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Speaker 3: Let's get to something that we really got into, our
Speaker 3: started to get into yesterday, as President Trump appeared to
Speaker 3: invent a new weapon of economics state craft by threatening
Speaker 3: what he dubbed secondary tariffs on countries that buy oil
Speaker 3: from Venezuela to choke off its oil trade with other
Speaker 3: nations with moron the what, where, when and why with
Speaker 3: US as Bloomberg News US Treasury reporter Dan Flatley, he's
Speaker 3: out there in a Washington, DC beer. All right, Dan,
Speaker 3: what exactly do we know about possible secondary tariffs? And
Speaker 3: why are they kind of secondary tariffs?
Speaker 4: Yeah?
Speaker 5: No, it's interesting. So it appears that Trump has sort
Speaker 5: of taken this idea of secondary sanctions. It's been around
Speaker 5: for a while, and his sort of fondness for tariffs
Speaker 5: and kind of combined the two. And it's understandable if
Speaker 5: you look at it from Trump's perspective. He's talked for
Speaker 5: the last several months about how sanctions could hurt the
Speaker 5: US dollar, and you know how he wants to protect
Speaker 5: the US dollar, and he's certainly made no secret about
Speaker 5: his fondness for tariffs, and so what he's kind of
Speaker 5: come up with here, and we're still trying to understand
Speaker 5: some of the details here, is essentially an idea to
Speaker 5: use tariffs as a sanction. And one of the features
Speaker 5: that tariffs as a sanction have or has that sanctions
Speaker 5: don't have is the ability to sort of ramp them
Speaker 5: up and ramp them down depending on how the target
Speaker 5: nation is responding. So if Trump doesn't get what he
Speaker 5: wants out of Venezuela, he could take them up to
Speaker 5: thirty percent or forty percent. If things look like they're
Speaker 5: improving and he's getting what he wants, he could reduce them.
Speaker 5: So it's sort of a combination of what he has
Speaker 5: talked about as his favorite word in the dictionary, this
Speaker 5: very powerful tool the tariff uh with with sanctions, and
Speaker 5: more traditional kind of use of sanctions. So you know,
Speaker 5: it's it's it's it's certainly interesting, and I think, just
Speaker 5: to you know, kind of bring it all together, that
Speaker 5: a lot of this is aimed at China because China
Speaker 5: is one of the big buyers of Venezuelan oil, so
Speaker 5: you know, it kind of fits into that whole trade discussion.
Speaker 6: Well that's that's where I wanted to get because we
Speaker 6: said that it's on countries that buy oil from Venezuela
Speaker 6: to choke off it's oil trade with other nations.
Speaker 5: It's really just about China, right, Yeah, I mean I
Speaker 5: think that a lot of you know, folks that have
Speaker 5: reached out to me in the UH, in the you know,
Speaker 5: since the story went out, we're kind of making that
Speaker 5: point that this is really about China and the Chinese UH.
Speaker 5: Some Chinese officials did respond to the story and oppose
Speaker 5: the use of what they call or characterize as extra
Speaker 5: territorial use of US economic statecraft tools like sanctions and
Speaker 5: tariffs and things like that. And so basically what we
Speaker 5: know at this point is Trump has imposed successive rounds
Speaker 5: of ten percent, two successive rounds of excuse me, tariffs
Speaker 5: of ten percent each on China. So we're at twenty
Speaker 5: percent right now. And if these tariffs were to go
Speaker 5: into effect, these secondary tariffs, then we'd be looking at
Speaker 5: potentially an additional twenty five percent on top of that,
Speaker 5: So you know, we're talking about forty five percent tariffs
Speaker 5: on Chinese goods and services potentially. But you know, we
Speaker 5: still are kind of sorting through some of those details here,
Speaker 5: and of course, all of this stuff is very much
Speaker 5: subject to change, depending on how the government in Venezuela responds,
Speaker 5: what Trump thinks he's getting out of them, and all
Speaker 5: of that. So you know, it's it's like many of
Speaker 5: the things that have been rolled out in the last
Speaker 5: couple of months, you know, it's all kind of subject
Speaker 5: to change.
Speaker 6: How is this enforceable, Dan, Well, it's a good question.
Speaker 5: You know, sanctions are primarily enforced really by the banks
Speaker 5: and the big financial institutions who safeguard there the channels
Speaker 5: that are used to uh transmit money and other forms
Speaker 5: of transactions under a fear of penalties big finds and
Speaker 5: stuff like that imposed by the US government. Secondary tariffs
Speaker 5: would in theory be potentially imposed or or enforced by
Speaker 5: a similar mechanism, but it would have to be kind
Speaker 5: of set up in a new form because this has
Speaker 5: never really been tried before. So I think that all
Speaker 5: of this, all of these details are sort of things
Speaker 5: that will have to be ironed out. But again, you know,
Speaker 5: this is assuming that they ultimately go into effect as
Speaker 5: as announced.
Speaker 3: I think about kind of longer term in terms of
Speaker 3: the implications. Can we expect some kind of retaliation? I'm
Speaker 3: curious how we are kind of gaming out what we
Speaker 3: might get then from China.
Speaker 5: Yeah, it's interesting. I spoke last night with somebody who
Speaker 5: worked in the first Trump and illustration who raised this point,
Speaker 5: which is, if secondary tariffs are used more frequently, it
Speaker 5: does kind of give other countries the option of using
Speaker 5: tariffs in retaliation for the secondary tariffs, which they don't
Speaker 5: necessarily have in the same way with sanctions. So there's
Speaker 5: there's a retaliatory element to this that becomes more operative
Speaker 5: or whatever you want to call it with tariffs than
Speaker 5: might be the case with sanctions. So that is kind
Speaker 5: of an interesting wrinkle in all of this, and so
Speaker 5: we'll have to kind of see how this plays out.
Speaker 3: I mean, dan tariffs makes so much sense for the
Speaker 3: United States, be it President Trump or somebody else, because
Speaker 3: we buy so much. Is that also fair in terms
Speaker 3: of how we think about this, and this is why
Speaker 3: maybe it's making it all so uncomfortable globally, we buy
Speaker 3: so much stuff.
Speaker 5: Yeah, it's a great point. I mean, even myra In,
Speaker 5: the President's chief of the Council of Economic Advisors, made
Speaker 5: this point yesterday when he was here speaking with my
Speaker 5: colleague Salaia Mosen about the fact that the US does
Speaker 5: buy so much from other countries and so we do
Speaker 5: have a point of leverage there. I think what Trump
Speaker 5: has kind of identified as well is that, you know,
Speaker 5: even if these tariffs don't work, if they don't have
Speaker 5: the intended effect like a sanction, might you still get
Speaker 5: some revenue in theory from the tariffs themselves. So it's
Speaker 5: kind of a win win situation in his mind. So
Speaker 5: I definitely think that gives the US some leverage, but
Speaker 5: it does potentially have some unintended consequences, as we were
Speaker 5: talking about with the retaliatory terifts.
Speaker 3: One last question, Dan, so again another reason for us
Speaker 3: all to focus on April second next week?
Speaker 5: Yes, absolutely, I mean April second is, as Trump has
Speaker 5: described it, liberation Day. So we're expecting some more tariffs,
Speaker 5: some reciprocal tariffs on April second. There's been a lot
Speaker 5: of activity behind the scenes, and my colleagues have done
Speaker 5: some great reporting on this about how within the administration
Speaker 5: there's sort of the hawks, the trade hawks, and some
Speaker 5: people who are more of a moderating influence that are
Speaker 5: all kind of trying to make sure that this works
Speaker 5: in the way that it's intended. And just by sort
Speaker 5: of doing that and by sort of following the letter
Speaker 5: of the law, by making sure that you're on solid
Speaker 5: legal footing, it does appear to have somewhat of a
Speaker 5: potentially moderating effect on the tariffs themselves, because you want
Speaker 5: to make sure that when you put tariffs in place,
Speaker 5: that they stick, that they work, and that they're not
Speaker 5: subject to legal challenges and other things like that. So
Speaker 5: that does kind of appear to be limiting the scope
Speaker 5: of maybe some of the maximalist tariffs that we were
Speaker 5: expecting a month or two ago. But you know, caveat
Speaker 5: empdor Trump could you know, with his the authorities that
Speaker 5: he has impose still very stiff tariffs, you know, basically
Speaker 5: you know, on his own discretion, at his own discretion,
Speaker 5: And that is something that I think still has markets
Speaker 5: a little.
Speaker 3: Bit nervous, all right, good stuff, and so glad we
Speaker 3: could check in with you. Dan. Thank you so much.
Speaker 3: Dan Flatley. He's US Treasury reporter here at Bloomberg News.
Speaker 3: He is joining us from our DC bureau.
Speaker 2: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 3: For more than two decades, Google Search has definitely ruled
Speaker 3: the web. Search is also Google's beating heart, generating more
Speaker 3: than one hundred and ninety eight billion dollars in revenue
Speaker 3: in twenty twenty four. Almost sixty percent of Alphabet's annual
Speaker 3: sales tim though enter into the AI race, chatchipt and more,
Speaker 3: and Google is searching for its next game.
Speaker 6: It is the cover story of the new upcoming issue
Speaker 6: of Bloomberg Business Week, which you can read now at
Speaker 6: Bloomberg dot com and on the Bloomberg terminal and soon
Speaker 6: on newstands. To get directly to this story, just go
Speaker 6: to Bloomberg dot com slash BusinessWeek. It's also the Big Take,
Speaker 6: which means our editorial team has singled it out as
Speaker 6: a must read for all and I absolutely agree with that.
Speaker 6: The reporters on the story Bloomberg News Technology reporter Julia
Speaker 6: Love and Bloomberg News Big Tech reporter Davey Alba. Julia
Speaker 6: is in our San Francisco bureau. Davy here with us
Speaker 6: in our New York studio. Julia, I do want to
Speaker 6: start with you because Google is synonymous with search. We
Speaker 6: google things.
Speaker 7: It's a verb.
Speaker 6: Now, it's ubiquitous, It's dominant for what seems like forever.
Speaker 6: That was then, But there are some new players in town,
Speaker 6: enter the AI era. What's going on?
Speaker 4: Yeah, so the search market has really gotten a lot
Speaker 4: more interesting over the past few years. There's been a
Speaker 4: rush of new players. A lot of people use chat,
Speaker 4: GPT for search. There are also startups like Perplexity, and
Speaker 4: those new companies have really challenged Google to use generative
Speaker 4: AI to rethink what the core product should look like
Speaker 4: for the first time in many years.
Speaker 3: So what's kind of wild, Julia, is that it sounds
Speaker 3: like Google and Alphabet had an opportunit unity to maybe
Speaker 3: beat CHATCHYBT at its own game, and yet it kind
Speaker 3: of passed. Take us back there.
Speaker 4: Yeah, so with this story, we are really shining a
Speaker 4: light on the attempts that Doodle employees made to incorporate
Speaker 4: generative AI in search to have a chatbot that would
Speaker 4: provide answers along side links. They were trying to do
Speaker 4: this well before the launch of chat GPT. Doodle invented
Speaker 4: the AI technology that makes this possible, but the search
Speaker 4: team that proposed this encountered a lot of resistance. Internally,
Speaker 4: the company was really loath to reconsider its business model.
Speaker 4: They also had some concerns about the accuracy just because
Speaker 4: Doodle is held to such a high bar. It's a
Speaker 4: critical utility, not just a fun novelty like a startup
Speaker 4: might be, Well Davie.
Speaker 6: The story also explores over the last couple of years,
Speaker 6: the complaints that people have had when it comes to
Speaker 6: Google Search, and the idea that it hasn't become as
Speaker 6: useful for some people because of the way that publishers
Speaker 6: and website developers have really started to game the system.
Speaker 7: Yeah, yeah, I think that's something that we explored the story.
Speaker 7: Even before generative AI sort of exploded onto the scene,
Speaker 7: there was already a sense that you could make Google
Speaker 7: more useful than it just on its own by doing
Speaker 7: things like typing your search query and then adding Reddit,
Speaker 7: and then you know, Google was also contending with site
Speaker 7: owners and sort of spammers who just knew Google's rules
Speaker 7: and wanted to gain the system to get right up
Speaker 7: top on search results, but those results weren't necessarily the
Speaker 7: best quality results. So that was sort of the scene
Speaker 7: in which you know, chat GPT came on, and then
Speaker 7: Google also had to figure out how does it respond
Speaker 7: to this existential threat and also improve itself so that
Speaker 7: some of these quality issues are addressed. And I think
Speaker 7: it's kind of an open question whether people like what
Speaker 7: they're doing with generative AI, you know, because of market
Speaker 7: pressures they have added on these generative AI features, whether
Speaker 7: or not users have asked for them. And right now,
Speaker 7: a lot of the things that would have been you know,
Speaker 7: sort of experimental in the past, or that Google might
Speaker 7: not have launched because it has such a high bar
Speaker 7: and accuracy. Right, that's right in the main product.
Speaker 6: You like it, Carol, what Google? Yeah, the Google AI
Speaker 6: search results?
Speaker 3: Because Tim is like, where did you get this from?
Speaker 3: Like take us in Like I feel like when we
Speaker 3: do a big techt story and there's like disruption going on,
Speaker 3: and you know, execs or pitch something and they kind
Speaker 3: of passed. There's internal discussions about, hey, we kind of
Speaker 3: missed the mark. Take us inside alphabet Google and what's
Speaker 3: going on right now? Are they being like, wait a minute,
Speaker 3: the employees, we've got this, we need to move on.
Speaker 4: Yeah, So Doodle is coming off of a rocky few years.
Speaker 4: Davey and I have heard from our sources that chat
Speaker 4: GPT really sparked a panic inside the company. It was
Speaker 4: very painful for Doodle to see someone else taking its
Speaker 4: invention and finding the product hit. And so they've really
Speaker 4: turned up the heat on their employees to ship products faster.
Speaker 4: And the woman really at the center of it all
Speaker 4: when it comes to search is Liz Reid. She's in
Speaker 4: the top search job now. And what's interesting about her
Speaker 4: is she's a long time Doodle executive, but she's spent
Speaker 4: most of her time in Google Maps, and so that
Speaker 4: means that she's a little bit less wedded to some
Speaker 4: of the old ways of doing things in search. She's
Speaker 4: a little more willing to experiment, and I think that
Speaker 4: that sensibility has really come in handy as Google kind
Speaker 4: of enters this new era.
Speaker 3: I think what is wild and I think we've seen
Speaker 3: this was it with either electric cars or something Tim
Speaker 3: will remember better than I will. But you guys writing
Speaker 3: the story. One thing that really stung about chatchpt's rise
Speaker 3: was that it was built on Google's own inventions. Open
Speaker 3: AI's chatbot uses an AI architecture that Google detailed in
Speaker 3: a now legendary research paper published back in twenty seventeen.
Speaker 3: I mean, Davy, that's we've seen this before, where all
Speaker 3: of a sudden, like a company had the research and
Speaker 3: then passed on it. Yeah, that's got to kill absolutely.
Speaker 7: I mean Google runs two of the most advanced AI
Speaker 7: labs in the world, Google deep Mind, which has since
Speaker 7: joined into Google deep Mind, I should say, and a
Speaker 7: lot of the AI developments that they have rolled out
Speaker 7: over the years has been really under the hood of
Speaker 7: these consumer facing products. So, you know, AI is something
Speaker 7: that CEO Sundar Pichai has said he wanted to orient
Speaker 7: the company around even by the mid twenty tens. But
Speaker 7: not the kind of generative AI that we see in chat,
Speaker 7: GBT and you know, major products today, but more like
Speaker 7: improvements to search that are under the hood, things like
Speaker 7: making search faster, right, making it more return more relevant results,
Speaker 7: things like that. So yeah, really stung when chat GBT
Speaker 7: came out and became so popular among Well.
Speaker 6: You two make the point in the piece that he
Speaker 6: thinks that we're at the really, really early innings when
Speaker 6: it comes to AI's effect, in AI's role not just
Speaker 6: on the company, but also on the world, in the
Speaker 6: way that we interact with the world. Julia, it makes
Speaker 6: sense that Google would be so protective of Google and
Speaker 6: what its search page looks like. After all, it accounts
Speaker 6: for so much of the company's revenue and profit. It's
Speaker 6: really the thing that they need to guard. That said,
Speaker 6: what are they doing moving forward in a few months
Speaker 6: that will potentially upend the way that consumers see search results?
Speaker 4: Yeah, I think that we see Goodle testing a few
Speaker 4: different paths right now. It seems to me like they
Speaker 4: aren't entirely certain yet of what the best way is
Speaker 4: to incorporate this into Google Search. They've got the AI overviews,
Speaker 4: which Carol is a fan of, where they're often topping
Speaker 4: the search results with an answer that was drafted by
Speaker 4: artificial intelligence. Those are there whether or not you choose them,
Speaker 4: they just appear automatically. But then they've also announced that
Speaker 4: they're experimenting with this new tab called AI mode that
Speaker 4: you'll be able to click to, you know, similar to
Speaker 4: photos and the other you know features in Goodle Search,
Speaker 4: and you'll be able to go there for kind of
Speaker 4: like a chat GPT experience, like when you really want
Speaker 4: to go deep and have a back and forth with
Speaker 4: Doodle's artificial intelligence to explore a particular topic. And so
Speaker 4: I think it's interesting to see them rolling out that
Speaker 4: dedicated mode and we'll see how that goes over. People
Speaker 4: who pay for Doodle's premium AI features are getting an
Speaker 4: early crack at it now.
Speaker 3: I mean we talked some numbers at the introduction to
Speaker 3: you guys, one hundred and ninety eight billion dollars in
Speaker 3: revenue in twenty twenty four search. Whenever they report earnings,
Speaker 3: we go to those search numbers because at the heart
Speaker 3: of their business, that's what it's all about. Julia, I
Speaker 3: want you to first weigh in on this, you know,
Speaker 3: this cover story. How important is it that Google gets
Speaker 3: this right as the world continues to move forward and
Speaker 3: embrace AI.
Speaker 4: It's critical. I think that the success of the company
Speaker 4: depends on it. Goodle has made some progress in recent
Speaker 4: years in diversifying its revenues. Goodle Cloud is now profitable,
Speaker 4: which was a big win for them. But search is
Speaker 4: still the heart of the company. They need to remain
Speaker 4: relevant to users daily lives. They still want to be
Speaker 4: that thing that you turn to reflectively when you have
Speaker 4: a passing question. And analysts have begun to tell Davy
Speaker 4: and me that they are concerned that search growth going
Speaker 4: forward may start to level off a bit.
Speaker 3: We know things can change, remember AOL, I mean, and
Speaker 3: other things. I'm just gonna say.
Speaker 6: Right, oh, that's what happens.
Speaker 3: Exactly exactly, Davey got about thirty seconds left. Your final
Speaker 3: thoughts on this story and kind of what comes next?
Speaker 7: Yeah, I mean, I think that this story shows what
Speaker 7: a critical piece of infrastructure in a lot of ways
Speaker 7: Google Search is to the web, and as AI marches forward,
Speaker 7: what is sort of the future?
Speaker 3: Google is a reflection of the web.
Speaker 7: Uh, And it's also sort of, you know, a utility
Speaker 7: to explore the web. But if both are degrading, which
Speaker 7: is sort of the sense that we get from from
Speaker 7: our sources, then what next.
Speaker 3: Yeah, it's a big question. And you know, this is
Speaker 3: why it's such an interesting time period when we look
Speaker 3: at all of these big tech play big tech players.
Speaker 3: Davey thank you so much. Davey Alba, big tech reporter
Speaker 3: at Bloomberg News here in studio, and of course Julia
Speaker 3: Love out there in our San Francisco bureau. She is
Speaker 3: our technology reporter here at Bloomberg News.
Speaker 5: You let me drive.
Speaker 6: No, no, no no, this is not a toy, honey, please,
Speaker 6: I'll do the gravel.
Speaker 3: I want to drive.
Speaker 6: It's a good question, good time.
Speaker 1: This is the drive to the clothes.
Speaker 4: Punks and music.
Speaker 2: Well, Brier runs.
Speaker 1: Down on Bloomberg Radio.
Speaker 3: All right, TikTok, everybody. You are up to speed on
Speaker 3: the markets thanks to Charlie Pellett and Bill Maloney. And
Speaker 3: we're bouncing around here. A little change though on the
Speaker 3: S and P five hundred, slightly lower in the Dow
Speaker 3: Jones Industrial Average, and just up about four ten percent
Speaker 3: on the Nasdaq one hundred. So yeah, as we kicked
Speaker 3: off a couple of hours ago, or almost two hours ago,
Speaker 3: market's really searching for some direction here, Tim.
Speaker 6: Well, let's see what Julie Beale has to say about this.
Speaker 6: She's chief market strategist in portfolio manager at Kane Anderson Rudnick.
Speaker 6: She joins us from Santa Monica. We just heard from
Speaker 6: Barry Redholts about sort of the twists and turns of
Speaker 6: the market since the election was yesterday, in your view,
Speaker 6: a turning point, given the rally that we saw, the
Speaker 6: conviction that we saw based on potentially more targeted US tariffs.
Speaker 8: I think that for sure, there was a lot of
Speaker 8: enthusiasm and excitement that you know, maybe this is really
Speaker 8: the moment where there's going to be more clarity and
Speaker 8: we're going to be moving a little bit less quickly
Speaker 8: and more thoughtfully. I think that still remains to be seen,
Speaker 8: and I think the much bigger issue is less how
Speaker 8: the market reacts and more how companies and consumers react,
Speaker 8: because that's really what's going to be driving the markets
Speaker 8: on the long term horizon. And I think you can
Speaker 8: say to most companies, hey, we're going to add these tariffs.
Speaker 8: Oh just kidding, We're not going to do them. You're
Speaker 8: going to be fine now. I think most capital allocators
Speaker 8: are like, there's still the risk that this will change
Speaker 8: really quickly, and I don't want to be caught sideways
Speaker 8: on that. So I think there's a lot of still
Speaker 8: underlying concern that even if you do roll back these
Speaker 8: tariffs and make them less deep or less broad, there's
Speaker 8: still this underlying concern. Hey, I don't really know what's
Speaker 8: going to be coming down. It hasn't necessarily been well communicated,
Speaker 8: and I don't want to put myself in a risky
Speaker 8: position and where I'm on the wrong side of that.
Speaker 3: All right, So does that mean, Julie, move into cash?
Speaker 3: Move into cash like investments, don't play the equity side
Speaker 3: of things, Like, what do you do then in this environment?
Speaker 8: I think your previous guests really said. What I truly
Speaker 8: believe is that it's really impossible to try to time
Speaker 8: this kind of a market. It is so much desire
Speaker 8: to kind of create and add value by trading, by moving,
Speaker 8: by reacting. This is a really good time to be
Speaker 8: sitting on your hands. Frankly, I like the Howard Mark statement,
Speaker 8: don't just do something, sit there, And I think this
Speaker 8: is a real sit there moment. Where as long as
Speaker 8: you have a portfolio that's put together of good quality
Speaker 8: companies that are they themselves able to respond to changes
Speaker 8: in the market, you should be okay. That is better
Speaker 8: off than trying to position for a very specific outcome.
Speaker 6: Well, let's talk about some of those companies that you
Speaker 6: have your eye on. We always love it when our
Speaker 6: guests send us stock picks, especially stocks that we don't
Speaker 6: talk about all the time.
Speaker 3: I want they're not household names.
Speaker 6: These are not well for me, they're not household names
Speaker 6: for you either, Carol Now, Okay, co part CPRT is
Speaker 6: the Tickeer. It's down three point three percent year to date.
Speaker 6: They provide insurance companies with services to process and sell
Speaker 6: salvage vehicles through auctions. It's about a fifty three billion
Speaker 6: dollar company. Yeah, what's your view?
Speaker 8: So you know, I think, look, this is we're looking for,
Speaker 8: are these companies that have really durable earning streams even
Speaker 8: in trickier market conditions, trickier economies, so that we don't
Speaker 8: have to be perfectly correct on the macro. And Copart's
Speaker 8: a great example of that, where if you look at
Speaker 8: the consistency of their earnings, it's really a demonstration of
Speaker 8: how competitively protected they are. Right, A lot of these
Speaker 8: salvage yards, these are really not things that you want
Speaker 8: in your backyard. They're really hard to permit, they're really
Speaker 8: hard to come by, and so they are a really
Speaker 8: valuable asset or once you have it in place and
Speaker 8: you need to build the scale so that you can
Speaker 8: run these very large auctions, so they have a lot
Speaker 8: of competitive protections around them. They're good stewards of capital
Speaker 8: and that is the kind of not flashy, not sexy
Speaker 8: type of business that I'm really attracted to right now.
Speaker 3: All right. Another one is Varisk Analytics. Hopefully I'm saying
Speaker 3: it correctly. This is about a forty billion dollar more
Speaker 3: than forty billion dollar company.
Speaker 6: It's kil they're based in Jersey City. It's in your backyard.
Speaker 6: You should know this company literally in your backyard.
Speaker 3: I have no idea where they are. I'll have to
Speaker 3: look for their address. Who are they? What are they?
Speaker 3: They're up about four percent here year to date.
Speaker 8: So you can think of Varisk as this intermediary where
Speaker 8: they take a lot of the claims insurance data and
Speaker 8: then sell it back to the insurance company so that
Speaker 8: they can do a better job with their underwriting. And
Speaker 8: that is something that started years ago, I think in
Speaker 8: the seventies, where the insurance companies got together and said,
Speaker 8: if we pool our data and compare it, it will
Speaker 8: be much easier for us to underwrite accurately. And that's
Speaker 8: where this company kind of came to fruition. So Obviously,
Speaker 8: these data assets are extremely valuable, and it's pretty awesome
Speaker 8: when your customer actually provides the thing that you sell
Speaker 8: back to them. That's a pretty unique business model and
Speaker 8: there's a lot of regulatory barriers around that too. So again,
Speaker 8: this is a kind of quiet company that not a
Speaker 8: lot of people have heard about, but I would rate
Speaker 8: it as among the highest quality that we own.
Speaker 5: All right.
Speaker 6: So that's ticker VRSK up four percent year to date.
Speaker 6: A company that's flat year to date, Tyler Technologies. This
Speaker 6: is a company that's based in Roslin Heights, New York.
Speaker 6: It's twenty five billion dollar market cap. What's your view?
Speaker 8: So Tyler Technology sells software to municipalities, local governments, and
Speaker 8: a lot of these cities have this really big challenge
Speaker 8: right now where they don't they're not really able to
Speaker 8: actually have good IT staff and programmers on site, do
Speaker 8: not pay enough for that to really work for them,
Speaker 8: and many of the solutions that they have kind of
Speaker 8: cobbled together are homegrown solutions or companies that just don't
Speaker 8: even exist anymore. You know, Tyler is unique and that
Speaker 8: they have pretty modern software that they're selling to municipalities,
Speaker 8: but they really know this customer better than an oracle
Speaker 8: can ever speak to them. And so most of these
Speaker 8: cities are really being able to outsource a lot of
Speaker 8: their it to a company like Tyler, who can take
Speaker 8: that off their hands and run it, you know, in
Speaker 8: a successful way.
Speaker 3: You know, it's funny, there's been so much. In fact,
Speaker 3: there are a couple of columns on the Bloomberg today
Speaker 3: from our opinion team Julie about investing overseas versus continuing
Speaker 3: to invest in the United States. What's a smart thought
Speaker 3: about that? What are you doing for your investors? Are
Speaker 3: you expanding in terms of investments overseas? And just got
Speaker 3: about thirty seconds.
Speaker 2: Yeah.
Speaker 8: Absolutely. I think what we are seeing right now is
Speaker 8: just a function of Europe just got way too cheap
Speaker 8: relative to the US. I do think that there's renewed
Speaker 8: excitement and fiscal spending that's going to be happening, and
Speaker 8: so that could drive more economic growth. Right now, growth
Speaker 8: estimates are still better for the US than for Europe.
Speaker 8: But I think you should be diversified and have exposure
Speaker 8: to both.
Speaker 3: Okay, which were you maybe saying that six months ago
Speaker 3: or no, just quickly.
Speaker 8: I think, broadly speaking, I think you should have but
Speaker 8: you really weren't getting paid for having international exposure for
Speaker 8: the last like five six years, right, But I think
Speaker 8: it really.
Speaker 3: Makes sense now, all right, Really appreciate it. Jillie Beale,
Speaker 3: Chief Market Strategi's portfolio manager at Cain Anderson Rednick, joining
Speaker 3: us from Santa Monica, California.
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