1 00:00:02,920 --> 00:00:08,680 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:09,960 --> 00:00:13,840 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 3 00:00:13,920 --> 00:00:17,000 Speaker 2: weekdays at ten am Eastern on Apple Car playing Android 4 00:00:17,000 --> 00:00:20,120 Speaker 2: Auto with the Bloomberg Business App. Listen on demand wherever 5 00:00:20,160 --> 00:00:24,520 Speaker 2: you get your podcasts, or watch us live on YouTube. 6 00:00:24,840 --> 00:00:25,720 Speaker 3: All right, let's get to Gena. 7 00:00:25,720 --> 00:00:30,160 Speaker 4: Martin Adams, So Boomberg Intelligence Chief equity strategist, Gina, how 8 00:00:30,240 --> 00:00:33,520 Speaker 4: much complacency at this point is still left in the market. 9 00:00:34,800 --> 00:00:37,320 Speaker 5: Oh, I don't think there's too much complacency at all, Alex. 10 00:00:37,360 --> 00:00:40,320 Speaker 5: It's pretty rare to see the VIC spike well north 11 00:00:40,360 --> 00:00:42,879 Speaker 5: of sixty. Yes, we did on Monday morning and not 12 00:00:42,960 --> 00:00:45,360 Speaker 5: have a full washout in sentiment. 13 00:00:45,400 --> 00:00:46,400 Speaker 6: And I think we did see that. 14 00:00:46,479 --> 00:00:48,960 Speaker 5: By the time we got to the point of Monday close, 15 00:00:49,080 --> 00:00:53,080 Speaker 5: the vixlas above thirty. The fourteen day RSI momentum score 16 00:00:53,120 --> 00:00:55,520 Speaker 5: for the S and P five hundred was just at thirty. 17 00:00:56,080 --> 00:01:00,600 Speaker 5: That kind of oversoul momentum and extreme pop and vis 18 00:01:00,960 --> 00:01:03,680 Speaker 5: has historically led to positive returns eighty percent of the 19 00:01:03,760 --> 00:01:08,680 Speaker 5: time over the next three months, so we've generally sort 20 00:01:08,680 --> 00:01:09,479 Speaker 5: of washed out. 21 00:01:09,360 --> 00:01:10,680 Speaker 6: A lot of the complacency. 22 00:01:11,200 --> 00:01:13,959 Speaker 5: I do think that to the degree that valuations are 23 00:01:14,000 --> 00:01:16,759 Speaker 5: still a little bit too elevated. In tech that may 24 00:01:16,800 --> 00:01:21,080 Speaker 5: be a space where complacency still exists. And you know, frankly, 25 00:01:21,200 --> 00:01:24,120 Speaker 5: as much as we nitpick at these company earnings, the 26 00:01:24,160 --> 00:01:25,600 Speaker 5: earnings have been very. 27 00:01:25,520 --> 00:01:26,200 Speaker 6: Very strong. 28 00:01:26,840 --> 00:01:29,040 Speaker 5: So there's not a lot in the earnings that you 29 00:01:29,080 --> 00:01:32,560 Speaker 5: can say really sort of dismantled the confidence in the 30 00:01:32,600 --> 00:01:36,240 Speaker 5: tech space. If there's any complacency, it might be there, 31 00:01:36,280 --> 00:01:38,880 Speaker 5: but I'd say markets at large, you have gone a 32 00:01:38,920 --> 00:01:44,240 Speaker 5: long way to pricing out any sort of elevated enthusiasm. 33 00:01:44,680 --> 00:01:47,920 Speaker 7: So I'm still trying to figure out what happened, Like, 34 00:01:47,960 --> 00:01:50,120 Speaker 7: what happened Monday, Tuesday and today? 35 00:01:50,240 --> 00:01:50,880 Speaker 8: Was it technical? 36 00:01:51,040 --> 00:01:51,920 Speaker 3: You forget Friday? 37 00:01:52,320 --> 00:01:54,520 Speaker 8: Friday too? I wonder why I forgot Friday. 38 00:01:54,520 --> 00:01:58,160 Speaker 7: It's on the beach, So is it a technical thing? 39 00:01:58,800 --> 00:02:01,520 Speaker 7: Japan carried thing that people are telling me about the 40 00:02:01,600 --> 00:02:02,840 Speaker 7: Nieck trading crazy? 41 00:02:03,120 --> 00:02:03,760 Speaker 8: What was it? 42 00:02:04,600 --> 00:02:07,480 Speaker 5: I think it's predominantly about Japan, and you can almost 43 00:02:07,520 --> 00:02:09,079 Speaker 5: one for one mark all the way back to the 44 00:02:09,080 --> 00:02:12,320 Speaker 5: middle of July when the market started weakening as the 45 00:02:12,440 --> 00:02:17,440 Speaker 5: yen turned significant to made a significant turn in direction, right, 46 00:02:17,520 --> 00:02:20,959 Speaker 5: So it's very much about an unwinded the carry trade. 47 00:02:21,320 --> 00:02:23,920 Speaker 5: And then last week when we did get final confirmation 48 00:02:24,200 --> 00:02:26,720 Speaker 5: from the Bank of Japan that they were raising interest 49 00:02:26,800 --> 00:02:30,320 Speaker 5: rates for the first time in seventeen years. That created 50 00:02:30,360 --> 00:02:34,119 Speaker 5: a lot of instability that was then exacerbated on Friday 51 00:02:34,280 --> 00:02:37,440 Speaker 5: with some relatively weak economic data in the US. So 52 00:02:37,480 --> 00:02:41,640 Speaker 5: it's that spread in interest rate differentials between the US 53 00:02:41,680 --> 00:02:44,679 Speaker 5: and Japan that is really key to this market meltdown 54 00:02:45,280 --> 00:02:49,520 Speaker 5: that clearly widened substantially over the weekend. US bond markets 55 00:02:49,520 --> 00:02:53,480 Speaker 5: starting to price for fed ease, where the Japanese market 56 00:02:53,560 --> 00:02:56,960 Speaker 5: is now starting to expect a tightening in Japan created 57 00:02:57,040 --> 00:03:02,000 Speaker 5: tremendous weakness in the currency marks, which then exacerbated declines 58 00:03:02,040 --> 00:03:03,000 Speaker 5: in the equity markets. 59 00:03:03,040 --> 00:03:03,639 Speaker 6: I mean, I think that. 60 00:03:03,600 --> 00:03:06,480 Speaker 5: There there is a link between all of these markets 61 00:03:06,480 --> 00:03:09,360 Speaker 5: that is very, very notable. When you have this carry 62 00:03:09,360 --> 00:03:12,600 Speaker 5: trade in place for nearly two decades and it's starting 63 00:03:12,639 --> 00:03:16,520 Speaker 5: to unwine, it creates some issues of force selling, some 64 00:03:16,600 --> 00:03:20,919 Speaker 5: liquidity issues broadly that generally impact the equity markets, and 65 00:03:20,960 --> 00:03:24,880 Speaker 5: I think that's largely what's driven the instability. Thankfully, overnight 66 00:03:24,919 --> 00:03:26,880 Speaker 5: we did get some news from the Bank of Japan 67 00:03:26,960 --> 00:03:29,760 Speaker 5: that they have they've committed at the very least not 68 00:03:29,880 --> 00:03:34,120 Speaker 5: to tighten during periods of general financial market distress going forward. 69 00:03:34,680 --> 00:03:37,200 Speaker 5: But you know, frankly, we are in a different path 70 00:03:37,360 --> 00:03:39,760 Speaker 5: for central bank policy than we have been in the 71 00:03:39,760 --> 00:03:41,920 Speaker 5: points in the past, So we're going to have to 72 00:03:41,960 --> 00:03:45,400 Speaker 5: be on guard for bouts of indigestion as we adjust 73 00:03:45,440 --> 00:03:46,240 Speaker 5: to this new normal. 74 00:03:46,920 --> 00:03:48,520 Speaker 7: All right, Gene, I've been doing a stock market thing 75 00:03:48,560 --> 00:03:50,520 Speaker 7: for thirty five years. I have no idea what's going 76 00:03:50,560 --> 00:03:52,200 Speaker 7: on at there, Gina Martin Adams. 77 00:03:52,240 --> 00:03:52,680 Speaker 8: She's a pro. 78 00:03:52,880 --> 00:03:53,680 Speaker 6: That's not helpful. 79 00:03:54,840 --> 00:03:56,040 Speaker 8: I have no idea what's going on? 80 00:03:56,240 --> 00:03:58,960 Speaker 7: Gena Martin Adams, chief equity strategist for Bloomberg Intelligence. 81 00:03:59,480 --> 00:03:59,880 Speaker 8: Joining us. 82 00:04:01,720 --> 00:04:05,600 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 83 00:04:05,680 --> 00:04:09,240 Speaker 2: weekdays at ten am Eastern on applecar Play and Android 84 00:04:09,240 --> 00:04:12,000 Speaker 2: Auto with the Bloomberg Business Act. You can also listen 85 00:04:12,120 --> 00:04:15,240 Speaker 2: live on Amazon Alexa from our flagship New York station, 86 00:04:15,600 --> 00:04:18,640 Speaker 2: Just say Alexa, play Bloomberg eleven thirty. 87 00:04:19,600 --> 00:04:22,239 Speaker 3: And Alex Steel Pulse. We need is Bloomberg Intelligence Radio. 88 00:04:22,240 --> 00:04:24,839 Speaker 4: We are broadcasting to you live from our rainy interactive 89 00:04:24,839 --> 00:04:27,080 Speaker 4: broker studio right here in New York. Although I don't 90 00:04:27,080 --> 00:04:28,840 Speaker 4: know if it's actually raining right now, but doesn't look 91 00:04:28,839 --> 00:04:29,720 Speaker 4: pretty dark. 92 00:04:29,839 --> 00:04:31,440 Speaker 3: It looks dark. It looks a little grim, looks a 93 00:04:31,480 --> 00:04:31,960 Speaker 3: little dark. 94 00:04:32,600 --> 00:04:34,360 Speaker 4: R Let's go to the bond market for a moment, 95 00:04:34,440 --> 00:04:38,360 Speaker 4: because four years ago those twenty year bond auctions were 96 00:04:38,400 --> 00:04:38,839 Speaker 4: a thing. 97 00:04:39,200 --> 00:04:39,960 Speaker 3: Of the past. 98 00:04:40,040 --> 00:04:44,000 Speaker 4: But Treasury Secretary at the time, Steve Manushan, reintroduced those 99 00:04:44,040 --> 00:04:47,880 Speaker 4: twenty year bonds and monthly auctions. Their sale apparently, if 100 00:04:47,880 --> 00:04:50,839 Speaker 4: you just do back in the envelope calculations tacked on 101 00:04:50,920 --> 00:04:53,640 Speaker 4: roughly two billion dollars a year in interest expenses. And 102 00:04:53,680 --> 00:04:56,240 Speaker 4: now Steve Manushan saying, you know what, guys, maybe we 103 00:04:56,240 --> 00:04:59,080 Speaker 4: don't need them anymore, maybe they're too expensive. Well here 104 00:04:59,200 --> 00:05:02,560 Speaker 4: joining us in studio. Yesha a Bloomberg Markets reporter. He 105 00:05:02,920 --> 00:05:05,960 Speaker 4: is the lead on this story for Bloomberg. It's reading 106 00:05:06,040 --> 00:05:07,599 Speaker 4: quite how you guys should definitely check it out on 107 00:05:07,680 --> 00:05:09,520 Speaker 4: the terminal or on Bloomberg dot com. 108 00:05:09,800 --> 00:05:11,320 Speaker 3: Yeah, what is he saying. 109 00:05:12,080 --> 00:05:14,640 Speaker 9: He's saying, as you just said, just to kill it. 110 00:05:14,640 --> 00:05:20,559 Speaker 9: It's expensive paper for the government to keep selling every month. 111 00:05:20,680 --> 00:05:23,719 Speaker 9: It's almost like one trillion over the past four years 112 00:05:23,760 --> 00:05:27,320 Speaker 9: they sold and based our calculation based on the average 113 00:05:27,600 --> 00:05:31,960 Speaker 9: yields of tens and thirty year bonds, the government overpaid 114 00:05:32,240 --> 00:05:35,520 Speaker 9: roughly two billion a year and it adds up to 115 00:05:36,400 --> 00:05:39,520 Speaker 9: forty billing over the life of the bonds. So and 116 00:05:39,839 --> 00:05:42,840 Speaker 9: if the government keeps selling it, it's just really costs 117 00:05:42,880 --> 00:05:44,440 Speaker 9: a lot of money for taxpayers. 118 00:05:44,800 --> 00:05:46,880 Speaker 8: Why why is it costing more money? 119 00:05:47,080 --> 00:05:51,120 Speaker 9: Yeah, because you are selling the most expensive bonds on 120 00:05:51,200 --> 00:05:54,840 Speaker 9: the trairie Yo cuve. You would sell the bonds cheaply 121 00:05:54,960 --> 00:05:57,920 Speaker 9: raise the money cheaply for the governments if you sell 122 00:05:57,960 --> 00:06:01,599 Speaker 9: the ten years for example. And the two billion doesn't 123 00:06:01,600 --> 00:06:03,839 Speaker 9: sound a lot of money, and just considering in the 124 00:06:03,880 --> 00:06:08,000 Speaker 9: context of the government's spanning is almost seven trillion a year, 125 00:06:08,200 --> 00:06:11,200 Speaker 9: So two billion is not a big deal in big 126 00:06:11,480 --> 00:06:14,359 Speaker 9: scheme of things. But at the same time, it's not 127 00:06:14,520 --> 00:06:18,880 Speaker 9: small money. Right, we look at the budget of the governments. 128 00:06:19,080 --> 00:06:22,440 Speaker 9: It's roughly equal to the annual cost for running the 129 00:06:22,520 --> 00:06:26,800 Speaker 9: national parks. It's also equal to the subsidy for the 130 00:06:26,960 --> 00:06:29,360 Speaker 9: veteran housing. So it's real money. 131 00:06:29,839 --> 00:06:31,320 Speaker 3: Why did he like it to begin with? 132 00:06:31,360 --> 00:06:31,520 Speaker 5: Then? 133 00:06:32,000 --> 00:06:39,120 Speaker 9: So the government and it's two twenty. The government's looking 134 00:06:39,279 --> 00:06:43,040 Speaker 9: for new ways to diversive that by their funding and 135 00:06:43,160 --> 00:06:46,560 Speaker 9: try to raise a lot of money because the it's pandemic. 136 00:06:46,760 --> 00:06:50,320 Speaker 9: The government spanning is really ramping up and they try 137 00:06:50,360 --> 00:06:52,440 Speaker 9: to find a new source of the funding, and they 138 00:06:52,560 --> 00:06:56,240 Speaker 9: studied a lot of ways, including selling fifty year bounds 139 00:06:56,360 --> 00:07:00,920 Speaker 9: or one hundred year bonds. The government have a committee 140 00:07:00,960 --> 00:07:05,040 Speaker 9: they try to convince that MANUSI that it's not a 141 00:07:05,080 --> 00:07:07,960 Speaker 9: good deal to sell really long bounds fifty one hundred 142 00:07:08,000 --> 00:07:11,760 Speaker 9: year bounds because it's even more expensive. Nobody's going to 143 00:07:11,800 --> 00:07:16,240 Speaker 9: buy buy it. So the Mnusian took the idea and 144 00:07:16,920 --> 00:07:19,800 Speaker 9: sell the twenty year bounds. Remember, in the past, as 145 00:07:19,800 --> 00:07:24,040 Speaker 9: you mentioned earlier, the government sold the twenty year bounds 146 00:07:24,080 --> 00:07:28,720 Speaker 9: in the nineteen eighties, but it only lasted four years 147 00:07:29,040 --> 00:07:32,160 Speaker 9: because they run the same problem as we run now. 148 00:07:32,720 --> 00:07:36,600 Speaker 9: There are no sufficient demand for the twenty year bonds, 149 00:07:36,680 --> 00:07:39,760 Speaker 9: and at that time the government also have the limit 150 00:07:39,920 --> 00:07:43,320 Speaker 9: of how much long term bonds they can sell with. 151 00:07:43,920 --> 00:07:47,720 Speaker 9: So at that time the US Treasury decided to just 152 00:07:47,960 --> 00:07:50,920 Speaker 9: abandon the twenty year bounds in favor of keeping selling 153 00:07:50,960 --> 00:07:55,080 Speaker 9: the thirty year bounds. Thirteen bonds has more demand at 154 00:07:55,200 --> 00:07:57,960 Speaker 9: least it looks like now that because a lot of 155 00:07:57,960 --> 00:08:03,080 Speaker 9: the pensions insurance company realize these long duration, long interest 156 00:08:03,120 --> 00:08:09,360 Speaker 9: and sensitive security to match their balance sheet liability. So yeah, 157 00:08:09,600 --> 00:08:10,000 Speaker 9: there we. 158 00:08:09,960 --> 00:08:11,440 Speaker 8: Are one of the things. 159 00:08:11,840 --> 00:08:14,160 Speaker 7: If it's more expensive sell in the twenties, why isn't 160 00:08:14,200 --> 00:08:17,120 Speaker 7: the Treasury just not sell any than just auction off 161 00:08:17,120 --> 00:08:17,960 Speaker 7: tens and thirties. 162 00:08:18,040 --> 00:08:22,680 Speaker 9: Yeah, So the Treasury in their debt management principle, they 163 00:08:22,760 --> 00:08:27,440 Speaker 9: really want to make the debt issuance more predictable, more reliable. 164 00:08:27,680 --> 00:08:30,120 Speaker 9: So once they start issuing new bonds, they want to 165 00:08:30,160 --> 00:08:33,880 Speaker 9: see it stick for a while, so everyone have the 166 00:08:33,920 --> 00:08:36,960 Speaker 9: same expectations. So you just can't turn it on and 167 00:08:37,000 --> 00:08:41,520 Speaker 9: turn it off on a whim. So that's the argument 168 00:08:41,640 --> 00:08:47,640 Speaker 9: for keep doing it. And the the other argument is 169 00:08:47,679 --> 00:08:50,640 Speaker 9: that if you're looking down in the next few years, 170 00:08:50,679 --> 00:08:54,480 Speaker 9: the deficity is going to continue grow very quickly and 171 00:08:54,600 --> 00:08:57,640 Speaker 9: they need every help from every part of the curve 172 00:08:58,040 --> 00:09:02,199 Speaker 9: since you have already this new instry instrument, so they 173 00:09:02,320 --> 00:09:05,480 Speaker 9: like to stick with it. And also that the argument 174 00:09:05,640 --> 00:09:07,600 Speaker 9: is that if you don't sell the twenty year bonds, 175 00:09:07,679 --> 00:09:10,640 Speaker 9: you have to sell more ten years, thirty years, then 176 00:09:10,679 --> 00:09:14,240 Speaker 9: you're going to increase the cost for that part of 177 00:09:14,280 --> 00:09:15,200 Speaker 9: the curve as well. 178 00:09:15,760 --> 00:09:18,959 Speaker 4: An argument are they issuing more front end or back end? 179 00:09:19,559 --> 00:09:24,880 Speaker 9: Yeah, so the so there's some academic study the most 180 00:09:25,080 --> 00:09:28,560 Speaker 9: cost efficient way is sell in the middle of the curve, 181 00:09:28,720 --> 00:09:31,520 Speaker 9: in the badley of the curve, like five years, ten years, 182 00:09:31,760 --> 00:09:35,880 Speaker 9: anything beyond that. It's costs a lot of money. But 183 00:09:36,040 --> 00:09:39,319 Speaker 9: they also want a more diversified of the case. So 184 00:09:39,559 --> 00:09:42,120 Speaker 9: if you sell, like all of a sudden, sell lots 185 00:09:42,160 --> 00:09:45,040 Speaker 9: of the ten year bonds in one auction, you could 186 00:09:45,080 --> 00:09:50,600 Speaker 9: see that auction fair fairly poorly, And this is something 187 00:09:50,600 --> 00:09:53,840 Speaker 9: they want to avoid. So that's the argument to just 188 00:09:54,080 --> 00:09:54,640 Speaker 9: keep doing that. 189 00:09:54,760 --> 00:09:58,760 Speaker 7: Yeah, these deficits are they're becoming a thing here. I 190 00:09:58,800 --> 00:10:02,440 Speaker 7: mean the annual de it's almost two trillion dollars. 191 00:10:02,559 --> 00:10:03,160 Speaker 8: That's per year. 192 00:10:03,240 --> 00:10:06,560 Speaker 7: Kids, that's double the level of just five years ago. 193 00:10:07,480 --> 00:10:09,839 Speaker 7: What is What does your bond markets say about that? 194 00:10:10,240 --> 00:10:12,959 Speaker 9: Yeah, that's there's a lot of a debate on that. 195 00:10:13,240 --> 00:10:17,360 Speaker 9: We saw that last summer, the law and the curve 196 00:10:17,600 --> 00:10:21,600 Speaker 9: really kind of keep rising. Remember at the time, the 197 00:10:21,640 --> 00:10:24,640 Speaker 9: federal was raising interest rates, so a lot of people 198 00:10:24,720 --> 00:10:28,880 Speaker 9: were concerned that we are don't have a sufficient demand 199 00:10:29,160 --> 00:10:31,640 Speaker 9: for these bonds. And I think I think this is 200 00:10:31,679 --> 00:10:34,400 Speaker 9: still the concern in the market, the this talk of 201 00:10:34,600 --> 00:10:38,760 Speaker 9: bond vigilanty. It becomes a thing nowadays that the idea 202 00:10:38,880 --> 00:10:40,840 Speaker 9: that that we are going to have a bier strikes 203 00:10:41,360 --> 00:10:45,680 Speaker 9: all these auctions because think about it, some of the 204 00:10:45,720 --> 00:10:48,840 Speaker 9: foreign investors, especially central bank in China, Japan, they are 205 00:10:48,840 --> 00:10:51,600 Speaker 9: not going to they are not coming to the US 206 00:10:51,640 --> 00:10:57,000 Speaker 9: treasure market anymore. And uh, the it's really the private 207 00:10:57,280 --> 00:11:01,160 Speaker 9: sectors buying all these bonds and they're there price sensitive. 208 00:11:01,280 --> 00:11:04,320 Speaker 9: They want to buy the price. They're not going to 209 00:11:04,320 --> 00:11:06,720 Speaker 9: buy the price that's really low. They want to be 210 00:11:06,760 --> 00:11:09,480 Speaker 9: compensated for the risks. So there's a term in the 211 00:11:09,520 --> 00:11:13,200 Speaker 9: BOMBA called the term premium. This is how much actual 212 00:11:13,320 --> 00:11:17,240 Speaker 9: compensation you wanted for holding the long term bonds. And 213 00:11:17,280 --> 00:11:20,080 Speaker 9: we see it backed up a little bit over the 214 00:11:20,120 --> 00:11:24,200 Speaker 9: course of the year, but now there's recession consuming the market, 215 00:11:24,280 --> 00:11:28,640 Speaker 9: especially over the last couple of days. That term premium 216 00:11:28,720 --> 00:11:32,520 Speaker 9: is capture at bay at the moment, but at some 217 00:11:32,600 --> 00:11:36,040 Speaker 9: point there's some has to be some confrontation between the 218 00:11:36,080 --> 00:11:38,640 Speaker 9: markets and all the supply coming to the market at 219 00:11:38,720 --> 00:11:39,120 Speaker 9: some point. 220 00:11:39,320 --> 00:11:42,320 Speaker 4: Totally, all right, Yashan, thanks a lot, Yasha his Bloomberg 221 00:11:42,360 --> 00:11:45,000 Speaker 4: Markets reporter. Definitely check out everything that he writes because 222 00:11:45,000 --> 00:11:46,960 Speaker 4: that's where I learn all my stuff. Just thank you 223 00:11:47,000 --> 00:11:49,640 Speaker 4: very much for all your hard work and you're writing. 224 00:11:50,840 --> 00:11:54,720 Speaker 2: You're listening to the Bloomberg Intelligence podcast. Catch us live 225 00:11:54,840 --> 00:11:57,520 Speaker 2: weekdays at ten am Eastern on fo card Playing and 226 00:11:57,640 --> 00:12:01,040 Speaker 2: Brounoto with the Bloomberg Business App. Listen on demand wherever 227 00:12:01,080 --> 00:12:04,200 Speaker 2: you get your podcasts, or watch us live on YouTube. 228 00:12:06,080 --> 00:12:09,439 Speaker 4: Let's get more to the equity moves Lift also moving 229 00:12:09,640 --> 00:12:12,920 Speaker 4: in the market. Airbnb though just really struggling, Man deep saying, 230 00:12:12,920 --> 00:12:17,160 Speaker 4: Bloomberg Intelligence in your tech industry. Analyst joins us on Airbnb. 231 00:12:17,559 --> 00:12:20,840 Speaker 4: So is this Airbnb misjudging something or is this just 232 00:12:20,920 --> 00:12:23,160 Speaker 4: the US consumer surprisingly slowing? 233 00:12:23,760 --> 00:12:27,200 Speaker 10: I think with Airbnb, the biggest concern has been the 234 00:12:27,280 --> 00:12:30,240 Speaker 10: saturation in their core market. And you know, we are 235 00:12:30,240 --> 00:12:34,000 Speaker 10: coming off of pandemic where the tailwind was behind them 236 00:12:34,520 --> 00:12:38,400 Speaker 10: in terms of people traveling more. But now everyone realizes 237 00:12:38,520 --> 00:12:41,240 Speaker 10: that their room night growth is tapering off. And the 238 00:12:41,280 --> 00:12:43,920 Speaker 10: reason why it's tapering off is because they are highly 239 00:12:43,960 --> 00:12:48,040 Speaker 10: penetrated in their core markets, whether it's in the US, Europe, 240 00:12:48,160 --> 00:12:52,800 Speaker 10: and with any marketplace business, you got to grow supply. 241 00:12:53,200 --> 00:12:56,520 Speaker 10: If you're not growing supply, then it becomes a problem 242 00:12:56,559 --> 00:12:59,360 Speaker 10: because then your demand is sort of limited by how 243 00:12:59,440 --> 00:13:02,120 Speaker 10: much supply you can grow. So what they told us 244 00:13:02,200 --> 00:13:05,440 Speaker 10: last night is they're going to spend more in terms 245 00:13:05,480 --> 00:13:11,000 Speaker 10: of acquiring new supply outside their core markets in Latin America, 246 00:13:11,240 --> 00:13:15,160 Speaker 10: in Asia pack and there will be ROI down the line, 247 00:13:15,400 --> 00:13:18,160 Speaker 10: but for the next two to three quarters, they're gonna 248 00:13:18,160 --> 00:13:21,080 Speaker 10: be growing mid single digit. And that's where I think. 249 00:13:21,160 --> 00:13:25,439 Speaker 10: When you're trading at eight nine time sales, the highest valuation, 250 00:13:25,960 --> 00:13:27,560 Speaker 10: you get this kind of response. 251 00:13:27,760 --> 00:13:30,000 Speaker 7: It looks like we're surrounded here in our studio by 252 00:13:30,080 --> 00:13:32,200 Speaker 7: these bi anals. We got man Deep, we got Jonathan 253 00:13:32,240 --> 00:13:34,680 Speaker 7: Palmer on the healthcare. It's almost like there's not a 254 00:13:34,720 --> 00:13:37,439 Speaker 7: management team in there keeping tabs on where all the animals. 255 00:13:37,200 --> 00:13:42,599 Speaker 3: Are for because they're all here. We make them come here. 256 00:13:40,800 --> 00:13:42,120 Speaker 7: On the beach at the moment, I mean most of 257 00:13:42,160 --> 00:13:46,240 Speaker 7: the management team, all right, So Man Deep Airbnb. To me, 258 00:13:46,280 --> 00:13:47,800 Speaker 7: it feels like we're just kind of getting. 259 00:13:47,559 --> 00:13:49,360 Speaker 8: Back to a new normal. I mean, if I like 260 00:13:49,400 --> 00:13:52,000 Speaker 8: this story and I like the concept, I buy the 261 00:13:52,040 --> 00:13:54,000 Speaker 8: stock on the weakness, what are some of the Are 262 00:13:54,040 --> 00:13:55,880 Speaker 8: people concerned about the model. 263 00:13:55,679 --> 00:13:58,120 Speaker 7: Per se or they just saying, Hey, I just don't 264 00:13:58,200 --> 00:13:59,600 Speaker 7: like the cops, I don't like the numbers of stores. 265 00:13:59,679 --> 00:14:03,360 Speaker 10: Yeah, it's more about the estimates getting revised lower. So 266 00:14:03,600 --> 00:14:06,640 Speaker 10: if you were hoping you will see upward revisions. That's 267 00:14:06,679 --> 00:14:10,120 Speaker 10: not happening with this stock. And the reason that's the 268 00:14:10,200 --> 00:14:12,440 Speaker 10: case is when what they told us last night is 269 00:14:12,840 --> 00:14:15,280 Speaker 10: even though they are talking about new products, you know, 270 00:14:15,440 --> 00:14:19,640 Speaker 10: rooms and experiences, nothing is adding in terms of the 271 00:14:19,680 --> 00:14:22,640 Speaker 10: incremental top line growth or the margins. In fact, the 272 00:14:22,680 --> 00:14:26,120 Speaker 10: margins would take a hit because they talked about expenses 273 00:14:26,160 --> 00:14:29,240 Speaker 10: being on the higher side. So if you are looking for, 274 00:14:29,480 --> 00:14:32,800 Speaker 10: you know, a next one to two year investment, there 275 00:14:32,840 --> 00:14:35,720 Speaker 10: isn't a lot to look forward to in Theirbnb story. 276 00:14:36,040 --> 00:14:39,640 Speaker 10: And plus, there is a cyclical element to this stock, 277 00:14:39,800 --> 00:14:43,160 Speaker 10: given you know, the economy is slowing down, consumer spending 278 00:14:43,240 --> 00:14:46,040 Speaker 10: is slowing down. They had the best tailwind in terms 279 00:14:46,040 --> 00:14:49,760 Speaker 10: of Olympics, you know, summer travel. Still they guide it 280 00:14:49,800 --> 00:14:52,440 Speaker 10: to mid single digit room night growth, So that wasn't 281 00:14:52,880 --> 00:14:54,080 Speaker 10: music to investors. 282 00:14:54,640 --> 00:14:58,200 Speaker 3: Is the demand there still demand? That's the other side, right. 283 00:14:58,520 --> 00:15:01,120 Speaker 10: So if you look across the in terms of how 284 00:15:01,160 --> 00:15:07,000 Speaker 10: the marketplace travel marketplaces have done, booking, Uber Lift, every 285 00:15:07,360 --> 00:15:11,040 Speaker 10: company has suggested that they are seeing some softness. Now 286 00:15:11,080 --> 00:15:14,000 Speaker 10: nobody is saying we are seeing recessionary trends. And when 287 00:15:14,720 --> 00:15:18,800 Speaker 10: you know, people pare down in terms of their travel spend. 288 00:15:19,240 --> 00:15:22,840 Speaker 10: Maybe they're not going to take you know, three vacations 289 00:15:22,880 --> 00:15:25,280 Speaker 10: as opposed to they'll trade down and take two. And 290 00:15:25,600 --> 00:15:27,880 Speaker 10: you know, same thing with type of uber rights, they're 291 00:15:27,920 --> 00:15:30,560 Speaker 10: not taking the most expensive. So there is that trading 292 00:15:30,560 --> 00:15:33,360 Speaker 10: down that's happening right now. But nobody is calling for 293 00:15:33,440 --> 00:15:35,200 Speaker 10: an outright recession yet. 294 00:15:35,600 --> 00:15:37,840 Speaker 8: Lift, is there any future for this company? 295 00:15:37,960 --> 00:15:38,800 Speaker 3: Can Lift get a lift? 296 00:15:38,840 --> 00:15:40,800 Speaker 8: Can Lift get a lot? Sorry at all? 297 00:15:41,400 --> 00:15:44,280 Speaker 10: I mean scale is your friend when it comes to 298 00:15:44,440 --> 00:15:47,880 Speaker 10: marketplace is given how tough marketplace businesses are. And in 299 00:15:48,320 --> 00:15:52,520 Speaker 10: Lift's case, they need to partner with somebody who's rolling 300 00:15:52,560 --> 00:15:56,880 Speaker 10: out autonomous vehicles, whether it's Vemo or Tesla. 301 00:15:57,400 --> 00:15:58,240 Speaker 8: That's the hope. 302 00:15:58,280 --> 00:16:00,640 Speaker 10: They need a part or even a door dash. 303 00:16:00,920 --> 00:16:03,360 Speaker 8: That's the enough place to be. Now, what's management saying. 304 00:16:03,360 --> 00:16:04,440 Speaker 8: Are they open to a partnership? 305 00:16:04,520 --> 00:16:04,800 Speaker 5: They are. 306 00:16:04,920 --> 00:16:08,080 Speaker 10: They said their fleet network is the best to roll 307 00:16:08,120 --> 00:16:11,840 Speaker 10: out these autonomous and robotaxis. But clearly, you know, we 308 00:16:11,920 --> 00:16:14,080 Speaker 10: know Tesla's ambitions or they want to do it on 309 00:16:14,120 --> 00:16:15,960 Speaker 10: their own. They don't want to use any of the 310 00:16:16,120 --> 00:16:21,040 Speaker 10: intermediary So time will tell if Lift will be partnering 311 00:16:21,080 --> 00:16:21,320 Speaker 10: with them. 312 00:16:21,360 --> 00:16:22,200 Speaker 8: All right, that's amazing. 313 00:16:22,200 --> 00:16:24,880 Speaker 7: I just can't believe the different how those two companies 314 00:16:24,920 --> 00:16:27,000 Speaker 7: have diverged since their IPOs. 315 00:16:26,640 --> 00:16:29,560 Speaker 10: One reflected in the valuation. I mean, look at lifts valuation. 316 00:16:29,720 --> 00:16:33,480 Speaker 7: It's a monster, just ten x in terms of market cap. 317 00:16:33,640 --> 00:16:36,600 Speaker 7: Mandeep Cheing thinks so much. We appreciate technology channel somehow 318 00:16:36,640 --> 00:16:38,800 Speaker 7: it covers all those marketplace things. I think it's all 319 00:16:38,960 --> 00:16:39,640 Speaker 7: kind of a scam. 320 00:16:39,640 --> 00:16:42,040 Speaker 8: But I don't know. People love the Airbnb. My kids 321 00:16:42,120 --> 00:16:44,200 Speaker 8: use them all the time. Oh yeah, so good, good 322 00:16:44,200 --> 00:16:44,480 Speaker 8: for them. 323 00:16:46,000 --> 00:16:49,880 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 324 00:16:49,960 --> 00:16:53,000 Speaker 2: weekdays at ten am Eastern on Apple car Play and 325 00:16:53,000 --> 00:16:56,280 Speaker 2: Android Auto with the Bloomberg Business. You can also listen 326 00:16:56,400 --> 00:16:59,480 Speaker 2: live on Amazon Alexa from our flagship New York station 327 00:16:59,840 --> 00:17:02,240 Speaker 2: Just Alexa playing Bloomberg eleven. 328 00:17:04,119 --> 00:17:05,720 Speaker 4: Let's go to the other thing that I love, and 329 00:17:05,760 --> 00:17:10,680 Speaker 4: that's energy. How to store energy is huge, and it's 330 00:17:10,760 --> 00:17:14,400 Speaker 4: huge because if you want to diversify what energy you're using, 331 00:17:14,440 --> 00:17:17,800 Speaker 4: like wind and solar and even hydrogen, you need batteries, 332 00:17:17,840 --> 00:17:19,879 Speaker 4: and you need really big batteries to be able to 333 00:17:19,920 --> 00:17:21,639 Speaker 4: store it. Now, you can maybe do it for a 334 00:17:21,720 --> 00:17:24,360 Speaker 4: couple hours, maybe a day or two, but doing that 335 00:17:24,440 --> 00:17:27,639 Speaker 4: longer has proved really difficult and really expensive, and one 336 00:17:27,720 --> 00:17:30,400 Speaker 4: company is trying to change that. The company is called 337 00:17:30,560 --> 00:17:34,760 Speaker 4: energy Vault now. It's backed back in twenty twenty one. 338 00:17:35,720 --> 00:17:38,920 Speaker 4: Before it's backed, SoftBank was an investor. It's a Swiss 339 00:17:38,960 --> 00:17:42,280 Speaker 4: startup basically that is trying to find different ways of 340 00:17:42,400 --> 00:17:46,160 Speaker 4: storing energy. And the CEO joins us now, Rob Paconi, 341 00:17:46,200 --> 00:17:49,280 Speaker 4: CEO of Energy Vault. He joins US from Switzerland. Rob, 342 00:17:49,280 --> 00:17:52,040 Speaker 4: we appreciate the time. Can you just describe a little 343 00:17:52,080 --> 00:17:55,000 Speaker 4: bit in dumb down language what it is that you 344 00:17:55,040 --> 00:17:55,520 Speaker 4: guys do. 345 00:17:56,920 --> 00:17:57,280 Speaker 11: Sure. 346 00:17:57,320 --> 00:18:01,200 Speaker 12: So we broadly focus on energy storage, and we focus 347 00:18:01,240 --> 00:18:05,280 Speaker 12: on it with varying technologies and software. So we do 348 00:18:05,440 --> 00:18:09,800 Speaker 12: shorter duration energy storage using latimion. We do long duration 349 00:18:09,960 --> 00:18:13,520 Speaker 12: energy storage meaning things to get sort of in a six, eight, twelve, 350 00:18:13,600 --> 00:18:16,440 Speaker 12: even twenty four hours, so full day types of storage 351 00:18:16,440 --> 00:18:21,000 Speaker 12: with a unique gravity solution where we lift in. 352 00:18:21,000 --> 00:18:24,919 Speaker 11: Lower blocks or will shift water from different heights. And 353 00:18:25,000 --> 00:18:27,000 Speaker 11: we also do ultralong. 354 00:18:26,520 --> 00:18:31,359 Speaker 12: Duration meaning multi day storage using green hydrogen and microgrids. 355 00:18:32,600 --> 00:18:37,520 Speaker 13: Who are your customers, Rob, Our main customers are first 356 00:18:37,520 --> 00:18:40,560 Speaker 13: and foremost utility, so we can sell directly to utilities, 357 00:18:41,359 --> 00:18:45,199 Speaker 13: and we also sell to independent power producers so the 358 00:18:45,240 --> 00:18:48,280 Speaker 13: ones that will, for example, build out solar wind and 359 00:18:48,480 --> 00:18:52,280 Speaker 13: pair storage with that and have long term contracts with utilities. 360 00:18:52,680 --> 00:18:56,080 Speaker 11: And the third group are the large industrial users. 361 00:18:56,119 --> 00:19:00,560 Speaker 12: So our investors include people like Saudi Aramco HP, the 362 00:19:00,640 --> 00:19:03,959 Speaker 12: largest mining group in the world, and groups that are 363 00:19:04,000 --> 00:19:06,800 Speaker 12: looking to make their own clean energy transition or that 364 00:19:06,920 --> 00:19:09,840 Speaker 12: have desires to make streen hydrogen for example, where you 365 00:19:09,880 --> 00:19:13,560 Speaker 12: can make that using solar an electoralizer, but you need. 366 00:19:13,520 --> 00:19:17,520 Speaker 11: Long duration storage. So because our technology is focus. 367 00:19:17,160 --> 00:19:21,080 Speaker 12: Across a series of durations, we can actually meet a 368 00:19:21,080 --> 00:19:24,360 Speaker 12: lot of those needs and hence serving those three market segments. 369 00:19:24,560 --> 00:19:27,920 Speaker 4: So let's go back to the gravity storage solution thing. 370 00:19:27,960 --> 00:19:29,720 Speaker 4: So this is from an article here at bo boomer 371 00:19:29,760 --> 00:19:31,320 Speaker 4: from a few years ago, but it describes it and 372 00:19:31,320 --> 00:19:34,320 Speaker 4: I feel like accurately and pretty well. An electric crane 373 00:19:34,480 --> 00:19:37,760 Speaker 4: hoists up blocks of concrete and stacks them into a 374 00:19:37,840 --> 00:19:40,639 Speaker 4: tower when power is plentiful. When power is needed, it 375 00:19:40,720 --> 00:19:44,560 Speaker 4: uses gravity to take the structure apart brick by brick, 376 00:19:44,680 --> 00:19:47,919 Speaker 4: and the weight of the descending blocks converts kinetic energy 377 00:19:47,960 --> 00:19:51,320 Speaker 4: into electricity. That sounds really hard and complicated. 378 00:19:53,000 --> 00:19:55,359 Speaker 12: You know what, gravity has been around for a while. 379 00:19:55,640 --> 00:19:58,000 Speaker 12: I tell people it's not an idea, it's the law. 380 00:19:58,160 --> 00:20:01,920 Speaker 12: So the whole physics of moving weights up and down, 381 00:20:02,000 --> 00:20:04,399 Speaker 12: it's been around, but you're right to do that in 382 00:20:04,440 --> 00:20:07,639 Speaker 12: a way that's economical to do that now with software 383 00:20:07,680 --> 00:20:11,520 Speaker 12: where we can automate that entire process and dynamically look 384 00:20:11,560 --> 00:20:15,439 Speaker 12: at the timing and dynamically accelerate and accelerate that lifting 385 00:20:15,480 --> 00:20:19,520 Speaker 12: and lowering. And also we actually don't use concrete, so 386 00:20:19,560 --> 00:20:22,520 Speaker 12: we avoid it because it's not really sustainable. It's one 387 00:20:22,520 --> 00:20:25,000 Speaker 12: of the contributors I think seven to eight percent to 388 00:20:25,080 --> 00:20:28,359 Speaker 12: greenhouse gases. So we actually have a material science team 389 00:20:28,880 --> 00:20:31,960 Speaker 12: and worked with SEMX to use dirt and even waste 390 00:20:32,040 --> 00:20:35,680 Speaker 12: materials like coal ash, even concrete debris are the things 391 00:20:35,720 --> 00:20:39,919 Speaker 12: that would go into landfills. We can utilize that to 392 00:20:40,000 --> 00:20:42,560 Speaker 12: make these large blocks that are twenty five metric tons, 393 00:20:42,600 --> 00:20:45,640 Speaker 12: So we try and avoid materials that are not sustainable 394 00:20:46,400 --> 00:20:48,760 Speaker 12: to make those very same blocks. 395 00:20:49,680 --> 00:20:53,000 Speaker 7: So, how is I guess your business changing to try 396 00:20:53,040 --> 00:20:57,400 Speaker 7: to meet the changing sources and uses of energy these days. 397 00:20:59,000 --> 00:21:01,480 Speaker 12: It's a great question and it is one of the challenges. 398 00:21:01,520 --> 00:21:07,280 Speaker 12: It's definitely focused globally on countries wanting to achieve energy independence, 399 00:21:07,320 --> 00:21:10,080 Speaker 12: and to do that, you need to be able. 400 00:21:09,840 --> 00:21:10,960 Speaker 11: To produce locally. 401 00:21:11,040 --> 00:21:14,760 Speaker 12: Hence our gravity solution that's more long duration, of course 402 00:21:15,359 --> 00:21:17,960 Speaker 12: is ideal because you can produce most of that from 403 00:21:18,000 --> 00:21:20,320 Speaker 12: local materials with the labor I mean it's construction, you're 404 00:21:20,359 --> 00:21:23,080 Speaker 12: building a building. When you get to the short duration, 405 00:21:23,160 --> 00:21:24,800 Speaker 12: which is most of the market today, and if we 406 00:21:24,840 --> 00:21:27,720 Speaker 12: know about lithium ion, so that's two to four hours, 407 00:21:28,240 --> 00:21:31,159 Speaker 12: that's this time shifting people trying to manage you're relying 408 00:21:31,200 --> 00:21:33,480 Speaker 12: on the rare earth metals, which I believe Paul what 409 00:21:33,520 --> 00:21:37,320 Speaker 12: you're referring to, and that's where through mechanisms like the 410 00:21:37,400 --> 00:21:39,360 Speaker 12: IRA that was put in place in the US, they're 411 00:21:39,359 --> 00:21:40,720 Speaker 12: trying to get that localized. 412 00:21:41,720 --> 00:21:43,680 Speaker 11: And to deal with that, you have to. 413 00:21:43,640 --> 00:21:46,399 Speaker 12: Come up with mechanisms to try to bring some of 414 00:21:46,400 --> 00:21:48,840 Speaker 12: that production local as much as you can in terms 415 00:21:48,880 --> 00:21:52,439 Speaker 12: of getting content, and that's been a big focus area 416 00:21:52,640 --> 00:21:56,639 Speaker 12: and of leveraging technologies like hydrogen. For example, green hydrogen 417 00:21:56,920 --> 00:21:59,959 Speaker 12: can be made sustainably. We're using that to back up 418 00:22:00,119 --> 00:22:03,280 Speaker 12: the city of Calistoga in northern California and near Napa 419 00:22:03,640 --> 00:22:06,680 Speaker 12: to provide a sustainable backup solution for two to four 420 00:22:06,760 --> 00:22:09,960 Speaker 12: days that otherwise would have taken natural gas. So it's 421 00:22:09,960 --> 00:22:13,239 Speaker 12: a combination of technologies you really have to use to 422 00:22:13,320 --> 00:22:17,800 Speaker 12: solve this issue of reliance on either a few countries 423 00:22:17,800 --> 00:22:20,240 Speaker 12: in the world or a few rare word metals. 424 00:22:20,800 --> 00:22:22,960 Speaker 4: So if I just look at your stock, it's ninety 425 00:22:22,960 --> 00:22:26,520 Speaker 4: three cents. It's had a tough road since it's a spack, right, 426 00:22:26,560 --> 00:22:28,639 Speaker 4: I mean, clearly there was a lot of enthusiasm in 427 00:22:28,680 --> 00:22:30,880 Speaker 4: the beginning. You had a nice pop, and that's been 428 00:22:30,880 --> 00:22:34,040 Speaker 4: really tough. In the last earnings estimate and the last 429 00:22:34,040 --> 00:22:36,960 Speaker 4: earnings for second quarter, the headline is revenue missing estimates. 430 00:22:37,359 --> 00:22:41,280 Speaker 4: How how do you manage this at this time? It's 431 00:22:41,320 --> 00:22:43,679 Speaker 4: expensive to probably get all this done, even though the 432 00:22:43,720 --> 00:22:45,560 Speaker 4: demand we know is still there. 433 00:22:46,960 --> 00:22:49,520 Speaker 12: Yeah, the demand is high, and the capital markets have 434 00:22:49,600 --> 00:22:52,879 Speaker 12: been very challenging in particular if you go back to 435 00:22:53,000 --> 00:22:55,600 Speaker 12: mid twenty twenty two, when the interest rate environment changed 436 00:22:55,600 --> 00:22:58,880 Speaker 12: and really fundamentally, I think the risk appetite for new 437 00:22:58,920 --> 00:23:04,439 Speaker 12: emerging growths like ours really soured and changed. And for us, 438 00:23:04,480 --> 00:23:07,399 Speaker 12: we focused on execution and our you know, we had 439 00:23:07,400 --> 00:23:09,120 Speaker 12: one hundred and forty eight million in our first year 440 00:23:09,200 --> 00:23:12,520 Speaker 12: revenue twenty twenty two, our second year almost three hundred 441 00:23:12,560 --> 00:23:15,000 Speaker 12: and fifty millions. We more than doubled the size of 442 00:23:15,000 --> 00:23:17,840 Speaker 12: the company, but at the end, investors are really focused 443 00:23:17,880 --> 00:23:21,640 Speaker 12: on cash flow and minimizing risk. We've guided that that's 444 00:23:21,640 --> 00:23:24,560 Speaker 12: going to happen next year. So in our first I 445 00:23:24,600 --> 00:23:27,840 Speaker 12: guess would be our first third, our third full year 446 00:23:28,119 --> 00:23:31,679 Speaker 12: of revenue, we're going to be cash flow positive and 447 00:23:31,720 --> 00:23:34,520 Speaker 12: even at positive. And I think until that happens, a 448 00:23:34,560 --> 00:23:37,320 Speaker 12: lot of investors are on the sidelines. And what we 449 00:23:37,359 --> 00:23:40,080 Speaker 12: can do is what we're doing, which is executing for 450 00:23:40,200 --> 00:23:42,520 Speaker 12: customers and in different regions of the world. We announced 451 00:23:42,720 --> 00:23:46,400 Speaker 12: new deals in Australia, we announced a large gravity project 452 00:23:46,480 --> 00:23:48,959 Speaker 12: in Italy had a coal mine, and I think filling 453 00:23:49,000 --> 00:23:51,600 Speaker 12: up that order book alex is going to be fundamental, 454 00:23:51,680 --> 00:23:54,560 Speaker 12: so investors see it's not about if, it's just about 455 00:23:54,560 --> 00:23:57,200 Speaker 12: when and as we feel that order book, then when 456 00:23:57,240 --> 00:24:00,600 Speaker 12: that cast flow roadmap becomes very clear, which we're getting 457 00:24:00,600 --> 00:24:02,479 Speaker 12: there to twenty twenty five, which is what we guided, 458 00:24:02,920 --> 00:24:05,320 Speaker 12: I think then we'll see investors re entering the stock. 459 00:24:05,760 --> 00:24:07,800 Speaker 8: In the interim, how do you fund your growth? 460 00:24:07,800 --> 00:24:10,960 Speaker 7: Because I'm looking at the FA function, which gathers up 461 00:24:11,000 --> 00:24:13,600 Speaker 7: all the anaals estimate it's still no free positive free 462 00:24:13,600 --> 00:24:15,520 Speaker 7: cash flow in sight here, So how do you fund 463 00:24:15,520 --> 00:24:15,920 Speaker 7: that growth? 464 00:24:17,200 --> 00:24:19,960 Speaker 12: Well, we're in a great cast position, so we're well 465 00:24:20,000 --> 00:24:23,280 Speaker 12: north of one hundred million no debt. Unlike a lot 466 00:24:23,320 --> 00:24:27,440 Speaker 12: of the companies that pursued this backgroute, they've done diluted 467 00:24:27,560 --> 00:24:30,639 Speaker 12: convertible notes and really at high cost and also that 468 00:24:30,720 --> 00:24:31,360 Speaker 12: hurt investors. 469 00:24:31,359 --> 00:24:32,239 Speaker 11: We've done none of them. 470 00:24:32,720 --> 00:24:35,360 Speaker 12: So we have no debt as a company, well over 471 00:24:35,359 --> 00:24:37,840 Speaker 12: one hundred million in cash, and we've reduced our burn 472 00:24:37,960 --> 00:24:40,439 Speaker 12: rate to about fifteen million at quarter, and in the 473 00:24:40,480 --> 00:24:44,640 Speaker 12: meantime we're ramping up now that revenue we've guided five 474 00:24:44,680 --> 00:24:47,400 Speaker 12: hundred to seven hundred million between this year and next year. 475 00:24:47,760 --> 00:24:50,600 Speaker 12: We do have a second half ramp, so that's not 476 00:24:50,720 --> 00:24:54,639 Speaker 12: unusual when we're relying on EPC projects and the timing 477 00:24:54,640 --> 00:24:58,720 Speaker 12: of these projects starts. So that's from a cash perspective 478 00:24:58,920 --> 00:25:02,159 Speaker 12: and being good stewards of the shareholder money and cash. 479 00:25:02,280 --> 00:25:04,040 Speaker 12: We've actually done a very good job of that and 480 00:25:04,680 --> 00:25:06,400 Speaker 12: that's going to be playing out as we get into 481 00:25:06,400 --> 00:25:08,439 Speaker 12: our growth period where we don't have a need to 482 00:25:08,520 --> 00:25:09,200 Speaker 12: take on debt. 483 00:25:09,960 --> 00:25:12,000 Speaker 4: All right, Rob, we really appreciate it, Thank you so much. 484 00:25:12,119 --> 00:25:14,560 Speaker 4: It's such an important space, and particularly with all the 485 00:25:14,600 --> 00:25:17,199 Speaker 4: money flowing into it from private equity companies as well 486 00:25:17,240 --> 00:25:23,080 Speaker 4: as governments. We appreciate that insight. Arabiconi, CEO of Energy Vault, 487 00:25:23,359 --> 00:25:26,359 Speaker 4: joining us on energy storage, which we definitely definitely need. 488 00:25:26,440 --> 00:25:28,120 Speaker 3: I think the question also becomes, you. 489 00:25:28,080 --> 00:25:30,600 Speaker 4: Know, we just had sun Power file for bankruptcy yesterday 490 00:25:30,600 --> 00:25:33,120 Speaker 4: as a solar company based in California, and there were 491 00:25:33,119 --> 00:25:36,480 Speaker 4: it is syncratic issues, to be sure, but what happens 492 00:25:36,520 --> 00:25:39,840 Speaker 4: when someone else or whoever takes the White House in November, 493 00:25:39,880 --> 00:25:43,600 Speaker 4: if it's President Trump, what areas of this gets rolled 494 00:25:43,680 --> 00:25:46,840 Speaker 4: back of the IRA? Maybe nothing, I mean money's already 495 00:25:46,840 --> 00:25:49,120 Speaker 4: been spent, but maybe something. And I think that must 496 00:25:49,119 --> 00:25:51,919 Speaker 4: be very difficult to kind of manage in this business 497 00:25:51,960 --> 00:25:52,880 Speaker 4: right now right And if. 498 00:25:52,760 --> 00:25:54,680 Speaker 7: Your investor, do you want to stick around? And why 499 00:25:54,720 --> 00:25:57,639 Speaker 7: you have that level of uncertainty? So yeah, we'll have 500 00:25:57,640 --> 00:25:59,760 Speaker 7: to see. So certainly one of the industries that is 501 00:25:59,760 --> 00:26:02,720 Speaker 7: paying close attention to the national elections. 502 00:26:04,200 --> 00:26:08,080 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 503 00:26:08,160 --> 00:26:11,680 Speaker 2: weekdays at ten am Eastern on applecar Play and Android 504 00:26:11,720 --> 00:26:14,480 Speaker 2: Auto with the Bloomberg Business app. You can also listen 505 00:26:14,600 --> 00:26:17,720 Speaker 2: live on Amazon Alexa from our flagship New York station. 506 00:26:18,080 --> 00:26:23,040 Speaker 2: Just say Alexa play Bloomberg eleven thirty. 507 00:26:22,560 --> 00:26:24,440 Speaker 8: Alex Steel, Paul sweeneing. We're live here in our Bloomberg 508 00:26:24,440 --> 00:26:25,479 Speaker 8: and Active broke the studio. 509 00:26:25,520 --> 00:26:28,200 Speaker 7: We're streaming live on YouTube as well, so you can 510 00:26:28,240 --> 00:26:31,800 Speaker 7: see us YouTube dot Com search Bloomberg Podcast. All right, 511 00:26:32,000 --> 00:26:33,960 Speaker 7: you know, commercial real estate, this is the way I 512 00:26:34,000 --> 00:26:37,560 Speaker 7: frame it for everybody. Third Avenue, New York City, between 513 00:26:37,600 --> 00:26:41,040 Speaker 7: Grand Central and our hqu here at fifty eighth Street. 514 00:26:41,400 --> 00:26:43,359 Speaker 7: When those buildings trade there, what are they going to 515 00:26:43,440 --> 00:26:47,080 Speaker 7: trade at? I mean, what discount to the market. Bloomberg 516 00:26:47,200 --> 00:26:49,160 Speaker 7: News did a great story on about a year ago, 517 00:26:49,200 --> 00:26:51,679 Speaker 7: saying that's really a risky area and it's emblematic of 518 00:26:51,680 --> 00:26:53,040 Speaker 7: some of the problems in urban real estate. 519 00:26:53,119 --> 00:26:54,000 Speaker 8: Lisa Nee joins us. 520 00:26:54,000 --> 00:26:55,679 Speaker 7: She's a managing partner and head of real estate at 521 00:26:55,680 --> 00:26:58,320 Speaker 7: Eisner Amper. I don't pick a building there seven to 522 00:26:58,320 --> 00:27:02,680 Speaker 7: fifty Third Avenue when that thing trades ten percent discount, 523 00:27:02,720 --> 00:27:04,920 Speaker 7: twenty forty fifty percent discount? 524 00:27:05,080 --> 00:27:06,479 Speaker 8: Where is the market these days? 525 00:27:06,680 --> 00:27:06,840 Speaker 6: Yeah? 526 00:27:06,920 --> 00:27:08,480 Speaker 1: Hi, thank you for having me. So that's a really 527 00:27:08,480 --> 00:27:11,000 Speaker 1: great question as to where the valuation sits and where 528 00:27:11,040 --> 00:27:13,400 Speaker 1: people are willing to have the buyers and the sellers 529 00:27:13,680 --> 00:27:16,359 Speaker 1: agree to that price. So seven fifty third Avenue. 530 00:27:17,240 --> 00:27:18,760 Speaker 8: Which is just to pick one ount of the blue. 531 00:27:19,080 --> 00:27:21,119 Speaker 1: It wasn't my old office space. We currently moved to 532 00:27:21,119 --> 00:27:22,800 Speaker 1: where I was seven thirty three now, so it was 533 00:27:22,800 --> 00:27:25,280 Speaker 1: our old space there. But looking at there and sort 534 00:27:25,280 --> 00:27:27,439 Speaker 1: of looking a Class A office building is going to 535 00:27:27,440 --> 00:27:29,280 Speaker 1: trade differently than a B and C and the curtain's 536 00:27:29,280 --> 00:27:31,400 Speaker 1: going to trade differently. So last year, if you would 537 00:27:31,400 --> 00:27:33,320 Speaker 1: have had me here at this time, things where people 538 00:27:33,359 --> 00:27:36,280 Speaker 1: weren't willing to make those price adjustments. And now when 539 00:27:36,320 --> 00:27:38,879 Speaker 1: you're looking at valuations, are they're looking to make some 540 00:27:38,920 --> 00:27:41,879 Speaker 1: of the adjustments. Now how much of a decrease is 541 00:27:41,920 --> 00:27:43,280 Speaker 1: really the key there? 542 00:27:43,359 --> 00:27:44,040 Speaker 8: And looking at the. 543 00:27:44,040 --> 00:27:46,080 Speaker 1: Leases in place too, is it a long term lea 544 00:27:46,200 --> 00:27:49,199 Speaker 1: short term? And so the valuation is the key of 545 00:27:49,240 --> 00:27:51,840 Speaker 1: what everything is going to be driving at. Now we 546 00:27:51,880 --> 00:27:54,080 Speaker 1: finally have some buyers and sellers who are willing to 547 00:27:54,119 --> 00:27:56,560 Speaker 1: bridge that gap because the sellers are obviously waiting for 548 00:27:56,600 --> 00:27:59,359 Speaker 1: the higher pricing. The buyers really want those deeper, deeper 549 00:27:59,400 --> 00:28:00,879 Speaker 1: discounts that they're willing to do. 550 00:28:00,880 --> 00:28:01,800 Speaker 8: Do we have a market? 551 00:28:02,640 --> 00:28:06,040 Speaker 7: Could you say, you know what I understand is Class 552 00:28:06,040 --> 00:28:08,359 Speaker 7: A in New York or Boston or San Francisco holding 553 00:28:08,359 --> 00:28:11,919 Speaker 7: its value correct and doing well B and C. Some 554 00:28:11,960 --> 00:28:15,600 Speaker 7: of the discounts we're hearing, I'm hearing fifty percent plus correct. 555 00:28:15,640 --> 00:28:17,560 Speaker 1: And it's also where how far are you along on 556 00:28:17,560 --> 00:28:19,879 Speaker 1: that cycle? Where are you you with your debt on that? 557 00:28:20,000 --> 00:28:22,320 Speaker 1: And so what are the banks pressuring you? I mean, 558 00:28:22,320 --> 00:28:24,280 Speaker 1: the banks at this point have been doing the pretend 559 00:28:24,320 --> 00:28:26,600 Speaker 1: and extent, which because they want to keep it on 560 00:28:26,640 --> 00:28:28,520 Speaker 1: their balance sheet. Now they're looking at some of those 561 00:28:28,600 --> 00:28:30,320 Speaker 1: v's and c's and looking to say, do we have 562 00:28:30,359 --> 00:28:32,280 Speaker 1: to get those off our balance sheets? And they're pressuring 563 00:28:32,800 --> 00:28:36,720 Speaker 1: the owners of the borrowers of the buildings to really 564 00:28:36,720 --> 00:28:39,600 Speaker 1: go and do some due diligence and making sure to 565 00:28:39,600 --> 00:28:41,880 Speaker 1: see how long they can last with those buildings and 566 00:28:41,920 --> 00:28:44,000 Speaker 1: seeing if they really need to start getting those off 567 00:28:44,040 --> 00:28:45,800 Speaker 1: their balance sheets. And so the banks are putting some 568 00:28:45,840 --> 00:28:48,720 Speaker 1: pressure regulatory reasons, I mean, the whole host of things 569 00:28:50,400 --> 00:28:53,600 Speaker 1: for those buyers to start looking and making some adjustments 570 00:28:53,640 --> 00:28:54,400 Speaker 1: for the sellers. 571 00:28:54,640 --> 00:28:56,560 Speaker 4: We also saw I think it was yesterday, I think 572 00:28:56,640 --> 00:29:00,000 Speaker 4: Goldman Sachs took one of the big buildings in Time 573 00:29:00,160 --> 00:29:03,760 Speaker 4: Square and sl Green is going to be the property developer. 574 00:29:03,760 --> 00:29:04,800 Speaker 3: But basically, the guys. 575 00:29:04,640 --> 00:29:07,000 Speaker 4: Who owned it defaulted on loans and then banks had 576 00:29:07,120 --> 00:29:09,000 Speaker 4: taken control of it. Is that are we going to 577 00:29:09,040 --> 00:29:11,200 Speaker 4: see that over and over now or is this going 578 00:29:11,240 --> 00:29:12,080 Speaker 4: to be like a one off? 579 00:29:12,440 --> 00:29:14,880 Speaker 1: So those are great headlines. That's what people want to read, 580 00:29:15,000 --> 00:29:17,440 Speaker 1: is those headline stories. You're not going to read the 581 00:29:17,480 --> 00:29:19,400 Speaker 1: portfolios that we're able to work itself out through the 582 00:29:19,400 --> 00:29:21,640 Speaker 1: news because no one cares. But those are happening. And 583 00:29:21,680 --> 00:29:24,360 Speaker 1: so those behind the scenes stories are happening day after day. 584 00:29:24,440 --> 00:29:25,440 Speaker 3: How do they get worked out? 585 00:29:25,760 --> 00:29:29,280 Speaker 1: So the banks will work with the the borrowers and 586 00:29:29,320 --> 00:29:31,520 Speaker 1: they'll put in some provisions in there for plans, they'll 587 00:29:31,560 --> 00:29:33,600 Speaker 1: look at their rent roles. They're making sure that they 588 00:29:33,600 --> 00:29:36,800 Speaker 1: can make those payments and trying to make modifications within 589 00:29:36,840 --> 00:29:40,040 Speaker 1: those debts to make sure that the borrowers really can 590 00:29:42,440 --> 00:29:44,600 Speaker 1: can make the properties work. The banks don't want to 591 00:29:44,600 --> 00:29:46,840 Speaker 1: see those headlines undistressed. I mean, the banks don't want 592 00:29:46,840 --> 00:29:48,240 Speaker 1: to go out of business, so they really want to 593 00:29:48,240 --> 00:29:50,080 Speaker 1: make sure that they're working and if they can make 594 00:29:50,080 --> 00:29:51,960 Speaker 1: the cash flow work, they are going to work to 595 00:29:51,960 --> 00:29:54,960 Speaker 1: modify those those debt instruments for the lenders or for 596 00:29:54,960 --> 00:29:55,440 Speaker 1: the borrowers. 597 00:29:55,480 --> 00:29:57,680 Speaker 7: I should say, you know, I have yet to have 598 00:29:57,960 --> 00:29:59,920 Speaker 7: or we have yet to have because we focus on 599 00:30:00,080 --> 00:30:02,120 Speaker 7: commercial real estate. Maybe we think about office too much, 600 00:30:02,160 --> 00:30:04,040 Speaker 7: and we think about New York City, San Francisco office 601 00:30:04,080 --> 00:30:05,120 Speaker 7: too much because. 602 00:30:04,920 --> 00:30:07,720 Speaker 8: Commercial is so much broader. But I want the person 603 00:30:07,760 --> 00:30:08,280 Speaker 8: to come in here. 604 00:30:08,440 --> 00:30:10,080 Speaker 7: Maybe it's a family business been in New York real 605 00:30:10,200 --> 00:30:12,000 Speaker 7: estate for one hundred and fifty years and said we're 606 00:30:12,000 --> 00:30:14,760 Speaker 7: done too many of our We had B and C 607 00:30:14,880 --> 00:30:17,560 Speaker 7: buildings on Third Avenue and the banks are forces and 608 00:30:17,600 --> 00:30:19,360 Speaker 7: we're only getting fit fifty cents in the dollar. My 609 00:30:19,400 --> 00:30:21,720 Speaker 7: one hundred and fifty year family business is done well. 610 00:30:21,720 --> 00:30:23,560 Speaker 1: We never want that to happen, right, so we want 611 00:30:23,560 --> 00:30:25,800 Speaker 1: to make sure well working it is not happening. Most 612 00:30:25,800 --> 00:30:28,480 Speaker 1: of those are very lower they're low leverage, holding those 613 00:30:28,480 --> 00:30:30,800 Speaker 1: buildings for a long time, and those are smart cash 614 00:30:30,840 --> 00:30:33,480 Speaker 1: flowing assets, and so they've been working those assets for 615 00:30:33,560 --> 00:30:35,120 Speaker 1: quite a long time. You're not going to see a 616 00:30:35,120 --> 00:30:35,720 Speaker 1: flood of deals. 617 00:30:36,040 --> 00:30:36,320 Speaker 5: You're not. 618 00:30:36,400 --> 00:30:38,360 Speaker 1: You're going to see the here off bigger deals that 619 00:30:38,400 --> 00:30:39,880 Speaker 1: you're going to be able to read about in the paper. 620 00:30:40,080 --> 00:30:42,040 Speaker 1: But the floods that people were waiting for with all 621 00:30:42,040 --> 00:30:44,600 Speaker 1: the capital to come in and rescue hasn't happened yet, 622 00:30:44,840 --> 00:30:47,000 Speaker 1: and now have we hit the bottom? You know, I 623 00:30:47,480 --> 00:30:50,040 Speaker 1: was away with a bunch of really really smart owners 624 00:30:50,040 --> 00:30:52,480 Speaker 1: and operators last week and they couldn't agree if we've 625 00:30:52,520 --> 00:30:54,840 Speaker 1: hit the bottom yet, And so it's just trying to 626 00:30:54,840 --> 00:30:55,400 Speaker 1: figure that out. 627 00:30:55,440 --> 00:30:58,440 Speaker 4: So to that point, I guess it's twofold question, why 628 00:30:58,480 --> 00:31:02,320 Speaker 4: haven't we seen this flood of defaults like we are 629 00:31:02,360 --> 00:31:05,760 Speaker 4: all kind of waiting for? And if we imply it's 630 00:31:05,800 --> 00:31:08,200 Speaker 4: more on like a rolling basis where there's going to 631 00:31:08,240 --> 00:31:11,120 Speaker 4: be these one off buildings, et cetera, one off deals, 632 00:31:11,520 --> 00:31:14,600 Speaker 4: how long can that last for forever? 633 00:31:15,280 --> 00:31:15,560 Speaker 5: Great? 634 00:31:15,640 --> 00:31:16,280 Speaker 6: Great question? 635 00:31:16,840 --> 00:31:18,760 Speaker 1: Wish I knew most of that, but again it's hard 636 00:31:18,840 --> 00:31:20,800 Speaker 1: to deal with what the banks are willing to tolerate 637 00:31:20,800 --> 00:31:22,720 Speaker 1: and how they can go in and do the modifications 638 00:31:22,760 --> 00:31:25,320 Speaker 1: from a cash flow perspective. What people also are talking 639 00:31:25,360 --> 00:31:27,840 Speaker 1: about is when you're looking to go in and purchase 640 00:31:27,880 --> 00:31:30,960 Speaker 1: those deals and bring in the distress capital, the distress 641 00:31:31,040 --> 00:31:33,120 Speaker 1: isn't there, so it's really not as dire, and so 642 00:31:33,520 --> 00:31:36,000 Speaker 1: really getting the people to understand what the valuations of 643 00:31:36,040 --> 00:31:39,160 Speaker 1: those properties are and wanting to infuse capital to make 644 00:31:39,160 --> 00:31:41,520 Speaker 1: those properties work. And so I think we're going to 645 00:31:41,560 --> 00:31:44,120 Speaker 1: keep seeing the one off for a little bit until 646 00:31:44,160 --> 00:31:46,440 Speaker 1: we really hit that equilibrium where the buyers and the 647 00:31:46,480 --> 00:31:49,280 Speaker 1: sellers can and we're almost there can start making some 648 00:31:49,320 --> 00:31:50,360 Speaker 1: real meaningful trades. 649 00:31:50,600 --> 00:31:54,040 Speaker 8: What are the good stories out there? And commercial real estate, there's. 650 00:31:53,880 --> 00:31:55,440 Speaker 1: A lot of good thank you, there's a lot of 651 00:31:55,480 --> 00:31:58,520 Speaker 1: good stories. So industrial is doing really well. Data centers 652 00:31:58,760 --> 00:32:03,040 Speaker 1: are hot, Hospitality come back, hotels great, people are traveling. 653 00:32:02,760 --> 00:32:03,360 Speaker 8: And doing that. 654 00:32:03,600 --> 00:32:06,040 Speaker 1: You know, maybe a little bit nervous about consumer spending 655 00:32:06,360 --> 00:32:09,040 Speaker 1: people with that fear and what's going to happen with 656 00:32:09,040 --> 00:32:11,640 Speaker 1: the report that just came out, But hospitality industry is 657 00:32:11,680 --> 00:32:14,400 Speaker 1: doing remarkably while considering where we were, you know, a 658 00:32:14,440 --> 00:32:16,800 Speaker 1: few years ago. So there are some great stories and 659 00:32:16,840 --> 00:32:19,480 Speaker 1: there's some great opportunities. But in every asset class, there's 660 00:32:19,480 --> 00:32:23,000 Speaker 1: always a great opportunity for a great property with a 661 00:32:23,040 --> 00:32:25,520 Speaker 1: really good vision. Why not take a great opportunity for that. 662 00:32:25,600 --> 00:32:29,000 Speaker 1: So there are some exciting moments in commercial real estate. 663 00:32:29,080 --> 00:32:31,200 Speaker 4: So Paul has a six percent or over six percent 664 00:32:31,200 --> 00:32:33,440 Speaker 4: of Morgan right, he had straight up six. So the 665 00:32:33,480 --> 00:32:35,680 Speaker 4: big question is like, you know, when does he refine? 666 00:32:35,680 --> 00:32:37,840 Speaker 4: And he's like in the fives, he'll consider it. I'm 667 00:32:37,880 --> 00:32:39,640 Speaker 4: guessing it has to be in the lower fives tree 668 00:32:39,720 --> 00:32:43,960 Speaker 4: to really consider it. What kind of FED cutting cycle 669 00:32:44,120 --> 00:32:46,280 Speaker 4: do we need for things to make a lot more 670 00:32:46,320 --> 00:32:47,640 Speaker 4: sense in your world. 671 00:32:47,800 --> 00:32:50,720 Speaker 1: So we're all anticipating, we talked about this before the session. 672 00:32:50,760 --> 00:32:54,040 Speaker 1: We're all anticipating about fifty basis points in September for 673 00:32:54,080 --> 00:32:56,440 Speaker 1: the FED to reduce. We saw in Alarming what people 674 00:32:56,440 --> 00:32:59,120 Speaker 1: wanted an emergency, which is not going to happen again 675 00:32:59,320 --> 00:33:02,160 Speaker 1: to do the refinance is much different than the buyer market. 676 00:33:02,400 --> 00:33:04,400 Speaker 1: So that refinance, I'm not sure Paul's going to get 677 00:33:04,400 --> 00:33:05,160 Speaker 1: where he wants to. 678 00:33:05,120 --> 00:33:05,960 Speaker 3: Go so quickly. 679 00:33:06,200 --> 00:33:09,040 Speaker 1: But what should happen is that hopefully for people who 680 00:33:09,080 --> 00:33:12,160 Speaker 1: are looking to sell, with the lowering of the interest rates, 681 00:33:12,240 --> 00:33:13,959 Speaker 1: it'll make it a little bit easier for the buyers 682 00:33:14,000 --> 00:33:17,160 Speaker 1: to come in and purchase, so that purchase those assets. 683 00:33:17,200 --> 00:33:19,720 Speaker 1: With respect to home building, now, remember there's a lot 684 00:33:19,760 --> 00:33:21,880 Speaker 1: more inventory now, believe it or not, than there were 685 00:33:21,960 --> 00:33:25,440 Speaker 1: a year ago. With there's been a surge recently of 686 00:33:25,560 --> 00:33:27,320 Speaker 1: used homes, which are the homes that we've all lived in, 687 00:33:27,360 --> 00:33:29,200 Speaker 1: and the home builders are having a little bit more 688 00:33:29,200 --> 00:33:33,000 Speaker 1: of an influx of inventory for new units. What's interesting though, 689 00:33:33,440 --> 00:33:36,320 Speaker 1: is there was a study done for the median home purchase. 690 00:33:36,680 --> 00:33:40,200 Speaker 1: The disparity disparity now between rental and that mortgage payment 691 00:33:40,240 --> 00:33:43,240 Speaker 1: is still thirteen hundred dollars a month. Ten year average 692 00:33:43,280 --> 00:33:45,520 Speaker 1: was three to four hundred a month, So we got 693 00:33:45,520 --> 00:33:47,240 Speaker 1: to get that a little bit lower to be able 694 00:33:47,280 --> 00:33:49,080 Speaker 1: to make a meaningful difference there. 695 00:33:49,680 --> 00:33:53,000 Speaker 7: So our banks lending, like, if I want to I'm 696 00:33:53,040 --> 00:33:56,280 Speaker 7: in Poughkeepsie and I want to build an office park, 697 00:33:56,440 --> 00:33:59,440 Speaker 7: or maybe it's maybe not an office park, probably like 698 00:33:59,440 --> 00:34:02,080 Speaker 7: a just a warehouse or something, will my local bank 699 00:34:02,160 --> 00:34:03,760 Speaker 7: lend to me at reasonable terms? 700 00:34:04,400 --> 00:34:06,600 Speaker 1: They're making the regulatory is making it harder. It's making 701 00:34:06,640 --> 00:34:08,320 Speaker 1: harder for them to go on their balance sheets and 702 00:34:08,400 --> 00:34:10,920 Speaker 1: do it. Creative financing is a little bit more so 703 00:34:10,960 --> 00:34:13,600 Speaker 1: whether it's a debt fund, and even in the insurance 704 00:34:13,640 --> 00:34:16,440 Speaker 1: companies aren't running to do those lens. Sellar financing has 705 00:34:16,480 --> 00:34:19,759 Speaker 1: really had an uptick in those types of projects. Again, 706 00:34:19,800 --> 00:34:21,880 Speaker 1: that's land and you're building a warehouse. If you're building, 707 00:34:21,920 --> 00:34:25,080 Speaker 1: if you're renovating and existing, you might get seller financing. 708 00:34:25,360 --> 00:34:27,440 Speaker 1: But the debt funds and some familieve it or not, 709 00:34:27,560 --> 00:34:30,279 Speaker 1: those families that we spoke about, they're looking to do 710 00:34:30,360 --> 00:34:33,840 Speaker 1: some creative financing too for people in the real estate space. 711 00:34:34,080 --> 00:34:36,160 Speaker 1: So it's going to be not if your debt might 712 00:34:36,200 --> 00:34:38,400 Speaker 1: not look the way it had historically, but there is 713 00:34:38,480 --> 00:34:40,840 Speaker 1: money out there for those investments. 714 00:34:41,120 --> 00:34:43,840 Speaker 4: All right, Lisa, really great stuff. Really appreciate that perspective. 715 00:34:43,840 --> 00:34:45,920 Speaker 4: Please come back. Liason, the managing partner and head of 716 00:34:45,920 --> 00:34:48,560 Speaker 4: real estate over at Eisner Amper. And finally enough we 717 00:34:48,560 --> 00:34:51,839 Speaker 4: got Brookfield coming on with earnings today and just they 718 00:34:51,880 --> 00:34:54,800 Speaker 4: were expecting deal activity to pick up now that central 719 00:34:54,840 --> 00:34:57,640 Speaker 4: banks are going to be cutting interest rates and that 720 00:34:57,680 --> 00:35:00,319 Speaker 4: they think that there'll be some large scale transactions happen 721 00:35:00,400 --> 00:35:02,319 Speaker 4: and they're able to exit some of their investments. But 722 00:35:02,360 --> 00:35:04,920 Speaker 4: that's like a behemoth, and they're an asset manager, so 723 00:35:04,920 --> 00:35:06,680 Speaker 4: that's a whole different kind of even ship. 724 00:35:06,680 --> 00:35:07,839 Speaker 8: I've seen them walk away from. 725 00:35:08,120 --> 00:35:10,200 Speaker 7: I mean some of the big names, like I would 726 00:35:10,239 --> 00:35:12,520 Speaker 7: just think from a reputational perspective, I wouldn't. 727 00:35:12,160 --> 00:35:15,880 Speaker 8: Walk away from the building and take loss like a professional, like. 728 00:35:15,920 --> 00:35:17,080 Speaker 3: A like a like a thing. 729 00:35:17,239 --> 00:35:18,400 Speaker 8: Yeah, but it's something I. 730 00:35:18,920 --> 00:35:20,880 Speaker 7: Don't know, but I guess there are these big funds 731 00:35:20,920 --> 00:35:21,480 Speaker 7: and they can do it. 732 00:35:21,719 --> 00:35:23,320 Speaker 4: I guess they do say that the real estate market 733 00:35:23,360 --> 00:35:25,359 Speaker 4: it is improving. I guess the question is like how 734 00:35:25,400 --> 00:35:27,160 Speaker 4: fast does it improve? And then where we kind of 735 00:35:27,880 --> 00:35:28,480 Speaker 4: go from there. 736 00:35:30,000 --> 00:35:33,879 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 737 00:35:33,960 --> 00:35:37,480 Speaker 2: weekdays at ten am Eastern on applecar Play and Android 738 00:35:37,520 --> 00:35:40,280 Speaker 2: Auto with the Bloomberg Business app. You can also listen 739 00:35:40,400 --> 00:35:43,520 Speaker 2: live on Amazon Alexa from our flagship New York station, 740 00:35:43,880 --> 00:35:46,920 Speaker 2: Just say Alexa play Bloomberg eleven thirty. 741 00:35:47,960 --> 00:35:50,719 Speaker 4: From alex See alongside Paul Sweeney. This is Bloomberg Intelligence 742 00:35:50,800 --> 00:35:52,960 Speaker 4: Radio could bring you all the top news in business 743 00:35:52,960 --> 00:35:55,080 Speaker 4: and finance and economics. There are lens of our Bloomberg 744 00:35:55,120 --> 00:35:58,000 Speaker 4: Intelligence analysts. They cover two thousand companies and one hundred 745 00:35:58,000 --> 00:36:02,080 Speaker 4: and thirty industries worldwide. We also love earnings, We love companies. 746 00:36:02,120 --> 00:36:03,640 Speaker 4: We love to dig deep into some of the ones 747 00:36:03,680 --> 00:36:05,360 Speaker 4: you may not have heard of and from. One of 748 00:36:05,400 --> 00:36:10,040 Speaker 4: that is Nayax. It's ticker and y ax on the Nasdaq. 749 00:36:10,520 --> 00:36:13,840 Speaker 4: It is classified as an other financial services It's a 750 00:36:13,960 --> 00:36:17,560 Speaker 4: vending payment solution company. The stock is up almost five 751 00:36:17,600 --> 00:36:20,840 Speaker 4: percent of reported earnings. This morning, they reported a loss 752 00:36:20,840 --> 00:36:24,319 Speaker 4: of about eight cents a share on revenue of As 753 00:36:24,360 --> 00:36:26,160 Speaker 4: I go ahead and try and bring it up on 754 00:36:26,160 --> 00:36:30,040 Speaker 4: my computer on revenue about seventy eight point one million dollars. 755 00:36:30,040 --> 00:36:33,960 Speaker 4: The CFO joins us, Now SAGI te manor joins us. 756 00:36:34,400 --> 00:36:36,400 Speaker 3: Sagi tell us more about your company. What do you 757 00:36:36,400 --> 00:36:36,799 Speaker 3: guys do? 758 00:36:38,600 --> 00:36:39,320 Speaker 6: Good morning. 759 00:36:40,080 --> 00:36:44,160 Speaker 14: So Nayax is the only global company in the unattended space. 760 00:36:44,200 --> 00:36:46,960 Speaker 14: And what do I mean by d You usually think 761 00:36:47,000 --> 00:36:49,760 Speaker 14: about going into a store and paying with a cashier. 762 00:36:50,200 --> 00:36:53,640 Speaker 14: We're exactly the outside of the store in the automated 763 00:36:53,680 --> 00:36:54,440 Speaker 14: self service. 764 00:36:54,560 --> 00:36:56,279 Speaker 6: So think about as the. 765 00:36:56,280 --> 00:36:58,840 Speaker 14: Vending machine, a massagere as you might see in the 766 00:36:58,920 --> 00:37:05,960 Speaker 14: JFK airport, laundromat, EV charging stations and whatnot. We are, 767 00:37:06,000 --> 00:37:09,600 Speaker 14: as I said, the only global company in that space, 768 00:37:09,840 --> 00:37:13,120 Speaker 14: selling to more than one hundred and twenty countries. We 769 00:37:13,200 --> 00:37:16,400 Speaker 14: have one point two million devices around the world with 770 00:37:16,560 --> 00:37:20,880 Speaker 14: eighty five thousand customers, and we are very happy with 771 00:37:21,000 --> 00:37:24,000 Speaker 14: the positioning that we have today in order to because 772 00:37:24,160 --> 00:37:27,800 Speaker 14: this space is early stages, so very excited. 773 00:37:28,640 --> 00:37:32,040 Speaker 7: So SAGI, talk to us about your relationship with the 774 00:37:32,080 --> 00:37:36,359 Speaker 7: EV business. How does your technology interface with the EV 775 00:37:36,680 --> 00:37:37,920 Speaker 7: charging business? 776 00:37:39,120 --> 00:37:43,279 Speaker 14: So we're actually selling our product in forty four different verticals. 777 00:37:43,440 --> 00:37:47,920 Speaker 14: I've mentioned the vending machine, Nostasche, kid ride, laundromat, parking 778 00:37:48,400 --> 00:37:52,040 Speaker 14: as well as the EV charging stations, which it's a 779 00:37:52,160 --> 00:37:55,440 Speaker 14: very interesting vertical and we are very excited about the 780 00:37:55,440 --> 00:38:00,840 Speaker 14: opportunity there. So if you think about today, there's literally 781 00:38:01,080 --> 00:38:06,200 Speaker 14: payment device on an electric vehicle charging station. So what's 782 00:38:06,239 --> 00:38:10,600 Speaker 14: happened is the user needs to download and up in order. 783 00:38:10,440 --> 00:38:11,759 Speaker 6: To pay for the electricity. 784 00:38:12,239 --> 00:38:15,200 Speaker 14: And what we see right now in the in all 785 00:38:15,360 --> 00:38:19,759 Speaker 14: markets is we see regulational changing. We saw that in California, 786 00:38:19,880 --> 00:38:23,640 Speaker 14: we see that in Germany, in the UK and many 787 00:38:23,719 --> 00:38:29,160 Speaker 14: most states like that where you they we have you 788 00:38:29,239 --> 00:38:32,040 Speaker 14: have to have a device, a payment device on those machines. 789 00:38:32,040 --> 00:38:35,080 Speaker 14: So we see retro fit and we are we actually 790 00:38:35,120 --> 00:38:40,360 Speaker 14: work with all of the electric vehicle charging manufacturers and 791 00:38:40,480 --> 00:38:44,359 Speaker 14: we have the only solution today to have a car 792 00:38:44,520 --> 00:38:47,239 Speaker 14: present solution as we call it, being able to pay 793 00:38:47,239 --> 00:38:51,279 Speaker 14: with your credit card in a station everywhere you go. 794 00:38:51,920 --> 00:38:54,279 Speaker 3: How easy would it be there to have that disrupted? 795 00:38:54,400 --> 00:38:55,960 Speaker 4: Like if I just go to the gas station, I 796 00:38:55,960 --> 00:38:58,640 Speaker 4: can use any credit card, I want payment system easy. 797 00:38:58,880 --> 00:39:01,560 Speaker 3: How quickly could that part of your business be disrupted? 798 00:39:03,239 --> 00:39:06,719 Speaker 14: Well, it's actually it's a great opportunity for us right 799 00:39:06,800 --> 00:39:10,440 Speaker 14: because even today when you think about gas station some 800 00:39:10,520 --> 00:39:13,080 Speaker 14: of it you have to go into the store in 801 00:39:13,200 --> 00:39:15,520 Speaker 14: order to pay with a credit card. So that was 802 00:39:15,640 --> 00:39:18,400 Speaker 14: one same is you think about it the same with 803 00:39:18,520 --> 00:39:22,640 Speaker 14: electric vehicles? Well instead of downing an app, and by 804 00:39:22,680 --> 00:39:26,160 Speaker 14: the way, sometimes you need sixteen different apps because there's 805 00:39:26,239 --> 00:39:28,720 Speaker 14: sixteen different companies. 806 00:39:28,440 --> 00:39:31,680 Speaker 6: That allowing electric vehicle charging. 807 00:39:32,320 --> 00:39:35,400 Speaker 14: So now you're going to be able with the Nix device, 808 00:39:35,480 --> 00:39:38,040 Speaker 14: with our yellow Nix device, to be able to pay 809 00:39:38,040 --> 00:39:42,040 Speaker 14: with a credit card. So you have that opportunity users 810 00:39:42,120 --> 00:39:44,520 Speaker 14: and people that have an electric vehicle, they have an 811 00:39:44,520 --> 00:39:47,399 Speaker 14: anxiety if they need to drive, especially in the US 812 00:39:47,440 --> 00:39:48,960 Speaker 14: where it's so big, if. 813 00:39:48,840 --> 00:39:52,000 Speaker 6: You don't have enough stations out there. 814 00:39:52,200 --> 00:39:55,040 Speaker 14: So now think about the ability to pay with your 815 00:39:55,120 --> 00:39:59,120 Speaker 14: credit card is changing the entire business. 816 00:40:00,160 --> 00:40:03,560 Speaker 7: How do you differentiate your company versus others like Block 817 00:40:03,680 --> 00:40:06,960 Speaker 7: or Toast that are out there there in the payment business. 818 00:40:08,080 --> 00:40:09,080 Speaker 6: It's a great question. 819 00:40:09,280 --> 00:40:13,840 Speaker 14: So if you think about Toast and Block and Square 820 00:40:14,000 --> 00:40:16,040 Speaker 14: for that matter, they're inside the store. 821 00:40:16,600 --> 00:40:17,960 Speaker 6: So there we will be. 822 00:40:18,200 --> 00:40:20,840 Speaker 14: We call it the attended space where you have a 823 00:40:20,880 --> 00:40:23,279 Speaker 14: cashier in front of you. We are actually in the 824 00:40:23,440 --> 00:40:28,120 Speaker 14: automated self service, as I said, where you actually outside 825 00:40:28,120 --> 00:40:31,280 Speaker 14: there's no one in front of you. So this is one. 826 00:40:31,920 --> 00:40:35,920 Speaker 14: We also have the end to end solution. So you 827 00:40:36,040 --> 00:40:38,920 Speaker 14: have the device, you have the payment, and you have 828 00:40:39,000 --> 00:40:43,000 Speaker 14: the software. And so what we are providing every customer 829 00:40:43,040 --> 00:40:44,439 Speaker 14: that we have, and as I said, we have eighty 830 00:40:44,480 --> 00:40:46,880 Speaker 14: five thousand customers. Most of them, by the way, are 831 00:40:46,920 --> 00:40:50,319 Speaker 14: small businesses where they cannot allow themselves too much of 832 00:40:50,360 --> 00:40:54,279 Speaker 14: a hassle. We are allowing them two things. Enablement of 833 00:40:54,320 --> 00:40:57,960 Speaker 14: payment and to manage their business better. What does it mean, 834 00:40:58,080 --> 00:41:02,680 Speaker 14: manage their employee, manage employees, manage their inventory, really look 835 00:41:02,680 --> 00:41:05,160 Speaker 14: at the transaction value and be able to see how 836 00:41:05,200 --> 00:41:06,960 Speaker 14: they can manage their business better. 837 00:41:07,440 --> 00:41:11,359 Speaker 4: I see, what are you hearing from your customers right now? 838 00:41:11,400 --> 00:41:13,280 Speaker 4: We talk a lot about the state of the economy. 839 00:41:13,320 --> 00:41:16,320 Speaker 4: We talk about people in companies investing or not investing. 840 00:41:16,480 --> 00:41:18,400 Speaker 4: What are you hearing from your clients? 841 00:41:19,560 --> 00:41:21,520 Speaker 6: So I'll give you an example. 842 00:41:21,560 --> 00:41:25,560 Speaker 14: In Q two, one point two billion dollars transactions went 843 00:41:25,600 --> 00:41:27,880 Speaker 14: through our devices. But when you look at out the 844 00:41:28,000 --> 00:41:32,279 Speaker 14: number of transactions that happened, it's six hundred million. My 845 00:41:32,400 --> 00:41:34,800 Speaker 14: point is, at the end of the day, in our business, 846 00:41:35,040 --> 00:41:39,040 Speaker 14: it's a very small transaction value. The everlet transaction value 847 00:41:39,080 --> 00:41:42,520 Speaker 14: for us it's two dollars and in that space. We 848 00:41:42,600 --> 00:41:47,160 Speaker 14: don't see much of a change in the economy. 849 00:41:46,719 --> 00:41:51,160 Speaker 6: Like maybe retail is seeing. We actually continue to grow 850 00:41:51,200 --> 00:41:54,600 Speaker 6: this quarter. We grew thirty nine percent a quarter of 851 00:41:54,640 --> 00:41:56,200 Speaker 6: a quarter with forty. 852 00:41:55,840 --> 00:42:00,520 Speaker 14: Seven percent increase on our recurring revenue. Our area, which 853 00:42:00,560 --> 00:42:04,240 Speaker 14: is again the unattended space, is really in its early 854 00:42:04,280 --> 00:42:07,799 Speaker 14: stage and we don't really see any headwinds coming in. 855 00:42:07,920 --> 00:42:10,319 Speaker 6: We haven't seen that for the last four years. 856 00:42:11,760 --> 00:42:13,719 Speaker 7: All right, thank you saying so much for joining a 857 00:42:13,719 --> 00:42:17,440 Speaker 7: segee monor chief financial officer for Nayaks the. 858 00:42:17,480 --> 00:42:20,239 Speaker 8: Company, the electronic payments company here. 859 00:42:20,400 --> 00:42:22,040 Speaker 7: You know, and you go to like the places in 860 00:42:22,080 --> 00:42:25,000 Speaker 7: your self service, so you get a sandwich, you know, 861 00:42:25,040 --> 00:42:28,080 Speaker 7: a drink and maybe at an airport, tap your card 862 00:42:28,080 --> 00:42:29,320 Speaker 7: and ask for a tip. 863 00:42:29,840 --> 00:42:32,440 Speaker 3: Yeah, what's up at that zero? 864 00:42:33,200 --> 00:42:36,120 Speaker 7: But now it's harder to do that when it's somebody 865 00:42:36,160 --> 00:42:37,640 Speaker 7: standing behind the count It is true. 866 00:42:37,760 --> 00:42:39,680 Speaker 3: And also like if they're making new stuff. 867 00:42:40,680 --> 00:42:42,920 Speaker 8: Yeah, but I'm that's a tough one. 868 00:42:42,920 --> 00:42:46,759 Speaker 7: The hope tipping when I'm old enough to be set 869 00:42:46,800 --> 00:42:49,720 Speaker 7: in my ways and say I've never done that for 870 00:42:50,120 --> 00:42:51,759 Speaker 7: fifty plus years, why would I start now? 871 00:42:52,120 --> 00:42:53,560 Speaker 3: I mean, it's it's a fair point. 872 00:42:53,719 --> 00:42:56,160 Speaker 8: I mean the young folks. They're being trained to tip 873 00:42:56,239 --> 00:42:57,560 Speaker 8: for things that we were not. 874 00:42:58,360 --> 00:43:01,279 Speaker 4: But if you think of like Starbucks, like you guys 875 00:43:01,280 --> 00:43:04,080 Speaker 4: work hard, drink orders are complicated. 876 00:43:04,800 --> 00:43:07,680 Speaker 3: Yes, should I give a dollar? It is a new thing. 877 00:43:07,960 --> 00:43:08,959 Speaker 8: It is a new thing. 878 00:43:10,120 --> 00:43:13,240 Speaker 4: But like somebody just ringing up my stuff at a store, 879 00:43:13,760 --> 00:43:14,879 Speaker 4: I don't know about that one. 880 00:43:14,920 --> 00:43:15,640 Speaker 3: That's a tough one. 881 00:43:15,680 --> 00:43:18,200 Speaker 4: But then I feel torn, and then you feel guilt, 882 00:43:18,320 --> 00:43:19,520 Speaker 4: and then like should you do that? 883 00:43:19,680 --> 00:43:21,719 Speaker 7: But you know, and then if you come from another 884 00:43:21,760 --> 00:43:23,319 Speaker 7: part of the world where you don't tip, you're like, 885 00:43:23,320 --> 00:43:24,120 Speaker 7: what what is that? 886 00:43:24,200 --> 00:43:24,359 Speaker 5: Yeah? 887 00:43:24,440 --> 00:43:25,799 Speaker 4: Yeah, And I used to be a waitress, so I 888 00:43:25,840 --> 00:43:29,040 Speaker 4: know the tips and ceiling so it's like, I feel you. 889 00:43:29,120 --> 00:43:30,200 Speaker 4: I want to do that for you. 890 00:43:30,920 --> 00:43:35,440 Speaker 2: This is the Bloomberg Intelligence podcast, available on Apples, Spotify, 891 00:43:35,640 --> 00:43:38,560 Speaker 2: and anywhere else you will get your podcasts. Listen live 892 00:43:38,640 --> 00:43:42,240 Speaker 2: each weekday ten am to noon Eastern on Bloomberg dot Com, 893 00:43:42,360 --> 00:43:45,760 Speaker 2: the iHeart Radio app, tune In, and the Bloomberg Business app. 894 00:43:45,880 --> 00:43:49,000 Speaker 2: You can also watch us live every weekday on YouTube 895 00:43:49,080 --> 00:43:51,000 Speaker 2: and always on the Bloomberg terminal