WEBVTT - Banks, Jack Dorsey, India, and Gene Editing (Podcast) 0:00:00.760 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.520 --> 0:00:15.560 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.600 --> 0:00:18.439 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:21.840 at Bloomberg dot com slash podcast. All right, I've been 0:00:21.880 --> 0:00:23.920 looking to talk to this guy for a couple of days. Here. 0:00:23.960 --> 0:00:27.120 I need some perspective. I need a little bit of cynicism, 0:00:27.160 --> 0:00:29.360 maybe even a little bit of snark, and for that 0:00:29.400 --> 0:00:32.120 I go to Cameron christ Our Macroman. He's a Bloomberg 0:00:32.120 --> 0:00:36.239 News Cameron, you're out with the note today saying the 0:00:36.360 --> 0:00:39.440 yield curve says rate cuts are nearly a certainty. What 0:00:39.440 --> 0:00:41.800 do you mean by that, Well, I look at the 0:00:42.200 --> 0:00:44.479 front end of the old curve. I mean the two 0:00:44.560 --> 0:00:49.760 year note has obviously gone crazy ballistic since the Silicon 0:00:49.840 --> 0:00:54.200 Valley bank stuff hit the tape, and the inversion between 0:00:54.320 --> 0:00:57.920 the three months sector and the two year sector is now, 0:00:58.520 --> 0:01:03.640 you know, kinda hit one hundred basis points earlier earlier today. 0:01:04.280 --> 0:01:06.400 That's only the second time that's happened in the last 0:01:06.400 --> 0:01:09.160 forty years. The other one was the very beginning of 0:01:09.240 --> 0:01:11.560 two thousand and one, which is when the FED actually 0:01:11.560 --> 0:01:14.720 cut rates kind of on the first real trading day 0:01:15.319 --> 0:01:19.080 of the year. And if you look at all times 0:01:19.160 --> 0:01:21.920 when three months two year was inverted by at least 0:01:21.959 --> 0:01:25.600 fifty basis points, the FED is cut rates within six 0:01:25.640 --> 0:01:30.640 months on like ninety three percent of those occasions. So statistically, 0:01:30.760 --> 0:01:33.800 we only get pricing like this when the FED is 0:01:33.880 --> 0:01:37.480 about to make a pretty swift turn. I guess one 0:01:37.560 --> 0:01:41.040 question though for you, is inflation under control? I mean, 0:01:41.319 --> 0:01:43.600 we've had rate cuts from the ECP, from the Bank 0:01:43.600 --> 0:01:46.080 of England and obviously from the FED. You know, are 0:01:46.120 --> 0:01:52.240 they pretty much done? Is inflation under control at the moment? No? 0:01:54.040 --> 0:01:59.760 But in the future who knows? And that's really the 0:01:59.880 --> 0:02:03.600 issue with all those banking sector stress is you just 0:02:03.640 --> 0:02:06.639 don't know what the impact is going to be. Um. 0:02:07.240 --> 0:02:09.240 I mean, I think we can we can pretty clearly 0:02:09.240 --> 0:02:11.720 say it's not a two thousand and eight situation because 0:02:11.760 --> 0:02:16.839 there's not all this toxic you know, toxic waste on 0:02:16.960 --> 0:02:20.560 bank balance sheets. There's other kinds of waste, which is 0:02:20.960 --> 0:02:26.160 you know, which is government issued or government guaranteed UH 0:02:26.320 --> 0:02:29.120 debt UM. But that's a slightly ket different kind of 0:02:29.120 --> 0:02:33.600 fish because it's held in holding maturity UM buckets, and 0:02:33.639 --> 0:02:38.120 there are liquidity uh measures in place so that banks 0:02:38.240 --> 0:02:42.320 can can obviously meet the needs of depositors UM who 0:02:42.360 --> 0:02:44.120 want their money. But I think the issue that mister 0:02:44.120 --> 0:02:47.360 Powell raised on Wednesday is the right one, which is 0:02:47.360 --> 0:02:50.160 that if we get this sort of significant tightening and 0:02:50.240 --> 0:02:54.400 credit conditions that seems likely as a result of all 0:02:54.440 --> 0:02:57.240 of this banking kerfuffle, and essentially it's going to take 0:02:57.280 --> 0:03:02.280 the place of r of rate hikes in in in UM, 0:03:02.440 --> 0:03:07.720 restraining the growth of credit and ultimately UM ultimately demand. 0:03:08.200 --> 0:03:11.120 So it does make sense that the Fed has kind 0:03:11.160 --> 0:03:15.120 of shifted its perspective UM. The market, I think is 0:03:15.240 --> 0:03:20.640 sort of obviously leaning very very very very heavily towards 0:03:20.880 --> 0:03:24.000 this is a big deal uh, and the economy is 0:03:24.000 --> 0:03:27.280 going to enter a recession sort of post haste UM, 0:03:27.400 --> 0:03:30.200 which then raises the question of why the equity market 0:03:30.240 --> 0:03:34.600 hasn't done more poorly on on a broader basis UH. 0:03:35.000 --> 0:03:38.600 And then we get to a more philosophical question. Yeah, 0:03:38.720 --> 0:03:43.119 philosophical question of you know, who's who's at the vanguard 0:03:43.240 --> 0:03:47.040 of economic analysis and who's sort of in the caboose um. 0:03:47.120 --> 0:03:50.680 You know, i'd remind you and listeners that the stock 0:03:50.760 --> 0:03:53.920 market reached new highs after the FED first cut rates 0:03:53.920 --> 0:03:56.760 in two thousand and seven, um, and that obviously went 0:03:56.880 --> 0:04:00.520 pretty horridly wrong in the end. Even you know what, 0:04:00.600 --> 0:04:02.520 the provider that this is not a sort of a 0:04:02.520 --> 0:04:05.760 two thousand and eight situation. And Cameron on the recession discussion, 0:04:05.960 --> 0:04:08.240 I have a hard time kind of getting to a recession, 0:04:08.280 --> 0:04:10.320 like a lot of folks are talking about. I've got, 0:04:10.360 --> 0:04:13.040 you know, still pretty darn your full employment. We had 0:04:13.080 --> 0:04:16.039 a good jobs print today still this week below two 0:04:16.120 --> 0:04:18.880 hundred thousand. We get the pm I numbers today coming 0:04:18.880 --> 0:04:22.600 in much stronger than expected. I don't know, I kind 0:04:22.600 --> 0:04:25.400 of feel like we can soft land this thing. What 0:04:25.839 --> 0:04:27.880 do you think. I think it's become a lot more 0:04:27.920 --> 0:04:31.240 difficult given the stress in the banking sector. Okay, I 0:04:31.279 --> 0:04:34.920 think what we're probably going to see. And again this 0:04:35.000 --> 0:04:37.080 is something I've written, I think Powell alluded to it 0:04:37.480 --> 0:04:41.039 on Wednesday, is some of the cumuloultive impact of tightening 0:04:41.320 --> 0:04:46.320 generally and credit tightening in particular, is nonlinear. It kind 0:04:46.360 --> 0:04:48.920 of has no impact, no impact, no impact. And then 0:04:48.960 --> 0:04:52.640 an animal falls on your foot. It's I can use 0:04:52.680 --> 0:04:56.680 sort of a Warner Brothers well, a wily coyote type 0:04:56.720 --> 0:05:00.120 metaphor there, And I think that's the It's certainly he 0:05:00.200 --> 0:05:03.440 looks like there's an enhanced risk that that's what's going 0:05:03.440 --> 0:05:07.160 to happen. Um, we don't know, uh, And so I 0:05:07.200 --> 0:05:10.919 think it makes sense to keep one's options open and 0:05:11.000 --> 0:05:15.360 maintain analytical flexibility and not be dogmatic about what the 0:05:15.360 --> 0:05:19.880 future looks like, have a little humility about the outlook. Um. Well, 0:05:19.920 --> 0:05:21.960 I think we can say though, is that the market, 0:05:22.240 --> 0:05:24.760 the market pricing as it stands now in the sixth 0:05:24.760 --> 0:05:29.080 income market is one that is not a stable equilibriate. 0:05:29.839 --> 0:05:32.440 Either the Fed's going to have to deliver rate cuts 0:05:33.040 --> 0:05:36.720 um and short rates are going to drop fairly soon, 0:05:37.640 --> 0:05:40.520 or the market's going to have to recalibrate the yield 0:05:40.520 --> 0:05:42.760 curve UM and the two year yield's gonna have to 0:05:42.800 --> 0:05:45.520 go quite a bit higher again because this sort of 0:05:45.560 --> 0:05:49.000 spread between the very short rate and the two year 0:05:49.080 --> 0:05:52.200 treasury is just not somewhere that it can can it 0:05:52.240 --> 0:05:54.720 can last for very long um For no other reason 0:05:54.760 --> 0:05:57.159 that leverage owners of the two year yield have to 0:05:57.200 --> 0:05:59.080 pay the shorts, you have to pay the REPO rate 0:05:59.279 --> 0:06:02.279 to finance their positions, and that's a big negative carry trade. 0:06:02.279 --> 0:06:04.200 And the one thing we know about fixed income operators 0:06:04.279 --> 0:06:09.520 is there's nothing they hate more than negative care to 0:06:09.720 --> 0:06:11.960 one thing, though, I mean, you've made the point about 0:06:12.320 --> 0:06:14.400 you know, you've got the FED tightening conditions as well, 0:06:14.400 --> 0:06:16.960 but I mean you go back to banks tightening conditions, 0:06:17.000 --> 0:06:18.919 and so I look ahead to the second half of 0:06:18.920 --> 0:06:21.720 the year, you can see these two paths kind of 0:06:22.000 --> 0:06:25.840 diverging or converging rather onto the American spender, and then 0:06:25.920 --> 0:06:28.120 there's going to be a lot of reason for people 0:06:28.279 --> 0:06:31.039 to pull back their purse strings, not to mention the 0:06:31.080 --> 0:06:33.520 fact that the employment market could start looking really, very 0:06:33.600 --> 0:06:36.920 very tricky. So I mean, looking ahead to that, do 0:06:37.000 --> 0:06:39.520 you see that you know there's a substantial potential for 0:06:39.560 --> 0:06:42.320 things to be a lot tougher and for fixingtom to 0:06:42.360 --> 0:06:46.159 get a lot more expensive later on. Yeah, absolutely, there's 0:06:46.160 --> 0:06:49.599 the potential for things to get a lot tougher. And 0:06:49.680 --> 0:06:52.560 if that happens, then yeah, the pricing that's already in 0:06:52.680 --> 0:06:55.599 placent in the yield curve will come to pass. But 0:06:55.640 --> 0:06:57.400 then you have to ask the question of what's the 0:06:57.560 --> 0:06:59.200 you know, what's the stock markets still doing? Up on 0:06:59.240 --> 0:07:03.200 the air? Um, you know, in an environment where things 0:07:03.200 --> 0:07:07.200 are bad enough and people sort of retrench quickly enough 0:07:08.120 --> 0:07:10.760 that these rate cuts that are in the price are merited. 0:07:11.120 --> 0:07:14.000 That's not a situation where the earnings outlook is anything 0:07:14.000 --> 0:07:17.520 but awful. Would I would think, So there is this 0:07:17.600 --> 0:07:21.480 sort of dissonance between what's being priced across various aspects 0:07:22.560 --> 0:07:26.800 of you know, of the financial market universe. Cameras spent 0:07:26.880 --> 0:07:28.760 thirty seconds and how concerned are you about the US 0:07:28.840 --> 0:07:34.080 banking system? A lot more so than a couple of 0:07:34.080 --> 0:07:38.080 weeks ago. I think if everyone agrees that it's healthy, 0:07:38.520 --> 0:07:42.160 then it's healthy. But if everyone thinks that it's in trouble, 0:07:42.280 --> 0:07:47.000 then the nature of facts fractional reserve banking means that 0:07:47.160 --> 0:07:50.000 it kind of almost becomes a self fulfilling prophecy, particularly 0:07:50.040 --> 0:07:53.440 in this environment of social media where people can sort 0:07:53.440 --> 0:07:57.240 of fan the flames of fear without facts really intruding 0:07:57.240 --> 0:08:01.160 on then earth. Okay, camera christ Macro Strategy, Bloomberg News 0:08:01.160 --> 0:08:04.280 and most notably on his CV. He's a graduate of 0:08:04.360 --> 0:08:08.480 Duke University. What happened to our hoops team this year? Dude? 0:08:09.080 --> 0:08:12.920 You're listening to the Team Cancer Live program Bloomberg Markets 0:08:12.960 --> 0:08:16.080 weekdays at ten am easting on Bloomberg dot Com, the 0:08:16.120 --> 0:08:18.880 I Heard Radio app, and the Bloomberg Business app. We're 0:08:18.920 --> 0:08:24.280 listening on demand wherever you get your podcast block. Obviously. 0:08:24.280 --> 0:08:27.080 In the news this week, Hindenburg Research out with a 0:08:27.200 --> 0:08:30.760 short seller report on this company. The company vows to fight. 0:08:30.800 --> 0:08:33.560 I need the latest on this name and do that. 0:08:33.600 --> 0:08:37.120 We turn to Jenny Sreen, finance reporter with Bloomberg News. 0:08:37.320 --> 0:08:39.360 I believe she's in London somewhere. I'm not really sure 0:08:39.360 --> 0:08:41.720 she's over there. Jennifer During Thanks, Yeah, okay, all right, 0:08:42.240 --> 0:08:44.040 so Jenny Sreen, thanks, So what for joining us? Give 0:08:44.080 --> 0:08:47.120 us the latest here? Because Block Jack Dorsey all that 0:08:47.200 --> 0:08:50.720 kind of stuff. They're going to fight this thing, aren't they. Yeah, No, 0:08:50.840 --> 0:08:54.440 that's exactly right. They're out with I mean a relatively 0:08:54.480 --> 0:08:58.760 concise statement, given the length of the Hindenburg Research report 0:08:58.760 --> 0:09:00.480 that was put out on them. But yeah, they've vowed 0:09:00.520 --> 0:09:02.120 to fight it. They've said they'll work with the SEC 0:09:02.280 --> 0:09:05.559 to do so, and they seem pretty ready to dispute 0:09:05.640 --> 0:09:07.600 the claims that we're brought against them. Can you just 0:09:07.640 --> 0:09:10.160 summarize for us what are the claims. What's the thesis 0:09:10.200 --> 0:09:14.720 of this short? Yeah, absolutely, So, you know, it's interesting. 0:09:14.760 --> 0:09:16.960 I think there was a lot of stuff that the 0:09:17.040 --> 0:09:21.360 investors likely already knew in the report, and so I 0:09:21.360 --> 0:09:25.079 think the biggest new piece was really just the idea 0:09:25.120 --> 0:09:27.520 that a lot of fraud and a lot of criminal 0:09:27.520 --> 0:09:30.920 activity could be going over the cash app network specifically. 0:09:30.960 --> 0:09:33.640 So this is like a person to person payments app 0:09:33.720 --> 0:09:36.040 that you know, rivals the likes of Venmo or Zell 0:09:36.920 --> 0:09:40.400 and Hindenburg, and you know, a bunch of public records 0:09:40.440 --> 0:09:43.160 requests and a lot of other deep dive research says 0:09:43.200 --> 0:09:46.040 that they've found evidence of a widespread fraud on this network. 0:09:46.080 --> 0:09:48.040 And so that that's really I think when investors are 0:09:48.040 --> 0:09:50.480 worried about and really keying in on. I mean, the 0:09:50.559 --> 0:09:52.760 thing I really want to know about this is where 0:09:52.840 --> 0:09:54.840 the regulators are on this, and what they're thinking is 0:09:54.880 --> 0:09:57.800 because you know, we've certainly seen concerns raised about Zell 0:09:57.920 --> 0:10:02.160 for example, and you know, you wonder if these these 0:10:02.160 --> 0:10:04.600 new payment systems, these new ways of transferring money super 0:10:04.720 --> 0:10:07.240 quickly from one to another. It's they've been around for 0:10:07.280 --> 0:10:09.520 a little while. So I feel like the regulators really 0:10:09.559 --> 0:10:12.960 have gotten a bit flat footed on this. Yeah, it's 0:10:13.000 --> 0:10:15.560 interesting because I think, um, you know, with sell, a 0:10:15.559 --> 0:10:19.160 lot of the complaints and consumer criticism is that UM 0:10:19.200 --> 0:10:22.959 fraudsters have seized it and convinced consumers to send money 0:10:22.960 --> 0:10:25.360 to the wrong person essentially, and so in that instance, 0:10:25.400 --> 0:10:28.320 you know, it's really UM a fraudster says, hey, you know, 0:10:28.720 --> 0:10:30.719 send me this, and a person might think it's their 0:10:30.720 --> 0:10:32.800 aunt or their uncle or their friend, and and it 0:10:32.800 --> 0:10:35.560 turns out to be a scammer. So that's one area, UM. 0:10:35.600 --> 0:10:39.360 But really what this report shows is UM that there 0:10:39.600 --> 0:10:43.040 was UM, you know, use of this network by UM 0:10:43.520 --> 0:10:46.080 sexual traffickers and and just all sorts of really a 0:10:46.120 --> 0:10:49.120 criminal CD underbelly that that's really being alleged here. And 0:10:49.120 --> 0:10:51.640 so I think there's very different kinds of fraud and 0:10:51.920 --> 0:10:54.600 mouthfee sense that could be occurring. And regulators, I have 0:10:54.640 --> 0:10:56.880 to imagine, are are looking closely at this and kind 0:10:56.880 --> 0:10:59.800 of um taking a closer look because I think, um, 0:11:00.160 --> 0:11:01.720 you know a lot of these FinTechs have popped up 0:11:01.760 --> 0:11:05.760 and you know, and unfortunately oftentimes see bad actors really 0:11:05.760 --> 0:11:08.720 looking to see a lot of new technologies. Have we 0:11:08.760 --> 0:11:12.520 heard from any big shareholders for block here, because the 0:11:12.559 --> 0:11:15.600 stock has obviously been under significant pressure since this report 0:11:15.640 --> 0:11:19.120 came out. That's actually a good point. We haven't um 0:11:20.040 --> 0:11:22.800 no one has swept into their defense just yet. You know, 0:11:22.800 --> 0:11:24.520 I think a lot of the analyst community, at the 0:11:24.600 --> 0:11:28.000 very least, they're really trying to draw lines between what 0:11:28.160 --> 0:11:30.959 is a known issue and what block has been publicly 0:11:30.960 --> 0:11:32.800 out there trying to fix. You know, they're one of 0:11:32.840 --> 0:11:35.319 many payment providers that have seen a slowdown in volumes, 0:11:35.320 --> 0:11:37.520 for instance, and then they've got different strategies in place 0:11:37.600 --> 0:11:40.760 to fix that, and then what is the new stuff? 0:11:40.760 --> 0:11:42.600 And I think a lot of this, you know, potential 0:11:42.600 --> 0:11:45.480 criminal activity and then the allegations there. That's really what 0:11:45.559 --> 0:11:47.880 I think analysts and in the investor community more broadly 0:11:47.920 --> 0:11:51.400 is trying to understand maybe before sticking their neck out right. 0:11:51.440 --> 0:11:53.560 I'm just looking at the a n R functional on 0:11:53.559 --> 0:11:58.360 the Bloomberg terminal for analyst rating recommendations forty buys, eleven 0:11:58.440 --> 0:12:00.960 holds and two cells, which it looks like they're still 0:12:01.040 --> 0:12:03.600 kind of supporting the name. Yeah, they haven't got the 0:12:03.600 --> 0:12:06.679 news yet maybe or are they so? Jenny? I mean, 0:12:06.840 --> 0:12:09.160 I guess what are next steps here for the company? 0:12:10.520 --> 0:12:13.520 I mean, I imagine that we um I guess we 0:12:13.679 --> 0:12:16.240 hope we've reached out for additional comment and really had 0:12:16.280 --> 0:12:18.720 to have them address some of these allegations more directly. 0:12:19.480 --> 0:12:23.240 The statement that we got last night was really, I 0:12:23.280 --> 0:12:26.000 would say, you know, obviously very forceful in terms of 0:12:26.040 --> 0:12:28.240 promising legal action and then really trying to take a 0:12:28.240 --> 0:12:31.160 stand against it, but not really addressing the specific claims. 0:12:31.160 --> 0:12:32.679 And I think you know, in the cases in the 0:12:32.679 --> 0:12:34.680 past where you've seen these big short Siller reports, you 0:12:34.720 --> 0:12:37.760 often do see company responses that are you know, tens 0:12:37.760 --> 0:12:41.600 of pages long and very detailed, and so I feel 0:12:41.600 --> 0:12:45.280 like that's we hope that's what we'll get, you know. 0:12:45.400 --> 0:12:47.640 Notwithstanding that, I think they have earnings coming up in 0:12:47.640 --> 0:12:49.880 a couple of weeks and they'll absolutely have to address 0:12:49.920 --> 0:12:52.560 it then. So you know, I think we're just going 0:12:52.600 --> 0:12:54.400 to have to wait and see how the company wants 0:12:54.400 --> 0:12:56.959 to respond from here. Do you see any other knock 0:12:56.960 --> 0:12:59.480 on impact into any other sectors of the financial services 0:12:59.520 --> 0:13:03.720 industry from this? I definitely think, you know, especially with 0:13:03.840 --> 0:13:06.439 players like Sell and Venmo, this just ratchets up the 0:13:06.480 --> 0:13:09.880 scrutiny on those guys even more because I think, you know, 0:13:09.920 --> 0:13:12.480 there's always a concern that would you know, where there's 0:13:12.520 --> 0:13:15.959 one issue, there's many, and so you'll probably see regulators 0:13:15.960 --> 0:13:18.199 looking more closely at all of these e money providers 0:13:18.200 --> 0:13:20.360 and looking for ways that they can make sure that 0:13:20.640 --> 0:13:22.640 you know, there is criminal activity, that they can catch 0:13:22.679 --> 0:13:25.079 it and tamp down on it, and that these providers 0:13:25.160 --> 0:13:28.040 do have systems in place to catch it. You know, Jenny, 0:13:28.120 --> 0:13:31.880 we don't read too much about short selling in successful 0:13:31.880 --> 0:13:34.000 short saying bad I guess we have. Recently, these Hindenburg 0:13:34.040 --> 0:13:36.360 folks have been kind of busy. They I guess the 0:13:36.400 --> 0:13:40.079 most notable short report and short action they've taken this 0:13:40.200 --> 0:13:42.800 against Adani an Indian companies. So can you tell us 0:13:42.800 --> 0:13:46.400 a little about Hindenburg Research and kind of what their 0:13:46.440 --> 0:13:51.760 business is. Yeah, I mean, I think it's it's exactly 0:13:51.800 --> 0:13:54.880 like you said. They usually write these really big reports 0:13:54.880 --> 0:13:57.719 and then use social media and other ways to kind 0:13:57.720 --> 0:14:00.959 of distribute them and promote their ideas. But they're betting 0:14:00.960 --> 0:14:02.719 against the stocks fall, so you have to kind of 0:14:02.800 --> 0:14:05.040 keep that in mind as you're reporting on them and 0:14:05.080 --> 0:14:07.559 reading these research that they definitely have an angle and 0:14:07.840 --> 0:14:10.560 have a financial incentive to cause this type of decline 0:14:10.600 --> 0:14:14.120 that we've seen in blocks stock this week. But You're 0:14:14.120 --> 0:14:16.640 absolutely right, Donnie. Was their other big report that they 0:14:16.679 --> 0:14:19.400 did this year. A couple of years ago they had 0:14:19.440 --> 0:14:22.000 went out on Lordstown. They had a lot on the 0:14:22.040 --> 0:14:23.840 ev market just a few years ago. So I think, 0:14:24.800 --> 0:14:27.600 you know, they're relatively new player, but definitely have caused 0:14:27.680 --> 0:14:29.520 quite a stir every time they do take one of 0:14:29.520 --> 0:14:32.680 these very public formal positions. I'm very interested in your 0:14:32.720 --> 0:14:34.440 point that you know they're putting this all out on 0:14:34.440 --> 0:14:37.560 social media. It seems like these kinds of the kinds 0:14:37.560 --> 0:14:40.320 of angles on these stories move very very quickly. I mean, 0:14:40.320 --> 0:14:42.040 do you have a sense that it moves a little 0:14:42.080 --> 0:14:46.840 bit too quickly? Um? I mean I think, Um, I 0:14:46.840 --> 0:14:49.600 guess as a journalist, you know, we cover the stocks 0:14:49.680 --> 0:14:53.080 drop and try to explain that for readers. But yeah, 0:14:53.120 --> 0:14:55.360 I mean, I think everybody reading any research, you know, 0:14:55.440 --> 0:14:58.440 even if it's a you know, someone who's not a 0:14:58.480 --> 0:15:01.760 short seller, sometimes there's folks who of uh invested in 0:15:01.760 --> 0:15:03.560 the stock who put out their ideas and they want 0:15:03.560 --> 0:15:04.800 to see the stock go up, so they would have 0:15:04.840 --> 0:15:06.960 a bias too in some ways. So um, yeah, I 0:15:06.960 --> 0:15:09.080 think it's important whenever we're reading any research to kind 0:15:09.080 --> 0:15:12.240 of take into account what financial incentives the author might have. 0:15:12.480 --> 0:15:15.520 And Jenny following up on that, how's the track record 0:15:15.640 --> 0:15:18.720 of Hindenburg Research been? I mean, I you know, they 0:15:18.720 --> 0:15:23.080 were relatively unknown to me until the Donnie news broke, 0:15:23.120 --> 0:15:25.200 because I was always think of Carson Block at whatever 0:15:25.400 --> 0:15:29.600 firm he's at as a prominent short seller. Um, what's 0:15:29.600 --> 0:15:32.920 the track record for Hindenburg? Um, it's a good question. 0:15:33.000 --> 0:15:35.400 I mean, I feel like, especially with something like a Donnie, 0:15:35.520 --> 0:15:37.520 I guess, you know, obviously they want to see the 0:15:37.520 --> 0:15:40.520 stock drop and then the Donni case, it absolutely dropped 0:15:40.520 --> 0:15:43.880 in the days and weeks following that report. Um, but 0:15:43.960 --> 0:15:47.640 I think and ultimately it depends on when Endiburg decides 0:15:47.680 --> 0:15:49.840 to sell their position and how much they're really hoping 0:15:49.840 --> 0:15:52.440 to net and so. UM. You know, it's always a 0:15:52.480 --> 0:15:55.400 long term, you know discussion, like if if Donnie seems 0:15:55.400 --> 0:15:57.040 to turn things around or is able to back back 0:15:57.080 --> 0:16:00.800 these allegations sufficiently. Um, it'll be I'm interested to see 0:16:00.800 --> 0:16:02.600 if I think it's still probably too a little bit 0:16:02.600 --> 0:16:05.400 too early to tell. All Right, Jenny, thank you so much. 0:16:05.600 --> 0:16:08.960 We appreciate that. Jenny Serene she is a financial reporter 0:16:09.000 --> 0:16:11.440 for Bloomberg News. Checking her out, She's based in New York, 0:16:11.680 --> 0:16:13.320 but she's spent in a few months over in the 0:16:13.440 --> 0:16:17.080 London studio. You're listening to the tape cans are our 0:16:17.120 --> 0:16:20.880 live program Bloomberg Markets weekdays at ten am Eastern on 0:16:20.920 --> 0:16:23.960 Bloomberg Radio, the tune in app, Bloomberg dot Com, and 0:16:24.000 --> 0:16:26.800 the Bloomberg Business App. You can also listen live on 0:16:26.880 --> 0:16:30.160 Amazon Alexa from our flagship New York station. Just say 0:16:30.200 --> 0:16:35.360 Alexa play Bloomberg eleven thirty. All right, let's get the 0:16:35.960 --> 0:16:38.440 kind of an overlay. What's you know? What are the 0:16:38.480 --> 0:16:41.480 stock pickers thinking these days? I mean, good luck to them. 0:16:41.520 --> 0:16:43.640 Scott Harrison, he does this stuff for a living. He's 0:16:43.640 --> 0:16:48.440 a portfolio manager for Argent Capital Management. Scott Harrison, you 0:16:48.520 --> 0:16:50.560 sit out there, You've got a lot of cross currents 0:16:50.560 --> 0:16:52.440 out there. We just finished up earnings, waft some more 0:16:52.480 --> 0:16:54.400 earnings kicking off in a few weeks. He got that 0:16:54.840 --> 0:16:58.160 earnings probably at risk, and you got central bankers whippin' 0:16:58.240 --> 0:17:00.200 rates all over the place, and then you out a 0:17:00.240 --> 0:17:01.520 little bit of a bank. I'm not going to call 0:17:01.560 --> 0:17:04.119 it a crisis, but some angst out there about the 0:17:04.160 --> 0:17:07.240 global banking space. Your portfolio management, you get paid to 0:17:07.240 --> 0:17:10.879 put money to work. How do you put it all together? Yeah, 0:17:10.880 --> 0:17:13.400 thank you. I appreciate that, and I think the word 0:17:13.440 --> 0:17:16.200 you use their angst is very appropriate for what we're 0:17:16.200 --> 0:17:19.840 seeing in the market today. And for us, we start 0:17:19.920 --> 0:17:24.240 thinking about crisis well before it, so we think about 0:17:24.320 --> 0:17:27.320 risk and our portfolio is a constant part of our 0:17:27.359 --> 0:17:31.199 investment process. But what I like to remind investors is 0:17:31.560 --> 0:17:34.400 that while the financial sector is getting all the attention 0:17:34.440 --> 0:17:38.240 for the right reasons, if the stock market itself goes down, 0:17:38.280 --> 0:17:41.879 there might be opportunities outside of financials that really we 0:17:41.920 --> 0:17:46.040 should be looking for. And ultimately, regardless of what's going 0:17:46.080 --> 0:17:48.640 on in the environment, there are going to be companies 0:17:48.680 --> 0:17:52.040 that can continue to compound cash flows and that come 0:17:52.160 --> 0:17:54.679 out of whatever is going on today come out in 0:17:54.720 --> 0:17:58.000 a stronger position going forward. So that's really what we're doing. 0:17:58.080 --> 0:18:02.560 We're a fundamental invest we are looking at company fundamentals, 0:18:02.600 --> 0:18:05.080 We're rolling up our sleeves, and we're really looking for 0:18:05.119 --> 0:18:08.679 those opportunities today that can compound cash flows as we 0:18:08.720 --> 0:18:11.760 look out over the next three to five years. So 0:18:11.880 --> 0:18:15.399 what are your favorite sectors now at this point? Sure, 0:18:15.680 --> 0:18:18.159 I look at last year and the two hardest hit 0:18:18.240 --> 0:18:21.520 areas of the stock market last year, consumer discretion and 0:18:21.760 --> 0:18:25.800 information technology. I view the weakness of last year is 0:18:25.840 --> 0:18:31.080 potentially presenting opportunities today. So semiconductors, for instance, we're one 0:18:31.080 --> 0:18:34.640 of the hardest hit areas in technology last year, and 0:18:34.680 --> 0:18:37.119 that's an area that we've been increasing our exposure to 0:18:37.280 --> 0:18:40.640 this year. In a company like Texas Instruments, for instance, 0:18:41.400 --> 0:18:46.200 is a name recently that's correct, and you know we've 0:18:46.280 --> 0:18:49.840 we've added to that to our investment strategy over the 0:18:49.920 --> 0:18:53.120 last several months. And ultimately, what we're looking for all 0:18:53.119 --> 0:18:57.040 those companies that can offer attractive dividends, that can compound 0:18:57.080 --> 0:19:00.959 cash flows over time, and that management to speaks our language. 0:19:00.960 --> 0:19:03.960 They believe that growing free cash flow per share is 0:19:04.000 --> 0:19:07.280 the best way to create value for shareholders, and that's 0:19:07.320 --> 0:19:10.720 exactly what we believe in. So there are opportunities like 0:19:10.880 --> 0:19:16.159 Texas Instruments tractor supply company. I'm guessing the company is 0:19:16.160 --> 0:19:19.240 basically what the name says it is, but I don't 0:19:19.240 --> 0:19:21.880 think we have any tractor supply stores here in Manhattan. 0:19:21.920 --> 0:19:25.000 Tell us about this company, okay? Sure that that's another 0:19:25.040 --> 0:19:28.119 great opportunity and that that fits in the consumer discretionary 0:19:28.640 --> 0:19:32.800 sector that I mentioned earlier, Tractor Supply actually started around 0:19:32.800 --> 0:19:35.760 a great depression in the thirties and they started out 0:19:35.880 --> 0:19:40.240 offering exactly what the name says, supplies for tractors. But 0:19:40.359 --> 0:19:44.080 it's evolved into a leading retailer and today about half 0:19:44.080 --> 0:19:48.160 of the company's business comes from livestock or pets. More 0:19:48.160 --> 0:19:51.520 than eighty percent of the sales of the company has 0:19:51.560 --> 0:19:55.080 to do with immediate use products, and they are the 0:19:55.280 --> 0:19:58.919 dominant leader in rural markets. So we can think of 0:19:59.080 --> 0:20:02.399 home depot and lows and those types of retailers and 0:20:02.560 --> 0:20:07.080 urban markets. Tractor Supply is the equivalent for the rural 0:20:07.119 --> 0:20:12.159 community and they have a strong following. They supply and 0:20:13.000 --> 0:20:17.200 really target the rancher community, and there is no company 0:20:17.240 --> 0:20:19.440 that comes close to them in terms of market share 0:20:19.480 --> 0:20:21.320 and what they're able to do. Scott, I got to 0:20:21.320 --> 0:20:23.199 get out in New York City more often. This is 0:20:23.200 --> 0:20:26.639 a twenty five billion dollar market cap stock, and you 0:20:26.720 --> 0:20:29.920 put it up on the comp functional in the Bloomberg Trauma, 0:20:29.960 --> 0:20:31.800 I get a five year look at this stock. Over 0:20:31.880 --> 0:20:35.600 five years, this stock has compounded thirty two percent a 0:20:35.680 --> 0:20:38.480 year versus S ANDP of eleven percent. Scott, how about that, 0:20:38.720 --> 0:20:41.919 I've never heard of this thing? Well, that's you know, 0:20:42.040 --> 0:20:45.080 you just said our favorite word there, which was compounding. 0:20:45.600 --> 0:20:49.159 We believe the compounding cash flows is the greatest forces investing, 0:20:49.400 --> 0:20:53.560 and Tractor Supply has done just that through the pandemic. 0:20:53.600 --> 0:20:57.639 Alan They've increased sales by over seventy percent. There is 0:20:57.720 --> 0:21:01.879 no competitor that's close to them in their markets. Strong barriers, 0:21:02.520 --> 0:21:06.399 strong brand, and just a company that continues to execute 0:21:06.680 --> 0:21:09.600 um and just the hallmark to them. While other retailers 0:21:09.640 --> 0:21:13.160 have struggled coming out of the pandemic and dealing with 0:21:13.200 --> 0:21:17.880 that transition, they have just executed phenomenally and continue to 0:21:17.920 --> 0:21:21.600 target that high single digit growth rate. And compounding is 0:21:21.640 --> 0:21:24.119 exactly the right word that I would use when I 0:21:24.160 --> 0:21:27.359 think of Tractor Supply, I think the closest one Jennifer 0:21:27.400 --> 0:21:30.919 to hear, I'm looking at it Middletown, New Jersey. John. 0:21:31.320 --> 0:21:34.720