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Speaker 1: Hello, and welcome to What Goes Up, a weekly markets podcast.

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Speaker 1: My name is Mike Eagan. I'm a senior editor at Bloomberg.

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Speaker 2: And numbldna hire a market support at Bloomberg.

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Speaker 1: And this week on the show, you probably heard about this,

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Speaker 1: but the Federal Reserve signal this week that even though

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Speaker 1: they paused this month, central bankers are expecting to lift

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Speaker 1: interest rates again this year. Yet the stock market took

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Speaker 1: it all in stride and is continuing its riproaring twenty

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Speaker 1: twenty three rally that's been largely driven by hype around

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Speaker 1: artificial intelligence. So what are we to think about a

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Speaker 1: week like this? Is the equity market right to fight

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Speaker 1: the Fed this time given all of the optimism around AI,

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Speaker 1: or is it time to sober up and get with

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Speaker 1: the feds program. We're going to get into it with

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Speaker 1: a fund manager who manages a global equity fund. But first, Voldana,

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Speaker 1: I'm very excited for our Craziest Things segment because.

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Speaker 2: Can I give a hand in giving a spoiler?

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Speaker 1: All right, that joke's not going to make sense till

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Speaker 1: later in the podcast, but I will confirm it's a good.

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Speaker 2: Joke and listeners, Yeah, I'm really sticking my neck out.

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Speaker 1: Here also a very off color joke, but.

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Speaker 2: Yeah, it's actually really terrible. You know, our guest, he's

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Speaker 2: joining us for the first time ever, and he probably

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Speaker 2: thinks we're just two big weirdos.

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Speaker 1: Which is true.

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Speaker 2: Yeah, it's true, but I really don't want to keep

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Speaker 2: him waiting. It's Mark Barribow. He's the head of Global

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Speaker 2: Equity at Jennison Associates, which is the fundamental equity business

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Speaker 2: of p Jim. Mark, thank you so much for joining us.

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Speaker 3: It's great to be here.

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Speaker 2: I promise our little intro will make a little more

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Speaker 2: sense later, but maybe just to start out, you can

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Speaker 2: tell us about your at Jennison and what you do there.

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Speaker 3: I'm the head of Global Equities at Jennison, so we

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Speaker 3: managed global equity portfolios, international equity portfolios, and emerging market portfolios,

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Speaker 3: both small, MidCap and large caps, so that whole spectrum

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Speaker 3: and our specialty at Jennison is growth equities, and all

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Speaker 3: of our global products are growth oriented.

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Speaker 1: So Mark, did what we heard from Jrome Pow this

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Speaker 1: week change your thinking at all about what took spect

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Speaker 1: for the rest of the.

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Speaker 3: Year, Not at all. The big hit the equity markets

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Speaker 3: took last year was in response to the change in

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Speaker 3: Fed policy. We got the big rate increases, unprecedented really

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Speaker 3: for any rate cycle in the post war era, and

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Speaker 3: that speed led to valuation declines across the board last year,

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Speaker 3: but particularly growth stocks, which dropped relative to value stocks

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Speaker 3: to their lowest level since the crisis eight. So the

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Speaker 3: setup coming into the year is pretty good on a

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Speaker 3: value from evaluation perspective. And now the markets are just

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Speaker 3: reacting to earnings news and normal fundamental things, and that's

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Speaker 3: why I think it's looking pretty constructive.

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Speaker 2: Mark how difficult is it for the Fed to get

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Speaker 2: its messaging right going forward? Like they didn't hike this time,

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Speaker 2: but then they came out saying we do want to

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Speaker 2: continue potentially hiking further later on this year. They see

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Speaker 2: growth actually being better than they had anticipated prior to

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Speaker 2: yesterday's meeting. It's such a like, how difficult is it

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Speaker 2: going to be for them to actually message this to

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Speaker 2: the market and investors.

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Speaker 3: They overshot on the downside, they're probably going to oversheet

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Speaker 3: on the upside. That's typically what the Fed does. Let's

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Speaker 3: say eighty to ninety percent of it's behind us, So

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Speaker 3: I think that's why the markets are moving on.

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Speaker 1: You, Mark, As I mentioned in the introduction, artificial intelligence,

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Speaker 1: following the release of the latest versions of chat Cheap

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Speaker 1: is really captivated investors' attention. But I do think what's fascinating.

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Speaker 1: There's a lot of hype, but there does seem to

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Speaker 1: be some fundamentals attached to the theme, almost immediately when

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Speaker 1: you look at the outlook from a company like Nvidia.

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Speaker 1: I know, one of the top holdings in your Global

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Speaker 1: Opportunities fund Oracle last week saying their cloud revenue is

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Speaker 1: really getting juiced by AI as well. Yeah, I'm sort

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Speaker 1: of reminded of that old cliche that in the gold Rush,

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Speaker 1: most people that got rich were the merchants selling the

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Speaker 1: picks and shovels. And to me, I feel like you know,

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Speaker 1: in this gold rush, it's the chip makers, the cloud

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Speaker 1: companies that are the picks and shovel merchants of this.

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Speaker 1: I'm just curious, though, with that all said, how you're

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Speaker 1: thinking about AI as far as separating the hype from

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Speaker 1: where the true prospects are the potential for fundamental improvement

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Speaker 1: for various companies and various sectors.

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Speaker 3: Sure, I mean, well, at first I would absolutely agree

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Speaker 3: with you that the infrastructure layer that allows for this

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Speaker 3: accelerated computing to go on is the way to play

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Speaker 3: AI right now, because we're in the R and D phase.

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Speaker 3: The applications are just getting developed, and it is going

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Speaker 3: to be a tectonic shift in technology for the next decade.

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Speaker 3: It's the biggest thing to happen since the mobile Internet,

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Speaker 3: and so we're very excited about it. But again, the

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Speaker 3: best way to play it is through the infrastructure required

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Speaker 3: to do this computing. So that starts with high end semiconductors,

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Speaker 3: it starts with cloud based computing workloads, and I think

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Speaker 3: investors will do quite well in that. And then as

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Speaker 3: we move forward, you're going to see more and more

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Speaker 3: software applications embed this technology that's already starting, but it's

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Speaker 3: going to accelerate over the next year. This isn't a

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Speaker 3: long term thing. You're not going to have to wait

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Speaker 3: three to five years to see what happens. It's going

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Speaker 3: to start to come into every application that's important for

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Speaker 3: productivity purposes in the next four quarters, and then we'll

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Speaker 3: start to see separation like who's got the winning formula,

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Speaker 3: who's developing unique applications that we couldn't even dream of.

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Speaker 3: Maybe old companies that maybe new companies, we don't know.

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Speaker 3: But what's important, this is a real advancement in technology.

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Speaker 3: It's going to be utilized aggressively, and so I think

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Speaker 3: investors should definitely try to position for it.

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Speaker 1: Yeah, and Mark, the other narrative of the year that

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Speaker 1: sort of has gone hand in hand with AI is

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Speaker 1: what I refer to the top heaviness of the rally

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Speaker 1: that we've seen this year. The big megacap tech stocks

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Speaker 1: are really dominating the gains. And I'm curious how you

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Speaker 1: approach that as a fund manager. You know, as I mentioned,

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Speaker 1: Nvidia's one of your top holdings, do you have any

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Speaker 1: limits on sort of how big of an allocation you

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Speaker 1: can give to one stock? Does it worry you at all?

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Speaker 1: This top heaviness? How do you think about that when

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Speaker 1: you're managing a fund like this?

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Speaker 3: First, I would say, if you own these stocks in

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Speaker 3: your portfolio, you're really happy. Yeah, So I have no

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Speaker 3: complaints about the concentration of the market. So there's a

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Speaker 3: couple of reasons behind it. One, we started the year

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Speaker 3: at very low valuations because of what happened last year. Secondly,

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Speaker 3: these companies are generating among the highest levels of free

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Speaker 3: cash flow you can find in the global stock market,

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Speaker 3: and that's one of the reasons investors are flocking to them.

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Speaker 3: It's because you don't have to take a lot of

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Speaker 3: risk to participate in a market rally. And investors still

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Speaker 3: are a little wary about what's happening out there because

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Speaker 3: the FED is tightened so much. So I'm not saying

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Speaker 3: there's a flight to safety, but there's a flight to quality,

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Speaker 3: and so they're benefiting from that. And then of course

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Speaker 3: the AI boom has ignited a catalyst for future growth,

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Speaker 3: and that catalyst really wasn't here a year ago. We

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Speaker 3: didn't know where the next wave of investment spending would occur,

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Speaker 3: and now we know, and so that clarity is leading

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Speaker 3: the true companies that benefit from it to lead the market.

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Speaker 3: And then other things are participating. And so what I

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Speaker 3: would say right now is as we go into earning

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Speaker 3: season the summer and go into the fall, you've got

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Speaker 3: to be careful because you don't want to be exposed

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Speaker 3: in stocks that participated in the rally but in reality

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Speaker 3: have nothing new to offer the marketplace, because those are probably.

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Speaker 2: Correct and mark broadly speaking, what is the base case

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Speaker 2: on AI for the average investor, for instance, So why

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Speaker 2: might somebody be buying stocks right now based on the

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Speaker 2: AI thme. Is it the idea that these companies have

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Speaker 2: so much cash and they, as you said, maybe will

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Speaker 2: be putting some of it towards research and development, et cetera.

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Speaker 3: Well, you want to be in the ones that one

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Speaker 3: are positioned in. The infrastructure build out in Video is

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Speaker 3: an easy example.

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Speaker 1: We refer to.

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Speaker 3: Their earnings release on May twenty fourth is the big

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Speaker 3: bang because in my history of doing growth equities since

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Speaker 3: the nineties, I've never seen a company raised guidance for

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Speaker 3: a quarter by four billion dollars. That's unprecedented. So their

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Speaker 3: data center revenue is effectively going to double quarter over

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Speaker 3: quarter from four billion to eight billion. And again these

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Speaker 3: are numbers that are staggering. So in Video's valuation, ironically,

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Speaker 3: it has been declining the last month, not going up,

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Speaker 3: even though the stock is because the power of that

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Speaker 3: earnings revision is so huge. With fundamental strength there, it

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Speaker 3: gives investors more confidence that you're not buying into hype,

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Speaker 3: you're actually buying into real demand strength, and that's very good.

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Speaker 3: Other beneficiaries, of course, are Microsoft because of their asure

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Speaker 3: cloud and their big investment and chat GPT, and of

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Speaker 3: course you have Google Cloud, and Google of course has

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Speaker 3: deep learning. It's also an AI expert, and Amazon's aws

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Speaker 3: will probably benefit as well. So you have different ways

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Speaker 3: where you're going to see positive revenue and earnings revisions

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Speaker 3: hopefully as the year goes on. From that pure investment spending.

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Speaker 3: I think that's why the stocks are doing well, and

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Speaker 3: you don't have to get ahead over your skis yet

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Speaker 3: thinking about what are the new applications that are going

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Speaker 3: to come out that are very exciting I can't miss.

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Speaker 3: You don't have to worry about that yet. That'll develop

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Speaker 3: over the next year mark.

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Speaker 1: Earlier in the year and late last year, it felt

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Speaker 1: like the consensus really believe that a recession was inevitable.

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Speaker 1: Now's the year goes on, I think it's much more

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Speaker 1: debatable whether this proverbial soft landing can actually perhaps maybe

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Speaker 1: be achieved. But I'm wondering how much of that plays

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Speaker 1: into the outlook for growth stocks. If we do see

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Speaker 1: a deterioration in the data, rise in joblessness, lower GDP,

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Speaker 1: or even negative GDP, how big of a risk is

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Speaker 1: that to this whole AI theme and the capital spending

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Speaker 1: that goes along with it, that is propelling it.

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Speaker 3: Okay, First, on the recession outlook. I mean, the recession

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Speaker 3: has been pre announced four or five times every quarter.

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Speaker 3: Here maybe it happens. But we had a big downturn

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Speaker 3: in home construction last year. We had a big downturn

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Speaker 3: in Silicon Valley last year, big layoffs as you know.

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Speaker 3: So you've had these rolling recessions and different segments of

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Speaker 3: the marketplace over the last year and so far this year.

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Speaker 3: I don't know what if we created one point seven

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Speaker 3: million new job that's not a recession. It's steady state,

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Speaker 3: slow growth, so fueled by a powerful job market. So

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Speaker 3: we probably do get a soft landing. I think that's

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Speaker 3: what the market is coming around to believe in. Now,

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Speaker 3: what does it mean for growth stocks. It's really bullish

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Speaker 3: for growth if you go into a soft landing, because

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Speaker 3: the average company is seeing a slowdown in its earnings,

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Speaker 3: whereas growth companies will be putting up hopefully on average,

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Speaker 3: double digit earnings growth. And that's quite a differentiator in

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Speaker 3: a slowing, uncertain market environment. And that's indeed what we're

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Speaker 3: seeing in our portfolios. We looked at this data the

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Speaker 3: other day because we've just gone through a big earning

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Speaker 3: season and for the first quarter, that weighted average growth

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Speaker 3: in the portfolio was around fifteen percent. For the S

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Speaker 3: and P five hundred, it's three point two. You're finally

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Speaker 3: getting rewarded for that growth again once that big reevaluation

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Speaker 3: reset occurred last year.

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Speaker 2: So your funds obviously are doing well this year. But

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Speaker 2: at the same time, you said today's markets are among

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Speaker 2: the most challenging we have seen in several decades. There's

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Speaker 2: a lack of visibility, contradictory indicators. Can you talk about that.

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Speaker 3: Yeah, it all starts with the pandemic, right, So we

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Speaker 3: had the V shaped recovery during the pandemic. It shocked

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Speaker 3: the global economy. The growth companies did very well during

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Speaker 3: the pandemic because they were supplying everything from streaming entertainment

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Speaker 3: to laptops needed to work remotely. Digital transformation of companies

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Speaker 3: as they accelerated their cloud deployments to make everything work.

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Speaker 3: And so we had a big demand surge and then

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Speaker 3: the hangover post pandemic as you adjusted to more normal

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Speaker 3: rates of spending growth and for the whole economy, of course,

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Speaker 3: we had this apply chain problem which led to the

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Speaker 3: inflation and that's eason. Now as supplies come into the market,

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Speaker 3: you're no longer constrained on any number of products, right,

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Speaker 3: and goods inflation has turned negative, services inflation still positive.

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Speaker 3: That's a very complicated environment with the FED being as

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Speaker 3: aggressive as they are, because the Yell curve would suggest

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Speaker 3: we go we might have a recession, but of course

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Speaker 3: the Yell curve predicts lots of recessions that never happen,

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Speaker 3: so that's not a certainty. And then you have different

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Speaker 3: economies around the world doing different things, which is actually beneficial.

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Speaker 3: So the US might be slowing, whereas China's coming out

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Speaker 3: of the pandemic finally, so that's a good offset to

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Speaker 3: might slow down here. Europe seems to be doing okay

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Speaker 3: for Europe, not a problem. There's a lot of cross

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Speaker 3: currents that are very challenging. Now, getting back to one

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Speaker 3: of the other point that was raised earlier questions the

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Speaker 3: other thing that's likely to happen we think in the

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Speaker 3: next couple of years is a lot of good support

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Speaker 3: for a number of US investment areas. And the reason

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Speaker 3: is we have this unprecedented combination of public industrial policy,

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Speaker 3: which we've never had before. So we have the US

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Speaker 3: Chips Act, which is going to lead to the onshing

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Speaker 3: of semiconductor manufacturing in the United States. That's tens and

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Speaker 3: tens of billions of dollars of capex that will occur

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Speaker 3: here on top of the Inflation Reduction Act, which is

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Speaker 3: again leading to multi billion dollar build out of electric

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Speaker 3: vehicle and battery manufacturing as well as alternative energy systems.

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Speaker 3: So we have tremendous structural support in certain areas of

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Speaker 3: capital spending wich we've typically not had in the US,

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Speaker 3: which is structural and secular and has years to run,

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Speaker 3: and we're in the early innings of it, so that's

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Speaker 3: also very exciting. These are very positive trends that are occurring,

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Speaker 3: maybe as the overall economy slows, but if you're invested

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Speaker 3: in those segments of the economy, you're actually seeing strength.

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Speaker 3: It's really important from a stock selection perspective to weed

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Speaker 3: through those all of the different parts of the market

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Speaker 3: and just focus on those that have really good secular

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Speaker 3: demand strength, because I think that's going to work.

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Speaker 1: You know, Mark, there was a chart I must have

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Speaker 1: seen about a thousand times this year that basically showed

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Speaker 1: the Nasdaq one hundred and the inverse of some treasure yield,

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Speaker 1: whether it's the ten year yield or the real yield,

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Speaker 1: and the thinking being that a lot of people thought

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Speaker 1: there was this negative correlation. As interest rates go up,

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Speaker 1: growth stocks should suffer for her. That's obviously if that

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Speaker 1: correlation existed, it's been demolished in the past month or two.

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Speaker 1: I think there's many cliff Astness and others who would

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Speaker 1: argue that that was a bogus correlation to begin with,

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Speaker 1: that we're being fooled by a simple overlay chart like that.

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Speaker 1: I'm just curious how you're thinking about that relationship between

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Speaker 1: interest rates and growth. Is it a valid headwind to

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Speaker 1: growth stocks as an asset class? And I know you

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Speaker 1: like to focus on the quality with the strong balance

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Speaker 1: sheets and the strong cash flow. If you're thinking of

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Speaker 1: growth as a factor on its own, does interest rates

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Speaker 1: worry you at all about it?

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Speaker 3: Historically the correlation wasn't there, but it was there with

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Speaker 3: a bullet in twenty twenty two.

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Speaker 1: Yeah, as you.

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Speaker 3: Said, it's broken down this year, so it's not working anymore.

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Speaker 3: I think the only important part about that correlation is

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Speaker 3: just the step function change. So if you do go

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Speaker 3: from an interest rate environment that's been there for a

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Speaker 3: long time and then you jump rates up several hundred

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Speaker 3: basis points pretty quickly. That's a lot to ask for

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Speaker 3: from evaluation perspective. You are going to get compression, and

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Speaker 3: we did get that. But once that happens, it's over. Now.

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Speaker 3: It's just the way we look at it. It's made

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Speaker 3: the best company win, right because you reset valuation across

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Speaker 3: the system globally, and now we'll see who has the

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Speaker 3: best growth and earnings growth, and that stock's going to win.

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Speaker 3: That's our you.

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Speaker 2: I need to give a shout out to our colleague

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Speaker 2: Katie Greifeld, who sometimes fills in as co host on

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Speaker 2: this show, for thinking of the next question. But I

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Speaker 2: want to pose it to you as well. I'm wondering

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Speaker 2: what you think of the two areas of the market

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Speaker 2: that are super hot right now, being totally polar opposite.

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Speaker 2: One is AI and the other is money market funds,

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Speaker 2: which are still seeing tons of cash coming in.

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Speaker 3: Yeah. I mean, if you can get at four percent

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Speaker 3: or five percent yield and then the taxi jumpt ones

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Speaker 3: even better on a tack s adjusted basis, that's stiff

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Speaker 3: competition for stocks. So I think it's really hard for

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Speaker 3: the average stock to compete against that, for sure. But

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Speaker 3: one of the reasons AI related names are doing so

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Speaker 3: well is they do offer good competition because they have

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Speaker 3: the prospects for perhaps very strong growth going forward and

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Speaker 3: very strong current demand. So that looks relatively safe. So

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Speaker 3: that's how I would explain that. And then you're right,

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Speaker 3: you have that deep void in the middle that's not

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Speaker 3: really doing anything.

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Speaker 1: Yeah, well, it kind of goes to what you said

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Speaker 1: earlier about it really being you know, when you look

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Speaker 1: at a market that NASDAQ one hundreds up what thirty

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Speaker 1: percent this year, you think, yeah, you think, oh, it's

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Speaker 1: this speculative frenzy, but it really is a chase for

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Speaker 1: quality and maybe safety on the other end of the

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Speaker 1: barbell with the money mark funds. But I've got to

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Speaker 1: confess this is one of those nightmare scenarios for me

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Speaker 1: when I have to pronounce the name of a company

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Speaker 1: that I'm not sure how to produce in the video.

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Speaker 1: In video, I can say in video, this is one

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Speaker 1: of those companies I've read. I've read the name a

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Speaker 1: million times is, and I'm not sure I've ever said

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Speaker 1: it out loud. I'm going to say Hermes Ermez is

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Speaker 1: that how you say, Mark.

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Speaker 2: Is she right about easier than the video?

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Speaker 1: I'm gonna you say Hermie, you say Sayers International, Yeah,

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Speaker 1: I purely in French. It's whereas we say in Philly Ermes.

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Speaker 1: I did want to ask you about Ermez and another

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Speaker 1: top holding of the fund, lv m H two sort

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Speaker 1: of luxury good famous luxury European luxury good goods providers.

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Speaker 1: I mean there's two fcs surrounding companies like this that

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Speaker 1: I've heard this year. One is the China reopening will

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Speaker 1: unlock a lot of demand from China. The other is

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Speaker 1: high end consumers like Vildana over there are so many

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Speaker 1: they are immunes to inflation. They'll keep spending. They're not

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Speaker 1: pinching pennies because cpis Ferrari another one, another one. You know,

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Speaker 1: I'm curious your rationale for having these Ferrari, LVMH, Air Miz.

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Speaker 1: What's the rationale with having a heavyweighting in these guys.

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Speaker 3: Sure, it's very interesting because side by side with Nvidia

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Speaker 3: and Microsoft and Apple and Broadcom, we have LVMH and

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Speaker 3: Airs and Ferrari. So what makes them appealing? First? Their

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Speaker 3: business models, they're direct to consumer models. In other words,

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Speaker 3: you can only buy their product from their stores or

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Speaker 3: their website, So Louis Bhutan or air Man or Ferrari,

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Speaker 3: and you can't get access all their products. They'll sell

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Speaker 3: out very quickly because they ration their most popular products

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Speaker 3: to maintain exclusivity and protect pricing and margins, and they

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Speaker 3: control the distribution so they don't get into inventory problems.

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Speaker 3: They have pricing power and direct to consumer brand models

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Speaker 3: are the best in the world and they just happen

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Speaker 3: to have developed them over time. And so what you've

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Speaker 3: seen is the return on invested capital for these companies

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Speaker 3: has been rising quite significantly over the last decade, particularly

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Speaker 3: compared to say European market average, and that's because of

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Speaker 3: the business model superiority. Then you get to the economics

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Speaker 3: of their customer and yes, it's true higher and consumers

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Speaker 3: are less exposed to inflation problems and pinched paychecks and

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Speaker 3: all of that, but the majority of the customers for

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Speaker 3: luxury are actually Neil and gen Z around the world.

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Speaker 3: It's not your old wealthy people, and so there is

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Speaker 3: a fashion element, there's a social element we don't quite understand,

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Speaker 3: but the spending is quite strong, so we like the

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Speaker 3: customer mix. They do a very good job managing their business,

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Speaker 3: keeping supplies tight, maintaining that exclusivity and pricing power, and

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Speaker 3: for that reason you generate really strong margins and cash flow.

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Speaker 3: And again it's hard to find that consistently anywhere else,

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Speaker 3: but we have found it here. We really like the

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Speaker 3: industry from that perspective. But again we only go with

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Speaker 3: the big leaders. We don't go across the industry. There's

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Speaker 3: only a few brands that have this capture the moment

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Speaker 3: with consumers, and we just like to stick with those brands.

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Speaker 1: Interesting millennial angle there. It confirms my image of Wildana.

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Speaker 1: Drive it around in your Ferrari with yorks Vatan bag

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Speaker 1: filled with I did have it ermes Thai one time,

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Speaker 1: hermes Thai one time, but it was actually a hand

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Speaker 1: me down from my older brotherhood. Very much more of

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Speaker 1: a passionate stuff than my Joseph A. Beggs mark. I

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Speaker 1: think we've established that I did not take French in

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Speaker 1: high school, but I did take Spanish, so I can

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Speaker 1: pronounce another stock in your top ten. I don't think

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Speaker 1: a lot of us listeners are familiar with this one,

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Speaker 1: so maybe you can talk to us a little bit

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Speaker 1: about Mercado Libre.

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Speaker 3: Oh yeah, that's one of our favorites. So there, you know,

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Speaker 3: think of them as the Amazon of Latin America or

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Speaker 3: the Ali Baba of Latin America. So they span the

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Speaker 3: entire region with an e commerce platform which is the

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Speaker 3: largest and in Latin America, even in the biggest market, Brazil,

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Speaker 3: e commerce is very underpenetrated. We estimate, for example, in

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Speaker 3: Brazil it might be around ten percent penetration of the market,

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Speaker 3: whereas in the US we're well above twenty China is

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Speaker 3: almost thirty and so there's a long runway of growth

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Speaker 3: for them if they continue to execute well to get

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Speaker 3: more and more people online shopping. And it's different about

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Speaker 3: e commerce markets in emerging markets versus developed like the

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Speaker 3: US is. You usually get another facet to the platform,

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Speaker 3: and in the case of Ali Baba, it was financial technology.

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Speaker 3: In other words, how do you get people to buy

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Speaker 3: online whenether they don't have credit cards. You create an

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Speaker 3: internet based payment system and you allow people to load

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Speaker 3: money onto that, and then it becomes a de facto

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Speaker 3: payment system, not just for your e commerce site, but

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Speaker 3: people use it offline at a gas station, at a

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Speaker 3: farm stand, at a grocery store, pay your utility bills,

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Speaker 3: pay your Netflix bill, etc. Mercado Libra has the most

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Speaker 3: valuable payments platform in Latin America as well, called Mercado Pago,

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Speaker 3: and it's a big growth engine for them and a

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Speaker 3: huge source of profitability. So when you think about financial

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Speaker 3: access in Latin America or other emerging markets, it's really

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Speaker 3: important because they typically don't have access to state of

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Speaker 3: the art financial services. So once you start a payments

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Speaker 3: platform just to fuel your e commerce platform, all of

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Speaker 3: a sudden, you can start offering all sorts of financial

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Speaker 3: services on top of it at low feet and the

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Speaker 3: banking system doesn't offer it to the majority of the population.

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Speaker 3: So again you have another huge addressable market, unmet need

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Speaker 3: in the marketplace being solved for by technology companies. So

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Speaker 3: that's that's why we like it so much.

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Speaker 1: Really interesting, you know, it's great to hear. We don't

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Speaker 1: often talk to global fund managers with global discussions, so

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Speaker 1: it's educational to hear about these companies we might not

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Speaker 1: know so much about. Well Mark Barrabou, he's the head

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Speaker 1: of Global Equity at Jennison Associates, which is the fundamental

433
00:27:21,040 --> 00:27:24,280
Speaker 1: equity business at PGIM. Thanks so much, Mark, We can't

434
00:27:24,359 --> 00:27:27,000
Speaker 1: quite let you go just yet. Though. We do have

435
00:27:27,040 --> 00:27:29,960
Speaker 1: a tradition on the show where we all must discuss

436
00:27:30,800 --> 00:27:35,320
Speaker 1: the craziest things we saw in markets this week. And well,

437
00:27:35,320 --> 00:27:37,719
Speaker 1: don I'm gonna pick your brain on this one.

438
00:27:38,119 --> 00:27:41,440
Speaker 2: Wow, you're still going with the jokes. The jokes are

439
00:27:41,480 --> 00:27:43,040
Speaker 2: as you said, in bad taste.

440
00:27:42,760 --> 00:27:45,560
Speaker 1: The very bad tastes. Yeah, but you started it, so

441
00:27:45,640 --> 00:27:48,560
Speaker 1: it's all your fault I did. I'm not going to

442
00:27:48,600 --> 00:27:49,679
Speaker 1: get Lindy a hand on that.

443
00:27:49,920 --> 00:27:54,080
Speaker 2: Oh my god, Okay, this but this really was It's

444
00:27:54,280 --> 00:27:57,359
Speaker 2: it's a market. It's a market, yes, but it's also

445
00:27:57,520 --> 00:27:59,960
Speaker 2: a really creepy, spooky story.

446
00:28:00,600 --> 00:28:03,560
Speaker 1: Right, No more, Ado, Without further Ado hit him with

447
00:28:03,640 --> 00:28:04,320
Speaker 1: the craziest thing.

448
00:28:05,119 --> 00:28:09,159
Speaker 2: The manager of Harvard's medical school morg got in trouble

449
00:28:09,160 --> 00:28:12,480
Speaker 2: this week for stealing body parts and then selling them.

450
00:28:13,000 --> 00:28:16,720
Speaker 2: This was a huge story on the terminal. So this guy,

451
00:28:17,359 --> 00:28:21,280
Speaker 2: he allowed buyers into the school's morgue. They chose body

452
00:28:21,320 --> 00:28:29,080
Speaker 2: parts from donated donors. Yep, and he transported heads, brainskin

453
00:28:29,240 --> 00:28:31,399
Speaker 2: and bones to his home in New Hampshire.

454
00:28:31,720 --> 00:28:33,879
Speaker 1: Now you were thinking, all right, is there these for

455
00:28:34,160 --> 00:28:37,400
Speaker 1: organ donations organ transplant which would be a high dollar

456
00:28:37,520 --> 00:28:41,160
Speaker 1: value I'm obviously most obsessed with the price discovery on

457
00:28:41,240 --> 00:28:44,000
Speaker 1: the body parts. You know, you hear kidneys selling for

458
00:28:44,360 --> 00:28:47,760
Speaker 1: hundreds of thousands and millions. Maybe, but no, this is

459
00:28:48,160 --> 00:28:54,640
Speaker 1: like Cat's creepy corner, like a retail store selling like macabs. Yeah,

460
00:28:54,800 --> 00:28:57,960
Speaker 1: scary stuff. I'm going to go one further because I

461
00:28:58,160 --> 00:29:01,000
Speaker 1: did the due diligence to get some price discovery on

462
00:29:01,080 --> 00:29:04,120
Speaker 1: these body parts, and I'm not sure you did. So

463
00:29:04,160 --> 00:29:07,120
Speaker 1: I think that means we can play our little game show.

464
00:29:07,120 --> 00:29:10,160
Speaker 1: The price is precise, and I regret to inform you Mark,

465
00:29:10,200 --> 00:29:12,400
Speaker 1: you're now a contestant on that he doesn't want the

466
00:29:12,440 --> 00:29:14,040
Speaker 1: prices very good.

467
00:29:14,280 --> 00:29:17,960
Speaker 3: We're gonna test your Are we talking for transplant or petsod?

468
00:29:20,120 --> 00:29:23,040
Speaker 1: It's more like a novelty market. I'll give you an example.

469
00:29:23,160 --> 00:29:25,440
Speaker 1: I apologize this all is in very bad taste. It

470
00:29:26,120 --> 00:29:31,160
Speaker 1: but one guy purchased a bunch of human skin. I

471
00:29:31,160 --> 00:29:31,880
Speaker 1: can't even.

472
00:29:31,640 --> 00:29:33,120
Speaker 2: Say, Oh, this is so bad.

473
00:29:33,320 --> 00:29:36,720
Speaker 1: He purchased in Pennsylvania, my home state. It's just embarrassing

474
00:29:36,960 --> 00:29:40,080
Speaker 1: it would be Pennsylvania. He purchased a bunch of human skin,

475
00:29:40,160 --> 00:29:43,240
Speaker 1: then he tanned it and turned it in. No he didn't, Yeah,

476
00:29:43,440 --> 00:29:46,880
Speaker 1: which I gotta say, oh my god, I personally I

477
00:29:46,880 --> 00:29:50,320
Speaker 1: am an Oregon donor if someone took my skin and

478
00:29:50,520 --> 00:29:54,560
Speaker 1: made leather out of it, maybe a LVMH handbag or

479
00:29:54,720 --> 00:29:58,440
Speaker 1: an Ermes mark shaking it marks about the mark's about

480
00:29:58,480 --> 00:30:04,120
Speaker 1: to end this soon, he's gone anyway. Prices precise, and

481
00:30:04,160 --> 00:30:07,280
Speaker 1: what happened is the payments. Of course, where else would

482
00:30:07,280 --> 00:30:07,840
Speaker 1: they be made?

483
00:30:07,960 --> 00:30:11,080
Speaker 2: But Venmo, I'm surprised it wasn't via crypto.

484
00:30:11,360 --> 00:30:13,280
Speaker 1: Yeah, maybe there were some that we don't know about.

485
00:30:13,680 --> 00:30:17,920
Speaker 1: One customer purchased a human head. Oh my god, human

486
00:30:17,920 --> 00:30:20,200
Speaker 1: head number seven to be specific. So he would let

487
00:30:20,200 --> 00:30:22,640
Speaker 1: these people into go shopping around in the moor to

488
00:30:22,720 --> 00:30:24,240
Speaker 1: decide what they wanted.

489
00:30:24,520 --> 00:30:25,840
Speaker 2: This is so wild.

490
00:30:25,920 --> 00:30:29,040
Speaker 1: So human head number seven was paid for with a

491
00:30:29,120 --> 00:30:32,680
Speaker 1: Venmo payment. What do you suppose the price was for

492
00:30:32,800 --> 00:30:34,120
Speaker 1: human head number seven?

493
00:30:35,200 --> 00:30:36,240
Speaker 2: Twenty thousand dollars?

494
00:30:36,280 --> 00:30:42,080
Speaker 1: Twenty thousand dollars mark? What's your price's precise? Guess for human.

495
00:30:42,640 --> 00:30:45,000
Speaker 3: Because I'm not prepared for this at all, but I

496
00:30:45,000 --> 00:30:46,480
Speaker 3: would say less than a thousand.

497
00:30:46,840 --> 00:30:50,360
Speaker 1: Oh, that is why he is the head of fundamentals

498
00:30:50,360 --> 00:30:55,200
Speaker 1: and I'm not one thousand exactly? What yeah, yeah, one

499
00:30:55,600 --> 00:30:57,680
Speaker 1: thousand for human head number seven.

500
00:30:58,360 --> 00:31:00,600
Speaker 2: Because Pa do you know if you're getting right price.

501
00:31:02,120 --> 00:31:04,480
Speaker 1: It's a very thin market. Not a lot of liquidity

502
00:31:04,480 --> 00:31:07,960
Speaker 1: in this market. Which there's a joke, but don't make it.

503
00:31:07,960 --> 00:31:12,040
Speaker 1: Don't make it. There was one venmo payment with the

504
00:31:12,080 --> 00:31:17,760
Speaker 1: memo that just said brains with five eyes. It's winter

505
00:31:17,840 --> 00:31:18,720
Speaker 1: Bucks for the brain.

506
00:31:18,840 --> 00:31:20,640
Speaker 2: Oh my god, I.

507
00:31:20,680 --> 00:31:22,960
Speaker 1: Think I've even disgusted myself with a segment.

508
00:31:23,280 --> 00:31:24,080
Speaker 2: This is horrible.

509
00:31:24,360 --> 00:31:26,480
Speaker 1: It's horrible, but Veldona secretly loves it.

510
00:31:26,520 --> 00:31:31,440
Speaker 2: You can go No, I just was interested in the story.

511
00:31:32,280 --> 00:31:35,240
Speaker 1: Mark. We apologize for that segment. We have to be okay,

512
00:31:35,640 --> 00:31:37,760
Speaker 1: we have to be true to our mission here and

513
00:31:37,800 --> 00:31:40,160
Speaker 1: that is truly the craziest thing. It really is.

514
00:31:40,200 --> 00:31:43,280
Speaker 2: It's wild. There was some other stuff. There were some

515
00:31:43,440 --> 00:31:44,320
Speaker 2: other good stories.

516
00:31:44,480 --> 00:31:46,240
Speaker 1: Maybe Mark has a good one. Mark, you got any

517
00:31:46,240 --> 00:31:48,760
Speaker 1: good crazy stories for us, any good crazy.

518
00:31:48,680 --> 00:31:50,840
Speaker 3: I don't have anything. I don't have any I can't

519
00:31:50,880 --> 00:31:51,360
Speaker 3: compete with.

520
00:31:51,520 --> 00:31:55,280
Speaker 2: I'm so sorry, Mark, he's never going to come back on.

521
00:31:56,000 --> 00:31:58,840
Speaker 1: Well that was Mark Barrebeau of Jennison at p JAM.

522
00:31:59,600 --> 00:32:01,440
Speaker 1: Really quite a pleasure to talk to you and hear

523
00:32:01,480 --> 00:32:04,440
Speaker 1: your insight on everything going on in the markets these days. Mark,

524
00:32:04,560 --> 00:32:05,760
Speaker 1: We really appreciate your time.

525
00:32:06,040 --> 00:32:08,640
Speaker 3: Thank you. It was great to be on and hopefully

526
00:32:08,640 --> 00:32:09,480
Speaker 3: you'll have me back.

527
00:32:09,720 --> 00:32:15,040
Speaker 2: Yeah, we're gonna pick you my god Mark, I'm sorry

528
00:32:15,160 --> 00:32:17,560
Speaker 2: and thank you. It was great to have you on.

529
00:32:18,280 --> 00:32:20,440
Speaker 3: Thanks, we'll see you later work.

530
00:32:28,000 --> 00:32:30,320
Speaker 1: What Goes Up will be back next week. Until then,

531
00:32:30,320 --> 00:32:33,080
Speaker 1: you can find us on the Bloomberg Terminal, website and app,

532
00:32:33,200 --> 00:32:36,160
Speaker 1: or wherever you get your podcasts. We'd love it if

533
00:32:36,160 --> 00:32:38,080
Speaker 1: you took the time to rate and review the show

534
00:32:38,160 --> 00:32:41,520
Speaker 1: on Apple Podcasts. Some more listeners can find us, and

535
00:32:41,560 --> 00:32:44,480
Speaker 1: you can find us on Twitter, follow me at Reaganonymous.

536
00:32:45,080 --> 00:32:48,760
Speaker 1: Wildna Hirich is at Bildona Hirich. You can also follow

537
00:32:48,760 --> 00:32:53,360
Speaker 1: Bloomberg Podcasts at podcasts. What Goes Up is produced by

538
00:32:53,400 --> 00:33:02,400
Speaker 1: Stacy Wang. Thanks for listening, See you next time at

539
00:33:03,320 --> 00:33:03,760
Speaker 1: mentan