Six Flags, Meta, and Markets

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. Daniel de martinoz Booth Joints and she's the CEO in chief Strategistic QI Research. Danielle The market likes with your fed Chairman j Powell had to say, shoulday, what's your takeaway?

Well, he didn't say much, Okay, I mean at the beginning he.

Kind of read a lot of his answers.

I'm like, dude, you're still reading your your statements over quit reading already.

I thought that was weird. I honestly, I listened. I was on Comfort Radio, and I thought it was awkward. Why isn't this guy like taking a stand one way or the other one? Why even bother having the if you're not going to.

Say at the dot plot, oh it's meaningless. You know, we've got all these employment reports and CPI reports before we get to December twelfth and thirteen, So disregard that.

I mean, it was it was I'm like, dude, do you know you're talking out loud?

You're like on TV TV, right, yeah, I mean this, dude, And I think what was disappointing was that so many of the reporters asked the same regurgitated question we reworded over and over and abotton. I can somebody please take off the gag order and let somebody ask him about the balance sheet already?

All right, tell us about the balance sheet. What would you like about the balance sheet?

Well, I mean, gosh, you've seen other deposits, liabilities. My mentor, doctor Lacey Hunt, you always I follow them every single week. We're about to break underneath fifteen trillion.

When the data hit tomorrow afternoon.

Wait, what do you say about Lacy Hunt from Hooisington, Right.

Yeah, he's my mentor.

Oh so he's taught me how.

I mean, every single week the Fed's data comes out and it shows you weekly liquidity on bank balance sheets, and you've gone from just about seventeen trillion to next

Okay, you've lost me and Paul already. I'm gonna say you see why I go.

That's your bankruptcy function. Look, it's companies rely on liquidity, and right now we're seeing banks continue to tighten lending standards. I mean, I'll be up and ready on Monday morning for the Senior Loan Officer survey, but the Dallas Fed has a more frequent lending survey, and it's just got getting tighter and tighter and tighter. Everything we heard from Capital One ally they're seeing normalization in defaults and credit card delinquencies and auto default.

Wait, you said normalization doing air quotes.

Normalization air quotes, that means that means it's going above subprime. So it's not contained to subprimes. I love to quote pernanky, but it's not contained a subprime. And that's what we're seeing.

We've seen about a twelve and.

A half fold increase of prime all loans being downgraded into subprime territory based on where they're trading right now on bank balance sheets. We've never seen anything like this, and it's because when you put the rent on hold, the auto payment on hold, when you paid people twenty five hundred dollars extra a month, when you put the mortgages on, everything went on hold.

So we saw and Moody's has done some good work on this.

We saw insane levels of Fico's score inflation during the pandemic and now it's all coming back to bite because weges just aren't there and layoffs. You've got continuing jobless claims up six weeks in a row north of one point eight. They're just on top of where they were in twenty sixteen.

So is your biggest concern that the consumer is not nearly as strong as maybe we think it is.

Oh, I think the consumers telling you they're not as strong. I mean, if you looked inside of the final University of Michigan consumer sentiment print at the medium tersile and top tersile of earners, they're like, job cuts are coming, and it's the lowest tersile that doesn't see it. Coming, but we're seeing it come out in the data week after week after week. I was I was talking to Daily Jobcuts dot Com, the founder, and he's like, November

They've come out of the gate. He seemed to twenty five companies close in two days.

This is the Austrian hangover coming after all of that insane stimulus stimulus, it's still going on. Remember that Canes versus High k Rap video. Look, I mean crisis you've got.

You've got some people are going to be paying their mortgage for the first time in December. That's how long FHA Forbearance has been going since March of twenty two.

All Right, I got a listener question here writing in, did Danielle listen to the Drunken Miller interview with Paul Tudor Jones? Stan thinks rates are going higher because of an out of control debt profile of the US. Do you agree?

I don't, No, I don't.

I mean, we've been spending like drunken sailors since Reagan was in office. It's just I think Wall Street wants a narrative right now.

But you know, Reagan boosted spending on the military. We were talking yesterday to Paul's mentor, Cam Harvey from Duke, and he pointed out that next year we're gonna have interest payment costs of nine hundred billion dollars. We're gonna pay more to service our debt than we do to fund the military.

Yep.

Actually we passed that up in the at the end of the fiscal year, about six hundred and eighty five billion for military, eight hundred and eight billion fiscal year ended August thirty one interest payments. So we've already we've already rounded that. And I the shame about the fiscal spending right now is it's.

Not doing much.

There's it's not creating anything. Like there's no Hoover Dam, there's no Holland Tunnel.

There's so little way.

They're working like crazy out there, the people out in Jersey, right, John Tucker, they were building that Oh.

Yeah, number those gigantic cranes by the Gateway project.

Question, I stand correct, Hey we're building a tunnel.

Yeah, it'll be ready.

I'm I'm always on the bridges going to LaGuardia.

Sorry, exactly, So is recession in your scenario? In your I.

Think I think recession starts the current quarter.

Okay, this quarter Q four.

As of this morning's jobless claims data, the only state holdout right now that does not have rising continuing jobless claims year over here is Kentucky.

Well, I mean Florida, but that's that's a base effect from Hurricane Ian. So that's gonna go away here. But that's it.

I mean September twenty twenty two, there were zero states with rising continuing jobless claims.

Now we got fifty.

Okay, so you have a recession in your outlook?

How deep?

How long?

I think it's gonna last longer than we think because we've pulled so much demand forward. We're seeing one furniture company after another go out of business that had been in business for one hundred years because we pulled so much demand forward with all that stimulus money.

All Right, that's the hangover, dude.

It is a hangover, yes, but it's not as funny as the movie.

So so should the Fed?

What should the Fed do here?

I think I think the Fed's on hold, I really do. But again, it's about the balance sheet. Nobody's talking about Voldemort.

I'm saying it out loud. It's about the balance sheet, people, It's real.

The worry. The worry is that the Fed went too far right because, like Cam said, if you take out whatever they call it, rent equivalent, inflation is below two percent. And our buddy j Hatfield from Infrastructure Capital a smart one. He's got his CPI dash R where they replace the housing component with ky Schiller and that's one point three percent year over year compared to the four point Everything's great in Dallas, right.

Well, no, Actually, war notices in the state of Textas have gone through the roof. That's what's hard to believe. And it's no longer like super cheap to live there. So I mean, Austin's a cesspool of when it comes, it's it's residential real estate ground zero.

It's a mess again.

And I'm a longhorn, and I mean, I love, I love Austin, but they overbuilt.

They overbuilt, and there's and they don't have any infrastructure for.

The true but they have limescooters. That's all I care about.

Burn Martino, CEO and chief strategist Research.

You're listening to the Team Ken's Are Live program Bloomberg Markets weekdays at ten am eastering on Bloomberg dot com, the iHeartRadio app and the Bloomberg Business app, or listen on demand wherever you get your podcasts.

A little bit of a M and a trade in the theme park business, Cedar Fair, six Flags, they're getting together all Stock merger.

Let's break down a little bit.

We can do that with Jody Laura.

She covers the entertainment companies for Bloomberg Intelligence from the credit side. So, Jody, thanks so much for joining us here. Boy, I'm looking at the balance sheets of these two companies.

They're almost the.

Exact same two and a half billion dollars of debt, about five hundred million of ibadas, so they're both levered pretty highly around five times leverage. Here from your perspective, what's the rational for putting these two companies together?

Fuir So, Paul, I mean, I think I think that's a great question. Is that really at the end of the day, why are these companies joining? And I think it really comes down to the fact that the tailwinds that they experienced during the pandemic have sort of petered off, and now they're saying what's next for these companies, they've experienced tremendous weather related issues this year.

That have sort of marred their opportunity and.

Benefiting from people spending on leisure.

Too hot, Yeah.

Well, so subplace was too hot, others it was too rainy. It was just you know, a mix of storms and

Got Disney. You look at Disney there love their theme park business. Comcast loves its universal theme park business. They're both of those companies are increasing dramatically. They're capital spending in those businesses. Is that just a benefit of scale and that six Flags and Sedar don't enjoy that same kind of scale, so this is one way to get there?

Well, I would say.

That they definitely have a lot of scale, particularly six Flags.

Maybe even some would argue too much scale. It's a different business model.

When you're dealing with regional versus very focused theme parks. Right, So Disney, like SeaWorld, benefits from having Florida, having Southern California, and so that of course helps them from a cash flow perspective, more consistency because they don't have to shut down for part of the year.

For six Flags and Cedar Fair, it's.

A little bit more regional. The type of customer is a little bit different. It's not as much destination. They're hoping to shift that a little bit and you're certainly seeing that. You know, Cedar Fair does have hotels at some of their properties, and so I think that the thought process is is that once you're a bit larger, you can more actively have a branding and maybe more of a presence everywhere you go. So if you're a card carrier of a six Flags Great Adventure, you can

Well, can I ask about the dreaded phrase merger of equals?

I think they're.

Saying this themselves, like they think it's a good idea to spin that. Daimler Chrysler said the same thing, and it was anything but I mean, what a load of bs?

What?

What's who's buying? Who's buying whom?

Here? Right?

So they structured the deal interestingly, So Cedar Fair is.

An LP or an MLP specifically, so a limited partnership right now, so they have unit holders.

Six Flags is your standard CE corporation.

And the way that they structured it is that Cedar Fair will get fifty one point two percent of the new company shares outstanding. And the reason why they did that is I think it sort of helps them to not trigger the change of control provision for bondholders, meaning bond holders can't then put back the bonds at one oh one percent of par and so that of course

A little bit more.

Right, well, they have, it's been stronger. They have Cedar Point, which I grew up going to that in Sandusky. They have the Beast. It's King's Island in Cincinnati. When I was a kid. That was the longest, the fastest, the tallest wooden roller coaster in the world. Jody, You've got I'm guessing, uh, real amusement park experience.

What are the.

Best rides out there? What are the rides that the roller coaster freaks are psyched about?

Well, there are quite a few.

It's funny because I have this conversation a lot with I'm gonna name job Ira Jersey, who sits in my little Hubble in Princeton. His his son is a roller coaster enthusiast, so we're constantly trading discussions about all the different roller coasters out there, so which ones are the best?

I mean, I'm a traditionalist.

I still I grew up well, you know, grew up relative once it finally came out the Batman, the original Batman ride not you know, that was in Great Adventure. I just always have a soft spot for that, as well as for Steel Force, which is at Dorney Park.

And so, I mean those are just rides.

That I always went to just because it was a regional sort of feel that said. I mean, you know, Disney obviously has its.

Own sort of space mountain right.

Well, they have Guardians with the Galaxy Now, which was certainly an intense ride, definitely different. I mean from an innovation standpoint, they certainly do a different sort of innovation than what you see at the three regional guys.

All right, Jerdi, thanks so much for joining us. Appreciate it.

Jody Lorii credit analysts Bloomberg Intelligence breaking down this Cedar Fair and six Flags a deal that it's a merger of vehicles is what they're calling it. But trying to get a little bit of scale in that theme park business.

You're listening to the tape Cat's are Line program M 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 Darkening door.

Here is Doug Adams.

He's a global cohead of ECM, that would be Equity capital Markets at Citybank, one of my former places of employee. I used to run the street with Tyler Dixon.

We were due deals.

One day he called me out and says, hey, I just took down a bunch of this clear channel stock. Can you tell me what the radio bis how where radio company works? I was like, what I mean, that's the kind of risk we would take back in the day. Maybe stupid risk, but anyway, Doug Adams does a I'm sure a better job than Tyler.

Doug.

Thanks so much for joining us here, appreciate it.

Talk to us about the equity capital markets these days.

It's tough market, tough geopolitical issues.

I'm sure the companies don't have a lot of confidence maybe in their forecasts or kind of just even the next couple of quarters. What are the kind of conversations you have with clients these days about their capital structure?

Now, I appreciate the opportunity to share our thoughts with you, and you're right, it's a complicated market right now. We're dealing with a number of issues globally and there's a lot of uncertainty, and so clients are trying to manage their balance sheets, trying to manage their forecasts through that time. I do think we are expecting there to be some capital raising come in. There are companies that need to

So does that mean it's going to twenty twenty four is going to be a better year than twenty twenty three for i POS.

That's certainly what we're hoping at this point.

I mean, it's been a what.

If we fall into a recession, is it still does it still look like it could be a good year for i pos.

There are a lot of companies lining up, and a lot of them have secular growth as opposed to being exposed to cyclical aspects in their business. The one thing that we have seen and we're tracking, you know, over a thousand companies privately private companies right now, and you know, there's a lot of really interesting, really exciting companies. The real question is when is the right time for them

You know, I've some of the deals that came public Doug after the Labor Day had what they called marquee investors.

I'm not sure what the term is. I never had them in my deals.

I just whatever that top application was. I gave Fiddel like twice that amount and I'm done. What are these marquey investors? How does that come into it is that important.

Yeah, we refer to them today as kind of corner service as investors. And you know, part of it is in a market that's reopening like we're going through. Part of it is how do I de risk de risk a transaction? And so those investors act in two things.

So what's the you know, where are we in terms of the private equity business and the private credit business Because it seems like companies can stay private a lot longer.

There's so many sources of capital for them.

They don't need maybe to go public as much as maybe they did prior.

Where are we in that continuum these days?

And so at say, we run our public and private capital raising all through our group in equity capital market, and we are seeing that convergence, right, And so investors or companies are thinking about what do I raise capital? What are the alternatives in the private market? What are the alternatives in the public market? And how do I think about that? And you're right, you know, they are more alternatives today in the private market, But that's not

And what's the value?

It helps in retention of employees, it helps that it's an acquisition currency, and for many companies it helps from event, branding event for them. And so there are different reasons to go public than just raising the capital.

At the time of the IPO, I mean, how much have you when you're looking at your employees right in your group, have you seen a shift from the amount of women and men you hire to take companies public and the amount of women and men you hire to give them money on the private side. I mean, you've been at city since like Nirvana, right, so yeah, the band. You've been at a city since the early nineties, right.

Have.

You know in terms of where people are spending their time. You know, we've asked our team to really focus on understanding what companies needs are and then thinking about the public market solutions as well as private market solution, and so the teams are versatile to be able to talk to clients about the different alternatives that exist. And that's one of the things that we've been really focused on is understanding the client and coming up with solutions at best at their needs.

You know, in the private I know source of IPOs across the street of private private financed private equity finance companies, and you always are talking to your private equity clients about kind of what their needs are. There haven't been a lot of IPO activity for several years now. I would think the backlog from the big private equity companies like guys, you give me a five minute window. I got to get some stuff out the door because I need some monetizations, I need to mark these things. I

I think the there's no question private equity firm are evaluating their portfolio companies and trying to decide which are the right ones to exit in the public market and which are the right companies to exit in the private market, and they do that all the time. I think with a better functioning leverage finance market. One of the things that has happened is that the notion of a dual track process has become back in viable alternatives for companies

Next exactly, So what what's it used to be back in the day, My day, we could take a company public with just a thought, you know, an idea. Now you have to have revenue, you have to have profits, you have to have defendable franchises. It seems tougher and tougher. Where are you where's the market now? In terms of I wanted to bring my company public?

What would you tell me?

I'd have to have we focus on company that are either profitable or a clear path to profitability in the near term. And that's what investors want. When we're in a market that's reopening, you have to really open the market with the highest quality companies. Rebuild the confidence. That's been challenge over the last twenty four months. You know, one of the things going back to twenty twenty one.

Are there any sectors out there that you're seeing more or less demand from from your clients?

Hey, we want.

More energy, or we want more tech, or you know what are you hearing from your clients?

The clients are focused on growth and quality of company. So don't think it's necessarily those.

Two things didn't used to be the same thing, right, growth and quality. And when you say quality you mean like free cash flow, right, or.

We're profitability or path to profitability. People that have built a moat around their businesses and are differentiated. There's a lot of companies working on really interesting as I mentioned earlier, you know, strategies and disrupting traditional industries. But the real question is have they proven that they can actually operate as a business as opposed to a plan in those in those areas. But we're seeing companies in certainly in

Are hedge funds where where the hedge funds in terms of buyers of IPOs are just new issues? How important are they to you know, an underwriutter like city.

Look all the investors, the active equity investors are important, So long only accounts and mutual funds, hedge funds all make up kind of the complexion of the investor base. And one of the things is we look at the IPOs that came post Labor Day. It wasn't a demand issue, right Those transactions were multiple times over subscribed.

You know.

The challenge has been the aftermarket performance, and part of that is goes to whether you're a hedge fund or a long only investor, you know, the average or the typical active equity investor are trilling their indexes because the indexes have been dominated by a small number of stocks, and so if the stock isn't performing well, they can't chase that in the aftermarket. They have to cut their losses rather than suffer.

Because I kept wondering, because I said, back in my day, I know where you're buying here, here, here, how much you're buying. So if the stock does fall, I know you're coming in to buy more. But it seems like we didn't see that this.

Yeah, I think there's some technical factors and some fundamental factors. I think the technical factors is the underperformance by the active equity investment in investor relative to their benchmark. And the fundamental challenge has been you know that tenure has moved pretty significantly since labor Day, so the cost of capital for these companies has gone up significantly.

All right, Doug, great stuff.

Appreciate you taking a few minutes your time to come across the street and talk to us. Doug Adams, he's co head Global cohead of ECM four City.

You're listening to the tape CANSUR 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.

There's a thing met here in the healthcare business called Obesity Week. It used to be a quiet annual meeting of weight loss specialists and a few farmer reps. But over four days in Dallas this month, it became clear that the new obesity drugs are changing that along with everything else in their path.

Lisa Jarvis joins us to break it down.

Lisa is a calumnist with Bloomberg Opinion covering biotech, healthcare, and the pharmaceutical biz. Lisa, can you put into perspective what these GLP one drugs are? How impactful are they? Where are we going with this stuff? Because it came out of nowhere and that's all anybody can talk about these days.

Right, Thanks for having me. Well, yeah, they're taking the world by storm, that's for sure. They've been used. This class of drugs has been used for a long time for diabetes, and you know a side effect was weight loss, and so they decided to amp that up and you know, explore the drugs for use for use, just for weight loss, and the difference between what they can do and kind of all the older diet pills that existed is best.

I just want to lose like ten to fifteen percent of my body weight. But apparently, sorry, Novo Nordisk has put the starter doses on hold because they just can't make enough. And we asked the CEO today Lars for Regard Jurgensen, you know, what are you going to do

Yeah, I mean it's been an ongoing to struggle with all of these drugs, the fact that they can't keep up with demand. I think the issue is less than actual ingredient and then drug itself and more of the vials that they put it into. And so they've been really you're right cage about it and been really careful about allowing new people out of the drugs. The problem is, you know, there's this whole gray market of compounding, compounded

Heard a commercial yesterday on Bloomberg Radio on Serious XM Channel one nineteen, and it was for what sounded like probably a pretty sketchy place saying like, hey, call us up, we can charge this to your insurance trust US, and I was thinking, cool, because it's one thousand dollars a month, right, can they charge at LISA to my insurance or do I have to pay myself.

Well, that's the thing with these drugs right now. Very few people are able to get them covered by insurance, you know, because insurers are worried about how much it's going to cost in the long term. If everybody goes on them, and the idea is that you take them for life, and you know, that could be a significant burn into most plans given the number of people in the US who are of a body weight where they

You know, Lars was telling us this morning too, because I said, dude, I don't want like, I don't care that much about stomach problems. I definitely don't want suicidal thoughts, which some reports have said, you know, that's a possibility potential. And then I'm terrified of needles, and he said, you know a lot of people like to go to the doctor once a week and get a shot. Is that possibly true? Like I can't even get my couch to

You know, I think so well, you don't have to go to the doctor. You do it at home yourself, just like you do with if you had diabetes. Because the people who are taking ozen Pick instead of we go be ozen Pick is the same drug, lower dose for diet approof for diabetes. But there's good news for you in the sense that there are pills that are in the works that you know, could replace the need

Get on it.

So, yeah, is there any scenario like I I was going to ask you a size of the business, but that's that's a big size. Is this always going to be or is this expect it to always be a prescription type situation or they're being over at the counter option at some point.

I think, I think we're going to stick to a prescription for the foreseeable future in the sense that people are going to want insurance to pay for it, and oftentimes with over the counter that's that's not something that insurance always covers. But you know, especially as we start to see this drug, more data come out for the health outcomes. So you know, we're talking about weight loss, but Novo has offered some data showing that taking this drug can reduce the risk of heart attacks and strokes

It's kind of odd to think about this to be a drug you have to commit to for life. I mean, it's one thing if you're doing that for a disease or something that you.

Have to, but this is more on the other hand, Dude, I'm committed to like hogen DAWs and Heinekens for life, right, And you know, I might even spend less on we go Vi Euros Epic if I can. You know, I don't know, Like I don't know how much it's gonna limit my cravings to drink alcohol, to eat sugary foods, to smoke cigarettes. But apparently it helps Lisa with all those things.

It's so far anecdotally at least, it seems to be helping with all those and it's now being studied as for addiction. So whether that's alcohol, you know, other drugs, illicit drugs, or other things. But you know, and you can think of sugar in that same way. I've talked to a lot of people who are taking these drugs and they just most of them say almost instantly, like within the first twenty four hours, they feel a change in the they're kind of brain signals telling them to eat.

That's the the interesting thing is, uh, well a couple things. Can this reduce fat only and not reduce muscle mass? And then also if people are smoking more weed, are they gonna need this to counteract the munchies?

Well, fair enough, although they might not desire the weed, to be honest with you, if they're taking the drug. So that's one thing. It's just hard. Everyone has a different experience with it. Some people like just lose their desire for you know, whatever was their vice. So on that news, Yeah, I mean, you know, I think I think there's a lot to a lot to we still just don't know, you know, about how long people are even gonna want to, for example, not enjoy some of

To have their cake and eat it too.

Or at least pause. But so yeah, so there's sort of like a lot of discussion about what how is this sustainable in the long term? You take down the dose, could you take breaks? You know, how could we think about what it looks like in the long term so that you can maintain that weight loss. And like you said, you know, thinking about the muscle mass too. And I'll just note the companies are also looking at ways of combining these drugs with drugs that help you sustain your muscle mass, so it.

Could be a whole new I'm gonna let I'm gonna let other people take the lead on this. I'm gonna be a big time follower at least drivers. Thanks so much for joining us.

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Let's kind of continue that legal thing.

Our next guest Nouvelle Gonzalo, founder Gonzalo Law Group. She joins us live here in our Bloomberg Interactive Brokers studio, or she get.

Her JD b B Ohio State University, right, the Ohio State University in conjunction with Oxford University in England too.

But yes, I feel like.

Those two are on the same level as they're excellent. They're both excellent university exactly.

One has a better football.

One has a better football depending upon how you define football throat all. Right, let's talk about Meta first, because they have been sued by California and like, I don't know, forty seven other states talk about harmful youth marketing.

What's going?

I mean the stock nobody cares in the stock sotocks of one hundred fifty five percent. From a legal perspective, is there anything there?

Oh?

My gracious, this is huge. This is an amazing case because you were looking at over forty three attorney generals from different states that are this case against Meta. And we're talking about a platform that owns Facebook, Instagram, Messenger, WhatsApp. There's about four billion users worldwide.

What's that threads Twitter competitor?

Right?

Yes, yes, so you know, this is huge and we have not seen this type of bipartisan support with forty three you know, states going against them. But essentially, what the issue is here, this is not only data privacy law, but this is data privacy law and children because essentially, what the states are arguing is that, hey, you are intentionally harming children with how you're handling your platforms, the

No, No, I have none of that. What I'm what I'm fascinated by. Look, there's a ton of studies that show us that social media is in general toxic, but it's especially toxic to children. But so are lots and lots of other things. Hey, if are probably regulated for you. Yeah, but isn't this something parents are supposed.

To regulate with their keep I was thinking exactly so.

And you know, to me, the bigger concern with Meta I still call it Facebook is they and Google Google just dominate online advertising. It seems like there's a little bit of an anti trust question. How are two companies driving, you know, the vast majority of ads online. It seems there should be some competition.

It does seem I was gonna ask you, Novelle, is this kind of a way in for prosecutors who have concerns about monopolistic behaviors but just can't seem to bust them on that kind of like you know, when they were going after al Capone, they wanted to get him for organized crime, and they actually ended up getting him on taxi. So I just wonder if they're trying to is that way for them to go in the back door or and maybe kind of break up or minimize a little bit the power of someone like Meta.

I'd say that it's possible, but it's not likely. And that's because they're not asking them to break up their companies. They're asking them to regulate how they're obtaining information on the users and to really comply with data privacy laws. And so that's a different question that we're asking. And so when we're saying, okay, you're doing psychological research on how to make sure things are engaging for children, how to make sure that you're hooking them, you have research

So you lived in Europe for a long time, Yes, Europeans seem to take the right to privacy laws much more seriously than we do in the United States. Wouldn't those sort of things that say, it's my data and I can control it, and Facebook or for that matter, Apple, Google, Amazon can't be selling and reselling. Isn't that the choke point to generate some control over not only how these companies affect us, but specifically what we allow them to do with our minor children's data.

Berry That is an excellent question, and I couldn't agree more. What we're seeing in the United States is we take a lot of our privacy laws from the European model with the General Data Protection Regulation or the GDPR, and so we're taking our laws a lot from that, or kind of adopting our own set, but not as.

Strict that we seem to be much looser than the European.

We're by state, so we'll see, you know, each state has their own sets of regulations California, Illinois, and so forth, but we are looking at how they do things and the reality is, yes we have those regulations, Yes we have it to protect, but if they're not being followed, then that's the problem. And that's what's being alleged here that they're violating some of the children's.

Data protection laws.

And so if that, I will tell you if they violated either the children's Data protection privacy laws or even any of our state ones, they absolutely most likely violated the global ones, because anytime you have a user from the EU any part of Europe, the GDPR comes into effect.

What are the damages if Meta loses the case? What sort of options are going to take place? Is this going to be them riting a big check or are they going to have to change how they do business?

I think we'll see a variety of things. One of the things that ended up coming up is they were launching getting ready to launch Instagram Kids. And so Instagram Kids was a flatform, a platform for children age thirteen and under, and so you're talking about some of the most vulnerable parts of our population. Children's minds are not even developed yet. And so they did this and they

So you'll see disclosures.

All right, Noville, thank you, so much for joining us.

Novelle Gonzalo, a founder of Gonzalo Law Group, bring us up to date on some of the legal challenges out there for meta as somebody, anybody in this case, the States trying to get a handle on some of the content that's being consumed out there, particularly by kids, so we'll stay on top of that.

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 Faull Sweeney.

I'm on Twitter at pt Sweeney.

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