Transcripts For BLOOMBERG Bloomberg Markets Balance Of Power

Might be around the corner. Kevin cirilli is at the white house, where we expect Prime Minister trudeau any minute. Kevin canadian Prime Minister Justin Trudeau set to meet with President Trump to discuss the usmca as the house of skeptical ases is to whether they are willing to advance this measure. Mexico has taken the next step to advance the trade agreement between the u. S. , mexico, and canada. In addition to meeting with the president , canadian Prime Minister Justin Trudeau is expected to meet with democrats on capitol hill. That that lobbying effort he is going to have to win over in order to finalize this deal. Yesterday i spoke with senior members in the Democratic Party who are on various committees that are in the middle of these negotiations. What they had to say was they are unsure that there is a path forward for usmca ahead of david the Prime Minister wants to try to expand the relations with President Trump beyond that. There are other issues on the agenda, including those two canadians being held in china, apparently in connection with huawei. Hasn the way that huawei been impacting the u. S. China trade deal President Trump has been saying he might be willing to use huawei as a negotiation table with the u. S. China trade talks. I caught up with a democrat from virginia. He said he believes huawei should not be part of the u. S. China trade talks. Senator mitt romney, a republican from utah, attaching an amendment to the Defense Authorization act that would make it more difficult for the president to do business with huawei as well. David it may be difficult to put that genie back in the bottle. Lets go to theresa rafael. There are about to be 2 where are we in this process . We are at the end of the parliamentary part of the tory Leadership Campaign carried by the end of this evening, around 6 00 p. M. London time, we will know which candidates go through to the Party Members for a vote. Theill have the results for third week of july. We know that Boris Johnson, the far end way favorite, is one of them here the other place will his ally and gove, lead campaigner and now environment secretary, or jeremy hunt, the foreign secretary. David at that point we go to a general election of all the members of conservative party across the country in late july. We have a sense of who is in the lead there . We know Boris Johnson has been leading through parliament. What about with voters . Therese the conservative Party Members are not representative of the country as a whole. There are about 160,000 of them. Not all will be eligible to vote. They are largely white, largely male, largely older. I think the average age is 57. They are overwhelmingly in favor of leaving the European Union without a deal. Goes through,e they will have two candidates who both say they are willing to leave without a deal. In that sense, they are fairly even. The main differentiating factor is that for the members i think they will see Boris Johnson as a politician who is far more able bull of winning a general election the michael gove. Johnson is mayor was mayor of london, a strongly labour city. David before they are done, they may find out whether he can win an election against jeremy corbyn. Thank you so much aaron lets go back to so much. Lets go back to bill fari es. A talked this morning with retired Brigadier General about escalation and whether that is what iran is after. With the iranians are trying to do is provoke us into an unnecessary response, and over response. I think they are taking a great risk by doing that. They are trying to keep this low level, but at the same time they are shooting down drones, attacking Oil Companies inside of iraq. Faries, what about it . . . What is the military position . What is the White House Position . Bill President Trump has a range of advisors, including National Security advisor john bolton, who has a long history of advocating conflict with iran. I think the u. S. Has to look carefully and terms of how it calibrates a response to this. You do not want to go to war over the shooting down of a drone and you have to try to look at iran as a whole. You have a civilian government that may not have total control over the military. You have the irani and special revolutionary guard, which reports to the supreme leader. You want to look at which of , whichactors within iran one of those factions is perhaps behind these strikes and what their motivations are and how do you respond to that. That is going to be a complicated equation for the white house and the pentagon to sort out. I should point out this does come at a typical time for the pentagon, which has been at a lot of leadership flux with the acting secretary due to depart sunday evening. You have a new acting secretary, mark esper, coming on board early next week. There is a lot to consider. David it is a very complicated situation within iran. It is not clear who is controlling the revolutionary guard. It is also complicated because iran has other surrogates in the area. There was a report that the Houthi Rebels were backed by missile intod a saudi arabia, perhaps hitting a power plant. Meddling toos been much in regional affairs. You mentioned the war in yemen. There is also conflict in syria. This is what President Trump said should have been addressed when the original Iran Nuclear Deal was signed in 2015. That is what he said he had to pull out of it last year. Thanks to bill faries reporting from washington. We are watching as President Trumps greeting Prime Ministers trudeau from canada. They will talk to camera. We will bring that to you when we have it. In the meantime, let get a check on the markets. We are wanting waiting for slacks first trade. Emma we are waiting with bated breath. Aroundndicated to open 38 or 39 a share. It was given a Reference Price of 26 a share, so that is higher than that. We will bring you the latest once we do see a trade on the New York Stock Exchange. Lets take a look at the majors. We are looking at a risk on rally fueled by the feds more dovish stance. The majors all rising around. 6 . We are off the highs of the open. S p 500 hit a record high when it did that. We retreated from then. We are not far off the lows of the session, but still gains of. 6 . President trump tweeting about that record for the s p 500, but also tweeting about iran, saying they have made a big mistake, like you reference with the shooting down of a u. S. Drone. That may be sending a fugitive through the market. Lets take a close look at the s p 500 and the dow and the nasdaqs performance. Take a look at this june chart. We should be able to tell you slack. We are going to switch gears again. Slack is open to trading on the New York Stock Exchange, trading on the New York Stock Exchange. We have been waiting for it all morning. Slack had had a Reference Price of some 26. It is not an ipo. It is a direct listing for slack, very different to the been seeingwe have for other Silicon Valley companies. 50 atover 50 , close to slack opens for the first time on the New York Stock Exchange. Its valuation has increased somewhat throughout all of that time. We are looking at a 60 million valuation. Thatve been waiting to see for some time. Looking now that it has a market cap of 19 billion. 16ad been estimated to be million for slack. Its last valuation was close to 17 7 million 7 billion. David i am glad that you brought up slack. We have some way to reinforce that with us now, Abigail Doolittle. The valuation has gone up and up and up. It looks like 19 billion. All of this relative to the direct Public Offering has to do with the Reference Price, which initially was 26. In the way the bankers got that number was looking at 2019 revenues, which are expected to million dollars, 50 greater. That gives you 20 times for 2021. It puts it in that 20 times club that you were talking about for other big numbers. David i find this fascinating. We were talking about valuations as multiples of revenue, not earnings. Abigail no earnings. David a number of these cloudbased companies have no earnings. Gail in their snc filing, sec filing, they said they do not guarantee they will ever be profitable. Times 2021 revenue. David those evaluations have to be based on growth. Are they growing as fast this year as they were last . Abigail they are not. They were growing closer to 80 a couple years ago. 2019 growth still strong and investors clearly wanting in on that kind of opportunity. David one of the interesting things to me is the shift from consumer facing tech facebook, google, alphabet over to enterprise related tax, which is what we are seeing with slack. Abigail this was initially a consumer enterprising company. It started as a gaming company. It did not work. They created this internal messaging system. You now have this messaging application the enterprise users can use to send each other documents, messages, and other things. It has taken off well. It is also similar to chinas, which has been successful. David one basic question is why not an ipo . Why a direct listing . Spotify went that way but most people when ipo. Why did they make that choice . Abigail the ceo said the number one reason they use the dpo was that there would not be dilution. It is only the existing shareholders. Their biggest private investor is excel. That way you are not going to have that dilution. There is no lock up. Those employees can sell their shares if they want to. We have had a lot of these hot ipos where they go sky high and then come back in with lots of volatility. The ceo was talking about the idea that there could be less volatility here. Sith the stock up 50 , that i good. Does that set them up for a drop . We will watch that. David we are going to bring in eric newcomer. He covers start ups. I am not sure we call this a start up. Eric all of my companies are growing up. This has been the opposite of watching the uber ipo. Today has been up, up, up for slack. David what is the attitude down there, the atmosphere in the New York Stock Exchange . Eric it took a while to get to excitement once it gets close. You have seen this range go up. A lot of the key players disappeared after the opening bell. It is not the same sort of where youu have have the uber Board Members watching this happen. Slack has been less present on the floor. It is more traders trying to figure out where price is. David the New York Stock Exchange is where the action is. ,ets go out to San Francisco silken valley, the home of all of this. Our colleague is out there. Initial reaction on how this stock is opened . I think everyone is surprised to see the Reference Price has gone up so much. Originally the Reference Price was 26. Now we see it at 38. 50. People are going to be asking does that set slack up for a drop in the days to come . It is a much higher climb than people expected. We talked earlier in the morning about this. You expressed concerns about this valuation. It is pretty high. It is. The president was set by zoom. It is kind of pre precedent was set by zoom. How many investors take a position in this stock . Listing,is is a direct not an ipo. We have seen this where people can get out quickly. You did not have institutional People Holding onto it. Banks came is why under pressure around hot ipos. Terms of the holders, if we were to see big profittaking in the days and weeks ahead, it would be those existing shareholders, employees and private investors. The ceo addressed this. You think they would there will not be in exodus because they are committed to the longterm investment of this company. Will they look for a trade on this . Hard to say right i would think not. I would think it would be more of an investment opposed to a trade, especially up. Traditionally, when we look like at a company like this, what prevents another company from moving into this space and competing . What is the answer for slack . Ellen i think they would talk about the stickiness of their product. Once your company starts using it, it becomes harder and harder to move away. Imagine your Company Moving more and more internal communications onto slack. Now you have communications history, file history come a lot of stuff that would make it harder to decide we are going to cut this expensive things get tough. David give me some sense of the degree of penetration of the market here. Microsoft has been a major player. Slack lists them as a primary competitor. Thatnk there is a sense slack got adoption among startups, technology companies. It has been moving up to large enterprises. It just becomes the question of how much they can get of the fortune 100 Type Companies to really deploy slack, not just on one team, but throughout the company. Stick with us. We will talk more about slack later in the program. Bloomberg bait at the venture parent arm of our company is an investor in slack. We will stay in the area of tax, talking about cryptocurrency and facebook. Sherrod brown of ohio responded to the announcement, saying there had to be oversight from somebody. We welcome senator brownback to bloomberg. Thank you for your senator brown back to bloomberg. We have now heard from the coo. We have heard from jay powell, saying they are talking. What kind of oversight do you want . Facebookith this is too big and too powerful. I do not know that people would have said that two or three or five years ago. The public increasingly believes they are too big and too powerful, particularly to engage ,n a risky cryptocurrency running a cryptocurrency system out of a swiss bank. We want to first know more. Second, we want to around this. We know what happened to our Banking System 10 years ago. There is this collective amnesia and washington about what wall street did and we also know that the trump regulators the wall street the white house looks like a retreat for wall street. We know that trump regulators are never aggressive at big companies, whether they are wall street banks or Silicon Valley. We want to shine light on this and figure out what facebook is trying to do and then begin to move with the regulators to protect the public, protect the Financial System and the with theespecially attacks on privacy facebook is well known for. David has facebook visited you yet . Sheryl sandberg says they are talking to people. Are they on capitol hill . Sen. Brown they have lots of lobbyists, lots and lots of people. They are a powerful organization by any stretch in the economic marketplace, deep little marketplace. They have too much power with the white house. They have to get in line with wall street and others at the white house. It is a concern. I think the public already has such skepticism about facebook when it comes to protecting privacy. Facebook has shown interest in one thing two things. Being a bigger player in the market and making more money. Maybe three things being powerful and the political system, too. We have to make sure the peoples privacy is protected. There is not Much Movement in congress to do that yet. David there are a lot of questions to ask. Initially, do you have any thoughts about who or what is the best regulatory scheme for this . Sometimes in washington i have seen you can have multiple agencies. Sometimes companies slip between the cracks. Is this a banking issue for the fed, a securities issue for the sec . Who should have primary lead on the regulation oversight . Sen. Brown i do not know yet because i do not know enough about what they are trying to do to run their cryptocurrency operation out of this Swiss Bank Account. Is i amhat there skeptical of the regulators because we have seen regulators k. Ready wea the trump regulators at the fed and the sec have already moved toward weakening rules to keep banks honest, particularly the big wall street banks. We have got to tread a careful path. We want to first of all i think the role of the media is important. Light on whatne a facebook is up to. Most of the American Public does not know what running a cryptocurrency operation out of a Swiss Bank Account means to americans or means to a Financial System or means to your use of credit card or cash in an american store. Know. D to so much more the role of the media is one of the reason these hearings are great. Toare calling on facebook appear so the public does learn what this is all about and what threat this company that never seems to be big enough, never seems to be powerful enough, never seems to be rich enough, is up to. David i want to change subjects. Something that is important he was the usmca. There is a headline coming up ri