Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Tim Stanevik. We're here every day bringing you the latest
Speaker 1: news from the world's of business and finance, clus technology, politics, economics,
Speaker 1: all harnessing the power of Business Week reporters and editors,
Speaker 1: not to mention our journalists and analyst in more than
Speaker 1: one twenty countries. You can download Bloomberg Business Week on iTunes, SoundCloud,
Speaker 1: or Bloomberg dot com. You can also listen to our
Speaker 1: radio show at two pm Eastern Time on Bloomberg Radio
Speaker 1: or stream us live on YouTube and Bloomberg dot Com.
Speaker 1: The Bloomberg Big Take Today a story in the upcoming
Speaker 1: new issue of Bloomberg Business Week, add on newstands tomorrow,
Speaker 1: already online at Bloomberg dot com slash business Week. It's
Speaker 1: also on the Bloomberg Terminal. The story Tim taps into
Speaker 1: how traditional economic indicators, well they can't predict the timing
Speaker 1: of a downturn, and then some of the newer forecasting
Speaker 1: methods they're just kind of untested. Yeah, this is why
Speaker 1: I calling us recession is trickier than ever before, especially
Speaker 1: with all the mixed signals that we're getting. It is
Speaker 1: just not easy. We hear over and over again, it's
Speaker 1: not easy from CFO was it's tough here with the story.
Speaker 1: We got Bloomberg News US econom reporter Katya Dmitrieva on
Speaker 1: zoom the in the ninety nine one studio and Bloomberg
Speaker 1: Bureau in Washington, d C. Along with the editor of
Speaker 1: Business Week, Joe Webber. He's here in the Bloomberg Interactive
Speaker 1: Broker's studio. Come on, Joel. I thought this was easy.
Speaker 1: I thought all you had to do was be the
Speaker 1: national view of economic research and you just, you know, say,
Speaker 1: look in your crystal ball. I thought that tells you
Speaker 1: exactly when the recession may or may not go. Yeah.
Speaker 1: And on top of that that no pressure for economist
Speaker 1: here because they've had some noteworthy misses. Uh, you know
Speaker 1: there's an inflation thing from GDPHO things. Yeah. So so really,
Speaker 1: what's what's happened here is this, Uh, there's been a
Speaker 1: proliferation of data. Everybody's got an opinion now, right, gad
Speaker 1: you and and what is the best we can come
Speaker 1: up with with how to figure out how to call
Speaker 1: a recession? Yeah, there's a lot of data. In addition
Speaker 1: to the traditional indicators, you also have all of the
Speaker 1: new ones. You know, everything from the open table restaurant
Speaker 1: reservations to h where people are flying and if they're flying,
Speaker 1: if they're coming back into the office, and then even
Speaker 1: things like plastic surgery. Some economists like to look at
Speaker 1: that as a gauge of sort of how much people
Speaker 1: are spending on things that are completely discretionary of the time.
Speaker 1: So you have a lot of stuff to look at. Um,
Speaker 1: And unfortunately, you know, unfortunately it's no easier this time
Speaker 1: around with this data than it was, for example, during
Speaker 1: the last recession or pre COVID I should say, twenty nineteen,
Speaker 1: when everyone was thinking, okay, we're due for a recession
Speaker 1: before times the PC pre COVID times. Um, you know,
Speaker 1: I think right now, Uh, there is some indication of stress. Um,
Speaker 1: there is some indication that things are slowing down. But
Speaker 1: the tricky thing is trying to figure out when you're
Speaker 1: piecing together all these different pieces of the economy. Um,
Speaker 1: is the image that you get that we're entering a
Speaker 1: reset shan or is it simply a renormalization and kind
Speaker 1: of a slowing down to something we might have seen
Speaker 1: in nineteen. So that's what's proving very difficult for for
Speaker 1: a lot of economists right now. I'm so glad we're
Speaker 1: talking to you right now. We we just spoke with
Speaker 1: Mario Cordero, who runs the Port of Long Beach, and
Speaker 1: he was saying that, um, you know, we kind of
Speaker 1: like tried to hold his feet to the fire and
Speaker 1: get him to say whether or not we're in a recession,
Speaker 1: whether or not he sees one coming. I mean, this
Speaker 1: is the guy who can look out his window and
Speaker 1: see the economic activity, you know, how many ships are
Speaker 1: lined up in the economic activity that's taking part. And
Speaker 1: he wouldn't. He was like, I'm on team soft landing,
Speaker 1: but he wasn't comfortable making a call. We said like
Speaker 1: yes or no, and he wouldn't do it. Yeah, he
Speaker 1: wouldn't do it, right, Yeah, you know, I mean that's
Speaker 1: the exact same experience that you're going to get with
Speaker 1: a lot of other economists right now. I mean, even
Speaker 1: Claudia Sam you know she created the some rule. Uh,
Speaker 1: this is sort of when you talk about art versus
Speaker 1: science and economy. This is pretty much as science as
Speaker 1: you can get. You know, It's a line on a
Speaker 1: chart attracts the on him ployment rate over time, compared
Speaker 1: to the sort of past twelve months unemployment rate, and
Speaker 1: it is very accurate in terms of predicting at a
Speaker 1: certain point. Okay, we've entered a recession, and yet even
Speaker 1: when I was chatting with her, she was saying, you know,
Speaker 1: I hope that it's wrong this time around. And there's
Speaker 1: a chance that it might be wrong this time around
Speaker 1: because the consumer outlook is still pretty strong and we
Speaker 1: haven't seen a lot of kind of impact negative impact
Speaker 1: in the labor market yet. Um. And again, I mean,
Speaker 1: we could enter a situation where consumer spending managers to
Speaker 1: hold up. Right. So, we saw the retail sales figures
Speaker 1: for the past few months pretty dismal, but we're coming
Speaker 1: off of that high, right, So um, we could enter
Speaker 1: a situation where companies have a bit more room to
Speaker 1: cut prices now, Um, now that the FED is kind
Speaker 1: of done its job and we're seeing inflation slow down
Speaker 1: a bit. Um, And then we could have consumers saying, Okay,
Speaker 1: I'm going to keep spending, maybe not like I did
Speaker 1: two years ago or a year ago, but you know,
Speaker 1: I gonna keep this economy going. Everyone's going to keep
Speaker 1: doing their part. Uh. So it's just still a big
Speaker 1: question mark words later, you know, twenty economists interviews later,
Speaker 1: and it's still to be I'll do my part. Um,
Speaker 1: So what about the yield curve, because that's then as
Speaker 1: you write a tried and true recession indicator, does it
Speaker 1: still hold as much weight as we've always thought or
Speaker 1: is it sort of slightly maybe less? And these other
Speaker 1: things kind of take into account, like what what's the
Speaker 1: new uh, you know, the new thinking on inverted yield curves? Yeah,
Speaker 1: the yield curve is a funny one people people love
Speaker 1: it and it's a great Um. It's a great indicator
Speaker 1: of what investors are thinking and whether they see kind
Speaker 1: of a recession down the road. And it's pretty straightforward.
Speaker 1: Um when sort of the short versus long term the
Speaker 1: curve inverts like it's a it's a signal. It's one
Speaker 1: signal of many signals. Um, But how does it compare
Speaker 1: with a drop in sales of men's underwear? Yeah? Yeah,
Speaker 1: I know, Alan Green's fans favored or used to be
Speaker 1: his favorite indicator. Um. You know, it's it's more accurate
Speaker 1: than a lot of other indicators. The thing. The thing
Speaker 1: with the yield curban version though, is that there could
Speaker 1: be a false positive. So we have in the nineteen
Speaker 1: sixties where the yield curve inverted and we didn't have
Speaker 1: a recession immediately afterwards. And we also had the yield
Speaker 1: curve inverting twice at least twice last year. And we're
Speaker 1: you know, I mean, you could talk to some economists,
Speaker 1: they'd argue, we're already in a recession, but we don't see, um,
Speaker 1: the traditional signs of a recession right this very second.
Speaker 1: So you could maybe even call call that a false positive.
Speaker 1: So with a lot of these indicators, like you really
Speaker 1: have to take them all together. So yield curve plus
Speaker 1: the som rule plus you know, for example, the Conference
Speaker 1: Boards leading Indicator index, which is weakening and flashing rend.
Speaker 1: It's going to wait for a year when everybody says, oh,
Speaker 1: guess what we were in all it already happened. Hey, listen,
Speaker 1: how does though there's a great sound bite in your
Speaker 1: in your story are a great quote about how this
Speaker 1: is the most traditional of traditional recessions in a couple
Speaker 1: of decades, right, the last two we know, right, we
Speaker 1: had the financial mailtdown, the housing crisis, that's one, and
Speaker 1: then you had a pandemic that shut down the economy
Speaker 1: thirty seconds left. It being traditional makes it easier or
Speaker 1: harder to call. It makes it just as hard to call.
Speaker 1: I mean, we're lucky this time and that right now
Speaker 1: we don't have a black Swan event, at least not
Speaker 1: yet fingers crossed like we did for the last two
Speaker 1: especially the last pandemic recession. UM. But it doesn't make
Speaker 1: it any easier. In fact, I would argue, what makes
Speaker 1: it harder because you're seeing, uh, you know, kind of
Speaker 1: a slowdown of demand, but you're also seeing these mixed
Speaker 1: signals of like positive things happening in the economy. So
Speaker 1: I would say it's it's just as hard as it
Speaker 1: was before. It's not easy calling a US recession. That's it. Um.
Speaker 1: What a great story and so relevant, certainly to all
Speaker 1: of our conversations we're having Katya Dmitreva. She is US
Speaker 1: economy reporter at Bloomberg News via zoom from Washington, d C.
Speaker 1: Thanks to her, along with Joell Webber, the editor of
Speaker 1: Bloomberg Business Week, this is Bloomberg Radio. You're listening to
Speaker 1: Bloomberg Business Week with Carol Messer and Tim Stenovic on
Speaker 1: Bloomberg Radio. We want to get to our next guest
Speaker 1: because our big take today a story in the upcoming
Speaker 1: issue of Bloomberg Business Week. It's talking about how traditional
Speaker 1: economic indicators can't predict the timing of a downturn. We keep,
Speaker 1: you know, talking about when a recession, what kind of recessions,
Speaker 1: so on and so forth. I think a great indicator
Speaker 1: has anything to do with transportation. Yeah. One indicator you
Speaker 1: could say that has often been relied on as a
Speaker 1: good gauge of economic health is anything to do with transport. Carol,
Speaker 1: and we're lucky to have back with us to that end.
Speaker 1: Mario Cordero, executive director at the Port of Long Beach,
Speaker 1: who joins us via zoom in Long Beach, California. Mario,
Speaker 1: good to have you with us. How are you well,
Speaker 1: Thank you, Thank you for the kind invitation. We'll talk
Speaker 1: to us about activity at the ports. Um. We've spoken
Speaker 1: to you a couple of times throughout the last two years.
Speaker 1: How many ships right an hour off the coast waiting
Speaker 1: to get in zero So we essentially have no vessel
Speaker 1: backup since back in November. So it's essentially a great
Speaker 1: success here in the largest complex for the United States
Speaker 1: here in terms of containerized cargo. Would you say that
Speaker 1: things are back to quote unquote normal as they were,
Speaker 1: you know before the pandemic. Well overall will be lard
Speaker 1: to the fluidity here in the Poor Long Beach, I
Speaker 1: would say is back to normal. Obviously. On the other hand,
Speaker 1: the nations supply chain, there's still some work ahead, but
Speaker 1: again far better than when we were a year ago.
Speaker 1: So tell us what changed. Is it that there's more
Speaker 1: truckers to pick up the goods off of ships, there's
Speaker 1: more workers to get the goods off of ships, or
Speaker 1: there's less ships coming in. I know that there's a
Speaker 1: lot of factors. We could look at what is different,
Speaker 1: what is a combination of factors, But I think the
Speaker 1: bottom line here with the economy is as we all know, uh,
Speaker 1: the imports that come into our nation's gateways, and the
Speaker 1: numbers reflect where we are in our economy. So the
Speaker 1: good news is, I think we're doing very well in
Speaker 1: terms of the surge that we had that we handled
Speaker 1: here twenty million containers at the St. Peter Bay complex
Speaker 1: that is together to Port Lammis, Los Angeles. So the
Speaker 1: economy has slowed, but I think we all have to
Speaker 1: agree that to a certain extent, it's an intention here
Speaker 1: given the Federal Reserve in their attempts to control the
Speaker 1: inflationary rate that we were experiencing in two. So part
Speaker 1: of that plane of action is to slow the economy
Speaker 1: and the holiday season. Though it was successful, it did,
Speaker 1: uh was lord in the expectation that some people thought,
Speaker 1: and so I think you're starting to see that the
Speaker 1: consumer demand is dissipating. And the other and last aspect
Speaker 1: to this is we had very, very high inventories in
Speaker 1: the fourth quota of two because of the cargo that
Speaker 1: was moved here from Asia ahead of time, given the
Speaker 1: surge and all the bottleneck issues that we were experiencing
Speaker 1: in you to write. We talked about that with companies,
Speaker 1: right They built up their inventories because they didn't want
Speaker 1: to be caught off guard and without goods that consumers want,
Speaker 1: and as a result, they didn't need to ship in
Speaker 1: new um. So that makes a lot of sense when
Speaker 1: you say that the economy has slowed. So the activity
Speaker 1: that you were seeing, U are the level of economic activity?
Speaker 1: Is its similar to what we saw just pre pandemic
Speaker 1: or is it below that level? Give us some more context.
Speaker 1: You're someone who understands the levels in and out different
Speaker 1: economic downs, you know, different economic cycles. So give us
Speaker 1: a more perspective and color. Thank you. We are getting
Speaker 1: to pre pandemic in many metrics. But keep in mind
Speaker 1: and when you look at the economy and the inflationary
Speaker 1: rate for you, for December, we're now at a six
Speaker 1: point five percent given the peak of what we were
Speaker 1: experiencing in the summer six what no, seven seven, I'm sorry,
Speaker 1: seven point one percent year to year in terms of
Speaker 1: the slationary rate, so you're talking about so that was
Speaker 1: in November and December we went down to six point
Speaker 1: five So when you look in terms of what that
Speaker 1: rate was in the height of the escalating inflationary issue
Speaker 1: of the utmost of nine. Again good metric in terms
Speaker 1: of again what the Federal Reserve is doing, asked to
Speaker 1: monetary policy. The second point to that is we could
Speaker 1: all agree how much the supply chain was part of
Speaker 1: the phraseology used by the Federal Reserve in terms of
Speaker 1: factors that were uh causing inflation. So they dead news
Speaker 1: at least for the supply chain. We are not high
Speaker 1: on the list anymore in terms of those inflationary factors.
Speaker 1: And I'm talking about supply chain disruption and of course
Speaker 1: transportation costs. You know, with regard to the West Coast,
Speaker 1: the transportation costs from Asia to the West Coast are
Speaker 1: now back to a normal type of setting. So again
Speaker 1: to your question, yes, we're seeing now is a semblance
Speaker 1: of normalization that is pre pandemic numbers here. Maybe it's
Speaker 1: a good thing that President Biden isn't visiting your port anymore,
Speaker 1: as he did, you know in June of last year, right, Yes,
Speaker 1: And I think credit to the White House emboy. Uh,
Speaker 1: first was John mccardi and now General Steam Alliance and
Speaker 1: bringing out the stakeholders together to try to address these
Speaker 1: various challenges we had here going back to the COVID
Speaker 1: nineteen impacts. We talked with Mario Cordero, executive director at
Speaker 1: the Port of Long Beach via Zoom in Long Beach, California. Mary.
Speaker 1: When you say transportation costs back to normal, is that
Speaker 1: though still inflated because there's still inflation in those numbers
Speaker 1: or no, Well, I think transportation costs back to normal.
Speaker 1: You know, we we had about a reduction of what
Speaker 1: that containerized cargo costs to bring the container from Asia
Speaker 1: to to to the West Coast. And I think in
Speaker 1: large part is the capacity question. Uh. You know, we
Speaker 1: have more a city here now. Uh. And of course
Speaker 1: the carriers are canceling sailings because of that diminished import number.
Speaker 1: And when I say diminished important numbers, not just a
Speaker 1: question of the West Coast, is diminished important number overall
Speaker 1: to the nation. But on the other hand of good news,
Speaker 1: if you ask any of these international carriers and UH
Speaker 1: and the American and the shipper, you know, bottom line,
Speaker 1: the market here is in the USA in terms of
Speaker 1: consumer demand. So despite the diminishment of that consumer demand,
Speaker 1: we are in a very good setting in terms of
Speaker 1: going back to pre pandemic numbers. Just in the last
Speaker 1: minute we have with you, Mario, any indication to you
Speaker 1: that we're going into a recession are already there, because
Speaker 1: some say that we could be like kind of right
Speaker 1: there right now. Well, I think you know, there are
Speaker 1: those who talk about a soft landing, and I'm in
Speaker 1: that category. And of course over those if you go
Speaker 1: back to the summer and spring two who were predicting
Speaker 1: a serious recession of a magnitude level, we're not there.
Speaker 1: So I think the good news is I think you're
Speaker 1: starting to see that number one. The important thing that
Speaker 1: CPI and the consumer Price Index is diminishing. And of course,
Speaker 1: on the other hand, with regard to the recessionary numbers,
Speaker 1: I think there's still a lot of optimism among the
Speaker 1: economists that we're not going to have the type of
Speaker 1: recession that some people fear. So the good news is, yes,
Speaker 1: there's a cycle here, and I think it's going to
Speaker 1: be a mild one, uh that we're going to go through.
Speaker 1: So hopefully, uh, we're all correct on that side of
Speaker 1: the column. So I look forward to a second half
Speaker 1: better than the first half. But yes or no, we're
Speaker 1: not there in a recession yet. Yes or no, Uh no,
Speaker 1: we're not there a serious recession. Mary Cardero, thank you
Speaker 1: so much, Executive director at the Port of Long Beach,
Speaker 1: joining us from California. This is Bloomberg. These sees Bloomberg
Speaker 1: Business Week with Carol Masair and Tim Stenebec on Bloomberg Radio.
Speaker 1: A story about how startups are getting created, are creating
Speaker 1: what they are doing, They're getting creative. I should say,
Speaker 1: when they are in the hunt for crash and for cash,
Speaker 1: catch by that it's Wednesday that these things happening. It's
Speaker 1: some day, just like they're getting creative. I'm getting creative. Um,
Speaker 1: but some of that creativity is raising eyebrows. Well, we
Speaker 1: got a great voice with us. He's quoted in this story,
Speaker 1: Ken Smith. He's from Next Round Capital Partners. He helped
Speaker 1: start up start ups obtained financing. He's with us right
Speaker 1: now in the Bloomberg Interactive Broker's studio. Ken. Good to
Speaker 1: have you with us. You know, as as we heard
Speaker 1: um Charlie going through the markets, you were telling us
Speaker 1: a little bit about you know, your impressions of Elon
Speaker 1: Musk and you know how he paid overpaid for tests
Speaker 1: for Twitter. Excuse me ahead of Tesla earnings this afternoon. Um,
Speaker 1: the environment has shifted so much just in the past year.
Speaker 1: What are you seeing in the work that you're doing
Speaker 1: when you're out there helping startups raise money? First, thank
Speaker 1: you for having me. It's a pleasure to be here. Um. Yeah,
Speaker 1: we're seeing an in ironment which is drastically shifted in
Speaker 1: the last twelve months. Particularly. I think UH investors obviously
Speaker 1: are kind of coming off a very very rosy scenario
Speaker 1: which was two thousand one, where multiples were sky high
Speaker 1: and people were paying for growth at any cost, And
Speaker 1: now we're back to fundamentals, as they say, and investors
Speaker 1: are really focused on when companies are gonna be profitable
Speaker 1: or they're gonna be cash break even, and and particularly
Speaker 1: what multiples are they paying now for that future growth
Speaker 1: given interest rate headwinds, the FED and a potential recession.
Speaker 1: So a smarter market today in terms of focusing on fundamentals,
Speaker 1: where it got a little stupid when there was so
Speaker 1: much cheap money, they got super crazy. Uh, some firms
Speaker 1: and I won't name names, we're doing you know, ten
Speaker 1: deals a week, right, How can you keep that pace
Speaker 1: and and really be doing serious diligence um on these companies?
Speaker 1: So what we're seeing now is really kind of a
Speaker 1: very much a pullback, very much focus on what's gonna
Speaker 1: work not only now but in several years from now,
Speaker 1: and durable business models. What I want to ask you, Kenny,
Speaker 1: is that in a market like this, does it create
Speaker 1: companies that will ultimately be your Google's, your Facebook's there,
Speaker 1: I say Twitter, you know, the companies that actually have
Speaker 1: longer legs and sustainability going forward because of the focus
Speaker 1: on fundamentals. Absolutely, you're going to see companies that really
Speaker 1: were sort of cash burning machines. That need adventure capital
Speaker 1: to continue growing, right, they could continue to feed losses.
Speaker 1: And a lot of the consumer models if you look
Speaker 1: back at Casper Mattresses, if you look at back at Lime,
Speaker 1: at Bird, these were ideas that just consumed massive amounts
Speaker 1: of money. The vcs had to continue funding at ever
Speaker 1: raising rounds and ever raising prices. And when that's working
Speaker 1: and money is cheap, it's great. You can run a
Speaker 1: business like that all day long. But when the month,
Speaker 1: when the tide goes out, as Warren Buffett says, you know,
Speaker 1: look out below, right, investors are just not willing to
Speaker 1: fund those losses indefinitely. So what's the environment that exists
Speaker 1: right now in the context of the new companies that
Speaker 1: are out there being created. Are we in a more
Speaker 1: normalized world of you know, I don't know, the nineteen
Speaker 1: nineties perhaps where we see interest rates not at zero? Right?
Speaker 1: So now we're I believe we're in the sort of
Speaker 1: two thousand nine period called two thousand twenty to two
Speaker 1: thousand eight for the venture capital IPO market where everything
Speaker 1: where everything ground to a halt, and two thousand seven
Speaker 1: was two thousand one. But but what came after that,
Speaker 1: it was like the best time ever to be a
Speaker 1: ventric right, and a lot of the venture capitalists hadn't
Speaker 1: seen a two thousand twenty two yet. Remember a lot
Speaker 1: of these firms got started in two thousand ten, two
Speaker 1: thousand eleven, two thousand twelve. All they knew was a
Speaker 1: bowl market. If you were an employee started working for
Speaker 1: a startup, you got all these options and all you
Speaker 1: saw them is go straight up, straight up, straight up,
Speaker 1: and you never sold a share, and you were the
Speaker 1: smartest person in the world because then if you had
Speaker 1: the I p O the lock up and you were rich,
Speaker 1: and that's all you had to do is just keep
Speaker 1: doing that over and over again. Now venture capitalists are
Speaker 1: starting to have to think like hedge fund managers, although
Speaker 1: they have to say, you know, Chime was a twenty
Speaker 1: five billion a year ago, and that was it a
Speaker 1: hundred times multiple, and now Chime is trading at ten
Speaker 1: billion and potentially it was public down the six billion.
Speaker 1: Should I have sold a lot a year ago? Do
Speaker 1: I need to start actually managing a portfolio? Because this
Speaker 1: whole buy and whole thing in the VC world isn't
Speaker 1: gonna work in every environment. They got lucky and it
Speaker 1: worked for a while, but it's just not gonna work
Speaker 1: in time one of those startup you know, so called
Speaker 1: neo banks. That's right, So what does this mean for
Speaker 1: startups who do need cash? I mean, Hmma Palmer who
Speaker 1: wrote this story, she's our hedge fund reporter here at
Speaker 1: Bloomberg News. She talked about how startups are having to
Speaker 1: be creative in terms of the hunt for cash. So
Speaker 1: what are you doing? What does that mean? And what
Speaker 1: do they have to promise or what they have to do?
Speaker 1: I think early stage startups if we defined the world
Speaker 1: by early stage, mid stage companies series C, Series D,
Speaker 1: and then late stage post series E, when you really
Speaker 1: have a business going on. I think a lot of
Speaker 1: what I was talking about in the article was companies
Speaker 1: that have already raised money. They have significant businesses going
Speaker 1: on hundred million, two hundred million, three hundred million revenues,
Speaker 1: but are still burning cash, right, and so they have
Speaker 1: a certain amount of cash and kind of two thousand
Speaker 1: two was sort of a freebee there, southing twenty two
Speaker 1: sorry was a freebee. You raise a lot of money
Speaker 1: in twenty one. You had plenty of cash to get
Speaker 1: through twenty two. Now you're hoping as a CFO, you
Speaker 1: wake up and this all goes away, right, because you
Speaker 1: don't want to go out and raise money at a
Speaker 1: discount or a fifty percent discount to what you did,
Speaker 1: hence the down round. Right. Not only that, but you've
Speaker 1: got employees and executives to keep happy, right, and if
Speaker 1: you wipe out their equity, guess what, you got a
Speaker 1: lot of upset people walking around the office saying, hey,
Speaker 1: what did you do? So this is gonna be the
Speaker 1: interesting part two thousand twenty three and mid part this
Speaker 1: year into two thousand, rubber is going to meet the road.
Speaker 1: Every CFO is gonna have to say, what's this? Where
Speaker 1: are we going with this? Do I keep growing my
Speaker 1: business or do I dilute my investors and wipe out
Speaker 1: my equity of my employees? Right? And that's gonna be
Speaker 1: the big dilemma. So you see companies like Sneak that
Speaker 1: just did a down round. They got a major free
Speaker 1: pass only down right from their previous round. If you
Speaker 1: can do that, you should do that all day long.
Speaker 1: But I think companies but Sneak is in a SAS
Speaker 1: software high margin business, so they can probably get away
Speaker 1: with it. But if you're instat cart trying to raise
Speaker 1: money now or go puff good luck. Yeah, we've seen
Speaker 1: I mean, we've written about the challenge that those companies
Speaker 1: are facing quite a bit in Business Week. So I
Speaker 1: guess my question is about the types of businesses that
Speaker 1: are going to come of age during this period of
Speaker 1: hiring rates and you know where the money isn't free anymore,
Speaker 1: that's right, m Are these gonna be just better businesses?
Speaker 1: Are you optimistic? Or is are you? Are you kind
Speaker 1: of very optimistic? I'm almost glad this has happened because
Speaker 1: it's making CFOs and companies actually have to be aware
Speaker 1: of cost, be aware of how much money they're burning
Speaker 1: of investors money to grow these businesses, responsible about hiring
Speaker 1: and hiring and right sizing your organization and not just
Speaker 1: throwing money at problems because that's what everyone got, punched
Speaker 1: drunk on free money. So if you're just punched drunk
Speaker 1: on free money, you're gonna hire as many people as
Speaker 1: you want. You're going to invest as much money into
Speaker 1: sales and marketing. So you're gonna go after bad product
Speaker 1: ideas and they may or may not work, But do
Speaker 1: you care there's a VC standing by and wanting to
Speaker 1: give you more money. What are the opportunities. Then, the
Speaker 1: opportunities are in virtual reality, companies like Andrew the opportunity
Speaker 1: he's although I think it's the defense that's right. I
Speaker 1: think companies like company. He's the guy who created Oculus,
Speaker 1: sold it to Facebook. Now he's trying to take that.
Speaker 1: Andrill is one of our top requested names, obviously, and
Speaker 1: I start talk about open ai. But open aiy is
Speaker 1: kind of the new Uh, let's just say darling of
Speaker 1: the private world. Um, and we're going to see a
Speaker 1: shakeout in that world. I think I can that world
Speaker 1: to when Yahoo was the leader in search and then
Speaker 1: Google came along and actually made it a business, right,
Speaker 1: And so that's what we're kind of seeing with AI
Speaker 1: is who can actually make it into a workable business model. Um.
Speaker 1: We're seeing a lot in logistics and transportation companies like
Speaker 1: flex Sport. And then we're also seeing a lot of
Speaker 1: the sas businesses which do cloud data storage, AI, machine learning, data, bricks,
Speaker 1: data robot companies that actually are helping businesses be more
Speaker 1: efficient with very high profit margins. In the In the interim,
Speaker 1: he does it also mean that companies will go to
Speaker 1: public sooner rather than later? I don't think so. I
Speaker 1: think we're in a very interesting period where investors are
Speaker 1: willing to pay a certain multiple. You look at public
Speaker 1: company multiples that are comparable, and if you're a private
Speaker 1: company CFO, you might say, you know what, it's probably
Speaker 1: better to stay private for right now. I agree, But
Speaker 1: because it's a different environment, there isn't so much cheap money,
Speaker 1: it's not going to force some companies to have to
Speaker 1: tap the public markets. Do you think there'll be enough
Speaker 1: out there? I think that when companies do start raising
Speaker 1: money again in the private market, if the appetite is
Speaker 1: there and they can do it at the right price,
Speaker 1: they're going to try to stay private until the market
Speaker 1: recovers and then you can go public at a higher multiple.
Speaker 1: Remember businesses in software that are growing at selling for
Speaker 1: five times multiple from the public market. You know a
Speaker 1: lot of these private businesses times more plus. So that
Speaker 1: trend continues, because it's something that Tim and I talk
Speaker 1: a lot about. It just kind of floors us when
Speaker 1: we go to different conferences. We were at Milk and
Speaker 1: it was all about the private markets. That trend continues,
Speaker 1: that the private markets are continue to fund so much
Speaker 1: out there. Just got about thirty seconds. That's right. Look,
Speaker 1: that doesn't change a lot of the best ideas are
Speaker 1: the early stage ideas vcs. If you're a VC that
Speaker 1: caught open a I, really you're sitting on a hundred
Speaker 1: times your money. That is where the real money is made.
Speaker 1: You got to catch them early enough, though, you know
Speaker 1: many times once they get too late, just like Uber
Speaker 1: had raised so many financing rounds by the time of
Speaker 1: one public at one down. So you know, you just
Speaker 1: got to catch the timing right. But this is innovation.
Speaker 1: We're gonna pay for it. There's gonna be a bull
Speaker 1: market again, and you know, stay positive and look at fundamentals.
Speaker 1: All right, we certainly will. Ken SMI thank you so much.
Speaker 1: Next round. Capital Partners founder joining us in our Bloomberg
Speaker 1: Interactive studio. Check at him a parm Oer, our hedge
Speaker 1: fund reporter at Bloomberg News. Her story talks about exactly
Speaker 1: what Ken just laid out for us. You're listening to
Speaker 1: Bloomberg Business Week with Carol mess Here and Tim Stenovic
Speaker 1: on Bloomberg Radio. Chinese eight RS. They have been on
Speaker 1: a tear this year. The Nazi Golden Dragon China Index
Speaker 1: of Chinese eight RS at trade here in the US.
Speaker 1: It's up about eight year to day, up seventy seven
Speaker 1: percent since October of last year. Mind you, it's still
Speaker 1: way off its highs that we saw back a couple
Speaker 1: of years ago. It is the m q Q Emerging
Speaker 1: Markets Internet and e Commerce et F invests in the
Speaker 1: space and is up nearly eight in the past month,
Speaker 1: in the past three months. It's a lot of numbers. Yeah, sorry,
Speaker 1: that's no. It makes sense though, a lot of perspective
Speaker 1: because we just want this sector has been on fire
Speaker 1: and has really seen a pretty strong bounce back as
Speaker 1: of late. We've got a great voice on this to
Speaker 1: give us more on the space, which includes companies like
Speaker 1: ten Cent, Ali, Baba, Pinduo, Duo, j D, dot Com,
Speaker 1: by Do and more. Kevin Carter's with us. He's the
Speaker 1: founder of e m q Q, joining us on the
Speaker 1: phone from San Francisco. Good to have you with us, Kevin,
Speaker 1: How are you. I'm great, Thanks for having me. Okay,
Speaker 1: So Carol talks about this space all the time. I
Speaker 1: made a point today by telling her you haven't talked
Speaker 1: about you know, Chinese internet companies that are traded here
Speaker 1: in the US once this week, which is just like
Speaker 1: such an anomaly for But you do it for good reason, Carol,
Speaker 1: because these are really important companies and it's a really
Speaker 1: important economy. It's the second biggest economy in the world.
Speaker 1: That said, investors are a little scared of it over
Speaker 1: the past couple of years, given what we saw with
Speaker 1: COVID in China and given trade tensions between the U
Speaker 1: S and China. In addition of that, Um, what's the
Speaker 1: Chinese government going to do with these big companies? So
Speaker 1: what's the thesis that you have for having exposure to
Speaker 1: the space? Sure? Well, um, you know, the thesis of
Speaker 1: e m q Q is pretty simple. You've got six
Speaker 1: and a half billion people in emerging markets, and they're
Speaker 1: becoming consumers first and foremost. They want more and better food, clothing, appliances, etcetera.
Speaker 1: They're getting their first computer ever and it's happening today,
Speaker 1: and it's not a desktop, it's a sixty dollar Android
Speaker 1: based smartphone. And and they're getting the Internet for the
Speaker 1: first time when they get that smartphone. And because they
Speaker 1: don't have a target store, they don't have a bank account,
Speaker 1: there even more digital than we are. So to think
Speaker 1: of it as the fang stocks for you know, the
Speaker 1: other ninety percent of the world's people, and and China
Speaker 1: is the biggest part of that story. And China has
Speaker 1: been the biggest part of what we do UM. And
Speaker 1: it's also the biggest e commerce market in the world.
Speaker 1: I mean, China might be an emerging market in a
Speaker 1: traditional sense, but when it comes to you know, smartphones
Speaker 1: and e commerce and and all things are related. China
Speaker 1: is the most developed country on the planet. And you know,
Speaker 1: in many ways they are the Jetsons. So it's obviously
Speaker 1: a China play. That's your biggest you know, when it
Speaker 1: comes to geography, Uh, you're bigger exposure, but you do
Speaker 1: have exposure to South Korea, India and elsewhere around the world. Uh.
Speaker 1: And you do track the Emerging Markets Internet Index. You
Speaker 1: are beholden to the index. And I guess what I
Speaker 1: want to ask you, Well, there has been quite a
Speaker 1: bounce back as of late Kevin UM the index the area,
Speaker 1: it's still down about from the high back in mid
Speaker 1: February one. And it's it's still a group that in
Speaker 1: many ways with that China exposure, is beholden to what
Speaker 1: the Chinese government and regulators they're do. That's a big
Speaker 1: variable I would say, if you look at the last
Speaker 1: couple of years, so why risk that exposure? Well, I
Speaker 1: mean you're absolutely right, the last couple of years until October,
Speaker 1: the end of October, this was a horrible place to
Speaker 1: be investing the from the top to the bottom. I
Speaker 1: think at one point we were down about and you
Speaker 1: know the first part of that, we're all the China
Speaker 1: concerns that you alluded to, um And essentially there were
Speaker 1: two different China fears and risks that that we're just
Speaker 1: troubling investors over that period. And the first was the
Speaker 1: so called China tech crackdown, which I don't think people
Speaker 1: quite understand um. And I think that really that really
Speaker 1: isn't it. What do people not understand about the China crackdown? Well,
Speaker 1: first of all, all over the planet, the Internet platforms,
Speaker 1: you know, they've grown so fast that no regulators have
Speaker 1: been able to keep up. And you don't have to
Speaker 1: look very far. Every day you'll see one of the
Speaker 1: fang stocks in the newspaper for getting fined, or look
Speaker 1: at what we saw with Marck Garland yesterday exactly. It's
Speaker 1: I mean it's and in Europe as well, I mean
Speaker 1: Google pays you know, goodness knows how many billions of
Speaker 1: dollars and fines they pay a year. So this isn't
Speaker 1: a China specific thing. The only problem is people are
Speaker 1: so conditioned to be afraid of the Chinese government that
Speaker 1: when they do something, instead of being you know, a
Speaker 1: regulatory you know, worded in a favorable way, it's a
Speaker 1: it's a crackdown. And and and I you know, I've
Speaker 1: been involved with investing in China for eighteen years, and
Speaker 1: you know I have gone through as they happened, each
Speaker 1: of the four regulatory issues from the ant group I
Speaker 1: p O canceled to the online education uh you know
Speaker 1: uh rule change, and every one of those things were
Speaker 1: very sensible to me that the government did. I mean,
Speaker 1: they cost us a little money, they were fines, and
Speaker 1: the fintech rules changed so that the you know, the
Speaker 1: fintech companies aren't as valuable. But but but either way,
Speaker 1: it looks like that's behind us. However you want to
Speaker 1: characterize it as a crackdown, and you know, things like
Speaker 1: jack Ma's missing, fine, but if you look and listen
Speaker 1: to the Chinese government, at least over the last twelve weeks,
Speaker 1: it's over. They did their regulations, that they can just
Speaker 1: change their minds. President she has proved he's willing to
Speaker 1: sacrifice economic growth before and other priorities in exchange for control. Kevin,
Speaker 1: that we've seen that time and time again. How do
Speaker 1: you know that that doesn't change again. Well, it certainly
Speaker 1: could change again. But if you listen to you know,
Speaker 1: his his most recent comments on on the matter, he's
Speaker 1: and China has a lot of problems, by the way,
Speaker 1: and I think, you know, trying to get this tension
Speaker 1: behind them, and so the at the highest level they
Speaker 1: have stated that the regulatory crackdown is over. Um so,
Speaker 1: but you're right, they could change their minds and go
Speaker 1: any number of different directions. But but let me just
Speaker 1: say that's that was the one big fear. The second
Speaker 1: big fear was the de listing risk and the D word,
Speaker 1: which I spend more time on this than unfortunately almost
Speaker 1: anything in my career. And it was so intellectually dishonest
Speaker 1: on so many levels and had such a low chance
Speaker 1: of happening and more importantly, a very low chance that
Speaker 1: anyone loses any money. I mean, people don't seem to
Speaker 1: understand that a stock market is different than a share
Speaker 1: of ownership and you know, a corporation and whether it
Speaker 1: trades here or there are somewhere else, no one's gonna
Speaker 1: steal your your shares. But people didn't understand that in
Speaker 1: any time the D words showed up, it crushed the stocks.
Speaker 1: Now this has also been somewhat resolved. You can go
Speaker 1: to the pc I O B website Bill to tell
Speaker 1: you that they went and did their exams in Hong
Speaker 1: Kong in October and and they felt they had full
Speaker 1: access to what they needed and it should be uh,
Speaker 1: you know something that's behind us now. And again, is
Speaker 1: it fair to say that being bullish on this area
Speaker 1: requires you to have faith in the Chinese government in
Speaker 1: a way that you don't have to have faith in
Speaker 1: other governments when you're you know, you have to yeah,
Speaker 1: when you're investing in those regions. Yeah. Well, let me
Speaker 1: let me say one important thing. We have a second
Speaker 1: offering which is called f m q Q, which is
Speaker 1: the same thing without China. So for people that don't
Speaker 1: like China, or maybe they already own a China product
Speaker 1: that they don't want China, you can buy the story
Speaker 1: without China. But the reality is that you know, emerging
Speaker 1: markets are risky and and the emerging markets governments are
Speaker 1: the volatile and you know, we've seen what's happened in
Speaker 1: Russia and and it really doesn't matter what form of
Speaker 1: government you had. If the leader goes crazy, then you
Speaker 1: might you may be in trouble. But but here's what's
Speaker 1: exciting about this story. UM, let's move beyond the China
Speaker 1: park because China, you know, China's e commerce markets the
Speaker 1: most developed, you know, as I said, on the planet
Speaker 1: by far, it's four times as big as all of
Speaker 1: the other forty five of emerging markets combined. And that's
Speaker 1: why it's been about of the revenue from this emerging
Speaker 1: markets internet sector. But now India, the rest of Southeast Asia,
Speaker 1: which is very young, especially relative to the West, into China, UM,
Speaker 1: south the rest of Southeast Asia. You've got five and
Speaker 1: a half billion people beyond China in what we call
Speaker 1: the next frontier emerging markets. And those people are just
Speaker 1: getting their smartphones today and they're getting online for the
Speaker 1: first time, and the growth there over the next decade
Speaker 1: is going to be stunning. Well, and as you said,
Speaker 1: the f m q Q South Korea India looks like
Speaker 1: our your top geographic holdings and if I look at
Speaker 1: the performance of that and this again takes out China.
Speaker 1: In the past three months, it's up almost seventeen percent. Here,
Speaker 1: I looks like it's beating the index and UH in
Speaker 1: the last month up about thirteen and a half percent UM.
Speaker 1: Great conversation, Kevin, really appreciate it. Kevin Carter, founder of
Speaker 1: e m q Q, JO earning us on the phone
Speaker 1: from San Francisco. I'm roa macro journal. Yeah, but you
Speaker 1: let me drive? No, no, no no, all right, please, I
Speaker 1: don't want to drive. It's good question. This is the
Speaker 1: drive to the clothes up on Bluebird Radio. Right just
Speaker 1: about seventeen minutes left in today's trading session, I heard
Speaker 1: Charlie breaking down the numbers he's been on the market turnaround.
Speaker 1: Still in the red for the SMP down at NAZAC,
Speaker 1: but definitely off its lows of the session. But you know,
Speaker 1: we're kind of driven from data point to data point
Speaker 1: and earnings released to earnings release. We've got some big
Speaker 1: ones after the closing bell. Yeah, but is there something
Speaker 1: bigger happening? And how do we kind of draw all
Speaker 1: these earnings and results together? For that, we turned to
Speaker 1: Jimmy Lee, the founder and CEO at the Wealth Consulting Group.
Speaker 1: It's an independent management, registered investment advisory firm. They've got
Speaker 1: about two point nine billion dollars in assets under management.
Speaker 1: Jimmy joins us once again on the phone from Las Vegas. Jimmy,
Speaker 1: how are you great? Thanks for having me on. It's
Speaker 1: good to have you back with us. Okay, let's take
Speaker 1: a step back, UM, not talking about our nings yet.
Speaker 1: I just want to get your views on the macro
Speaker 1: and the landscape that you're seeing, because I don't think
Speaker 1: we've been able to speak to you yet in um,
Speaker 1: what are you? What are you seeing as you look out?
Speaker 1: I think what we what we were going through now
Speaker 1: is a shift from just a few weeks ago, from
Speaker 1: a a lot more of the pundits believing that we're
Speaker 1: definitely going to be in a recession and it's just
Speaker 1: not you know, not knowing how deep it's going to be,
Speaker 1: to where I think a lot a lot of those
Speaker 1: bears have turned more bullish, thinking that we may actually
Speaker 1: avoid a recession. And so I think that the negative sentiment,
Speaker 1: although it's still very very high, there's a little less
Speaker 1: than what it was just a few weeks ago, and
Speaker 1: I think that's what we're seeing. So I think, you know,
Speaker 1: good news, You're you're seeing money get put to work
Speaker 1: into risk assets such as equities and also fixed income
Speaker 1: and bond has been a good place for investors this
Speaker 1: year as many people think rates are going to stabilize
Speaker 1: and then go down at some point. It does seem
Speaker 1: like the conversation certainly has shifted over the last few weeks.
Speaker 1: But what do you think are we are we going
Speaker 1: to be able to pull this off? Well, my base
Speaker 1: case has been all along that we could avoid a recession.
Speaker 1: I wasn't in the camp of we're definitely going to
Speaker 1: be in a recession. And you know, whether the FED
Speaker 1: raises fifty or seventy five or maybe even one percent,
Speaker 1: I don't think really it matters that much. It's more
Speaker 1: about are they gonna you know, pause at some point
Speaker 1: and when's that going to be? And certainly it's gonna
Speaker 1: be in the first half of this year. Some people
Speaker 1: like myself think it could be as early as March
Speaker 1: um and if that happens, I would be a little
Speaker 1: bit of a surprise, and I think that would help, um,
Speaker 1: you know, fuel this rally that we're seeing in stocks
Speaker 1: what makes you think or what signs are you seeing
Speaker 1: that inflation maybe comes down faster than many expected. Well,
Speaker 1: I've been I've been kind of talking are you along
Speaker 1: or the last few months anyways about and last year
Speaker 1: about just how big housing and shelter which was the
Speaker 1: problem in last month's report, right, how big that is
Speaker 1: a part of course cp I, nearly course c p I.
Speaker 1: And I think it's been well reported now that you know,
Speaker 1: the BLS collect that data with the Ruby mirror, and
Speaker 1: everybody knows that housing market and rents have kind of
Speaker 1: stabilized and and it's it's been tough in the housing market.
Speaker 1: And so you know, when that data eventually gets into
Speaker 1: the inflation numbers, at least the headline numbers that they're
Speaker 1: fed looking at, they think will look a lot better. Um,
Speaker 1: and I think they'll be able to pause and then
Speaker 1: and then I think that there was even a chance
Speaker 1: that they could lower before the end of the year.
Speaker 1: Why do you think that they would lower. They've come
Speaker 1: out and said, well as of last month, that they
Speaker 1: don't plan to lower. You know what, I agree in
Speaker 1: terms of the sentiments, not the sentiment, the statements and
Speaker 1: what people are listening to from the FED members about
Speaker 1: how hawk is they're sounding, But you know, I think
Speaker 1: they can change that. So if we get weakness in
Speaker 1: the economy in the second half of the year from
Speaker 1: from the high interest rates, um, I think that that
Speaker 1: would be the main reason that we could see some weakness,
Speaker 1: maybe even in the labor data down the road. You know, Jimmy,
Speaker 1: I'm looking at the note you shared with our producer
Speaker 1: Paul Brennan, and you know, the things are areas that
Speaker 1: you would be overweighted include something that shows an economy
Speaker 1: that's that's either turning around or is already turned around.
Speaker 1: That's energy, industrial, materials, and financials. Is that safe to
Speaker 1: say that that's why that's your play, because you don't
Speaker 1: I think we're going to be in a recession and
Speaker 1: that you do think inflation will come down and at
Speaker 1: the FED stops sooner rather than later. Yes, And I
Speaker 1: also believe that China is a big part of a
Speaker 1: global growth story, especially for for the Asian countries, and
Speaker 1: I think China will end up being in a net
Speaker 1: positive for global growth this year. And so yes, I
Speaker 1: think that that we avoid a recession at least that's
Speaker 1: what I hope, and that I think a lot of
Speaker 1: acid classes, equities, fixed income, and real estate will have
Speaker 1: an bounce back this year. I still think we're gonna
Speaker 1: be volable for the time being, but you know, investors
Speaker 1: need to get a positioned ahead of the pause. I
Speaker 1: think by the time you know, those words come out
Speaker 1: of Pale's mouth, I think stocks will be higher. And
Speaker 1: that's that's the main reason. Okay, so, uh, new client
Speaker 1: comes to you with a bunch of cash right now,
Speaker 1: how do you deploy it? I know it depends on
Speaker 1: their age, what their goals are, um, but but how
Speaker 1: do you time You know, you can't time the market.
Speaker 1: We know that how do you time the investments? It's
Speaker 1: very difficult to time the market. But history has shown
Speaker 1: that in any given twelve month period, literally any given
Speaker 1: twelve month period going back, seventy five percent of the time,
Speaker 1: the stock market is higher. So it's very difficult to
Speaker 1: to not, you know, want to put the money to
Speaker 1: work knowing that. But usually we'll we'll take the cash
Speaker 1: and and add some into the portfolio that we want
Speaker 1: to invest into fairly soon and then and then look
Speaker 1: at deploying the rest depending on what's going on in
Speaker 1: the recent news that we're that we're headed against, and
Speaker 1: so you know, i'd say maybe like a half now
Speaker 1: and half over the coming months. Type strategy is typically
Speaker 1: how we would do it, unless there's some sort of
Speaker 1: an event that we're watching out for and we'd want
Speaker 1: to wait for that to We just got about forty
Speaker 1: five seconds or so left here. Does it matter if
Speaker 1: that the real inflation rate that we get back to
Speaker 1: is not or in the Fed funds rate that we
Speaker 1: get back to it is not two percent that it runs,
Speaker 1: that the run rate is higher, whether it's four percent
Speaker 1: or so even three percent, does that matter in terms
Speaker 1: of investment strategy for you? You know, we're nearing the
Speaker 1: point where the Fed funds rates crossing potentially, um, you know,
Speaker 1: where inflation is core CPI and so now we're getting
Speaker 1: to a point where where rates really can be restrictive
Speaker 1: and can work on inflation. And so I think, you know,
Speaker 1: once once we get inflation lower than where the Fed
Speaker 1: funds rate is, I think then we're gonna be just fine.
Speaker 1: And so now will that change Fed speak? I don't know,
Speaker 1: but um, I can tell you that I think there's
Speaker 1: a lot of money sitting in in cash and money
Speaker 1: market funds and c D is that that's waiting for
Speaker 1: a brighter outlook. Um, because still, even though that the
Speaker 1: sentiment has moved a little bit more positive over the
Speaker 1: last few weeks, I think that the negative sentiment is
Speaker 1: still pretty bad out there, and that's what people were
Speaker 1: hearing in at least retail investors are so. But for us,
Speaker 1: I think that, you know, the rates that we're getting
Speaker 1: to now is a comfortable workple place, all right, Gonna
Speaker 1: leave it there. Hey, Jimmy, thank you so much. Jimmy Lee,
Speaker 1: founder and chief executive officer of Wealth Consulting Group two
Speaker 1: point nine billion roughly in assets under management, joining us
Speaker 1: on the phone from Las Vegas. Thanks for listening to
Speaker 1: Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or
Speaker 1: Bloomberg dot com. You can also listen to our radio
Speaker 1: show at two pm Eastern on Bloomberg Radio or stream
Speaker 1: us live on YouTube and Bloomberg dot com.