WEBVTT - Bloomberg Businessweek Weekend - March 4th, 2022 0:00:01.040 --> 0:00:05.400 This is Bloomberg Business Week inside from the reporters and 0:00:05.600 --> 0:00:09.200 editors who bring you America's most trusted business magazine, plus 0:00:09.240 --> 0:00:13.160 global business, finance and tech news as it happens. Bloomberg 0:00:13.240 --> 0:00:16.759 Business Week with Carol Messier and Bloomberg Quick Takes Tim 0:00:16.800 --> 0:00:21.279 Stinovic on Bloomberg Radio. Hi, everyone, Welcome to the weekend 0:00:21.440 --> 0:00:25.160 edition of Bloomberg Business Week. Geopolitical tensions were the story 0:00:25.160 --> 0:00:27.960 of this past week, with Russia's invasion of Ukraine now 0:00:28.080 --> 0:00:31.360 a full scale war, the death toll rising on both sides, 0:00:31.400 --> 0:00:34.880 and the financial fallout rippling through the global economy. That's 0:00:34.920 --> 0:00:36.919 the subject of our cover story, and we're gonna get 0:00:36.920 --> 0:00:38.720 to that in just a moment and a riveting and 0:00:38.720 --> 0:00:41.879 stirring cover image as well. We will also hear from 0:00:41.880 --> 0:00:44.559 the CEOs of Hewlett Packard Enterprise and app Harvest on 0:00:44.600 --> 0:00:47.360 earnings and the head of Plug Power on how Russia's 0:00:47.400 --> 0:00:50.680 war in Ukraine is affecting the supply of key raw materials, 0:00:50.720 --> 0:00:53.040 plus the return of the so called razor blade trade 0:00:53.080 --> 0:00:55.040 on Wall Street. All of that to come. We begin, though, 0:00:55.080 --> 0:00:57.200 with a special report on the war in Ukraine the 0:00:57.240 --> 0:00:59.720 magazine with a deep dive into the tactic of using 0:00:59.760 --> 0:01:03.040 fine dance as a weapon. Bloomberg News Financial Investigation senior 0:01:03.080 --> 0:01:06.039 writer Stephanie Baker part of the team covering all the 0:01:06.040 --> 0:01:10.039 battle raging on Russia's financial front. She joins us from London, Stephanie, 0:01:10.120 --> 0:01:14.600 take us inside the issue here and your personal experience 0:01:15.080 --> 0:01:18.720 watching this in full over the last few years. Right, 0:01:18.800 --> 0:01:22.720 so Um, I went to Ukraine three times in twenty 0:01:22.840 --> 0:01:28.440 nineteen reporting on the whole controversy surrounding Rudy Giuliani, the 0:01:28.480 --> 0:01:32.480 former New York mayor UM and his efforts on behalf 0:01:32.560 --> 0:01:38.240 of Donald Trump, UM to pressure Ukrainian officials into announcing 0:01:38.240 --> 0:01:42.280 an investigation into Joe Biden and his son in Ukraine. 0:01:42.440 --> 0:01:44.839 So and I had gone and done reporting on Paul 0:01:44.920 --> 0:01:48.800 Manafort and his work in Ukraine prior to that. I've 0:01:49.240 --> 0:01:52.440 lived in Russia for a few years and interviewed and 0:01:52.480 --> 0:01:55.680 profiled some of these oligarchs that are now being sanctioned. 0:01:56.240 --> 0:01:59.640 So Um, you know this is this struck me as 0:02:00.240 --> 0:02:04.320 end of an era. This thirty year period after the 0:02:04.360 --> 0:02:06.920 collapse of the Soviet Union, the fall of the Berlin Wall, 0:02:07.120 --> 0:02:10.960 the opening up of Eastern Europe and Russia to the 0:02:11.000 --> 0:02:17.160 global economy. Inward investment from from Western companies building up 0:02:17.880 --> 0:02:19.720 and it just struck me as this is the end 0:02:19.760 --> 0:02:23.960 of that era. Um. Russia is completely isolated. It has 0:02:24.000 --> 0:02:27.480 now been declared a pariah state, and it's hard to 0:02:27.520 --> 0:02:33.000 see how it comes back, um unless Putin is removed 0:02:33.040 --> 0:02:35.520 from the picture. Well, let's let's talk a little bit 0:02:35.520 --> 0:02:38.520 about that, because we have covered through throughout the week 0:02:38.800 --> 0:02:41.680 all the different companies that have ceased operations in Russia 0:02:41.800 --> 0:02:44.480 or put them on pause, or pulled out of Russia completely. 0:02:44.520 --> 0:02:47.600 But for this piece, you spoke to Bill Browder, who 0:02:47.639 --> 0:02:50.480 many of our audiences is familiar with, perhaps having read 0:02:50.520 --> 0:02:54.720 his book or followed his career over the last few decades. UM. 0:02:54.800 --> 0:02:58.000 He says, the key to cutting off Putin at his 0:02:58.040 --> 0:03:00.960 Achilles heel is the olive our talk about that a 0:03:00.960 --> 0:03:03.840 little bit, right. Yeah, I've known Bill ever since I 0:03:03.960 --> 0:03:06.880 was a reporter in Moscow in the nineties. So UM, 0:03:06.919 --> 0:03:10.000 and have you know charted how he was banned by 0:03:10.720 --> 0:03:13.639 uh Putin from entering Russia when he was once the 0:03:13.639 --> 0:03:17.679 biggest portfolio investor in the country. Um. And you know 0:03:17.800 --> 0:03:22.600 his argument is the way to um hit Putin where 0:03:22.600 --> 0:03:26.240 it hurts is to sanction the oligarchs um, some of 0:03:26.280 --> 0:03:32.000 whom he believes are close to Putin and hold his wealth. Uh. 0:03:32.200 --> 0:03:35.800 You know, Putin has amassed wealth. We don't know the 0:03:35.840 --> 0:03:41.120 full extent of it. We believe the intelligence agencies know 0:03:41.400 --> 0:03:44.960 much more, um. And you know, the way to make 0:03:45.240 --> 0:03:49.920 him feel the pain is to isolate Russia and the 0:03:49.960 --> 0:03:55.120 oligarchs UM from every angle, to make him realize that 0:03:55.200 --> 0:03:58.760 the cost of this war is too great to continue. 0:03:58.960 --> 0:04:02.640 Stephanie spent party career in Russia. You also witnessed the 0:04:02.800 --> 0:04:05.960 collapse of the Soviet Union when you were in Prague 0:04:05.960 --> 0:04:09.920 in in n when you had just graduated from from college. 0:04:10.160 --> 0:04:13.080 I'm wondering where the Russian people fall into this, Not 0:04:13.120 --> 0:04:18.120 the oligarchs, but everyday Russians who have seen their currency collapse, 0:04:18.360 --> 0:04:23.040 who are no longer able to get products from Western 0:04:23.080 --> 0:04:25.880 companies that have announced that they will stop selling those 0:04:25.880 --> 0:04:29.039 products there, who perhaps will have their travel industry absolutely 0:04:29.080 --> 0:04:32.720 crippled as Boeing and Airbus refused to service planes that 0:04:32.760 --> 0:04:35.880 are on Russian airlines. Do they have any power in 0:04:35.960 --> 0:04:38.760 bringing an end to Putin? I'm so glad you asked that, 0:04:38.800 --> 0:04:42.279 because it's an absolutely crucial question. Uh. The problem is 0:04:42.360 --> 0:04:47.880 that Putin has shut down independent sources of information. For instance, Um, 0:04:47.920 --> 0:04:51.440 there was a famous radio station called Echo Muskui, which 0:04:51.440 --> 0:04:54.840 he has just closed down. Um. And there's I think 0:04:54.880 --> 0:04:59.800 there's one surviving independent newspaper. He controls the television station, 0:05:00.520 --> 0:05:04.200 and he's still calling this a special operation and not 0:05:04.320 --> 0:05:07.960 a war. So there is an incredible degree of propaganda 0:05:08.160 --> 0:05:11.120 reminiscent of the Soviet Union happening right now that it's 0:05:11.240 --> 0:05:15.240 very hard to see how Russians can rise up or 0:05:15.320 --> 0:05:19.480 understand what's really going on until, of course, some of 0:05:19.520 --> 0:05:23.360 the casualties become clear. And it was extreme, very very 0:05:23.400 --> 0:05:29.240 significant that Russia announced at almost five soldiers had died. 0:05:29.520 --> 0:05:32.359 They don't generally do that, and for Russia to admit 0:05:32.400 --> 0:05:36.480 that is a huge, huge deal. UM. So when that 0:05:36.680 --> 0:05:40.320 starts to filter through to the Russian population, you could 0:05:40.400 --> 0:05:44.440 see some movement, but the price of protesting, either posting 0:05:44.440 --> 0:05:48.000 things online or going out onto the streets to protest, 0:05:48.080 --> 0:05:52.600 is incredibly high. Um. And I think it's it's sad 0:05:52.640 --> 0:05:54.960 that not only on that level, that the level of 0:05:55.000 --> 0:05:58.320 protest is so difficult, but there are tons of Russians 0:05:58.400 --> 0:06:01.440 and I know many of them who are just ordinary 0:06:01.520 --> 0:06:06.400 Russians of all levels working for normal companies, Russian companies, 0:06:06.400 --> 0:06:08.920 just trying to do their best, trying to you know, 0:06:08.960 --> 0:06:13.320 do business in UH an efficient and a westernized way, 0:06:13.960 --> 0:06:18.040 and that has all been destroyed. All that work building 0:06:18.120 --> 0:06:22.360 up UH these companies over the past thirty years has 0:06:22.400 --> 0:06:25.120 been destroyed and it will be very hard to recover. Well, 0:06:25.240 --> 0:06:27.880 it is a must read, and we really appreciate your time, 0:06:27.880 --> 0:06:30.640 and we know what's been a really busy week. Um, Stephanie, 0:06:30.680 --> 0:06:32.679 thank you so much. Are thanks to Bloomberg News Financial 0:06:32.680 --> 0:06:36.320 Investigation Senior writer Stephanie Baker and her work included in 0:06:36.360 --> 0:06:38.640 a special report in this week's issue on the war 0:06:38.680 --> 0:06:41.479 in Ukraine. It is the global cover story. Coming up, 0:06:41.480 --> 0:06:43.000 we're gonna turn our attention to the world of tech 0:06:43.040 --> 0:06:45.680 and a big quarterly earnings, a big beat for the 0:06:45.680 --> 0:06:48.159 team at HP Enterprize. We're gonna check in with the 0:06:48.200 --> 0:06:52.040 company's CEO, Antonio Nary. That is next. This is Bloomberg. 0:07:01.720 --> 0:07:05.720 This is Bloomberg Business Week with Carol Messer and Bloomberg 0:07:05.760 --> 0:07:10.640 Quick Takes Tim Stinovik from Bloomberg Radio. Earlier this week, 0:07:10.720 --> 0:07:14.040 cland Packard Enterprise boosted and suggested earnings per share forecast 0:07:14.080 --> 0:07:16.360 for the full year. After the company released first quarter 0:07:16.440 --> 0:07:20.000 earnings that blue past analyst estimates, shares of HP rose 0:07:20.040 --> 0:07:23.040 the most nearly two years on Wednesday, after also exceeding 0:07:23.080 --> 0:07:27.120 expectations on gross margin. This despite a tough supply chain environment. 0:07:27.360 --> 0:07:30.680 The president's CEO, Antonio Nary, joined me and Bloomberg News 0:07:30.720 --> 0:07:33.680 Cross asset reporter Katie Graveveld to talk about how his 0:07:33.720 --> 0:07:36.160 team did it. This is driven by customer of the month, 0:07:36.360 --> 0:07:39.640 is driven by our strategy, anything with the customers, and 0:07:39.680 --> 0:07:43.680 honestly a great expecution team because obviously we are balancing 0:07:43.680 --> 0:07:47.240 the revenue and the profitability of the business. Well, I 0:07:47.240 --> 0:07:49.320 want to dig into that demand a little bit more 0:07:49.360 --> 0:07:51.520 because what stuck out to me was that you had 0:07:51.560 --> 0:07:55.920 a growth in orders, which was your third consecutive quarter 0:07:56.000 --> 0:08:00.640 of at least increase. Breakdown that demand a little bit more. 0:08:00.640 --> 0:08:04.040 Where is it coming from? What's driving that? That's actually 0:08:04.120 --> 0:08:06.680 exactly right. So this is the third consecutive quarter of 0:08:06.720 --> 0:08:09.840 twenty plus percent or the growth, and it was across 0:08:09.880 --> 0:08:13.640 all businesses. You know, our compute business, with obviously people 0:08:14.440 --> 0:08:19.360 believe is commoditized um you know, grow our edge business, 0:08:19.480 --> 0:08:23.720 which is all about secure connectivity with a subscription model 0:08:23.840 --> 0:08:29.800 grew an excess of our storage business including data services 0:08:29.880 --> 0:08:33.960 grew an excess of fift and even our high performance 0:08:34.000 --> 0:08:37.920 computing an AI business grew and excess of I will 0:08:38.000 --> 0:08:40.720 say the shining star though, is we bring it all 0:08:40.760 --> 0:08:43.679 together in a platform which we call it HPI Green Lake, 0:08:44.200 --> 0:08:46.720 which you can consumers. A service grew a hundred and 0:08:46.760 --> 0:08:50.440 thirty six percent year of the year, So it's across 0:08:50.520 --> 0:08:54.120 all businesses. But the momentum we have is because we're 0:08:54.160 --> 0:08:58.640 bringing all our solutions in an integrated, unified experience under 0:08:58.800 --> 0:09:01.320 Hi Green like Umbrella. A journio we learned on the 0:09:01.320 --> 0:09:04.199 call yesterday you said that supply and logistics challenges they 0:09:04.200 --> 0:09:07.959 may last through two. It's it's somewhat different than from 0:09:07.960 --> 0:09:09.960 some of the companies we've heard from thus far in 0:09:10.080 --> 0:09:13.760 recent weeks as they've reported earnings. Are you just being conservative? 0:09:14.320 --> 0:09:15.959 What's going to improve first here? Is it going to 0:09:16.040 --> 0:09:18.000 be logistics challenges or is it going to be chip 0:09:18.080 --> 0:09:22.240 components and availability here? Well, my message has been consistent 0:09:22.320 --> 0:09:25.720 enough for several quarters, always said that this supply chain 0:09:25.880 --> 0:09:32.360 and logistics overload situation will continue well into physically or two, 0:09:32.679 --> 0:09:35.240 and we still see it that way, the majority of 0:09:35.280 --> 0:09:38.360 the challenges actually are in what are called low level 0:09:38.440 --> 0:09:41.959 components and not on the high value commodities. And think 0:09:42.600 --> 0:09:44.920 think about it now, stuff that people don't think about, 0:09:44.920 --> 0:09:49.480 a voltage, regulators, capacitors, things that you need to build 0:09:49.679 --> 0:09:52.679 a system at the low level before you can build 0:09:52.760 --> 0:09:56.120 actually the full integrated system. And that has to do 0:09:56.280 --> 0:09:59.040 with the with the fact that the demand is very 0:09:59.080 --> 0:10:03.240 strong and the availability of substrates particularly you know, these 0:10:03.280 --> 0:10:06.000 components are what we call in the old generation of 0:10:06.080 --> 0:10:09.640 technologies like twenty eight meters and stuff, and a lot 0:10:09.679 --> 0:10:13.640 of the fabrication has moved to the newer technologies like 0:10:13.720 --> 0:10:16.960 fourteen and below. So I think, um, you know, the 0:10:17.000 --> 0:10:19.360 supplier of the substrate got called a little bit in 0:10:19.400 --> 0:10:22.800 between because of the huge demand that they are seeing 0:10:23.040 --> 0:10:25.440 and now they need to catch up. And this takes 0:10:25.440 --> 0:10:29.520 time because when you start bringing new capacity is complicated 0:10:29.600 --> 0:10:34.280 systems processes. And we said all along will take well 0:10:34.360 --> 0:10:38.080 under twenty At the end of two however, I will 0:10:38.120 --> 0:10:42.760 say we have never seen any noticeable customer cancelation, which 0:10:42.840 --> 0:10:45.640 again give us the confidence. The demand is there is 0:10:45.720 --> 0:10:48.840 very robust, and it's also driven by the data explosion. 0:10:48.920 --> 0:10:52.520 We see around us above in a personal life and 0:10:52.520 --> 0:10:57.200 in a in a business side well, and even with 0:10:57.360 --> 0:11:00.680 those supply chain and those logistical challenge is you did 0:11:00.720 --> 0:11:05.880 see gross margin increased by thirty or rather gross margin. 0:11:05.920 --> 0:11:11.120 And what I'm curious about is whether that's sustainable. Yes, absolutely, 0:11:11.840 --> 0:11:14.600 it is sustainable, and I think he points to the 0:11:14.679 --> 0:11:20.199 quality of earnings of how we're driving our company forward. Obviously, 0:11:20.320 --> 0:11:23.600 we are driving higher mix of software and services. If 0:11:23.600 --> 0:11:27.200 you look at one particular slide, our CFO Tirek Robiety 0:11:27.240 --> 0:11:30.280 showed the yesterday and commented on it was the fact 0:11:30.320 --> 0:11:33.880 that our green Lake offer drives more software in services 0:11:33.920 --> 0:11:37.360 in fact now is almost two thirds of the offer 0:11:38.200 --> 0:11:43.120 that drives higher gross margins, higher gross operating margins. Obviously, 0:11:43.120 --> 0:11:47.600 the edge business comes with higher gross margins too, also 0:11:47.640 --> 0:11:50.680 because it's driven by a subscription model to software before 0:11:50.760 --> 0:11:54.080 you actually deploy some sort of port and access point 0:11:54.400 --> 0:11:58.120 or or a switching point. So all of that comes 0:11:58.120 --> 0:12:00.680 with higher margin. And remember that we were one of 0:12:00.720 --> 0:12:03.440 the first through the pandemic at the beginning of the 0:12:03.440 --> 0:12:07.280 pandemic to enact what we call our real locational resources 0:12:07.360 --> 0:12:10.200 in through the future areas of growth. That's also paying 0:12:10.280 --> 0:12:14.079 off for us. So the margin are sustainable, and I 0:12:14.120 --> 0:12:16.520 will say really proud of what the team had done 0:12:16.679 --> 0:12:21.080 managing prioritization of orders and margins. And listen, if you 0:12:21.080 --> 0:12:24.200 look at a compute business again in the market is 0:12:24.280 --> 0:12:27.720 being seen as a commoditized business. The operative margins of 0:12:27.720 --> 0:12:31.839 the business was thirteen point eight percent. There is no 0:12:32.000 --> 0:12:34.720 vendor out there and drive the level of profitability in 0:12:34.720 --> 0:12:38.200 a commoditized business. And Antonio, let's talk a little bit 0:12:38.240 --> 0:12:40.640 about intelligent and share because you are going head to 0:12:40.679 --> 0:12:43.959 head with Cisco, but clearly you're growing in this area. 0:12:44.000 --> 0:12:46.600 And I'm curious whether that's a function of you taking 0:12:46.640 --> 0:12:50.240 market share, whether the pie is just getting bigger. Well, 0:12:50.280 --> 0:12:54.000 we've definitely taking market share. Um. At the same time, 0:12:54.440 --> 0:12:58.920 the own ramp to digitize your business is through connectivity. 0:12:59.280 --> 0:13:02.720 You know, we called the edge the next frontier and 0:13:02.760 --> 0:13:06.080 the edges where we live and work. Um. You know, 0:13:06.320 --> 0:13:09.000 that's where the vast majority of the data is created, 0:13:09.120 --> 0:13:12.200 not in a in a cloud of sorts, but really 0:13:12.240 --> 0:13:15.400 what the action is and that first step is to 0:13:15.440 --> 0:13:18.600 be connected in One of the concerns I have, while 0:13:18.720 --> 0:13:21.319 this is all good, is the fact that connectivity is 0:13:21.360 --> 0:13:25.480 an essential service, not different than water and electricity, and 0:13:25.480 --> 0:13:27.760 and that's why it's important as we go forward and 0:13:27.840 --> 0:13:31.920 we deployed this new massive distributed enterprise and this new 0:13:32.000 --> 0:13:35.560 way of working, connectivity needs to be available everywhere. So 0:13:35.600 --> 0:13:39.080 we are taking share, we are creating new opportunities. But 0:13:39.160 --> 0:13:42.240 we have a differentiated strategy is called a Ruba Age 0:13:42.240 --> 0:13:45.600 Services Platform as a part of each pigree lake in 0:13:45.679 --> 0:13:48.760 that cloud oriented approach. In a mobile first approach, you 0:13:48.840 --> 0:13:54.439 can procure, provision and manage any aspect of your connectivity, 0:13:54.440 --> 0:13:57.600 whether it's a Wi Fi connectivity, whether it's a land 0:13:57.600 --> 0:14:01.400 port connectivity or a one connectivity. Remember that a lot 0:14:01.440 --> 0:14:04.080 of the old systems, you know, whether it's a data center, 0:14:04.160 --> 0:14:08.160 campus and branch, we are connected through fixed networks. As 0:14:08.240 --> 0:14:12.640 more and more cloud native applications, particularly your phone gets developed, 0:14:12.760 --> 0:14:16.080 the traffic gets routed through the Internet and the refore 0:14:16.240 --> 0:14:18.880 you have to connect these millions of endpoints in a 0:14:19.000 --> 0:14:23.640 very sustainable way. And HP Aruba Services Platform provide that 0:14:23.840 --> 0:14:27.200 integrated experience for our customers in a subscription model, and 0:14:27.240 --> 0:14:30.840 that's why we're growing so so fast. That was President 0:14:30.840 --> 0:14:33.880 and CEO of Hewlett Packard Enterprise, Antonio Neary. He spoke 0:14:33.920 --> 0:14:36.040 with me and my Bloomberg Quick Take co host Katie 0:14:36.040 --> 0:14:38.600 Greifeld still ahead on Bloomberg Business Week the so called 0:14:38.720 --> 0:14:41.520 razor blade trade. It is back on Wall Street and 0:14:41.560 --> 0:14:45.000 retail investors are leading the way. We'll explain. This is 0:14:45.040 --> 0:14:55.480 Bloomberg Broadcasting from the financial capital of the world, Bloomberg 0:14:55.520 --> 0:14:59.000 eleven Frio in New York to Washington, d C. Bloomberg 0:15:00.040 --> 0:15:03.239 to Boston, Bloomberg one oh six one to San Francisco, 0:15:03.280 --> 0:15:06.720 Bloomberg nine sixty to the country Sirius XM Chado one 0:15:06.800 --> 0:15:09.720 nine team and around the globe the Bloomberg Business app 0:15:09.880 --> 0:15:15.360 and Bloomberg Radio dot Com. This is Bloomberg Business Week. Well, 0:15:15.400 --> 0:15:17.160 this story was among our most read on the Bloomberg 0:15:17.280 --> 0:15:19.680 terminal this past week. Tim it was also a Bloomberg 0:15:19.680 --> 0:15:21.800 Big Take. It was one of the stories that you 0:15:21.840 --> 0:15:23.520 know had to be on your radar, and you can 0:15:23.560 --> 0:15:26.120 find it, of course, also in this week's Finance section 0:15:26.120 --> 0:15:29.120 of Bloomberg Business Week magazine. It's about Wall streets risky 0:15:29.200 --> 0:15:32.520 razor blade trade making a comeback and everyday investors piling 0:15:32.560 --> 0:15:36.240 into exchange traded funds ETFs of course that make it 0:15:36.360 --> 0:15:38.840 easy to use leverage or short the market, and that 0:15:38.920 --> 0:15:41.640 could pose a major problem for lower level traders. Now 0:15:41.720 --> 0:15:44.360 to understand why we caught up with Bloomberg News Cross 0:15:44.360 --> 0:15:48.000 Asset reporter Deniza say Kova and Bloomberg Business Week editor 0:15:48.120 --> 0:15:52.160 Jill Weber. Many retail investors don't really know what they're getting. 0:15:52.200 --> 0:15:54.280 It just sound. It sounds like something that maybe they 0:15:54.360 --> 0:15:58.720 want some exposure to UM. Maybe maybe it promises a 0:15:58.800 --> 0:16:03.480 quick buck uh and and oftentimes that can happen and successfully, 0:16:03.560 --> 0:16:07.160 but the downside is also always a risk of So 0:16:07.480 --> 0:16:10.200 Denita walk us through why we should be caring about 0:16:10.240 --> 0:16:13.480 this and and and reasonably a trade right now? Yeah, 0:16:13.560 --> 0:16:16.560 of course. So, first, I've seen a really historic boom 0:16:16.920 --> 0:16:19.600 in those products. We're talking in terms of total assets, 0:16:19.680 --> 0:16:22.600 in terms of volumes UM. Just as an example for 0:16:22.760 --> 0:16:25.440 total assets, we've seen a fifty five percent growth just 0:16:25.600 --> 0:16:28.720 over a year UM in the US. This of course 0:16:28.800 --> 0:16:34.040 comes as retail traders UM have been entering market more 0:16:34.080 --> 0:16:37.120 and more as voltity has been rising. And some people 0:16:37.160 --> 0:16:41.440 actually say that Vomageddon, which happened in two thousand eighteen 0:16:41.880 --> 0:16:45.120 with one volatility product, was kind of an infliction point 0:16:45.160 --> 0:16:47.280 and a lot of people heard about those products and 0:16:47.520 --> 0:16:49.880 instead of being concious about it, they're like, maybe we 0:16:49.920 --> 0:16:53.320 should give it a try. Um. So definitely retail traders 0:16:53.640 --> 0:16:57.320 love them. They offer big returns quickly, but um, as 0:16:57.400 --> 0:17:00.360 we talk in article, they may be offering big losses 0:17:00.360 --> 0:17:02.560 as well if you don't use them carefully. But in 0:17:02.760 --> 0:17:05.880 terms of regulation UM and experts, a lot of people 0:17:06.080 --> 0:17:08.800 worn about the risk of those products, first because they're 0:17:09.160 --> 0:17:12.800 very complex. A second, they're like very sophisticated vehicles that 0:17:12.960 --> 0:17:15.520 rely on day trading and timing the market, which is 0:17:15.520 --> 0:17:17.800 such a difficult thing. So obviously a lot of people 0:17:17.840 --> 0:17:20.080 are failing at that and in the carry costs, which 0:17:20.119 --> 0:17:23.840 can obviously just either way at everything. So there's some 0:17:24.119 --> 0:17:27.200 interesting tickers and et f s in this space. What 0:17:27.480 --> 0:17:30.680 are some of the biggest, and especially in the era 0:17:30.760 --> 0:17:32.400 of the meme trader, which one is kind of grew 0:17:32.440 --> 0:17:35.520 in popularity the most. Yeah, the biggest one for sure 0:17:35.720 --> 0:17:39.680 are those who bet against the navdack or the performance 0:17:39.680 --> 0:17:42.639 of the navtack, so sqq and q q q uh. 0:17:42.760 --> 0:17:44.359 These are for sure the biggest one in terms of 0:17:44.480 --> 0:17:49.160 trade trade volume and assets. But for example, interesting one 0:17:49.400 --> 0:17:52.320 is uv x y UM that's a very popular one 0:17:52.400 --> 0:17:56.960 that's also a votility product. So these are kind of 0:17:57.040 --> 0:18:01.080 the most popular one. For example, um our interviewee, she 0:18:01.359 --> 0:18:05.359 bets on small caps. She uses the t c A, 0:18:06.040 --> 0:18:09.159 which is against three times the inverse performance of the 0:18:09.240 --> 0:18:12.080 Russell two thousands. So pretty much you can bet against 0:18:12.320 --> 0:18:15.679 any index UM and you can have a lot of leverage. 0:18:15.680 --> 0:18:18.359 In the US it's only two or three times, but 0:18:18.480 --> 0:18:20.840 in other places of the world you can get up 0:18:20.960 --> 0:18:26.080 to five and even twenty. In that case, yeah, well, uh, 0:18:26.480 --> 0:18:29.000 look good when it goes up or or or you 0:18:29.080 --> 0:18:30.960 know your way on the right side of the bat 0:18:31.040 --> 0:18:35.400 right exactly, uh, DANITZA. Who who are using these products 0:18:35.680 --> 0:18:39.600 and who should be using these products? What our experts say? Yeah, well, 0:18:39.800 --> 0:18:43.600 retail traders are definitely using them a lots like we 0:18:43.720 --> 0:18:46.320 have JP Morgan data showing that the mong ts this 0:18:46.480 --> 0:18:50.120 is UM their most popular choice. As as I said, 0:18:50.440 --> 0:18:54.240 UM big returns really fast, so that's kind of very tempting. 0:18:54.600 --> 0:18:56.800 But in terms of who should be using them, when 0:18:56.840 --> 0:18:59.920 we go to those big providers, whether pre shares or other, 0:19:00.119 --> 0:19:03.280 they all say they're very for very sophisticated investors. They've 0:19:03.320 --> 0:19:04.840 been on the market for a very long time and 0:19:04.880 --> 0:19:07.719 they should know how to use them, um, etcetera. Etcetera. 0:19:07.920 --> 0:19:10.880 But even the sec when they look at their products, 0:19:11.480 --> 0:19:14.639 they say they pose risk even for those investors because 0:19:15.119 --> 0:19:17.520 it's just such a big bet on the market that 0:19:18.320 --> 0:19:21.000 even if you're a sophisticated investor, you can get it wrong. 0:19:21.160 --> 0:19:22.679 All right, So how likely is it that we get 0:19:22.720 --> 0:19:24.320 it wrong and this could lead to some kind of 0:19:24.359 --> 0:19:30.320 financial crisis? Well, what do people think? It really depends 0:19:30.880 --> 0:19:34.000 on on the product. Like with votility, Obviously this this 0:19:34.240 --> 0:19:38.199 is caused system wide risk with betting on an index UM. 0:19:38.359 --> 0:19:41.080 I guess the chances of kind of UH causing a 0:19:41.160 --> 0:19:43.879 system wide risk UM is very small. But if you 0:19:43.960 --> 0:19:47.959 can imagine just the basic number of how many active 0:19:48.040 --> 0:19:53.720 majors UM do better than passive index and I don't 0:19:53.720 --> 0:19:57.280 know what's the number, Maybe just imagine that type of 0:19:57.440 --> 0:20:00.520 leverage three times and getting it right. So the chances 0:20:00.600 --> 0:20:03.399 of being wrong, at least from my reporting, seems to 0:20:03.480 --> 0:20:06.239 be maybe higher than the chances of getting it right. 0:20:06.560 --> 0:20:09.600 That was Bloomberg News cross asset reporter Deniza Skova and 0:20:09.760 --> 0:20:12.600 the editor of Bloomberg Business Week magazine, Jill Webber. You're 0:20:12.640 --> 0:20:15.440 listening to Bloomberg business Week. Coming up next, we're talking 0:20:15.480 --> 0:20:18.080 about app harvest The company has seen at stock and 0:20:18.160 --> 0:20:22.440 steady decline since going public via Spack merger thirteen months ago, 0:20:22.920 --> 0:20:26.000 and yet the company's physical expansion continues on just a 0:20:26.119 --> 0:20:29.520 massive scale. They're definitely thinking longer term. CEO Jonathan Webb 0:20:29.920 --> 0:20:33.240 talks about building his product pipeline and the key innovations 0:20:33.320 --> 0:20:36.560 helping the company overcome the challenges of climate change, which 0:20:36.680 --> 0:20:38.960 was also, as we know courtesy that u N report 0:20:39.000 --> 0:20:41.879 this week, very much in the news. This is Bloomberg. 0:20:51.480 --> 0:20:55.000 You're listening to Bloomberg Business Week with Carol Messer and 0:20:55.119 --> 0:21:00.280 Bloomberg Quick Takes Tim Stinovich from Bloomberg Radio. Shows of 0:21:00.320 --> 0:21:02.679 the high tech greenhouse and vertical farm company app Harvest 0:21:02.800 --> 0:21:05.280 have not performed well since hitting the public markets. Just 0:21:05.400 --> 0:21:08.760 last February, fourth ward earnings released. Last week's showed adjusted 0:21:08.880 --> 0:21:12.360 EPs with a bigger loss than forecast. Still, app Harvest 0:21:12.480 --> 0:21:15.040 is committed to expanding its footprint and building a product 0:21:15.080 --> 0:21:18.520 pipeline that's tailor made for a future fraud with climate uncertainty, 0:21:18.520 --> 0:21:20.679 And to be fair, we did see the stock jump 0:21:20.880 --> 0:21:24.080 on those earnings results, but certainly it's still way off 0:21:24.119 --> 0:21:26.200 its highs. For look at the business and outlook, we 0:21:26.359 --> 0:21:28.840 caught up with app Harvest founder and CEO Jonathan Webb. 0:21:29.240 --> 0:21:31.880 He maintains the future it is bright as his team 0:21:32.000 --> 0:21:37.640 ramps up in two. We're quadrupling our farm network, diversifying 0:21:37.760 --> 0:21:40.719 crops so we we we had app Harvest are growing 0:21:40.920 --> 0:21:44.879 UH fruits and vegetables in a controlled environment, focused on 0:21:45.040 --> 0:21:48.480 year round production here in the US. Our first facility 0:21:48.560 --> 0:21:51.800 here in more at Kentucky is is growing tomatoes, which 0:21:52.080 --> 0:21:54.080 we were targeting a lot of a lot of the 0:21:54.160 --> 0:21:57.000 imports coming in from south of the border. And then 0:21:57.119 --> 0:22:00.920 later this year we'll be growing leafy green salad, greens, 0:22:01.440 --> 0:22:06.240 strawberries in more variety of tomatoes. So opening more farms, 0:22:06.640 --> 0:22:09.760 getting more crops to market UH and focused on getting 0:22:09.800 --> 0:22:12.600 good quality out to grocers all up and down the 0:22:12.640 --> 0:22:16.360 East Coast and Midwest and southeast. Hey, what does it mean, Jonathan, 0:22:16.440 --> 0:22:18.960 for your growth trajectory in terms of I'm pulling up 0:22:18.960 --> 0:22:21.840 the f a function on the Bloomberg. UH So looking 0:22:21.920 --> 0:22:25.080 at you know, revenue growth, it looks pretty dynamic when 0:22:25.119 --> 0:22:29.439 you look at two or three um like more than 0:22:29.560 --> 0:22:33.680 three year over year growth or year over year growth. 0:22:34.400 --> 0:22:37.960 But give us some idea of the ramp up with this, Yeah, 0:22:38.040 --> 0:22:41.560 so we we've been under construction. UH really really proud 0:22:41.640 --> 0:22:44.720 of our construction team building some of the largest c 0:22:44.920 --> 0:22:46.920 e A facilities in the world in the middle of 0:22:47.000 --> 0:22:49.520 a global pandemic. What does that mean? What does that mean? 0:22:49.760 --> 0:22:54.320 That designation? Uh, Controlled environment agriculture. So you know, I 0:22:55.480 --> 0:22:59.000 try to say the third wave of sustainability twenty years 0:22:59.040 --> 0:23:02.320 ago was renewable energy, ten years ago it was electric vehicles. 0:23:02.359 --> 0:23:04.720 And today, you know, you'll continue to hear the term 0:23:04.840 --> 0:23:08.720 c e A controlled environment agriculture using technology to grow 0:23:08.800 --> 0:23:11.879 fruits and vegetables a year round, uh, not having to 0:23:11.920 --> 0:23:16.880 worry about climate disruption, using far less land, far less water. Um. 0:23:17.320 --> 0:23:19.680 But building those facilities in the middle of of of 0:23:19.720 --> 0:23:23.200 a global pandemic and the supply chain issues is has 0:23:23.240 --> 0:23:25.200 been something our team has been able to navigate. And 0:23:25.400 --> 0:23:28.800 we'll be bringing those facilities online later this year, which 0:23:28.920 --> 0:23:32.760 is which is gonna dramatically increase our our production across 0:23:32.880 --> 0:23:35.320 multiple crop types. So when we see numbers like I 0:23:35.400 --> 0:23:38.119 say on the on the Bloomberg that talks about you know, 0:23:38.200 --> 0:23:45.120 more than revenue growth from that's pretty realistic. Yeah, yeah, 0:23:45.200 --> 0:23:49.000 certainly that more could be even more. UM. Look forward 0:23:49.000 --> 0:23:50.879