1 00:00:02,640 --> 00:00:05,320 Speaker 1: Welcome to the Bloomberg Penel podcast. I'm Paul swing you, 2 00:00:05,360 --> 00:00:07,680 Speaker 1: along with my co host Lisa Brahma wits. Each day 3 00:00:07,720 --> 00:00:10,240 Speaker 1: we bring you the most noteworthy and useful interviews for 4 00:00:10,280 --> 00:00:12,520 Speaker 1: you and your money, whether at the grocery store or 5 00:00:12,560 --> 00:00:15,480 Speaker 1: the trading floor. Find a Bloomberg penl podcast on Apple 6 00:00:15,520 --> 00:00:17,959 Speaker 1: podcast or wherever you listen to podcasts, as well as 7 00:00:17,960 --> 00:00:24,840 Speaker 1: at Bloomberg dot com. Well, it certainly was a news 8 00:00:24,920 --> 00:00:28,840 Speaker 1: filled afternoon yesterday with the FED cutting rates by twenty 9 00:00:28,920 --> 00:00:31,639 Speaker 1: five basis points, and then the Q and a and 10 00:00:31,720 --> 00:00:35,400 Speaker 1: presentation by Chairman Pal which calls I think some uncertainty 11 00:00:35,400 --> 00:00:37,720 Speaker 1: with many investors in the marketplace to try to make 12 00:00:37,760 --> 00:00:40,520 Speaker 1: sense of it. We welcome our next guest, Christina Hooper. 13 00:00:40,960 --> 00:00:44,880 Speaker 1: Christina is a chief global market strategist for Investco based 14 00:00:44,920 --> 00:00:47,519 Speaker 1: here in York. Christina, you're joining us here on Bloomberg 15 00:00:47,520 --> 00:00:50,120 Speaker 1: Interactor Broker Studio. It's great to see you. What were 16 00:00:50,159 --> 00:00:54,440 Speaker 1: your takeaways yesterday from yesterday's testimony and Q and a 17 00:00:54,560 --> 00:00:57,880 Speaker 1: and all that. Well, there are a few key takeaways Paul. 18 00:00:58,080 --> 00:01:01,480 Speaker 1: First of all, it seems that the narrative is that 19 00:01:01,640 --> 00:01:05,440 Speaker 1: the last rate hike of two thousand eighteen was a mistake, 20 00:01:05,840 --> 00:01:09,160 Speaker 1: and we're giving that back, um, but that it doesn't 21 00:01:09,200 --> 00:01:13,399 Speaker 1: necessarily mean we're going to see any series of rate 22 00:01:13,480 --> 00:01:17,399 Speaker 1: cuts from here. Maybe one war. But J. Powell was 23 00:01:17,560 --> 00:01:21,240 Speaker 1: very clear and suggesting that this is an adjustment, not 24 00:01:21,400 --> 00:01:24,800 Speaker 1: a trend, and so that speaks volumes, but it does 25 00:01:24,880 --> 00:01:28,200 Speaker 1: also cause confusion in markets. I think the other key 26 00:01:28,240 --> 00:01:32,240 Speaker 1: takeaway was that the FET is confused because there are 27 00:01:32,319 --> 00:01:36,520 Speaker 1: so many different data points swirling around that suggests different things. 28 00:01:36,600 --> 00:01:41,920 Speaker 1: The dichotomy in the US economy strengthen the consumer, strengthened services, 29 00:01:41,959 --> 00:01:45,560 Speaker 1: but of course weakness in manufacturing, which really mirrors what 30 00:01:45,600 --> 00:01:50,360 Speaker 1: we're seeing globally. Um. Also just in general, we're seeing 31 00:01:50,360 --> 00:01:53,080 Speaker 1: a strong domestic economy for the most part, but we 32 00:01:53,160 --> 00:01:56,440 Speaker 1: have to worry about trade wars, and really there is 33 00:01:56,480 --> 00:02:00,000 Speaker 1: no playbook for trade wars. So a lot of people 34 00:02:00,160 --> 00:02:04,680 Speaker 1: said the VODO reserved disappointed markets. Yesterday you did see 35 00:02:04,720 --> 00:02:07,600 Speaker 1: US so often equities a bit of a sell often bonds. 36 00:02:07,960 --> 00:02:10,520 Speaker 1: Today we're seeing bonds rally and we're seeing two year 37 00:02:10,560 --> 00:02:13,800 Speaker 1: yields come in uh the most in a couple of weeks. 38 00:02:14,120 --> 00:02:17,240 Speaker 1: I'm trying to figure this out. Why. Well, I think 39 00:02:17,280 --> 00:02:22,280 Speaker 1: there's always that visceral knee jerk reaction, and then markets 40 00:02:22,360 --> 00:02:26,840 Speaker 1: take time to digest information, so they didn't necessarily get 41 00:02:26,919 --> 00:02:29,960 Speaker 1: what they wanted from the press conference. They seemed to 42 00:02:29,960 --> 00:02:33,079 Speaker 1: get what they wanted from the actual decision, but stock 43 00:02:33,160 --> 00:02:36,120 Speaker 1: started to go down when the press conference occurred, and 44 00:02:36,200 --> 00:02:39,000 Speaker 1: so it seems as though they were left feeling a 45 00:02:39,000 --> 00:02:42,519 Speaker 1: little empty. Because J. Powell UM insisted that this is 46 00:02:42,600 --> 00:02:45,119 Speaker 1: more of an adjustment rather than a trent. I say, 47 00:02:45,160 --> 00:02:47,800 Speaker 1: this feels like a relationship. You know, they wanted to 48 00:02:47,800 --> 00:02:51,920 Speaker 1: hear more, something more, what's what's the future? Well, it 49 00:02:52,000 --> 00:02:57,280 Speaker 1: is a relationship. Uh And and luckily though, um J. 50 00:02:57,480 --> 00:03:00,919 Speaker 1: Powell has colleagues on the FED, and so most likely 51 00:03:00,960 --> 00:03:03,160 Speaker 1: we're going to see Vice Chair Clara to come out 52 00:03:03,280 --> 00:03:07,560 Speaker 1: and clean up some of the comments and comfort markets. Um, 53 00:03:07,639 --> 00:03:11,359 Speaker 1: this is a relationship. So, Christina, is there anything that 54 00:03:11,639 --> 00:03:15,600 Speaker 1: happened yesterday or that will change how you guys view 55 00:03:15,880 --> 00:03:18,440 Speaker 1: the marketplace? Maybe? How yet, allocating some capital for the 56 00:03:18,440 --> 00:03:22,359 Speaker 1: remainder of the year, anything changed from yesterday? Nothing really changes, 57 00:03:22,639 --> 00:03:25,600 Speaker 1: but it does suggest that we are likely to see 58 00:03:25,760 --> 00:03:30,840 Speaker 1: more dollar strength um, and that really the FED has 59 00:03:31,000 --> 00:03:35,320 Speaker 1: paved the way for other central banks to start getting 60 00:03:35,360 --> 00:03:41,800 Speaker 1: more accommodative, so UM on the margins, though really not 61 00:03:42,000 --> 00:03:45,880 Speaker 1: a lot of change UM, just I would expect that 62 00:03:46,040 --> 00:03:49,600 Speaker 1: stronger dollar. I would expect UM something of a tilt 63 00:03:49,880 --> 00:03:55,200 Speaker 1: towards UH risk assets performing well in environment where the 64 00:03:55,280 --> 00:03:58,920 Speaker 1: Fed stands ready to be more accommodative if it needs to. 65 00:03:59,280 --> 00:04:02,880 Speaker 1: UM certainly, and balance sheet normalization a bit early was 66 00:04:02,920 --> 00:04:05,320 Speaker 1: a nod to the doves. So I think this is 67 00:04:05,320 --> 00:04:08,480 Speaker 1: an environment that all else being equal, favors risk assets. 68 00:04:08,600 --> 00:04:10,960 Speaker 1: What about emerging markets given the fact that you're expecting 69 00:04:10,960 --> 00:04:15,760 Speaker 1: the dollar to strengthen, So emerging markets could do well 70 00:04:15,800 --> 00:04:20,400 Speaker 1: in this environment in that the Fed has removed UM 71 00:04:20,640 --> 00:04:25,560 Speaker 1: one key headwind, which is balance sheet normalization. Recall that 72 00:04:25,640 --> 00:04:28,640 Speaker 1: was creating something of a liquidity suck for emerging market 73 00:04:28,800 --> 00:04:31,520 Speaker 1: So I think that actually this could pave the way 74 00:04:32,000 --> 00:04:36,520 Speaker 1: UM for for UM emerging markets to perform better. So 75 00:04:36,800 --> 00:04:39,479 Speaker 1: another news item that seems a narrative that seems to 76 00:04:39,520 --> 00:04:42,040 Speaker 1: be have been addressed a little bit this week, as trade. 77 00:04:42,480 --> 00:04:44,440 Speaker 1: It appears that you know what the U S trade 78 00:04:44,480 --> 00:04:47,960 Speaker 1: delegation going, and then coming back from Shanghai that it 79 00:04:48,000 --> 00:04:50,760 Speaker 1: appears that while there doesn't look like there's going to 80 00:04:50,800 --> 00:04:54,200 Speaker 1: be a deal immediately. At least there's just kicked this 81 00:04:54,320 --> 00:04:56,200 Speaker 1: can down the road, and maybe this might even be 82 00:04:56,200 --> 00:04:59,960 Speaker 1: a post election. Is that scenario from a trade perspec 83 00:05:00,760 --> 00:05:04,120 Speaker 1: enough for the markets right now? I think it's enough. 84 00:05:04,440 --> 00:05:06,440 Speaker 1: I think what we need to do, though, is watch 85 00:05:06,480 --> 00:05:10,839 Speaker 1: for any signs of a deterioration in the relationship. But luckily, 86 00:05:10,880 --> 00:05:15,799 Speaker 1: I think markets have begun to manage their own expectations 87 00:05:15,800 --> 00:05:18,600 Speaker 1: with this. I think there was way too much optimism. 88 00:05:18,680 --> 00:05:21,240 Speaker 1: I've always been a real pessimist when it comes to 89 00:05:21,240 --> 00:05:23,920 Speaker 1: the U S. China trade situation, and I think now 90 00:05:24,000 --> 00:05:27,960 Speaker 1: markets have come to again it's another relationship. Have come 91 00:05:28,000 --> 00:05:32,600 Speaker 1: to accept um diminished expectations for what could happen between 92 00:05:32,760 --> 00:05:35,760 Speaker 1: the US and China. However, if we see more tariffs 93 00:05:35,960 --> 00:05:39,120 Speaker 1: than I do, think that will send stocks lower and 94 00:05:39,160 --> 00:05:41,720 Speaker 1: really shape confidence. So we have the market on the 95 00:05:41,760 --> 00:05:45,200 Speaker 1: couch speaking with the therapist right now. UM. I do 96 00:05:45,279 --> 00:05:46,680 Speaker 1: want to know. You know a lot of people were 97 00:05:46,680 --> 00:05:50,160 Speaker 1: talking about J. Powell and that his performance was not great. 98 00:05:50,839 --> 00:05:55,400 Speaker 1: Do you agree? No? Actually, UM, what I would say 99 00:05:55,560 --> 00:05:59,279 Speaker 1: is that, uh, you know, quite often it is hard 100 00:05:59,560 --> 00:06:05,680 Speaker 1: to articulate a decision, uh, particularly one in which um, 101 00:06:05,720 --> 00:06:08,479 Speaker 1: there are so many factors at play. I actually felt 102 00:06:08,520 --> 00:06:11,640 Speaker 1: for him. Um. I certainly think Janet Yellen probably would 103 00:06:11,680 --> 00:06:14,960 Speaker 1: have done more in the way of preparation and would 104 00:06:15,040 --> 00:06:17,880 Speaker 1: have been very very scripted in her comments to make 105 00:06:17,920 --> 00:06:21,000 Speaker 1: sure there was nothing offhanded that was mentioned. But when 106 00:06:21,040 --> 00:06:25,520 Speaker 1: you think about UM J. Powell, he did try to articulate, um, 107 00:06:25,560 --> 00:06:27,960 Speaker 1: the kind of conflicts the FED had in terms of 108 00:06:28,120 --> 00:06:31,800 Speaker 1: what's looking positive and what's looking negative. And also I 109 00:06:31,839 --> 00:06:35,040 Speaker 1: think he really stood up for FED independence as well, 110 00:06:35,480 --> 00:06:39,080 Speaker 1: UM by making that stay. But he of course he does. 111 00:06:39,480 --> 00:06:41,560 Speaker 1: I mean he's act to say, yeah, actually we're going 112 00:06:41,640 --> 00:06:44,520 Speaker 1: a cave to what the president says. Lisa. Nothing is 113 00:06:44,560 --> 00:06:48,880 Speaker 1: a given in this environment. So I actually do think 114 00:06:49,000 --> 00:06:51,520 Speaker 1: that he had to to stand up and say that, 115 00:06:51,600 --> 00:06:54,080 Speaker 1: and he did, Uh, And I think he was quite 116 00:06:54,080 --> 00:06:58,040 Speaker 1: clear um not giving in. He could have been much 117 00:06:58,080 --> 00:07:00,799 Speaker 1: easier for him to say, you know, to to really 118 00:07:00,800 --> 00:07:02,920 Speaker 1: say nothing about this, but he tried to make sure 119 00:07:02,920 --> 00:07:05,280 Speaker 1: it was viewed as an adjustment because he doesn't want 120 00:07:05,320 --> 00:07:07,239 Speaker 1: to look like he's cow towing to the White House. 121 00:07:07,960 --> 00:07:10,640 Speaker 1: Christine is about thirty seconds left up. We're about halfway 122 00:07:10,640 --> 00:07:13,160 Speaker 1: through the earning season. What have you seen anything unusual? 123 00:07:14,040 --> 00:07:17,440 Speaker 1: I've seen again that phenomenon that managing expectations can be 124 00:07:17,440 --> 00:07:23,080 Speaker 1: a very good thing because while um earnings estimates were lowered, 125 00:07:23,440 --> 00:07:26,840 Speaker 1: now they're coming in meeting expectations or in some cases 126 00:07:26,880 --> 00:07:29,280 Speaker 1: beating them, and that has created something of a positive 127 00:07:29,320 --> 00:07:32,840 Speaker 1: sentiment in markets. Christina Hooper, thank you so much. We 128 00:07:32,960 --> 00:07:35,800 Speaker 1: love having you on. Thank you, thank you. Christina Hooper 129 00:07:35,880 --> 00:07:39,160 Speaker 1: is chief Global market strategist for investco Whish overseas nearly 130 00:07:39,200 --> 00:07:57,800 Speaker 1: a trillion dollars. This has been a mixed second quarter 131 00:07:57,920 --> 00:08:01,080 Speaker 1: earnings period for many company ease, but there is one 132 00:08:01,160 --> 00:08:04,440 Speaker 1: company that is doing a huge victory lap today and 133 00:08:04,480 --> 00:08:08,440 Speaker 1: that is Shopify, the darling of the Canadian tech world, 134 00:08:08,480 --> 00:08:12,640 Speaker 1: shares surging at ten today to a new record after 135 00:08:12,680 --> 00:08:15,560 Speaker 1: reporting better than expected earnings. We're lucky to have with 136 00:08:15,640 --> 00:08:20,600 Speaker 1: us now the chief operating officer of the firm, Harley Ficklstein. 137 00:08:20,760 --> 00:08:24,800 Speaker 1: He's uh, He's based in Ottawa, Ontario, in Canada. Harley, 138 00:08:24,840 --> 00:08:28,640 Speaker 1: congratulations and a very good earnings report and obviously the 139 00:08:28,840 --> 00:08:31,800 Speaker 1: shares are reflecting that. What was the main driver of 140 00:08:31,880 --> 00:08:35,079 Speaker 1: growth in the second quarter. Thanks so much for the 141 00:08:35,160 --> 00:08:37,280 Speaker 1: kind words and thanks for having me on your show. 142 00:08:37,520 --> 00:08:39,360 Speaker 1: I mean a couple of things are happening. One is 143 00:08:39,440 --> 00:08:41,959 Speaker 1: I think people are getting to realize what Shopflight actually 144 00:08:42,040 --> 00:08:44,319 Speaker 1: is doing. UM. I think for a long time we 145 00:08:44,320 --> 00:08:48,040 Speaker 1: were known as this this very popular e commerce provider 146 00:08:48,080 --> 00:08:51,480 Speaker 1: to help merchants build online stores. And I believe with 147 00:08:51,520 --> 00:08:54,080 Speaker 1: the release of things like Shopslight Capital or point of 148 00:08:54,080 --> 00:08:56,760 Speaker 1: sale offering, which is now in a hundred thousand stores, UH, 149 00:08:56,800 --> 00:08:59,000 Speaker 1: these shop Flight of film and network that we've recently announced, 150 00:08:59,240 --> 00:09:01,520 Speaker 1: people get into realize that we're actually building here is 151 00:09:02,320 --> 00:09:06,720 Speaker 1: the first global retail operating system for for businesses both 152 00:09:06,800 --> 00:09:09,200 Speaker 1: big and and and very small. UH. And I think 153 00:09:09,320 --> 00:09:11,400 Speaker 1: part of the part of that is finally coming to 154 00:09:11,760 --> 00:09:14,040 Speaker 1: people are being to realize that now after uh, sort 155 00:09:14,040 --> 00:09:15,840 Speaker 1: of putting all the pieces together over the last couple 156 00:09:15,880 --> 00:09:17,840 Speaker 1: of years. So hardly in the quarter I'm just looking 157 00:09:17,880 --> 00:09:21,040 Speaker 1: at the quarterly numbers, internationals called out as an area 158 00:09:21,080 --> 00:09:23,520 Speaker 1: of growth. What's driving the international growth for you guys? 159 00:09:24,720 --> 00:09:27,320 Speaker 1: So I think Shopify, just by virtue of the fact 160 00:09:27,320 --> 00:09:30,040 Speaker 1: that we were online, you know, our an internet company, 161 00:09:30,160 --> 00:09:33,960 Speaker 1: we've always had merchants in in UH, in a global 162 00:09:34,160 --> 00:09:36,040 Speaker 1: in a global reach. We've had merchants in hunter seventy 163 00:09:36,040 --> 00:09:38,320 Speaker 1: five countries. UH. Even at the time of our I 164 00:09:38,400 --> 00:09:41,319 Speaker 1: PO back into thousands fifteen. What's changed though in the 165 00:09:41,400 --> 00:09:44,880 Speaker 1: last twelve eight months is a couple of things. We 166 00:09:44,920 --> 00:09:48,640 Speaker 1: realized that even though we have merchants in places like Japan, Singapore, 167 00:09:48,720 --> 00:09:52,040 Speaker 1: in Germany and France, we didn't actually have true product 168 00:09:52,120 --> 00:09:55,520 Speaker 1: market fit for those merchants, meaning the Shopify admin where 169 00:09:55,520 --> 00:09:57,880 Speaker 1: the merchants run their store, run their businesses, that was 170 00:09:57,920 --> 00:10:00,560 Speaker 1: only in English, and last year we we translated it 171 00:10:00,559 --> 00:10:02,240 Speaker 1: into a number of languages. Now it's it's close to 172 00:10:02,320 --> 00:10:05,240 Speaker 1: nineteen languages, so merchants that don't speak English can also 173 00:10:05,240 --> 00:10:07,800 Speaker 1: you Shopify today. We also went ahead and begin to 174 00:10:07,920 --> 00:10:10,040 Speaker 1: did We did a deeper dive figuring out what are 175 00:10:10,080 --> 00:10:13,800 Speaker 1: the nuances of what merchants need in each particular geography. So, 176 00:10:13,880 --> 00:10:17,280 Speaker 1: for example, in a place like Germany, credit card penetration 177 00:10:17,400 --> 00:10:18,959 Speaker 1: and credit card usage is not as high as in 178 00:10:19,000 --> 00:10:21,640 Speaker 1: the US, debit cards are a lot more popular. So 179 00:10:21,720 --> 00:10:24,040 Speaker 1: beyond just the translation, we began to figure out what 180 00:10:24,080 --> 00:10:27,439 Speaker 1: those merchants need there from a payment perspective, from integration perspective. 181 00:10:27,760 --> 00:10:31,360 Speaker 1: And then finally we also created and began to develop 182 00:10:31,480 --> 00:10:35,480 Speaker 1: our international Shopify partner community. We began going to these countries, 183 00:10:35,480 --> 00:10:39,680 Speaker 1: and cultivating relationships and partnerships with agencies and freelancers who 184 00:10:39,760 --> 00:10:42,319 Speaker 1: not only refer merchants to Shopify, and I mentioned on 185 00:10:42,360 --> 00:10:45,040 Speaker 1: the call more than twenty two thousand partners orfer business 186 00:10:45,040 --> 00:10:47,280 Speaker 1: of Shopify in the last twelve months, but beyond that 187 00:10:47,440 --> 00:10:51,520 Speaker 1: are now building applications and and integrations for merchants in 188 00:10:51,559 --> 00:10:54,160 Speaker 1: those locations that are particularly relevant to the needs of 189 00:10:54,200 --> 00:10:57,079 Speaker 1: merchants in places like Japan or Germany or France and 190 00:10:57,200 --> 00:10:59,520 Speaker 1: all that. All that has led to us having the 191 00:10:59,559 --> 00:11:02,040 Speaker 1: largest because of international merchants today that we've ever had. 192 00:11:02,480 --> 00:11:05,560 Speaker 1: So the numbers are pretty impressive. Revenue grew forty eight 193 00:11:05,679 --> 00:11:10,599 Speaker 1: percent according to the statement and analysts for projecting a 194 00:11:10,640 --> 00:11:16,760 Speaker 1: three hundred and fifty point five million dollar revenue. Sounds amazing, right, increase, 195 00:11:16,880 --> 00:11:20,000 Speaker 1: Yet it is the slowest in shop fives four years 196 00:11:20,000 --> 00:11:22,360 Speaker 1: as a listed company. And I'm wondering whether you're the 197 00:11:22,400 --> 00:11:24,360 Speaker 1: slowdown is due to just the fact that you're maturing 198 00:11:24,760 --> 00:11:27,480 Speaker 1: as a company, or whether this has to do with 199 00:11:27,600 --> 00:11:29,720 Speaker 1: just sort of the global macro backdrop and some of 200 00:11:29,760 --> 00:11:32,880 Speaker 1: these slow in growth. Yeah, look, we think, you know, 201 00:11:32,920 --> 00:11:35,800 Speaker 1: growing revenue at our size almost fifty percent, we think 202 00:11:35,840 --> 00:11:39,360 Speaker 1: is really great. We also saw g m V growth 203 00:11:39,440 --> 00:11:42,680 Speaker 1: beyond so g m V for the for the second 204 00:11:42,720 --> 00:11:47,120 Speaker 1: quarter was almost fourteen billion, which again is greater than 205 00:11:47,200 --> 00:11:51,120 Speaker 1: last year. Uh. Frankly, because we're so distributed and we're 206 00:11:51,240 --> 00:11:53,240 Speaker 1: we have merchants all over the world. Um, you know, 207 00:11:53,280 --> 00:11:56,600 Speaker 1: obviously some macro trends will affect us, but but generally 208 00:11:56,679 --> 00:11:59,520 Speaker 1: we think that there's huge opportunities for us, not just internationally, 209 00:11:59,559 --> 00:12:02,079 Speaker 1: but also with our existing merchants. We've been eight hundred 210 00:12:02,080 --> 00:12:05,280 Speaker 1: thousand merchants now and figure out ways to expand what 211 00:12:05,360 --> 00:12:08,040 Speaker 1: they use from us, whether it's capital. We've given out 212 00:12:08,040 --> 00:12:11,199 Speaker 1: more than six thirty million dollars of cash advances to merchants, 213 00:12:11,200 --> 00:12:13,599 Speaker 1: helping them now with filment and shipping, helping them with 214 00:12:13,640 --> 00:12:15,720 Speaker 1: fraud protection. We think that not only can we get 215 00:12:15,760 --> 00:12:17,880 Speaker 1: way more merchants, but the merchant we already have, we 216 00:12:17,920 --> 00:12:20,480 Speaker 1: can also expand the services that we provide for them 217 00:12:20,640 --> 00:12:23,280 Speaker 1: and and and make Shopify much more relevant to their 218 00:12:23,320 --> 00:12:26,240 Speaker 1: their their business. Harley, what's the risk to your story? 219 00:12:26,280 --> 00:12:29,600 Speaker 1: What's the bear case? Look? I think for a while 220 00:12:29,679 --> 00:12:31,640 Speaker 1: people were a little nervous that some of the merchants 221 00:12:31,640 --> 00:12:34,640 Speaker 1: coming on to Shopify. We're small businesses and not all 222 00:12:34,679 --> 00:12:38,040 Speaker 1: some small small businesses succeed. We know that, and actually 223 00:12:38,080 --> 00:12:40,320 Speaker 1: we think that that's okay. The way that we look 224 00:12:40,360 --> 00:12:42,320 Speaker 1: at it from a business perspective is we want to 225 00:12:42,360 --> 00:12:45,040 Speaker 1: create the largest top of final possible. We want anyone 226 00:12:45,040 --> 00:12:48,280 Speaker 1: that has an aspiration or an ambition to build a 227 00:12:48,320 --> 00:12:51,400 Speaker 1: startup or a business or a small a small retailer 228 00:12:51,440 --> 00:12:53,760 Speaker 1: to do so on Shopify, and we acknowledge not all 229 00:12:53,800 --> 00:12:56,040 Speaker 1: will succeed. What's important to us, though, is that the 230 00:12:56,080 --> 00:12:59,000 Speaker 1: ones that do succeed offset the cost of those that don't, 231 00:12:59,160 --> 00:13:01,120 Speaker 1: and that certainly is happening with us, and we've we've 232 00:13:01,120 --> 00:13:03,280 Speaker 1: been seeing that for a number of years. And then 233 00:13:03,520 --> 00:13:06,599 Speaker 1: the other piece of it is retail in general is 234 00:13:06,600 --> 00:13:08,800 Speaker 1: getting far more complicated. So now you're you know, we're 235 00:13:08,800 --> 00:13:12,800 Speaker 1: seeing companies like Instagram create create new new retail channels. 236 00:13:12,840 --> 00:13:16,000 Speaker 1: We're seeing new marketplaces pop up, We're seeing accelerated check 237 00:13:16,000 --> 00:13:18,600 Speaker 1: out with things like shopify pay and Apple Pay. The 238 00:13:18,679 --> 00:13:21,520 Speaker 1: more that retail becomes complicated for a small business, we 239 00:13:21,559 --> 00:13:24,120 Speaker 1: think the value of shop of that increases because shop 240 00:13:24,160 --> 00:13:26,040 Speaker 1: if I can allow you to sell anywhere you want 241 00:13:26,080 --> 00:13:28,960 Speaker 1: online or offline, or on marketplaces or on Instagram, but 242 00:13:29,040 --> 00:13:31,560 Speaker 1: it all feeds back from one centralized back office. And 243 00:13:31,600 --> 00:13:34,199 Speaker 1: so I would say that even though complexity and the 244 00:13:34,280 --> 00:13:36,679 Speaker 1: challenge of a retail needs to grow, we continue to 245 00:13:36,720 --> 00:13:38,880 Speaker 1: bend that learning curve. And and that's really what we're 246 00:13:38,920 --> 00:13:41,400 Speaker 1: focused on. We think there's an opportunity for us at 247 00:13:41,480 --> 00:13:45,319 Speaker 1: a macro global scale to be the entrepreneurship company. There 248 00:13:45,400 --> 00:13:48,120 Speaker 1: isn't a company out there right now that truly owns entrepreneurship, 249 00:13:48,400 --> 00:13:49,840 Speaker 1: and we think we have the best shot at doing 250 00:13:49,840 --> 00:13:51,959 Speaker 1: that of anyone UM And and and so that's what we're 251 00:13:51,960 --> 00:13:54,520 Speaker 1: focused on today. Harley, thank you so much for your 252 00:13:54,559 --> 00:13:56,920 Speaker 1: comments and reviewing the quarter with us and the kind 253 00:13:56,920 --> 00:13:59,640 Speaker 1: of the outlook for the company. Hardly Finglestein, chief operating 254 00:13:59,640 --> 00:14:02,480 Speaker 1: officer for Shopify, thanks for joining us. I'm just looking 255 00:14:02,480 --> 00:14:05,920 Speaker 1: at the consensus numbers on the Bloomberg terminal um you know, 256 00:14:05,960 --> 00:14:09,720 Speaker 1: looking for revenue group about sixty percent last year, gonna 257 00:14:09,760 --> 00:14:14,199 Speaker 1: grow forecast at over this year and then overt uh 258 00:14:14,320 --> 00:14:16,920 Speaker 1: next year. And the company has gone from IBATA negative 259 00:14:17,559 --> 00:14:21,440 Speaker 1: to forecast at EBA positive in nineteen. So the company 260 00:14:21,920 --> 00:14:25,480 Speaker 1: seems to be making the pivot here and clearly the 261 00:14:25,480 --> 00:14:27,480 Speaker 1: stock up about a d and fifty percent this year. 262 00:14:27,880 --> 00:14:31,960 Speaker 1: Investors clearly paying up for this stock. This is Bloomberg. 263 00:14:48,280 --> 00:14:50,880 Speaker 1: I remember a time when people thought that hil bonds 264 00:14:50,880 --> 00:14:54,120 Speaker 1: were gonna lose money, but instead they've just continued their 265 00:14:54,200 --> 00:14:57,360 Speaker 1: gravy train. This year. You see returns of ten and 266 00:14:57,400 --> 00:15:01,120 Speaker 1: a half percent for the US junk bonds year to date. 267 00:15:01,200 --> 00:15:04,680 Speaker 1: The question did the Fed just give them another leg 268 00:15:04,760 --> 00:15:07,360 Speaker 1: to go? Here? Andrew Feltis is joining us here in 269 00:15:07,360 --> 00:15:10,240 Speaker 1: our Blomberg Interactive Broker Studios. He's co director of Global 270 00:15:10,320 --> 00:15:14,080 Speaker 1: High Yield for a Moony Pioneer, which oversees about eighty 271 00:15:14,120 --> 00:15:17,960 Speaker 1: billion dollars. Andrew, wonderful having you. So, what do you 272 00:15:18,000 --> 00:15:21,040 Speaker 1: think what's going to be the full year total return 273 00:15:21,440 --> 00:15:26,560 Speaker 1: for US hiled bonds. That's a loaded question, but here 274 00:15:27,600 --> 00:15:31,200 Speaker 1: the bulk of the spread tikings probably occurred, but the 275 00:15:31,240 --> 00:15:33,680 Speaker 1: faults are low. You're still get a pretty good yield. 276 00:15:33,720 --> 00:15:35,560 Speaker 1: So I think we're about ten ten and a half 277 00:15:35,680 --> 00:15:38,760 Speaker 1: right now. Probably will continue to clip that coupon, and 278 00:15:38,840 --> 00:15:41,560 Speaker 1: I think it's an environment we're choosing. The right security 279 00:15:41,600 --> 00:15:43,800 Speaker 1: has gonna matter a lot more, so we think we 280 00:15:43,840 --> 00:15:47,800 Speaker 1: can add some value in that side. Fourteen fifteen sounds 281 00:15:47,800 --> 00:15:50,080 Speaker 1: about right, Wow, Andrew, what did you did you hear 282 00:15:50,120 --> 00:15:53,640 Speaker 1: anything yesterday from the FED chairman Pal that makes you 283 00:15:53,840 --> 00:15:56,280 Speaker 1: change at all? Shade at all? How you guys are 284 00:15:56,280 --> 00:15:59,520 Speaker 1: looking at the market, So our our concern is more 285 00:15:59,560 --> 00:16:03,440 Speaker 1: about the market reaction. I think we're consistent with what 286 00:16:03,560 --> 00:16:05,880 Speaker 1: the FED sees. The economy is in good shape. We 287 00:16:05,880 --> 00:16:08,320 Speaker 1: don't see a lot of risks here in the us UH. 288 00:16:08,360 --> 00:16:10,840 Speaker 1: Internationally there's more risks, and that seems to be hitting 289 00:16:10,880 --> 00:16:14,880 Speaker 1: trade and other issues. But the curve is inverted, and 290 00:16:14,960 --> 00:16:17,520 Speaker 1: openly that's going to cause banks to change their behavior 291 00:16:17,560 --> 00:16:21,400 Speaker 1: and that could lead openly to a recession. Now we 292 00:16:21,440 --> 00:16:24,240 Speaker 1: think the FED will probably cut again, but the Fed 293 00:16:24,440 --> 00:16:27,480 Speaker 1: was to keep that curve inverted. The longer it stays inverted, 294 00:16:27,560 --> 00:16:30,040 Speaker 1: the more risk there is of a negative outcome. So 295 00:16:30,120 --> 00:16:32,640 Speaker 1: at this point we haven't changed our views, but we're 296 00:16:32,640 --> 00:16:37,880 Speaker 1: monitoring the situation closely. So whenever hil bonds rallied, there 297 00:16:37,920 --> 00:16:40,840 Speaker 1: are the slews of nervous nellies that come out and 298 00:16:40,880 --> 00:16:44,640 Speaker 1: say the end is nigh and this means that everything 299 00:16:44,720 --> 00:16:46,880 Speaker 1: is going to go to pot next year when we 300 00:16:47,040 --> 00:16:49,960 Speaker 1: face a day of reckoning. What gives you comfort that 301 00:16:50,000 --> 00:16:53,040 Speaker 1: we're not just setting ourselves up for some sort of 302 00:16:53,840 --> 00:16:58,160 Speaker 1: publicious frabie beer goggle type behavior. Well, that's great question 303 00:16:58,240 --> 00:17:02,600 Speaker 1: list at least uh The first thing that most comfortable 304 00:17:02,600 --> 00:17:05,480 Speaker 1: with is we're not seeing a lot of excess activity. 305 00:17:05,520 --> 00:17:07,840 Speaker 1: So when I do see risky bonds, they tend to 306 00:17:07,840 --> 00:17:12,320 Speaker 1: be getting priced very uh wide, So we're not underwriting 307 00:17:12,320 --> 00:17:14,040 Speaker 1: a lot of bad deals, and you actually see the 308 00:17:14,080 --> 00:17:17,320 Speaker 1: average credit qualities improving. There's more double b s, there's 309 00:17:17,359 --> 00:17:19,960 Speaker 1: less triple cs. We don't see l B o s 310 00:17:20,000 --> 00:17:23,240 Speaker 1: coming into the market, so quality is very high. Actually, 311 00:17:23,320 --> 00:17:25,679 Speaker 1: the average credit ratings the highest we've ever seen it 312 00:17:25,720 --> 00:17:27,520 Speaker 1: in the high yale market. So what does that start 313 00:17:27,560 --> 00:17:31,200 Speaker 1: to cheerating as companies take advantage of this borrowing environment, 314 00:17:31,240 --> 00:17:33,080 Speaker 1: so you'd see you have to see triple cs be 315 00:17:33,119 --> 00:17:35,119 Speaker 1: able to come into the market, more l B o s, 316 00:17:35,760 --> 00:17:39,440 Speaker 1: but also the pricing get much lower. And the problem 317 00:17:39,560 --> 00:17:41,040 Speaker 1: is if you do in a triple ce and you've 318 00:17:41,040 --> 00:17:44,560 Speaker 1: gotta pay ten per cent, you really can't refi a 319 00:17:44,840 --> 00:17:47,760 Speaker 1: LBO type structure and make money with that type of return. 320 00:17:47,960 --> 00:17:50,560 Speaker 1: So it's really limiting the type of bad deals are 321 00:17:50,600 --> 00:17:53,080 Speaker 1: getting done in the market. So it gives a sense 322 00:17:53,119 --> 00:17:54,879 Speaker 1: of the new issue market. It seems like if I 323 00:17:54,960 --> 00:17:58,840 Speaker 1: had any capital needs whatsoever. Uh, you know, I would 324 00:17:58,880 --> 00:18:02,240 Speaker 1: just love to access the high yield market given where 325 00:18:02,400 --> 00:18:05,800 Speaker 1: rates are. Are you singing issuance pick up? So we're 326 00:18:05,840 --> 00:18:09,440 Speaker 1: actually on track for a record month in July. About 327 00:18:09,480 --> 00:18:11,760 Speaker 1: a quarter of that comes from one single deal, so 328 00:18:11,800 --> 00:18:14,760 Speaker 1: that that's a bit of a one off, but generally 329 00:18:15,560 --> 00:18:18,480 Speaker 1: that was the Diamond Sports. So those are the Disney 330 00:18:18,800 --> 00:18:24,400 Speaker 1: Regional Sports and that Cereal. Yeah exactly, and you get 331 00:18:24,720 --> 00:18:27,880 Speaker 1: now that deal one over great, right, Well, all these 332 00:18:27,920 --> 00:18:31,399 Speaker 1: deals have done well. All the higher quality deals have 333 00:18:31,480 --> 00:18:34,560 Speaker 1: done really well. Uh So, if you're a double B company, 334 00:18:34,600 --> 00:18:37,080 Speaker 1: which means you don't have too much leverage, you're in 335 00:18:37,080 --> 00:18:40,719 Speaker 1: your one notch below investment grade, you can get financed 336 00:18:40,720 --> 00:18:44,600 Speaker 1: at five to six percent. That's pretty aggressively. The guys 337 00:18:44,640 --> 00:18:47,200 Speaker 1: that they will ultimately lead to a bubble that lead 338 00:18:47,240 --> 00:18:49,440 Speaker 1: you to lose money, and not just on a market 339 00:18:49,560 --> 00:18:52,760 Speaker 1: market basis, our permanent impairman default Those are the triple 340 00:18:52,840 --> 00:18:55,560 Speaker 1: see you guys and those you know, you monitor the 341 00:18:55,600 --> 00:18:58,159 Speaker 1: amount of issuance in there and like what kind of 342 00:18:58,160 --> 00:19:01,440 Speaker 1: pricing and if people are not being paid for default risk, 343 00:19:01,720 --> 00:19:04,040 Speaker 1: that's when you start getting worried about a bubble, and 344 00:19:04,080 --> 00:19:05,919 Speaker 1: we just don't see that type of behavior going on. 345 00:19:06,000 --> 00:19:08,480 Speaker 1: The market's been very disciplined, so that gives us a 346 00:19:08,520 --> 00:19:11,359 Speaker 1: certain level of confidence. How do you go about selecting 347 00:19:11,400 --> 00:19:15,080 Speaker 1: securities in this environment since it does become that, Yeah, 348 00:19:15,119 --> 00:19:17,200 Speaker 1: it's just rolling up your sleeves and doing hard work, 349 00:19:17,320 --> 00:19:21,480 Speaker 1: so modeling the company's talking to management, understanding the business models. 350 00:19:21,840 --> 00:19:24,679 Speaker 1: And then most importantly, you have to look at covenants, 351 00:19:25,160 --> 00:19:27,320 Speaker 1: right because that's if something goes wrong, the covenants are 352 00:19:27,320 --> 00:19:33,160 Speaker 1: there to protect you in anymore. That's keep hearing exactly, 353 00:19:33,200 --> 00:19:35,600 Speaker 1: and that's become reality. But it's something you do have 354 00:19:35,640 --> 00:19:38,320 Speaker 1: to pay attention to because in the next recession those 355 00:19:38,359 --> 00:19:40,280 Speaker 1: type of things will matter. Any names that you can 356 00:19:40,320 --> 00:19:44,639 Speaker 1: throw up, I'm not a BA exactly, So what it 357 00:19:44,640 --> 00:19:47,800 Speaker 1: just gives a sense of kind of leverage where you know, 358 00:19:47,840 --> 00:19:50,320 Speaker 1: I think about the media industry and that can you 359 00:19:50,359 --> 00:19:53,919 Speaker 1: can borrow money at you know, five six times leverage 360 00:19:53,960 --> 00:19:55,919 Speaker 1: maybe even a little bit higher where we're just in 361 00:19:55,960 --> 00:19:58,040 Speaker 1: terms of leverage in your mind. So you know, first 362 00:19:58,080 --> 00:20:01,280 Speaker 1: all the rating seas have been pretty steady on this. 363 00:20:01,359 --> 00:20:04,560 Speaker 1: So if I look at Double be in two thousand nineteen, 364 00:20:05,359 --> 00:20:07,440 Speaker 1: same type of average leverage that you've see in two 365 00:20:07,440 --> 00:20:10,800 Speaker 1: thousand nine two eight, so that they have not done 366 00:20:10,800 --> 00:20:12,520 Speaker 1: what they did in the housing market where they just 367 00:20:12,560 --> 00:20:16,320 Speaker 1: completely abandoned all standards. So it depends on the business. 368 00:20:16,560 --> 00:20:18,600 Speaker 1: You know, if you are a less cyclical business like 369 00:20:18,640 --> 00:20:21,080 Speaker 1: a utility, you can leverage a little bit more than 370 00:20:21,119 --> 00:20:23,440 Speaker 1: you can So single bees are more than that five 371 00:20:23,480 --> 00:20:26,679 Speaker 1: to six territory, while your average double be is going 372 00:20:26,760 --> 00:20:28,720 Speaker 1: to be more than that three to four type area. 373 00:20:28,880 --> 00:20:32,879 Speaker 1: So what's the argument. If credit is good or not bad, 374 00:20:33,080 --> 00:20:34,800 Speaker 1: and the FED is supportive of the market, why not 375 00:20:34,880 --> 00:20:38,200 Speaker 1: just invest in stocks and and rates? Why go to 376 00:20:38,440 --> 00:20:41,879 Speaker 1: entire bonus? So the beauty of high yield is you 377 00:20:41,920 --> 00:20:45,160 Speaker 1: get paid to weight. So if we are moving sideways 378 00:20:45,800 --> 00:20:49,920 Speaker 1: marketing pitch. So if we move sideways in the economy, 379 00:20:49,920 --> 00:20:52,680 Speaker 1: we're not growing profits, We're not growing the top line. 380 00:20:52,840 --> 00:20:54,879 Speaker 1: These guys can pay their bills. So you clip your 381 00:20:54,960 --> 00:20:58,520 Speaker 1: cupon and you make your six seven, which is probably 382 00:20:58,520 --> 00:21:00,920 Speaker 1: pretty close to what you get an equity these days 383 00:21:00,960 --> 00:21:03,800 Speaker 1: for equities style perform, And look, we want equities outperformed 384 00:21:03,800 --> 00:21:06,000 Speaker 1: because it makes our job easier. It's another source of 385 00:21:06,040 --> 00:21:08,960 Speaker 1: capital for our companies. So there's load defaults when equities 386 00:21:08,960 --> 00:21:11,280 Speaker 1: are going up. But equity guys need to grow that 387 00:21:11,320 --> 00:21:14,240 Speaker 1: top line. They need to have improving profits. Margins are 388 00:21:14,280 --> 00:21:17,440 Speaker 1: at great levels now, but it's really hard to expand margins. 389 00:21:17,480 --> 00:21:20,480 Speaker 1: You know. Now we did the tax reform, that's not 390 00:21:20,560 --> 00:21:23,040 Speaker 1: off the table. You really need to have growth, and 391 00:21:23,240 --> 00:21:25,520 Speaker 1: we think you're gonna get growth, but it's a much 392 00:21:25,560 --> 00:21:29,160 Speaker 1: harder environment to get that profit growth. So high yield 393 00:21:29,280 --> 00:21:31,520 Speaker 1: is something that will give you that cupin and really 394 00:21:31,560 --> 00:21:34,719 Speaker 1: help balance your portfolio up anything else, tu, I mean, 395 00:21:34,720 --> 00:21:37,880 Speaker 1: this is fixed income, this is high yield. Basically, I'm 396 00:21:37,920 --> 00:21:40,520 Speaker 1: not gonna engaged, just real quick. How long can this 397 00:21:40,600 --> 00:21:43,240 Speaker 1: go on? The good times? This can go on until 398 00:21:43,320 --> 00:21:46,480 Speaker 1: somebody makes a mistake. So whether that's the FED, whether 399 00:21:46,560 --> 00:21:49,639 Speaker 1: that's a fiscal policy, whether that's something on the regulatory front, 400 00:21:49,720 --> 00:21:54,840 Speaker 1: on the trade front, but until uh, someone makes a mistake, 401 00:21:55,119 --> 00:21:58,640 Speaker 1: this can go on forever. Probably won't, but I can. 402 00:21:59,200 --> 00:22:02,240 Speaker 1: Music is just class, that's right. Andrew Felt is co 403 00:22:02,320 --> 00:22:04,960 Speaker 1: director of Global high Yield at a Mundy Pioneer. Thank 404 00:22:05,000 --> 00:22:07,000 Speaker 1: you so much for joining us on our Bloomberg Interactive 405 00:22:07,040 --> 00:22:10,200 Speaker 1: Broker studio talking all things high yield. And again, I 406 00:22:10,240 --> 00:22:13,679 Speaker 1: think still if we're hearing from Andrew. Still a constructive market, 407 00:22:13,960 --> 00:22:17,720 Speaker 1: US four turns in a year that's plaised to be 408 00:22:17,800 --> 00:22:20,040 Speaker 1: one of the best years since they're recovery from the 409 00:22:20,080 --> 00:22:37,520 Speaker 1: financial crisis. Well after a two year slowdown, solar energy 410 00:22:37,560 --> 00:22:40,360 Speaker 1: in America is apparently taking off again. To figure out 411 00:22:40,359 --> 00:22:42,639 Speaker 1: what's going on there, we welcome Hugh Bromley. Hugh is 412 00:22:42,680 --> 00:22:46,000 Speaker 1: a solar market analyst for Bloomberg New Energy financi joins 413 00:22:46,040 --> 00:22:48,240 Speaker 1: us here in a Bloomberg eleven three oh studio. Hugh, 414 00:22:48,280 --> 00:22:50,199 Speaker 1: thanks so much for joining us. Just give us, if 415 00:22:50,240 --> 00:22:54,000 Speaker 1: you will, kind of the state of the solar energy 416 00:22:54,040 --> 00:22:56,359 Speaker 1: market in the US right now. Yeah, sures you really 417 00:22:56,480 --> 00:22:58,359 Speaker 1: think about it as a couple of different markets. First 418 00:22:58,359 --> 00:23:01,320 Speaker 1: of all, the rooftop market homes of businesses buying solar, 419 00:23:01,600 --> 00:23:03,680 Speaker 1: and that's really been slowing down the last couple of years. 420 00:23:03,760 --> 00:23:05,720 Speaker 1: A couple of reasons for that. One. There was a 421 00:23:05,720 --> 00:23:08,840 Speaker 1: little bit of a consumer uncertainty on the back of 422 00:23:08,840 --> 00:23:11,960 Speaker 1: some regulatory change, mostly at the state level. Uh. And 423 00:23:12,000 --> 00:23:14,200 Speaker 1: then also kind of investor where you know, it's following 424 00:23:14,200 --> 00:23:16,199 Speaker 1: a couple of bankruptcies a few years ago, kind of 425 00:23:16,200 --> 00:23:20,160 Speaker 1: investors pulling back, questioning their their investments the solar companies 426 00:23:20,200 --> 00:23:21,920 Speaker 1: and saying don't grow so fast. We want to see 427 00:23:21,920 --> 00:23:25,520 Speaker 1: profits rather than unsustainable growth. Both of those in cumbinations 428 00:23:25,520 --> 00:23:28,399 Speaker 1: slowed down that rooftop market in utility scale. It's all 429 00:23:28,400 --> 00:23:31,880 Speaker 1: about subsidy. There was a threat that federal subsidy would 430 00:23:31,880 --> 00:23:33,400 Speaker 1: have been removed a couple of years ago, a lot 431 00:23:33,400 --> 00:23:36,520 Speaker 1: of builder as a result, and then when it finally 432 00:23:36,600 --> 00:23:38,320 Speaker 1: was extended, this wasn't enough products to build in the 433 00:23:38,400 --> 00:23:40,399 Speaker 1: last two years. So the market has slowed down just 434 00:23:40,440 --> 00:23:43,240 Speaker 1: because there's not enough land ready ready to move forward 435 00:23:43,680 --> 00:23:46,520 Speaker 1: um across the board though, although all those elements, all 436 00:23:46,560 --> 00:23:48,560 Speaker 1: those market sectors are ready to kind of start to 437 00:23:48,600 --> 00:23:53,360 Speaker 1: start rebounding now um were the the the consumer unease 438 00:23:53,600 --> 00:23:56,520 Speaker 1: or or uncertainty is certainly wearing off, and we're starting 439 00:23:56,520 --> 00:23:58,760 Speaker 1: to see many many of the state markets former former 440 00:23:58,920 --> 00:24:02,160 Speaker 1: large solo markets could cover. So it's interesting to hear 441 00:24:02,200 --> 00:24:04,600 Speaker 1: you talk about and the hardware of this, basically the 442 00:24:04,600 --> 00:24:08,320 Speaker 1: solar panels for example, and then also the utilities that 443 00:24:08,359 --> 00:24:11,520 Speaker 1: rely on solar energy. And I'm just I'm wondering how 444 00:24:11,640 --> 00:24:15,280 Speaker 1: much the success or failure of these companies hinges on 445 00:24:15,520 --> 00:24:19,800 Speaker 1: subsidies from the government. Or incentive programs versus just being 446 00:24:19,880 --> 00:24:22,520 Speaker 1: economic at their own rate. Sure, so it's a big 447 00:24:22,600 --> 00:24:25,280 Speaker 1: question right now because those same federal subsidies that were 448 00:24:25,280 --> 00:24:27,200 Speaker 1: thought to have that may have expired a few years 449 00:24:27,240 --> 00:24:30,399 Speaker 1: ago and worltimate extandard are now stepping out of the 450 00:24:30,440 --> 00:24:32,359 Speaker 1: next few years. A lot of lobbying if it's underway 451 00:24:32,400 --> 00:24:36,080 Speaker 1: again to extend those those subsidies. But many players would 452 00:24:36,119 --> 00:24:38,800 Speaker 1: argue they're not required anymore. Certainly for your large utility 453 00:24:38,800 --> 00:24:42,560 Speaker 1: scale projects that are the supplying supplying our bulk power needs. 454 00:24:43,040 --> 00:24:45,560 Speaker 1: Um those projects with the energy from those products could 455 00:24:45,600 --> 00:24:48,840 Speaker 1: be competitive in many com many cases without subsidy. Certainly, 456 00:24:48,880 --> 00:24:51,520 Speaker 1: project finance heres would love those subducting out of the way. 457 00:24:51,760 --> 00:24:55,000 Speaker 1: In many cases, they distort pricing, make deals much more 458 00:24:55,000 --> 00:24:58,640 Speaker 1: complicated to to to to arrange and to transact upon. 459 00:24:59,560 --> 00:25:02,640 Speaker 1: In small scaling rooftop markets, those vendors, the large venders 460 00:25:02,680 --> 00:25:05,560 Speaker 1: in particular, have business models that are that are almost 461 00:25:05,640 --> 00:25:09,200 Speaker 1: entirely reliant on there being a federal tax subsidy, tax incentive, 462 00:25:09,720 --> 00:25:12,360 Speaker 1: and without those they would need really to rethink their 463 00:25:12,400 --> 00:25:15,159 Speaker 1: business model. Talking about the commercial market, it seems like 464 00:25:15,160 --> 00:25:17,480 Speaker 1: I when I drive down the road and you you know, 465 00:25:17,520 --> 00:25:20,000 Speaker 1: go by an office park, you'll see this huge solar 466 00:25:20,080 --> 00:25:23,320 Speaker 1: panel field, I mean just huge. Even Bloomberg Down in 467 00:25:23,320 --> 00:25:26,320 Speaker 1: Princeton we have a great, really cool solar panel field. 468 00:25:26,359 --> 00:25:28,960 Speaker 1: I'm not sure what it's called, but um, how prevalent 469 00:25:29,080 --> 00:25:33,720 Speaker 1: is it in the commercial market our business is adopting solar? Well, look, 470 00:25:33,720 --> 00:25:35,640 Speaker 1: it really depends on where in the country you are. 471 00:25:35,720 --> 00:25:38,480 Speaker 1: It's such a such part of the policies and incentives 472 00:25:38,480 --> 00:25:40,479 Speaker 1: are mostly at the state level, and New Jersey being 473 00:25:40,520 --> 00:25:44,280 Speaker 1: one of the richest richest states for incentive, California, Massachusetts 474 00:25:44,320 --> 00:25:46,800 Speaker 1: being some of the other really big markets and therefore 475 00:25:46,880 --> 00:25:49,399 Speaker 1: build but build, you know, the number of panels that 476 00:25:49,440 --> 00:25:51,800 Speaker 1: are installed tends to boom and bust depending on the 477 00:25:51,840 --> 00:25:55,960 Speaker 1: state of states, of state subsidy um. And for that reason, 478 00:25:56,000 --> 00:25:58,800 Speaker 1: across the entire country, it hasn't been a big, big market. 479 00:25:58,840 --> 00:26:01,720 Speaker 1: You know, maybe well under one percent half percent of 480 00:26:01,720 --> 00:26:04,480 Speaker 1: businesses at the moment have have have solar installed on 481 00:26:04,480 --> 00:26:07,160 Speaker 1: their facilities. There's a whole lot of room to to grow, 482 00:26:07,720 --> 00:26:09,560 Speaker 1: but at the moment, pricing gets in the way. It 483 00:26:09,640 --> 00:26:12,560 Speaker 1: is it is expensive, and that's partly partly because of 484 00:26:12,600 --> 00:26:16,159 Speaker 1: these these incentives that are distorting pricing, and partly because 485 00:26:16,200 --> 00:26:18,800 Speaker 1: there is just there isn't the presence of of of 486 00:26:18,800 --> 00:26:22,040 Speaker 1: of large national firms in the states where there aren't 487 00:26:22,280 --> 00:26:26,880 Speaker 1: generous state incenters. So we're talking about companies, solar companies. 488 00:26:26,960 --> 00:26:29,760 Speaker 1: Let's give some names to the Sun Power corp Uh 489 00:26:29,800 --> 00:26:32,119 Speaker 1: and Phase Energy. Are there others that we should be 490 00:26:32,119 --> 00:26:35,000 Speaker 1: looking at just off the bat, Yeah, sure. So those 491 00:26:35,000 --> 00:26:37,240 Speaker 1: two firms are done particularly well recently on the back 492 00:26:37,280 --> 00:26:40,560 Speaker 1: of partly regulatory change and a shift in technology preferences 493 00:26:40,560 --> 00:26:43,879 Speaker 1: towards what they're offering. They're both offering premium equipment and 494 00:26:43,920 --> 00:26:47,760 Speaker 1: Phase some Power produces really high end panels, the panels 495 00:26:47,760 --> 00:26:51,040 Speaker 1: that go on your roof and face produces high ended inverters. 496 00:26:51,080 --> 00:26:52,879 Speaker 1: That's a little device that clips onto the panel that 497 00:26:53,280 --> 00:26:55,879 Speaker 1: converts the power in from solar power into into what 498 00:26:55,920 --> 00:26:58,040 Speaker 1: you need in your home. They're doing quite well because 499 00:26:58,040 --> 00:27:00,160 Speaker 1: the regulators have kind of shifted the market to war 500 00:27:00,240 --> 00:27:03,880 Speaker 1: the particular product that in Phase is selling further downstreaming. 501 00:27:03,880 --> 00:27:06,399 Speaker 1: There's a lot of opportunity or companies that people like 502 00:27:06,480 --> 00:27:09,040 Speaker 1: to watch that are the installers themselves, the ones that 503 00:27:09,119 --> 00:27:11,240 Speaker 1: finance the deals and structure that structured the deals, and 504 00:27:11,280 --> 00:27:13,639 Speaker 1: in many cases have the crews that come I come 505 00:27:13,680 --> 00:27:16,640 Speaker 1: to your home. That's groups like sun Run, some Power 506 00:27:16,680 --> 00:27:20,280 Speaker 1: as well as active in that space, Fun Hotel that 507 00:27:20,359 --> 00:27:24,160 Speaker 1: really struggled, Vivin Solar and and and Tesla. But Tesla 508 00:27:24,240 --> 00:27:26,879 Speaker 1: is really full back from this sector. Honestly, I do 509 00:27:26,960 --> 00:27:29,399 Speaker 1: have to wonder how much the rebound that we're seeing 510 00:27:29,400 --> 00:27:32,359 Speaker 1: this year is due to just the degree of the 511 00:27:32,400 --> 00:27:35,720 Speaker 1: pullback in the prior four years, because a global inext 512 00:27:35,760 --> 00:27:39,320 Speaker 1: of solar stocks. Maintain my bloomberk has surged tht so 513 00:27:39,400 --> 00:27:42,600 Speaker 1: far this year, but it declined for of the past 514 00:27:42,680 --> 00:27:45,000 Speaker 1: five years. And I do have to wonder some of 515 00:27:45,040 --> 00:27:47,760 Speaker 1: the positioning, how much there is hedge fund involvement sort 516 00:27:47,800 --> 00:27:50,720 Speaker 1: of crowding. Absolutely, I said before that kind of investors 517 00:27:50,760 --> 00:27:53,280 Speaker 1: pulling back from this space was was a major factor here. 518 00:27:53,760 --> 00:27:57,840 Speaker 1: Certainly some sorry Tesla after acquiring Solo City back in 519 00:27:57,920 --> 00:28:02,159 Speaker 1: back in really slowed down their business model. That the 520 00:28:02,560 --> 00:28:04,760 Speaker 1: contraction we've seen in Tesla explains a lot of the 521 00:28:04,800 --> 00:28:07,080 Speaker 1: contraction we've seeing the entire solo market, but not all 522 00:28:07,080 --> 00:28:10,040 Speaker 1: of it. So the market was still slowing overall. But 523 00:28:10,200 --> 00:28:13,080 Speaker 1: really where the growth has been is in small local firms. 524 00:28:13,119 --> 00:28:15,440 Speaker 1: You know, two guys in a truck taking market share 525 00:28:15,480 --> 00:28:18,679 Speaker 1: from these big national players. Not as sexy probably for 526 00:28:18,760 --> 00:28:22,440 Speaker 1: people looking for an easy share to buy, but definitely compelling. 527 00:28:22,480 --> 00:28:24,480 Speaker 1: Hugh Bromley, thank you so much for being with us. 528 00:28:24,960 --> 00:28:27,399 Speaker 1: He Bromley has a solar market analyst with Bloomberg New 529 00:28:27,480 --> 00:28:31,000 Speaker 1: Energy Finance, which does some incredible work looking at all 530 00:28:31,040 --> 00:28:34,360 Speaker 1: of the new energies that are coming up. Really interesting 531 00:28:34,359 --> 00:28:36,760 Speaker 1: to see some of the new technology. Thanks for listening 532 00:28:36,800 --> 00:28:39,200 Speaker 1: to the Bloomberg P and L podcast. You can subscribe 533 00:28:39,200 --> 00:28:42,040 Speaker 1: and listen to interviews at Apple Podcasts or whatever podcast 534 00:28:42,040 --> 00:28:45,600 Speaker 1: platform you prefer. Paul Sweeney, I'm on Twitter at pt Sweeney. 535 00:28:45,640 --> 00:28:48,560 Speaker 1: I'm Lisa Abramloids. I'm on Twitter at Lisa A. Bramwoids. 536 00:28:48,560 --> 00:28:51,440 Speaker 1: One Before the podcast, you can always catch us worldwide. 537 00:28:51,440 --> 00:28:52,440 Speaker 1: I'm Bloomberg Radio.