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P&L: Bloomberg's Sherman and Smith on AT&T-Time Warner Deal · Bloomberg Intelligence

• 0:04
  Speaker 1: Welcome to the Bloomberg P and L Podcast. I'm Pim Fox.
• 0:08
  Speaker 1: Along with my co host Lisa Abramowitz. Each day we
• 0:11
  Speaker 1: bring you the most important, noteworthy, and useful interviews for
• 0:14
  Speaker 1: you and your money, whether you're at the grocery store
• 0:16
  Speaker 1: or the trading floor. Find the Bloomberg P L Podcast
• 0:20
  Speaker 1: on iTunes, SoundCloud and at Bloomberg dot com. All right,
• 0:29
  Speaker 1: let's solve the question of whether people should invest in
• 0:31
  Speaker 1: Japan and in companies in Asia. Joining us now is
• 0:35
  Speaker 1: John Vail. John joins us. He is the global chief
• 0:39
  Speaker 1: Global Strategist of Nico Asset Management, helping to manage I
• 0:42
  Speaker 1: believe over like a hundred and sixty five billion dollars. John,
• 0:46
  Speaker 1: thanks for being in the studio with us. All right,
• 0:49
  Speaker 1: so give us your assessment, because I was noting that
• 0:51
  Speaker 1: in part of your reports you're saying that you're not
• 0:53
  Speaker 1: really your underweighting equities generally speaking, but you do like
• 0:58
  Speaker 1: stocks in Japan and in several developed Asia markets. Tell
• 1:02
  Speaker 1: us about it. Well, it's really quite a story about
• 1:06
  Speaker 1: Japan's unique corporate governance improvement. Most countries are in the
• 1:11
  Speaker 1: world have fairly good corporate governance, especially in the US,
• 1:14
  Speaker 1: and to a lesser extent in Europe, but Japan is
• 1:17
  Speaker 1: coming from a low level upward. So it's a structural
• 1:20
  Speaker 1: increase in the improvement in their corporate governance, and that's
• 1:23
  Speaker 1: in increasing profit margins quite dramatically. It's also improving stock
• 1:28
  Speaker 1: buy backs. They're also doing a great deal stock buy backs,
• 1:31
  Speaker 1: and that's along with b O j buying Bank of
• 1:34
  Speaker 1: Japan buying, that's pushing the stock market index upward. Well,
• 1:38
  Speaker 1: hold on a second, back up. I'm looking at the
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  Speaker 1: knee k right now, UM down eight percent on the year.
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  Speaker 1: And you know this isn't because people are looking at
• 1:46
  Speaker 1: companies and saying, well, we don't know about your corporate governance.
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  Speaker 1: This has been driven in part in part by people
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  Speaker 1: getting their money out of the country and trying to
• 1:54
  Speaker 1: uh figure out, you know, what's going on with the economy.
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  Speaker 1: I mean, what's at what point we'll technicals give way
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  Speaker 1: to fundamental analysis like the one you're giving right now. Yeah.
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  Speaker 1: I'm not big on technicals, to be honest, But all
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  Speaker 1: I can say about the stock market declining this year,
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  Speaker 1: that's because the end has been very strong and it
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  Speaker 1: has impacted corporate profits profits in Japan. But if you
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  Speaker 1: look at it in US dollar terms like a U
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  Speaker 1: S investor would. It's actually up on the year about
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  Speaker 1: two three percent, which is not far away from where
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  Speaker 1: the U S stock market is up five So for
• 2:25
  Speaker 1: U S investors has not been a bad return at
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  Speaker 1: all for Japan this year. Well, I was I just
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  Speaker 1: break injured. Because you know, you talk about changing corporate governments,
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  Speaker 1: this isn't being done apparently because they like to make
• 2:36
  Speaker 1: this change in corporate governance. A lot of this has
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  Speaker 1: to do with activist shareholders that have been pushing managements
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  Speaker 1: and boards to change the way they do business. Is correct, correct?
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  Speaker 1: And also the government um Abbe, Prime Minister Abbe has
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  Speaker 1: been a huge effort in terms of pushing for improved
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  Speaker 1: corporate governance. So are there some companies that are more
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  Speaker 1: ripe for let's say, outside pressure to have them change
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  Speaker 1: their government's program am so that they can then reward
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  Speaker 1: shareholders Because I know in South Korea, for example, you've
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  Speaker 1: got the situation right now where Elliott Management is going
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  Speaker 1: after Samsung. Yes, um in Japan has always been a
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  Speaker 1: few very good corporate governance companies. Even years ago, there
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  Speaker 1: were some that were very good, but there were always
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  Speaker 1: a lot of bad eggs as well. And it's these
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  Speaker 1: bad eggs when they're shifting from uh bad to good,
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  Speaker 1: that's when you can really make a great deal of money. So,
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  Speaker 1: moving away from Japan, what other markets in age are
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  Speaker 1: you looking at? Well, we like Hong Kong a great deal. Wait,
• 3:34
  Speaker 1: hold on a second. There was a story on the
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  Speaker 1: Bloomberg terminal that was saying that Chinese money is flowing
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  Speaker 1: out of Hong Kong stocks. You know, yes, um, Chinese
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  Speaker 1: money comes and goes um, But we still like the
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  Speaker 1: fact that China is growing quite firmly. It doesn't need
• 3:48
  Speaker 1: all the speculative money coming in or out of China.
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  Speaker 1: You can actually enjoy foreign capital foes from many countries.
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  Speaker 1: And it's yes, things are improving in China. And Hong
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  Speaker 1: Kong is a derivative basically on China, but almost all
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  Speaker 1: of its profits come from China or related to China,
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  Speaker 1: so it's doing quite well. Actually, how concerned are you
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  Speaker 1: by the weakening Gwen? Well, Um, it's basically tied to
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  Speaker 1: a basket of currencies now, and so when the dollar
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  Speaker 1: is strong versus the euro or the yen or the
• 4:23
  Speaker 1: Brazilian real, then the Chinese animal also depreciate versus the
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  Speaker 1: US dollar. But it certainly is coming to a point
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  Speaker 1: now where maybe some politicians are going to notice. So
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  Speaker 1: the U. S. Treasury is going to notice because it's
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  Speaker 1: it's hit new lows recently. And yes, well uh, and
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  Speaker 1: it's making you know, hundreds of billions of dollars of
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  Speaker 1: trade surpluses every year, right, So why is a country
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  Speaker 1: that's making so much a trade surplus losing value of
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  Speaker 1: its currency. It just doesn't seem right. But it is
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  Speaker 1: based on a basket, and I think it's following the
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  Speaker 1: basket reasonably closely. John, you said you were not a
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  Speaker 1: fan of technical analysis, so maybe you're a fan of
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  Speaker 1: fundamental analysis, which I guess you are right because I
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  Speaker 1: was just sort of I confess trying to make header
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  Speaker 1: tails of the Chinese. A lot of Chinese company balance
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  Speaker 1: sheets and income statements is beyond my pay grade. But um,
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  Speaker 1: I do look at the Japanese companies because just to
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  Speaker 1: go back there for a second, well, at least I've
• 5:28
  Speaker 1: been there, at least I you know that. But Phonic,
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  Speaker 1: for example, I always think of as the robot making company.
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  Speaker 1: Um Daniel loebe very successful with Phonic, and also Sony
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  Speaker 1: to get them to do share buy backs. What what
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  Speaker 1: analysis do you do and give us some names or
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  Speaker 1: some direction for how we should deploy money specifically in
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  Speaker 1: in Japan, because they don't just work in Japan, they
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  Speaker 1: just based there. Well, we have a fund that actually
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  Speaker 1: looks for these opportunities that have a lot of cash
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  Speaker 1: on their books. I don't actually know the names and
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  Speaker 1: probably should have mentioned them either at this point is
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  Speaker 1: run by very sex assful for fully manager we have
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  Speaker 1: in Japan. He has been doing it for I think
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  Speaker 1: two decades. And yes, there's still our companies in Japan
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  Speaker 1: that can do what Daniel Loebe wants to do in
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  Speaker 1: terms of returning a lot of a lot of their
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  Speaker 1: cash to shareholders, to reducing their unprofitable subsidiaries, concentrating on
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  Speaker 1: profit as opposed to market share, all the good things
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  Speaker 1: that we expect from companies here but are still to
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  Speaker 1: some companies in uh in the learning stage in Japan.
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  Speaker 1: In Japan, can you remove the variable in your fundamental
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  Speaker 1: analysis of quantitative easing and what the Japanese Central Bank
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  Speaker 1: is doing and how they might extricate themselves from current
• 6:44
  Speaker 1: policies that have proved incredibly challenging, particularly to the financial sector. Well, uh, no,
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  Speaker 1: I don't think we can, other than to say that
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  Speaker 1: the stock market probably would be lower, um if the
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  Speaker 1: Bank in Japan was not buying a lot of stocks
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  Speaker 1: or doing a lot of QUI. I think that's pretty clear.
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  Speaker 1: But um, I would say that the Bank of Japan
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  Speaker 1: is doing basically the right thing right now. It's in
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  Speaker 1: terms of lessening the importance of the que policy and
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  Speaker 1: moving towards basically a price fixing of the long bond.
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  Speaker 1: And it's a risky move which could require unlimited amounts
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  Speaker 1: of intervention at some point, but in a way it
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  Speaker 1: softens the blow of tapering because they don't need to
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  Speaker 1: really buy any more bonds because they already own most
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  Speaker 1: of the ten year bonds. They own like sev of
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  Speaker 1: five to ten year bonds and probably more of the
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  Speaker 1: longer durrated so they can effectively fix that price I
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  Speaker 1: think without much effort. We shall see John Bail, chief
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  Speaker 1: global strategist at NICO Asset Management, which overseas one hundred
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  Speaker 1: and sixty five billion dollars, Thank you so much. So
• 8:08
  Speaker 1: let's take a deeper look at the A T and
• 8:11
  Speaker 1: T time Warner deal as far as whether it really
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  Speaker 1: is all that likely that it will get done? And
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  Speaker 1: what the regulatory hurdles are that the banker's face at
• 8:21
  Speaker 1: this point. Uh. We want to bring in Alex Sherman,
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  Speaker 1: Bloomberg m and a reporter and Jerry Smith, Bloomberg media
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  Speaker 1: reporter to talk about this deal. Alex, I want to
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  Speaker 1: start with you. I mean, what do you put the
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  Speaker 1: chances at that this deal is actually going to meet?
• 8:35
  Speaker 1: You're asking me this. At least I didn't drink lemon water,
• 8:38
  Speaker 1: I didn't exercise this morning, and yet I'm still being
• 8:41
  Speaker 1: grilled with questions here. All Right, I'm gonna do my best.
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  Speaker 1: You can just say no. Look, take a look at
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  Speaker 1: where the stock is trading right now. You could say no. Uh.
• 8:51
  Speaker 1: Time the market believes this deal is in serious jeopardy.
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  Speaker 1: I mean the time Warner is trading well below the
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  Speaker 1: offer price of a hundred and seven dollars and fifty
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  Speaker 1: cents a share right now. That is an indication that
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  Speaker 1: there is a lot of concern regulators will mix this deal. Uh.
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  Speaker 1: And and with some reason. Donald Trump has already come
• 9:10
  Speaker 1: out and said he'll block the deal. Hillary Clinton has
• 9:13
  Speaker 1: said we need to look at deals like this with
• 9:16
  Speaker 1: an increased level of scrutiny, maybe meaning that she plans
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  Speaker 1: on being even tougher than the Obama administration has been,
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  Speaker 1: and they've been pretty tough. I mean, the Comcast Time
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  Speaker 1: Warner cable deal did not go through, even though those
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  Speaker 1: two companies don't directly compete against each other. The Comcast
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  Speaker 1: NBC deal of two thousand nine, which is what A T.
• 9:34
  Speaker 1: T is pointing to, that deal did go through, and
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  Speaker 1: that probably is the closest proxy for this deal of
• 9:41
  Speaker 1: a distribution company buying a large content company. But the
• 9:45
  Speaker 1: world has changed since two thousand nine, Jerry Smith, changed
• 9:49
  Speaker 1: since two thousand nine. You think this is what what
• 9:52
  Speaker 1: Alex says makes sense. I mean, you can disagree a
• 9:54
  Speaker 1: little bit, a little bit, a little bit, not a lot.
• 9:56
  Speaker 1: He's here with you. I think it's changed since last year.
• 10:00
  Speaker 1: I was gonna say it's not. It's it's like the
• 10:02
  Speaker 1: landscape every six months. It's something that's big, indifferent, right.
• 10:05
  Speaker 1: I mean, you can see what A T and T
• 10:08
  Speaker 1: and Time Warner are. You know. The argument that they're
• 10:10
  Speaker 1: laying out now is as Alex said, and also they're
• 10:13
  Speaker 1: talking about how there's so many new competitors that they
• 10:16
  Speaker 1: face now. Um, you know, companies like Netflix and Amazon
• 10:20
  Speaker 1: that weren't in the television business just a couple of
• 10:22
  Speaker 1: years ago. Um. So yeah, I mean this it's very similar.
• 10:26
  Speaker 1: This deal is very similar to the Comcast NBC deal. Um,
• 10:29
  Speaker 1: that went through, but it was it went through with
• 10:32
  Speaker 1: some pretty tough conditions attached to it that in some
• 10:35
  Speaker 1: ways has hampered, um, you know, Comcast and NBC's ability
• 10:38
  Speaker 1: to do business. So um. You know, analysts right now
• 10:41
  Speaker 1: are kind of putting this out about a fifty fifty chance. Um.
• 10:45
  Speaker 1: Certainly the climate has changed. I mean, if you look
• 10:47
  Speaker 1: at what happened with Comcast, Time Warner Cable, A lot
• 10:50
  Speaker 1: of people thought that deal was a sure thing when
• 10:52
  Speaker 1: it was first announced and it was blocked. So you know,
• 10:56
  Speaker 1: I think it's it's really um, you know, it remains
• 10:58
  Speaker 1: to be seen. So with a big deal like this,
• 11:01
  Speaker 1: how much does even regardless of whether it even gets through,
• 11:04
  Speaker 1: how much does a big agreement like this pressure smaller
• 11:08
  Speaker 1: companies to join forces and to you know, sort of
• 11:11
  Speaker 1: generate some new wave of consolidation just by virtue of
• 11:14
  Speaker 1: the threat of such a behemoth. Yeah. I think that's right.
• 11:18
  Speaker 1: I mean I think there is a herd mentality when
• 11:20
  Speaker 1: you see deals like this happening. Um, you know, I
• 11:23
  Speaker 1: think a lot of media companies, especially smaller ones, are
• 11:26
  Speaker 1: looking at a T and T and Time Warner and
• 11:28
  Speaker 1: they're not really sure what they're up to, but thinking
• 11:31
  Speaker 1: to themselves, you know this, I need to get bigger.
• 11:34
  Speaker 1: I mean, the immediate game right now is very much
• 11:36
  Speaker 1: about size. How many subscribers you have, how many viewers
• 11:39
  Speaker 1: you have. Um So yeah, I mean there's a possibility
• 11:43
  Speaker 1: that this just is sort of a domino effect and
• 11:45
  Speaker 1: that there there's other media companies that want to get
• 11:47
  Speaker 1: larger to compete. And we already know there's one deal
• 11:50
  Speaker 1: in the works CBS and Viacom, which the boards are
• 11:53
  Speaker 1: looking at merging right now. So Time Warner would have
• 11:56
  Speaker 1: been an out perhaps if CBS didn't want to go
• 11:58
  Speaker 1: through with the deal. How that Time Warner has taken
• 12:01
  Speaker 1: in essence, I think it probably increases the likelihood that
• 12:05
  Speaker 1: CBS and vi comes boards decide okay, a merger is
• 12:08
  Speaker 1: beneficial for both companies. Alex Sherman tell us a little
• 12:11
  Speaker 1: bit about the price, and how do you believe they
• 12:14
  Speaker 1: arrived at this price? And and as you noted, the
• 12:16
  Speaker 1: shares of Time Warner. They trading about eighty seven dollars
• 12:19
  Speaker 1: a year. That's below the offer price. Well, so Fox
• 12:22
  Speaker 1: came after Time Warner two years ago with an eighty
• 12:24
  Speaker 1: five dollar per share offer, a hostile offer, you may remember,
• 12:27
  Speaker 1: and Time Warner next that one said it was too low,
• 12:30
  Speaker 1: that was a floor. So that was a floor exactly.
• 12:33
  Speaker 1: And Time Warner before we broke this story last week,
• 12:36
  Speaker 1: Tom Warner was trading around let's say seventy eight seventy
• 12:40
  Speaker 1: a share. Um, so you move about ten percent since
• 12:43
  Speaker 1: the since the deal was made, correct, So you knew
• 12:45
  Speaker 1: the offer was gonna have to be above eighty five
• 12:47
  Speaker 1: dollars a share, and probably well above because Fox indicated
• 12:50
  Speaker 1: they were willing to go even higher than eighty five.
• 12:52
  Speaker 1: That was just sort of their beginning offering price. Uh.
• 12:55
  Speaker 1: And Time Warner was very resistant that that that deal
• 12:58
  Speaker 1: was not going to happen. So an offer probably of
• 13:00
  Speaker 1: above a hundred dollars was almost a sure thing. Uh.
• 13:03
  Speaker 1: Then I think it just became a process of doing
• 13:05
  Speaker 1: their due diligence and coming up with one of seven
• 13:07
  Speaker 1: fifty um through the earlier wasn't what kind of multiple times,
• 13:15
  Speaker 1: which is a little high if you look at the
• 13:17
  Speaker 1: other comps. But again that's fairly typical when these deals
• 13:20
  Speaker 1: are announced, that the comp is a little bit higher
• 13:21
  Speaker 1: than the competition because you need to get the shareholders
• 13:24
  Speaker 1: on board and you want to put out a sort
• 13:26
  Speaker 1: of a suite premium. Jerry I wanted to ask with
• 13:29
  Speaker 1: Time Warner, let's say this deal does fall apart, how
• 13:32
  Speaker 1: how bad of a situation as Time Warner in. I
• 13:36
  Speaker 1: don't think they're in a bad situation at all. I
• 13:38
  Speaker 1: mean they were before this deal was announced. They were
• 13:40
  Speaker 1: pretty widely considered one of the best position companies in
• 13:43
  Speaker 1: the media industry. I mean, they have so many assets
• 13:46
  Speaker 1: that the UM you know, HBO, the Warner Brothers Studio, CNN,
• 13:51
  Speaker 1: we're all having great years. So I mean, they had
• 13:53
  Speaker 1: the right collection of assets they felt like and certainly,
• 13:57
  Speaker 1: you know, we know that UM Apple had at least
• 14:00
  Speaker 1: sort of vaguely entertained the idea of talking to them
• 14:03
  Speaker 1: at one point. Jeff Bucas this morning said that Apple
• 14:06
  Speaker 1: wasn't really that serious. But um, you know, if this
• 14:09
  Speaker 1: deal were to fall apart, UM, it's not hard to
• 14:11
  Speaker 1: imagine that they Time Warner could find another suitor at
• 14:14
  Speaker 1: some point. I think part of that logic also is
• 14:17
  Speaker 1: why this deal. Let's be honest here, despite what the
• 14:21
  Speaker 1: companies really say, there are no real synergies in this deal.
• 14:23
  Speaker 1: There were no real synergies one Comcast bought NBCU vertical integration.
• 14:28
  Speaker 1: It's just they don't really exist. An M and A
• 14:31
  Speaker 1: professor textbook would say, you don't do this deal. In fact,
• 14:33
  Speaker 1: this deal actually is exactly what you're not supposed to do,
• 14:36
  Speaker 1: which is it. It's diversifying your company and providing a
• 14:39
  Speaker 1: hedge against your core competency, which is really what what
• 14:43
  Speaker 1: if you took an M and A class in business school,
• 14:45
  Speaker 1: they tell you those deals typically don't work. But that said,
• 14:47
  Speaker 1: this is not a new concept. And actually Comcast buying
• 14:51
  Speaker 1: NBC did work for Comcast because they bought it at
• 14:54
  Speaker 1: such a low point in the market in two thousand
• 14:56
  Speaker 1: nine that they were purely buying a good asset on
• 14:59
  Speaker 1: the cheap. So that deal is gonna work. Now. Is
• 15:01
  Speaker 1: a T and T buying Time Warner on the cheap?
• 15:03
  Speaker 1: Much harder? Sell? I think? Uh so? I think, you know,
• 15:07
  Speaker 1: the obstacles for a T and T to really turn
• 15:08
  Speaker 1: this into a good deal are a lot higher. But
• 15:11
  Speaker 1: a T and T has a separate motivation for these deals.
• 15:13
  Speaker 1: It's also why By bought Direct TV at a very
• 15:16
  Speaker 1: high price. It needs free cash flow to pump through
• 15:18
  Speaker 1: its dividend. That's why a lot of people invest in
• 15:20
  Speaker 1: a T and T. So these are free cash flowing monsters,
• 15:23
  Speaker 1: these two companies, and that should work well for a
• 15:25
  Speaker 1: T and T S overall strategy. They're gonna need that
• 15:28
  Speaker 1: cash club because they're gonna be taken on a lot
• 15:29
  Speaker 1: of that if they actually get the deal done. I
• 15:31
  Speaker 1: want to thank you very much, Alex Sherman from Bloomberg News.
• 15:35
  Speaker 1: Our thanks also to Jerry Smith of Bloomberg News. Now
• 15:50
  Speaker 1: let's turn our attention to imagine what's going on in Britain.
• 15:54
  Speaker 1: We've got Mark Gilbert, Bloomberg View columnists joining us from
• 15:58
  Speaker 1: London Market. Gilbert the pound. The British pound has fallen
• 16:02
  Speaker 1: by nearly a fifth against the U. S Dollar since
• 16:06
  Speaker 1: that June vote to leave the European Union. It also
• 16:12
  Speaker 1: triggered a rise in prices paid by businesses for the
• 16:16
  Speaker 1: raw materials. I think that was like an eight percent
• 16:18
  Speaker 1: rise in August, and the rise in costs that came
• 16:21
  Speaker 1: down just a little bit to about seven percent. But
• 16:23
  Speaker 1: it does Britain have an inflation problem. What's going on
• 16:26
  Speaker 1: with with the cost of of having voted to exit
• 16:29
  Speaker 1: the European Union. Oh boy, oh boy, we have an
• 16:31
  Speaker 1: inflation problem coming down the hell, that's for sure. Microsoft
• 16:35
  Speaker 1: has just announced that if you use its business software
• 16:37
  Speaker 1: on a license in the UK, you're going to see
• 16:40
  Speaker 1: a price rise of about a fifth as a result
• 16:43
  Speaker 1: of the pounds drop against the dollar. If you look
• 16:45
  Speaker 1: at any of the market interpretations of future inflation, like
• 16:49
  Speaker 1: the swaps market, it's looking like it goes on on
• 16:53
  Speaker 1: a hockey stick. It goes up and up and up
• 16:54
  Speaker 1: and up, so that in turn is gonna I mean
• 16:57
  Speaker 1: the Bank of England is going to struggle to cause
• 16:58
  Speaker 1: interest rates. It means that one of the side effects
• 17:01
  Speaker 1: of a weak currency, which is arise in inflation expectations,
• 17:06
  Speaker 1: is being seen rather more quickly than what might be
• 17:09
  Speaker 1: seen as the good side, which would be a potential
• 17:12
  Speaker 1: rise in exports mark. You know, at a certain point
• 17:16
  Speaker 1: you have to wonder how much people's view of Brexit
• 17:21
  Speaker 1: in the rear view mirror is being colored by uh,
• 17:24
  Speaker 1: some of the lobbying that's going on. Um. I know
• 17:27
  Speaker 1: that the British Banking Association for example, is saying that
• 17:31
  Speaker 1: by the end of this year banks in the UK
• 17:34
  Speaker 1: will start pulling people out of uh London and relocating
• 17:38
  Speaker 1: them elsewhere as a result of the Brexit vote. H
• 17:41
  Speaker 1: this is a huge concern. I mean, this is sixty
• 17:43
  Speaker 1: six billion pounds of potential taxes from the financial services
• 17:47
  Speaker 1: that are at stake here. I mean, how much is
• 17:49
  Speaker 1: this just gimmickery, how much is this just trying to
• 17:53
  Speaker 1: color people's views, and how much is actually economic risk? Well,
• 17:57
  Speaker 1: I know Anthony Brown at the British Banks fotiations, he's
• 18:00
  Speaker 1: a serious chap, but it is his job to lobby
• 18:03
  Speaker 1: on behalf of his industry. And the key quotes he says,
• 18:06
  Speaker 1: they've got their hands poise quivering over the relocate button.
• 18:10
  Speaker 1: And now that might be true, but hey, we all
• 18:13
  Speaker 1: recognize moving staff overseas is kind of difficult, and we've
• 18:17
  Speaker 1: got story after story showing how office space in places
• 18:20
  Speaker 1: like Paris and Luxembourg and Frankfurt is very hard to
• 18:23
  Speaker 1: come by. What what Anthony's really looking for, I think
• 18:26
  Speaker 1: is to push the government into giving some tax concessions
• 18:29
  Speaker 1: to the UK banking industry to make it more attractive,
• 18:32
  Speaker 1: particularly for foreign max to keep their business here. And
• 18:35
  Speaker 1: he's also putting the pressure on the government that this
• 18:37
  Speaker 1: issue of passporting, the right of firms based in the
• 18:40
  Speaker 1: City of London to sell services into the EU region
• 18:44
  Speaker 1: once we've left the European Union. He wants to make
• 18:47
  Speaker 1: the pressure a bit harder on Prime Minister Theresa Maye
• 18:50
  Speaker 1: to try and ensure that there's some continuity of those
• 18:53
  Speaker 1: passporting rights, which frankly, at the moment the government seems
• 18:57
  Speaker 1: to de prioritize over its ability to cabin a great
• 19:00
  Speaker 1: That said, if you're a big foreign bank and you're
• 19:03
  Speaker 1: based in London and you're doing your five year plans
• 19:05
  Speaker 1: or your ten year plans, being outside of the EU
• 19:08
  Speaker 1: does make the does make London just a less attractive
• 19:11
  Speaker 1: place than it was previously. So this isn't all smoke,
• 19:15
  Speaker 1: but there might not be a full foot raging fire either,
• 19:18
  Speaker 1: Mark Gilbert, what about the cost of fuel and energy, Well,
• 19:22
  Speaker 1: we're entirely dependent upon what happens to the oil price there.
• 19:24
  Speaker 1: But we have a much high attacks on fuel in
• 19:27
  Speaker 1: the UK than than, for instance, you guys have in
• 19:31
  Speaker 1: the United So what is what is a leader of
• 19:33
  Speaker 1: a leader of petrol? As you would say, what is
• 19:36
  Speaker 1: a leader of petrol cost because I guess for about
• 19:39
  Speaker 1: four leaders to the gallant uh no idea because I
• 19:43
  Speaker 1: don't drive because I live in London. Very few people
• 19:48
  Speaker 1: in London actually drive because there's nowhere to park and
• 19:50
  Speaker 1: nowhere to drive it to directly. You know your column
• 19:52
  Speaker 1: today where you're talking about the fact that Britats are
• 19:56
  Speaker 1: starting to count the cost of Brexit, you said that
• 19:59
  Speaker 1: a pull conducted earlier this month by IPSIS shows almost
• 20:02
  Speaker 1: half a voters record they'll be personally worse off after
• 20:05
  Speaker 1: Brexit mets up from less than a third before the vote.
• 20:09
  Speaker 1: What is it so far that's changed their view, do
• 20:12
  Speaker 1: you think, Well, the inflation expectations is a big part
• 20:15
  Speaker 1: of it. You know, the day after the vote, Mark Carney,
• 20:17
  Speaker 1: the Bank of England governor, basically came out on television
• 20:20
  Speaker 1: and said, whatever it takes, we will do. We've cut
• 20:23
  Speaker 1: interest rates, You're gonna have cheaper mortgages with those sunlit
• 20:27
  Speaker 1: uplands that that that that those in favor of leaving
• 20:30
  Speaker 1: the EU were talking about. Were skeptical that's going to happen,
• 20:33
  Speaker 1: but hey, your central bank is here to help. Well,
• 20:36
  Speaker 1: if inflation does what the market prices suggest, inflation is
• 20:40
  Speaker 1: going to do. Then Carne's hands are tired. He's not
• 20:42
  Speaker 1: gonna be able to cut interest rates. You're not going
• 20:44
  Speaker 1: to have that cheaper mortgage. And we you know, big
• 20:47
  Speaker 1: international companies. We have a car factory up in a
• 20:50
  Speaker 1: place called Sunderland, run by Nissan, and they make their
• 20:53
  Speaker 1: cash Kite suv there that they're most popular, four by
• 20:56
  Speaker 1: four by a long way, six thousand, seven hundred jobs
• 20:59
  Speaker 1: of that factory, and the head of Nissan says, you
• 21:01
  Speaker 1: know what, when we do the next version of the
• 21:03
  Speaker 1: cash car, we might just not be doing that in Sunderland.
• 21:06
  Speaker 1: So those six thousand, seven undred direct jobs in the
• 21:09
  Speaker 1: factory might well be at risk. And you have not
• 21:12
  Speaker 1: a lot of companies so far saying listen, we're canceling this,
• 21:15
  Speaker 1: We're pulling out of that. But there's definitely a feeling
• 21:18
  Speaker 1: that investments is on hold, and that is increasing people's
• 21:21
  Speaker 1: nervousness about what their own jobs futures are and also
• 21:24
  Speaker 1: about their personal prosperity going forward. Bloomberview columnist Mark Gilbert
• 21:29
  Speaker 1: on Brexit and the pessimism that it's ensued. Thank you
• 21:31
  Speaker 1: so much for being with us, Thanks for listening to
• 21:39
  Speaker 1: the Bloomberg P and L podcast. You can subscribe and
• 21:42
  Speaker 1: listen to interviews at iTunes, SoundCloud, or whatever podcast platform
• 21:47
  Speaker 1: you prefer. I'm pim Fox. I'm out there on Twitter
• 21:50
  Speaker 1: at pim Fox. I'm out there on Twitter at Lisa Abramo.
• 21:54
  Speaker 1: It's one before the podcast. You can always catch us
• 21:56
  Speaker 1: worldwide on Bloomberg Radio to kill O Lord