Market Reaction to Trump Indictment

This is Jess witten Back with John Tucker, and we have in our interactive broker studio June Grasso, Bloomberg News legal analyst and host of Bloomberg Law here, and we're also going to bring in our star equities reporter Bailey Lipscholtz. He's here in Actually he's in Zooming News. Say where is he? He's not here. It's he's always here though, So it's fine. I don't think it's a star reporter. He's working from home. Hey, it's at And we're going to talk about the next legal steps in the criminal

case against former President Donald Trump. Also how these Trump leaks fact that you were talking about John earlier have been reacting this. So June, I'm going to start off with you, can you set the scene to just run down what's happened and what is ahead for this as far as when we're going into next week. So do you have a half hour. Oh you do, Okay, that's good.

So the main thing is that we don't know what the charges are because it's under sealed, so we won't find out what the charges actually are, perhaps until the

arrayment itself happens on Tuesday. So but what we suspect, and what's been reported and reported and reported, as John Tucker knows, is that it's supposed to be a falsifying business records charge, which is a misdemeanor, and in order to take that up to a felony, the prosecutors will have to prove that Trump falsified records to cover up a second crime, such as violating federal campaign finance law. So that's what we suspect it is. That's a novel

kind of theory. New York secutors have never tried that before. And as far as the arraignment, which comes next, is that he's going to be here downtown at this is New York Criminal Court. If you've ever been to arrayments, and I've been to any, not me, but watching others being array it's like it's an assistant district attorney who's like twenty five years old, and they power through it like your arraynment if you're just a typical Joe or Jane,

takes about twenty seconds. So I suspect probably will be different. Yeah, especially if they read the thirty count what CNN's reporting is a thirty count indictment, it will be longer. And I don't think it. I don't know for sure, but I think it might not be the twenty five year old assistant you know, oh you think. No, I don't know that is going to do it. But I think maybe one of the attorneys that's been working on this

case might do it. So just for you know, so we actually, I mean, we might actually get a shot of Donald Trump in the hallway. They sometimes allow cameras in the hallway, so if he's walked into the courtroom through the hallway, we might actually see him. That'll account for. That'll be the purp walk we usually yeah, but not but not. I don't think he'll be in handcuffs unless he wants to be. He has said there's been talk apparently about him wanting to have a perp walk with

handcuffs on. But so he'll be and you won't see he'll be booked in the DA's office. He'll be fingerprinted, the mug shot will be taken, maybe a DNA swap, I'm not sure about that. And we won't see those mug shops most likely unless some news organization says we need to see them under First Amendment grounds for some reason,

I don't know what. So that's what will happen, and then the charges will be read and he'll plead not guilty, and he'll get to go home to Florida, okay with your Bankran, And I have to point out to everybody we are talking to a Harvard Law school graduate who's got extensive experience. Is this case flimsy? I can't see. I mean, I can't trade because I haven't seen the charges. I mean everyone is waiting, every lawyer is waiting to

see what the charges are. You know, once that indictment is unsealed, to see if maybe there's more there than we thought. But let me just say this, I don't think that Alvin Bragg, who's a cautious kind of man, would indict a former president if he couldn't, if you didn't think he could. I remember talking to the chief judge of New Yor Sault Walkler, and he told me in New York you can indict a ham sand yes, but years later No. But this is not a hand

sandwich that we're indicting. This is a former president, and you don't want to indict him just because you can indict him and so, and also, look look at what he went through with the grand jury. I mean he called witness after witness, he called witnesses for the defense to the grand jury. Then he called rebuttal witnesses. So I mean, I think there might be more there. Let's bring in Bailey to get the take happening with these SPACs that have been linked to Donald Trump? What's happening today?

How have they've been before being Yeah? Right now we have Digital World, which is the spack working to take Trump media group. Public is up about eight percent, so trading around fourteen dollars. Remember SPACs typically go public around ten dollars. This one has a little bit more than ten dollars per share in cash value, so still trading at a thirty percent premium. Thirty percent and change premium to what it would be worth if this deal fell apart.

Really is just a gauge or a proxy of how much news is around Trump and how much excitement could be around it. So you see digital world trading higher. You see Rumble, which is the conservative alternative to YouTube, actually reported earnings and goes up double digits. Funware as a penny stock that's tied to Trump, also rallying, but still really down sharply over the past years. So those are the big three proxies that pretty much get a bid, whether it's good news or bad news, or really any

news as it relates to the former president. We typically see these stocks really moving tandem. So what's the ideas everybody's going to be watching these outlets? I don't even know what to qualum because well, yeah, twenty four hours now, that's the view it. Trump Media owns truth Social, so kind of his ripoff of Twitter, which is where he typically posts. So we've seen engagement pretty strong numbers relatively

from there. So that's kind of part of the optimism is that if Trump is making headlines, and if you are a follower or just interested in what he's doing, you're going to be spending more time on truth Social, maybe going on to Rumble, to hear Russell Grand or some other commentators who have been booted or banned from various platforms. Kind of laying out their expectations Rumble as a company that really wants to be uncancellable is the

way they phrase it. So those are kind of areas that at least the perception is that if you're not wanting to listen to Bloomberg Radio or other traditional media outlets, that's where you'll kind of go for your entertainment engagement sounding boards. Bailey, you cover all things spacks. What's next for this Trump tied spack moving forward? They've been working to get this deal done. This was a deal announced back in October twenty twenty one. They've really done everything

they can to get extensions. So right now their drop dead date is in September, so that means they can continue to work on getting the sign off from the likes of the Justice Department, the SEC who have been helping hold up this deal. So all eyes are on what could move forward. One thing that's interesting to note though, a few weeks ago, their CEO actually was booted from his role of Patrick Orlando, who had brought public a handful of spacks and was really a big fan of

Donald Trump. So the shaking up at Digital World with their new CEO, Eric Swiders, stepping into that role could be a cause for optimism that this deal will eventually get done. But I talked to a lot of people in this back industry and they still really see this as something that probably does not actually cross the finished line, which would mean the investors who bought it at fourteen dollars today or one hundred and seventy five back in October twenty twenty one will be left with about ten

dollars and thirty five cents. I've been. I've been this is unfair because I haven't seen the financials any of these companies. I mean, are they really viable. There's a lot of the beauty and curse of SPACs is that we don't really know much about what Trump Media wants to be or what it plans to be. Rumble. Uh valuation is really the big thing that an analysts are kind of skittish of. But they have seen an ability to court some of these uh call them talent or

influencers to their platform. So I think that Rumble it seems like, at least looking at the fundamentals, could serve as an alternative video platform. But there's a lot of gray area around the valuation of Trump media and actually what it would look like and whether it could ever turn a profit. In June, before you go, since you're still building us, we're what are your billable hours anyway, Tuesday wednes Tuesday, it's supposed to be Tuesday, we're hearing

two fifteen. Oh okay, we're hearing from home. Well that's your sort. The general. The General, it's out there. His attorneys have been talking and so he's supposedly coming in on Monday nine. If you want to go to Trump Tower to greet him, John, and then Tuesday he'll be down of the Criminal Courthouse. Excellent, and you'll be there too, I suspect. Thank you, June Grasso. It's great having you both here. June Grasso, Bloomberg New's legal analyst and Bailey

lipshoal to US equities reporter for Bloomberg. You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern Listen on Bloomberg dot com, the iHeartRadio app, and the Bloomberg Business app, or watch us live on YouTube. Andy Purty with Huawei USA. He's the chief security officer. We're going to help us detail some of the Companies twenty twenty two financial reports. Some of the particulars there, Andy, thanks for being on the program.

You're in Washington. Give us some of the highlights of what the report says. Well, we have been in a difficult situation for a couple of years, and we're pleased that our business has stabilized and we are in a

position to move forward. We are finding tremendous success in our five G to be business and we're investing historic amounts of money in this case twenty five point one percent of our revenue over twenty three billion dollars in R and D to help us deal with the recent unpleasantries and to help us find working with partners, the path forward to help grow our business. Hey, Andy, unpack

this latest report for us. Where were the biggest takeaways? Well, the overall revenue increased slightly, Our carrier business had a slight increase. Our enterprise business to tremendous up thirty percent.

That's really around our five G to be our digitalization right now, we're we work with seven hundred cities in the world two hundred and sixty seven the Fortune Global five hundred companies under under digital strategy we've got nine million developers and forty thousand ecosystent partners, and we're also announcing results of individual additional units, for example in digital power and cloud. Those are important areas for us that we look forward to driving some real progress in the

years ahead. Hey, you're a subsidiary of Wawei Technologies, which we all know is the largest maker of telecom equipment. The launch of sort of a new social control era in China focuses on technology, tracking technology, whatever you want to call at this point, and you have been scrutinized on Capitol Hill, not unlike what we saw with TikTok. What is happening on that front. When it comes to the regulatory capacity in Congress, well, the two major areas.

One has to do the ability to do business in the United States, and it's clear the United States is not interested in allowing us to do business in the United States. So that's a reality. We're not going to complain about it. We're going to move forward. The other is the question of trade restrictions, the ability of American companies to sell nonsensitive technologies to US. And while I applaud the efforts under the Chips Act, to bring a

lot of jobs to America. You know, the fact is I'm concerned about American jobs and the semiconductor industry their ability to sell nonsensitive technologies to US. I think it could be a difficult future and I hope there might be a way to allow the sale of such nonsensitive technologies to US. And when it comes to these security issues, what did you find had the most red flags? Well, the issues over and number of years, and there really

has not been anything specific. Obviously, there have been some geopolitical concerns, and so what we have tried to do around the world, in European Union, in Germany and all around the world is we try to develop and maintain the trust of our customers and the trust of the

folks they have to be or their particular governments. We're a supplier or they're an operator, and so we have worked very hard on our global Cybersecurity and Privacy Insurance program, on partnering with standers bodies, on parting, for example, the telecom equipment effort that the standers bodies form to create specific requirements for telecom companies, specific testing requirements and accountability requirements.

All those things we find gives the ability for most of the countries in the world to be able to push back and say no, there isn't a problem with while we take we take cybersecurity seriously, we take privacy seriously. And frankly, as I hear all this commotion, I hope the United States is going to take privacy production a whole lot more seriously than than we have in the past.

National privacy legislation will be good. That's not going to be good enough to help address the risk involving, for example, social media companies. Well, how much of what Huawei does around the world relates to governments keeping tabs under people? Well, it doesn't. I mean, the issue of surveillance is not something that we do. You know, there's I mean supplying

that the components to enable that. Well, the issues about what products you sell that could be misused and throw a very rough analogy, the idea of a hammer can be used for good, it can be used for bad. We don't help governments create special algorithms or special technologies that they can use to abuse people. And we are working globally to participate in the development of ethical principles for some of these things that go beyond the issue

of complying with the individual requirements in individual country. And we think those kinds of efforts are what's going to be necessary to help address the risk of misuse by governments. And there's definitely a risk there is there a path back into the United States. There is so much business to do around the world, so many places where people right now are anxious for us to do business, so we are not really pursuing the possibility of doing business

in the United States. And frankly, I'm glad that at least we can share some of the lessons we're learning about how countries and companies, how governments can benefit from the new technology, so that hopefully the United States, not with us, but hopefully the United States can ramp up their efforts to get the benefits of these technologies and to grow the competitiveness of America. And one of the great shortcomings has to do with our talent, our workforce,

because we're really not stepping up for the future. Andy, you brought up government and legislation earlier. What do you think specifically needs to be in that with regards to privacy, Well, I think we've seen some examples of what shouldn't be in there. And I defer to the privacy experts as to what and the industry experts as to what should

be in privacy legislation. But I think there need to be more than those kinds of requirements because the minimal requirements that you can get legislatures to agree on are not going to be good enough given the risk. One of the lessons we learned two years ago these major cyber attacks on trusted American companies Solar Winds of Microsoft Exchange Forever, proved there's no such thing as trusted suppliers. They're trusted, but the bad guys can hack into them.

So whoever's got data, whoever has important functions. And as we move into five genable technologies automation, machine, the machine, communication, sensor to machine, we have to make sure that those systems are going to be running. So we have to make sure that no matter who the supplier is, they're objective and transparent basis for knowing whether those products and services,

whether those data are protected. And I think the leaders of cybersecurity United States are moving in the right direction, but we've got to really ramp up those efforts to

promote assurance transparency and accountability. What is the future hold for your company in terms of technology, Well, right now, the proofcase of the five G to business, the digitalization of industries and sub industries is so exciting, and the benefits of smart mining and ports and manufacturing, the efforts we're working with the major carriers in the world to help produce the carbon footprint to help meet the UN goals we are actively participating, and how to generate green energy,

how to transport it, how to save it, how to increase the efficiency of everything that's done, and find ways to use more green energy. And so the future is very very bright, particularly with the strong partners that we have around the world. And you're talking about green energy, what specifically are those strategies Whenever you were talking to how to improve all of this, Well, you have some

existing technology that you them to be more efficient. So for example, in the carrier networks, data centers and base stations that kind of like antennas use up a lot of energy. So using technology sometimes with algorithms to try to take advantage of when they're not being used to reduce the power consumption. And in terms of whether they're stored outside or inside, where you have to use the air conditioning. Those kinds of techniques can increase efficiency and

can promote a reduction in the carbon footprint. And the fact is that hardcore research and development, working with our partners to try to develop green energy and how to bring it forward, how to find ways to deliver power that's based on green energy is something that we're working hard on and we're making substantial progress on. It's it's exciting to be part of that. You mentioned smart mining would give me the dummies definition me being the dummy

for smart training. So for example, you know how drone pilots can don't have to be on the battlefield. So increasingly, and we've got a number of examples in Africa and shine on other places where you create special five G special power requirements that can be five G underground, so you can you can have the sensor, you can have the machines so that they can control the equipment without

going down in the mines. There's one mind of my colleague told me about he visited that's three thousand meters underground and the working shift for the workers is four weeks. They have to go down there for four weeks. So the idea of having this technology that can allow not only the operations, but the monitor of safety. So you have like at thirty meter giant machine, it's it's it's it's doing the mining, and you have multiple cameras to monitor.

So you use an AI algorithm to stitch together the videos along that thirty meter strip so that the operator can monitor it and you can have a and those who are providing oversight for safety and control and resilience they can monitor it. Also. It's the same thing with reports. The ability to have automation can increase efficiency and help cut down on some of the supply chain bottle next

or there and manufacturing. Generally, the greater efficiency the manufacturing process is going to save money and reduce energy consumption. And this stuff is all very exciting. Andy, thanks a lot, Andy purty Uahwei's USA Chief security officer detail like some of the financial report of the company's twenty two financial results. You're listening to Bloomberg Business Week right here on Bloomberg Radio.

You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six eastre on Bloomberg Radio, the Bloomberg Business app and YouTube You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg eleven thirty. So we've got another great guest in our lineups of Cappy Cranning Ger and she's the former director of the Consumer Financial Protection Bureau,

also vice president of regulatory Affairs at solid Labs. She's on Zoom from Washington, DC. And so solid or solid saw do you pronounce that? Solidust correct? Solidists excuse me, solidusta, sorry, butcher that but we corrected it. So Solidust Labs. So, to give some context to our listeners, it's a crypto market surveillance firm that works with exchanges, regulators and investment

firms to flag market manipulation and other risk issues. And so, Kathy, I want you to break this down for us because obviously we've had the wake of multiple bank collapses. We've also had FTX in recent months. What happened with that situation is still ongoing obviously, right, But then how exactly has all this ended up impacting the crypto market specifically, and it has a dramatic impact. Look, I believe in the future of the digital asset space. I think it's

the future of the Internet. That's why I joined this industry, and I'm excited to be, you know, wearing a white hat at Solidus Labs, which as you noted, you know, looks for manipulation and seeks to root out fraud in this space. But the news of FTX, the tentacles that FTX had across the globe, to regulators, to policy makers, it was looked at as a as a leader in some respects in the conversation around what regulation and what

responsible market participants should do. And you see that it was a big scam, and as you noted, additional charges were brought this week and more keeps coming on that. But look, fraud is not new and certainly digital asset markets did not invent it. You see this in traditional finance. There are regular enforcement actions against the biggest banks and institutions you know, in financial services on a not infrequent basis.

And also there are scammers who are always going to seek to take advantage of people unfairly, and the hope is that prosecutors go after them and to the fullest extent of the law. They managed to claw back funds and make people who are hurt whole in the cryptospace, is am I correct to say, it's the platforms where all the who can this has been taken place, Like, the platforms perform an important role to the extent that

you've got intermediaries in the space. Of course, one of the promises and directions of digital asset markets is decentralization, so you don't always necessarily have to have that intermediary in the middle. But but look, many of us don't want to manage our own wallets individually and understand, you know, the details of the security that would be needed to

engage directly in the space. So you're going to have platforms in the future, and some of the core issues are really around what these underlying sets are and then therefore which regulatory structure UM you know is required of them. Um, there is still a requirement around transparency and fairness and disclosure, and many of the good market participants in this space are doing that to the best of their ability, complying with the law that you applies to them, using capabilities

like we provide a solid as labs UM. But there are also those that are not doing that, And I got to ask the obligatory question is is this a currency or a commodity. I mean, who who's the regulator. You're getting to the heart of the matter. That is part of the challenge. I do fundamentally believe the digital assets are not just a one nature. It's not one

type of asset. And so the question of you know what is it is, you know, an asset by asset assessment that is not you know, foreign to lawyers who are looking at those things. That are you know, instruments in traditional finance, and there are clear rules around securities. We talk a lot about the Howie test and the Reeves test, but those need to be applied, and the platforms are saying we're applying those tests, and Chairman Gensler

is saying, um, you know, I don't think so. So there's a lot to be worked out definitely in the courts on that front that is completely separate from you know, fraud and bad actors. Wanted to make sure I said that pretty clearly. And what are your thoughts on Senator Elizabeth Warren in her position on crypto Because I know that the Senate obviously has a particular stance on the market regulation, but what's going on there and how do

you see all that playing out? Like I think Congress needs to engage in this space, and members need to be educated and understand the technology, think through the best way to put a specific regulatory framework into place. I'm one of the people that leaves Congress needs to act on that front. And so you have members that are really engaged and have spent the time you know Senator's Lummis and Jillibrand at a bipartisan bill they issued last year.

They're working on it again and going to reissue that this year. You have leadership on the House Financial Services Committee two that is excited about well trying to tackle the issues around stable coins and market structure. The Agriculture committees in the House and the Senate to really engaging

in this space. So there are going to be a lot of different perspectives, and I just fundamentally believe, as I said, that the future of the Internet, in the future of so many things about how our economy can operate, innovate and be accessible for the future is in this technology. But there are risks and those need to be weighed, as does the right regulatory regime. Where are we in the regulatory front, I mean, in a nutshell, is it happening? Uh?

It's happening through the courts. That's likely. Let's not really regulations. That's more like you've got to do this, guys. Yeah, that's that's that's the unfortunate part about this. You're seeing it through enforcement actions from the SEC and the cftc um, some of them clearly designed to try to put the bounds around around crypto assets and define them as securities or commodities, but not in a direct way, not by

issuing notice in common regulation um. And that's where you get to Congress too, because in some respects Congress needs to solve some of these issues. But you do also have the sec issuing regulations around custody that encompass certainly many aspects of traditional finance, but also encompass crypto assets. I mean, does the is the industry welcoming all this? I mean they were obviously, you know, one of the reasons for being is to avoid that or not be

regulated or whatever. Do they now welcome it or what? The industry has been pretty consistent, although it is hard with the centralization to talk about it as one industry. But to be clear, those who are the platforms that you mentioned earlier, John, and those that are in intermediaries in the space. They know they have regulatory responsibilities under current law. They know there are regulatory responsibilities that need to be shaped and take into account the differences with

these assets and the differences with these markets. And so that's something that you know, we've put forth as the industry, a lot of different ideas around this, and do want to see Congress act and do want to see the SEC and the CFTC engage. What do you think is the most realistic way to try to address fraud because we've seen so many instances and scandals, as you know, especially even in recent months in the crypto world. It is incredibly disheartening. There's no other way to say it.

And some of it is just you know, unfortunately the nature of anything that's new. You know, you noted I was the director of the CFPB. The types of scams and frauds that you know, really go after vulnerable populations. You know, they're they're constant, so they're not unique to digital assets. But I see an opportunity, and we see it in our ability at SOLIDUS to identify RUG polls.

We can preclude those bad actors from at all benefiting from and getting the funds off ramped out of the blockchain ecosystem, so therefore completely disincentivizing deploying the scam to begin with. And so those are some of the things that the technology can really facilitate. You know, they they they deploy a token you can only buy, you can't

actually sell, you can't get out of it. And then you know, the person who actually deployed that does a rug pole, pulls all the funds and it escapes with those funds. If you can identify that as a run poll and stop them from escaping with the funds, there's no benefit then in deploying the scams to begin with. And that's something this technology facilitates. I have a reverse barometer. Whenever people talk about it at the barbershop, I've run and that's all they were talking about it a few

years ago. Crypt Though, Kathy, thanks a lot. I appreciate it. That was interesting. Kathy Craniger the vice president of regulatory regulatory Affairs at Solidust Laboratories. They worked with the exchanges and presumably on the regulatory front as well. You are listening the Bloomberg Radio, you know what, JT. I'm very excited about our next guest because this is a company that's female run by their strategy. So we have Stephanie Blake,

the chief executive officer Highlights Studios on Zoom California. No, you're still invited. We're not going to kick you out JT. And So Stephanie, I hear you're taking old iconic buildings and turning them into something cool. Tell us about what Skylight Studio is in what you do. Hi. Yeah, So Skylight we are placemaking and Venny development of management firm,

and we focus on adaptive reuse. We were founded actually in two thousand and eight, so similar times, if not potentially worse for commercial real estate, but for us, we drive creative revenue streams and new uses too often historic or underutilized properties by bringing in brands Fortune one hundred companies to do experiences, to foster sort of a new

way of gathering and entertainment. And we've been doing it for the last fifteen years, looking from the Highline to Moningham Station, the Ferry Building in San Francisco, Gardli Square, Detroit. So that is that is what we've been doing. And I think see a ton of opportunity right now. Oh, Stephanie, let me paint the picture for you. Where are we fifty eighth and Okay, so I don't know where I am. Look out the window, Well, look downstairs. There used to

be Starbucks. Remember in this build there was an H and M on the first floor. Gone. The container store has gone. Victoria Store there now instead of the start. Well, Matt Miller thinks it's a front for something out. There's a Victoria's Secret that's gone. What is the state of commercial real estate? From where you sit? Yeah, from where we said, I think that there's often a trend. You know, I think what was it now as of ten years and change ago? Retail was in question? What is the future?

Was the future of the ground floor? I think right now, with you know, COVID having accelerated the question mark of a lot of these traditional uses. What gets you out the door? What is the use of the built environment? Do you need to go to work? I think that's the question mark that's happening. And I think a lot of the transactions that have sort of been the foundation of commercial real estate with fortune one hundred tens expecting

them to continue, where office was not a question. Everyone needs to go to work, Everyone needs a place to go with that in question and combination with how retail has continued to evolve, I think that there's an opportunity now to really rethink how people are using space, how people come and interact and why. And I think that's where we're seeing this conversience of a venue being the new anchor of development where you can put F and

B that rotates. It can enable you to welcome the future by thinking about how, you know, an entertainment concept might be paired with a retail concept paired with culinary and I think that's the future. Is this collaborative approach to space? Tell us more about how you're working with landlords? Yeah, so we work with landlords in many different ways. Our partnerships with landlords often look like they have space and they're not sure exactly how to create dynamic and vibrant

sort of differentiators. So I think the same way that it was always was at fitness, food amenity, space was what was driving office and tenants back and in the building, and it was of an important sort of intersect for us when we work with landlords. Now we come to the table with how do you think about a venue?

How do you think about the negative space in your building, in your corridors, in your outdoor spaces, and what is the programming that's going to not just be a beautifully designed space or have the right food, but how are you going to encourage interaction and encourage sort of using programming and experiences and events to help encourage people to interact and use the space. There's so many amenity spaces now that are being built still and are not being used.

And I think that's where we've actually partnered a lot with architects alongside landlords to provide the heartbeat against the design. And I think that in the challenges where everybody wants to work from home nowaday, I mean, it's got to be incredibly challenging for you. Do people come to you, landlords, businesses and say I want my people back in the office. They don't want to come back, but if you give me some ideas, maybe we can change that. I personally are, yeah,

you're on tap. But and I think I mean my early days, I grew up at Google in my yea, um, but I will say yes. So that is one challenge absolutely that we're brought to all the time. How do we get tenants back, how do we do you know is it food? Is it? What is the thing? And I think people have hung their hat on its food and fitness. I think the other challenge, or the other way in which we're a solution is if you design

a venue that's used by tenants. Example, you know what we're doing right now at Penn District in the middle of midtown or in San Francisco with the auditorium at three four five Montgomery Um. There's an opportunity to think about a lot of companies who are not coming in daily, when do they come together? They want to come together, when they're bringing various departments together, when they have meetings,

when they have announcements. And it's interesting because we were for a very long time the types of assets we had when we created a venue was often for external purposes. How do we wow our clients, how do we share a product launch? Now it's how do we actually bring our employees together and be able to show them why do you need to be together? What is the value being together? And how do we create a meaningful experience?

And so there's an opportunity for some of these buildings to be used not just by the tenants having the amenity where you can bring people together, whether it's a beautiful auditorium, you have programming, that's an option that can create different ideas and experiences. But also how do you bring an outside tenants to use the space as well? And I think there's an intersection now where meetings have risen exponentially. Today. I think it's a two hundred and

sixty billion dollar market. By twenty twenty six, it's predicted to be a five hundred plus billion dollar market. And so people are spending to bring their employees together, whether it's in the office or another space. And I think that's that's the value that you can bring. It's deepanie when it comes to higher interest rates, how has that been impacting the rulant state environment in your view? Yeah, I mean where do you get thirty seconds to say

where we fit? You know, we've been able to come to deals to sort of derisk the opportunity from whether it's an investment or landlord perspective or a buyer's perspective. Obviously, interest rates will decrease transactions, which is again where you want to be able to bring in the best of many industries to use a space. It cannot just be office and expecting these tenants to come back and sign

the twenty year leases. By creating venues, it enables you to use the best of these markets and the best of these industries to come together for meeting space as a catalyst to then enable other tenants to come in and share that space. And I think there's a lot of value in how that can be created. Did you get the lunch today upstairs? I did not have time. I was you didn't have time. You let that go away. It was tuna. It was like a tuna, So it was all right, Stephanie Blake, I can't look at gift

tuna in the mouth, CEO. It's Skylight Studios, some unique real estate venue development. Stephanie, thanks a lot. We appreciate it. And you are listening to Bloomberg Radio. Sounds like a jazz station. Now you're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six eastre

on Bloomberg Radio, the Bloomberg Business app and YouTube. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa playing Bloomberg eleven thirty. I'm talking I gradual queezing bed. We're talking Basall Grew and gay Lord Perrot see the DOMI I think we're switching gears now too. We are. I'm guessing baseball we are. Why don't you pick it up for its we have.

We're gonna have Juel Weber here. He's the editor of Bloomberg business Week here in the Interest in the studio. He's not working from home. No, he's gonna right here with us, right here. We're also are gonna have Jerry Smith. He's a media reporter for Bloomberg News on the phone in New York City. So they're gonna talk to us about Jerry's latest Bloomberg BusinessWeek story. Watching your favorite team could cost you more than Netflix. So this is really interesting.

And I can start off with Jerry first breakdown and just set the scene for this story for us, because I know there's so many people that are interested in this right now. Sure, Yeah, especially with opening Day in the baseball right yesterday, we're seeing more and more of these local sports channels that are trying to reach the

cord cutters, the people who've canceled their cable subscription. So they are introducing online services that where you can watch baseball, basketball, and hockey in your local market without a cable subscription. Now I go back. I'm going to date myself what you guys probably do too. But I used to watch on Picks Channel eleven locally. I was expecting you to say radio, Well, you can hear it on radio too, but no, I would watch Phil Rossotto, Scooter and Bill

White with the Yankee games. Those days are over, I guess right. So the money around rights is really what this comes down to a feeling. This is Joel buzz Away, thank you. There we go. So the tensions here are between the owners who own the teams and can decide who gets to distribute it. Um, So what's the model when this works? What does it look like? Because what ultimately we're describing here is something that the burdens being put on the fans. But when when? What is everybody

vuying for here? In terms of what the business model can look like? Okay, so I have to pay ten dollars for a hot dog, fifteen dollars for a beer, and now if I want to watch it, yea for day, pay up for that. Okay, But Jerry, who's doing it? Right? I think we don't know yet I think this is all pretty early. I mean, these local sports channels are

really way behind in terms of streaming. If you think about Netflix, they started streaming two thousand and seven, and sixteen years later, Um, you know, the Yes network which broadcasts the Yankees, finally introduced the streaming service. You know, these are channels that made a ton of money in the old cable business model. Um, everybody paid for cable. Everybody paid for these channels, even if they never watched

a game. Um. And now these channels are trying to build a business outside that cable model, and they're charging twenty or thirty dollars a month in some cases for the service. And really, these are channels, these are online channels that are meant to protect the old business. Uh, they're meant to you know, they're not going to charge five or six dollars a month because then they're going to upset their distributors, the direct TVs and the copy But the fans, it's like, I'm not paying this and

I'm just not going to watch the game. Are though? Oh they are. We think maybe I'm not a very good chan Then I think if you're a real sports fan, you're you're still subscribing to cable. I mean that the people who still have cable, they get it for sports, maybe for news. Um, you know. I think this is something for the future where these channels think that there's you know, core cutters out there that they can bring

back into the fold. But I think that most of the people who want to watch their local sports game are probably already subscribing to cable and continuing to do so. So the thing with this streaming effort is that it actually is like pretty difficult to get the quality right. What are some of the customers saying about what the experience has been like so far. Yeah, this is it's a very different challenge than putting a movie or a TV show on a streaming service. Live sports, it's just

technically more difficult. You see a lot of examples of streaming services where it'll be the last couple of minutes of a game and it'll buffer, or if you're going to do it, do it right then. Yeah. So I gotta pay for this and it doesn't work, Yeah, pay a lot. Yeah, I mean these are yeah, these are cable channels that it's not in their DNA too. They don't have technology people in house they have to outsource

to work on this. They you know, they're not like Netflix with an army of engineers who can figure out how to make the stream perfect. So yeah, we've seen a lot of examples. So when I call customer service at their channel or whatever, they're going to pick up the phone seem sorry, sir, we'll refund you. Or there is at outsource that part too, but yeah, yeah, yeah, sorry, Jerry, we're having too much fun. No, no, it's I would love to hear what happens when you actually call a

customer service at any of these streaming services. That's assuming they have customers. So one of the ones that caught my attention was the Diamonds Sports Group, which is actually the largest US owner of local sports channel but even just this month they filed for bankruptcy. So what happened, what happened there, and what's the aftermath going to look? Claim? Yeah, so this is um I mean, they are sort of

unique because this was a four years ago. Their owner bought these nineteen sports channels and took on a huge amount of debt, over eight billion dollars a debt, and did so at probably the worst possible time, Because this is when cord cutting was really starting to accelerate. So you combine having a huge amount of debts with a business that's shrinking pretty quickly, and you know, they filed

for bankruptcy protection a few weeks ago. And it's a really huge story in the sports world because, you know, teams and the players are affected by this. The team owners get a lot of revenue from these these local sports rights and that goes to payroll paying. Yeah, those my next question how much of these exorbitant salaries that the players get. But how does it fold into the

mix there? Yeah, I think that's something to watch. Probably not something we'll see affecting player salaries tomorrow, but in a couple of years. It's these channels and a lot of people don't think these teams are ever going to get the kind of money from the sports channels that they did when the cable business was much healthier. So you could see a situation where some of these smaller market teams and there's it's really the smaller market teams

that are getting pinched by this. Um they could um, you know, have trouble paying for the best players. And then you look at um, you know, major League Baseball and the haves and the have not sort of get wider and wider apart because of it. So, Jerry, we only have about forty seconds left. But where does it go from here? Yeah, I mean, I think in the streaming services it remains to be seen how many people

are willing to pay between twenty and thirty dollars a month. Um, I mean one of the things to think about is how good are the teams on the field. Um. You know what, when when your team really stunk, it was still very annoying to call your cable company and cancel. Now, when the team that you're paying thirty dollars a month to stream if they have a bad season, you can

cancel that streaming service in two seconds. And great Friday story, by the way, Bloomberg Business Week editor Joel Webber and Bloomberg News Media reporter Jerry Smith watching your favorite team could quest you more than Netflix and our as engineer Sebastian reminds me that yes, Yankees, yes network does have their own streaming So okay, all right, have to sneak that in there you go, you're listening to Bloomberg Radio, Bloomberg Business Week. In fact, you're listening to the Bloomberg

Business Week podcast. Catch us live weekday afternoons from three to six Eastern Listen on Bloomberg dot com, the iHeart Radio app and the Bloomberg Business App, or watch us live on YouTube. I'm Rocael, Oh Journal, how about you let me drive? Oh? No, no, no no, no, who's going home? Honey? Please? I'll do the bridey Rebels. I don't want to drive. It's good question. This is the drive to the globe. Just that funkimmu thing. Well, driver up to go down

on Bloomberg Radio. All right, this is Jessminton back with John Tucker, and I'm excited to speak with our next guest, jt So we have David Dietz, who's managing principal and

senior investment strategist at Pepack Private Wealth Management. He's on the phone from Summit, New Jersey, and David, I'm glad you're here with us, because, as you know, this is the end of what's been a gangbuster first quarter, especially when you're looking at the NASTAC one hundred on pace for its best quarterly gain since twenty twenty and the second best in the past decade. So I want you to unpack this for us and wrap it up as far as how have you been positioning in the past

quarter and what have you been potentially buying the dip on. Yeah, absolutely pleasure to be with you guys this afternoon. So you know, the Q one basically what was pounded last year did spectacularly wellness first quarter. So we know that ASDAK was down thirty five percent last year, it's led

the indexes this year up about twenty percent. As an accelerates here at the end of the day, Well, the DAW, which is the best of the three indexes last year middlely down but down less than ten percent, is the lagrin in the group. It may end up perhaps one percent.

So that's one theme. The other theme, of course, is when you start looking at you know what sectors did best, it is those NASDAC sectors, the information technology, the communications group up you know, about ten percent just this month of March, about twenty percent for the year. Those sectors were given up for dead and now you know they're

they're off to the races again. Those sectors that did a little bit better last year relative to the overall market really didn't do well, and that may be the opportunity. We'll see. But you know, the financials are down about seven percent, and then you got the energy untill these real estate and is surprisingly healthcare also are down negative. Right you mention financials, have you been buying the dip that we've seen so far the past couple weeks with

a pullback in bankstocks. So it's a very controversial area. We just don't know what people are thinking, you know, deposits moving in, deposits moving out. But if I had to make one call here, it would be the group of regional banks, any one bank. They're very opaque, is very hard to figure out how those deposit flows are going. But I think one thing that investors need to keep in mind, it's not just a financial issue with those

regional banks. It's a political issue. And here's why. You know, you've got politicos and places like South Carolina and Iowa and Ohio. The last thing, ultimately, they want to tell their up and coming businesses. If you want to loan, put your tie on and grovel to the big Wall Street banks and hope they hand you some money and

spend some time with you. That's not going to work politically, they want too big to fail in each of their stage, Right, So how are you advising clients to position with all of that going on? There are no there are no no brainers in this business. But certainly one way to play it is to get an etf of regional banks a package. The idea is this asset class isn't going away. Any One bank might have a misstep, You're not quite sure what's in their portfolio, but there's a group they

cannot go away. I'm looking here just the worst twenty performers in the SMP five hundred for March. Eighteen of them are banks, and all but one are trading now at single digit price earnings ratio when that overall mark has moved up from seventeen to eighteen. So you know will happen in the next couple of weeks? Who knows? But you know why wouldn't over the next few years

they double or triple. I hate to be nervous Nelly here, but I will point out some of the major average, well particular the SP five hundred, being driven by kind of a narrow band of stocks, right, David, Should I be nervous? Certainly? I think some of the upside has been taken away So, for example, the Information Technology Group was trading at a twenty pe at the start of the quarter. Now it's done so well that price ranst

rations at twenty four. Now could it go higher? Sure, at the start of last year it was twenty eight. But here's the problem for the bulls and that in that type of a bet. Last year, the two year treasury in the beginning of the year was just three quarters of one percent. Today is over four percent, almost seven times more. And the fact of the matter is you have to moderate your pees once the competing investments like bonds, interest rates keep going up. So I don't

think it's going to go up to twenty eight. So I think it's brought forward some of the games for the year. And heck, if you could close the year at fifteen percent sixty percent of NAZAC, why wouldn't you do that? So I probably would be taking some profits from that area and rotating into the healthcare, real estate, financial services area. Okay, Now, how much of the rise do you suppose is predicated on the idea that we're going to see cuts later this year from the FED

A lot. You know, it all starts with inflation, and although part of the reason February were so bad, as we got a very hot number for January. We just saw this morning a softer than expected PC deflator inflation number, which apparently is the one that defed prefers. So we are gradually seeing a rolling over in Inflation certainly is much less hot than it was for example last summer. Is not going to go in any one direction in a straight line, but it seems to be receiving and

that makes interesting commodities down. Obviously, with the higher interest rates, real estate is under pressure, auto sales are under pressure, so the economy is cooling. That will allow interest rates to come back down. I mean, at one point the two year was over five, now just over four. That helps, and ultimately, you know, the markets dictate to the Fed what they're going to do. Ultimately, it's not the Fed

to tell the markets's what's going to happen. And I think ultimately, and we're seeing some signs in the last pressure that to maybe only be one more rate hike, the Fed will be less of a headwind than it was last year. And that's great. David, What about tech stocks that have been on such a tear this year? How are you positioning in that corner of the market. So you know, I think you want to be a little bit more selective because those valuations have been have

moved up. But but some may offer still some good opportunities. So for example, Meta was one of the meta platforms, was one of the best performers, up about seventy percent in the first quarter, but it's price to earnings face show is still under twenty. And of course, you know

Zuckerberg's on a tear. This is the years of efficiency, so he's cutting out all sorts of excess costs, reducing Catholic expenditures into met A, moving into AI, and of course it's a unique property which billions of people tuning into their social media platforms every day. And if the economy doesn't go into a hard recession, that social media advertising is going to pick up. That may be something that you want to continue to play, even though it's done so well so far this year. David from the

Great State of New Jersey? How your property taxes? David? Oh source subject. You know, I love New Jersey because I'm so close to the arching you guys, I should point well, I'm done at the shore. So um. Anyway, Consumer discretionary stuts. I should point out just I don't have any discretion anymore when it comes to dim so anyway, that's the best performance. David Dates were managing principal and senior investment Strategies at Private Wealth Managements on the phone

from Son of New Jerseys. These is the Bloombird Business Week podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live weekday afternoons from three to six Easterning on Bloomberg dot Com, the iHeartRadio app, tune In, and the Bloomberg Business App. You can also watch us live every weekday on YouTube and always on the Bloomberg Journal