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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 2: weekdays at ten am Eastern on Appo, CarPlay, and rout

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Speaker 2: Otto with the Bloomberg Business app. Listen on demand wherever

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Speaker 2: you get your podcasts, or watch us live on YouTube.

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Speaker 1: All right, let's check in with Alison Williams. She covers

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Speaker 1: the banks for Bloomberg Intelligence. In One of the big

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Speaker 1: banks is JP Morgan, and they're having their investor day today. Allison,

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Speaker 1: give us what have you learned from our good friends

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Speaker 1: at JPM today at their investor day.

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Speaker 3: So I think, you know, the most important thing is

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Speaker 3: they're keeping their long term seventeen percent targets and then

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Speaker 3: sort of supporting that they did up their net interest

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Speaker 3: income guidance. We don't think that there's going to be

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Speaker 3: much change to I guess the consensus, because I think

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Speaker 3: consensus is already there. So they up the guide ends

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Speaker 3: to reflect fewer cuts. But we already knew that they

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Speaker 3: also up their expense guidance. Again, we knew that because

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Speaker 3: they you know, have already flagged that they're going to

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Speaker 3: have a gain from some visa shares and they're going

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Speaker 3: to use some of that to pre fund investment, spending

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Speaker 3: some charitable contributions, and then finally, you know, they did

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Speaker 3: some math walking through capital. So Basil three endgame is

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Speaker 3: the big question. They looked like they would be short

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Speaker 3: based on the last proposals that we had that we

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Speaker 3: got last July, but Powell has said that we're going

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Speaker 3: to see big changes, and so JP Morgan did some

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Speaker 3: scenario analysis around that, and you know, they feel pretty

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Speaker 3: comfortable and they're starting to increase their buybacks and there

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Speaker 3: is a lot more to come if we do get

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Speaker 3: some relief to that proposal.

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Speaker 4: Also, aside is down like half a percent. Did do

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Speaker 4: I take away anything from that in terms of how

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Speaker 4: investors perceive the numbers?

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Speaker 3: I mean, I would say that we didn't get any

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Speaker 3: big positive surprises. So I think that's what the stock is,

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Speaker 3: you know, telling you, as I said, they they up

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Speaker 3: there in an interest income guidance, but consensus was already there.

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Speaker 3: We already knew that there were less federate cuts expected,

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Speaker 3: and so they just kind of guided to that. And

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Speaker 3: then you know, they there were questions around their target,

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Speaker 3: but they were so far above that last year. They're

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Speaker 3: operating at such a high level, and again consensus is

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Speaker 3: already expecting them to beat that target this year. So nothing,

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Speaker 3: I think, no real big surprises. I think the next

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Speaker 3: you know, I guess new news if you will, that

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Speaker 3: we will get o the stress tests in June, where

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Speaker 3: Jason Morgan said today they actually expect their stress buffer

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Speaker 3: their requirement to go up. So I think setting that

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Speaker 3: guideline it sets them up to either you know, meet

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Speaker 3: or surprise positively. And then when we do get those

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Speaker 3: guidelines the summer on, buzzle through the endgame to see,

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Speaker 3: you know, what the big changes are and if we

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Speaker 3: are going to get uh some of the reliefs that

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Speaker 3: everyone basically expects after Powell has made those comments.

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Speaker 1: You know, Alex, you mentioned this stocks down about half

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Speaker 1: a percent today, but intra day earlier this morning hit

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Speaker 1: an all time high. Fair enough, all he's unbelievable five

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Speaker 1: hundred and eighty five billion dollars in market cap, Alison

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Speaker 1: interest to refresh our memory, where are we in terms

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Speaker 1: of our discussion of succession for Jamie Diamond? Is that

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Speaker 1: even on the table anymore? We just where are we

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Speaker 1: in that?

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Speaker 2: You know?

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Speaker 3: I think that you know, they're sending more and more

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Speaker 3: clear message. Today, having Dan Pinto, you know, sort of

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Speaker 3: walk through some of the opening remarks, I think that

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Speaker 3: you know more and more that really they've they've sort

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Speaker 3: of made clear the plan. You know, Jamie has the

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Speaker 3: running joke about the five years, although you know, more

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Speaker 3: recently it seems like he has talked about getting a

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Speaker 3: little bit closer towards that goal. But I think really

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Speaker 3: at these investor days you see what a strong bench

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Speaker 3: they have on display. We already heard, you know, from

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Speaker 3: Marion Airdose and we heard from Marion Lake who runs

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Speaker 3: a consumer business. And really, I mean the strength in

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Speaker 3: these stories. There's so much positive going on, you know,

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Speaker 3: just continuing to invest for growth, you know, net influence

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Speaker 3: in the asset management business, building out branches in the

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Speaker 3: consumer business. You know, a lot of positive things going

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Speaker 3: on the business lines, and again a strong bench.

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Speaker 4: Before I let you go, have you learned anything about

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Speaker 4: investment banking, what the IPO looks like, what the M

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Speaker 4: and A market looks like. We're still waiting for that

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Speaker 4: turnaround moment, any word on that.

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Speaker 3: So that's I think all coming up on the agenda.

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Speaker 3: As I said, just so far, we really have just

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Speaker 3: been focusing on the asset and wealth and the consumer side.

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Speaker 3: But I think we'll definitely be digging into the details

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Speaker 3: and that in the next few sessions.

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Speaker 4: Excellent, all right, Alison Williams, thank you so much. We

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Speaker 4: really appreciate you stepping out and chatting with us. Alison

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Speaker 4: Williams is Bloomberg Intelligence Senior US Banks analyst. He also

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Speaker 4: covers basically anything that handles money, so she's very helpless manager,

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Speaker 4: you name it.

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Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 2: weekdays at ten am Eastern on applecar Play and Android

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Speaker 2: Auto with the Bloomberg Business app. You can also listen

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Speaker 2: live on Amazon Alexa from our flagship New York station.

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Speaker 2: Just say Alexa Play Bloomberg eleven.

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Speaker 4: Thirty tatty Monday. I'm Alex Stee alongside Paul Sween need this.

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Speaker 4: In Bloomberg Intelligence Radio, we bring you all the top

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Speaker 4: news and finance and economics through our lens of our

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Speaker 4: Bloomberg Intelligence analysts. They cover two thousand companies in one

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Speaker 4: hundred and thirty industries worldwide. We also take you outside

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Speaker 4: Bloomberg Intelligence and get a look at under the hood

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Speaker 4: and on the street and saying, hey, what are you

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Speaker 4: doing with your money. It is very clear that we're

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Speaker 4: in an everything rally when it comes to metals and

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Speaker 4: when it comes to the equity markets. John Tucker was

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Speaker 4: just saying, adding twelve trillion dollars in value since the

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Speaker 4: since the S and P bottom back in October. So

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Speaker 4: what's going to disrupt that? I honestly don't have a

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Speaker 4: good answer, but maybe Dana Dioria does, co chief investment

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Speaker 4: Officer over at invest net Is invest net I got

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Speaker 4: there is standing by Dana. What stops it?

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Speaker 3: Hi?

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Speaker 5: Thank you for having me.

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Speaker 6: Well, yeah, I mean we've definitely sort of get it

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Speaker 6: over to this idea that you know, the resilience.

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Speaker 5: Is the name of the game. The markets are doing well,

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Speaker 5: we're seeing breath.

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Speaker 6: It's not just you know, obviously the Magnificent seven, but

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Speaker 6: I do look, I mean there are definitely cracks that

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Speaker 6: could potentially and become more of an issue, and and

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Speaker 6: you know, one of them, of course, at a high level,

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Speaker 6: is just the election coming up and the volatility that's

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Speaker 6: going to be coming into markets as a result of that.

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Speaker 5: I think as the election season heats up, and that's

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Speaker 5: not to.

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Speaker 6: Say, you know, one winner versus another, there will be

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Speaker 6: definite winners and losers based on how the election pans out.

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Speaker 6: But I think as we head into the election, expect

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Speaker 6: more volatility, uh in markets. And then of course, you

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Speaker 6: know jobs, Employment obviously is a big one. You know,

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Speaker 6: we're not we're not seeing any real cracks there, but

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Speaker 6: if there were to be, that would be an issue.

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Speaker 6: And growth obviously came in this you know, last quarter

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Speaker 6: a little lower than expected as well.

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Speaker 1: Dana, it seems like some recent move we've seen off

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Speaker 1: that April kind of weakness was maybe driven by good

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Speaker 1: old fashioned earnings. What did you take away from the

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Speaker 1: most recent earning cycle? Again, we have another big name

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Speaker 1: reporting ondesday after the close with Nvidia.

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Speaker 6: Yeah, I mean, earnings has been what's been propping up

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Speaker 6: the account of me right alongside employment.

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Speaker 5: I think the fact that you know, we haven't.

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Speaker 6: Seen the weakness yet on the corporate side, we have

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Speaker 6: seen productivity kind of holding steady. Now that being said,

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Speaker 6: you know, the market to a large extent, I would say.

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Speaker 5: Has been sort of priced for an expectation.

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Speaker 6: So you know, individually, when you see anybody kind of

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Speaker 6: coming in not at you know exactly where it needs

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Speaker 6: to be your beating, you know, they kind of get punished,

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Speaker 6: and I expect that we continue, you.

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Speaker 5: Know, into next quarter as well.

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Speaker 6: But yeah, earnings have definitely bullied us for you know,

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Speaker 6: not even just.

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Speaker 5: This last quarter, but in general if you look back

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Speaker 5: to twenty twenty three.

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Speaker 4: Right, which makes it so hard to then sell because

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Speaker 4: if you take a look at say the EA function

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Speaker 4: on the Bloomberg terminal, and you look at earnings and

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Speaker 4: sales growth year on year, excuse me, quarter on quarter

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Speaker 4: over the next year, it just keeps going up. So

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Speaker 4: it's hard for me to then defind the reason to

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Speaker 4: then sell. How do you look at the next four quarters?

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Speaker 5: Yes, So one of.

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Speaker 6: The things I would differentiate, of course, is you know,

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Speaker 6: size of companies interest rate. You know, how dependent is

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Speaker 6: that company I'm going to capital markets, for example, in

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Speaker 6: an environment of.

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Speaker 5: Higher for longer for example.

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Speaker 6: Small caps tend to be you know, more interest rates sensitive.

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Speaker 5: If you're going to look individually just who who's.

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Speaker 6: Able to fund self fund versus not so in an

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Speaker 6: environment that's higher for longer and as corporate debt starts

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Speaker 6: rolling over. I do think that's one area if for

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Speaker 6: you know, as we're talking about it, to say, okay,

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Speaker 6: this is a place where weakness can come in on

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Speaker 6: the corporate side, because these companies do have to return

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Speaker 6: to capital markets and roll over debt at higher rates

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Speaker 6: than they've needed to in the past, higher rates than

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Speaker 6: you know, they've needed to in a decade. Right, So

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Speaker 6: I do think that's that's one thing. Now, that being said,

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Speaker 6: I am a proponent of small caps. I just think

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Speaker 6: you have to be able to buy in and hold

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Speaker 6: on because I think the market has priced in that

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Speaker 6: scenario for them.

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Speaker 1: Data in a fixed income side, how much risk are

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Speaker 1: you suggesting people take because we can sit in to

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Speaker 1: your treasure. You can get four point eight three percent today.

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Speaker 1: How much credit should I be taking out there?

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Speaker 6: Yeah? I mean, you know, it's a it's it's a

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Speaker 6: funny thing, right, Suddenly you're getting paid whereas you weren't

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Speaker 6: for a long time in the fixed income space, and

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Speaker 6: you really don't need to extend that credit.

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Speaker 4: So we so.

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Speaker 6: Coming from you know, a platform that services retail advisors

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Speaker 6: and clients for a long time. You know, we've we

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Speaker 6: saw sort of just a stretching on the fixed income side.

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Speaker 6: If you look at that standard sixty forty, taking that

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Speaker 6: forty percent and really stretching what could be called, you know,

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Speaker 6: a fixed income position, right, a traditional ballast position that

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Speaker 6: portfolio by pushing into higher and higher you know, higher

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Speaker 6: yielding you know, leverage loans even to an extent dividend

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Speaker 6: payers because you were looking for some return on that.

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Speaker 6: We're not in that environment anymore, And for the standard investor,

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Speaker 6: I agree with the premise of your question that, yes,

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Speaker 6: it's not the same take credit risk, but you don't

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Speaker 6: have the need anymore that you did, you know, in

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Speaker 6: a period of financial repression, to really move out on

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Speaker 6: the credit risk to be putting in you know, perhaps

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Speaker 6: you know, areas and fixed income on a different place

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Speaker 6: in the capital structure, and areas that are you know,

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Speaker 6: just just higher yielding but also bringing more risk to

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Speaker 6: the portfolio when you already have that big equity stake.

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Speaker 4: So you said you liked small caps, but you got

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Speaker 4: to kind of stomach it. Why do you like small caps? Yeah?

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Speaker 5: Look, I mean small caps, and if you excise.

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Speaker 6: The growthiest you know, least profitable small caps, which are

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Speaker 6: more like a lotto ticket type payoff structure, then you're

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Speaker 6: living in a world where you know, they have outperformed

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Speaker 6: over time. Small value in particular has tended to not

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Speaker 6: only outperform, but also to outpace inflation.

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Speaker 5: And so if you look at.

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Speaker 6: The standard portfolio that most people are sitting in, they

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Speaker 6: have a ton of the big growth just by virtue

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Speaker 6: of the fact that if they're not index ers, you know,

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Speaker 6: the active managers are not going to stray that far.

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Speaker 5: They can't stray that far to take on that much

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Speaker 5: tracking error.

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Speaker 6: So small caps are a nice diversifyer that have paid

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Speaker 6: off over time again if you take out those really

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Speaker 6: low profitability stocks. And that's why we see a lot

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Speaker 6: too around, you know, by quality small caps by the

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Speaker 6: six hundred.

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Speaker 5: Right, because you can you can get.

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Speaker 6: That diversification benefit, that long run return potential, especially now

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Speaker 6: that there's a cost of capital again, you know, and

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Speaker 6: some of the fundamentals can be reasserting in these you know,

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Speaker 6: style factors for example, in these portfolios.

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Speaker 4: All Right, Dan, thanks a lot, super appreciated. Dana d'oria

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Speaker 4: joining us CO chief investment officer over at in invest Net,

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Speaker 4: joining us from Connecticut. It just feels like it's going

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Speaker 4: to be really hard to change the narrative at this point.

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Speaker 4: I mean, maybe in Vidia does something.

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Speaker 1: But yeah, maybe in Vidia does something. Maybe we hear

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Speaker 1: from the FED. That's you know, I don't know what

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Speaker 1: we hear from the FED so often, But what could

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Speaker 1: they say at the next meeting that would freak people out?

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Speaker 1: I think the market they kind of conditioned the market

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Speaker 1: to saying, Hey, we're going to hang here for a

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Speaker 1: little bit, but on the margin, we're going to be

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Speaker 1: cutting more likely than not at some point this year.

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Speaker 1: I think that in of itself, the anticipation of a cut,

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Speaker 1: to me is almost as good as the cut itself, totally.

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Speaker 4: And that's what Mike McKee was saying to Rafael Bostik.

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Speaker 4: He was like, I know you guys don't want to

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Speaker 4: do four guidance, but aren't you kind of doing for

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Speaker 4: a guidance by doing all that? Because the market front

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Speaker 4: runs you and you obviously signed up that. But nonetheless.

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Speaker 2: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 2: weekdays at ten am Eastern on Apple car Playing and

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Speaker 2: broud Otto with the Bloomberg Business app. Listen on demand

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Speaker 2: wherever you get your podcasts, or watch us live on YouTube.

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Speaker 4: All right, let's get to the news item over the weekend,

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Speaker 4: and also take a look back at cut ours economic

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Speaker 4: form because a lot of interesting things came out of

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Speaker 4: that last week. Ronnie and President Ibrahim Ricey died yesterday

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Speaker 4: in a helicopter with his foreign minister. That was the news.

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Speaker 4: We want to go to Bobby Go. She's senior editor

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Speaker 4: at Bloomberg News and he joins us through Zoom. He

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Speaker 4: follows a lot of geopolitical issues along these lines with us. Bobby,

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Speaker 4: Where does this leave Iran? What is the instability risk here?

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Speaker 7: Well, this has never happened in Iran's recent history. No

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Speaker 7: sitting president has ever died. So this is a fork

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Speaker 7: in the road that Iran has never come to before.

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Speaker 7: This regime likes to convey a sense of stability and continuity,

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Speaker 7: but it has not been tested in this manner before. I,

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Speaker 7: for one, don't expect a great deal of instability, because

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Speaker 7: let's remind ourselves, the person who really pulls the strings

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Speaker 7: in Iran is not the president. It is the supreme leader,

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Speaker 7: who is unelected. Ali Khamine is his name. He sits

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Speaker 7: above the entire government and in the frankly the entire administration,

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Speaker 7: and he calls all the important shots. His policies are

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Speaker 7: the ones that the president and others implement. He hasn't changed.

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Speaker 7: He's old and ill and quite ill. He's eighty five

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Speaker 7: years old, and so there are some concerns about succession there,

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Speaker 7: and there was some thought that President Raisi would be

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Speaker 7: the logical successor to the Supreme Leader. Now that's off

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Speaker 7: the charts. But there's going to be an election in

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Speaker 7: fifty days. Anytime there is an election, there is always

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Speaker 7: an opportunity, however slim it might be, for other voices

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Speaker 7: to be heard. The regime will try to maintain that

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Speaker 7: continuity by making sure that in the new president, whoever

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Speaker 7: he is, is also a hardliner, just like RAYSI. But

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Speaker 7: you know, this is a black Swan event. And the

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Speaker 7: thing about things about black Swan events now that you

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Speaker 7: really can't be absolutely certain about what's going to happen next,

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Speaker 7: precisely because it's never happened before.

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Speaker 1: Bobby, is there any reason to believe the death of

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Speaker 1: the reigning president will alter in any way around views

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Speaker 1: or actions or policies as it relates to the broader

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Speaker 1: Middle East? Here, I'm thinking Daza Israels happening today.

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Speaker 7: I wouldn't be optimistic about that. Again, Kamene is the

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Speaker 7: one whose policies are being implemented. He's not going to

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Speaker 7: change his mind. He's an old school, died in the

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Speaker 7: world hardliner. He hates as well, he hates America, and

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Speaker 7: no matter who becomes president, they will basically have to

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Speaker 7: do what Kamene says. The other joker in the pack

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Speaker 7: is the IRGC, which is the military arm of the

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Speaker 7: Iranian state. They're also very hardline and they will basically

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Speaker 7: not tolerate a government that is softer towards the West.

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Speaker 7: So I don't expect any significant change in foreign policy

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Speaker 7: from the Iranians no matter who becomes president.

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Speaker 4: You were also last week at Katar's Economic Forum, I

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Speaker 4: mean huge lineup of guests. What were some of the

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Speaker 4: takeaways that you had from that, like what should we

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Speaker 4: be king in on?

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Speaker 7: Well, interestingly and coincidentally, the number one theme, and this

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Speaker 7: took me by surprise, was geopolitics and instability. I suppose

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Speaker 7: I shouldn't have been surprised because of what's going on

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Speaker 7: in the region, the war in Gaza. Now look at

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Speaker 7: it from this distance, you might think, well, that's a

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Speaker 7: very localized conflict that's just taking place in Gaza that

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Speaker 7: does not involve the rest of the Middle East and

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Speaker 7: the price of oil is stable, the governments in the

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Speaker 7: Middle East are all more or less stable, and so

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Speaker 7: they would be concerned. But actually there was a lot

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Speaker 7: of concern. We heard from the Prime Minister of Qatar

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Speaker 7: about his concerns about the fact that the ceasefire talks

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Speaker 7: between hamas And and Israel are not going anywhere. We

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Speaker 7: heard from the Prime minister from Malaysia. We heard from

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Speaker 7: the President of Indonesia. We also heard about the geopolitical

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Speaker 7: uncertainties that are sort of continuing from the Ukrainian the

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Speaker 7: conflict in Ukraine with the Russia invade in Ukraine. We

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Speaker 7: heard from the President of Poland who talked about that.

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Speaker 7: So it was really quite My perception was that the sessions, look,

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Speaker 7: it was a very well attended event, and all the

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Speaker 7: sessions were very well attended, but the ones that seem

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Speaker 7: to capture people's imaginations were around the idea that we

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Speaker 7: are now going through a period of instability because of wars,

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Speaker 7: hot wars between countries and the Cold War between the

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Speaker 7: United States and China and everything else. Everybody's strategy, every

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Speaker 7: company's way of thinking of the world, every government's way

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Speaker 7: of thinking of the world has to be refracted through

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Speaker 7: these lenses of conflict. That was quite striking to me.

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Speaker 1: Bobby, here's my ignorant question of the day. It's just

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Speaker 1: from a geography perspective, the Persian golf nations are attracting

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Speaker 1: so much capital, and there's so much optimism about many

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Speaker 1: of those that part of the world. There United Arab

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Speaker 1: Emirates Qatar, for example, How I guess how closely are

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Speaker 1: they kind of thought of from investors perspective with the

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Speaker 1: Middle East, with what's gone on in Israel, Egypt and Gazan.

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Speaker 1: I mean, are they considered two separate regions? So if

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Speaker 1: I'm thinking about investing in you know, Cutter, for example,

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Speaker 1: I'm not too concerned about the regional conflicts or am.

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Speaker 7: I Well, you would think that, but a lot of

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Speaker 7: international investors outside of the Middle East are not making

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Speaker 7: that distinction, and they are that we've heard recently. For instance,

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Speaker 7: Saudi Arabia, southi Arabia is a long way from the

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Speaker 7: war zone. The Saudist have a robastic well, while gas

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Speaker 7: prices are high, a pretty strong economy. They're sitting on

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Speaker 7: a massive, massive war chest. They're building these gigantic projects,

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Speaker 7: a whole new city in the desert and they're open

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Speaker 7: for business. They want foreign investors to come, and you

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Speaker 7: think foreign investors would want to get in on the

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Speaker 7: ground floor in a lot of those projects not happening.

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Speaker 7: Not happening the South as RBN Business Business Bloomberg News

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Speaker 7: colleagues have reported they're really struggling to get foreign investors.

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Speaker 7: And some of that is to do with the larger

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Speaker 7: geopolitical instability in the region. Some of it is specifically

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Speaker 7: to do with events in Saudi Arabia.

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Speaker 4: When we take a look at you politics, how we're

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Speaker 4: very obviously US centric because we're in the middle of

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Speaker 4: New York right, How interested is the rest of the

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Speaker 4: world in the twenty twenty four presidential election? Like, how

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Speaker 4: did the Biden Trump scenario play out? And cut there?

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Speaker 7: Oh yeah, every conversation I had, bar every conversation with

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Speaker 7: every delegate, all wanted to know, you from New York,

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Speaker 7: what's going on with the election? Is Biden really going

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Speaker 7: to win? Is Trump really going to win? There was

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Speaker 7: some attempt to you know, we heard from Ken Griffin,

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Speaker 7: for instance, on the stage, who said that who gave

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Speaker 7: the impression that it wouldn't really matter. He seems to

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Speaker 7: favor a Trump presidency, a return of Trump. But there

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Speaker 7: were some attempts on from stage from various speakers to say, oh,

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Speaker 7: you know, the US economy is robust and it doesn't matter.

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Speaker 7: That is not how it was reflected. In my private

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Speaker 7: conversations with people off the stage. A lot of it

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Speaker 7: was really really deep concerned, you know, the things that

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Speaker 7: they are seeing from that distance taking place in America unprecedented,

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Speaker 7: an American former president in court for every day, with

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Speaker 7: the possibility of going to jail. There's a lot of

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Speaker 7: concern about that. Would that lead to instability, would that

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Speaker 7: lead to something a repetition of the storming of Congress.

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Speaker 7: There's concern about the age of the candidates, even in

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Speaker 7: a part of the world where leaders tend to be

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Speaker 7: quite old. So that was the backdrop against which all

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Speaker 7: conversations do place.

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Speaker 1: All right, Bobby, thank you so much for joining us there.

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Speaker 1: Bobby go She's a senior editor for Bloomberg News, joining

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Speaker 1: us from New York via zoom Busy on the geopolitical front,

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Speaker 1: and we'd like to have access to Bobby and his

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Speaker 1: world view and all of his experience there again, the

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Speaker 1: death of the Iranian president over the weekend, and then

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Speaker 1: of course the Economic Forum and cut her a lock

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Speaker 1: go on on in that part of the world obviously.

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Speaker 4: Yeah, and also I'm sure that Ellen g played prominently

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Speaker 4: also just in terms of that being a key product

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Speaker 4: that the US has me as well as Japan and

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Speaker 4: cut her in the AAE, and then also securing that

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Speaker 4: sort of energy security conversation as well. I'm just so interested.

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Speaker 4: If I'm a CEO of a company, how do you

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Speaker 4: possibly make long term investment decisions in this political environment

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Speaker 4: US and globally, Like, how do you do that?

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Speaker 1: I think, Well, I don't know. I mean, I think

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Speaker 1: you have to think that these investments are going to

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Speaker 1: outlive the next four years, the next whatever.

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Speaker 4: And yeah, but when you don't have any distanctions and

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Speaker 4: trade restrictions.

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Speaker 1: Like, how do you And they're so different one side

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Speaker 1: versus the other. I mean before, I mean, there were

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Speaker 1: distinctions between Republicans and Democrats, but like everything else in

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Speaker 1: the world today, those distinctions seem to be more stark

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Speaker 1: these days. And that includes regulatory restrictions when it towers.

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Speaker 1: But now we've got the Biden administration not only maintaining

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Speaker 1: the Trump administration towers but adding new ones, which is

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Speaker 1: something you wouldn't necessarily right.

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Speaker 4: It's like, how do you deglobalize? How do you deglobalize

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Speaker 4: and also decarbonize and also grow? How do you do

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Speaker 4: all of those three things at once?

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Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 2: weekdays at ten am Eastern on Apple car Play and

436
00:22:56,720 --> 00:22:59,359
Speaker 2: royd Outo with the Bloomberg Business App. You can also

437
00:22:59,440 --> 00:23:02,200
Speaker 2: listen Love I Have on Amazon Alexa from our flagship

438
00:23:02,280 --> 00:23:06,280
Speaker 2: New York station, Just Say Alexa playing Bloomberg eleven thirty.

439
00:23:08,280 --> 00:23:10,240
Speaker 1: Alex Deal Paul Sweeney. We're live here in our Bloomberg

440
00:23:10,240 --> 00:23:13,679
Speaker 1: Interactive Broker Studio. We're streaming live on YouTube as well

441
00:23:13,680 --> 00:23:18,120
Speaker 1: as head over YouTube dot com and search Bloomberg Podcast. Commodities.

442
00:23:18,200 --> 00:23:20,760
Speaker 1: Let's talk the hard commodities, the metals. We'll get to

443
00:23:20,800 --> 00:23:23,560
Speaker 1: the safts on another day, another time. It's all about

444
00:23:23,560 --> 00:23:25,400
Speaker 1: copper and gold and all that kind of stuff. Oh yeah,

445
00:23:25,440 --> 00:23:27,719
Speaker 1: what's going on here? Mike Mclone does because he's been

446
00:23:27,720 --> 00:23:30,080
Speaker 1: doing us his whole life. He's a senior commodity strategist

447
00:23:30,119 --> 00:23:33,679
Speaker 1: for Bloomberg Intelligence. He's usually down at South Beach, but

448
00:23:33,720 --> 00:23:35,199
Speaker 1: we got him up here in New York where the

449
00:23:35,200 --> 00:23:37,880
Speaker 1: real people work. So, Mike, thanks so much for joining

450
00:23:37,960 --> 00:23:41,040
Speaker 1: us here. First, I haven't heard about copper in a while.

451
00:23:41,080 --> 00:23:42,920
Speaker 1: Now it's every day we're hitting new highs.

452
00:23:42,960 --> 00:23:45,399
Speaker 8: What's going on there, Yeah, it finally has. There's been

453
00:23:45,440 --> 00:23:47,760
Speaker 8: some nuances there, but it's it's the key thing. You

454
00:23:47,840 --> 00:23:50,520
Speaker 8: started off with the hard commodities, and there's everything else.

455
00:23:50,560 --> 00:23:52,720
Speaker 8: The hardest commodities are the metals. So let's point out

456
00:23:52,720 --> 00:23:55,680
Speaker 8: the Bloomberg Golf Medals Total Index Total return DEX is

457
00:23:55,760 --> 00:23:58,520
Speaker 8: up twenty percent this year. That just tracks the hard commodities.

458
00:23:58,520 --> 00:24:00,240
Speaker 8: The copper is a big part of it. But the

459
00:24:00,280 --> 00:24:01,920
Speaker 8: way you look at copper, it's kind of just catching

460
00:24:02,000 --> 00:24:04,199
Speaker 8: up to gold in the stock market. It's made a

461
00:24:04,200 --> 00:24:07,280
Speaker 8: new high they in the US five dollars and twenty

462
00:24:07,280 --> 00:24:07,880
Speaker 8: cents a pound.

463
00:24:07,920 --> 00:24:09,919
Speaker 1: And what's what's the chicker actually be using for copper?

464
00:24:10,160 --> 00:24:11,160
Speaker 8: Hg one.

465
00:24:11,240 --> 00:24:14,400
Speaker 4: All right, I'm on it, and that's from versus the LM.

466
00:24:14,480 --> 00:24:16,439
Speaker 8: And I knew. I knew Alex would go over and

467
00:24:16,480 --> 00:24:18,200
Speaker 8: point out the other point out they all made tons.

468
00:24:18,240 --> 00:24:21,239
Speaker 8: It's in metric tons. But since ver Yanks, we'll talk

469
00:24:21,280 --> 00:24:24,480
Speaker 8: about the you know, I get knfuzzled with both of them.

470
00:24:24,520 --> 00:24:26,119
Speaker 8: So the key thing I like to point out is

471
00:24:26,119 --> 00:24:28,760
Speaker 8: what I'm concerned about is it's catching up to S

472
00:24:28,800 --> 00:24:31,320
Speaker 8: and P five hundred because it's a very high correlation.

473
00:24:31,359 --> 00:24:33,240
Speaker 8: I member Alex pointed out once that if you look

474
00:24:33,280 --> 00:24:36,159
Speaker 8: at those two, they're like tick for tick, but manage

475
00:24:36,200 --> 00:24:38,960
Speaker 8: money net possessions. I hedgehunds, futures stuff I used to

476
00:24:39,000 --> 00:24:41,800
Speaker 8: trade and used to watch the really long thirty two

477
00:24:41,800 --> 00:24:44,919
Speaker 8: percent of open interest. It's the high since twenty twenty one.

478
00:24:44,960 --> 00:24:47,439
Speaker 8: So they're on top of this trade. They're making money,

479
00:24:47,640 --> 00:24:50,920
Speaker 8: and it's rare that markets can really stay going up

480
00:24:51,040 --> 00:24:53,320
Speaker 8: when they're that longer rangy. So the key thing I

481
00:24:53,320 --> 00:24:55,919
Speaker 8: look at is then there's a macro. I look at

482
00:24:55,920 --> 00:24:58,320
Speaker 8: the US stock market in some ways it's very stretched

483
00:24:58,400 --> 00:25:00,920
Speaker 8: just versus one hundred week movement A is twenty two percent.

484
00:25:01,280 --> 00:25:03,480
Speaker 8: And then China. Number one thing is China. Just look

485
00:25:03,480 --> 00:25:05,880
Speaker 8: at bond yields in China. So those two key factors

486
00:25:06,040 --> 00:25:08,919
Speaker 8: for copper to stay strong in long term obviously very

487
00:25:08,960 --> 00:25:12,040
Speaker 8: bullish copper, but China in decline and use stock market

488
00:25:12,160 --> 00:25:14,360
Speaker 8: very expensive means. I think these headshreens are more likely

489
00:25:14,359 --> 00:25:16,080
Speaker 8: to have to hit their stops and their lungs and

490
00:25:16,119 --> 00:25:17,320
Speaker 8: get stopped out of it at some point.

491
00:25:17,560 --> 00:25:20,400
Speaker 4: So a couple of things that get you get all.

492
00:25:20,320 --> 00:25:22,920
Speaker 1: That I'm stopping out of my cop.

493
00:25:23,840 --> 00:25:25,639
Speaker 4: So there's a couple of different exchanges right that you

494
00:25:25,680 --> 00:25:27,440
Speaker 4: look at, and that's London, then it's the US, and

495
00:25:27,560 --> 00:25:29,320
Speaker 4: that's Shanghai. And you can do a lot of arm

496
00:25:29,400 --> 00:25:31,320
Speaker 4: trades right where you can go long one and short

497
00:25:31,359 --> 00:25:32,920
Speaker 4: at the other base and where you think the demand's

498
00:25:32,920 --> 00:25:34,480
Speaker 4: going to be. And that's kind of what Mike was

499
00:25:34,520 --> 00:25:37,000
Speaker 4: talking about in terms of there was a short on

500
00:25:37,119 --> 00:25:39,600
Speaker 4: the US inventories and a long on the Shanghai copper,

501
00:25:39,600 --> 00:25:40,920
Speaker 4: and then all of a sudden that you got a

502
00:25:40,960 --> 00:25:43,840
Speaker 4: short squeeze that reverse. And now there's stories about let's

503
00:25:43,880 --> 00:25:47,120
Speaker 4: break this down to what so normal people can understand

504
00:25:47,119 --> 00:25:51,120
Speaker 4: this doing the bathroom. I was trying to do the bathroom.

505
00:25:51,280 --> 00:25:54,080
Speaker 1: Okay, I'm not using a lot of copper. I'm using

506
00:25:54,119 --> 00:25:55,640
Speaker 1: cross link polyethylene.

507
00:25:55,800 --> 00:25:59,919
Speaker 4: Okay. Well, actually that's that's an excellent point because if

508
00:25:59,880 --> 00:26:02,600
Speaker 4: it gets too expensive, then you're going to see substitutions, right,

509
00:26:02,640 --> 00:26:06,959
Speaker 4: And that's is the bull thesis for copper, as bullish

510
00:26:07,280 --> 00:26:09,679
Speaker 4: as the bulls say, which is basically like you're going

511
00:26:09,760 --> 00:26:12,680
Speaker 4: to have endless demand and the energy transition forever.

512
00:26:13,640 --> 00:26:17,200
Speaker 8: HIVR Blast's column this morning, I forget the title of it,

513
00:26:17,280 --> 00:26:20,719
Speaker 8: was pointed out that is the problem, and Copperer is

514
00:26:20,960 --> 00:26:23,640
Speaker 8: very article related. It's almost like silver. Silver's to earn

515
00:26:23,680 --> 00:26:26,040
Speaker 8: the reputation as the devil's metal because it only goes

516
00:26:26,320 --> 00:26:28,879
Speaker 8: down after it goes up. I'm worried about that happening

517
00:26:28,920 --> 00:26:31,400
Speaker 8: in copper. It's like, Okay, you had to hear that first,

518
00:26:31,760 --> 00:26:34,960
Speaker 8: but it's ceuta cordation factor. So I think people are

519
00:26:34,960 --> 00:26:37,880
Speaker 8: buying into the bullish theory thesis and it makes sense

520
00:26:37,920 --> 00:26:41,240
Speaker 8: in the long term. But for a trader standpoint, when

521
00:26:41,240 --> 00:26:44,000
Speaker 8: you see these type of nuances where stock market is

522
00:26:44,040 --> 00:26:47,560
Speaker 8: really expensive, it's catching up manage money and positions really strong,

523
00:26:47,600 --> 00:26:49,760
Speaker 8: and China having problems and by the way, China's the

524
00:26:49,760 --> 00:26:52,800
Speaker 8: biggest buyer a planet of gold, it kind of makes

525
00:26:52,840 --> 00:26:54,800
Speaker 8: me very scared about getting longer copper. Now I'm very

526
00:26:54,840 --> 00:26:57,280
Speaker 8: enduringly bullish gold. I mean, gold could correct ten percent,

527
00:26:57,280 --> 00:26:59,760
Speaker 8: it still doesn't matter. It's the fact is central banks

528
00:26:59,760 --> 00:27:01,520
Speaker 8: are gold, They're not buying copp The key thing is

529
00:27:01,680 --> 00:27:03,879
Speaker 8: that's one thing I've heard. There's rumors that maybe China's

530
00:27:03,880 --> 00:27:04,840
Speaker 8: hoarding some other metals.

531
00:27:04,920 --> 00:27:05,640
Speaker 1: Have you heard that out?

532
00:27:06,840 --> 00:27:09,199
Speaker 4: I have not heard it, but that doesn't surprise me.

533
00:27:09,440 --> 00:27:11,240
Speaker 4: I mean, it makes sense. You can make an argument

534
00:27:11,280 --> 00:27:14,040
Speaker 4: that the US should also be having a strategic preserves

535
00:27:14,119 --> 00:27:17,000
Speaker 4: of things like nickel and lithium and stuff like that

536
00:27:17,119 --> 00:27:20,160
Speaker 4: for the energy transition. No, we do not tweave oil

537
00:27:20,200 --> 00:27:23,440
Speaker 4: as far as we know this is true. I'm glad

538
00:27:23,440 --> 00:27:26,360
Speaker 4: you point out Hoavier's column, So, Javier Blast Bloomberg opinion columnists,

539
00:27:26,359 --> 00:27:28,520
Speaker 4: I highly recommend you guys read it. And he was

540
00:27:28,560 --> 00:27:32,040
Speaker 4: saying that the big distinction between say oil and copper

541
00:27:32,720 --> 00:27:35,240
Speaker 4: is that oil, once you use it, you burn it,

542
00:27:35,240 --> 00:27:37,760
Speaker 4: it's done. Copper you use it if you put it

543
00:27:37,800 --> 00:27:40,199
Speaker 4: in your pipe for your bathroom or whatever, that's going

544
00:27:40,280 --> 00:27:42,040
Speaker 4: to be there for a very long time. And you

545
00:27:42,040 --> 00:27:44,639
Speaker 4: can also then reuse copper too, So it doesn't have

546
00:27:44,760 --> 00:27:49,080
Speaker 4: the same kind of demand pull endless man pull in

547
00:27:49,119 --> 00:27:52,959
Speaker 4: the same way, even if structurally you are looking at

548
00:27:53,040 --> 00:27:55,600
Speaker 4: stronger demand because the energy transition. I found that to

549
00:27:55,600 --> 00:27:56,640
Speaker 4: be very thought provoking.

550
00:27:57,560 --> 00:28:00,240
Speaker 8: The headline of his article was Copper's boom story has

551
00:28:00,280 --> 00:28:01,840
Speaker 8: some truth and much hogwash.

552
00:28:02,119 --> 00:28:03,760
Speaker 1: And that's what I love is that hogwashes when you

553
00:28:03,800 --> 00:28:05,040
Speaker 1: hear everybody say the same thing.

554
00:28:05,280 --> 00:28:07,719
Speaker 8: I've heard it so many times, like Member Crudel two

555
00:28:07,800 --> 00:28:09,800
Speaker 8: years ago as going to one fifteen and we're heard

556
00:28:09,840 --> 00:28:12,280
Speaker 8: at nine eighty bucks. Your hearing Commandie's got to be

557
00:28:12,320 --> 00:28:14,480
Speaker 8: very careful. The only one that usually really works in

558
00:28:14,480 --> 00:28:15,679
Speaker 8: the long term is gold.

559
00:28:15,640 --> 00:28:17,120
Speaker 1: And that's what you've been telling us since day one.

560
00:28:17,200 --> 00:28:19,640
Speaker 1: So all right. So if I I'm trying to come

561
00:28:19,680 --> 00:28:23,120
Speaker 1: up without the trade here copper, I feel like it's

562
00:28:23,280 --> 00:28:27,320
Speaker 1: technically high. Technicals are driving this thing. So it's just

563
00:28:27,320 --> 00:28:30,000
Speaker 1: a question when I see this thing roll over, yeah, short.

564
00:28:29,800 --> 00:28:33,080
Speaker 8: It because well that I look at as a trader,

565
00:28:33,119 --> 00:28:34,960
Speaker 8: I'd be willing to I can't say it anymore, but

566
00:28:35,000 --> 00:28:37,359
Speaker 8: I would structure like a plip strategy. I'll be thinking that,

567
00:28:37,920 --> 00:28:40,880
Speaker 8: and so why not. Also, the thing is that it's

568
00:28:40,880 --> 00:28:44,280
Speaker 8: the trickle down. If copper starts trickling down, it's probably

569
00:28:44,320 --> 00:28:47,000
Speaker 8: gonna be really to this US stock market, really to China.

570
00:28:47,080 --> 00:28:50,720
Speaker 8: And it's that deflationary trajectory. I see you look at

571
00:28:50,720 --> 00:28:54,520
Speaker 8: cgb's Chinese government bondials at two point three percent versus

572
00:28:54,720 --> 00:28:57,880
Speaker 8: our tenure note yield at four point four percent. That's

573
00:28:58,040 --> 00:29:00,920
Speaker 8: very rare, and that's an indication from a sovereign market

574
00:29:00,960 --> 00:29:04,120
Speaker 8: of deflationary trends in the world's second largest economy.

575
00:29:04,160 --> 00:29:06,080
Speaker 4: Well also, I mean talking about the trade, just because

576
00:29:06,080 --> 00:29:07,360
Speaker 4: it may go down doesn't mean it's going to go

577
00:29:07,440 --> 00:29:09,960
Speaker 4: to zero. Like okay, is that like say ten thousand

578
00:29:10,040 --> 00:29:12,000
Speaker 4: on the lme you take a little bit of heat off,

579
00:29:12,040 --> 00:29:14,720
Speaker 4: it's not. It's still not. We're still going to be

580
00:29:14,840 --> 00:29:17,560
Speaker 4: using it. And there is still a both thesis. You

581
00:29:17,560 --> 00:29:19,480
Speaker 4: don't have to necessarily be a crazy bowl though.

582
00:29:19,760 --> 00:29:22,120
Speaker 8: Yeah, Well, commodity people think trading right a lot, so

583
00:29:22,200 --> 00:29:25,160
Speaker 8: I look in conpric very simply. If you're looking that,

584
00:29:25,320 --> 00:29:27,240
Speaker 8: people look at four is kind of the key pivot.

585
00:29:27,240 --> 00:29:29,080
Speaker 8: Once it broke about four hours a pound, which was

586
00:29:29,200 --> 00:29:31,480
Speaker 8: at the end of March, which shot up. It was

587
00:29:31,520 --> 00:29:34,720
Speaker 8: a good technical signal. Now it's like it just got

588
00:29:34,760 --> 00:29:37,440
Speaker 8: to be careful with that big thesis of everybody's piling on.

589
00:29:37,520 --> 00:29:39,479
Speaker 8: That's what I point out from a commodity simpoint. Yes,

590
00:29:39,520 --> 00:29:42,080
Speaker 8: they were very cheap versus the stock market just a

591
00:29:42,080 --> 00:29:43,560
Speaker 8: few months ago on the start, and I'm hearing a

592
00:29:43,640 --> 00:29:47,000
Speaker 8: significant allocation towards commodities. But I always like to point out, well,

593
00:29:47,160 --> 00:29:49,600
Speaker 8: stick with the metals bloombergol medals in the next typically

594
00:29:49,640 --> 00:29:51,400
Speaker 8: is the best performance over time start with gold, and

595
00:29:51,400 --> 00:29:55,080
Speaker 8: if you really interest in broader commodities, energy equities typically

596
00:29:55,080 --> 00:29:59,360
Speaker 8: way outperformed things like like like USO.

597
00:30:00,040 --> 00:30:04,560
Speaker 1: Right, let's switch gears to gold another high. So is

598
00:30:04,600 --> 00:30:06,920
Speaker 1: this I mean you've been saying long, gold, short everything

599
00:30:06,920 --> 00:30:10,800
Speaker 1: else for years and years and years. Are we what's

600
00:30:10,840 --> 00:30:12,480
Speaker 1: the case for gold here? Other than I guess the

601
00:30:12,520 --> 00:30:13,600
Speaker 1: Chinese are buying it.

602
00:30:13,600 --> 00:30:16,360
Speaker 8: It starts I think with the macroeconomic situation. You know,

603
00:30:16,400 --> 00:30:19,280
Speaker 8: unlimited friendship shifted the world order. The world's largest buyer

604
00:30:19,320 --> 00:30:21,640
Speaker 8: of gold right now is China. Central banks the world's

605
00:30:21,640 --> 00:30:23,800
Speaker 8: gold The World Gold Council point out of Q one

606
00:30:24,240 --> 00:30:26,440
Speaker 8: was the biggest Q one ever and their view is

607
00:30:26,480 --> 00:30:29,200
Speaker 8: it's going to continue. Okay, So that's what matters. But

608
00:30:29,240 --> 00:30:31,400
Speaker 8: I hear'st put some numbers on it. There's been thirty

609
00:30:31,440 --> 00:30:36,080
Speaker 8: million outflows from gold ETFs in terms of bounces and

610
00:30:36,160 --> 00:30:40,400
Speaker 8: about one hundred million purchases of ounces.

611
00:30:40,320 --> 00:30:41,240
Speaker 1: From central banks.

612
00:30:41,400 --> 00:30:44,600
Speaker 8: So what's been significant is the banks are buying deepest

613
00:30:44,600 --> 00:30:47,280
Speaker 8: money in pockets we can print dollars are buying gold,

614
00:30:47,280 --> 00:30:50,880
Speaker 8: and there's issues with you know, China, Russia. But investors

615
00:30:50,920 --> 00:30:52,280
Speaker 8: like to say in this country is why by gold?

616
00:30:52,320 --> 00:30:54,520
Speaker 8: If you get five percent t build the stock market's

617
00:30:54,520 --> 00:30:56,080
Speaker 8: on a tear. That to me is gonna flip at

618
00:30:56,080 --> 00:30:58,320
Speaker 8: some point because we had so much outflows and ETFs.

619
00:30:58,320 --> 00:30:59,680
Speaker 8: At some point that's going to turn back up, and

620
00:30:59,760 --> 00:31:01,080
Speaker 8: that accelerates the gold.

621
00:31:01,400 --> 00:31:03,600
Speaker 4: So you give him one question with gold though, just

622
00:31:03,640 --> 00:31:05,520
Speaker 4: because China keeps buying it doesn't mean they're going to

623
00:31:05,640 --> 00:31:07,040
Speaker 4: keep buying it exactly.

624
00:31:07,080 --> 00:31:09,760
Speaker 8: That's why I had lunch with a World Gold Council

625
00:31:09,840 --> 00:31:12,400
Speaker 8: member last year and last week, and I always try

626
00:31:12,400 --> 00:31:14,280
Speaker 8: to put them down, what's your expectation. Yes, that's the

627
00:31:14,360 --> 00:31:16,800
Speaker 8: rice they could stop, but it's not just China. Like

628
00:31:16,800 --> 00:31:19,000
Speaker 8: in the last data, the number one buyer was Turkey.

629
00:31:19,720 --> 00:31:22,680
Speaker 8: Singapore Monetary Exchange was a big buyer. It's just they're

630
00:31:22,720 --> 00:31:24,280
Speaker 8: starting to add up. And I think it's part of

631
00:31:24,320 --> 00:31:27,160
Speaker 8: that kind of run away from the dollar situation to

632
00:31:27,200 --> 00:31:29,040
Speaker 8: worry about. Like I say, it was started with the

633
00:31:29,120 --> 00:31:30,560
Speaker 8: unlimited friendship.

634
00:31:30,920 --> 00:31:33,520
Speaker 1: WTI eighty dollars a barrel here, what are we doing

635
00:31:33,560 --> 00:31:34,600
Speaker 1: with gold? I mean with oil.

636
00:31:34,800 --> 00:31:37,040
Speaker 8: I think it's more likely and I've been wrong, but

637
00:31:37,120 --> 00:31:39,760
Speaker 8: early maybe more like would go to fifty than higher.

638
00:31:39,760 --> 00:31:41,960
Speaker 8: Because look at WTI the price right now on the screen.

639
00:31:41,960 --> 00:31:43,880
Speaker 8: It is first trade in two thousand and seven. And

640
00:31:43,920 --> 00:31:45,920
Speaker 8: what happens when it goes up, it goes down. Why

641
00:31:46,000 --> 00:31:47,880
Speaker 8: because it creates more supply and demands. So the key

642
00:31:47,920 --> 00:31:51,360
Speaker 8: fact is what's pressured Crudel for the last fifteen years

643
00:31:51,600 --> 00:31:54,280
Speaker 8: is the excess of supply to US and Canada. And

644
00:31:54,320 --> 00:31:57,640
Speaker 8: now we have that building surplus out of OPEC. So

645
00:31:57,800 --> 00:31:59,720
Speaker 8: to me, it's just about matter of time it goes over.

646
00:32:00,040 --> 00:32:01,120
Speaker 1: There's also be an example.

647
00:32:01,440 --> 00:32:04,040
Speaker 8: Natural gas did it It got too expensive, it got

648
00:32:04,080 --> 00:32:06,120
Speaker 8: down to low price, cure at the lowest priced since

649
00:32:06,200 --> 00:32:09,720
Speaker 8: nineteen ninety, and it bounced. I think krudelse found that trajectory.

650
00:32:09,760 --> 00:32:11,959
Speaker 8: You have to shut off that excess to supply out

651
00:32:12,000 --> 00:32:15,400
Speaker 8: of the US. And here's key facts. Diesel demand, unleaded

652
00:32:15,440 --> 00:32:18,080
Speaker 8: gas demand, and container board demand in this country are

653
00:32:18,120 --> 00:32:19,920
Speaker 8: all in recessionary trajectories.

654
00:32:21,040 --> 00:32:24,040
Speaker 1: Okay, we did the container shipping, the container board stuff

655
00:32:24,320 --> 00:32:27,480
Speaker 1: stuff left. We did hear, Yes we heard that, Yes.

656
00:32:27,360 --> 00:32:30,160
Speaker 4: We did hear that. But it also you're having some

657
00:32:30,280 --> 00:32:32,880
Speaker 4: refiners open up now after maintenance season and it is

658
00:32:32,920 --> 00:32:35,560
Speaker 4: summer driving season. So even if the demand isn't great.

659
00:32:35,600 --> 00:32:37,280
Speaker 4: You may just continue to se a little uptick of

660
00:32:37,280 --> 00:32:38,000
Speaker 4: demand because we're.

661
00:32:37,840 --> 00:32:38,440
Speaker 1: Going to drive more.

662
00:32:38,480 --> 00:32:38,760
Speaker 3: I don't know.

663
00:32:38,840 --> 00:32:41,280
Speaker 1: We see because he drives like seventeen hours a day

664
00:32:41,320 --> 00:32:42,760
Speaker 1: and the Michael Barr. You put those.

665
00:32:42,640 --> 00:32:44,800
Speaker 4: Together, it should be better for them. But you know

666
00:32:44,840 --> 00:32:47,040
Speaker 4: they're going to complain anyway. So there is that, and then.

667
00:32:46,960 --> 00:32:48,480
Speaker 1: They have the congestion pricing they have to pay.

668
00:32:48,520 --> 00:32:50,560
Speaker 4: Well, that's a whole different bag of chips on that. Hey, Mike,

669
00:32:50,600 --> 00:32:52,400
Speaker 4: good to see you. Good to see you in studio.

670
00:32:53,160 --> 00:32:56,160
Speaker 4: Mike mcgloonan, a Bloomberg Intelligence senior Kammardi Strategy, is always

671
00:32:56,160 --> 00:32:56,720
Speaker 4: fun to talk to.

672
00:32:56,720 --> 00:33:03,160
Speaker 2: You're listening of the Bloomberg Intelligence podcast. Catch us live

673
00:33:03,240 --> 00:33:06,280
Speaker 2: weekdays at ten am Eastern on Apple card Play and

674
00:33:06,280 --> 00:33:09,200
Speaker 2: Android Auto with the Bloomberg Business app. You can also

675
00:33:09,280 --> 00:33:12,480
Speaker 2: listen live on Amazon Alexa from our flagship New York

676
00:33:12,520 --> 00:33:16,880
Speaker 2: station Just Say Alexa playing Bloomberg eleven thirty.

677
00:33:18,160 --> 00:33:19,960
Speaker 1: So Alex, you asked if I've ever been in the

678
00:33:19,960 --> 00:33:23,120
Speaker 1: board Menia answers Yes. My famous board meeting discussion is

679
00:33:23,320 --> 00:33:26,440
Speaker 1: I literally got thrown out by a top three, top

680
00:33:26,480 --> 00:33:29,840
Speaker 1: four media mobile on the planet for valuing his satellite

681
00:33:29,920 --> 00:33:33,880
Speaker 1: company at what he thought was half the price. We

682
00:33:33,960 --> 00:33:36,239
Speaker 1: literally got thrown out, esquoted out. He didn't pass our

683
00:33:36,240 --> 00:33:38,240
Speaker 1: fee for like a year. Wow, it was due like

684
00:33:38,280 --> 00:33:41,520
Speaker 1: the day after good job two years later. Sold it

685
00:33:41,560 --> 00:33:42,240
Speaker 1: for half of what.

686
00:33:42,240 --> 00:33:44,280
Speaker 4: We valued it half of what you valued it at.

687
00:33:44,360 --> 00:33:46,760
Speaker 1: Yeah, so we were wrong, but we were high. But anyway,

688
00:33:46,840 --> 00:33:50,040
Speaker 1: that was my getting thrown out. Our next guest describes

689
00:33:50,120 --> 00:33:53,440
Speaker 1: participating in board meetings as a quote, punch yourself in

690
00:33:53,480 --> 00:33:56,880
Speaker 1: the face experience. I've experienced that. Edward Norton joined. He's

691
00:33:56,920 --> 00:33:59,280
Speaker 1: a co founder of ZECH. He joins us live here

692
00:33:59,280 --> 00:34:02,000
Speaker 1: in on o Bloomberg Inner Actor Broker Studio. No mailating

693
00:34:02,160 --> 00:34:04,480
Speaker 1: for this guy. Edward, thank you so much for joining us.

694
00:34:04,520 --> 00:34:07,520
Speaker 1: Really appreciate it. Talk to us about ZECH. What are

695
00:34:07,560 --> 00:34:08,879
Speaker 1: you guys trying to do with ZECH.

696
00:34:09,680 --> 00:34:18,320
Speaker 9: Well, we're trying to make the experience between management of organizations,

697
00:34:19,040 --> 00:34:22,480
Speaker 9: and I say that meaning corporations or nonprofits, because obviously

698
00:34:22,560 --> 00:34:26,560
Speaker 9: we've got a couple million nonprofit organizations in this country

699
00:34:26,560 --> 00:34:30,000
Speaker 9: that have governance and boards and stuff like that. We're

700
00:34:30,040 --> 00:34:34,280
Speaker 9: trying to take what we feel is an increasingly toxic

701
00:34:34,400 --> 00:34:38,320
Speaker 9: dynamic and reform it into being what it's supposed to

702
00:34:38,400 --> 00:34:43,960
Speaker 9: be which is a relationship that that propels an organizations supports,

703
00:34:44,160 --> 00:34:48,640
Speaker 9: you know, brings additional leverage, positivity to an organization. And

704
00:34:49,040 --> 00:34:52,719
Speaker 9: we you know, I've definitely had some people say to me, like,

705
00:34:52,760 --> 00:34:54,799
Speaker 9: you have an interesting day job, why would you get

706
00:34:54,840 --> 00:34:55,440
Speaker 9: involved in.

707
00:34:55,560 --> 00:34:57,680
Speaker 1: And your day job? Just for folks that on the radio,

708
00:34:57,840 --> 00:34:59,719
Speaker 1: Edward Norton actor has been in a bunch of movies

709
00:34:59,719 --> 00:35:00,600
Speaker 1: in the all kind of stuff.

710
00:35:00,680 --> 00:35:04,680
Speaker 9: Yeah, the and I and I will, I will admit

711
00:35:04,760 --> 00:35:09,360
Speaker 9: that you know, on the surface, like a software platform

712
00:35:09,440 --> 00:35:15,799
Speaker 9: for for board governance features seems pretty esoteric, but it

713
00:35:15,840 --> 00:35:18,600
Speaker 9: grew out of it grew out of my own experiences

714
00:35:18,680 --> 00:35:21,439
Speaker 9: over the last thirty years, not dissimilar to years from

715
00:35:21,960 --> 00:35:25,839
Speaker 9: serving on the board of arts organizations, serving on you know,

716
00:35:25,920 --> 00:35:29,280
Speaker 9: conservation organization boards. And then as I built my own companies,

717
00:35:30,840 --> 00:35:33,960
Speaker 9: and I've built a few software companies that that we

718
00:35:34,040 --> 00:35:36,959
Speaker 9: had our own boards, people like Fred Wilson from Union

719
00:35:37,000 --> 00:35:40,920
Speaker 9: Square or you know Excel or Graylock or these these firms.

720
00:35:41,800 --> 00:35:44,120
Speaker 9: We were on the management side and we were experiencing

721
00:35:44,120 --> 00:35:46,439
Speaker 9: what it meant to have a board. And then when

722
00:35:46,480 --> 00:35:48,200
Speaker 9: I sold one of my companies and I joined the

723
00:35:48,200 --> 00:35:51,640
Speaker 9: board of GoFundMe the company that acquired us. You know,

724
00:35:51,680 --> 00:35:56,200
Speaker 9: I started sitting on corporate boards and we my partners,

725
00:35:56,200 --> 00:36:00,160
Speaker 9: and I really started feeling that that this there, there's

726
00:36:00,160 --> 00:36:02,239
Speaker 9: this elephant in the room, which is that is that

727
00:36:03,000 --> 00:36:05,799
Speaker 9: companies go through four to eight times a year. They

728
00:36:05,800 --> 00:36:08,319
Speaker 9: go pencils down to get ready for this thing that

729
00:36:08,520 --> 00:36:12,239
Speaker 9: essentially to them feels like a hall monitoring moment. And

730
00:36:12,360 --> 00:36:14,239
Speaker 9: board members, on the other hand, when I was a

731
00:36:14,280 --> 00:36:16,399
Speaker 9: board member, you got thirty six hours before the meeting,

732
00:36:16,400 --> 00:36:18,480
Speaker 9: You get a ninety page PDF and you're supposed to

733
00:36:18,560 --> 00:36:21,120
Speaker 9: read it in the airport terminal, and then you go

734
00:36:21,120 --> 00:36:22,759
Speaker 9: to the meeting and get it read back to you.

735
00:36:22,760 --> 00:36:23,359
Speaker 5: You know what I mean?

736
00:36:23,480 --> 00:36:25,319
Speaker 8: Like there was just and so.

737
00:36:25,239 --> 00:36:28,080
Speaker 4: You're looking to make it a more what interactive visual

738
00:36:28,760 --> 00:36:29,920
Speaker 4: engaging experience.

739
00:36:30,000 --> 00:36:33,799
Speaker 9: I think we say two things. One is quantitatively, board

740
00:36:33,800 --> 00:36:36,279
Speaker 9: meetings are an enormous waste of time for everybody, and

741
00:36:36,320 --> 00:36:38,319
Speaker 9: that has to do with the amount of redundant time

742
00:36:38,360 --> 00:36:41,680
Speaker 9: waste on setting these meetings up and the presentation materials.

743
00:36:41,719 --> 00:36:44,560
Speaker 9: And that can be crushed down by having cloud based

744
00:36:45,400 --> 00:36:48,799
Speaker 9: AI powered tools that make it like a tenth the

745
00:36:48,880 --> 00:36:51,520
Speaker 9: time for a company on zech a company can set

746
00:36:51,600 --> 00:36:53,719
Speaker 9: up for a board meeting in one tenth the time

747
00:36:54,040 --> 00:36:58,200
Speaker 9: wow that they were using to prep before it. Board

748
00:36:58,239 --> 00:37:01,440
Speaker 9: members should get to read something that's you know, you

749
00:37:01,600 --> 00:37:04,319
Speaker 9: wouldn't read in the New York Times or Bloomberg on

750
00:37:04,440 --> 00:37:07,200
Speaker 9: a PDF. You you read it in a mobile friendly

751
00:37:07,239 --> 00:37:10,960
Speaker 9: scroll right that we expect that now, and so everything

752
00:37:11,000 --> 00:37:13,760
Speaker 9: about the user interface should be easier for both sides

753
00:37:13,800 --> 00:37:16,239
Speaker 9: of the table. But also think about this, think about

754
00:37:16,280 --> 00:37:20,919
Speaker 9: how much time, how many professional talented people with time

755
00:37:21,000 --> 00:37:25,640
Speaker 9: is valuable sit there in board meetings, approving minutes, approvals,

756
00:37:25,680 --> 00:37:28,360
Speaker 9: approving stock option packages, things that they ought to be

757
00:37:28,400 --> 00:37:31,440
Speaker 9: able to do from the airport lounge in advance. So

758
00:37:31,480 --> 00:37:34,480
Speaker 9: we built governance function that can be interactive and mobile.

759
00:37:34,480 --> 00:37:37,480
Speaker 1: And also so your customer is the board.

760
00:37:38,120 --> 00:37:40,879
Speaker 9: Customer is the company and the board. You know, yeah,

761
00:37:41,239 --> 00:37:46,359
Speaker 9: both sides, management and board members suffer in different ways,

762
00:37:46,440 --> 00:37:48,919
Speaker 9: and we've tried to reform it. But when you when

763
00:37:48,920 --> 00:37:52,920
Speaker 9: you when you crush the redundant inefficiency of time waste,

764
00:37:53,239 --> 00:37:55,520
Speaker 9: you improve the quality of the meeting too, because a

765
00:37:55,560 --> 00:37:58,320
Speaker 9: board meeting should be a forward looking experience.

766
00:37:57,920 --> 00:38:01,160
Speaker 8: Not a you don't want to spend.

767
00:38:00,880 --> 00:38:05,319
Speaker 9: Hours looking backward. Everybody can ingest the looking backward part

768
00:38:05,360 --> 00:38:08,040
Speaker 9: before the meeting. You want the meeting to be propulsive

769
00:38:08,200 --> 00:38:11,279
Speaker 9: and additive to where the company or the organization is

770
00:38:11,280 --> 00:38:13,680
Speaker 9: trying to go. And the best thing about what people

771
00:38:13,719 --> 00:38:15,600
Speaker 9: are saying to us is not just oh, we really

772
00:38:15,640 --> 00:38:18,120
Speaker 9: love the user interface. It's much easier, it's easier to read.

773
00:38:18,760 --> 00:38:21,719
Speaker 9: We love that they're saying to us. This has radically

774
00:38:21,800 --> 00:38:25,680
Speaker 9: improved the quality and the value of the meeting itself

775
00:38:25,680 --> 00:38:27,720
Speaker 9: and what we're getting out of our board.

776
00:38:28,520 --> 00:38:30,399
Speaker 4: So you guys just raised about seven and a half

777
00:38:30,440 --> 00:38:34,759
Speaker 4: million Series A led by Salesforce Ventures, including some other

778
00:38:34,760 --> 00:38:36,440
Speaker 4: guys as well. What are you gonna do with it

779
00:38:36,760 --> 00:38:38,200
Speaker 4: and what's sort of your angle here?

780
00:38:38,840 --> 00:38:41,440
Speaker 9: Well, you know, I think if you look at I mean,

781
00:38:41,440 --> 00:38:45,640
Speaker 9: first of all, Salesforce to this day is still I mean,

782
00:38:45,680 --> 00:38:51,280
Speaker 9: they still are the greatest innovator in cloud based corporate tools.

783
00:38:51,719 --> 00:38:54,799
Speaker 9: And I've known Mark Benioff a long time, even though

784
00:38:55,239 --> 00:38:56,880
Speaker 9: I never told him that we were doing this with

785
00:38:56,960 --> 00:38:59,239
Speaker 9: his own team until it was done, because I didn't

786
00:38:59,280 --> 00:39:01,279
Speaker 9: want to, you know, I didn't want it to come

787
00:39:01,280 --> 00:39:04,640
Speaker 9: from the top down. The Salesforce team is really phenomenal.

788
00:39:05,200 --> 00:39:07,880
Speaker 9: But you know, our fantasy was to work with Salesforce

789
00:39:07,920 --> 00:39:14,960
Speaker 9: because really nobody nobody understands the business of cloud based

790
00:39:15,160 --> 00:39:18,120
Speaker 9: corporate tools better than they do. And I also like

791
00:39:18,160 --> 00:39:20,520
Speaker 9: their ethos as a company. I think I think they

792
00:39:20,560 --> 00:39:26,400
Speaker 9: have a great customer service ethos there. But you know,

793
00:39:26,440 --> 00:39:29,799
Speaker 9: if you look at think about today, would you ever

794
00:39:29,840 --> 00:39:33,400
Speaker 9: get a FedEx package with with signature tabs on your

795
00:39:33,480 --> 00:39:37,560
Speaker 9: legal documents? No, you get it in DocuSign. Now, right, don't.

796
00:39:37,600 --> 00:39:40,920
Speaker 9: You don't manage your cap table in Excel spreadsheets anymore?

797
00:39:40,960 --> 00:39:44,600
Speaker 9: You use Karta. And we've we've made this evolution towards

798
00:39:44,600 --> 00:39:48,400
Speaker 9: Lots of aspects of corporate function have gone into the cloud,

799
00:39:48,760 --> 00:39:52,000
Speaker 9: but this really critical function hasn't. And we think that

800
00:39:52,600 --> 00:39:54,640
Speaker 9: on a business level, to be honest, if you look

801
00:39:54,680 --> 00:39:57,960
Speaker 9: at you know, Karta, which is a seven billion dollar

802
00:39:58,080 --> 00:40:01,360
Speaker 9: private company and DocuSign is a fifteen billion dollar public company,

803
00:40:01,880 --> 00:40:07,680
Speaker 9: there's an enormous market in in relatively low priced corporate

804
00:40:07,719 --> 00:40:11,440
Speaker 9: software tools. And we really thought this this was a

805
00:40:11,440 --> 00:40:15,360
Speaker 9: good business. We think there's a very large marketplace of

806
00:40:15,440 --> 00:40:20,000
Speaker 9: companies and nonprofit orgs that need to reform this critical

807
00:40:20,040 --> 00:40:21,360
Speaker 9: piece of Where are you in the.

808
00:40:21,960 --> 00:40:24,280
Speaker 1: Evolution of the company? You signed up clients?

809
00:40:24,320 --> 00:40:26,759
Speaker 9: Now, oh yeah, we have, we have We're into the

810
00:40:26,840 --> 00:40:29,319
Speaker 9: thousands of companies and nonprofit orgs.

811
00:40:29,320 --> 00:40:31,920
Speaker 1: Who are our customers like Fortune five hundred companies, what

812
00:40:31,960 --> 00:40:32,480
Speaker 1: size companies?

813
00:40:32,560 --> 00:40:34,440
Speaker 9: Yeah, well, actually it's funny you say that we are

814
00:40:34,640 --> 00:40:36,920
Speaker 9: just in the process of clearing what they call the

815
00:40:37,040 --> 00:40:41,200
Speaker 9: sock two software security process, and that that lets you

816
00:40:41,480 --> 00:40:43,600
Speaker 9: be a platform for public We actually have a number

817
00:40:43,640 --> 00:40:46,960
Speaker 9: of large public companies using it, but we have been

818
00:40:47,040 --> 00:40:50,640
Speaker 9: mostly for smaller and mid sized private companies until we

819
00:40:50,680 --> 00:40:52,520
Speaker 9: clear this this critical kind of So.

820
00:40:52,480 --> 00:40:54,600
Speaker 4: You guys have an end goal here because I know

821
00:40:54,680 --> 00:40:57,839
Speaker 4: with your previous company, crowd Rise, right, that was sold

822
00:40:57,880 --> 00:41:00,480
Speaker 4: to go fund me. Yeah, the same co found Uh

823
00:41:00,920 --> 00:41:02,839
Speaker 4: is this the same roadmap for you guys here?

824
00:41:03,200 --> 00:41:03,439
Speaker 6: Yeah?

825
00:41:03,480 --> 00:41:06,440
Speaker 9: You know, I think that I think that we've been

826
00:41:06,480 --> 00:41:10,719
Speaker 9: totally focused on the product to date, making sure that

827
00:41:10,760 --> 00:41:14,040
Speaker 9: it really really works and really gets the kind of

828
00:41:14,360 --> 00:41:17,960
Speaker 9: response that it's getting. So essentially, we went to Salesforce

829
00:41:18,000 --> 00:41:20,840
Speaker 9: and said we've here, here's how it works.

830
00:41:20,840 --> 00:41:21,000
Speaker 6: Here.

831
00:41:21,080 --> 00:41:22,839
Speaker 9: They loved it, and we said, how do we how

832
00:41:22,840 --> 00:41:25,759
Speaker 9: do we now sell this? You know, how how do

833
00:41:25,800 --> 00:41:30,040
Speaker 9: we now grow this as a business? And and you know,

834
00:41:30,280 --> 00:41:35,120
Speaker 9: even even when we present it like Salesforce's Dreamforce and things,

835
00:41:35,239 --> 00:41:38,520
Speaker 9: you're you're talking to a constituency of many tens of

836
00:41:38,560 --> 00:41:42,840
Speaker 9: thousands of companies, and and that's and that's our agenda.

837
00:41:42,880 --> 00:41:44,680
Speaker 9: Now is we we kind of did it in stealth,

838
00:41:44,680 --> 00:41:46,560
Speaker 9: and as we're doing here with you, we're kind of

839
00:41:46,920 --> 00:41:48,200
Speaker 9: we're kind of coming up and out.

840
00:41:48,200 --> 00:41:49,640
Speaker 1: And is it just a subscription model?

841
00:41:49,760 --> 00:41:54,600
Speaker 9: Yeah, yeah, it's for any company, for any company that

842
00:41:55,280 --> 00:41:58,479
Speaker 9: it's incredibly familiar. And if you subscribe to docu sign

843
00:41:58,480 --> 00:42:02,320
Speaker 9: if you subscribe to Karta, you're talking sub ten thousand

844
00:42:02,360 --> 00:42:06,040
Speaker 9: dollars a year type subscriptions for these tools. And that's

845
00:42:06,040 --> 00:42:08,840
Speaker 9: why we think because it has to work for it

846
00:42:08,880 --> 00:42:10,719
Speaker 9: has to work for a nonprofit org, it has to

847
00:42:10,760 --> 00:42:14,480
Speaker 9: work for a small startup company. It's we're not talking about,

848
00:42:14,520 --> 00:42:17,480
Speaker 9: you know, one hundred thousand dollars year enterprise software contracts.

849
00:42:17,480 --> 00:42:19,560
Speaker 9: We're we're literally talking under ten thousand dollars a year.

850
00:42:19,920 --> 00:42:23,000
Speaker 1: Interesting stuff. Thanks for stopping absolutely. Edward Norton, he's a

851
00:42:23,040 --> 00:42:26,120
Speaker 1: co founder of ZECH. He's also got an acting career

852
00:42:26,120 --> 00:42:28,080
Speaker 1: from what I understand, so he's kind of busy out

853
00:42:28,120 --> 00:42:30,600
Speaker 1: there doing that there kind of again bringing I bet

854
00:42:30,640 --> 00:42:33,600
Speaker 1: you're the pandemic. The pandemic accelerated a lot of that stuff.

855
00:42:33,800 --> 00:42:34,760
Speaker 4: It's such a good quodcast.

856
00:42:34,800 --> 00:42:35,560
Speaker 1: Sign and all that stuff.

857
00:42:35,600 --> 00:42:37,719
Speaker 4: I don't know anything on PDF. Ideas were done on

858
00:42:37,760 --> 00:42:39,360
Speaker 4: my phone, Like of course you're going to want to

859
00:42:39,360 --> 00:42:39,640
Speaker 4: but you.

860
00:42:39,600 --> 00:42:41,200
Speaker 1: Still go to a restaurant and you give them the

861
00:42:41,239 --> 00:42:43,440
Speaker 1: credit card. They go somewhere, they do it all. They

862
00:42:43,520 --> 00:42:45,360
Speaker 1: bring you back to seventeen or as you go to

863
00:42:45,640 --> 00:42:48,560
Speaker 1: one of Europe, somewhere the little person comes up and what's.

864
00:42:48,560 --> 00:42:50,279
Speaker 4: The little person comes up and puts the other thing.

865
00:42:50,360 --> 00:42:52,440
Speaker 1: I don't know how it works, but the technology serving.

866
00:42:52,200 --> 00:42:53,760
Speaker 4: You in Europe, every little people.

867
00:42:55,040 --> 00:42:59,520
Speaker 2: This is the Bloomberg Intelligence podcast, available on Apple, Spotify,

868
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Speaker 2: and anywhere else you get your podcasts. Listen live each

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Speaker 2: weekday ten am tonoon Eastern on Bloomberg dot com, Beheartradio app,

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Speaker 2: tune In, and the Bloomberg Business app. You can also

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Speaker 2: watch us live every weekday on YouTube and always on

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Speaker 2: the Bloomberg terminal