WEBVTT - FTX Was an Empty Black Box All Along 0:00:01.800 --> 0:00:04.440 This is Bloomberg Business Week. I'm Carole Masser and I'm 0:00:04.440 --> 0:00:07.280 Bloomberg Quick Takes Tim Stanovk. We're here every day bringing 0:00:07.280 --> 0:00:09.760 you the latest news from the world to business and finance, 0:00:09.840 --> 0:00:13.640 plus technology, politics, economics, all partnising the power of Business 0:00:13.640 --> 0:00:17.119 Week reporters and editors, not to mention our journalists and 0:00:17.120 --> 0:00:19.600 analyst in more than one and twenty countries. You can 0:00:19.640 --> 0:00:23.160 download Bloomberg Business Week and iTunes, SoundCloud, or Bloomberg dot com. 0:00:23.400 --> 0:00:25.120 You can also listen to our radio show at two 0:00:25.160 --> 0:00:27.840 pm Eastern Time on Bloomberg Radio or watch us on 0:00:27.880 --> 0:00:31.800 YouTube and now also on Bloomberg Quick Take. A lot 0:00:31.920 --> 0:00:34.640 going on in our world, and especially when it comes 0:00:34.640 --> 0:00:38.080 to crypto and you were just drawing my attention, Tim 0:00:38.120 --> 0:00:41.160 to some the latest story when it comes to Sam 0:00:41.240 --> 0:00:43.200 make been freed, of course, the former ft X CEO, 0:00:43.320 --> 0:00:47.560 saying he was mistaken about the cryptocurrencies exchanges leverage levels, 0:00:47.560 --> 0:00:50.960 thinking it was about five billion when it was thirteen billion. 0:00:51.000 --> 0:00:53.920 And he's putting this out in a series of tweets. Yeah, 0:00:53.960 --> 0:00:57.040 he twenty three tweets. He said, thirteen billion dollars in leverage, 0:00:57.080 --> 0:00:59.560 total run on the bank, total collapse in asset value 0:00:59.600 --> 0:01:02.800 all at once, which is why you don't want leverage 0:01:02.800 --> 0:01:05.520 all right, So let's get into because those are his words, Yeah, 0:01:05.600 --> 0:01:08.360 those are his words. Good point. Um. The cover story 0:01:08.520 --> 0:01:10.400 of the newisho of Bloomberg Business Week, which is out 0:01:10.400 --> 0:01:12.600 on news stands tomorrow, already on the BLOOMBERGA and at 0:01:12.600 --> 0:01:16.600 Bloomberg dot Com, looks into f t X. It's undoing 0:01:16.959 --> 0:01:19.720 how it delivered a lot of shocks, but perhaps most 0:01:19.720 --> 0:01:21.319 of all the shock of what we didn't know, which 0:01:21.400 --> 0:01:23.959 is kind of interesting to hear what SPF maybe didn't 0:01:24.000 --> 0:01:26.640 know either about leverage at his own firm. Let's get 0:01:26.680 --> 0:01:30.160 to it. Bloomberg News crypto reporter Ohkarif has been following this. 0:01:30.319 --> 0:01:33.520 Her reporting on f t X and crypto has been 0:01:33.560 --> 0:01:35.959 a musty. She joins us via zoom from Portland, Oregon. 0:01:36.200 --> 0:01:38.080 I'll go good to have you here with Tim and myself, 0:01:38.120 --> 0:01:40.839 So tell us about your story and what you looked into. 0:01:42.200 --> 0:01:44.760 Thank you, it's great to be here. So essentially we 0:01:44.920 --> 0:01:50.160 looked at sort of what happened, what are the ramifications 0:01:50.240 --> 0:01:54.960 for the crypto industry, And this has been, of course 0:01:55.000 --> 0:01:58.720 a huge shock for everybody who's been in the crypto 0:01:58.760 --> 0:02:01.480 community for a long time him and as well as 0:02:01.600 --> 0:02:04.720 new newer investors who came in in the last couple 0:02:04.720 --> 0:02:07.680 of years. You know, it's a complete shock because uh 0:02:08.000 --> 0:02:11.760 some bank Munfreed or sbfest he was known. You know, 0:02:11.880 --> 0:02:16.520 he was sort of considered to be one of the 0:02:16.560 --> 0:02:20.480 most sort of trustworthy, if you will, people in crypto. 0:02:20.560 --> 0:02:24.880 He was testifying in congress, he was meeting with regulators. 0:02:24.919 --> 0:02:28.560 He had um a lot of respect and a lot 0:02:28.600 --> 0:02:31.919 of a lot of weight in this industry, and all 0:02:31.960 --> 0:02:34.880 of a sudden his company has come and done a 0:02:34.919 --> 0:02:37.360 lot of respect and a lot of influence magazine covers 0:02:37.440 --> 0:02:40.880 is even he alluded to. He said he became overconfident 0:02:41.480 --> 0:02:44.480 as a result of that. Hey, um olga. One thing 0:02:44.480 --> 0:02:47.960 that I'm having a really hard time reconciling with reconciling is, 0:02:48.240 --> 0:02:51.480 you know, the prominent backers of the company and the 0:02:51.560 --> 0:02:54.480 really sloppy, leaked balance sheet that we saw. I mean, 0:02:54.520 --> 0:02:59.520 how does the company this big uh have such a 0:02:59.600 --> 0:03:02.640 lack of understanding of what it has on the balance sheet? 0:03:03.400 --> 0:03:04.760 And we're seeing that play out in real time with 0:03:04.800 --> 0:03:07.680 Sam bankman Fried's tweets like he's saying, these are all 0:03:07.800 --> 0:03:10.000 rough and he said he didn't know how much leverage 0:03:10.000 --> 0:03:14.880 he had. Yeah, you know, it's it's incredibly surprising. And 0:03:14.919 --> 0:03:18.400 I think what this means that is that there wasn't 0:03:18.560 --> 0:03:22.240 enough oversight. There wasn't enough due diligence that you need 0:03:22.280 --> 0:03:26.919 for a company this size with such caliber of investors. 0:03:27.320 --> 0:03:30.480 Typically you wanna for a company this size, you would 0:03:30.520 --> 0:03:33.240 have a board and you would have all kinds of 0:03:33.480 --> 0:03:37.280 you know, auditing going on and committees and you know, 0:03:37.360 --> 0:03:40.480 plenty of people who will be looking through what's going on. 0:03:40.560 --> 0:03:43.400 And what we find is that for FTX, a lot 0:03:43.480 --> 0:03:47.160 of it has been just you know, Sam Bankman Freed 0:03:48.160 --> 0:03:51.920 overseeing the entire operation. You know, it's interesting, you know, 0:03:52.000 --> 0:03:53.880 you knowe to some of the other tweets that Sam 0:03:53.880 --> 0:03:56.680 Bankman Freed has has done and talked about how he 0:03:56.720 --> 0:04:00.120 messed up different words that he used and blaming were 0:04:00.160 --> 0:04:05.120 internal labeling of accounts. This is not someone who doesn't 0:04:05.160 --> 0:04:08.600 understand right, how the sophisticated financial system works. If you 0:04:08.640 --> 0:04:12.560 look about his past experience, right, this is someone who 0:04:12.560 --> 0:04:16.880 should have known or do we give him some room 0:04:16.920 --> 0:04:19.400 for not having better systems in place? How are we 0:04:19.400 --> 0:04:22.640 supposed to look at this so on? On the one hand, 0:04:22.720 --> 0:04:25.800 he is only thirty years old. So but on the 0:04:25.839 --> 0:04:28.919 other hand, during this thirty years he has managed to 0:04:28.960 --> 0:04:32.960 do a lot. He was a trader at James Street 0:04:33.320 --> 0:04:38.480 of course, the very highly respected quantity trading firm, which 0:04:38.520 --> 0:04:42.159 gave him Wall Street cred um. And then he also 0:04:42.360 --> 0:04:49.240 ran UM Alamida since Alameda Research was his trading firm. 0:04:49.279 --> 0:04:54.920 Initially he Um Alameda essentially made money off of uh, 0:04:55.000 --> 0:04:58.400 you know, price differences on on different crypto exchanges and 0:04:58.440 --> 0:05:01.200 made quite a lot of money that way, and then 0:05:01.279 --> 0:05:05.600 he branched out into actually running a crypto exchange in 0:05:05.680 --> 0:05:11.880 twenty nineteen, and so he had he had a lot 0:05:11.920 --> 0:05:18.520 of experience I would think with financial matters, so um 0:05:18.600 --> 0:05:21.840 even though he's quite young, but but he has had 0:05:21.880 --> 0:05:25.159 a few years when he should have learned how to 0:05:25.320 --> 0:05:30.599 run things properly. So what repercussions could he face? He 0:05:30.640 --> 0:05:32.599 does keep tweeting over and over again that his number 0:05:32.640 --> 0:05:35.760 one priority is making it right with customers. We'll see 0:05:35.760 --> 0:05:39.320 if he's able to do that, But what consequences could 0:05:39.320 --> 0:05:44.120 he face? So in terms of his tweets, they're getting 0:05:44.160 --> 0:05:50.599 a huge backlash online because people don't trust don't trust 0:05:50.680 --> 0:05:56.320 him anymore and essentially just almost wish that he didn't 0:05:56.360 --> 0:06:00.200 even say anything because instead of this empty promise is 0:06:00.600 --> 0:06:06.039 in terms of what could happen to him, it's still unclear. Uh. 0:06:06.080 --> 0:06:08.479 You know, ft X is still in the process of 0:06:08.520 --> 0:06:13.039 filing um. You know, it's it's a bankruptcy all of 0:06:13.120 --> 0:06:18.240 all of its requisite sort of finitial bankruptcy documents. I'm 0:06:18.279 --> 0:06:21.200 sure there will be an analysis of what exactly went 0:06:21.279 --> 0:06:25.680 drawing and who's to blame. Uh, you know, nobody has 0:06:25.720 --> 0:06:29.520 been charged with anything yet, so so I think it's 0:06:29.520 --> 0:06:33.400 going to be a pretty long and drawn out process. Uh. Well, 0:06:33.600 --> 0:06:36.479 we'll have to see how it plays out. But a 0:06:36.520 --> 0:06:38.680 lot of but but a lot of people are kind 0:06:38.680 --> 0:06:42.840 of convinced that somebody, you know could face charges for this. 0:06:43.400 --> 0:06:47.480 Well you know, okay, it almost feels like an uber 0:06:47.600 --> 0:06:50.360 uber case of FOMA, right, you know, as soon as 0:06:50.400 --> 0:06:54.680 he got momentum, and you know, media coverage, you know, 0:06:54.760 --> 0:06:57.600 lad you know, created some of that momentum, you know, 0:06:57.640 --> 0:07:00.760 you had certain venture capitalists are still and value investors 0:07:00.800 --> 0:07:02.920 getting in. I'm sure friends were talking about, way what 0:07:02.960 --> 0:07:04.960 do you guys onto like, it's just you think about 0:07:05.000 --> 0:07:09.039 how the momentum and velocity that was created by SPF. 0:07:09.279 --> 0:07:12.040 I'm not you know, behind him for a lot of 0:07:12.080 --> 0:07:15.400 different reasons, and big name investors wanting to get in 0:07:15.480 --> 0:07:18.360 because you know, some other big name investors were in 0:07:18.960 --> 0:07:22.560 and not giving him a pass. But you realize this 0:07:22.640 --> 0:07:26.200 can happen, you know, when there are frenetic investments that 0:07:26.240 --> 0:07:29.960 are out there. Absolutely, I think we because sort of 0:07:30.080 --> 0:07:34.720 until um this year, we were in this reaching crypto 0:07:34.760 --> 0:07:39.600 bull market where you know, prices were going up like crazy. Everybody, 0:07:39.760 --> 0:07:43.000 all of the venture capitalists wanted to find the next 0:07:43.800 --> 0:07:49.040 unicorn and crypto. Uh and uh when when they saw 0:07:49.560 --> 0:07:54.000 you know this, very respected investors like Sequoia, you know, 0:07:54.200 --> 0:07:58.000 backing f t X. Uh. Perhaps some of them haven't 0:07:58.040 --> 0:08:01.960 done as much due diligence. Uh. It sounds like guess 0:08:02.040 --> 0:08:06.640 they should have just to check things out. There are 0:08:06.880 --> 0:08:13.320 sort of standard processes for due diligence in any industry, 0:08:13.360 --> 0:08:16.040 but I think some of them may have been forgotten 0:08:16.480 --> 0:08:18.960 in the rush to get in. Yes or no, Alga, 0:08:19.000 --> 0:08:21.120 we have ten seconds. Is this the end of crypto 0:08:21.160 --> 0:08:24.040 as we know it? I don't think so. I think 0:08:24.080 --> 0:08:26.400 it's gonna come out of it, but it's gonna be 0:08:26.560 --> 0:08:30.560 a long lull before while investors licked their wounds and 0:08:30.560 --> 0:08:35.160 and sort of crypto prices start moving up again and 0:08:35.679 --> 0:08:39.280 everybody that comes invested in crypto again. Those wounds are 0:08:39.320 --> 0:08:41.840 deep Ogakarifa Bloomberg News. This is the cover story of 0:08:41.880 --> 0:08:45.720 the magazine you're listening to, Bloomberg Business Week with Carol 0:08:45.800 --> 0:08:50.240 Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. 0:08:50.760 --> 0:08:53.680 The last few years have reminded us of how the 0:08:53.720 --> 0:08:55.440 world as we know it can be turned upside down 0:08:55.440 --> 0:08:58.559 thanks to the global pandemic, the push back against globalization, 0:08:58.640 --> 0:09:01.760 and rising an unexpected your political tensions. While this is 0:09:01.800 --> 0:09:04.000 all happening, of course, as G twenty leaders have been 0:09:04.200 --> 0:09:07.360 meeting in Bali, Indonesia, with all of that in mind, 0:09:07.400 --> 0:09:10.439 we welcome former U S Secretary of Commerce Carlos gutierres 0:09:10.640 --> 0:09:13.480 served under President George W. Bush. His co founder and 0:09:13.520 --> 0:09:17.000 executive chairman chairman of EmPATH. It's a company that works 0:09:17.040 --> 0:09:20.000 with other companies and their HR teams really on identifying 0:09:20.040 --> 0:09:22.440 the skills of its workers, tapping into that talent to 0:09:22.480 --> 0:09:25.280 the benefit of both employee employer, and he joins us 0:09:25.920 --> 0:09:30.000 on the phone from Washington, d C. Mr Secretary, so 0:09:30.120 --> 0:09:33.080 delighted to have you here with us. I do want 0:09:33.080 --> 0:09:35.160 to ask you, and start with the G twenty, do 0:09:35.280 --> 0:09:38.560 you think it was a productive round of meetings? If 0:09:38.600 --> 0:09:43.960 so or if not, if you could explain, well, you know, 0:09:44.000 --> 0:09:47.560 you never exactly I never expect a lot from those meetings. 0:09:48.120 --> 0:09:51.760 The statements for usually what you get, but very rarely 0:09:51.840 --> 0:09:57.280 do you get any concrete decisions. Um. One thing that 0:09:57.320 --> 0:10:01.360 the G twenty did do is is your statement against 0:10:01.440 --> 0:10:06.559 the war in Ukraine. Although it wasn't really UH and 0:10:07.080 --> 0:10:09.839 unanimous said that there were a couple of there was 0:10:10.040 --> 0:10:17.120 language that tended to soften the demand, let's say, on 0:10:17.160 --> 0:10:21.720 the trade side. I found their statement to be very bland, 0:10:22.080 --> 0:10:27.280 very noncommittal. Um. They talked about trade, but they talked 0:10:27.280 --> 0:10:31.240 about trade and relation to sustainability. So anytime you see 0:10:31.240 --> 0:10:36.480 the word trade, usually see sustainability. UM. Nothing about tariffs, 0:10:36.720 --> 0:10:42.520 nothing about protectionism, um, really nothing about globalization. So it 0:10:42.640 --> 0:10:46.600 was a very weak endorsement of trade. UM. I agree 0:10:46.640 --> 0:10:51.080 that w t O needs reform, UM, and that goes ahead. 0:10:51.120 --> 0:10:53.839 I wish we had a reformed the strengthened w t 0:10:53.960 --> 0:10:57.280 O when all the tariffs started, but it seems to 0:10:57.320 --> 0:10:59.960 me like it's going to continue to be the stay 0:11:00.000 --> 0:11:03.120 at his quote, how would you have advised the Biden 0:11:03.160 --> 0:11:07.439 administration to go into this G twenty with the results 0:11:07.440 --> 0:11:11.480 that you were looking for? Yeah, I would, especially now 0:11:11.600 --> 0:11:15.640 that um that the mid terms are over, I would 0:11:15.679 --> 0:11:21.400 have leaned forward a lot more on the importance of trade. UM. 0:11:21.440 --> 0:11:24.280 Maybe the administration try to get a statement in there 0:11:25.160 --> 0:11:30.920 about trade and intellectual property and technology, but uh, probably 0:11:30.960 --> 0:11:33.199 could not get the whole group to go with it. 0:11:34.000 --> 0:11:38.400 But yes, you know, the administration has really left some 0:11:40.120 --> 0:11:45.640 big value on the table. For example, the uh ct 0:11:45.720 --> 0:11:51.880 P p uh A trade agreement which will bring or 0:11:51.960 --> 0:11:57.240 open up a lot of countries in Asia for US manufacturers, 0:11:57.320 --> 0:12:04.640 US companies. That was an Obama era agreement and nothing 0:12:04.679 --> 0:12:07.559 has happened. I would have thought that President Trump took 0:12:07.559 --> 0:12:13.640 it out because he was following protectionist policies, and I 0:12:13.679 --> 0:12:17.720 would have expected President Biden to come back in because 0:12:17.760 --> 0:12:20.280 it's for the good of the US. It's actually it's 0:12:20.320 --> 0:12:27.079 hard to explain because uh, we're giving Asia essentially to China. Uh. 0:12:27.120 --> 0:12:31.079 They have our step which would unify Asia under one agreement, 0:12:31.640 --> 0:12:34.360 and the US won't be part of it. So I 0:12:34.640 --> 0:12:40.600 think what's happening is that domestic politics are overshadowing and 0:12:40.640 --> 0:12:46.000 taking over any foreign policy, But you rarely hear any 0:12:46.200 --> 0:12:51.720 foreign policy strategy, UM, any doctrine of sorts. It really 0:12:51.840 --> 0:12:55.920 is behaving on the basis of what works domestically. Mr 0:12:55.960 --> 0:12:58.280 Secretary does feel like we've seen a lot of nations 0:12:58.280 --> 0:13:00.480 looking inward and maybe that's the result of the pandemic 0:13:00.600 --> 0:13:02.400 or they had to take care of their own even 0:13:02.400 --> 0:13:06.800 though it was a global pandemic. Um, do you believe 0:13:07.400 --> 0:13:11.560 the era of globalization, the era of global supply chains? 0:13:11.640 --> 0:13:13.640 On a day when we see Apple getting pretty to 0:13:13.640 --> 0:13:17.680 begin outsourcing chips UH for its devices from a plant 0:13:17.679 --> 0:13:20.000 here in Arizona, which would be a big pivot from 0:13:20.040 --> 0:13:23.160 them away from Asia back here home. Um, do you 0:13:23.200 --> 0:13:29.000 feel like globalization and global supply chains that era is over? Well, 0:13:29.040 --> 0:13:32.760 there's no question that it's taken a pause, and how 0:13:32.800 --> 0:13:36.520 long that pause will last is really something to see. 0:13:36.600 --> 0:13:41.319 But companies who bring manufacturing back, while that's very welcome 0:13:41.400 --> 0:13:45.360 from the standpoint of jobs, it does raise the cost 0:13:46.200 --> 0:13:49.480 so UH, at some point they're going to have to 0:13:49.520 --> 0:13:55.680 address that. We'll always have lower cost foreign competition. So yes, 0:13:55.760 --> 0:14:00.720 bringing manufacturing back is a great idea domestically, but it 0:14:00.800 --> 0:14:05.640 is going to increase the cost UM different supply chains, 0:14:06.080 --> 0:14:09.959 longer supply chains or even supply chains closer by they're 0:14:10.000 --> 0:14:15.840 not as efficient as they were, will also impact costs. 0:14:16.160 --> 0:14:18.240 I think it's really interesting right now, and this is 0:14:18.320 --> 0:14:23.200 just anecdotally, but I am seeing more out of stocks 0:14:24.360 --> 0:14:27.840 then I remember seeing any time during COVID, and that 0:14:28.000 --> 0:14:32.160 what that tells me is where are you seeing that? 0:14:32.200 --> 0:14:35.800 What are you saying? I'm seeing them at pharmacies and 0:14:35.880 --> 0:14:40.000 I'm seeing at grocery stores, basically the two places where 0:14:40.040 --> 0:14:43.680 I go, And Uh, it's incredible. It's just hard to 0:14:43.720 --> 0:14:46.520 find things, and the out of stocks go on for 0:14:46.560 --> 0:14:50.560 a week or two, and that just means that the supply, 0:14:50.680 --> 0:14:54.680 the new supply chains or whatever supply chains are being constructed, 0:14:55.320 --> 0:14:58.920 aren't working. We're not getting the right product to the 0:14:59.000 --> 0:15:01.960 right place at the right time. Kind of interesting, right, Uh, 0:15:02.000 --> 0:15:04.000 certainly fascinating in terms of what you're seeing in your 0:15:04.000 --> 0:15:06.520 and your thoughts on this the big picture. UM, thank 0:15:06.520 --> 0:15:09.840 you so much. Carlos Gutierrez, former US Secretary of Commerce 0:15:09.920 --> 0:15:12.760 under President George W. Bush, who's co founder and executive 0:15:12.840 --> 0:15:15.280 chairman of em Path, joining us on the phone from 0:15:15.400 --> 0:15:20.040 d C. You're listening and watching Bloomberg Radio. This is 0:15:20.080 --> 0:15:24.000 Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes 0:15:24.120 --> 0:15:27.960 Tim Stinovic on Bloomberg Radio to next guest. Knows a 0:15:27.960 --> 0:15:30.400 lot about getting packages ship, especially when it comes to 0:15:30.440 --> 0:15:32.640 the e commerce world. So delighted to get to our 0:15:32.680 --> 0:15:35.040 next guest. We've got Lauren Barn's Woo, co founder and 0:15:35.240 --> 0:15:37.720 CEO of ship So she joins us via zoom from 0:15:37.840 --> 0:15:39.960 the San Francisco Bay area. Laura, great touch out with 0:15:40.000 --> 0:15:44.520 you once again. Um, So you've got tons of thousands 0:15:44.560 --> 0:15:48.280 of businesses that Shippo serves, you work too, use software 0:15:48.320 --> 0:15:51.600 to get them the best deals on their shipping. Um, 0:15:51.680 --> 0:15:53.120 give us an idea. I want to talk about business 0:15:53.160 --> 0:15:54.440 in a second, but just give us an idea of 0:15:54.440 --> 0:15:56.680 what you're seeing when it comes to the economy out there, 0:15:56.680 --> 0:15:59.040 because we're getting mixed reports from some of the biggest 0:15:59.120 --> 0:16:03.400 retailers out there. Yeah, it's great to be on Bloomberg 0:16:03.480 --> 0:16:06.000 Radio today. Thanks for having me. And then just to 0:16:06.320 --> 0:16:08.640 uh kind of set the stage around what we do 0:16:08.680 --> 0:16:12.320 here at Shipboat. So we're a software platform that connects 0:16:12.320 --> 0:16:15.160 e commerce companies to a network of different shipping providers. 0:16:15.360 --> 0:16:18.240 So all of our customers there they need to ship there. 0:16:18.360 --> 0:16:20.560 They're selling products on the Internet and they need to 0:16:20.600 --> 0:16:22.840 move their products from A to B to the to 0:16:23.000 --> 0:16:27.080 the customers. And um, we're building that that software component there. Um, 0:16:27.120 --> 0:16:29.800 the carriers are doing the heavy lifting, they're doing the shipping, 0:16:30.000 --> 0:16:33.000 and we're building the technology giving access to discounted shipping 0:16:33.080 --> 0:16:36.360 rates and just helping SMB ship like retail giants. And 0:16:36.360 --> 0:16:39.680 now to your question around what we're seeing, UM, it 0:16:39.840 --> 0:16:43.200 is it is a difficult prediction for this holiday season. 0:16:43.440 --> 0:16:45.920 I think what's what's for sure happening is that in 0:16:46.000 --> 0:16:48.320 previous years, we've seen that there was a big spike 0:16:48.440 --> 0:16:51.600 around the big deal days like Black Friday and Cyber Monday, 0:16:51.800 --> 0:16:55.280 and we're seeing that change. We're seeing elevated UM shipping 0:16:55.360 --> 0:17:00.160 and elevated discounts just way earlier in the season, which 0:17:00.200 --> 0:17:03.120 is a very interesting trend. It's interesting. We don't yeah, 0:17:03.280 --> 0:17:04.760 we don't think that there will be as big of 0:17:04.800 --> 0:17:08.240 a spike on these two big like normal deal days, 0:17:08.440 --> 0:17:11.240 but those deals are happening much earlier in the season nowadays. 0:17:11.520 --> 0:17:15.159 And UM, yeah, customers or consumers are writing access to 0:17:15.560 --> 0:17:18.639 discount products earlier on I was gonna say, Laura, I 0:17:18.640 --> 0:17:20.080 mean I had to pick up something for my daughter 0:17:20.080 --> 0:17:22.679 and she's like, hey, mom, there's already a Black Friday sale, 0:17:22.720 --> 0:17:25.119 so you can get it now now. So it's definitely happened. 0:17:25.400 --> 0:17:27.879 Having said that, I do like talking to folks like 0:17:27.880 --> 0:17:30.160 you because you do have a great indication of what's 0:17:30.200 --> 0:17:34.000 going on in the macro environment. What you are seeing 0:17:34.000 --> 0:17:37.399 in terms of activity and the upcoming holidays, does it 0:17:37.480 --> 0:17:42.000 speak recession to you. So we're for sure looking at 0:17:42.040 --> 0:17:45.520 a much softer queue for compared to previous que for us. 0:17:45.760 --> 0:17:48.640 But previous kew fors were out of the ordinary as 0:17:48.640 --> 0:17:52.919 well with pandemic limiting us from like going to physical stores. 0:17:53.119 --> 0:17:55.080 So this year we're seeing a little bit of back 0:17:55.119 --> 0:18:00.040 to the previous trend lines um and then kind of 0:18:00.119 --> 0:18:04.760 below kind of that is that is what we're expecting 0:18:04.800 --> 0:18:08.080 also because consumers still have a lot of like the 0:18:08.160 --> 0:18:11.720 job market is still going strong, consumer spending is still 0:18:11.760 --> 0:18:14.560 doing okay, but it's it's very hard to predict. I 0:18:14.560 --> 0:18:17.360 think we're like next year, we're for sure looking at 0:18:17.480 --> 0:18:21.080 a recession year, and we're we're thinking that this holiday 0:18:21.080 --> 0:18:24.080 season will still be a good year for our good 0:18:24.080 --> 0:18:27.480 season for retailers. Remind us to you talked about the business, 0:18:27.520 --> 0:18:30.199 and we appreciate you reminding our audience about what it 0:18:30.280 --> 0:18:32.040 is exactly that you guys do, but you do play 0:18:32.080 --> 0:18:37.040 into the e commerce sector. Who is your typical customer? Yeah, 0:18:37.040 --> 0:18:41.240 our typical customer is an SMB merchant, so merchants that 0:18:41.280 --> 0:18:45.280 are selling things on the internet SMB. SMB is between 0:18:45.320 --> 0:18:48.280 five hundred and five thousand packages a month. Um, so 0:18:48.320 --> 0:18:50.639 it's a it's a pretty right wide range here, but 0:18:50.720 --> 0:18:54.479 our our typical customerships anything from fashion to make up, 0:18:54.760 --> 0:18:57.360 anything you can buy on the internet. And um, we're 0:18:57.440 --> 0:19:00.879 we've actually seen an explosion in the SMBC segment during 0:19:00.920 --> 0:19:04.720 the pandemic, like more businesses getting started, more businesses moving online. 0:19:05.000 --> 0:19:08.919 So that's the that's the perfect audience for us, and um, 0:19:08.920 --> 0:19:12.479 we're not enterprised. So Amazon and Target and Walmart are 0:19:12.520 --> 0:19:15.120 out of stope for us, but like the smaller mid 0:19:15.119 --> 0:19:18.080 mark SMB and mid market segment, that's our that's our customer. 0:19:18.280 --> 0:19:19.640 What makes you so confident that we're going to see 0:19:19.680 --> 0:19:21.480 a recession next year? What's the data that you can 0:19:21.720 --> 0:19:27.320 point to that indicates that. Yeah, it looks like it 0:19:27.320 --> 0:19:32.600 looks like all indicators the tech market is softening, we're seeing, Yeah, 0:19:32.960 --> 0:19:35.199 rounds of layoffs in the in the tech industry that 0:19:35.240 --> 0:19:38.320 will affect other other industries later later on as well. 0:19:38.720 --> 0:19:41.280 And um, I think that is just calling the negative 0:19:41.280 --> 0:19:45.440 spiral there to consumer spending being being worse. People are 0:19:46.200 --> 0:19:50.359 just not willing to just spend on discretionary products. Inflation 0:19:50.440 --> 0:19:52.600 is at our record high and we've seen the gas 0:19:52.600 --> 0:19:56.760 crisis rising. So all all indications lead to a recession 0:19:56.840 --> 0:20:00.480 year next year. Um, but I'm not an economist, so 0:20:00.760 --> 0:20:04.840 fingers fingers across data, I'm wrong, all right, Yeah, well no, 0:20:04.960 --> 0:20:07.480 but you have a great, you know, view on vantage 0:20:07.480 --> 0:20:09.280 point when it comes to especially when it comes to 0:20:09.280 --> 0:20:12.200 small and medium businesses, which is so much the backbone 0:20:12.280 --> 0:20:15.040 of the US economy. Laura, thank you so much. Great 0:20:15.080 --> 0:20:17.240 to spend some time with you. Laura Baron's WOU co 0:20:17.359 --> 0:20:19.920 founder CEO Shippo joining SPA a zoom from the San 0:20:19.920 --> 0:20:27.560 Francisco Bay Area. I'm road Mac Journal. Yeah but you 0:20:27.600 --> 0:20:32.840 let me drive? No, no, no no, please, I'll do the 0:20:32.920 --> 0:20:39.760 riding gravels. I want to drive. It's a good question. Drive. 0:20:42.640 --> 0:20:49.040 This is the drive to the clothes down on Bluebird Radio. 0:20:49.440 --> 0:20:51.920 All right, everybody just got about ten minutes left in 0:20:51.960 --> 0:20:54.359 today's trading session. It's been a little bit of a 0:20:54.400 --> 0:20:57.440 tortured trade, if you will. Little change though, but mostly 0:20:57.440 --> 0:21:00.040 it's the technology names. As we heard from Charlie, a 0:21:00.160 --> 0:21:03.200 pressure today. Just a reminder, nastack down about one point 0:21:03.320 --> 0:21:05.960 almost one point four s and p though just down 0:21:06.000 --> 0:21:07.879 about six tents of a percent and call it flat. 0:21:08.000 --> 0:21:10.399 Slightly higher on the Dow Jones Industrial average. Yeah, but 0:21:10.400 --> 0:21:12.760 follows a couple of days of games for the major 0:21:12.880 --> 0:21:14.800 average is in a great week last weekend. That's what 0:21:14.800 --> 0:21:16.560 I want to talk to Emily Hill about. She's founding 0:21:16.600 --> 0:21:18.680 partner at Bauer Stock Capital Partners. They've got about a 0:21:18.760 --> 0:21:21.800 hundred million dollars in assets under management. Emily joins us 0:21:21.760 --> 0:21:24.040 on the phone from Lawrence, Kansas. Emily, how are you? 0:21:25.520 --> 0:21:28.159 How are you? It's good to have you back with us. Hey, UM, 0:21:28.200 --> 0:21:30.520 so thank great. We're grateful for the notes that you 0:21:30.560 --> 0:21:33.480 sent to our producer Paul Brennan. And I'm seeing that 0:21:33.560 --> 0:21:37.280 you're saying that we're in a bear market rally right now. Um, 0:21:37.320 --> 0:21:40.600 what makes you say that? Well, I think I'm not 0:21:40.760 --> 0:21:43.960 alone in suspecting that this is a bear market rally, 0:21:44.240 --> 0:21:47.360 you know. I I think this is very similar. It's 0:21:47.440 --> 0:21:50.240 it's a redo of what we saw in July. There's 0:21:50.240 --> 0:21:54.040 still so much liquidity in the market that, uh, you know, 0:21:54.080 --> 0:21:58.640 people are are looking for any kind of signal from 0:21:58.640 --> 0:22:00.920 the Fed that can be an that that that can 0:22:01.080 --> 0:22:04.320 lead to optimism. So I'm I think what we're what 0:22:04.359 --> 0:22:08.000 we're going to see is in the first quarter a 0:22:08.119 --> 0:22:11.240 revisiting of the lows we saw in June and again 0:22:11.240 --> 0:22:14.280 in October. And I think the primary driver for that 0:22:14.320 --> 0:22:18.480 will be the fourth quarter earning the reporting season. It 0:22:18.640 --> 0:22:24.120 just takes time for higher interest rates, strong dollar, tight 0:22:24.280 --> 0:22:27.400 labor market to feed through into earnings, and I don't 0:22:27.400 --> 0:22:29.840 think we saw the full impact of that in the 0:22:29.920 --> 0:22:33.639 third quarter. Earnings were really a mixed bag. But I 0:22:33.680 --> 0:22:38.359 think the I think this this rally is overdone, And 0:22:38.400 --> 0:22:41.399 again I don't think I'm alone in in in believing that, 0:22:41.440 --> 0:22:43.439 And in fact, the one thing that gives me pause 0:22:43.560 --> 0:22:46.600 is that I'm so positive that it's the pair market 0:22:46.680 --> 0:22:51.880 rally that I must be wrong. I'm rarely this positive 0:22:51.920 --> 0:22:54.320 of anything. It does feel like sometimes there's there's some 0:22:54.359 --> 0:22:57.960 significant swings emily in terms of sentiment. You know, when 0:22:57.960 --> 0:23:00.840 things are going bad, it does feel like everybody kind 0:23:00.840 --> 0:23:03.720 of overdes it to the downside and then all of 0:23:03.800 --> 0:23:06.280 a sudden, Wait, everything's okay and we're rallying. You know, 0:23:06.359 --> 0:23:09.280 like everyone said this was going to be a volatile year. 0:23:09.600 --> 0:23:11.919 I think that's about the one thing we could count 0:23:11.960 --> 0:23:17.439 on here in Well, I agree, and I think people 0:23:17.480 --> 0:23:21.080 have to remember that this is still a liquidity driven 0:23:21.119 --> 0:23:24.639 market and it has been for years, and normalizing this 0:23:24.840 --> 0:23:29.680 market is going to be a lengthy process. So every 0:23:29.720 --> 0:23:33.560 optimism driven rally that we have like this delays the 0:23:33.600 --> 0:23:36.480 normalization process. This is not what the FED. This is 0:23:36.480 --> 0:23:41.000 the last thing the FED wants is these bursts of euphoria. 0:23:41.880 --> 0:23:44.600 So you're taking me back to the spring when j 0:23:44.760 --> 0:23:49.720 Powell just came out and crushed the rally, Like, do 0:23:49.720 --> 0:23:52.240 you think he's going to do that again? Well, I 0:23:52.520 --> 0:23:56.080 listened to the same you're probably talking about. I think 0:23:56.080 --> 0:24:00.440 it was July when there was just this huge rally 0:24:00.440 --> 0:24:03.800 based on what you know, what your impulse said in 0:24:03.880 --> 0:24:06.920 the meeting, and I listened to the exact same conversation 0:24:07.080 --> 0:24:10.600