You're listening to Bloomberg Markets with Bonny Quinn and Paul Sweeney on Bloomberg Radio. Well, over the last couple of weeks, we've seen obviously a rise, a surge, if you will, in civil unrest, public demonstrations, uh, stemming from the death of George Floyd and the use of police force against minorities. And there's actually been the use of various forms of
the U. S military to deal with this. A number of retired generals and animals have spoken out with alarm really about adding active duty military to law enforcement and using the Insurrection Act to get that done. We are so fortunate this morning to have retired Admiral UH, Navy Admiral James Stavrita's former military commander and NATO and a Bloomberg Opinion commons to join US. Admiral, thanks so much
for taking your time. You wrote a column uh just recently about uh, you know, using US active duty military for some of these civil issues. Give us your thoughts and that you're that you want to express as well some of your colleagues in senior military. Sure, let's start, Paul with just kind of doing the numbers around the country and matching the challenges with what resources are available.
So in this country there are close to a million law enforcement officers and then we also have five hundred thousand National Guard. These are uniformed personnel. They're associated with the Department of Defense, but key difference they work for governors, their citizens soldiers. They're not full time soldiers. So when you add up law enforcement and National Guard, it's one
point five million. Um. I have not seen anything in the challenges of protecting these protesters, making sure these demonstrations stay peaceful, stopping any violent crime, stopping looting, those are all real challenges, but it is a set of challenges
one point five million men and women can handle. So my view and that of many of my senior military colleges, don't take the active duty military, who are sworn to uphold the Constitution in the United States, who have a significant role defending the nation outside of our national borders. Don't bring those active duty folks inside the country and apply them against protesters. Not an appropriate use of the Department of the Defense active duty personnel. Yeah, Admiral's Tavrida's
it's money. Just on that note, I mean, it's very unusual to see retired officers speaking out about a candidate or a party, or particularly what a president might say. And we saw it this time. We not just saw it from one what we saw it from several four former chairman of the Joint chiefs of Staff in fact. So it's not just that it's ill advised, it's actually being condemned, would you say it is? And this is
a really import and point, Vonnie. I've never seen the entire active duty four star military community so significantly united on a key issue. So it goes from people like General Maddis and General Kelly who are actually part of the administration at one time and have been very ritiscent about speaking out across the spectrum, to people like Admiral mccraven or General John Allen who have been fairly critical of the president. Two people like myself, we're kind of
centrists who are in the middle. As you mentioned four chairmen and the Joint chiefs of Staff. That's really quite remarkable to get that unanimity of view across this whole community, and it's because it really touches the nerve when you send active duty military against the citizens in this country. It should only be done in extreme circumstances. Um, And this does not appear to be a moment that would
call for that Admiral. On Sunday, Colin Palcole and Paliform and UH Joint Chiefs and Chairman and Secretary of State call that Republican lawmakers for really having quote nothing to say about President Trump's militarization of protest security. What is your sense of kind of what your expectations are for what Congress should be doing here as it relates to
the military's use. Well, I I stand with General Powell on this, and and I think the way to phrase it is the way you just did, Paul is Um, it's not incumbent just upon Democrats or just upon Republicans to stand up in this moment. And this really touches on why are these protests occurring. This is a significant moment in American history. We need the Congress to be part of the solutions. And so that runs the gamut I would say from UH initiating appropriate reform in police
departments around the country. It includes calling on the administration the executive branch not to use active duty military against peaceful protesters. UM. It includes providing resources to address the economic impact that comes out of COVID. So we need our Congress to step up on all those kinds of issues. I have tried to shine a spotlight on this issue of active duty military not being used against these protests. Yeah, and real stupid, as you've just said a few moments ago,
that this is not the moment for it. Do you ever envisage that there might be a moment for it's that the active military would be called out against US citizens. I think it's unlikely, but it has happened a couple of times in our history. Um. Once was most recently in the Los Angeles riots in the early nineties. And and here's a key distinction, Vonnie, if we are going to bring active duty in in a moment like that where a city is on flames, and um, there's really
no semblance of order in the city. It's got to be under local authorities. It can't be driven from Washington, d C. And a circumstance like that. And then a second example would be back in the sixties when some of the southern states refused to integrate their schools and federal truths were required during the Kennedy administration. So yes, there are extreme circumstances where this might be called for, this is not one of them, and never should active
duty military be used against peaceful protesters. That's a violation of the constitution. Admiral, just about the thirty seconds here, what did you think of General Mark Milly, the current Chairman of the Joint Chiefs, accompanying the President Lafayette Square. I think it was a mistake, and I think of General Milly had that one to do over again, he would not have done so short of a direct order. UM. I know he is uncomfortable being involved in politics and
he knows that's not his role. I I thank god that he did not appear in the photo op on the steps of the church. Um, let's hope that he can stay out of politics. We need the military to stay out of politics the act of duty military. Admiral steud is definitely looking forward to reading more of your opinions.
Always enjoy listening to what you have to say. Of course, former military commander of NATO and a Bloomberg Opinion columnistics ordinarily decorated soldier as well, So thank you in general for for joining us so Paul, it is really an interesting time and of course you know a couple of presidents cited, and I think that that moment has passed in this particular you know week of social unrest, but it came close at one one or two points there
last weekend to it definitely escalating for the worst it was. And I think the Admiral's commentary about the kind of you know, mixing politics with the military is it's a it's a it's something that he's been concerned about, I know really for the last several years and again having uh, you know, probably come into the four where once again with some of these civil unrest and demonstrations and and the use of the military in kind of managing them.
Time for Bloomberg Opinion. Let's turn to Bloomberg Opinion columns Tara la Chappelle. She covers entertainment, telecommunications and deals for Bloomberg Opinion. Tara, thanks so much for joining us here. You know, I'm a big fan of m and a market. Like to see deals come across the tape. Usually on that Merger Monday, we see some big deals and I always the first thing I do when I see a deal, uh story out as I go to the bottom of the story to see who the advisors are on the deal.
Talk to us a little bit about what's happening in the world of M and A. How are bankers getting deals done? Yes, I mean the world of M and A is is very old school, and that it all still revolved around meeting in person. You know, the handshake is the final way to steal the deal. And it's a lot of travel and you know, I think some bankers you know, would still be willing to get on a plane for you know, something a hundred billion dollar deal like the astro Zenica UM talks that were reported
over the weekend with Gill lead. But at the same time, I think, you know, a lot of people are still reluctant to travel UM. A lot of CEOs, especially at companies that are a bit more tech savvy like Verizon we saw this with for instance, are willing to look at doing pretty sizeable deals negotiating them over things like
Zoom video conferences. In the case of Verizon, just a few weeks ago, they bought a company called Blue Jeans Networks, which happens to be a video conferencing company a lot like Zoom, and so they bought a video conferencing company, but they also negotiated that deal over video chat, which is really unusual for the M and A world, And I think it's something more and more bankers and CEOs are going to start to embrace in these next few months and quarters. As you know, people are still a
little bit hesitant to go completely back to normal. So Tara, in your opinion piece today, you point out that M and A is actually down fift this year, but may pick up eventually when when things start to reopen a little wider across the United States. But in terms of these deals that you are seeing, that four hundred million dollar deal for Blue Jean's networks, for example, are they because of the pandemic or had they been envisaged before
the pandemic. I think you know what we're hearing is that there were deals that were probably in the works just before the pandemic, maybe even some transactions that were pretty close to getting announced or you know, getting close to agreeing on the terms at least, and then the crisis hit and it kind of just puts everything on hold. It would make sense for bankers to kind of go after those deals first and try to get those across
the finish line. Now, if the strategic logic is still there and if you can still come to some sort of agreement on the price, which is obviously difficult. We're seeing that in the case of Tiffany and l V m H, where they probably both still want to do the deal, but the price may not make as much
sense at this point. Um. But then I think there are other industries where, you know, some of these companies are still flush with cash, they still have growth needs, and it probably makes sense if they can get any company is a little bit cheaper because of this, that it makes sense to do that. Of course, there's not a whole lot of opportunities for it since the market is up the way it is, but I still think, you know, all roads are going to lead to deals
with this. I think there's just a lot of pent up demand and a lot of companies that need the growth. So, Ara, what are you hearing about when you when you talk to bankers across the street and other sources you have. I mean, is the expectation that the M and A market's really not going to come back until we really, you know, get a vaccine and kind of put this pandemic behind us, or is there a sense that you know, companies and bankers and lawyers can adapt and can kind
of start getting things done even beforehand. Well, we'll see. I do think so that bankers are going to try their darndists to try to get deals done. You know, I think that they know there are companies that were on the lookout for deals before this, So why not keep trying and why not try to adapt to this you know, new normal, if you want to call it that, you know, we are seeing you know, and tells that
a deal over zoom video chat. As more and more companies become comfortable with, you know, not meeting as often in person, not doing as much travel, having to do diligence and do due diligence, and new kind of inventive ways, you could see some companies more comfortable with that than others, you know, some industries that might just be hard to do.
Like I've heard investor's kind of half jokingly say that a big oil giant that wants to survey some land for a beleaguered oil company somewhere in America could use a drone, let's say, to try to look at that land and look at that property, which I don't know how feasible that is but I do think people are starting to think, you know, how can we look at this differently and still get deals done? Yeah? I mean definitely, dnes are being used in all sorts of sectors. Why
not this one? Right? Talk to us about companies also getting ready for an onslaught of interested buyers. You site a statistic which states that more than two dozen public companies adopted so called poison pills between March and mid April. Why is that? Yeah, this is fascinating. So a law firm, I believe it was K and L. They said that more than two dozen US companies have adopted poison pills, which is a lot more than we saw last year.
And I think that tells you that there are vulnerable companies, companies that were probably you know, their businesses were shut during these lockdowns and really affected by the lack of consumer demand. That they are worried about activist shareholders coming in now or opportunistic buyers. You know, pe firms are going to be on the prow and I think they're starting to put their guards up and say, you know, we we don't want to be bought on the sheep.
We don't want to be you know, take an advantage of in this crisis. So you're starting to see some companies put up their defenses. But I think it's interesting because just the environment that we're in right now, so there's been a lot of social activism over inequality. You know, we have the unemployment rate as high as it is, it's a really touchy thing to have an activist campaign or pe company, you know, using this as an opportunity like that. Tara, thank you so much for we're joining us.
We always love having you on Terra La Chapelle Entertainment, Telecommunications and deals columns for Bloomberg Opinion. You can read Terror's work at Bloomberg dot com, Slash Opinion plus all the other great opinion columns that we have. You can also get it at O. P. I N Go on the Bloomberg terminal. The Bloomberger Opinion folks do outstanding work.
I highly recommend it. Well. Some big news out of Apple today, not necessarily a new product introduction or a new phone or anything like that, but certainly news on the back end they're going to make their own chips and what does this really mean for Apple and for other players in that tech supply chain. To answer that we welcome Dan Ives. He's an equity analyst at wed Bush Securities and a Penn State alum. I should know Dan. Thanks so much for joining us here. How big is
this news from Apple about their chips. Yeah, it's great to be here. It's big in terms of you know, cooking Coopercino of talk for over a decade about this potential move, and it's really shot across about Intel and other semi players that Apple is just going to have more and more control of their devices. You've seen it on the iPhone. Now it goes to the max. And I think this is gonna be a trend. You're gonna see more and more as Apple looks from more full
control over its devices. So Dan also thinking about do they make chips for their other products as well or as just just for the back Yeah, if you look on the processors side, they've done it from a chip perspective in their iPhones as well as some of their other chord devices. And now there was a view that this Mac move maybe could have happened three or four years ago, but in terms of some of the technology innovations on the arms side, wasn't there. This is probably
about a year ahead expectations. If you look relative to the streets perspective, I viewed as an incremental positive for Apple and incremental negative for Intel, just given what this really says about going forward in terms of how Apple is really viewing the chip ecosystem, especially in their own devices. Now we knew this was coming for a little bit of time done, So why is the market reacting now?
Because this has really been something it's always on the com I mean, if you go back two thousand and five when Cook talked, you know, and when they were to talk about the grand vision from Apple, but it was thought that this is something from a Mac perspective that really couldn't happen. The fact that they ripped the band aid off and now it's going to be likely announcing June at the Virtual Developer Conference. It's a surprise, and I think it just shows the innovation that Apple
has been taking. More and more, even when you look at some of the five G battle versus Qualcom, more and more you're gonna see Apple continue to look to own the chips, build it because they want more control over their devices. And what that says for investors, it's more margins, more cash flow. It also gives more risk though to the company, right, because if it's if there's any kind of supply disruption, you know, in its own ranks, that's that's worse than than you know, if a supplier
has a supply disruption. No doubt it does put more risk. But I've about as much confidence in Cook and Cupertino as I do in Selly Cell and turtle Land and Airplane. And I think it comes down to the confidence that Cook and Apple bill with investors. The more control they have, they have more control over launches, over timing, and over even profitabile anywhere they could take it. So I think this is something, at least from the vestor perspective, you
want to see have Apple have a more control. And also it's more differentiation versus the HPS, the Della's traditional PC given it's not the Saame chip. So Dan, you know, I'm looking at the Apple chart here, another all time high a day. What's the call out there on the street here for Apple in the world of that that's likely to be altered for the certainly the near term,
maybe intermediate term, maybe even long term. Yeah, the call I continue view a year from now, there's a two trillion dollar market cap, and I think the first step is to get through this COVID nineteen dark storm, and you've seen it get down through the services business that's
about five to six hundred billion weekly. From evaluation perspective, now it's the drum mold to just a massive iPhone twelve products cycle with five G we think about three fifty million of nine fifty million iPhones world wider in the window of an upgrade opportunity. You start to put the math around it some of the parts. I mean, I think this is a stock has a fore in front of it, and I think you're going to continue
to see this get re rated. In our view on fang stocks and tech, where we're still in the sixth seventh inning, still think there's twenty more in this rallies to look at the rest of the year, what's next for what's the next sort of launch of products, and when we'll look into we'll be ready to eat them up. Yeah, in terms of a proper perspective, we know about iPhone twelve, the air pods. If you look at that, they're insulated to sell about five million units this year verse sixty
five million last year. So I think there'll be a new device there at w launching, but the big thing is going to be on services. Right now, the missing piece in the puzzle is content for Apple services on the streaming side video. I continue to think between now and the rest of this year they look to acquire a major Hollywood studio to fill that content void, especially in what you're seeing from Disney, Netflix and others, HBO,
Peacock going after this massive streaming opportunity. I think that's probably the next piece in the puzzle that investors are hoping to see. Just Dan thinking about these fang stocks here, just kind of rip thing once again. What's your thought on kind of it's just this group overall, it's had
such a great run. Give us your thoughts. Look, my view is that it's a These are safety blanket stocks, you know, category five COVID storm, which is how they've continued to navigate, and many of them hit all time highs. But ultimately think the second part of that is the rebound.
I think they're stronger, forgotten stronger, and you're seeing it from streaming in Netflix and e commerce and Amazon, social media and engagement with Facebook and advertising and Google, and then you look at Apple that's one where you have a massive icepline cycle in their rise. And I still think sang names wed this market higher and overall in tech.
That's why we continue to think it's a green light to own these names, especially on the second half macro recovery place, which will be the other leg in these stocks. All right, thank you so much for joining us today. Down always great to speak with you. That is done. I'ves equity analyst Dad web Bush Securities, And the course, Apple was higher today by about two and a half percent, not the best performer among the TEX stocks, but in
the SMP five hundred it'd certainly helped. But we saw advanced micro devices of more than five percent today, Poul and Video up more than Yeah, it's actually the tech stox getting a lift here and h and as Dan has mentioned, you know, they've been obviously the drivers in this market for more than a decade, both on the upside and the downside. Here. So Apple another all time
high today, just extraordinary. Moving to a slightly different asset class now on that Adventure Capital were excited to be joined by Mark Klein, who's president and CEO of st Rock Capital. Now, of course, some early backing. That's sort of Rock did very profitable exits include Facebook, Twitter, drop Box, and Lift. And the current portfolio companies include course Era, Lime, next Door, palant Here among them as well. So clearly some smart guys there with you, Mark, including yourself outside
of Rock Capital. Mark, give us a picture of the environment right now, because obviously we're looking at private equity, you know, really raining in its horns, if you like. And I'm wondering if the same is true a venture capital with the market drop earlier this year, did valuations decrease significantly? Are they? Are they still at those levels
or are they coming back? Sure? Thanks luck, Um. You know, obviously the market, the public markets collapsed at the beginning of the COVID crisis, going down, you know, anywhere between thirty and depending on what inducry, and they've subsequently rallied almost all of them back about is you note NAZAC making a new high yesterday. Um. On the venture capital side, I think you had a bifurcation. Um. Venture capital valuations tend to lag in the private valuations tend to lag
what happens in the public markets. And when you do have almost a v in the in the public market. The movements are actually pretty quick. So there were some cases where companies were in need of financing and did significantly down rounds UM and as, but there were others that continue to perform and actually we're having up rounds
during the last couple of months. What we've seen in the secondary markets is there is a fair amount of selling that has gone on UM at discounts to UM prior rounds that had occurred in the last three, six
or nine months. I think those are fairly fleeting, and the opportunity set becomes, uh, the ability to move against the opportunity set is pretty rapid as blocks of stock come up for sale and you have to make a determination whether you want to participate or not, and then they move away, especially when you have equity markets rallying
like they did over the last couple of weeks. So mark one of the areas as we think about this pandemic world that apps uh you know, maybe as a little bit of a beneficiaries education technology with this schooling from home, how do you think about that space and you know, where as what are some opportunities do you think going forward? Sure? Um, well, I I actually think that unlike simply a covid telwin that some other industries
are enjoying. I think you're now seeing a fundamental shift in education and online education and just bringing it home the idea of having a college student and let's just say they're graduating senior starting as a freshman next year, and that you're looking at a private education bill called seventy five dollars a year and the first six months is going to be spent virtually UM to go to some very nice liberal arts school. I think that the
world is going to shift away a bit from that. UM. In the public markets, you see significant performance by some of the online education company these like CHEG that's almost doubled since the pandemic started, or to you, which is about the same. So I do think the markets starting to recognize in the public markets that the need for
online education is actually structurally shifting. We're fortunate that we have two of those names in our portfolio, Course Era and Course hero Um, both that are experiencing as you can imagine, and this is documented in public information, uh extreme you know, usage of their products and and sort of way outside of what they had initially determined from
you know, just general understanding of the marketplace. So I do think that there is these tail winds, uh, and the structural shift will will lead to more and more opportunities in the public market for private education. Private education companies actually coming public, and there are several of them that are now multibillion dollar privately valued companies right including I'm sure of course Ero, which is one that you know so many people have signed up for it still
private or involved in that. But who wins out here? Because there are many, many great companies I'm looking at you know, the peer group of CHEG right now, and you're seeing vite horizons. Strategic education is a very interesting one as well. Obviously u K twelve. Does it depend on what teachers you get? Doesn't depend on how many people sign up? Does it depend on you know, what you get with your certificate at the end, Well, I mean, I think first of all, lumping all of online education
or even in one bucket is challenging. On one side, you have the corporate training side, which is a plural site or a skill soft. Then you go through obviously the case you twelve, post secondary and lifelong learning, and and I think in each segment there are clearly folks that are executing better than others um I think. In fact, Plura site announced that they're are doing an offering yesterday
after the stocks rallied materially during the pandemic. But I think a lot of them have an opportunity to be successful. I think the you know, the proverbial butts and seats businesses I think are a little harder than uh, the online side. But if you look at the you know, the eu demis of the world, udacities, master classes just copies.
I mean, there's plenty of them. Hey, Mark, thanks so much for journing us to really appreciate that Mark client presidency of st Rock Capital based in San Francisco, on some of the venture capital opportunities out there, and spend some time talking about the educational technology and clearly this pandemic world, as we all have kids at home, whether it's grade school or college, trying to work from home on the educational front is a challenge, to say the least,