Facebook, Twitter and Google Under Senate Microscope on Russia, De Vynck Says

want to bring in Garrett. Garrett Davincy is our technology reporter in Washington, d C. Today, Uh joining us now. You can follow Garrett on Twitter at Garrett d h Garrett mentioning Twitter. Let's begin their Twitter has identified and removed about accounts that were linked to something called the

Internet Research Agency. Uh. Maybe just use that as a jumping off point to explain what is it that's being investigated and what do we know so far about social media and collusion with Russian actors and um, the U S election in November. So yeah, we have three hearings over the next two days, one today to tomorrow, and in all three of them, representatives of Twitter, Google, and

Facebook will face questions from lawmakers. You mentioned Twitter, You mentioned the ira A, the Internet Research Agency, So that is the shadowy organization that has been linked to the Kremlin that you know, the public has known about for several years now, you know, dating back to even but all this information that the tech companies have disclosed, they disclosed the whole new raft of information last night Twitter

mentioning those accounts. As you mentioned Facebook talking about UM on six million Americans may have seen content that was generated or shared by Russian linked actors. Now those numbers are both bigger than what had been disclosed up into

this point. And we just saw Senator Mark Warner, who is the top Democrat Democrat on the Senate Intelligence Committee who will be interviewing these UM companies tomorrow, saying, you know, in the scrum to reporters at Congress, just now that you know, all this information that's been released kind of shows to him that maybe the story is going to keep getting bigger than what we know right now. He said, you know, they disclosed a certain amount earlier, and now

they're disclosing more. He called um you know, the attempts by the tech companies that kind of get ahead of the story is just incremental changes. So you know, the tech companies are really up for for sort of a real grilling from lawmakers today and tomorrow. Garrett. You know, we think about President Trump's administration as being anti regulation or at least pro deregulation. What's the appetite right now

to increase regulation around the tech companies? Relating to uh, some of this investigation into Russia's interference in the election. I mean you're seeing, you know, the Democrats, in part to Killer have a put forward a bill sponsored by

two Democrats as well as Republican Senator John McCain. So there is some bipartisan efforting there to sort of regulate the advertising on online um, you know, social networks such as these, and kind of bring the standards that we have for radio and television up to the level on you know, the online up to the level we have for these other mediums. A lot of other senators and congress people have sort of expressed, you know, they're not

so sure. They they want to kind of see how these hearings go before they take a stand, and that's really one of the things that that's up for debate here. We have some people in Congress saying, you know, this is the bill that we need to regulate advertising on these systems, make sure that um users of the social networks know when something is political, when it's and who it's been funded by and other people. Not so sure yet?

What's the cost benefit analysis is something like this, Garrett, not to the companies, but to the nefarious agents that were placing these ads. I mean, it's relative the inexpensive to put these ads and this kind of content up online. Correct.

It's another question that we will be you know, hearing a lot of people talking about and debating in the next couple of days, which is, if you have a small amount of money and you know, a consorted, concerted group of people trying to use that money to buy advertisements and then sharing it organically as well, how much impact can you really have? I mean, the amount of money that was involved one hundred thousand dollars that Facebook has been able to find. You know, we were not

sure there could be more but one dollars. I mean, this is a drop in the bucket for the amount of money that has spent on these platforms every day. On Google it was significantly even less than that, So you know, it's hard to know exactly how much of an impact these Russian trolls so to speak, actually had on the election. Garrett, I'm sure you've read through the testimony, because these big tech giants have released pre released some of what they're going to say. Can you give us

a flavor of the approach that they're taking. The approach that they're taking is to kind of, you know, try to show that they're being transparent and say, you know, their Facebook's general counsel, who will be testifying, you know, use very strong language. He said it was, you know, an affront to democracy that this kind of thing has happened, that they're very upset about it, that they really want

to work with lawmakers to change it. But what they also want to do is make sure that, you know, the regulations aren't too strict and don't go too far for them that may inhibit them to actually do their business. You know, one thing that came out this morning, the Internet Um lobbying group that represents these these three companies and a few other ones, said, you know, we need these laws if they are to come forward, to apply generally, not to just carve out our three companies because we're

the biggest names in this fight. Garrett Devinc, thank you so much for joining us. Garrett Devinc is a technology reporter for Bloomberg News. He's in Washington, d C. Today because that is where the action is at, with Facebook, Twitter, and Google all heading to Congress to talk about what they're doing, uh to counter false news, fake news, as well as UH perhaps uh international agents trying to interfere with US elections. Will be following that throughout the day.

The testimony is in the afternoon, and we will bring that live to you on Bloomberg Television. Now, want to visit with the Noah Felmanoah is the Felix Frankfurt Professor of Law of Harvard University. Is also a Bloomberg of You columnist, and he is also the author of a new book on James Madison, on the president of the Presidency of James Madison. The book is entitled The Three Lives of James Madison, Genius, Partisan and President. No thank

you very much for being with us. Um. You know, before we get into James Madison, let's talk about just something a little bit more, uh, sort of immediate, and this is the indictments that were handed down by Robert Mueller on yesterday for Paul Manafort and Mr Gates and and just the ongoing investigation. What do you make of this? Where do you think this all leads? And and why

is this is starting with an indictment of Manafort. It's started with Manaphort because he is vulnerable if the allegations in the indictment are true. He's exposed himself to up to eighty years in prison by essentially lobbying for foreign governments, not telling anybody about it, keeping the money overseas, not paying taxes on it, and then laundering it to pay for things like renovations on his Hampton's house. So he's

a weak link. And since he was for some period of time, for some months, charement of the campaign, it's a logical thing from a prosecutor's perspective. You start with the weak link. Where it's going. We still don't know enough to be certain. It's very clear that the Russians were trying to make contacts all over the Trump campaign, and the guilty plea of George Papadopoulos offers ample evidence of that. U The question is was there collusion back?

You know, did the Trump campaign do anything going back, and it's really much too soon to know that. We don't yet have direct evidence that that did happen, um, And that's what the investigation is going to turn on. If they can find that, it will look like a success from Aller, and if not, like a success for

the president. You know, No, I want to pick up on that point because you really highlighted that in your column that certainly President Trump seems to view this as a who wins and who loses type of UH investigation were as arguably Robert Muller views this as trying to find out what happened and the truth. And I'm wondering how important is it to sort of see it through President Trump's lens in in order to figure out whether

this will be effective? And even if Trump is impeached, a lot of people think that he will not get expelled from office because the Senate won't convict him. You know, like anything where there are two perspectives, it's really important to see it from both directions. And so from from mother's perspective, you know, his career as a public servant comes to fruition whether he gets the president or not. You know, he is going to try to find out

what actually happened and provide evidence. And that's how prosecutors typically are are brought up to see things. But from the president's perspective, and really this is the perspective it's most relevant to our polity as a nation. The question is does he go down or not? You know, does he end up in history as as Nixon, or did the end up in history as Bill Clinton bruised and battered but nevertheless acquitted by the Senate. And so I think it's hard, you know, for an elected official not

to see things in those terms. No, as far as the role of the special prosecutor goes in this, is there any possibility that the prosecutor will be wrong in going after certain people in the sense that we focus on the president, but maybe it had nothing to do with decisions made by Donald Trump. You know, prosecutors are a human believe it or not, and they make mistakes too.

In the case of Manaford, assuming that the allegations are are true, and there's no reason really to doubt that at this stage, the prosecu will will pick up some scalps of people who are criminals and have done things wrong um and should probably be punished for that, but who may not ultimately lead back to the big investigation, and that for the prosecut that's the kind of mistake

that you're talking about. I think it's where you go after somebody, you try to flip them and they've done nothing to tell and that may be true, and that happens to prosecutors um and then you know, the bad luck is to the people who committed the crimes in the first place and made themselves vulnerable to being charged and might otherwise never have been charged. Do you think

the Attorney General Jeff Sessions is at risk here? I haven't heard anything thus far suggesting that he is personally at risk, especially because the key meeting in which the President apparently pushed Comey was one in which Sessions wasn't present. So, you know, I think Sessions looks bad around this, but I don't yet have any indication that he himself is

directly in the line fire. You know. I just also want to follow up in this whole winner versus loser kind of way that President Trump seems to be viewing this. I mean, there is another aspect to this. We're gonna get elections midterm elections next year, and there is a good chance that should this escalate based on the popularity rankings of President Trump yesterday, that this could definitely impede the Republican's position in Senate, in Congress more broadly. What

what do you? What do you? What's your take on that? Well, you're absolutely right that in principle, if the President's popularity goes down even further, that should have a gravitational pull on other Republican candidates. It is, however, really important to remember that the first midterm elections in any presidential term almost always result in a significant loss of seats for the president's party. You know what happened to build Contentent,

happened to Barack Obama. It's it's quite normal, and so there's going to be some pull regardless. Um, the question is will that be very disproportionate? And if you look at the way the districts are designed, it's not certain that Trump's unpopularity will pull down repub into that much further in many House races, because many House districts are gerrymandered such that they're overwhelmingly Democrats or overwhelmingly Republican, and

the base may not care. No, just quickly and in your book, The Three Lives of James Madison, Genius, Partisan and President. Would you say that James Madison is one of the first presidents to really understand the power public

opinion and what was then the media. Yeah. Absolutely, It was in um It was in John Adams's presidency that he and Jefferson decided they needed to start a newspaper of their own, essentially a republican newspaper to go against the federalist newspaper that was being run by Alexander Hamilton's and they wrote very explicitly about this. In fact, Madison wrote a very famous essay called public Opinion where he basically said, you know, we didn't think it was going

to work this way under the Constitution. We thought that, you know, everyone would do his own research. But now we understand that the media affects the way people think, and so if you want to actually ensure that the Constitution is followed, it's not enough to rely on the government officials. He was thinking of the Adams administration actually have to rely on the media to inform the people. Sounds fascinating. A new book, The Three Lives of James Madison, Genious, Partisan,

and President, by Noah Feldman, who just joined us. Felix Frankfurter, professor of law at Harvard University, also able recue columnist. This is Bloomberg. Just last week, more than voters in Lombardy, that's the home to Italy's financial capital Milan, and the Veneto region around Venice, they voted yes in a non binding referendum to somehow access more autonomy from the state of Italy. Here to help us understand exactly what's going

on is Roberto Maroni. He is the president of the region of Lombardy and he is also a former Interior Minister of the Italian Republic in the Roberta Lomoni, President, thank you very much for being with us. What can you describe for people the difference between the referendum that was held in Italy about autonomy in these two regions and the referendum the balloting that went on in Catalonia. It's a very simple. The referendum in Catalonia was something

against the Spanish constitution. What we did in Lombardi and Vnito is something too uh to make the Italian constitutes to apply the Italian constitution, in particular reform of the constitution which took place sixteen years ago. The reform was we the regions can ask for more powers, more competences and more money. In these last sixteen years, no regions got new competencens, new powers. Why because the Italian government was always against giving money and competency. That's why we

did the referendum. It's a non binding referendum, yes, but from a political viewpoint, this gave me power. More than three million Lomber people went to vote, and this is the difference in any negotiating, tough negotiation with the government. President Maroni, can you just take a step back and explain, is it a coincidence that we're seeing these independence or autonomy movements in the economic capitals of a number of European regions, Because the Catalonia region is also the economic

capital of Spain, much like Lombardy. I don't think it's a coincidence. The problem is that Europe is not working. The governance of Europe from a political viewpoint, is not working. It's a sum of individual member states. Each of them is working as individual member states. We have nothing such as the US system federal system, and this uh is means that many important regions such as Catalonia Lombardi and

Ventito want Europe to change. I think, I hope that what is happening in Europe is hurt by the European Union, the European commissioned, the European Parliament, because we need to change the governance of Europe from a europe from a political viewpoint. This is the signal I think people has done with our referendum and also in Catalonia. What would

you like to see changed? Because I believe that one of the points during the referendum was that the two regions account for about thirty percent of the economic output of Italy, that includes industrial, agricultural services, finance and so on. Do you want more of the tax money to day in northern Italy rather than go to places in southern

Italy and Sicily, Yes, exactly. We pay a lot of taxes. Uh. If you the difference between what we pay in taxes and what we get back from the state from the government is a huge amount of taxes is fifty four billion euros per year. The difference I want at least half of this amount, twenty seven billion euros. So we'll let me to lower the level of taxation for companies, to increase investments from abroad and to put Lombardy on the top of the regions in Europe. I'm trying to understand.

You were saying Europe is not working. The European Union is not working, and so that's why the economic powerhouses in Europe are sort of putting their foot down. What would you like to see on a European Union level that would make it work? What we call the Europe of the Regions, not of twenty eight twenty nine eight member states. We have ten million people. We would be the sixth country in Europe um, but we don't count. We as Lombardy region don't have any power to interfere

with European decisions. That's why we want to Europe to move from what is now twenty eight member states into the Europe of the Region's taken into account, then Lombardy, Catalonia and regions are something special. That's our our vision, President Modony, and that that's highly radical. That's basically saying, break up Italy, break up Spain. It's not about them,

it's Lombardy and it's got a lot. Is that you're asking for We are asking in uh uh were What we want is that Lombardi event of the regions, the power the powerful regions in Europe can be taken into account more than what is now. We don't have nothing against Italy. Of course, our ferendum was inside the nation Italian nation. But I think that it will be useful or so for Italy and the regions in the South.

If if Lombardi is more has more money and more competencence and power have So it seems to be that there's this conflict between the political unity, let's say of Italy or even in Spain, with the economic and financial reality, which is this is all about money. Right, your rich region, you don't want that money to go to regions that have less money. Yet I don't want money to go to the Italian government because they don't use our money

the right way. I am willing to give money to the regions directly to the regions of the South in a bit to be relationship. This is what is useful for the South. This is my vision. And now we are trying to uh with the government to find a solution, a common solution, not against the government, not against Italy, but for the help of the original of the South. Robert to Maroni thank you so much for being with us.

President of the Region of Lombardy, which is his presidency is based in Milan in Italy, but he's joining us in our Bloomberg eleven three studios in New York focused on fixed income is brought to by PIMCO for investors who demand more than the markets deliver. All investments contain risk and may lose value. Consult your investment professional before investing, well before we do anything where we go on, check in with Simon Ballard. Here's our global credit strategist for

Bloomberg News based in London. Simon, always a pleasure. I'm going to give you a choice here. This is, you know, the trifecta. You get to talk either about inflation or deflation in the Eurozone, Italy and what the effects of quantitative easing have had on the economy or not. And the alternative for Germany, the Nationalist party that won seats in the Bundestag calling for a lawsuit to question quantitative eything from the ECB. Which one of those, uh, do

you want to kick off? Whichever one we pick, we're all gonna We're gonna come back to inflation. I think, indeed, go for it the all the lack of inflation, and the and and the fact that the you know, the e c B. Here we are four years into into quantitative easing and they're still trying to chase that two percent close to target that that they're wanting. So um, you know, be it bit directly in Germany, Beard in Italy.

You know, the lack of inflation is what's keeping monetary policy accommodative um at these sort of levels, which is continuing to fuel equities higher and risk assets generally sort of keeping the keeping the flames going. Simon, when you talk to band fund managers, are they basically asleep? Are they basically I don't care, just put it on an autopilot by everything. I don't care. There's nothing that could shake this until they see a catalyst, until they feel

there's a catalyst for change. Then yes, to a certain extent, there is that, although you do sense that they're becoming a little bit more how should I put it, a little bit more discerning in their approach to risk. And we've seen you know, a couple of high yield deals recently, sub investment grade deals having a little bit more of investor push back. There was a deal from from Shop Direct.

Last week, um It had an fr entranch. Investors came back said the risks, the covenants associated with the name were a little bit too much for them to stomach, so they pulled back and they cut the fr entranch end floating floating rate notes, right, I apologize as a floating rate notes. So they went with a fixed rate

coupon trance. The yield on that was had had to be pushed back from seven to seven and three quarter percent may not seem a huge amount, but in the context of a have a multi hundred billion dollar hundred hundred billion pounds transaction, it is. It just shows that investors have become a little bit more concerned about the underlying credit fundamental So they're not just chasing yield in

this environment. They are looking at the you know, the the risk reward that they potentially will be left holding if and when inflation starts pick up, if and when yields start to to to rise more significantly. Simon, is there any clear understanding as to why it would cost twice as much to borrow money from the UH from the markets in France and it does in Germany? Looking at ten year yields. I mean basically there you're just

going to look at the fundamental risks. And while France has improved significantly or did improve significantly with Mr Macron being voted into the into the into the Lias Palace, you know, a couple of question marks have started to come in his the Macron rally. Just as we had the Trump rally that faded, the Macron rally has faded to a certain extent. So you've got a greater degree of social security costs and and basically weaker economic growth

within the within the thing. But does that really affect people's opinion when it comes to the ability of the French government to repay its debts. I mean they're going to repay them in Euros, as is Germany, as is Italy, Spain and so on. Doesn't someone say, gee, this just doesn't make any sense for so long that Spain, you know, the tenure at one four seven, the US is at two three seven, and we don't have anybody yet that's

trying to secede. No, absolutely, and to a certain extent, if you look at your the level of absolute European yields versus the U s, you'd argue that from a fundamental perspective, you want to buy in the US all day long because of the you know, the improving story um and and the higher yields there in the US. At the end of the day, European investors are sort of obliged to hold European or euro denominated assets UM.

And the longer that the ECB continues to sort of pump prime the economy with quantity divis ng UM, you know, the lower those or certainly those low level of yields will will persist. Simon. We did get results out of BNP Pariba today that showed declines in their debt trading revenues. This kind of follows what we've been seeing. Uh and you are just shot a proprietary trading group in London. Um, there has been a market deterioration in volumes a relative

to the same period last year. How does this play into the calculus at all? Well, again, you know what we've seen here is a reiteration across the banking section and across many industries. Should we say of the challenging market conditions that the traders and investors face um and I think you know the numbers that we had from BNP while equities we were fairly buoyant. On the fixed income side, you know, margins continue to be to be pressed.

And until we start to see the CB getting into sort of rate tightening, into into interest rate raising mode um, then margins in the financial sector we're going to remain going to squeezed. I'm just wondering on a broader market perspective, the fact that volumes have been coming down, that people haven't had conviction, does that matter? Are people caring about bond market liquidity anymore? People don't don't care about bond

market liquidity at the moment. They're quite happy to just hold, but they will do when the market reverses and they're trying to look for a bid. Well that makes that

that makes sense. Any comments about the Alternative for Germany Party and their call for a lawsuit questioning ANCLA Merkel's reliance on the ECB, Yeah, you know again, I guess you know, the the a f D and generally, you know, the populist rising that we've seen across Europe, the protectionist type of rhetoric that we've seen coming into politics over the course of I guess the last couple of years

now um. It's really just helped take the headlines away from from Spain and Catalonia um as Pogumo ends up in in Belgium. But again I think it just underscores the the the the problems of a cross the Eurozone um at the moment um in terms of each individual nation wanting to ensure that it has its own economic growth and solid foundations for future, for future improvements. Simon Ballard, thank you so much for joining us. Simon Ballard is

a global credit strategist for Bloomberg. Coming to us from London. 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. It's one before the podcast. You can always catch us worldwide on Bloomberg Radio.