
Speaker 11: very resolute in that. As it relates to banking equities
17:17
Speaker 11: and future profits, that's still an open question mark as
17:19
Speaker 11: to what type of activity they'll have. But the reason
17:22
Speaker 11: that I think that the stress today is only thirty
17:24
Speaker 11: percent of the SNL crisis is that it hasn't become
17:27
Speaker 11: as widespread. So again, you had hundreds and hundreds of
17:29
Speaker 11: banks failing in the eighties, and that was at a
17:31
Speaker 11: period of time when there was much more pervasive in
17:34
Speaker 11: terms of the economy. You know, here we look at
17:36
Speaker 11: the banking issues, there's a lot of stress, there's a
17:38
Speaker 11: lot of big dollars involved in the takeovers that have
17:41
Speaker 11: gone under in the failures, but it's not as pervasive
17:44
Speaker 11: throughout the system. So I don't think it becomes quite
17:46
Speaker 11: as big of a risk factor.
17:48
Speaker 1: What do I go in the bond market here? I mean,
17:50
Speaker 1: I look at it to your treasury, it's almost four percent.
17:53
Speaker 1: It's not a beach of kick in the head. I think,
17:56
Speaker 1: given what happened in twenty twenty two, how are you
17:58
Speaker 1: guys thinking about the fixing space these days?
18:00
Speaker 11: Yeah, I think bonds are a pretty interesting opportunity here.
18:03
Speaker 11: I mean, do you have, as you mentioned, pretty solid yields.
18:05
Speaker 11: We've had the backdrop of continual improvements in inflation, so
18:08
Speaker 11: ten months in a row now of CPI improving. I
18:11
Speaker 11: think that continues. If you look at some of the
18:12
Speaker 11: comments in ism or some of the things you hear
18:14
Speaker 11: in earnings reports. Inventory levels are coming down they're being
18:18
Speaker 11: managed better. That points to future price improvement, points to
18:20
Speaker 11: better inflation, points to good outlook for bonds in the
18:23
Speaker 11: near term. And you're right that four percent type of
18:26
Speaker 11: level is a pretty good yield compared to where things
18:28
Speaker 11: might sit in the short term with a lot of
18:30
Speaker 11: the stress going on inequities.
18:31
Speaker 7: But then if you get stuck holding it and there
18:34
Speaker 7: is actually the very first default in history for the
18:37
Speaker 7: United States, you lose a lot of money very very quickly.
18:41
Speaker 7: What then looks good? I'm trying to think if there
18:45
Speaker 7: is actually a DeVault.
18:46
Speaker 11: Where do you go if it gets to that point.
18:48
Speaker 11: I think not very many things look good and it
18:50
Speaker 11: will be a very challenging.
18:51
Speaker 7: That's when you go to the ATMs and pull out cash.
18:54
Speaker 11: I'm hopeful that it doesn't get there, and I think
18:56
Speaker 11: that we'll find a way to solve the problem before
18:58
Speaker 11: it gets that bad.
18:59
Speaker 1: We were there thousand and eight. I was at an
19:01
Speaker 1: idea dinner from a investment bank, yeah, seven or eight
19:05
Speaker 1: reasonably smart investors, and I've been to a bunch of these,
19:09
Speaker 1: and the discussion was how much cash should you have
19:13
Speaker 1: in your house? Number one, ten grand, twenty five grand,
19:16
Speaker 1: fifty that that's what was discussion, and the second discussion
19:19
Speaker 1: was what's the best safe to have in your house?
19:21
Speaker 1: So people were on Amazon dot Com at this dinner
19:25
Speaker 1: buying safes that be delivered to there.
19:26
Speaker 11: We're not there now, We're not there, and I don't
19:28
Speaker 11: think we're any more close to there. And I remember
19:30
Speaker 11: that time as well, when the fear was over access
19:32
Speaker 11: to your money, and we had, you know, maybe a
19:34
Speaker 11: few hours of that fear perking up in the early
19:36
Speaker 11: days of this bank crisis. But that's that's been quashed
19:38
Speaker 11: pretty solidly, and I think deposits are sound here in
19:41
Speaker 11: the average consumer, the average employee in the job market
19:44
Speaker 11: throughout the country knows that how much should they say?
19:46
Speaker 9: We said twenty five grand in cash? Yep, all right,
19:50
Speaker 9: and like it's not easy to I don't know.
19:53
Speaker 1: It wasn't easy to do, but I mean, and then
19:55
Speaker 1: people were literally talking about, oh, this I got this safe.
19:57
Speaker 9: This is great, it's it's the best thing, you know,
19:59
Speaker 9: blah blah blah, A very different friends, clearly, I don't know.
20:02
Speaker 1: Robert Teeter, head of an investment policy and strategy group Silvercrest
20:06
Speaker 1: Asset Management, joining us here in our Bloomberg Interactive Broker Studio.
20:11
Speaker 6: You're listening to the team Ken's are Live program Bloomberg
20:15
Speaker 6: Markets weekdays at ten am Eastern on Bloomberg dot Com,
20:18
Speaker 6: the iHeartRadio app and the Bloomberg Business app, or listen
20:21
Speaker 6: on demand wherever you get your podcasts.
20:26
Speaker 1: If you're in Bangkok, Thailand, and let's say it's Friday,
20:28
Speaker 1: I don't eleven at thirty to night, twelve thirty nights
20:30
Speaker 1: something like that on a Friday.
20:32
Speaker 9: Do you dial into Bloomberg Radio.
20:33
Speaker 12: It sounds like maybe you do.
20:35
Speaker 1: No, that would not be bit But this guy, this
20:37
Speaker 1: is how hard he works. Dan Ives, Managing Director, senior
20:40
Speaker 1: equity analyst Webush Security. He's overdoing some Asian marketing trip.
20:43
Speaker 1: I guess trying to scam some votes from institutional investors.
20:46
Speaker 9: I appreciate that I did that for many years. But Dan,
20:48
Speaker 9: we're going to bring you back down to earth.
20:50
Speaker 8: Here.
20:50
Speaker 1: We got some movement here on Twitter and Tesla and
20:53
Speaker 1: Linda Yakarino out of NBC Universal. I guess her going
20:57
Speaker 1: over to Twitter is a really good thing for Twitter
21:00
Speaker 1: and maybe even a good thing for Tesla knit shareholders.
21:02
Speaker 1: What did you make of today's news?
21:04
Speaker 13: Yeah, I mean this is a home run higher because
21:08
Speaker 13: of because there are a background on a digital advertising
21:12
Speaker 13: perspective from NBC Universal. It's exactly what Twitter needed, I mean,
21:16
Speaker 13: must you know, ultimately this balancing act, the clock struck,
21:21
Speaker 13: sinnite investors will get more and more frustrated, and it's
21:24
Speaker 13: a positive for Tesla with now I mean even though
21:27
Speaker 13: he's CTO, efforts more and more focused on back on
21:31
Speaker 13: Tesla with Wynd and now we're going to be CEO.
21:35
Speaker 12: So sticking with the Twitter piece before we get over
21:38
Speaker 12: to Tesla here, Dan, does this move for Yakarina work
21:41
Speaker 12: well for the advertisement side of Twitter?
21:46
Speaker 10: Oh?
21:46
Speaker 13: I think it's exactly what the doctor ordered because she's
21:49
Speaker 13: extremely well respected in the advertisement community. She understands that world.
21:57
Speaker 13: And I think ultimately it's been uphill bad for Twitter
22:00
Speaker 13: and this is exactly what they needed. And I think
22:03
Speaker 13: it's the right pick and also something that compliments must
22:07
Speaker 13: in terms of the strategy of Twitter. Look, there's it's
22:10
Speaker 13: an uphill battle, but this was where I continue to
22:14
Speaker 13: view as a home run higher.
22:16
Speaker 1: All right, Dan, ever and Asia presumably meeting with the
22:18
Speaker 1: institutional investors. What are the names they want to talk about,
22:22
Speaker 1: what are the themes that they want to talk about
22:24
Speaker 1: when they get dan ives, you know, kind of across
22:26
Speaker 1: the conference table.
22:28
Speaker 10: Yeah.
22:29
Speaker 13: Look, the big focus has really been this AI arms race.
22:32
Speaker 13: How do you play? It? Is Microsoft just the winner?
22:36
Speaker 13: Is where does Google play? Where do other tech players?
22:40
Speaker 13: That that I believe is really one of the biggest
22:43
Speaker 13: teams that we're seeing along with just big tech. I
22:46
Speaker 13: mean there's a continue to grind higher and you mean
22:49
Speaker 13: you've talked about I think tech's up another rest of
22:53
Speaker 13: the year, which is what we're seeing in terms of
22:56
Speaker 13: better than fear numbers and fundamentals holding up.
23:00
Speaker 3: Games.
23:00
Speaker 12: Are you liking most if I can ask you to
23:02
Speaker 12: name any in the tech space.
23:05
Speaker 13: Yeah, right now. Look, Apple to me continues to be
23:09
Speaker 13: our top pick in terms of where I see that
23:11
Speaker 13: in terms of overall iPhone install based on the up
23:14
Speaker 13: great opportunity. Microsoft continues to be our core cloud play
23:18
Speaker 13: you know, just raised price stars and distreancial forty and
23:21
Speaker 13: that in this AI Game of Thrones battle, they continue
23:23
Speaker 13: to win that hands over. And I think Power Out
23:27
Speaker 13: on cybersecurity continues to be the core name, and then
23:30
Speaker 13: tess on disruptive tech. I mean, I think it's one
23:33
Speaker 13: where price cuts were needed. It's obviously struggling through in
23:37
Speaker 13: a margin perspective, But I think they're going to navigate
23:39
Speaker 13: and get onto the other side of Hey.
23:41
Speaker 1: Dan, you know, for me and for a lot of
23:43
Speaker 1: other I think investors, the deterioration in relations between the
23:47
Speaker 1: US and China is troubling on so many levels. One
23:51
Speaker 1: of the levels is just technology. Are we when you
23:55
Speaker 1: travel around Asia speaking to an institutional investors, are they
23:59
Speaker 1: concerned about it a tech cold war between China and
24:03
Speaker 1: kind of I don't know the West broadly defined.
24:06
Speaker 13: Oh, I think it's the biggest thing that comes up,
24:10
Speaker 13: especially here in Asia in terms of this cold tech
24:14
Speaker 13: war playing out has an impact of supply chain. There
24:17
Speaker 13: was just ultimately a potential black Swan event at one
24:20
Speaker 13: point down the road, and I think ultimately it really
24:25
Speaker 13: is the biggest risk impact now. I think Apple has
24:28
Speaker 13: to have navigated that phenomenally. But there's no doubt this
24:33
Speaker 13: is the geopolitical sort of tightwire act that you know,
24:37
Speaker 13: I believe right now, invessers are sort of continuing to
24:40
Speaker 13: focus more and more on although I think fundamentals really
24:44
Speaker 13: dictate to day right now.
24:45
Speaker 3: In big text, we had to.
24:48
Speaker 12: Paul's point, we had Larry Summer speaking with our David
24:51
Speaker 12: Weston about this, and he said that for businesses, the
24:54
Speaker 12: US gives you a wrist slap and China rolls out
24:56
Speaker 12: the red carpet. Are you sensing that from where you sit?
25:01
Speaker 13: Yeah? Look, and I think I think if you look
25:05
Speaker 13: even at Cook called ten percent politician ninety percent tactician,
25:09
Speaker 13: I mean, China understands right now in terms of this
25:13
Speaker 13: tenuous opportunity that we're seeing. You are trying to see
25:17
Speaker 13: more and more diversification to India, to Vietnam, you know,
25:21
Speaker 13: and cross and as well as in the US with Ira,
25:24
Speaker 13: and that's gonna be a tight rope that they play.
25:27
Speaker 13: But I think for right now you're gonna see that
25:31
Speaker 13: as the biggest risk. And I think ultimately Apple and
25:34
Speaker 13: Tesla are the ones that continue to sort of walk
25:37
Speaker 13: that tightwire act. And in really what's essentially the coupling
25:42
Speaker 13: between the US and China is.
25:44
Speaker 1: The feeling there in Asia a Dan As you spend
25:47
Speaker 1: a couple of weeks, I'm assuming you're gonna be doing
25:48
Speaker 1: some channel checks with the supply chain and so on.
25:52
Speaker 1: Is there a feeling in Asia that Asia plus India
25:55
Speaker 1: plus maybe some other parts of the world can maybe
25:59
Speaker 1: make up for any supply chain disruption that may even
26:03
Speaker 1: grow from here as relates to China.
26:07
Speaker 13: Yeah, and Paul, I think the one thing and we'll
26:09
Speaker 13: be in Taiwan next week as well, that the supply
26:13
Speaker 13: chain issues are really starting to moderate as well as
26:17
Speaker 13: you combine it with the feeling inventory from a chip perspective,
26:21
Speaker 13: we're really starting to get down to a point that
26:24
Speaker 13: we maybe turn here and that's positive for chips, it's
26:29
Speaker 13: positive for Apple, and then Cherry on top of the
26:32
Speaker 13: Sunday is really just AI. I mean Ai, we've used
26:35
Speaker 13: an atos a billion dollar mark in next decade. That's
26:38
Speaker 13: really added to how tech investors, not just here in Asia,
26:42
Speaker 13: but across the US, Europe, you're in around the world
26:44
Speaker 13: are trying to play this. It's not just Microsoft that's
26:48
Speaker 13: the winner. It's going to be a game of thrones
26:50
Speaker 13: playing out across big tech.
26:52
Speaker 12: Well within that frame of thinking, were you concerned at
26:55
Speaker 12: all about Apple not really digging into AI much in general,
27:00
Speaker 12: but also specifically in their latest earnings they were kind
27:02
Speaker 12: of one of the ones that really didn't mention it
27:04
Speaker 12: very much.
27:06
Speaker 13: Yeah, but it's standard cooking crew, Patino. I mean, they
27:11
Speaker 13: play a different game of poker than other big tech players.
27:14
Speaker 13: But I believe it's the Developer Conference next month as
27:18
Speaker 13: well as into the fall. They're going to talk more
27:20
Speaker 13: and more about their AI strategy, and I think Apple
27:24
Speaker 13: is not going to be on the outside looking in
27:25
Speaker 13: when it comes to AI. Just giving the DNA of
27:28
Speaker 13: Crew Pertina.
27:30
Speaker 1: And Tesla just lasts before we let you go. Hopefully
27:32
Speaker 1: you have a much more fun Friday evening than talking
27:35
Speaker 1: to us. But so for Tesla, is there a sense there?
27:38
Speaker 1: I mean, Elon's invested so much personally and professionally in China,
27:45
Speaker 1: is that still a market for Tesla or the incumbent
27:49
Speaker 1: electric vehicle makers they're going to really run the game.
27:53
Speaker 10: Yeah.
27:54
Speaker 13: Look, I think Tesla has been shared in China, but
27:57
Speaker 13: there's no doubt it's a price war that's playing out
28:00
Speaker 13: versus UID Neo and a lot of the domestic players.
28:04
Speaker 13: But that's gonna continue to going to be the core
28:07
Speaker 13: ingredients of their success. Of autos are coming out in China,
28:14
Speaker 13: and I think that's not really going to change. But
28:16
Speaker 13: there's no doubt the price war in China's front and center,
28:19
Speaker 13: and Tessa aggressively is going after that.
28:22
Speaker 1: All right, Dan, thanks very much, you know, we really
28:23
Speaker 1: appreciate the time we know you're on the other side
28:26
Speaker 1: of the globe. Dan Ives, he's a managing director and
28:28
Speaker 1: senior equity analysts for web Bush Securities. And when you're
28:31
Speaker 1: a tech on us like Dan and particularly well known
28:34
Speaker 1: and well respected tech analysts, you need to be in
28:36
Speaker 1: Asia probably more than the average financial type for a
28:39
Speaker 1: couple of reasons. One, you want to visit institutional investors
28:42
Speaker 1: are there, but too you want to get a first
28:44
Speaker 1: hand look at the supply chain, uh, in the technology space, hardware, software,
28:49
Speaker 1: and a lot of that, particularly on the hardware side,
28:52
Speaker 1: is in Asia. So that's why you'll see, uh, these
28:55
Speaker 1: techotiles spend a lot of time physically in Asia doing
28:58
Speaker 1: you know, channel checks, you know, where our things in
29:00
Speaker 1: the chip space, how are things in the manufacturing space?
29:02
Speaker 1: And now maybe with China disengaging a little bit more,
29:05
Speaker 1: it may be a greater issue. And I think that's
29:08
Speaker 1: kind of what tech guys like Dan Ives are doing.
29:10
Speaker 6: You're listening to the tape cans are live program Bloomberg
29:13
Speaker 6: Markets weekdays at ten am Eastern on Bloomberg Radio, the
29:17
Speaker 6: tune in app, Bloomberg dot Com, and the Bloomberg business app.
29:20
Speaker 6: You can also listen live on Amazon Alexa from our
29:23
Speaker 6: flagship New York station. Just say Alexa play Bloomberg eleven thirty.
29:30
Speaker 1: So we want to talk about the digital ad space,
29:33
Speaker 1: our go to pursus Mark Douglas. He's a president CEO
29:35
Speaker 1: of Mountain and Mountains and advertising software company enabling brands
29:39
Speaker 1: to drive measurable conversions, revenue and site visits right down
29:43
Speaker 1: the fairway for Mark. So, Mark, I had two very
29:47
Speaker 1: highly ranked and esteemed auto analysts or no, I take
29:51
Speaker 1: the back technology analysts who said this is a home
29:54
Speaker 1: run deal for Twitter and signing this executive from NBC Universal.
30:01
Speaker 9: You're not so sure, are you? Don't you don't take
30:03
Speaker 9: that rut?
30:05
Speaker 14: Yeah, I mean I want to say, first Linda the
30:08
Speaker 14: person at NBC Universal that is rumored to be the
30:13
Speaker 14: person that's going to take this role. She's a very
30:16
Speaker 14: very capable executive. My company mount has a big partnership
30:21
Speaker 14: with NBC and but the and I think she could
30:25
Speaker 14: definitely do the role. The one thing I'll say, though,
30:29
Speaker 14: is when you combine a kind of big brand advertising
30:33
Speaker 14: executive and you combine that with something that's like a
30:37
Speaker 14: social platform or a search platform, you kind of get Yahoo.
30:43
Speaker 1: And you're not saying that, you're not taking that in
30:45
Speaker 1: a positive sense.
30:47
Speaker 14: I mean, I'm saying that Linda can do this job,
30:50
Speaker 14: but at some point correct at some point. And the
30:54
Speaker 14: way I say you get Yahoo, what you get is
30:56
Speaker 14: a company that kind of tops out in revenue at
30:59
Speaker 14: a few bills. It's a lot of money, but you
31:02
Speaker 14: know Google and Meta they top out at over one
31:05
Speaker 14: hundred billion. Amazon has built an AD business. I think
31:08
Speaker 14: it's now approaching forty billion, and it's done in a
31:11
Speaker 14: remarkably short period of time. So those companies focus on
31:15
Speaker 14: performance advertising, direct response advertising. And so I think if
31:20
Speaker 14: Linda winds up leading that she's going to need a very,
31:25
Speaker 14: very capable team that probably formally worked a Meta or
31:29
Speaker 14: formally worked at Google to build out the technology and
31:34
Speaker 14: the platform to have a long tail of advertised So
31:38
Speaker 14: the thing might say Yahoo, that's a company that had
31:41
Speaker 14: a few thousand advertisers. You look at NBC to have
31:43
Speaker 14: a few thousand advertisers. Meta in Google have millions, and
31:47
Speaker 14: you can't really scale to the numbers that think well
31:50
Speaker 14: that people would really expect the Twitter without being able
31:54
Speaker 14: to reach million, you know, hundreds of thousands of millions
31:57
Speaker 14: potential advertising, and that chances are not going to come
32:00
Speaker 14: from television executives. It's going to come from, you know,
32:04
Speaker 14: from from other social social platforms like Meta, TikTok, the Google,
32:10
Speaker 14: the executives at those kind of companies. So she will
32:12
Speaker 14: have to add that to our team one way or another.
32:16
Speaker 3: It's kind of my point.
32:18
Speaker 12: So, Mark, what do you see as can you give
32:20
Speaker 12: me kind of a specific example of what you see
32:22
Speaker 12: as the biggest experience whole that could potentially impact her
32:26
Speaker 12: time at Twitter? And we should mention that Musk did
32:29
Speaker 12: confirm that she's taking on the CEO role in a tweet,
32:32
Speaker 12: But what do you see as you know, a specific
32:34
Speaker 12: situation she's going to encounter that her lack of social
32:37
Speaker 12: media experience might lead to some issues with Yeah, and.
32:41
Speaker 14: By the way, I think that had to be confirmed
32:43
Speaker 14: because NBC's upfront television up Front starts Monday. Oh yeah,
32:48
Speaker 14: so and chances are and she was leading it, so
32:53
Speaker 14: chance so it may not be.
32:54
Speaker 3: Six weeks now before she starts to roll.
32:57
Speaker 14: But I think yeah, I mean so, the skill set
33:03
Speaker 14: is fundamentally the big dollars in advertising on digital advertising,
33:09
Speaker 14: They come from the smallest of customers. So the experience
33:13
Speaker 14: they come from the companies that you know, the director
33:18
Speaker 14: consumer branding and a retailers. They know, those big dollars
33:21
Speaker 14: ironically don't come from the big advertisers.
33:23
Speaker 3: They don't come from.
33:25
Speaker 14: You know, the Coke Pepsi or things like that. They
33:29
Speaker 14: come from all of these smaller advertisers. With the millions
33:32
Speaker 14: of websites we have and shopping sites and travel sites
33:36
Speaker 14: and things like that, that that incrementally spends just really
33:39
Speaker 14: significant amounts of money and that really insulates you from
33:42
Speaker 14: economic downturns. You notice that even in the worst of
33:46
Speaker 14: economic times, Meta actually had an up quarter because they're
33:50
Speaker 14: very insulated from like any small number like one hundred
33:54
Speaker 14: cmos controlling a budget. So she's going to need people
33:57
Speaker 14: with that experience.
33:58
Speaker 3: How do you build out and perform?
34:00
Speaker 14: And it's marketing platform for Twitter that can attract all
34:04
Speaker 14: of these smaller advertisers who are ultimately who were going
34:07
Speaker 14: to build our business around and build it to much
34:11
Speaker 14: much larger scale. You see, like Amazon did the fantastic
34:15
Speaker 14: job of that. I mean, how the there aren't a
34:19
Speaker 14: lot of large advertisers on Amazon's advertising platform. It's all
34:23
Speaker 14: these small sellers that are the majority of that revenue,
34:26
Speaker 14: and that's what those that skill set to do that
34:29
Speaker 14: is I think the skill set she's going to need
34:31
Speaker 14: to add to her team. I don't think she classically
34:34
Speaker 14: has that on her resume.
34:36
Speaker 1: So mark every company in every industry over the last
34:40
Speaker 1: several quarters in her conference call have mentioned AI, and
34:44
Speaker 1: I think the kids are referring to artificial intelligence.
34:46
Speaker 9: I'm not sure about that.
34:47
Speaker 1: But so how does that factor into what is a
34:51
Speaker 1: multi gajillion dollar business, which is the advertising business, both
34:56
Speaker 1: linear you know, TV, radio, all that kind of stuff,
34:58
Speaker 1: as well as the growth engine which is digital advertising.
35:02
Speaker 14: Yeah, so what what Google and Meta is so good
35:05
Speaker 14: at is finding the right consumer for your brand. I
35:08
Speaker 14: mean that's ultimately I always say no advertising advertising purchases.
35:13
Speaker 14: They don't actually want to buy ads. They want to
35:15
Speaker 14: buy traffic. They want to buy the consumers that are
35:19
Speaker 14: aligned with the product that they're selling. And Google obviously
35:22
Speaker 14: is incredibly I mean, it's it's the most efficient marketing
35:26
Speaker 14: engine ever because you literally tell them what you're interested
35:30
Speaker 14: in buying, and then they go here and then they
35:32
Speaker 14: take you right to.
35:33
Speaker 3: It and so and so that's why they're so large.
35:37
Speaker 14: And Meta doesn't have that kind of input, but they
35:41
Speaker 14: got very very good at it, obviously to build their
35:44
Speaker 14: business over one hundred billion dollars, and that is really
35:47
Speaker 14: hard for small advertisers.
35:49
Speaker 3: And what those companies are really good at.
35:51
Speaker 14: I think now the where AI is going to play
35:55
Speaker 14: a role is one bringing more efficiency into the advertising
35:59
Speaker 14: egosis into just getting really, really, really incredibly good at
36:04
Speaker 14: making that connection. Who are the consumers that are very
36:07
Speaker 14: open to hearing your message and hopefully potentially want to
36:11
Speaker 14: buy a product? And I think there's still a lot
36:14
Speaker 14: of room to go in that type of technology, and
36:16
Speaker 14: I think we are at a point where a lot
36:18
Speaker 14: of that tech is going to be AI orient technology
36:20
Speaker 14: to do it.
36:21
Speaker 12: I also want to ask about Disney, while we have
36:24
Speaker 12: you a tough week for them, They owe Comcast a
36:27
Speaker 12: lot of money for the Hulu situation. What do you
36:30
Speaker 12: think is the likelihood of Comcast potentially just going all
36:34
Speaker 12: in and purchasing Hulu.
36:36
Speaker 10: Yeah.
36:36
Speaker 14: I think the conversations on that were very active, just
36:42
Speaker 14: you know, knowing people at Comcasts and Disney. But I
36:45
Speaker 14: think Disney definitively they said we're doing a bundle and
36:48
Speaker 14: they did, I mean, they upset they want to double
36:51
Speaker 14: down on on owning Hulu and making it a part
36:54
Speaker 14: of a major bundle with Disney Plus and some of
36:56
Speaker 14: the other properties. So I know is going to then
37:02
Speaker 14: try to extract as much money as they possibly can
37:05
Speaker 14: from the portion of Hulu that they own. But I
37:09
Speaker 14: think that was a big question mark. And I think
37:11
Speaker 14: this week that that question mark was removed, that that
37:14
Speaker 14: Disney wants to own Hulu and they and and that's
37:19
Speaker 14: going to happen, but the details on the money they
37:22
Speaker 14: owe comcasts relate to Hulu are still to be worked out.
37:25
Speaker 3: I also think just they have one more point.
37:28
Speaker 14: I mean Hulu as this I'm sorry, Disney as a
37:30
Speaker 14: stock is they have so much, they have so many
37:34
Speaker 14: ways to save money and make Wall Street happy and
37:37
Speaker 14: things like that. There's no doubt it's going to be
37:39
Speaker 14: pretty easy for Disney to be a good stock to own.
37:43
Speaker 14: I think the real question marks in their business are
37:45
Speaker 14: the brand is associated with magic and the and if
37:50
Speaker 14: the brand loses that magical luster, the question is do
37:55
Speaker 14: you want to own the stock short term?
37:57
Speaker 3: But do consumers want to own the product long term?
38:00
Speaker 14: So I think all the question marks around Disney have
38:03
Speaker 14: to do with the price points for Disneyland are literally insane.
38:09
Speaker 14: And if you remove magic as part of the value proposition,
38:13
Speaker 14: is any our people still.
38:14
Speaker 3: Don't want to pay that? It's becoming a huge question
38:17
Speaker 3: Mark all.
38:17
Speaker 1: Right, Mark, thanks very much. We always appreciate getting a
38:19
Speaker 1: couple of minutes of your time. We can talk to
38:21
Speaker 1: anything on the media technology space. Mark Douglas, President and
38:25
Speaker 1: CEO of Mountain kind of getting the latest on what's
38:27
Speaker 1: going on at Twitter with Elon Musk and Linda Yakarino,
38:30
Speaker 1: leaving NBC Universal going over some big changes in the
38:33
Speaker 1: ad space.
38:34
Speaker 6: You're listening to the tape. Catch a our live program
38:37
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38:41
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38:50
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38:53
Speaker 1: All right, kids, e SG Environmental Sustainability and Governance ESG.
39:00
Speaker 1: I'm all down with that. I learned this before you
39:02
Speaker 1: guys even knew what it was. You're like, I know,
39:05
Speaker 1: you know, I was over in meeting investors in Paris.
39:09
Speaker 1: I don't know ten eleven twelve years ago and I
39:12
Speaker 1: was talking pitching Disney or something like that.
39:13
Speaker 9: So how are they on ESG? And I'm like, what
39:16
Speaker 9: what is ESG? Mickey Mouse? Yeah, I mean it's Mickey Mouse.
39:20
Speaker 9: I mean, how do you know what ESG is? But
39:21
Speaker 9: now I know? Okay, it's big.
39:23
Speaker 1: A lot of money being allocated to research, to funds
39:27
Speaker 1: that focus on ESG and incorporate that into their investment process.
39:31
Speaker 1: It's a global situation, at global issue. That's why Bloomberg
39:35
Speaker 1: Intelligence has twenty analysts assigned to all aspects of ESG research.
39:40
Speaker 1: Sheeting contractor ESG research channel. She's our fave, She's a
39:44
Speaker 1: Bloomberg Intelligence. All right, some stuff going on here. You
39:48
Speaker 1: have to explain what Article nine is and why do
39:51
Speaker 1: I care about it? Or why do ESG investors care
39:53
Speaker 1: about it?
39:53
Speaker 15: So both Addicle nine funds are a European designation. Basically
39:57
Speaker 15: they represent the most sustained I guess for the lack
40:01
Speaker 15: of better words. And what happened is a lot of
40:04
Speaker 15: them got downgraded, maybe towards Q four of last year
40:08
Speaker 15: because basically the regulators went and said, you know, sustained
40:12
Speaker 15: and investing criteria very specific and have to be one
40:14
Speaker 15: hundred percent of the fund. So everybody you know uproard
40:17
Speaker 15: and then reclassified down and now they've listened to christeria.
40:20
Speaker 15: So we'll see what happens.
40:22
Speaker 12: So what does that mean for ESG investing in? People
40:26
Speaker 12: who are you know, like my friends who are like
40:28
Speaker 12: I kind of want to invest in ESG in they
40:33
Speaker 12: do what they do through like laves or something like
40:35
Speaker 12: we don't know what we're doing, you know. So what
40:38
Speaker 12: does this mean my.
40:38
Speaker 1: Friends are rolling over two month tea bills?
40:43
Speaker 9: I don't know.
40:45
Speaker 15: So I don't think it really means much. I mean,
40:49
Speaker 15: all it means is it is going from a MORI
40:51
Speaker 15: yes she category to a Lesia she category. Is just
40:53
Speaker 15: interchanging between the do nothing about the holdings are changing.
40:57
Speaker 15: I think what's really interesting this year is how we
41:00
Speaker 15: I saw a lot of fund liquidations, a lot of them.
41:04
Speaker 15: So that's really picked up in the US, and I
41:07
Speaker 15: feel like that's going to be exasperated a little bit
41:10
Speaker 15: by the political backlash. So now I feel like people
41:13
Speaker 15: have this bleak view of future asset gathering capabilities. So
41:17
Speaker 15: while I don't think, you know, assets decreased because of
41:20
Speaker 15: the political backshog, I think it's going to exasperate the slowdown,
41:24
Speaker 15: Cosmo liquidations, all that fun stuff.
41:26
Speaker 1: So the ESG investing, to me, it seems to have
41:30
Speaker 1: in terms of popularity, intensity, capital peaked and now's on
41:37
Speaker 1: the decline. In the US, that's just my so you
41:39
Speaker 1: can correct me if I'm wrong. But boy, not in Europe.
41:42
Speaker 9: So why is Europe different from the US, or why
41:44
Speaker 9: is US different from Europe?
41:45
Speaker 15: I think the US has gotten I guess caught a
41:49
Speaker 15: little bit in the political backlash. First of all, yes,
41:52
Speaker 15: she was, you know, very much a big institutional thing.
41:56
Speaker 15: So it was a few big institutions putting large chunks
41:58
Speaker 15: of money into eu SHE funds. It never really caught
42:01
Speaker 15: on beyond that. In Europe it sort of has always
42:06
Speaker 15: continued because there's favorable regulations. So in the US now
42:10
Speaker 15: what's happened is because of this political backlash, I feel like, no,
42:14
Speaker 15: but that investor base that was institutional, it's going to
42:17
Speaker 15: not expand or is going to be restricted from expanding,
42:20
Speaker 15: So it's going to continue to cause a slow down,
42:22
Speaker 15: whereas Europe does not have that problem.
42:25
Speaker 6: I can't.
42:25
Speaker 1: So does that reduce the incentive for companies to pursue
42:30
Speaker 1: ESG policies? If they're not going to get support from
42:34
Speaker 1: their shareholders and creditors and things like that.
42:36
Speaker 15: I think more than that regulators, right, the regulators are
42:39
Speaker 15: going to push down on the investors, like what's happening
42:42
Speaker 15: in Florida from you know, they're going to restrict them
42:44
Speaker 15: from doing ESG analysis or launching green bondes. I think
42:48
Speaker 15: something like that. So I think the regulators are going
42:50
Speaker 15: to cause more of that shift.
42:52
Speaker 12: And what about the moves from the Biden administration, like
42:55
Speaker 12: the IRA is that a sufficient heage against some of that?
42:58
Speaker 15: So that's very clean deck and clean energy focused. I
43:02
Speaker 15: kind of separate ESG and clean energy, right, Like that's
43:04
Speaker 15: clean energy is a theme, it's a it's more of
43:09
Speaker 15: like a very small subset. Es SHE is very like
43:12
Speaker 15: broad risks and opportunities, values based things like that. So
43:17
Speaker 15: while that you know, supported clean energy and will support
43:20
Speaker 15: it in the long term, yes, she's different all right.
43:24
Speaker 1: So for ESG on one side, I've got some conservative politicians.
43:28
Speaker 1: On the other side, I've got people like Larry Fink,
43:30
Speaker 1: a black rock who's all in ESG right, and he's
43:34
Speaker 1: got a couple of shekels under management.
43:35
Speaker 9: I mean, who wins this battle?
43:38
Speaker 15: Do you think, Oh, I don't know, no idea, no idea.
43:42
Speaker 15: So what we're hearing from like short lived.
43:44
Speaker 1: But how about a state like California, They're still all
43:46
Speaker 1: in from a pension fund perspective, like we get you know,
43:50
Speaker 1: we'll support companies and investment strategies that incorporate ESG.
43:54
Speaker 15: Yeah, so you have a very big divide like you have.
43:56
Speaker 15: On one hand, I feel like within the same week,
43:59
Speaker 15: the Chicago Bench Fund decided to drop fossil fuels, and
44:02
Speaker 15: the same week Vanguard Exit exited the net zero Asset Alliance.
44:05
Speaker 9: It was a Vanguard exited the net.
44:08
Speaker 15: Zero Asset Managers Alliance. So yeah, okay, And at the
44:12
Speaker 15: same time Chicago went and decided to exclude fossil fuels.
44:16
Speaker 15: So you're seeing a very two sided sort of America
44:20
Speaker 15: or for lack of a better dollar.
44:21
Speaker 9: Oh yeah.
44:22
Speaker 12: So what does this look like as we head into
44:23
Speaker 12: the rest of the year after all of like the
44:25
Speaker 12: banking turmoil, the Bobe debt ceiling issue, what's next?
44:28
Speaker 15: So I think for us for DSG, it's a it's
44:31
Speaker 15: a combination of a continued slowdown because, like I said,
44:34
Speaker 15: we had a very concentrated investor base. What we needed
44:37
Speaker 15: to see is that widen Will this stop the widening?
44:41
Speaker 15: Probably we might see cyclicality again. You know, large investors
44:46
Speaker 15: put large chunks of money, so suddenly like a one
44:49
Speaker 15: up and then suddenly a one down. So either cyclicality
44:52
Speaker 15: or a little bit of a slowdown, at least in
44:54
Speaker 15: the US.
44:55
Speaker 1: And it's funny because I spoke to Tim Craighead, who
44:57
Speaker 1: part of our management team running Bloomberg Intelligence in London,
45:01
Speaker 1: and he was just traveling through.
45:02
Speaker 9: The Nordic countries. Wow, that's all they talk about.
45:05
Speaker 15: Yeah, well they've ever talked that.
45:07
Speaker 9: That's all they talked about. I mean, you go to
45:08
Speaker 9: Nordis Bank.
45:09
Speaker 1: Which is, you know, one of the biggest sovereign wealth
45:12
Speaker 1: funds in the world. I mean, if you're not super green,
45:16
Speaker 1: they're not investing in so body.
45:18
Speaker 15: You asked me what was different about Europe. That's also
45:21
Speaker 15: another thing that's really different about Europe. Right, your ascid
45:24
Speaker 15: owners threw it down your throat. The US doesn't do
45:28
Speaker 15: that so much. And the asset owners, I don't feel
45:30
Speaker 15: like they control so much of the market. Then the
45:32
Speaker 15: European asset owners.
45:34
Speaker 9: It's funny because how did Norway make all their money oil?
45:38
Speaker 14: Right?
45:38
Speaker 12: Well, that's what's interesting too. We had a guest on
45:40
Speaker 12: the Business Week show recently who had a very contrarian esgview.
45:44
Speaker 12: He basically said that you could argue that some of
45:46
Speaker 12: the oil companies are an ESG investment because someday they're
45:50
Speaker 12: going to switch to clean energy.
45:52
Speaker 15: That's completely true. So I wouldn't say energy or oil
45:57
Speaker 15: is bad, and you know, something like deck is good.
46:00
Speaker 15: I think it's all relative to the business of the
46:02
Speaker 15: company and what they're doing. Like not just Bank excluded
46:05
Speaker 15: oil companies from the entire portfolio, not due to ESG reasons.
46:09
Speaker 15: They wanted to diversify their bension fund because their economy
46:12
Speaker 15: is so dependent.
46:13
Speaker 13: There you go.
46:13
Speaker 15: So they're very different reasons for doing different things.
46:18
Speaker 1: All right, But Bloomberg Intelligence has allocated a lot of
46:22
Speaker 1: resources to all things at ESG and believe that's a big,
46:27
Speaker 1: big future here. So Sheen Contractor, thanks so much for
46:29
Speaker 1: joining us. Shaheen Contractor. She is the ESG research analyst
46:33
Speaker 1: at Bloomberg Intelligence. She joins us live in a Bloomberg
46:36
Speaker 1: Interactor broker studio on a Friday. I will note so
46:39
Speaker 1: like double gold star for Shaheen, no Melanie and no
46:43
Speaker 1: work from home for Shaheen.
46:47
Speaker 2: Thanks for listening to the Bloomberg Markets podcast. You can
46:50
Speaker 2: subscribe and listen to interviews at Apple Podcasts or whatever
46:54
Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter
46:58
Speaker 2: at Matt Miller nineteen seventy three.
47:00
Speaker 9: And I'm Fall Sweeney. I'm on Twitter at pt Sweeney.
47:03
Speaker 1: Before the podcast, you can always catch us worldwide at
47:05
Speaker 1: Bloomberg Radio