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Investors Are Starting To Look At Argentinian Assets · Bloomberg Intelligence

• 0:05
  Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox.
• 0:08
  Speaker 1: Along with my co host Lisa Bramowitz. Each day we
• 0:11
  Speaker 1: bring you the most important, noteworthy, and useful interviews for
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  Speaker 1: you and your money, whether you're at the grocery store
• 0:17
  Speaker 1: or the trading floor. Find the Bloomberg p m L
• 0:20
  Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Well,
• 0:33
  Speaker 1: markets in general are pretty calm, at least if you
• 0:36
  Speaker 1: look at the United States. Look elsewhere, not so much.
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  Speaker 1: In particular, I'm talking about Argentina, which today asked the
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  Speaker 1: i m F the International Monetary Funds to expedite and
• 0:46
  Speaker 1: already agreed upon credit line the payments of fifty billion
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  Speaker 1: dollars still out there. Joining us now to talk about
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  Speaker 1: emerging markets and specifically some of the troubled child children
• 0:57
  Speaker 1: within them. Damien Sassaur, chief Merging markets credit strategist here
• 1:01
  Speaker 1: at Bloomberg Intelligence. Damien, what do you make of Argentina
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  Speaker 1: at this point, basically asking for help with their currency
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  Speaker 1: falling to a record low versus the dollar. Yeah, well,
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  Speaker 1: I mean Argentina has been trading heavy for a very
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  Speaker 1: long time now, I mean technicals have improved, but again
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  Speaker 1: I'm not convinced it's all clean positioning here. I mean
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  Speaker 1: it's fundamentals remain very very weak, declining GDP. I mean,
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  Speaker 1: it's going to enter its second recession in as many
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  Speaker 1: years this year. Rising interest rates, I mean interest rates
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  Speaker 1: have literally doubled. I mean, I think dollar interest rates
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  Speaker 1: in Argentina now are are hovering around ten percent. Uh,
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  Speaker 1: you're in the high if you look at local currency rates.
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  Speaker 1: So yeah, No, I mean rising inflation week externals, there's
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  Speaker 1: a lot not to like about Argentina. But interestingly enough,
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  Speaker 1: the past forty eight hours, I've received some interesting calls
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  Speaker 1: from investors, particularly advent riven investors, who are actually looking
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  Speaker 1: at current levels and perhaps looking to get involved, which
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  Speaker 1: may be a sign that you know, things might change. Uh.
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  Speaker 1: The reason I is because wait a minute, when when
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  Speaker 1: when this election took place? When when we got the
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  Speaker 1: new president mackri I remember distinctly people beating the drums
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  Speaker 1: saying this is different. You've got to get in. Argentina
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  Speaker 1: is going to be the best place to invest money.
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  Speaker 1: Oh come on, well, I mean you're right, Pim. I mean, look,
• 2:23
  Speaker 1: I mean if you look at going into March of
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  Speaker 1: this year, when Iam sort of melted down. It was
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  Speaker 1: the largest overweight in emerging markets according to JP Morgan's
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  Speaker 1: Positioning survey. Right, so people were definitely long and wrong.
• 2:36
  Speaker 1: And I think you're aut. You make a very good point.
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  Speaker 1: You know, people who held on on the way down
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  Speaker 1: in the last few months, it's gonna be very difficult
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  Speaker 1: for them to reload at current levels. Well, I'm just
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  Speaker 1: talking about credibility. Well, yeah, right, what credibility do they
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  Speaker 1: have when they are dealing with the second recession in
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  Speaker 1: two years and having defaulted what five times in the
• 2:52
  Speaker 1: past century. I would I would argue the other thing.
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  Speaker 1: I would say, they've they've made quite a bit of
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  Speaker 1: progress in structural reforms. They've liberalized their effects rate, they've
• 3:00
  Speaker 1: reduced export duties, they've cut fuel subsidies. I mean, they've
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  Speaker 1: re established times with global capital markets after being in
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  Speaker 1: the black for ten years. But um, but you're absolutely right.
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  Speaker 1: You know they want fifty billion dollars from the International
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  Speaker 1: Monetary Fund. Well, I mean, look, the government. If I think,
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  Speaker 1: I think the government would be better served if it
• 3:18
  Speaker 1: put disinflation efforts aside, engineered a controlled real depreciation of
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  Speaker 1: the PAS. So with the attention of again, boosting external competitiveness,
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  Speaker 1: attracting FDI and and reducing the fiscal deficit. And I
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  Speaker 1: think that fifty billion I m F line goes a
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  Speaker 1: long way to giving them the support they need and
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  Speaker 1: the credibility they need to put through, you know, to
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  Speaker 1: to actually do that. Unlike Turkey, right, I mean, Turkey,
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  Speaker 1: you know, has shown the I m F. They've shunned
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  Speaker 1: their Western investors. You know, Argentina has taken a very
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  Speaker 1: different tack. And yet Argentina five year CDs is trading
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  Speaker 1: above six hundred basis points in Turkeys only at what
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  Speaker 1: four hundred and eighty? So where's the disconnect their? Right?
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  Speaker 1: I mean, I would make the case that perhaps Argentina
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  Speaker 1: looks relatively attractive at current levels. Interesting I think that
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  Speaker 1: right now I want to add not a little bit
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  Speaker 1: Argentina as an adysentcratic story for sure. Uh Turkey as well,
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  Speaker 1: both of them seeing distress. But at a time when
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  Speaker 1: a number of pretty big asset managers have gotten burned
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  Speaker 1: very badly based on Argentinean and Turkish sell offs of assets,
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  Speaker 1: you have to wonder is this going to lead to
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  Speaker 1: a broader risk off in e m just because burned once,
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  Speaker 1: burned twice? How many times can these people get burned
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  Speaker 1: before they just say, forget it, I'm going to cast
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  Speaker 1: You know, I don't want to play this time in
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  Speaker 1: a different story with Argentina because you know, we've lived
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  Speaker 1: through Argentina. I mean, we um guys that live through
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  Speaker 1: Argentina for the better part of our careers. But you know,
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  Speaker 1: while the pacers plunged and rates have searched, um. You know,
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  Speaker 1: thus far, Argentine's remain quite confident in their banking system.
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  Speaker 1: They have not withdrawn deposits as they have in Latin
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  Speaker 1: in previous crisis. Is like we're seeing in other places
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  Speaker 1: like Turkey and and and look, I mean cross border
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  Speaker 1: market funding and liquid assets remain ample in both dollars
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  Speaker 1: and pacias in Argentina, So the banking system remains, you know,
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  Speaker 1: relatively healthy. So you don't contagion either within Argentina or
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  Speaker 1: more broadly in emerging markets. I think I think Turkey
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  Speaker 1: and Argentina have Look, they're a very small part of
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  Speaker 1: the emerging markets, you know, and so far, yeah, we've
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  Speaker 1: been relatively I guess fortunate that we haven't seen contagion.
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  Speaker 1: It's not China it's not you know, it's not even
• 5:18
  Speaker 1: brazila Russia. Um. But you know, I I take your point.
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  Speaker 1: You know, as things, you know, get worse and look,
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  Speaker 1: performances and perception is reality. So long as performance remains
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  Speaker 1: you know, low and poor. Um. You know, you know
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  Speaker 1: this will eventually slip into the real economy. You know.
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  Speaker 1: The longer that you know these economies failed to perform,
• 5:36
  Speaker 1: the longer that they you know, they are mired in
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  Speaker 1: this weakness, you know, things are going to get more
• 5:40
  Speaker 1: and more challenging and and so you're right from that perspective,
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  Speaker 1: but we're not quite there yet. UM. I still think
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  Speaker 1: that you know, Argentina, you know, can can manage their
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  Speaker 1: way out of this. Turkey is a different story. But Argentina,
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  Speaker 1: you know, I I think at current levels, it's starting
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  Speaker 1: to look a little bit of attractive. I sense a
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  Speaker 1: trip to Buenos airis in the future for Damian Sasaur.
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  Speaker 1: You never know, Damian Sassaura, thank you very much, Chief
• 6:02
  Speaker 1: Emerging markets credit strategist for Bloomberg Intelligence, giving us the
• 6:07
  Speaker 1: lowdown on investing in emerging markets. Canada's Foreign Affairs and
• 6:27
  Speaker 1: Minister Christopher Freelan is meeting in Washington, d C with
• 6:32
  Speaker 1: her US counterparts. This comes a day after US President
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  Speaker 1: Donald Trump announced a deal with Mexico on trade, and
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  Speaker 1: of course Canada was absent from those US Mexican discussions.
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  Speaker 1: Here to tell us more about this three way complicated
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  Speaker 1: trade agreement is Antonio Ortiz Mayna. He is a senior
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  Speaker 1: vice president for Albright stone Bridge Group a s G. Formerly,
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  Speaker 1: he served for eight years as head of Economics Affairs
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  Speaker 1: at the Embassy of Mexico in the United States, where
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  Speaker 1: he advised US companies with a presence in Mexico as
• 7:08
  Speaker 1: well as Mexican companies doing business in the United States. Ambassador,
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  Speaker 1: thank you very much for being with us. Can you
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  Speaker 1: tell us what is so terrible about if indeed that
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  Speaker 1: is so Canada not being part of the negotiations between
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  Speaker 1: the United States and Mexico, And then why would Mexico
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  Speaker 1: have those negotiations solely with the US if indeed having
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  Speaker 1: Canada there was so important. Yes, thank you for the
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  Speaker 1: invitation and glad to share my views on that. First
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  Speaker 1: of all, I would say that even though Canada was
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  Speaker 1: not at the table over the past two months, let's say,
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  Speaker 1: after the G seven summit in Canada, where there was
• 7:53
  Speaker 1: a fallout between Canada and the US. Canada was in
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  Speaker 1: a way of participating in the negotiations above all, with
• 8:02
  Speaker 1: great consultations between Mexico and Canada, and Mexico was dealing
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  Speaker 1: with the US on some pretty contentious issues, I would say,
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  Speaker 1: chief among them the automobile rules of origin, and was
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  Speaker 1: that was settled. It was pretty easy for Canada to
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  Speaker 1: buy into that and then to deal with issues that
• 8:21
  Speaker 1: are more three way challenges rather than bilateral issues. So
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  Speaker 1: that's where we stand. But the clock is sticking from
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  Speaker 1: now until of Friday, and I don't know what will happen.
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  Speaker 1: Has a lot changed really between the US and Mexico.
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  Speaker 1: I mean, is this deal likely to stick and is
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  Speaker 1: it really that different? Um, well, there there are open questions.
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  Speaker 1: First of all, will it be bilateral or trilateral? We
• 8:49
  Speaker 1: will now buy Friday. And this is not trivial because
• 8:52
  Speaker 1: under U s Trade Promotion Authority, the Congress delegated authority
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  Speaker 1: to US negotiators to update NAFTA, to modernize NAFTA, not
• 9:02
  Speaker 1: to do a bilateral deal with Mexico or even another
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  Speaker 1: bilateral deal with Canada. Some so, some members of the
• 9:10
  Speaker 1: House and Senate are questioning whether uh USDR has authority
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  Speaker 1: to submit a bilateral deal with Mexico. That's on a
• 9:18
  Speaker 1: sort of a legal technical perspective, but even more importantly,
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  Speaker 1: from a substantial perspective, I don't think it would be
• 9:27
  Speaker 1: a good idea to have a bilateral agreement. I think
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  Speaker 1: a trilateral agreement is much more significant from an economic perspective.
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  Speaker 1: So why did you believe Mexico entered into this bilateral negotiation.
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  Speaker 1: I think that Mexico wanted to accelerate negotiations as as
• 9:47
  Speaker 1: much as possible to see if they could sign the
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  Speaker 1: agreement with the current government that will end on December one,
• 9:56
  Speaker 1: and to do that they had to advance on a
• 9:59
  Speaker 1: number of bilater role issues with the US, and as
• 10:02
  Speaker 1: I mentioned, the main one was over all the rules
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  Speaker 1: of origin. So once they got that of out of
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  Speaker 1: the way, it was easier to accelerate negotiations. Our guest
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  Speaker 1: is Dr Antonio ortiz Amina. He is the senior vice
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  Speaker 1: president at albright Stone Bridge Group, previously serving as the
• 10:21
  Speaker 1: head of Economic Affairs at the Embassy of Mexico. And
• 10:26
  Speaker 1: nothing surprising their Doctor Ortismina from the Foreign Minister of
• 10:32
  Speaker 1: Canada that they're having good negotiations. But what could have
• 10:35
  Speaker 1: changed in such a brief amount of time. Is it
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  Speaker 1: that Canada realizes that the clock is taking in at
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  Speaker 1: the United States and Mexico or will go their own
• 10:42
  Speaker 1: way with or without Canada. Well, a couple of things
• 10:46
  Speaker 1: have happened. First the agreement on autos, which is critically
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  Speaker 1: important for Canada. Secondly, UH an important agreement on the
• 10:55
  Speaker 1: sunset class. So the sunset class was an absolute deal
• 10:59
  Speaker 1: breaker UH for both Mexico Canada. So with those two
• 11:04
  Speaker 1: big items out of the way, I think Canada can
• 11:08
  Speaker 1: now deal with some bilateral issues, above all supply management
• 11:12
  Speaker 1: in their dairy industry, and then to deal with something
• 11:17
  Speaker 1: that I think will be very complicated, and that's NAPTER
• 11:20
  Speaker 1: chapter nineteen, which deals with unfair trade practices, dumping and subsidies.
• 11:25
  Speaker 1: It is my understanding that Mexico on the US reached
• 11:29
  Speaker 1: an agreement to do away with NAPTA chapter nineteen, and
• 11:33
  Speaker 1: chapter nineteen is very important for Canada, but substantively over
• 11:37
  Speaker 1: the endless software lumber dispute and politically so they will
• 11:42
  Speaker 1: have to see how they can resolve that. So one
• 11:46
  Speaker 1: thing that I'm struck by here is that President Trump
• 11:48
  Speaker 1: is negotiating directly with Canada and with Mexico. But Congress
• 11:52
  Speaker 1: isn't necessarily on board. So how much cloud does President
• 11:56
  Speaker 1: Trump have in these renegotiations when Congress ultimately has to
• 12:00
  Speaker 1: sign off and it's unclear how connected they are to
• 12:02
  Speaker 1: to this whole process. Absolutely, they are different negotiations going
• 12:06
  Speaker 1: on right now. So it's US Canada trade negotiations finalizing
• 12:12
  Speaker 1: Mexico U S trade negotiations, and that trilateral negotiations, and then, uh,
• 12:17
  Speaker 1: the executive will have to make sure that Congress accepts
• 12:21
  Speaker 1: whatever they submit. And it is not a foregone conclusion
• 12:25
  Speaker 1: that the Congress will accept a bilateral deal because the
• 12:29
  Speaker 1: authority was granted to do a trilateral deal. Right. Well, yeah,
• 12:35
  Speaker 1: but those are the legal issues that you that you
• 12:37
  Speaker 1: mentioned previously. Now you mentioned Mexico's domestic political situation wanting
• 12:43
  Speaker 1: to get a deal done before the new administration of
• 12:46
  Speaker 1: Loprez Lopez Oprador takes office. Canada is also facing an election,
• 12:52
  Speaker 1: and then we have the US mid term elections in November.
• 12:56
  Speaker 1: Do you believe that politics is currently driving the negotiations. Yes,
• 13:01
  Speaker 1: I do believe that politics are are to great extin
• 13:04
  Speaker 1: driving the negotiation. And my view is that it might
• 13:09
  Speaker 1: be more US politics rather than Mexican politics. And let
• 13:12
  Speaker 1: me explain why. So, the upcoming Lopezo ad Or administration
• 13:18
  Speaker 1: wants to get the NAFTA issue out of the way
• 13:22
  Speaker 1: to focus on other domestic politics issues and additional very
• 13:27
  Speaker 1: complicated by lateral issues with the US, including undocumented migration,
• 13:32
  Speaker 1: cooperation and security, et cetera. So it's more of an
• 13:35
  Speaker 1: idea that they want to close this chapter and move
• 13:38
  Speaker 1: on to other things, rather than there being a risk
• 13:42
  Speaker 1: that the next Mexican Congress would not ratify a new
• 13:46
  Speaker 1: NAFTA agreement. So that is my view in terms of
• 13:49
  Speaker 1: the Mexican politics. The US politics, I think are more
• 13:53
  Speaker 1: complicated because the calculation by us DR has to do
• 13:59
  Speaker 1: with the current Congress and what could be ratified by
• 14:02
  Speaker 1: the current House and Senate. If they wait until they have,
• 14:06
  Speaker 1: you know, the a new Senate next year, then the
• 14:09
  Speaker 1: political calculus might change and what could have been acceptable
• 14:14
  Speaker 1: for you know, the current Congress in terms of the
• 14:17
  Speaker 1: Mexican concessions might not be acceptable later on. So I
• 14:22
  Speaker 1: do have say more questions about the effect of US
• 14:26
  Speaker 1: domestic politics on the negotiations and ratification than I do
• 14:31
  Speaker 1: about Mexican politics. Even though there will be a change
• 14:34
  Speaker 1: in government in Mexico. This is really compellingentis it suggests
• 14:38
  Speaker 1: to me that everyone's going to try to expedite this
• 14:41
  Speaker 1: through the process very quickly in order to avoid any
• 14:45
  Speaker 1: kind of political turmoil. That that is correct, But I'm
• 14:48
  Speaker 1: not concerned about US political turmoil than Mexican political turmoil. Yeah,
• 14:55
  Speaker 1: Antonio Ortiz at Manna, thank you so much for being
• 14:57
  Speaker 1: with us. Antonio Ortiz at Manna, see your vice president
• 15:00
  Speaker 1: of the all Bright stone Bridge Group. He's also the
• 15:03
  Speaker 1: former head of economic affairs at the Embassy of Mexico
• 15:07
  Speaker 1: in the United States, joining us now Alex Wayne Bloomberg
• 15:26
  Speaker 1: White House team Leader Alex. Interestingly, in response to this announcement,
• 15:31
  Speaker 1: Io S Senator Chuck Grassley, a Republican, tweeted out that
• 15:35
  Speaker 1: he hopes that is not the case, that this is
• 15:37
  Speaker 1: not true, and he tweeted this to President Trump, Alex,
• 15:41
  Speaker 1: what are we to make of all of this? So
• 15:43
  Speaker 1: arguably the president's biggest achievement has been getting judicial nominees
• 15:48
  Speaker 1: appointed to positions in the federal court system. He's gotten
• 15:52
  Speaker 1: uh sixty appointments to the court system already, including appeals
• 15:56
  Speaker 1: Court judges and a Supreme Court justice with more on
• 16:00
  Speaker 1: the way. Probably, so the Senate Judiciary Committee Chairman, Chuck
• 16:04
  Speaker 1: Grassley is the guy who has moved all those appointments
• 16:07
  Speaker 1: through the process. He's worked closely with McGann. Megan gets
• 16:09
  Speaker 1: a lot of credits on the right among conservatives and
• 16:12
  Speaker 1: among Republican members of Congress for shepherding all these judicial appointments.
• 16:16
  Speaker 1: And so I think that is what Grassley is concerned about,
• 16:19
  Speaker 1: that if there is turmoil in the White House Counsel's
• 16:22
  Speaker 1: position that the steady flow of judicial appointments may may
• 16:27
  Speaker 1: may get a little a little bumpy. Can you give
• 16:29
  Speaker 1: us a sense of the background to this. I mean,
• 16:31
  Speaker 1: Don McGann is not President Trump's personal lawyer and has
• 16:34
  Speaker 1: said he was not aware of some of the payments
• 16:37
  Speaker 1: that were made to people to not talk about. So
• 16:42
  Speaker 1: is that related to his decision to leave or has
• 16:44
  Speaker 1: this been in the works for a while now? What
• 16:46
  Speaker 1: what McGann is is involved in his UH Special Counsel
• 16:50
  Speaker 1: Robert Mueller's investigations. He has taught extensively with the Special
• 16:54
  Speaker 1: Counsel UH, essentially because the President gave him the green
• 16:58
  Speaker 1: light to do so. And so McGann that the White
• 17:01
  Speaker 1: House never expressed privilege over McGann to to limit what
• 17:05
  Speaker 1: he said to the Special Counsel, So he's He's believed
• 17:08
  Speaker 1: to have told Bob Mueller's folks a lot about how
• 17:12
  Speaker 1: the early days of the White House worked, the firing
• 17:15
  Speaker 1: of James Comey, UM, the Trump's decision making process with
• 17:19
  Speaker 1: regard to Michael Flynn as former National Security advisor, all
• 17:22
  Speaker 1: of those things Don McGann was very involved with and
• 17:25
  Speaker 1: uh and has has spoken on the Special Council about UM.
• 17:29
  Speaker 1: He and Trump have also reportedly budded heads over sort
• 17:33
  Speaker 1: of the limits of presidential power. Trump is, I think,
• 17:36
  Speaker 1: asked McGann to do things and McGann has had to
• 17:38
  Speaker 1: tell him no, and that's made the President a little
• 17:41
  Speaker 1: unhappy with him. Alex Washington is a political town. Is
• 17:46
  Speaker 1: this a firing or a resignation something in between? I think, um,
• 17:52
  Speaker 1: it's uh. We we don't know whether mcgannny this is coming.
• 17:56
  Speaker 1: There was a report at Axioist this morning, uh, tip
• 17:59
  Speaker 1: of the hat to them that said McGann was preparing
• 18:02
  Speaker 1: to leave either after Brett Kavanaugh was confirmed to the
• 18:05
  Speaker 1: Supreme Court or after the midterm elections. In November. But um,
• 18:11
  Speaker 1: the President seems to have sort of quickened the pace
• 18:13
  Speaker 1: on that departure a little bit with the tweet today.
• 18:16
  Speaker 1: Uh So it's, UM, I don't know, it's it's sort
• 18:19
  Speaker 1: of like a slow motion of firing or something. I'm
• 18:22
  Speaker 1: not exactly sure. What is the role of the White
• 18:24
  Speaker 1: House Council. What does the White House Council do? The
• 18:27
  Speaker 1: White House Council defends the White House and the Office
• 18:31
  Speaker 1: of the Presidency, uh and represents the White House in
• 18:34
  Speaker 1: the Office of the Presidency in legal matters. The White
• 18:37
  Speaker 1: House Council does not represent the President. That was apparently
• 18:40
  Speaker 1: a misunderstanding that Donald Trump had upon entering the White House.
• 18:43
  Speaker 1: He wanted. One thing we've we've seen reported is that
• 18:46
  Speaker 1: he sort of thought that Don mgan was his personal attorney.
• 18:49
  Speaker 1: And that's that's not what the White House Council does.
• 18:52
  Speaker 1: And go ahead, going forward, who's likely to replace Don
• 18:57
  Speaker 1: And does this expedited potential firing a Jeff Jeff Sessions
• 19:01
  Speaker 1: that some people have been suggesting this morning. Uh, don't
• 19:05
  Speaker 1: know that it has anything to do with Jeff Sessions.
• 19:07
  Speaker 1: But the guy that is regarded as probably the likely
• 19:11
  Speaker 1: successor to McGann isn't as a lawyer named Emmett Flood.
• 19:14
  Speaker 1: He was hired earlier this year to replace Ty Cobb,
• 19:18
  Speaker 1: who had been dealing with UH with Mueller. So Emmett
• 19:21
  Speaker 1: Flood is now the the special counsel, the guy dealing
• 19:25
  Speaker 1: with the special counsel investigation. He also handled UH investigations
• 19:30
  Speaker 1: in the Clinton White House. Interestingly, UM, so he's he's
• 19:34
  Speaker 1: not really a partisan guy and at Flood he's just
• 19:37
  Speaker 1: a guy who strongly believes in the independence of the
• 19:41
  Speaker 1: of the White House and in defending the president whoever
• 19:44
  Speaker 1: it is um from investigations both by by by Counsel
• 19:49
  Speaker 1: and the and the Justice Freman or by Congress. And
• 19:52
  Speaker 1: this would require no approval process. Is that correct? Right?
• 19:56
  Speaker 1: Especially the the White House Counsel is not a Senate
• 19:59
  Speaker 1: confirmed edition. It's not. It's not a count of position.
• 20:02
  Speaker 1: It's entirely up to the president. As far as Emmett
• 20:05
  Speaker 1: Flood is concerned, he's got experience, as you said, in
• 20:09
  Speaker 1: a variety of administrations. What would be his role in
• 20:16
  Speaker 1: disappointment of judges and in the general role of being
• 20:20
  Speaker 1: a White House counsel. I remember that he was representing
• 20:26
  Speaker 1: at the time Vice President Dick Cheney. Uh in the
• 20:29
  Speaker 1: lawsuit that was filed by Valerie Plaie I believe about
• 20:34
  Speaker 1: the Plame affair about the right. So conventional wisdom is
• 20:38
  Speaker 1: that Democrats are going to take the House in the
• 20:40
  Speaker 1: midterm elections. And if that happens, UH, the White House
• 20:43
  Speaker 1: can expect a flood of congressional investigations. Uh. Every subcommittee
• 20:49
  Speaker 1: in the House with investigation investigatory powers is going to
• 20:52
  Speaker 1: be probing one scandal or another within the Trump administration.
• 20:57
  Speaker 1: And so Emmett Flood will be the guy if he
• 20:59
  Speaker 1: if he assumes the job, he will be the guy
• 21:01
  Speaker 1: who has to respond to all these investigations and fight
• 21:04
  Speaker 1: back against them. Alex, if we could just take a
• 21:06
  Speaker 1: step back and talk about the turnover that we've seen
• 21:10
  Speaker 1: so far in the White House and try to draw
• 21:13
  Speaker 1: some sort of implication from it. Is this pretty typical
• 21:17
  Speaker 1: or is this a sign of something else? But if
• 21:21
  Speaker 1: it's not typical, then then what can we draw from it?
• 21:23
  Speaker 1: Is it just that President Trump is known for high
• 21:26
  Speaker 1: turnover just generally, and this is his style? Is this
• 21:31
  Speaker 1: good guy to work for the President is a difficult
• 21:33
  Speaker 1: person to work for? And this is a very tumultuous
• 21:35
  Speaker 1: White House. There has been a lot, a lot of turnover,
• 21:37
  Speaker 1: more turnover than any previous presidency than anybody's ever looked
• 21:41
  Speaker 1: closely at Brookings Institute has has good numbers on that um.
• 21:45
  Speaker 1: And that's all because of the kind of guy Donald
• 21:47
  Speaker 1: Trump is. Uh. He demands loyalty from his subordinates. Uh,
• 21:52
  Speaker 1: he doesn't tend to show them much loyalty himself, and
• 21:55
  Speaker 1: so a lot of people come in and out. I
• 21:58
  Speaker 1: want to thank you very much for joining us, alex
• 22:00
  Speaker 1: Wayne of Bloomberg sharing some insight into what's going on
• 22:04
  Speaker 1: in the White House. Of course, Don McGan the announcement
• 22:07
  Speaker 1: from President Donald Trump that he will be leaving his
• 22:10
  Speaker 1: position as the White House Counsel uh sometime in the fall,
• 22:16
  Speaker 1: based on the tweet from the President to speaking about
• 22:20
  Speaker 1: also the appointment of Brett Kavanaugh to the US Supreme Court.
• 22:25
  Speaker 1: Our thanks to alex Wayne joining us down to tell
• 22:41
  Speaker 1: us all about the world of video gaming. Is Ted Pollock.
• 22:44
  Speaker 1: He is a video game technology analyst and the co
• 22:47
  Speaker 1: founder of The Gamer E t F G a m
• 22:52
  Speaker 1: R E t F. Ted Pollock, thanks very much for
• 22:54
  Speaker 1: being here. How old were you when you first played
• 22:57
  Speaker 1: video games? Well, I think my parents brought home about
• 23:01
  Speaker 1: age seven or eight, and have you've been playing them
• 23:03
  Speaker 1: continuously since then? Not quite. I have a lot of
• 23:06
  Speaker 1: different hobbies, but it's a great thing to do for
• 23:09
  Speaker 1: your screen time, and it's it's more intellectually engaging than television.
• 23:14
  Speaker 1: Tell me about the technology set up that many gamers have,
• 23:18
  Speaker 1: because if you're not in the gaming world, you're not
• 23:20
  Speaker 1: necessarily aware of the power, the complexity, the vibrancy of
• 23:27
  Speaker 1: the graphics that are now rudimentary when it comes to
• 23:31
  Speaker 1: a game. That's a great point. There's a huge spectrum
• 23:34
  Speaker 1: of of systems ranging from the most powerful, which will
• 23:37
  Speaker 1: be your gaming PCs made by companies like Dell, alien Ware, HP, Lenovo,
• 23:44
  Speaker 1: so on and so forth. And then you go down
• 23:46
  Speaker 1: into the PlayStation four, the Xbox one, the Nintendo Switch.
• 23:51
  Speaker 1: You have tablet gaming, you have mobile phone gaming. There's
• 23:55
  Speaker 1: still arcade gaming out there, you have virtual reality. Uh,
• 23:59
  Speaker 1: just a huge spectrum of gaming. And coming up in
• 24:01
  Speaker 1: the next three to five years, there's going to be
• 24:03
  Speaker 1: a revolutionary change in gaming as we moved to cloud streaming.
• 24:08
  Speaker 1: Cloud streaming is where the game is being processed on
• 24:11
  Speaker 1: a remote server and all you need is a very
• 24:14
  Speaker 1: low power processor to play high quality graphics. So certainly
• 24:18
  Speaker 1: gaming has expanded dramatically, and not just from a playing perspective,
• 24:22
  Speaker 1: but also a spectating perspective. And there's one study that
• 24:26
  Speaker 1: you highlighted that showed that professional video gaming just in general,
• 24:31
  Speaker 1: the industry will search just this year alone. Okay, that's
• 24:37
  Speaker 1: the backdrop. Let's move fast forward to where we are
• 24:40
  Speaker 1: right now. Or there's some questions, particularly in China with
• 24:44
  Speaker 1: their decision not to approve some pretty mainstream games, and
• 24:50
  Speaker 1: this has led to a lot of uncertainty. What's the
• 24:53
  Speaker 1: impact of that, How how significantly should people take that? Well, China,
• 24:57
  Speaker 1: their cultural agencies are very dringent on all sorts of media,
• 25:02
  Speaker 1: and they they throttle certain certain media titles, certain brands,
• 25:09
  Speaker 1: and they're also very careful about the business models that
• 25:12
  Speaker 1: the game companies are using. There. Some of the uh,
• 25:16
  Speaker 1: the free to play models encourage kids to perhaps play
• 25:19
  Speaker 1: a little bit too much, so they're being careful about
• 25:22
  Speaker 1: how they do that. But on a positive note in China, uh,
• 25:25
  Speaker 1: there's a game company called net Dragon Websoft that just
• 25:28
  Speaker 1: today announced six increase in earnings and they make educational games.
• 25:36
  Speaker 1: So there's some positive things going on in China as well.
• 25:38
  Speaker 1: It's not all bad news. So I'm looking right now
• 25:41
  Speaker 1: at the geographic allocation of your assets in the game
• 25:44
  Speaker 1: or e t F. China is nearly ten, the US
• 25:47
  Speaker 1: is about thirty. Uh. How will that, how will that
• 25:52
  Speaker 1: shift over the next couple of years from your expectations,
• 25:55
  Speaker 1: I think that it should remain fairly stable and in
• 25:59
  Speaker 1: those and then allocations, I gonna I'd be remiss if
• 26:03
  Speaker 1: I didn't ask you about any fall out having to
• 26:05
  Speaker 1: do with the tragedy in uh, Jacksonville in Florida, having
• 26:10
  Speaker 1: to do with those public games that was NFL MAT
• 26:14
  Speaker 1: and nineteen. I think security is important at schools, at
• 26:18
  Speaker 1: music concerts, at any place where people gather, and that uh,
• 26:23
  Speaker 1: you know, that's really what's going on here that you're
• 26:26
  Speaker 1: gonna be It's gonna be a sort of the fact though,
• 26:29
  Speaker 1: that's the operational procedure. Everybody gets wanded, Everybody goes through
• 26:33
  Speaker 1: some kind of metal detector to check for any kind
• 26:36
  Speaker 1: of suspicious Uh. This this could this could segue into
• 26:39
  Speaker 1: a discussion not about the gaming industry, and but bottom
• 26:43
  Speaker 1: line is that you have to deal with the environment
• 26:45
  Speaker 1: that is out there currently in the current environment is
• 26:48
  Speaker 1: that when people gather, there's a risk that someone crazy
• 26:52
  Speaker 1: will do something bad. Just real quick. Uh. From your perspective,
• 26:57
  Speaker 1: do you expect gaming to be a rival to, say, football,
• 27:01
  Speaker 1: in ten years on the sports front? YEP, that's a
• 27:05
  Speaker 1: difficult question. I think that when you look at there's
• 27:07
  Speaker 1: there's three ways of looking at the popularity. There's there's participants,
• 27:11
  Speaker 1: there's followers, and there's revenue. So certainly the number of
• 27:15
  Speaker 1: followers and gaming. You have a billion people playing games
• 27:18
  Speaker 1: globally and just a small percentage of that would be
• 27:21
  Speaker 1: a massive amount of people. So I think gaming could
• 27:23
  Speaker 1: definitely rival professional sports and the number of followers. Monetizing
• 27:28
  Speaker 1: that is something that a lot of the game companies
• 27:30
  Speaker 1: are going after and some of them are doing a
• 27:31
  Speaker 1: really good job. Ted Pollock, thank you so much for
• 27:33
  Speaker 1: being with us. Thanks for having me on. Ted Pollock
• 27:35
  Speaker 1: Senior Game Menalist at John Petty Research. She's also the
• 27:38
  Speaker 1: President portfolio manager of the fund management management co founding
• 27:43
  Speaker 1: the Gamer et F. Thanks for listening to the Bloomberg
• 27:51
  Speaker 1: P and L podcast. You can subscribe and listen to
• 27:53
  Speaker 1: interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer.
• 27:58
  Speaker 1: I'm Pim Fox I'm on Twitter at pim Fox. I'm
• 28:02
  Speaker 1: on Twitter at Lisa Abramo. It's one before the podcast.
• 28:05
  Speaker 1: You can always catch us worldwide on Blueberg Radio.