Welcome to the Bloomberg p m L Podcast. I'm Pim Fox. Along with my co host Lisa Bramowitz. Each day we bring you the most important, noteworthy, and useful interviews for you and your money, whether you're at the grocery store or the trading floor. Find the Bloomberg p m L Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Yesterday, the Curious Exchange Commission rejected her request to list a
Bitcoin e t F run by the Winklevoss Brothers. They were study concerns about the reliability of trading and volume data for the cryptocurrency. Hester Purse was the only SEC commissioner to dissent from that ruler ruling, saying that she would have allowed the Bitcoin e TF to listen. She joins US now, commission or thank you so much for joining us. I want to start with why did you disagree with your colleagues on this issue? Sure, thanks for having me on. I I disagreed because it was really
a technical disagreement. I think that the way this was presented to US is an exchange presented to US um this this a rule change which would allow them to trade this particular product and um, the standards by which we review that should be whether or not the exchange can manage trading in that product, and instead, I think we looked to the underlying bitcoin market and we um, we looked at things in that market that we we didn't like, and we said we're not going to let
the product trade, which to me doesn't seem like the right approach at all. Commissioner person, I was reading your descent and I found it really interesting. The implication seemed to be that a bitcoin e t F may help actually bring more transparency to the market. Was I reading
that correctly right? I think that in this case, it wasn't an e t F specifically, but an exchange traded product, which would would allow institutions to play a bigger role in the bitcoin market, which I think would would be good for the market, and I think would be good for retail investors as well. Just can you offer your definition of what is a cryptocurrency and what is behind
the potential value in a cryptocurrency? Well, I think there are many different cryptocurrencies, so I think it's hard to provide one definition for all cryptocurrencies. Um. You know, bitcoin has been traded for quite some time, and and offers the ability for people to exchange value in a very efficient way. UM. And So you know, I think that there there are a lot of people think that there's real potential in bitcoin. UM. As I said in my descent, I'm not trying to make a judgment one way or
the other on bitcoin or any cryptocurrency. I'm just trying to give investors an opportunity to participate in this market. So, Commissioner I was interested by a study that came out by coin Metrics this week that showed that up to two thirds of the transaction activity registered on the bitcoin network has no economic value, with volumes being more influenced
by reshuffling balances between accounts and outright scams. So how did the Winklevoss brothers propose to offset that with their e t F that would give sort of more confidence to the institutional investors. Well, the way this product was set up, as it was pegged to the price on on one exchange to the auction the closing auction at the end of the day, and so that was that
was how they chose to do it. There are other there are other approaches that one could take, and others have come in with different potential potential suggestions of how to do that. But again, I mean as you get more institutions involved, the markets are going to become more regular, regularized, and you know as to whether or not there's economic
value in particular trading. I think we need to be careful in making those kind of kinds of judgments UM in our equity markets to there are people who are involved in the markets for all different reasons. We have people who are who are planning to buy and hold for long term, we have people who are holding for much shorter for much shorter time frames. And we have people who are UM providing liquidity and who are trading in and out quite rapidly, and all of those different
people have a different function in the market. But but I don't think we need to make judgments about UM whether their their activity has value or not. Commissioner, do you think that there's a regulatory bias against bitcoin right now and cryptocurrencies because there are people questioning whether they have inherent value and whether they are a bubble that
have sort of nothing behind them. Well, I think there are people who are questioning the value of bitcoin UM, and I think that as regulators, our role is not to judge investments, what the what the value of an investment is. It's to give people an opportunity to make those judgments themselves. UM. And you know, there are a lot of very very smart people who are very engaged in the crypto space and have UM have real ideas
about how it could transform our lives. And I think we need to give those people an opportunity to UM work work with with what they have, and to to see what they can make of it. And and I'd rather that we as regulators make sure that disclosure is good, which is which is certainly a key part of our
responsibility UM, but then allow investors to make their own choices. Commissioners, do you expect that your fellow commissioners will change their mind and could approve a bit coin or other cryptocurrency e t F in the near future. Well, I do think it's possible. I mean, things in this space are changing fast and and UM some of the concerns that have been laid out by the commission are ones that you know every day people are working on developing solutions
and addressing those concerns. So I think if we work with people in this space, UM, we may be able to get more comfortable about things that that have, uh, that have raised concerns from my colleagues. So I can't speak for them, you know, I can say from my perspective, I think we could have gone forward with this with this particular et P, and I think that, uh, doing so would have been would have been the right thing
to do for investors. What do you think should happen in order to mitigate the agency's concerns over fraudulent and manipulative acts or practices that could be perpetrated using cryptocurrencies. Well, I think that in many underlying you know, in many many assets, underlying products that trade on our exchanges, their
concerns about manipulation and so um. Yeah, But what could specifically be in order to mitigate this having to do with cryptocurrencies because this is an unregulated offshore market, Well, there there are onshore markets and offshore markets, so you're you're right, it's a global marketplace, uh, And and there are players involved in this space who are very interested
in making sure that there's no manipulation. And so there is quite a bit of self regulation going on right now to address manipulation or or charges The manipulation, and I think that's valuable um and I think if we were to bring in the possibility of more institutionalization in the market, I think there would be even more watching for manipulation that would be going on by people who
definitely have skin in the game. So, yes, there there is manipulation and and and there is the potential from manipulation and lots of markets and and we uh, we can see that that people involved in the those markets take steps to address that. And and so obviously the exchange that would be offering this product has a real interest in making sure that it's offering a product that isn't being manipulated, and if it sees problems in the
underlying it can step in and stop trading. We've got to leave it there, But I want to thank you very much for your time and your comments. Hester Purse, Securities and Exchange Commissioner, speaking about the rejection of the VINKL Boss Twins Crypto e t F. Another company that has been in the news is n XP a semiconductor Why because Qualcom was looking to acquire the company, but that deal has gone by the wayside. And here to tell us a little bit more about it is Rick Klemmer,
President and the chief executive of an XP Semiconductors. Thank you very much for being here. Maybe just explain why do you believe the deal didn't get done. Well, you know, it's hard for us to understand completely. We don't think there was any real regulatory issue that prevented the transaction from being approved in China. It was approved by twenty something other countries around the world, so it really wasn't a true regulatory issue, So it was probably a political issue.
But you know, at this point in time, it's all about how we move forward and how we can get back to driving the growth that's the best for our company and our shareholders. When you talk about moving forward, I have to wonder did you get about ten calls from other potential acquirers right after that saying hey, I want to meet for coffee. We haven't, and you know we don't plan on doing that. I mean, with the issue being the regulatory approval process, I don't know why
it would be any different with anyone else. So you know, we have a bright future when you look at where we are, we're the leading semiconductor supplying to the automotive market, very focused on autonomas driving, which really in the next few years are actually probably next ten years, is about drive, making driving safer, not really automatic driving, and so we're focused on that. We're focused on facilitating the Internet of Things, which you know is going to have seventy five billion
connected devices by three times what it is today. And our technology really is in a position where it can take advantage of that and really provides some useful solutions for everyone. Now, just to knowe you have a career that goes all the way back to the world of Texas instruments. Correct, Okay, Uh. The reason I bring that up is because an XP Semiconductor Phillips. I mean, that's really can you look forward into and tell us what do you think the chip company of the future is
really gonna look like? Well, you know, we're trying to be sure that we're that. So I I get I get that. But it's come through a lot of acquisitions and combinations, and so we did a merger of equals about three years ago with three freest which was the Motorola Semiconductor company, and and that's proved to be very successful for us in the automotive space where we can bring the combination of both technologies together to be able to make a difference for our customers in the car industry.
And so I think that those opportunities are really key. But it's about focusing on the future. And you know, we are in a unique position where we can provide the processing and the security because with all the hacking and risk of of hacking, being able to provide security in the connected world as a critical value. What did it do to morale to have this deal after so much hype and so much drama fall apart. You know, it was really interesting. Initially our organization was very excited
about the combination with Qualcom. When the confusion came in when Broadcom made the hostile bid for Qualcom late last year, it really created a damper on the environment because no one was looking forward to be in a position to be there. But you know, we've gotten through that fatigue. Now the organization is re energized. We we had an all hands meeting after the morning after it was announced, and everyone was quite excited about the future and just
having certainty and clarity about where we're going. Just to quickly when a client or a customer goes to a store and pays using their mobile phone like Apple Pay or Google Pay. What are they using an an XP product? Most likely they are. We have roughly a d eighty five percent market share in the mobile wallet. We invented NFC some near field communications, yes absolutely, which facilitates the mobile wallet, and so we're designed in and most of
those applications to be able to do that. We see that expanding, especially in Asia where it's becoming much more useful used for transit and other applications. Uh in India, they're actually where people don't have a bank account are now using their phone basically as their bank account to facilitate transactions, to be able to store money, save money. So we're seeing a real boom in usage in the India for the population that really doesn't even have a
bank account today. So you know, Apple talking about your smartphone use and and the smart pay. Apple has talked about possibly creating more of its own chips and trying to create more of its own infrastructure. How concerned are you about that? Well, you know, Apple has certainly got a bright future and they've clearly moved towards where they're
creating a significant amount of their own technology. I think we're uniquely positioned with some key technology that they probably don't want to invest in to be able to drive based on the broad usage from a broad customer base where they wouldn't be able to serve. So I think, based on our experience, we think we have a good relationship with OLI our uh you know, mobile handset customers, and I think we can continue to make good progress there.
Biometric passports. I love the details of this stuff, so I mean that's you as well, right, Biometric chips. We we do the chip that's used in the electronic passport that helps facilitate you know, processing information. So we do that. And I think any six countries around the world, what do you think is going to be the biggest smart market that is not smart right now? In other words, where chips going to be in the future that where they aren't today. You know it's gonna be ever place.
You know, as you start thinking about seventy five billion, you know it's huge. And so like your thermostat, all thermostats are going to be connected. Security, your security and your home or office or industry is all going to be connected so you can see what's going on wherever you are around the during your work day or around travel or whatever. So I have regulators been working closely with you Is they start to get concerned about surveillance
and safety and all that. We we work with a number of governments relative to how to provide that best security. But you know, with the new implementation of the you know, the new acts in Europe, we have to be very careful about that information and certainly we're working with them to be able to protect it but not ensure that it's not abused. Alright, well, I guess that uh, the future of an XP semiconductor as you see it right now independent. Absolutely, we look forward to continuing to drive
a bright future. And is the M and A wave in the semiconductor space dead? You know, I don't know that it's dead. It's clearly going to go through a very thoughtful process. If this transaction didn't get approved in China, where it was approved by the twentysomething countries around the world, I think people are gonna have to really think about, you know, how much risk they want to take. Twenty one months is a long time to put your organization
into a disruptive nature. So I think there will have to be a reflection associated with that. Did you feel any of the effects of the ban on purchasing products from China's ZTE Corporation purchase shipping product in Yes, we z T is a good customer of ours, and just last quarter we announced thirty one million dollar impact for the fact that the US had had prevented that from
taking place. So I think they're a good customer. I think, you know, it's important that you know the UH the appropriate steps are taken to provide the security about information. But with the proper oversight, it seems like it's only appropriate for the company to be able to to be competitive. There are no US companies that are still in that market the ZT serves, so it's not certainly not like
it's UH anti competitive for any US company. And they probably purchased around three and af or four billion dollars a year of semiconductor components, and my guess is sent percent of that is from US companies are US manufactured
like our product is. So you know, I think it's a big decision, and you know, I I applaud what's been done recently where they're putting them in a little bit different fashion with appropriate oversight to protect U s national security, but yet at less, at least letting them continue to operate as an independent company. Rick Clamora, thank you so much for being with us. Really a pleasure to speak with you. You're such a celebrity and sort of star of this soap opera we've been talking about
for so long. Uh, the potential tie up of Qualcom and n XP. Rick Klemmer as a president and chief executive of n XP Semiconductor's NXP Semiconductors to remain independent for the foreseeable future, you know, talk about another curveball. Investors in Twitter got a nice curveball and they whipped down right now. And here to tell us a little bit about Twitter's results and the changing nature of social media is Jim Anderson. He is the chief executive of
social Flow. Uh. They are a company that sort of measures and monitors flows of information on social media. And in full disclosure, social Flow is a platform used by Bloomberg for social media purposes. Jim Anderson, thanks very much for being here. Tell us, did I describe what you do at all accurately? You did. We're the platform most of the big media companies used to get their content
out to Twitter, Facebook, and other social platforms. We do a measure and sort of if you think about stock market analysts, we're not an analyst of the stocks, where an analysts consumer attention, right, And that's important because as a publisher, you want to know whether real people are really looking at your content. That's exactly right, that's the entire game. If you can't get real people to pay attention to what you're doing, why are you doing it? Okay?
Is Twitter getting more real people to do what they're supposed to do on the Twitter platform? The irony is yes. I mean you wouldn't know it from their stock price, and I think the takeaway and Facebook in the same category. When you're a tech growth stock and you're not growing as much as is the market expected you to grow, you're you're going to be punished. But the reality is there are just as many, if not more, real people using Facebook and Twitter today then there were six months ago,
three months ago, yesterday. I mean they're still growing, they're just not growing as fast as they were and as the market expects. And Twitter's results are sort of complicated a little bit by this whole bond problem, and they're trying to clean up their ecosystem when I think they
deserve amazing credit for trying to do that. But the numbers, you know, the total accounts, and whether they report them and whether they were including the numbers, you see a lot of you know, sort of questions about how you count these things. Well, Jim, you know, it's interesting that you say that there are more real users that are
paying attention and signing up for Twitter and Facebook. Roger mcnameee, one of the original investors in Facebook and currently head of Elevation Partners, was on Bloomberg Television yesterday and he said that he thinks that Facebook in particular is running out of potential users in its more profitable markets. Do you agree, yes. I mean Facebook's over two billion people and there's seven and a half billion people on the planet.
You know that a significant number of them aren't going to be candidates for for Facebook for all kinds of reasons. So I think that's absolutely uh been on their horizon for a long time. It's an open question how far can they grow. Of course, you have to wrap up Instagram in there, which is owned by Facebook. You have to wrap up What'sapp. So again you get into these counting questions. But without a doubt that that point I think has to be front and center. How big can
you possibly grow? Having said that, if you are an advertiser, what is the alternative? Is it Amazon? Well? Increasingly so. I mean I think it's interesting. You know, we talked about the fang stocks, right, Facebook, Apple, Amazon, Netflix, Google, and now you see the analysts starting to decouple Amazon. Amazon didn't hit his revenue target either, and there are stocks up four percent, but their profitability to make sense of Wall Street, which I know, it's it's kind of crazy.
Well except for the fact that Amazon has demonstrated the ability to layer on higher margin services on top of a relatively low margin, low profit commerce business, and so Amazon is closer to the point of purchase than anybody out there, even Google. I mean, look at how profitable Google is. It knows when you type in the search box I want to, you know, go on a vacation or whatever. They know you're shopping for a vacation. That's one of the reasons Google is able to make so
much money off of advertising. Amazon is poised to become an advertising powerhouse that they have fift of e commerce revenue in the US goes to Amazon. They know what I'm buying, and I say that in all candor, they know what probably what you're buying is once they get you in this store. Yeah yeah, But Jim, that raises a question for the profitability and usefulness of Facebook and UH and Twitter as advertising advertising behemoths because they don't
have the direct channel to the actual retailers. I mean, could this be part of the issue that from a consumer engagement standpoint, Twitter and Facebook just are not the best places to advertise. I don't know that. I would say that. I I put Twitter and Facebook more in the category of Netflix, which may seem odd I mean, they they're completely different business models. You know, ones ad supported and free and the other is subscription and doesn't
have ads. But they all three of those companies, Facebook, Twitter, and Netflix are really trying to get as much of your consumer attention as possible, essentially your recreational entertain information time. Amazon is really quite different. I don't know too many people who go to Amazon just to entertain themselves, right, I go to Amazon when I need to. You know, shopping is uh, shopping is an activity fair points, So okay,
I guess my male bias here. I don't go to I'm just saying, you know, you look at what people purchase and how they purchase it, and you think did you need that? You know, you didn't need that, but you were there and you started clicking around and pretty soon, you know, another brown Box shows up. But then it raises a question entertainment, Right, what is the sort of
uh I guess the Amazon. Is it as effective to advertise on that type of platform versus one where people are actually focused on actually buying things, they're opening up their pocketbooks. Well, you're getting into now, and this is a really big deal in the world of advertising, is sort of upper funnel brand awareness versus lower funnel direct response. And historically that the simple way to think of this
was face Book was traditionally more upper funnel. You know, I just want your Volvo wants people to know that Volvo cars are great and safe and and you know, all the attributes they're trying to convey. Contrast that with
sort of Google more click to buy. Right. I know that you're planning a trip to uh an exotic locale, and I want to sell you a hotel room or or airline tickets, and so all of advertising is tending to move towards more direct response, and so again Amazon is incredibly well poised to capitalize, and I think that's part of what we're seeing in the markets. Well, certainly that is what the investors believe. So you're seemingly on target there, because if you look at Amazon shares today, uh,
they are up one and a quarter percent. Twitter shares not so much. Twitter shares down a little bit more than Thanks very much for being with us, Jim Anderson, Chief Executive. Social Flow. Alzheimer's is a crippling disease that affects millions of people. One company, as I, has created a drug that will slow the progression of the earliest stages of the devastating condition, and a new study show that it did so by thirty percent. The response, however,
in the company shares with a steep decline. Joining us now is Ivan Chung, Chairman and chief executive of as I, which is based in Woodcliff Lake, New Jersey. Ivan, thank you so much for joining us. Were you surprised by the market's reaction given that this sounds like a pretty positive result. Thanks for having me. I'm not in a position to comment on the short term movements in the market, but um as we present it at the scientific Congress.
This is the first large trial that if you could remove enough a lot of toxic amyloid plaque in the brain, it could slow down Alzheimer's disease. Mr Chung explained to our listeners the way in which cognitive ability was measured in the study, whose results were released at that Alzheimer's Association conference in Chicago. Thank you for the question. We use an endpoint called at cooms, which is a composite of the key elements from three well validated traditional measures.
These three well validated traditional measures have been used for many years primarily to detect improvement in later stages of Alzheimer's disease, such as what as I developed almost twenty years ago are accept now we are testing to four SERO one in earlier stages of Alzheimer's disease because as you can imagine, these earlier stages of Alzheimer's disease patients, they're still functional, most of them are still at home.
So we have to detect the initial milder changes so that we can delay the progression of these of this disease. And that's why we developed the atcoms which have the key elements that are more sensitive to the earlier onset
of these milder cognitive impairments. UM. So I'm wondering, even just given the fact that there was definitely some proof in this study that there was a slowdown in the progression, but perhaps not as much as people were expecting, do you still see an accelerated approval as a possible path or a viable path to pursue for this drug. I think in the scientific community there are different numbers being
thrown out. For example, improvement would be clinically meaningful. In our study, we specifically defined improvement will be clinically meaningful. As you saw in the presentation earlier this week, we have shown a thirty percent uh improvement in delaying the decline and progression of Alzheimer's disease. We definitely believe is clinically meaningful, and by two other measures, which are the
more traditional measures. One we saw forty seven percent decline forty seven percent less decline and the other measure percent less decline. So we are confident about the robustness and the clinical meaningfulness of this data set. With regard to the Health authority and the FDA, let us do the work. We'll meet with them, we'll, I'm sure we'll have a productive conversation to understand the best path forward for pan
too for CERO one. Not just to give a little more detail, there were there was a high dose arm to the study, right, yes, correct, tell people what is a high dose arm. The high dose arm is taking pen midigram per kg twice a month. That's the high dose arm. And in this study, the high dose arm is the one that's the best dose that showed statistically
significant and means clinically meaningful results as what I described earlier. Okay, the reason I raised that issue is that European regulators have raised some concerns about some of the issues related to that high dose arm. They were worried about the threat of brain swelling. Right that was back in two thousand and uh fifteen when the trial was at the
initial stage. At that time, none of us in the field knew too much about this phenomenon call old area E, and that's why the European authority took more conservative approach. Now the European Authority does not have that concern anymore. Together with our partner Baugan, we have two other Phase three late stage clinical development programs for two other compounds. We are in the European site and we have no
such issues. That was a matter a few years back when the field didn't know much about how to take care of this issue, and now we don't have that issue anymore. All right, I want to thank you very much for helping us understand this a bit. Ivan Chung is the chairman and the chief executive of a SI. The parent company is ASI Company based in Tokyo, and he's talking about the release of new information having to do with their study of an Alzheimer's drug that was
released at the Chicago Alzheimer's meeting on Wednesday. Thank you very much for joining us. Thanks for listening to the Bloomberg P and L podcast. You can subscribe and listen to interviews at Apple Podcasts, SoundCloud, or whatever podcast platform you prefer. I'm pim Fox. I'm on Twitter at pim Fox. I'm on Twitter at Lisa Abramo wits one. Before the podcast, you can always catch us worldwide on Bloomberg Radio.