Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside my co host Matt Miller.
Every business day we bring you interviews from CEOs, market pros, and Bloomberg experts, along with essential market moven news.
Find the Bloomberg Markets podcast called Apple Podcasts or wherever you listen to podcasts, and at Bloomberg dot com slash podcast.
All right.
We also had some news critty this morning for I guess Twitter, which is now owned personally by Elon Musk, so no longer trains publicly, but Twitter is still a big news name they pulled. I went over to the NBC Universal and got one other senior executives, Linda Yakarino, to be the CEO of Twitter. It's kind of some big news in the world of advertising and digital advertising.
Mandy Sing joins us. He's a techan also Bloomberg Intelligence, So Mandy, but I know Twitter is no longer public, but I mean, I guess if nothing else, you could say, Elon Musk is serious about trying to, you know, try to rebuild Twitter as a digital advertising platform.
Yeah, and it's trusting to see him a point and executive, you know, from a traditional media company. Obviously she's seasoned, but I would be intrusted to know if he had more than one candidate in mind in terms of, you know, bringing someone for CEO role. And look, I think that's
the part that they need stability on. I mean, from what we have read so far, Twitter has been losing advertising dollars since the time have been private, So if somebody can study the ship on that front, clearly engagement has.
Been stable, I think for the most part.
So it's advertising dollars that was a cost for concern and maybe it's a good thing.
So Mandy, I know you follow Google, I know you follow Meta and all that digital advertising space. What's the feeling on Madison Avenue now and amongst advertisers, like do they even want to put their dollars on Twitter? Have they pulled their dollars off? Do we have any sense of kind of how they're viewing Twitter these days as an option?
Yeah?
So I think overall this earning season, the company's printed better than expected results, even though expectations work quite low, and my senses, even though Twitter is losing market share, things seem to be stabilizing and generative. AI overall is a positive for all the digital ad companies. We saw
Meta just announced AI Sandbox. I think every digital ad company is going to try to do something similar in terms of you know, self serve ads using generative AI to make ads more personable, and that is where that linear to digital shift is still going to continue. So I think platforms like Twitter and even the smaller ones
will benefit from that trend. Obviously, things are still kind of quite slow in terms of the ad growth, but my sense is we probably are close to a bottom in terms of the ad pricing headwinds over the last few quarters.
Well, of course, we're seeing that Twitter is a private company now, so we can't necessarily see a stock reaction there, but you can in Tesla, Bailey walk us through the logic there.
Yeah, right now, the stock over the past few days up more than three percent, sharply outperforming the Nasdaq, which is flat. And the big focus right now for investors is that Elon can now refocus his attention on Tesla with a new CEO overseeing Twitter or ex Corp, whatever you want to call it, and that would free him up. And that's been kind of the main thesis or one of the big question marks around Tesla's path forward was how distracted Cannelon must be and continue to deliver results
and to continue to deliver growth. And that seems to be why you're seeing investors already rewarding Tesla just because now it does seem like he can recenter that attention.
All right, Bailly Lipschultz, thank you so much for joining us. Billy Lipschialt he covers all the markets for Bloomberg News and man Deep Singh. He's a tech analyst, senior tech dude over at Bloomberg Intelligence.
You're listening to the Team Kensher live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg dot Com, the iHeartRadio app, and the Bloomberg Business app, or listen on demand wherever you get your podcast.
Jane Foley also doing the work she's had of FX Strategy a robobank.
So Jane, let's just start there.
I mean, you see some economic data there that is just really disappointing in the near term and then kind of inflationary looking out five to ten years. You know, from your perspective in the currency markets, what do.
You make of that data?
Well, I mean that's a bit of a worry isn't it. And certainly the inflation expectations number does lend itself to the higher for longer interest rates story. Now, clearly consumer sentiment is down, and you know that that could be a reaction to the concerns about that the debt ceiling, and maybe that would be something that would respond if
these debt ceiling issues were sorted out. But at the same time, you know it, with inflation higher, you know, you've you've got to assume that the Fed will keep on pressing to get that down to its two percent target. And therefore, you know, at what cost to the economy are we going to see? You know, that recession in the latter half of this year and no let up and interest rates And I think that's quite likely this scenario that we are going to see.
Jane, what is the bear case here for the dollar? It feels like, if you're talking about a recession, you buy the dollar. If you're talking about a US debt default, you go to safety in buy the dollar. What is the bare case for the green back?
Well, to be honest, you know, for those reasons that we do think that the dollar will come back in the second half of the year. We think you're a dollar you know, could slip to it to one oh six in the second half of the year, and as the market prices out interest rate hikes, and as safe
haven bids get stuck in. Because let's face it, if the US economy does hit recession at a time when we might have just stagnation for the Eurozone and where the Chinese economy is or the Chinese recovery is disappointing, you know many forecasters who really wants to move into to high risk and I certainly thinking in that environment that you would buy the dollar. So that is our forecast. But your question is what would turn it, you know, what would make the dollar you know, sell off and
go stronger. And I think in that scenario, we would have to have a scenario where the global economy is looking really good, where the market wants to buy on pile more into the high risk because that is generally what happens, that the dollar has a pretty good inverted correlation with risky assets, and when the global economic outlook has been good and people piling to risk assets, the dollar does it poorly. And I don't think that's what we're going to see in the second half of this year.
So, but it does sound like, ultimately, when we're talking about even the ball case for the dollar, which you have beautifully laid out, the idea of interest rate differentials, the idea of a hawkish ECB or a hawkish BOE kind of driving the euro and pound strength, that doesn't seem to be what's driving the narrative for the dollar anymore. It's no longer about interest rates as much as it was, say a year ago.
Would you agree with that?
Well, you know what, I think we can actually look and see what is in the price and the market has already got more ECB interest rate hikes priced in, it's already got more Bank of England interust rates priced in. And I think if we take the euro, for instance, over and above what is already priced in, can the market make an even better call for buying the euro? And I think at this stage probably not, because what we've had for the Euro since the start of the
year is relief, better than expected news. Because we had in mid winter here in Europe, guess prices have come down. We didn't have the recession in Germany, and we've seen a hawky GCB. But now that that's all priced in what are we facing when we're facing probably stagnation in H two and so is that a reason to buy
the euro world? Probably not. And the market's already long and so I think interest rate differentials are still very much at play, but we've got to compare them to what's already in the price.
And Jane, I'm just looking at the pounds sterling. You know, it's up seventeen eighteen percent off of that low. What's going on there?
Well, you know it has had a good run, but actually in the last twenty four hours or so, it's it's really beginning to fail. And again, you know, similar to the Euro, there's a lot of better news in the price. If we look back in March, Sterning was the best performing G ten currency in March and that reflected a slow or better than expected data which we're
coming through there. So you could argue that although the Bank of England increased its forecast for GDP yesterday and also for inflation, when the markets sort of already knew that, it was already perhaps prepared for more interstrate hikes or another interstrate hike care from the Bank of England before you know, before the peak, and so from that point of view, because sterling failed or cable failed to hold
its higher levels. And let's say also the dollar was on the front foot yesterday because it failed to go higher. Well you know, the technicals began to sour and it went lower instead. And I think we are at the point now whereby it's we've had enough better news for the UK for the market to close its short positions. But have we got the sort of news that the market wants to build long stirling positions from this point?
And I think probably not, because although these GDP numbers were revised up, they've been revised up to a stagnationary or even a statulationary environment, and a better outlook for the UK economy is what we've got. That doesn't mean to say it's good, certainly not well, how how what.
Is it like in in London? Says in England these days?
What's just kind of the feeling for the average brit right now as it relates to the economy, the outlook?
What can you what can you share with us?
Well, you know, you know, the first thing I would share is that the feeling in London is usually very different to other The economy London and the Southeast tends to be a lot more prosperous, but you know, I do know that around the country as a whole. You know, over the last year or so, there has been a real streep rise in food banks and the amount of people using food banks. So because of living crisis on an individual basis has been extremely painful for an awful
lot of people. That's said, because the labor market is tight and because most people you know who want a job have got a job. What we have seen is aggregate demand has been stronger than expected and that's what's led to this improved GDP outlook and actually improved level for the government coffers even because there's been more taxes
being paid. So we've had this better than expected outcome on an aggregate basis, But on an individual basis, there's an awful lot of people really feeling the pinch because of higher inflation and higher interest rates.
Well, speaking of really feeling the pinch, there's a fun fact I think from the I'm of Spring meetings that I just can't let go of the idea that is going to take years for the British economy to climb their way out of this kind of recessionary period. What does that do to the currency? I mean, we're looking at one twenty four on the cable rate right now. How much upside, how much downside is there?
Well, you know, but perhaps a better example of that is, you know, I can tell you that that Sterling has still not recovered to its levels against the Euro that
were there before the Brexit referendum in twenty sixty. So from that point of view, I think that reflects perhaps also the weakness of business investment, for instance in the UK, a lot of the political uncertainty that we've had in recent years, and that has certainly over the last year or two and before that created this this theory of doubt, this sentiment of doubt and uncertainty surrounding the UK economy
and also sterling. Now with respect to cable, obviously that's governed quite a lot about what the dollar does, and I think in the second half of the year cable's going to be more about the dollar perhaps than about sterling. But even though sterling has covered a lot against the dollars in say much historically, it's still below its medium levels.
Jane Fowley, thank you so much for joining us. We always appreciate getting your perspective. Jane Foley, head of FX strategy at Robobanks. She is based in London. I always appreciate getting that view as well. So again the currency markets. Looking at the Bloomberg Dollar Index, it's up three tenths of one percent today.
You're listening to the tape canser, our live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, the tune in app, Bloomberg dot Com, and the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa playing Bloomberg eleven.
Thirty going on again that you mission data.
I mean, it's just ugly any way.
You look at current conditions, worse than people than we had thought, inflation going to be higher than we had thought. There's just not a good way to spin that. Robert Teeter joins us. He's head of investment policy and the Strategy Group at Silvercrest Asset Management CRETY.
It's interesting to note that he joins us in studio.
Yeah.
Yeah, Bloomberg employees aren't even in the building.
I was ordinarily that would get a gold star from Paul. Yeah, on like a day like today, it's like three gold stars, maybe a trophy.
I don't know exactly, So Robert, let's just start with some ego data that you missed.
Data came out. I don't know, man, it just doesn't look good anyway, Slice, what did you make of it?
Yeah, So, I think the two things I focused on the most were the sentiment side, which looks, you know, very negative. Most sentiment indicators have been very negative. It's quite an interesting disconnect between the relatively strong job market and just continued persistent negative sentiment. So I think that's an interesting disconnect that will resolve at some point one way or the other. I think more towards sentiment improving.
You look at the component of it related to inflation expectations ticking up, that's not that much of a surprise to me. While it was better than, you know, higher, hotter, worse than expectations, it is something that we've been hearing for months and months now that inflation's going to be sticky and persistent, and so I'm not that surprised to see it show up in the survey data. The number that it's at, it's a bit elevated but not terrible in my opinion.
Let's talk about the dead ceiling.
Sharlotte, Oh, that's fun.
Yeah.
Always it feels like there is a concern about just how bad it'll get. Talk to us about the layers of messy mess here.
Yeah, I think that's a great way to think of it. I do think like most people that in the end, cooler heads will prevail and we will get a solution. The question is what's the path look like from here to there? And I think the path could get a bit messy, and I think that sets the stage for you know how we have to think about the state of politics in the US going forward being a risk factor in the economy. And so I do think we'll
get resolution. I think that's a good thing, but it could get a little bit.
Messy because what are the options here?
Though?
Yeah.
So I think one of the things is that whenever you saw the release from Secretary Yellen talking about the X state, you know, making it June first and trying to get everyone focused in on June first as a deadline, there was also some language in there that indicated the fact that, well, it could be several weeks after that, and so you could have this rolling crisis situation where where you push and push and push into June one, don't get a resolution, and glide another couple of weeks,
and then hope that, you know, we get to those dates where more money comes in the door and the X date gets pushed out further. I think that's a pretty tough situation for markets, because you'll just be looking at a rolling series of crises overcoming weeks. So I think if we don't get that resolution by June one, we could be in for some real choppiness after that.
All right, So I don't know what do you do here?
I mean, it's there's a lot of what ifs out there, and most notably I guess I guess this. You know this stuff about the debt ceiling, but there's a lot of cross currents out there. How are you when you talk to clients, what are you kind of how you kind of framing out the next six to twelve months?
Yeah, So I sort of start with the economy and where we are today, and I think we're running at about one and a half percent growth. So I look at the real time models, I look at mobility indicators, spending and things like that. I think we're a little north of one percent. We have a pretty strong job market, and so that's consistent with that sort of stability as
far as the economy is concerned. When you look out in the near term, though, you know, we're certainly going to have some continued drag from the from the credit crunch and from the things going on in the banking sector. So there we've modeled that out. We looked at the eighties and nineties SNL crisis very different, similar in terms of dollar amounts, but very dissimilar in terms of the
eighties nineties. You had hundreds of banks failing every year, and so we estimate something like thirty percent of stress of the eighties today and to us that leads to about a one percent GDP decline, So that gets us pretty close to that flat line of you know, flat growth for coming quarters.
Oh my gosh, thirty percent of the pain in the eighties, that's not that's that's something.
The eighties were pretty good to me, So I know.
We always talk about we always talk about the.
Eighties with me and Paul.
I was not around in the eighties, surprise, surprise, but I always refer to the eighties, especially to talk about inflation and you know, Reagan and defense and all that fun stuff, and he's like, you know what I was doing in the eighties, having a great time, And I was like, yeah, same. Let's talk about the trade here, though, because it is a pretty doomsday scenario that thirty percent of the pain in the eighties is still quite a lot of pain. Is it as simple as you just
liquidate your treasury holdings? Is that the trade?
I don't think so. I think your bride through there is quite a premium there looking at the you know, the spread in terms of the treasuries maturing around the debt ceiling, so that's certainly a risk factor there. On the banking side, I think that I look at it across three different levels, So I think from a depositor standpoint, the crisis has basically been solved. And I think that you know, the fad, the FDIC and Treasury have been
very resolute in that. As it relates to banking equities and future profits, that's still an open question mark as to what type of activity they'll have. But the reason that I think that the stress today is only thirty percent of the SNL crisis is that it hasn't become as widespread. So again, you had hundreds and hundreds of banks failing in the eighties, and that was at a period of time when there was much more pervasive in
terms of the economy. You know, here we look at the banking issues, there's a lot of stress, there's a lot of big dollars involved in the takeovers that have gone under in the failures, but it's not as pervasive throughout the system. So I don't think it becomes quite as big of a risk factor.
What do I go in the bond market here? I mean, I look at it to your treasury, it's almost four percent. It's not a beach of kick in the head. I think, given what happened in twenty twenty two, how are you guys thinking about the fixing space these days?
Yeah, I think bonds are a pretty interesting opportunity here. I mean, do you have, as you mentioned, pretty solid yields. We've had the backdrop of continual improvements in inflation, so ten months in a row now of CPI improving. I think that continues. If you look at some of the comments in ism or some of the things you hear in earnings reports. Inventory levels are coming down they're being
managed better. That points to future price improvement, points to better inflation, points to good outlook for bonds in the near term. And you're right that four percent type of level is a pretty good yield compared to where things might sit in the short term with a lot of the stress going on inequities.
But then if you get stuck holding it and there is actually the very first default in history for the United States, you lose a lot of money very very quickly. What then looks good? I'm trying to think if there is actually a DeVault.
Where do you go if it gets to that point. I think not very many things look good and it will be a very challenging.
That's when you go to the ATMs and pull out cash.
I'm hopeful that it doesn't get there, and I think that we'll find a way to solve the problem before it gets that bad.
We were there thousand and eight. I was at an idea dinner from a investment bank, yeah, seven or eight reasonably smart investors, and I've been to a bunch of these, and the discussion was how much cash should you have in your house? Number one, ten grand, twenty five grand, fifty that that's what was discussion, and the second discussion was what's the best safe to have in your house? So people were on Amazon dot Com at this dinner buying safes that be delivered to there.
We're not there now, We're not there, and I don't think we're any more close to there. And I remember that time as well, when the fear was over access to your money, and we had, you know, maybe a few hours of that fear perking up in the early days of this bank crisis. But that's that's been quashed pretty solidly, and I think deposits are sound here in the average consumer, the average employee in the job market throughout the country knows that how much should they say?
We said twenty five grand in cash? Yep, all right, and like it's not easy to I don't know.
It wasn't easy to do, but I mean, and then people were literally talking about, oh, this I got this safe.
This is great, it's it's the best thing, you know, blah blah blah, A very different friends, clearly, I don't know.
Robert Teeter, head of an investment policy and strategy group Silvercrest Asset Management, joining us here in our Bloomberg Interactive Broker Studio.
You're listening to the team Ken's are Live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg dot Com, the iHeartRadio app and the Bloomberg Business app, or listen on demand wherever you get your podcasts.
If you're in Bangkok, Thailand, and let's say it's Friday, I don't eleven at thirty to night, twelve thirty nights something like that on a Friday.
Do you dial into Bloomberg Radio.
It sounds like maybe you do.
No, that would not be bit But this guy, this is how hard he works. Dan Ives, Managing Director, senior equity analyst Webush Security. He's overdoing some Asian marketing trip. I guess trying to scam some votes from institutional investors.
I appreciate that I did that for many years. But Dan, we're going to bring you back down to earth.
Here.
We got some movement here on Twitter and Tesla and Linda Yakarino out of NBC Universal. I guess her going over to Twitter is a really good thing for Twitter and maybe even a good thing for Tesla knit shareholders. What did you make of today's news?
Yeah, I mean this is a home run higher because of because there are a background on a digital advertising perspective from NBC Universal. It's exactly what Twitter needed, I mean, must you know, ultimately this balancing act, the clock struck, sinnite investors will get more and more frustrated, and it's a positive for Tesla with now I mean even though he's CTO, efforts more and more focused on back on Tesla with Wynd and now we're going to be CEO.
So sticking with the Twitter piece before we get over to Tesla here, Dan, does this move for Yakarina work well for the advertisement side of Twitter?
Oh?
I think it's exactly what the doctor ordered because she's extremely well respected in the advertisement community. She understands that world. And I think ultimately it's been uphill bad for Twitter and this is exactly what they needed. And I think it's the right pick and also something that compliments must in terms of the strategy of Twitter. Look, there's it's an uphill battle, but this was where I continue to view as a home run higher.
All right, Dan, ever and Asia presumably meeting with the institutional investors. What are the names they want to talk about, what are the themes that they want to talk about when they get dan ives, you know, kind of across the conference table.
Yeah.
Look, the big focus has really been this AI arms race. How do you play? It? Is Microsoft just the winner? Is where does Google play? Where do other tech players? That that I believe is really one of the biggest teams that we're seeing along with just big tech. I mean there's a continue to grind higher and you mean you've talked about I think tech's up another rest of the year, which is what we're seeing in terms of better than fear numbers and fundamentals holding up.
Games.
Are you liking most if I can ask you to name any in the tech space.
Yeah, right now. Look, Apple to me continues to be our top pick in terms of where I see that in terms of overall iPhone install based on the up great opportunity. Microsoft continues to be our core cloud play you know, just raised price stars and distreancial forty and that in this AI Game of Thrones battle, they continue to win that hands over. And I think Power Out on cybersecurity continues to be the core name, and then tess on disruptive tech. I mean, I think it's one
where price cuts were needed. It's obviously struggling through in a margin perspective, But I think they're going to navigate and get onto the other side of Hey.
Dan, you know, for me and for a lot of other I think investors, the deterioration in relations between the US and China is troubling on so many levels. One of the levels is just technology. Are we when you travel around Asia speaking to an institutional investors, are they concerned about it a tech cold war between China and kind of I don't know the West broadly defined.
Oh, I think it's the biggest thing that comes up, especially here in Asia in terms of this cold tech war playing out has an impact of supply chain. There was just ultimately a potential black Swan event at one point down the road, and I think ultimately it really is the biggest risk impact now. I think Apple has
to have navigated that phenomenally. But there's no doubt this is the geopolitical sort of tightwire act that you know, I believe right now, invessers are sort of continuing to focus more and more on although I think fundamentals really dictate to day right now.
In big text, we had to.
Paul's point, we had Larry Summer speaking with our David Weston about this, and he said that for businesses, the US gives you a wrist slap and China rolls out the red carpet. Are you sensing that from where you sit?
Yeah? Look, and I think I think if you look even at Cook called ten percent politician ninety percent tactician, I mean, China understands right now in terms of this tenuous opportunity that we're seeing. You are trying to see more and more diversification to India, to Vietnam, you know, and cross and as well as in the US with Ira, and that's gonna be a tight rope that they play. But I think for right now you're gonna see that
as the biggest risk. And I think ultimately Apple and Tesla are the ones that continue to sort of walk that tightwire act. And in really what's essentially the coupling between the US and China is.
The feeling there in Asia a Dan As you spend a couple of weeks, I'm assuming you're gonna be doing some channel checks with the supply chain and so on. Is there a feeling in Asia that Asia plus India plus maybe some other parts of the world can maybe make up for any supply chain disruption that may even grow from here as relates to China.
Yeah, and Paul, I think the one thing and we'll be in Taiwan next week as well, that the supply chain issues are really starting to moderate as well as you combine it with the feeling inventory from a chip perspective, we're really starting to get down to a point that we maybe turn here and that's positive for chips, it's positive for Apple, and then Cherry on top of the Sunday is really just AI. I mean Ai, we've used
an atos a billion dollar mark in next decade. That's really added to how tech investors, not just here in Asia, but across the US, Europe, you're in around the world are trying to play this. It's not just Microsoft that's the winner. It's going to be a game of thrones playing out across big tech.
Well within that frame of thinking, were you concerned at all about Apple not really digging into AI much in general, but also specifically in their latest earnings they were kind of one of the ones that really didn't mention it very much.
Yeah, but it's standard cooking crew, Patino. I mean, they play a different game of poker than other big tech players. But I believe it's the Developer Conference next month as well as into the fall. They're going to talk more and more about their AI strategy, and I think Apple is not going to be on the outside looking in when it comes to AI. Just giving the DNA of Crew Pertina.
And Tesla just lasts before we let you go. Hopefully you have a much more fun Friday evening than talking to us. But so for Tesla, is there a sense there? I mean, Elon's invested so much personally and professionally in China, is that still a market for Tesla or the incumbent electric vehicle makers they're going to really run the game.
Yeah.
Look, I think Tesla has been shared in China, but there's no doubt it's a price war that's playing out versus UID Neo and a lot of the domestic players. But that's gonna continue to going to be the core ingredients of their success. Of autos are coming out in China, and I think that's not really going to change. But there's no doubt the price war in China's front and center, and Tessa aggressively is going after that.
All right, Dan, thanks very much, you know, we really appreciate the time we know you're on the other side of the globe. Dan Ives, he's a managing director and senior equity analysts for web Bush Securities. And when you're a tech on us like Dan and particularly well known and well respected tech analysts, you need to be in Asia probably more than the average financial type for a
couple of reasons. One, you want to visit institutional investors are there, but too you want to get a first hand look at the supply chain, uh, in the technology space, hardware, software, and a lot of that, particularly on the hardware side, is in Asia. So that's why you'll see, uh, these techotiles spend a lot of time physically in Asia doing you know, channel checks, you know, where our things in the chip space, how are things in the manufacturing space?
And now maybe with China disengaging a little bit more, it may be a greater issue. And I think that's kind of what tech guys like Dan Ives are doing.
You're listening to the tape cans are live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, the tune in app, Bloomberg dot Com, and the Bloomberg business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg eleven thirty.
So we want to talk about the digital ad space, our go to pursus Mark Douglas. He's a president CEO of Mountain and Mountains and advertising software company enabling brands to drive measurable conversions, revenue and site visits right down the fairway for Mark. So, Mark, I had two very highly ranked and esteemed auto analysts or no, I take the back technology analysts who said this is a home run deal for Twitter and signing this executive from NBC Universal.
You're not so sure, are you? Don't you don't take that rut?
Yeah, I mean I want to say, first Linda the person at NBC Universal that is rumored to be the person that's going to take this role. She's a very very capable executive. My company mount has a big partnership with NBC and but the and I think she could definitely do the role. The one thing I'll say, though, is when you combine a kind of big brand advertising executive and you combine that with something that's like a social platform or a search platform, you kind of get Yahoo.
And you're not saying that, you're not taking that in a positive sense.
I mean, I'm saying that Linda can do this job, but at some point correct at some point. And the way I say you get Yahoo, what you get is a company that kind of tops out in revenue at a few bills. It's a lot of money, but you know Google and Meta they top out at over one hundred billion. Amazon has built an AD business. I think it's now approaching forty billion, and it's done in a remarkably short period of time. So those companies focus on
performance advertising, direct response advertising. And so I think if Linda winds up leading that she's going to need a very, very capable team that probably formally worked a Meta or formally worked at Google to build out the technology and the platform to have a long tail of advertised So the thing might say Yahoo, that's a company that had a few thousand advertisers. You look at NBC to have
a few thousand advertisers. Meta in Google have millions, and you can't really scale to the numbers that think well that people would really expect the Twitter without being able to reach million, you know, hundreds of thousands of millions potential advertising, and that chances are not going to come from television executives. It's going to come from, you know, from from other social social platforms like Meta, TikTok, the Google,
the executives at those kind of companies. So she will have to add that to our team one way or another.
It's kind of my point.
So, Mark, what do you see as can you give me kind of a specific example of what you see as the biggest experience whole that could potentially impact her time at Twitter? And we should mention that Musk did confirm that she's taking on the CEO role in a tweet, But what do you see as you know, a specific situation she's going to encounter that her lack of social media experience might lead to some issues with Yeah, and.
By the way, I think that had to be confirmed because NBC's upfront television up Front starts Monday. Oh yeah, so and chances are and she was leading it, so chance so it may not be.
Six weeks now before she starts to roll.
But I think yeah, I mean so, the skill set is fundamentally the big dollars in advertising on digital advertising, They come from the smallest of customers. So the experience they come from the companies that you know, the director consumer branding and a retailers. They know, those big dollars ironically don't come from the big advertisers.
They don't come from.
You know, the Coke Pepsi or things like that. They come from all of these smaller advertisers. With the millions of websites we have and shopping sites and travel sites and things like that, that that incrementally spends just really significant amounts of money and that really insulates you from economic downturns. You notice that even in the worst of economic times, Meta actually had an up quarter because they're very insulated from like any small number like one hundred
cmos controlling a budget. So she's going to need people with that experience.
How do you build out and perform?
And it's marketing platform for Twitter that can attract all of these smaller advertisers who are ultimately who were going to build our business around and build it to much much larger scale. You see, like Amazon did the fantastic job of that. I mean, how the there aren't a lot of large advertisers on Amazon's advertising platform. It's all these small sellers that are the majority of that revenue, and that's what those that skill set to do that is I think the skill set she's going to need
to add to her team. I don't think she classically has that on her resume.
So mark every company in every industry over the last several quarters in her conference call have mentioned AI, and I think the kids are referring to artificial intelligence.
I'm not sure about that.
But so how does that factor into what is a multi gajillion dollar business, which is the advertising business, both linear you know, TV, radio, all that kind of stuff, as well as the growth engine which is digital advertising.
Yeah, so what what Google and Meta is so good at is finding the right consumer for your brand. I mean that's ultimately I always say no advertising advertising purchases. They don't actually want to buy ads. They want to buy traffic. They want to buy the consumers that are
aligned with the product that they're selling. And Google obviously is incredibly I mean, it's it's the most efficient marketing engine ever because you literally tell them what you're interested in buying, and then they go here and then they take you right to.
It and so and so that's why they're so large.
And Meta doesn't have that kind of input, but they got very very good at it, obviously to build their business over one hundred billion dollars, and that is really hard for small advertisers.
And what those companies are really good at.
I think now the where AI is going to play a role is one bringing more efficiency into the advertising egosis into just getting really, really, really incredibly good at making that connection. Who are the consumers that are very open to hearing your message and hopefully potentially want to buy a product? And I think there's still a lot of room to go in that type of technology, and I think we are at a point where a lot of that tech is going to be AI orient technology to do it.
I also want to ask about Disney, while we have you a tough week for them, They owe Comcast a lot of money for the Hulu situation. What do you think is the likelihood of Comcast potentially just going all in and purchasing Hulu.
Yeah.
I think the conversations on that were very active, just you know, knowing people at Comcasts and Disney. But I think Disney definitively they said we're doing a bundle and they did, I mean, they upset they want to double down on on owning Hulu and making it a part of a major bundle with Disney Plus and some of the other properties. So I know is going to then try to extract as much money as they possibly can from the portion of Hulu that they own. But I
think that was a big question mark. And I think this week that that question mark was removed, that that Disney wants to own Hulu and they and and that's going to happen, but the details on the money they owe comcasts relate to Hulu are still to be worked out.
I also think just they have one more point.
I mean Hulu as this I'm sorry, Disney as a stock is they have so much, they have so many ways to save money and make Wall Street happy and things like that. There's no doubt it's going to be pretty easy for Disney to be a good stock to own. I think the real question marks in their business are the brand is associated with magic and the and if the brand loses that magical luster, the question is do you want to own the stock short term?
But do consumers want to own the product long term?
So I think all the question marks around Disney have to do with the price points for Disneyland are literally insane. And if you remove magic as part of the value proposition, is any our people still.
Don't want to pay that? It's becoming a huge question Mark all.
Right, Mark, thanks very much. We always appreciate getting a couple of minutes of your time. We can talk to anything on the media technology space. Mark Douglas, President and CEO of Mountain kind of getting the latest on what's going on at Twitter with Elon Musk and Linda Yakarino, leaving NBC Universal going over some big changes in the ad space.
You're listening to the tape. Catch a our live program Bloomberg Markets weekdays at ten am Eastern on Bloomberg Radio, the tune in app, Bloomberg dot Com, and the Bloomberg Business App. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa, play Bloomberg eleven thirty.
All right, kids, e SG Environmental Sustainability and Governance ESG. I'm all down with that. I learned this before you guys even knew what it was. You're like, I know, you know, I was over in meeting investors in Paris. I don't know ten eleven twelve years ago and I was talking pitching Disney or something like that.
So how are they on ESG? And I'm like, what what is ESG? Mickey Mouse? Yeah, I mean it's Mickey Mouse. I mean, how do you know what ESG is? But now I know? Okay, it's big.
A lot of money being allocated to research, to funds that focus on ESG and incorporate that into their investment process. It's a global situation, at global issue. That's why Bloomberg Intelligence has twenty analysts assigned to all aspects of ESG research. Sheeting contractor ESG research channel. She's our fave, She's a Bloomberg Intelligence. All right, some stuff going on here. You have to explain what Article nine is and why do I care about it? Or why do ESG investors care about it?
So both Addicle nine funds are a European designation. Basically they represent the most sustained I guess for the lack of better words. And what happened is a lot of them got downgraded, maybe towards Q four of last year because basically the regulators went and said, you know, sustained and investing criteria very specific and have to be one hundred percent of the fund. So everybody you know uproard and then reclassified down and now they've listened to christeria. So we'll see what happens.
So what does that mean for ESG investing in? People who are you know, like my friends who are like I kind of want to invest in ESG in they do what they do through like laves or something like we don't know what we're doing, you know. So what does this mean my.
Friends are rolling over two month tea bills?
I don't know.
So I don't think it really means much. I mean, all it means is it is going from a MORI yes she category to a Lesia she category. Is just interchanging between the do nothing about the holdings are changing. I think what's really interesting this year is how we I saw a lot of fund liquidations, a lot of them. So that's really picked up in the US, and I feel like that's going to be exasperated a little bit by the political backlash. So now I feel like people
have this bleak view of future asset gathering capabilities. So while I don't think, you know, assets decreased because of the political backshog, I think it's going to exasperate the slowdown, Cosmo liquidations, all that fun stuff.
So the ESG investing, to me, it seems to have in terms of popularity, intensity, capital peaked and now's on the decline. In the US, that's just my so you can correct me if I'm wrong. But boy, not in Europe.
So why is Europe different from the US, or why is US different from Europe?
I think the US has gotten I guess caught a little bit in the political backlash. First of all, yes, she was, you know, very much a big institutional thing. So it was a few big institutions putting large chunks of money into eu SHE funds. It never really caught on beyond that. In Europe it sort of has always
continued because there's favorable regulations. So in the US now what's happened is because of this political backlash, I feel like, no, but that investor base that was institutional, it's going to not expand or is going to be restricted from expanding, So it's going to continue to cause a slow down, whereas Europe does not have that problem.
I can't.
So does that reduce the incentive for companies to pursue ESG policies? If they're not going to get support from their shareholders and creditors and things like that.
I think more than that regulators, right, the regulators are going to push down on the investors, like what's happening in Florida from you know, they're going to restrict them from doing ESG analysis or launching green bondes. I think something like that. So I think the regulators are going to cause more of that shift.
And what about the moves from the Biden administration, like the IRA is that a sufficient heage against some of that?
So that's very clean deck and clean energy focused. I kind of separate ESG and clean energy, right, Like that's clean energy is a theme, it's a it's more of like a very small subset. Es SHE is very like broad risks and opportunities, values based things like that. So while that you know, supported clean energy and will support it in the long term, yes, she's different all right.
So for ESG on one side, I've got some conservative politicians. On the other side, I've got people like Larry Fink, a black rock who's all in ESG right, and he's got a couple of shekels under management.
I mean, who wins this battle?
Do you think, Oh, I don't know, no idea, no idea. So what we're hearing from like short lived.
But how about a state like California, They're still all in from a pension fund perspective, like we get you know, we'll support companies and investment strategies that incorporate ESG.
Yeah, so you have a very big divide like you have. On one hand, I feel like within the same week, the Chicago Bench Fund decided to drop fossil fuels, and the same week Vanguard Exit exited the net zero Asset Alliance.
It was a Vanguard exited the net.
Zero Asset Managers Alliance. So yeah, okay, And at the same time Chicago went and decided to exclude fossil fuels. So you're seeing a very two sided sort of America or for lack of a better dollar.
Oh yeah.
So what does this look like as we head into the rest of the year after all of like the banking turmoil, the Bobe debt ceiling issue, what's next?
So I think for us for DSG, it's a it's a combination of a continued slowdown because, like I said, we had a very concentrated investor base. What we needed to see is that widen Will this stop the widening? Probably we might see cyclicality again. You know, large investors put large chunks of money, so suddenly like a one up and then suddenly a one down. So either cyclicality or a little bit of a slowdown, at least in the US.
And it's funny because I spoke to Tim Craighead, who part of our management team running Bloomberg Intelligence in London, and he was just traveling through.
The Nordic countries. Wow, that's all they talk about.
Yeah, well they've ever talked that.
That's all they talked about. I mean, you go to Nordis Bank.
Which is, you know, one of the biggest sovereign wealth funds in the world. I mean, if you're not super green, they're not investing in so body.
You asked me what was different about Europe. That's also another thing that's really different about Europe. Right, your ascid owners threw it down your throat. The US doesn't do that so much. And the asset owners, I don't feel like they control so much of the market. Then the European asset owners.
It's funny because how did Norway make all their money oil?
Right?
Well, that's what's interesting too. We had a guest on the Business Week show recently who had a very contrarian esgview. He basically said that you could argue that some of the oil companies are an ESG investment because someday they're going to switch to clean energy.
That's completely true. So I wouldn't say energy or oil is bad, and you know, something like deck is good. I think it's all relative to the business of the company and what they're doing. Like not just Bank excluded oil companies from the entire portfolio, not due to ESG reasons. They wanted to diversify their bension fund because their economy is so dependent.
There you go.
So they're very different reasons for doing different things.
All right, But Bloomberg Intelligence has allocated a lot of resources to all things at ESG and believe that's a big, big future here. So Sheen Contractor, thanks so much for joining us. Shaheen Contractor. She is the ESG research analyst at Bloomberg Intelligence. She joins us live in a Bloomberg Interactor broker studio on a Friday. I will note so like double gold star for Shaheen, no Melanie and no work from home for Shaheen.
Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller nineteen seventy three.
And I'm Fall Sweeney. I'm on Twitter at pt Sweeney.
Before the podcast, you can always catch us worldwide at Bloomberg Radio