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Speaker 1: This is Bloomberg Business Week. I'm Carole Masser and I'm

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Speaker 1: Bloomberg Quick Takes Tim Stanovk. We're here every day bringing

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Speaker 1: you the latest news from the world to business and finance,

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Speaker 1: plus technology, politics, economics, all partnising the power of Business

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Speaker 1: Week reporters and editors, not to mention our journalists and

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Speaker 1: analyst in more than one and twenty countries. You can

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Speaker 1: download Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot com.

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Speaker 1: You can also listen to our radio show at two

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Speaker 1: pm Eastern Time on Bloomberg Radio or watch us on

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Speaker 1: YouTube and now also on Bloomberg Quick Take. A lot

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Speaker 1: going on in our world, and especially when it comes

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Speaker 1: to crypto and you were just drawing my attention, Tim

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Speaker 1: to some the latest story when it comes to Sam

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Speaker 1: make been freed, of course, the former ft X CEO,

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Speaker 1: saying he was mistaken about the cryptocurrencies exchanges leverage levels,

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Speaker 1: thinking it was about five billion when it was thirteen billion.

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Speaker 1: And he's putting this out in a series of tweets. Yeah,

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Speaker 1: he twenty three tweets. He said, thirteen billion dollars in leverage,

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Speaker 1: total run on the bank, total collapse in asset value

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Speaker 1: all at once, which is why you don't want leverage

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Speaker 1: all right, So let's get into because those are his words, Yeah,

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Speaker 1: those are his words. Good point. Um. The cover story

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Speaker 1: of the newisho of Bloomberg Business Week, which is out

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Speaker 1: on news stands tomorrow, already on the BLOOMBERGA and at

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Speaker 1: Bloomberg dot Com, looks into f t X. It's undoing

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Speaker 1: how it delivered a lot of shocks, but perhaps most

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Speaker 1: of all the shock of what we didn't know, which

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Speaker 1: is kind of interesting to hear what SPF maybe didn't

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Speaker 1: know either about leverage at his own firm. Let's get

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Speaker 1: to it. Bloomberg News crypto reporter Ohkarif has been following this.

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Speaker 1: Her reporting on f t X and crypto has been

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Speaker 1: a musty. She joins us via zoom from Portland, Oregon.

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Speaker 1: I'll go good to have you here with Tim and myself,

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Speaker 1: So tell us about your story and what you looked into.

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Speaker 1: Thank you, it's great to be here. So essentially we

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Speaker 1: looked at sort of what happened, what are the ramifications

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Speaker 1: for the crypto industry, And this has been, of course

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Speaker 1: a huge shock for everybody who's been in the crypto

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Speaker 1: community for a long time him and as well as

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Speaker 1: new newer investors who came in in the last couple

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Speaker 1: of years. You know, it's a complete shock because uh

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Speaker 1: some bank Munfreed or sbfest he was known. You know,

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Speaker 1: he was sort of considered to be one of the

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Speaker 1: most sort of trustworthy, if you will, people in crypto.

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Speaker 1: He was testifying in congress, he was meeting with regulators.

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Speaker 1: He had um a lot of respect and a lot

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Speaker 1: of a lot of weight in this industry, and all

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Speaker 1: of a sudden his company has come and done a

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Speaker 1: lot of respect and a lot of influence magazine covers

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Speaker 1: is even he alluded to. He said he became overconfident

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Speaker 1: as a result of that. Hey, um olga. One thing

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Speaker 1: that I'm having a really hard time reconciling with reconciling is,

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Speaker 1: you know, the prominent backers of the company and the

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Speaker 1: really sloppy, leaked balance sheet that we saw. I mean,

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Speaker 1: how does the company this big uh have such a

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Speaker 1: lack of understanding of what it has on the balance sheet?

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Speaker 1: And we're seeing that play out in real time with

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Speaker 1: Sam bankman Fried's tweets like he's saying, these are all

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Speaker 1: rough and he said he didn't know how much leverage

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Speaker 1: he had. Yeah, you know, it's it's incredibly surprising. And

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Speaker 1: I think what this means that is that there wasn't

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Speaker 1: enough oversight. There wasn't enough due diligence that you need

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Speaker 1: for a company this size with such caliber of investors.

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Speaker 1: Typically you wanna for a company this size, you would

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Speaker 1: have a board and you would have all kinds of

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Speaker 1: you know, auditing going on and committees and you know,

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Speaker 1: plenty of people who will be looking through what's going on.

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Speaker 1: And what we find is that for FTX, a lot

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Speaker 1: of it has been just you know, Sam Bankman Freed

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Speaker 1: overseeing the entire operation. You know, it's interesting, you know,

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Speaker 1: you knowe to some of the other tweets that Sam

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Speaker 1: Bankman Freed has has done and talked about how he

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Speaker 1: messed up different words that he used and blaming were

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Speaker 1: internal labeling of accounts. This is not someone who doesn't

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Speaker 1: understand right, how the sophisticated financial system works. If you

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Speaker 1: look about his past experience, right, this is someone who

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Speaker 1: should have known or do we give him some room

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Speaker 1: for not having better systems in place? How are we

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Speaker 1: supposed to look at this so on? On the one hand,

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Speaker 1: he is only thirty years old. So but on the

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Speaker 1: other hand, during this thirty years he has managed to

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Speaker 1: do a lot. He was a trader at James Street

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Speaker 1: of course, the very highly respected quantity trading firm, which

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Speaker 1: gave him Wall Street cred um. And then he also

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Speaker 1: ran UM Alamida since Alameda Research was his trading firm.

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Speaker 1: Initially he Um Alameda essentially made money off of uh,

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Speaker 1: you know, price differences on on different crypto exchanges and

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Speaker 1: made quite a lot of money that way, and then

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Speaker 1: he branched out into actually running a crypto exchange in

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Speaker 1: twenty nineteen, and so he had he had a lot

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Speaker 1: of experience I would think with financial matters, so um

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Speaker 1: even though he's quite young, but but he has had

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Speaker 1: a few years when he should have learned how to

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Speaker 1: run things properly. So what repercussions could he face? He

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Speaker 1: does keep tweeting over and over again that his number

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Speaker 1: one priority is making it right with customers. We'll see

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Speaker 1: if he's able to do that, But what consequences could

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Speaker 1: he face? So in terms of his tweets, they're getting

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Speaker 1: a huge backlash online because people don't trust don't trust

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Speaker 1: him anymore and essentially just almost wish that he didn't

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Speaker 1: even say anything because instead of this empty promise is

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Speaker 1: in terms of what could happen to him, it's still unclear. Uh.

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Speaker 1: You know, ft X is still in the process of

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Speaker 1: filing um. You know, it's it's a bankruptcy all of

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Speaker 1: all of its requisite sort of finitial bankruptcy documents. I'm

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Speaker 1: sure there will be an analysis of what exactly went

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Speaker 1: drawing and who's to blame. Uh, you know, nobody has

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Speaker 1: been charged with anything yet, so so I think it's

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Speaker 1: going to be a pretty long and drawn out process. Uh. Well,

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Speaker 1: we'll have to see how it plays out. But a

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Speaker 1: lot of but but a lot of people are kind

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Speaker 1: of convinced that somebody, you know could face charges for this.

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Speaker 1: Well you know, okay, it almost feels like an uber

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Speaker 1: uber case of FOMA, right, you know, as soon as

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Speaker 1: he got momentum, and you know, media coverage, you know,

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Speaker 1: lad you know, created some of that momentum, you know,

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Speaker 1: you had certain venture capitalists are still and value investors

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Speaker 1: getting in. I'm sure friends were talking about, way what

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Speaker 1: do you guys onto like, it's just you think about

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Speaker 1: how the momentum and velocity that was created by SPF.

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Speaker 1: I'm not you know, behind him for a lot of

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Speaker 1: different reasons, and big name investors wanting to get in

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Speaker 1: because you know, some other big name investors were in

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Speaker 1: and not giving him a pass. But you realize this

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Speaker 1: can happen, you know, when there are frenetic investments that

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Speaker 1: are out there. Absolutely, I think we because sort of

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Speaker 1: until um this year, we were in this reaching crypto

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Speaker 1: bull market where you know, prices were going up like crazy. Everybody,

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Speaker 1: all of the venture capitalists wanted to find the next

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Speaker 1: unicorn and crypto. Uh and uh when when they saw

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Speaker 1: you know this, very respected investors like Sequoia, you know,

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Speaker 1: backing f t X. Uh. Perhaps some of them haven't

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Speaker 1: done as much due diligence. Uh. It sounds like guess

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Speaker 1: they should have just to check things out. There are

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Speaker 1: sort of standard processes for due diligence in any industry,

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Speaker 1: but I think some of them may have been forgotten

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Speaker 1: in the rush to get in. Yes or no, Alga,

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Speaker 1: we have ten seconds. Is this the end of crypto

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Speaker 1: as we know it? I don't think so. I think

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Speaker 1: it's gonna come out of it, but it's gonna be

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Speaker 1: a long lull before while investors licked their wounds and

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Speaker 1: and sort of crypto prices start moving up again and

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Speaker 1: everybody that comes invested in crypto again. Those wounds are

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Speaker 1: deep Ogakarifa Bloomberg News. This is the cover story of

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Speaker 1: the magazine you're listening to, Bloomberg Business Week with Carol

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Speaker 1: Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio.

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Speaker 1: The last few years have reminded us of how the

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Speaker 1: world as we know it can be turned upside down

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Speaker 1: thanks to the global pandemic, the push back against globalization,

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Speaker 1: and rising an unexpected your political tensions. While this is

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Speaker 1: all happening, of course, as G twenty leaders have been

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Speaker 1: meeting in Bali, Indonesia, with all of that in mind,

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Speaker 1: we welcome former U S Secretary of Commerce Carlos gutierres

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Speaker 1: served under President George W. Bush. His co founder and

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Speaker 1: executive chairman chairman of EmPATH. It's a company that works

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Speaker 1: with other companies and their HR teams really on identifying

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Speaker 1: the skills of its workers, tapping into that talent to

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Speaker 1: the benefit of both employee employer, and he joins us

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Speaker 1: on the phone from Washington, d C. Mr Secretary, so

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Speaker 1: delighted to have you here with us. I do want

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Speaker 1: to ask you, and start with the G twenty, do

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Speaker 1: you think it was a productive round of meetings? If

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Speaker 1: so or if not, if you could explain, well, you know,

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Speaker 1: you never exactly I never expect a lot from those meetings.

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Speaker 1: The statements for usually what you get, but very rarely

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Speaker 1: do you get any concrete decisions. Um. One thing that

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Speaker 1: the G twenty did do is is your statement against

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Speaker 1: the war in Ukraine. Although it wasn't really UH and

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Speaker 1: unanimous said that there were a couple of there was

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Speaker 1: language that tended to soften the demand, let's say, on

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Speaker 1: the trade side. I found their statement to be very bland,

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Speaker 1: very noncommittal. Um. They talked about trade, but they talked

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Speaker 1: about trade and relation to sustainability. So anytime you see

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Speaker 1: the word trade, usually see sustainability. UM. Nothing about tariffs,

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Speaker 1: nothing about protectionism, um, really nothing about globalization. So it

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Speaker 1: was a very weak endorsement of trade. UM. I agree

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Speaker 1: that w t O needs reform, UM, and that goes ahead.

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Speaker 1: I wish we had a reformed the strengthened w t

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Speaker 1: O when all the tariffs started, but it seems to

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Speaker 1: me like it's going to continue to be the stay

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Speaker 1: at his quote, how would you have advised the Biden

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Speaker 1: administration to go into this G twenty with the results

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Speaker 1: that you were looking for? Yeah, I would, especially now

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Speaker 1: that um that the mid terms are over, I would

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Speaker 1: have leaned forward a lot more on the importance of trade. UM.

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Speaker 1: Maybe the administration try to get a statement in there

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Speaker 1: about trade and intellectual property and technology, but uh, probably

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Speaker 1: could not get the whole group to go with it.

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Speaker 1: But yes, you know, the administration has really left some

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Speaker 1: big value on the table. For example, the uh ct

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Speaker 1: P p uh A trade agreement which will bring or

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Speaker 1: open up a lot of countries in Asia for US manufacturers,

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Speaker 1: US companies. That was an Obama era agreement and nothing

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Speaker 1: has happened. I would have thought that President Trump took

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Speaker 1: it out because he was following protectionist policies, and I

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Speaker 1: would have expected President Biden to come back in because

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Speaker 1: it's for the good of the US. It's actually it's

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Speaker 1: hard to explain because uh, we're giving Asia essentially to China. Uh.

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Speaker 1: They have our step which would unify Asia under one agreement,

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Speaker 1: and the US won't be part of it. So I

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Speaker 1: think what's happening is that domestic politics are overshadowing and

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Speaker 1: taking over any foreign policy, But you rarely hear any

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Speaker 1: foreign policy strategy, UM, any doctrine of sorts. It really

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Speaker 1: is behaving on the basis of what works domestically. Mr

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Speaker 1: Secretary does feel like we've seen a lot of nations

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Speaker 1: looking inward and maybe that's the result of the pandemic

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Speaker 1: or they had to take care of their own even

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Speaker 1: though it was a global pandemic. Um, do you believe

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Speaker 1: the era of globalization, the era of global supply chains?

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Speaker 1: On a day when we see Apple getting pretty to

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Speaker 1: begin outsourcing chips UH for its devices from a plant

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Speaker 1: here in Arizona, which would be a big pivot from

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Speaker 1: them away from Asia back here home. Um, do you

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Speaker 1: feel like globalization and global supply chains that era is over? Well,

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Speaker 1: there's no question that it's taken a pause, and how

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Speaker 1: long that pause will last is really something to see.

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Speaker 1: But companies who bring manufacturing back, while that's very welcome

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Speaker 1: from the standpoint of jobs, it does raise the cost

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Speaker 1: so UH, at some point they're going to have to

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Speaker 1: address that. We'll always have lower cost foreign competition. So yes,

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Speaker 1: bringing manufacturing back is a great idea domestically, but it

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Speaker 1: is going to increase the cost UM different supply chains,

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Speaker 1: longer supply chains or even supply chains closer by they're

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Speaker 1: not as efficient as they were, will also impact costs.

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Speaker 1: I think it's really interesting right now, and this is

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Speaker 1: just anecdotally, but I am seeing more out of stocks

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Speaker 1: then I remember seeing any time during COVID, and that

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Speaker 1: what that tells me is where are you seeing that?

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Speaker 1: What are you saying? I'm seeing them at pharmacies and

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Speaker 1: I'm seeing at grocery stores, basically the two places where

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Speaker 1: I go, And Uh, it's incredible. It's just hard to

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Speaker 1: find things, and the out of stocks go on for

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Speaker 1: a week or two, and that just means that the supply,

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Speaker 1: the new supply chains or whatever supply chains are being constructed,

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Speaker 1: aren't working. We're not getting the right product to the

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Speaker 1: right place at the right time. Kind of interesting, right, Uh,

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Speaker 1: certainly fascinating in terms of what you're seeing in your

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Speaker 1: and your thoughts on this the big picture. UM, thank

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Speaker 1: you so much. Carlos Gutierrez, former US Secretary of Commerce

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Speaker 1: under President George W. Bush, who's co founder and executive

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Speaker 1: chairman of em Path, joining us on the phone from

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Speaker 1: d C. You're listening and watching Bloomberg Radio. This is

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Speaker 1: Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes

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Speaker 1: Tim Stinovic on Bloomberg Radio to next guest. Knows a

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Speaker 1: lot about getting packages ship, especially when it comes to

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Speaker 1: the e commerce world. So delighted to get to our

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Speaker 1: next guest. We've got Lauren Barn's Woo, co founder and

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Speaker 1: CEO of ship So she joins us via zoom from

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Speaker 1: the San Francisco Bay area. Laura, great touch out with

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Speaker 1: you once again. Um, So you've got tons of thousands

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Speaker 1: of businesses that Shippo serves, you work too, use software

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Speaker 1: to get them the best deals on their shipping. Um,

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Speaker 1: give us an idea. I want to talk about business

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Speaker 1: in a second, but just give us an idea of

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Speaker 1: what you're seeing when it comes to the economy out there,

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Speaker 1: because we're getting mixed reports from some of the biggest

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Speaker 1: retailers out there. Yeah, it's great to be on Bloomberg

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Speaker 1: Radio today. Thanks for having me. And then just to

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Speaker 1: uh kind of set the stage around what we do

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Speaker 1: here at Shipboat. So we're a software platform that connects

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Speaker 1: e commerce companies to a network of different shipping providers.

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Speaker 1: So all of our customers there they need to ship there.

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Speaker 1: They're selling products on the Internet and they need to

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Speaker 1: move their products from A to B to the to

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Speaker 1: the customers. And um, we're building that that software component there. Um,

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Speaker 1: the carriers are doing the heavy lifting, they're doing the shipping,

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Speaker 1: and we're building the technology giving access to discounted shipping

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Speaker 1: rates and just helping SMB ship like retail giants. And

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Speaker 1: now to your question around what we're seeing, UM, it

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Speaker 1: is it is a difficult prediction for this holiday season.

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Speaker 1: I think what's what's for sure happening is that in

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Speaker 1: previous years, we've seen that there was a big spike

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Speaker 1: around the big deal days like Black Friday and Cyber Monday,

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Speaker 1: and we're seeing that change. We're seeing elevated UM shipping

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Speaker 1: and elevated discounts just way earlier in the season, which

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Speaker 1: is a very interesting trend. It's interesting. We don't yeah,

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Speaker 1: we don't think that there will be as big of

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Speaker 1: a spike on these two big like normal deal days,

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Speaker 1: but those deals are happening much earlier in the season nowadays.

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Speaker 1: And UM, yeah, customers or consumers are writing access to

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Speaker 1: discount products earlier on I was gonna say, Laura, I

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Speaker 1: mean I had to pick up something for my daughter

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Speaker 1: and she's like, hey, mom, there's already a Black Friday sale,

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Speaker 1: so you can get it now now. So it's definitely happened.

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Speaker 1: Having said that, I do like talking to folks like

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Speaker 1: you because you do have a great indication of what's

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Speaker 1: going on in the macro environment. What you are seeing

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Speaker 1: in terms of activity and the upcoming holidays, does it

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Speaker 1: speak recession to you. So we're for sure looking at

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Speaker 1: a much softer queue for compared to previous que for us.

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Speaker 1: But previous kew fors were out of the ordinary as

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Speaker 1: well with pandemic limiting us from like going to physical stores.

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Speaker 1: So this year we're seeing a little bit of back

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Speaker 1: to the previous trend lines um and then kind of

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Speaker 1: below kind of that is that is what we're expecting

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Speaker 1: also because consumers still have a lot of like the

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Speaker 1: job market is still going strong, consumer spending is still

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Speaker 1: doing okay, but it's it's very hard to predict. I

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Speaker 1: think we're like next year, we're for sure looking at

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Speaker 1: a recession year, and we're we're thinking that this holiday

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Speaker 1: season will still be a good year for our good

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Speaker 1: season for retailers. Remind us to you talked about the business,

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Speaker 1: and we appreciate you reminding our audience about what it

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Speaker 1: is exactly that you guys do, but you do play

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Speaker 1: into the e commerce sector. Who is your typical customer? Yeah,

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Speaker 1: our typical customer is an SMB merchant, so merchants that

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Speaker 1: are selling things on the internet SMB. SMB is between

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Speaker 1: five hundred and five thousand packages a month. Um, so

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Speaker 1: it's a it's a pretty right wide range here, but

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Speaker 1: our our typical customerships anything from fashion to make up,

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Speaker 1: anything you can buy on the internet. And um, we're

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Speaker 1: we've actually seen an explosion in the SMBC segment during

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Speaker 1: the pandemic, like more businesses getting started, more businesses moving online.

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Speaker 1: So that's the that's the perfect audience for us, and um,

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Speaker 1: we're not enterprised. So Amazon and Target and Walmart are

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Speaker 1: out of stope for us, but like the smaller mid

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Speaker 1: mark SMB and mid market segment, that's our that's our customer.

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Speaker 1: What makes you so confident that we're going to see

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Speaker 1: a recession next year? What's the data that you can

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Speaker 1: point to that indicates that. Yeah, it looks like it

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Speaker 1: looks like all indicators the tech market is softening, we're seeing, Yeah,

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Speaker 1: rounds of layoffs in the in the tech industry that

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Speaker 1: will affect other other industries later later on as well.

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Speaker 1: And um, I think that is just calling the negative

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Speaker 1: spiral there to consumer spending being being worse. People are

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Speaker 1: just not willing to just spend on discretionary products. Inflation

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Speaker 1: is at our record high and we've seen the gas

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Speaker 1: crisis rising. So all all indications lead to a recession

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Speaker 1: year next year. Um, but I'm not an economist, so

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Speaker 1: fingers fingers across data, I'm wrong, all right, Yeah, well no,

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Speaker 1: but you have a great, you know, view on vantage

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Speaker 1: point when it comes to especially when it comes to

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Speaker 1: small and medium businesses, which is so much the backbone

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Speaker 1: of the US economy. Laura, thank you so much. Great

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Speaker 1: to spend some time with you. Laura Baron's WOU co

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Speaker 1: founder CEO Shippo joining SPA a zoom from the San

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Speaker 1: Francisco Bay Area. I'm road Mac Journal. Yeah but you

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Speaker 1: let me drive? No, no, no no, please, I'll do the

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Speaker 1: riding gravels. I want to drive. It's a good question. Drive.

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Speaker 1: This is the drive to the clothes down on Bluebird Radio.

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Speaker 1: All right, everybody just got about ten minutes left in

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Speaker 1: today's trading session. It's been a little bit of a

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Speaker 1: tortured trade, if you will. Little change though, but mostly

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Speaker 1: it's the technology names. As we heard from Charlie, a

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Speaker 1: pressure today. Just a reminder, nastack down about one point

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Speaker 1: almost one point four s and p though just down

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Speaker 1: about six tents of a percent and call it flat.

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Speaker 1: Slightly higher on the Dow Jones Industrial average. Yeah, but

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Speaker 1: follows a couple of days of games for the major

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Speaker 1: average is in a great week last weekend. That's what

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Speaker 1: I want to talk to Emily Hill about. She's founding

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Speaker 1: partner at Bauer Stock Capital Partners. They've got about a

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Speaker 1: hundred million dollars in assets under management. Emily joins us

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Speaker 1: on the phone from Lawrence, Kansas. Emily, how are you?

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Speaker 1: How are you? It's good to have you back with us. Hey, UM,

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Speaker 1: so thank great. We're grateful for the notes that you

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Speaker 1: sent to our producer Paul Brennan. And I'm seeing that

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Speaker 1: you're saying that we're in a bear market rally right now. Um,

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Speaker 1: what makes you say that? Well, I think I'm not

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Speaker 1: alone in suspecting that this is a bear market rally,

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Speaker 1: you know. I I think this is very similar. It's

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Speaker 1: it's a redo of what we saw in July. There's

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Speaker 1: still so much liquidity in the market that, uh, you know,

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Speaker 1: people are are looking for any kind of signal from

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Speaker 1: the Fed that can be an that that that can

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Speaker 1: lead to optimism. So I'm I think what we're what

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Speaker 1: we're going to see is in the first quarter a

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Speaker 1: revisiting of the lows we saw in June and again

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Speaker 1: in October. And I think the primary driver for that

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Speaker 1: will be the fourth quarter earning the reporting season. It

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Speaker 1: just takes time for higher interest rates, strong dollar, tight

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Speaker 1: labor market to feed through into earnings, and I don't

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Speaker 1: think we saw the full impact of that in the

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Speaker 1: third quarter. Earnings were really a mixed bag. But I

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Speaker 1: think the I think this this rally is overdone, And

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Speaker 1: again I don't think I'm alone in in in believing that,

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Speaker 1: And in fact, the one thing that gives me pause

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Speaker 1: is that I'm so positive that it's the pair market

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Speaker 1: rally that I must be wrong. I'm rarely this positive

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Speaker 1: of anything. It does feel like sometimes there's there's some

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Speaker 1: significant swings emily in terms of sentiment. You know, when

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Speaker 1: things are going bad, it does feel like everybody kind

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Speaker 1: of overdes it to the downside and then all of

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Speaker 1: a sudden, Wait, everything's okay and we're rallying. You know,

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Speaker 1: like everyone said this was going to be a volatile year.

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Speaker 1: I think that's about the one thing we could count

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Speaker 1: on here in Well, I agree, and I think people

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Speaker 1: have to remember that this is still a liquidity driven

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Speaker 1: market and it has been for years, and normalizing this

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Speaker 1: market is going to be a lengthy process. So every

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Speaker 1: optimism driven rally that we have like this delays the

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Speaker 1: normalization process. This is not what the FED. This is

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Speaker 1: the last thing the FED wants is these bursts of euphoria.

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Speaker 1: So you're taking me back to the spring when j

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Speaker 1: Powell just came out and crushed the rally, Like, do

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Speaker 1: you think he's going to do that again? Well, I

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Speaker 1: listened to the same you're probably talking about. I think

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Speaker 1: it was July when there was just this huge rally

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Speaker 1: based on what you know, what your impulse said in

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Speaker 1: the meeting, and I listened to the exact same conversation

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Speaker 1: and did not see any any optimism in that speech.

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Speaker 1: So my team laughed about it. We're an all female

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Speaker 1: team and we call it the testosterone driven rally. I mean,

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Speaker 1: I don't know where they were getting the reasons for

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Speaker 1: optimism and what he said, Well, I know, you know,

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Speaker 1: and I do wonder too, Emily. I mean, we can

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Speaker 1: go all macro here, and I feel like on any

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Speaker 1: given day we can make a different macro story sometimes

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Speaker 1: based on the economic data points or what FEEDE officials

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Speaker 1: are saying. But when it comes to you know, the

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Speaker 1: bottom line, I mean, you have to put money to

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Speaker 1: work for your investors, So how do you do it

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Speaker 1: in this environment? Where do you do it? That's a

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Speaker 1: very good question for people who have had liquidity events

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Speaker 1: in the last year and have substantial amounts of cash,

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Speaker 1: and I do have a number of investors like that

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Speaker 1: I do. I think it's important to start putting money

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Speaker 1: grab jo lead to work now because as I said,

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Speaker 1: I could be wrong, and there's so much happening globally.

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Speaker 1: You know, all it would take would be some kind

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Speaker 1: of resolution to the Russian Ukraine conflict or all sorts

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Speaker 1: of things out of our control that could really turn

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Speaker 1: this around. So it is important to keep putting money

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Speaker 1: to work, and if you're a long term strategic investor,

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Speaker 1: stay invested. But we are leaning more into cash equivalence,

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Speaker 1: you know, I know, they're not really exciting, but T

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Speaker 1: bills yielding almost you know, four point five percent in

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Speaker 1: the touring next May. This is a really good time. Frankly,

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00:25:38,320 --> 00:25:40,959
Speaker 1: we haven't seen yields like that in T bills and years,

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00:25:41,800 --> 00:25:44,480
Speaker 1: and there are worse places to be than that. You know,

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00:25:44,520 --> 00:25:47,440
Speaker 1: I think we're gonna we're in a U shaped downturn here,

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00:25:47,560 --> 00:25:50,919
Speaker 1: and I think we're probably probably going to be into

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00:25:51,160 --> 00:25:54,040
Speaker 1: you know, the second half of next year before we

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00:25:54,080 --> 00:25:56,000
Speaker 1: pull out of this. So that's a good place to

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00:25:56,080 --> 00:25:59,760
Speaker 1: part cash in the meantime. But you're not play here,

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00:26:01,440 --> 00:26:05,320
Speaker 1: you know, I do like small cap stocks. Small cap

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00:26:05,400 --> 00:26:11,800
Speaker 1: stocks are trading You always like small caps. I say that, Yeah,

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00:26:11,880 --> 00:26:14,000
Speaker 1: you you liked small caps when you've been on with

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00:26:14,080 --> 00:26:18,120
Speaker 1: us before. Is that really kind of your sweet spot? Well,

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00:26:18,240 --> 00:26:23,040
Speaker 1: right now small cap is trading at a bigger discount

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00:26:23,280 --> 00:26:27,120
Speaker 1: to large cap stocks than they have been sincerely two thousands,

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00:26:27,160 --> 00:26:33,480
Speaker 1: So just on a relative value basis, they're significantly more attractive. So,

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00:26:33,800 --> 00:26:37,040
Speaker 1: you know, does that mean that they're gonna you know,

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00:26:37,080 --> 00:26:39,520
Speaker 1: that they're going to pay off in three months or

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00:26:39,560 --> 00:26:42,320
Speaker 1: five months? You know, no, But in terms of long

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00:26:42,560 --> 00:26:45,720
Speaker 1: term for long term investors, this is a really good

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00:26:45,760 --> 00:26:51,480
Speaker 1: time to invest in small cap. Oh yeah, go ahead, sorry, Emily. Yeah,

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00:26:51,520 --> 00:26:55,840
Speaker 1: we also like uh, some international markets, but we definitely

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00:26:55,920 --> 00:26:59,320
Speaker 1: had our currency exposure because I think we're likely to

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00:26:59,359 --> 00:27:02,760
Speaker 1: continue to have a strong doll Emily, before we let

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00:27:02,760 --> 00:27:06,080
Speaker 1: you go, you said gradual if some of your clients

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00:27:06,119 --> 00:27:08,560
Speaker 1: have cash positions right now to start to flowing them

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00:27:08,560 --> 00:27:10,320
Speaker 1: into the market. What do you mean by gradual, Like,

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00:27:10,480 --> 00:27:15,119
Speaker 1: how should they be dollar cost averaging? Well, we have

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00:27:15,240 --> 00:27:18,080
Speaker 1: a long term we will we will set a plan

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00:27:18,280 --> 00:27:20,359
Speaker 1: and it may be in this case we're using a

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00:27:20,359 --> 00:27:25,159
Speaker 1: lot of nine month plans, lve month plans where we're

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00:27:25,200 --> 00:27:29,959
Speaker 1: we have a long term strategic asset allocations strategy and

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00:27:30,000 --> 00:27:33,399
Speaker 1: we're investing a certain amount per month. But we also

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00:27:33,440 --> 00:27:36,919
Speaker 1: have trigger And what I mean by that is, you know,

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00:27:36,920 --> 00:27:40,400
Speaker 1: if the market drops beyond something we expect, then we're

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00:27:40,400 --> 00:27:44,080
Speaker 1: going to accelerate that. So it's a little bit of

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00:27:44,200 --> 00:27:48,760
Speaker 1: a rigorous, rigorous country strategy combined with you know, some

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00:27:48,880 --> 00:27:53,359
Speaker 1: tactical maneuvering. Alright, we're gonna leave it on that note. Hey, Emily,

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00:27:53,440 --> 00:27:55,800
Speaker 1: thank you so much for joining us on this Wednesday.

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Speaker 1: Emily Hill, she is founding partner at Bowers Capital partners.

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00:27:59,200 --> 00:28:02,359
Speaker 1: They've got eight million in assets under management, showing us

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00:28:02,359 --> 00:28:05,080
Speaker 1: on the phone from Lawrence, Kansas. So interesting. I have

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00:28:05,119 --> 00:28:07,200
Speaker 1: to say, Tim, it does feel like there's a momentum

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00:28:07,240 --> 00:28:12,919
Speaker 1: about UH concerns about certainly at least early in the year.

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00:28:12,960 --> 00:28:15,960
Speaker 1: I think about what Emily was saying, I think about

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Speaker 1: the company that we talked with, ship of the CEO,

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00:28:19,160 --> 00:28:22,800
Speaker 1: concerns talking about recession. It does feel like the conversation

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00:28:23,400 --> 00:28:25,199
Speaker 1: is shifting a little bit. Yeah, But as Katy Grafheld

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00:28:25,240 --> 00:28:26,640
Speaker 1: has said, like, you know, are we going to talk

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00:28:26,640 --> 00:28:30,320
Speaker 1: ourselves into a recession? We could. Sentiment can be pretty

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00:28:30,320 --> 00:28:32,480
Speaker 1: powerful if everybody steps back. But if you're losing a

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Speaker 1: job and you're not making money, you don't have a choice.

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Speaker 1: You don't talk yourself into it. You just don't have

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Speaker 1: the money. Thanks for listening to Bloomberg Business Week. Download

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00:28:39,920 --> 00:28:43,240
Speaker 1: the podcast on iTunes, SoundCloud, or Bloomberg dot com. You

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00:28:43,240 --> 00:28:45,600
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00:28:45,640 --> 00:28:49,760
Speaker 1: Eastern on Bloomberg Radio or watch us live on YouTube now,

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00:28:49,800 --> 00:28:51,120
Speaker 1: also on Bloomberg Quick Take