1 00:00:00,240 --> 00:00:02,800 Speaker 1: Investors watching out for a range of headwinds. In twenty 2 00:00:02,840 --> 00:00:05,320 Speaker 1: twenty four, Linn Martin, the president of the New York 3 00:00:05,360 --> 00:00:08,639 Speaker 1: Stock Exchange, outlining three principal trends that may shape global 4 00:00:08,680 --> 00:00:13,000 Speaker 1: markets this year, volatility remaining, a reinvigorated IPO market, and 5 00:00:13,119 --> 00:00:16,279 Speaker 1: US capital markets continuing to lead the world. Lind Martin, 6 00:00:16,320 --> 00:00:18,479 Speaker 1: a police are saying, joins us at the table, Morty, Lyn. 7 00:00:18,600 --> 00:00:20,159 Speaker 2: Thanks for having me. It's great to be with you. 8 00:00:20,320 --> 00:00:22,600 Speaker 1: It's good to see you again. Let's start with the geopolitics. 9 00:00:22,600 --> 00:00:24,640 Speaker 1: Clearly the risk in the Middle East is front and 10 00:00:24,720 --> 00:00:26,759 Speaker 1: center after the events at the weekend. How does that 11 00:00:26,800 --> 00:00:29,400 Speaker 1: contribute to this theme of high volatility sticking around for 12 00:00:29,480 --> 00:00:30,639 Speaker 1: longer in your view? 13 00:00:31,160 --> 00:00:35,440 Speaker 3: Yeah, you know, the geopolitical environments are quite complicated environment. 14 00:00:35,479 --> 00:00:38,640 Speaker 3: I think we can all agree with that. It clearly 15 00:00:38,680 --> 00:00:42,320 Speaker 3: impacts the US equity markets and the global equity markets 16 00:00:42,320 --> 00:00:46,559 Speaker 3: by contributing to volatility. The surprise factor, that's what's going 17 00:00:46,600 --> 00:00:49,960 Speaker 3: to contribute to volatility, and this weekend's events were, you know, 18 00:00:50,040 --> 00:00:51,080 Speaker 3: one of those surprises. 19 00:00:51,240 --> 00:00:54,560 Speaker 1: Unfortunately, We've talked about this before, how capital markets might 20 00:00:54,560 --> 00:00:58,040 Speaker 1: be increasingly polarized regionally, geographically, it might see a situation 21 00:00:58,080 --> 00:01:01,160 Speaker 1: where it's US capital markets for US com companies Chinese 22 00:01:01,160 --> 00:01:03,640 Speaker 1: companies capital markets for Chinese companies. Do you see it 23 00:01:03,720 --> 00:01:04,800 Speaker 1: quite the same way? 24 00:01:05,200 --> 00:01:06,040 Speaker 2: You know, I don't. 25 00:01:06,120 --> 00:01:08,319 Speaker 3: I mean, the US capital markets are the envy of 26 00:01:08,360 --> 00:01:13,880 Speaker 3: the world. They have withstood multiple pandemics, multiple wars, and 27 00:01:13,920 --> 00:01:17,440 Speaker 3: they've really shown to be the best source of liquidity 28 00:01:17,880 --> 00:01:21,120 Speaker 3: for a founder, for an entrepreneur to raise the capital 29 00:01:21,160 --> 00:01:24,240 Speaker 3: that they need to change the world. If that's true, 30 00:01:24,319 --> 00:01:27,000 Speaker 3: more than more than ever. In fact, you know, you 31 00:01:27,080 --> 00:01:29,200 Speaker 3: see the ability. 32 00:01:28,720 --> 00:01:31,920 Speaker 2: To tap the US capital markets as. 33 00:01:32,240 --> 00:01:36,440 Speaker 3: Aspirational, but also when you look at the cost of capital, 34 00:01:36,680 --> 00:01:39,800 Speaker 3: the most efficient way to raise capital to change the world. 35 00:01:39,959 --> 00:01:41,760 Speaker 4: Let's put these two ideas together. So you think that 36 00:01:41,800 --> 00:01:45,920 Speaker 4: because of the potential volatility, because of the unknown unknowns 37 00:01:46,000 --> 00:01:49,480 Speaker 4: later this year, are people moving forward their plans for IPOs? 38 00:01:49,840 --> 00:01:52,240 Speaker 2: Absolutely? You know, we have a tremendous amount of companies 39 00:01:52,360 --> 00:01:52,960 Speaker 2: on the road. 40 00:01:53,000 --> 00:01:56,440 Speaker 3: We're actually about to welcome one a large one this week. 41 00:01:56,640 --> 00:02:00,200 Speaker 3: M or Sports, which is the holding company for Willis 42 00:02:00,520 --> 00:02:03,760 Speaker 3: for Louisville Slugger, for a lot of the brands you know, our. 43 00:02:03,680 --> 00:02:05,800 Speaker 2: Children and we use every day. 44 00:02:06,400 --> 00:02:11,160 Speaker 3: And just later today we're about to welcome a UK 45 00:02:11,320 --> 00:02:15,880 Speaker 3: based company, Flutter, who is transferring they're listing out of 46 00:02:15,919 --> 00:02:19,200 Speaker 3: their regional market over to the New York Stock Exchange 47 00:02:19,200 --> 00:02:20,320 Speaker 3: a little bit later this morning. 48 00:02:20,440 --> 00:02:23,160 Speaker 4: One of the reasons why IPOs haven't been as active 49 00:02:23,280 --> 00:02:26,399 Speaker 4: as people had expected was because of just a lot 50 00:02:26,480 --> 00:02:29,360 Speaker 4: of private equity companies not wanting to take the valuation cuts. 51 00:02:29,360 --> 00:02:31,000 Speaker 4: And we've seen that even with Reddit right they have 52 00:02:31,080 --> 00:02:35,440 Speaker 4: five billion dollar market capitalization different lower than what some 53 00:02:35,480 --> 00:02:39,040 Speaker 4: of the previous private market valuations had been. How much 54 00:02:39,080 --> 00:02:42,600 Speaker 4: are people accepting a haircut, accepting not getting the price 55 00:02:42,639 --> 00:02:45,120 Speaker 4: that they wanted in order to really cash out of 56 00:02:45,120 --> 00:02:45,840 Speaker 4: those investments. 57 00:02:46,000 --> 00:02:48,600 Speaker 3: You know, I think the main you had two reasons 58 00:02:48,639 --> 00:02:51,760 Speaker 3: really impacting the IPO markets over the last two years. 59 00:02:51,800 --> 00:02:54,600 Speaker 3: You had the volatility, the increased volatility when the VIX 60 00:02:54,720 --> 00:02:58,320 Speaker 3: is trading a you know, a thirty handle as opposed 61 00:02:58,360 --> 00:03:02,200 Speaker 3: to you know, below twenty. It's not that founders couldn't 62 00:03:02,200 --> 00:03:04,760 Speaker 3: get deals done, it was what is my stock going 63 00:03:04,800 --> 00:03:09,120 Speaker 3: to do the day after IPO, the month after IIPO? 64 00:03:09,440 --> 00:03:12,840 Speaker 3: What macroeconomic factors are going to influence. 65 00:03:12,760 --> 00:03:16,880 Speaker 2: The way my stock is trading? Now? 66 00:03:17,000 --> 00:03:22,079 Speaker 3: You also see that there is a recalibration of valuations 67 00:03:22,240 --> 00:03:24,920 Speaker 3: in the market. I would make the argument though, that 68 00:03:24,960 --> 00:03:28,680 Speaker 3: twenty twenty one had inflated valuations in the market, so 69 00:03:29,040 --> 00:03:32,320 Speaker 3: you know twenty twenty one was one side of tail risk. 70 00:03:32,840 --> 00:03:35,400 Speaker 3: This is the last two years or the other side 71 00:03:35,520 --> 00:03:37,600 Speaker 3: of tail risks on the Bell curve. 72 00:03:37,760 --> 00:03:39,560 Speaker 1: There is this structure story as well, and we've talked 73 00:03:39,560 --> 00:03:41,800 Speaker 1: a lot about it around this table and in Dallas 74 00:03:41,840 --> 00:03:44,400 Speaker 1: as well at the World Economic Forum, that we're seeing 75 00:03:44,440 --> 00:03:48,000 Speaker 1: regulation shift that will push more financing activity into private markets. 76 00:03:48,000 --> 00:03:49,800 Speaker 1: When you start to think about those themes, do you 77 00:03:49,800 --> 00:03:52,280 Speaker 1: think the lifespan, the arc of a company's lifespan, the 78 00:03:52,280 --> 00:03:54,520 Speaker 1: timeline of it is going to change just in terms 79 00:03:54,560 --> 00:03:56,520 Speaker 1: of how long they stay private for versus how long 80 00:03:56,560 --> 00:03:58,120 Speaker 1: they started private previously. 81 00:03:58,360 --> 00:04:00,760 Speaker 3: I think companies are going to be more disciple about 82 00:04:00,840 --> 00:04:04,640 Speaker 3: when they tap the public markets. Obviously, they're going to 83 00:04:04,760 --> 00:04:08,280 Speaker 3: want to be able to articulate a path to profitability 84 00:04:08,480 --> 00:04:12,080 Speaker 3: or profitability. So I think what you're going to see 85 00:04:12,160 --> 00:04:16,560 Speaker 3: is when companies come to market the public markets, they're 86 00:04:16,560 --> 00:04:19,479 Speaker 3: going to be public market ready. They're going to be 87 00:04:19,520 --> 00:04:24,000 Speaker 3: able to articulate a very clear message to investors, to 88 00:04:24,760 --> 00:04:28,680 Speaker 3: their shareholders that will enable them to thrive I don't 89 00:04:28,680 --> 00:04:31,719 Speaker 3: think there's any substitute though, for the public markets, and 90 00:04:31,720 --> 00:04:33,359 Speaker 3: that's been proven time and time again. 91 00:04:33,600 --> 00:04:35,640 Speaker 1: Have you seen that change already? That change you just 92 00:04:35,680 --> 00:04:37,080 Speaker 1: described absolutely. 93 00:04:37,279 --> 00:04:39,159 Speaker 3: With the amount companies we have on the road, we 94 00:04:39,200 --> 00:04:41,040 Speaker 3: have a tremendous mount companies on the road. We have 95 00:04:41,080 --> 00:04:44,360 Speaker 3: a tremendous amount of companies that we're working with at 96 00:04:44,360 --> 00:04:47,760 Speaker 3: the moment to tap the public market. So we're really 97 00:04:47,800 --> 00:04:50,440 Speaker 3: excited about the prospects for twenty twenty four. 98 00:04:50,480 --> 00:04:52,120 Speaker 1: I want to talk about one threat for twenty twenty 99 00:04:52,160 --> 00:04:55,440 Speaker 1: four and beyond AI. I've asked you about this before, 100 00:04:55,800 --> 00:04:59,640 Speaker 1: Let's go through it again. Confronting an era of misinformation 101 00:05:00,240 --> 00:05:01,800 Speaker 1: for someone in your position, how are we going to 102 00:05:01,800 --> 00:05:02,520 Speaker 1: go back to doing this? 103 00:05:02,800 --> 00:05:05,600 Speaker 3: You know, I'm really glad you made the point about misinformation, 104 00:05:05,680 --> 00:05:09,760 Speaker 3: because AI is just a continuation of data driven trends 105 00:05:09,800 --> 00:05:12,600 Speaker 3: that have really existed for more than a decade. If 106 00:05:12,640 --> 00:05:17,120 Speaker 3: you've got good data that is going to enable models 107 00:05:17,480 --> 00:05:20,919 Speaker 3: to add efficiencies to markets. It's something that we've seen 108 00:05:21,200 --> 00:05:24,760 Speaker 3: in production for more than a decade now with the 109 00:05:25,040 --> 00:05:28,599 Speaker 3: AI or large language models that we employ to add 110 00:05:28,640 --> 00:05:32,600 Speaker 3: transparency to the energy markets. And as a result of 111 00:05:32,839 --> 00:05:35,640 Speaker 3: the large language models that we have had in production 112 00:05:35,880 --> 00:05:39,680 Speaker 3: for a decade. We've seen the more opaque parts of 113 00:05:39,720 --> 00:05:43,040 Speaker 3: the energy market have tremendous amount of transparency, a tremendous 114 00:05:43,040 --> 00:05:46,479 Speaker 3: amount of liquidity added to them, particularly over the last 115 00:05:46,520 --> 00:05:47,159 Speaker 3: couple of years. 116 00:05:47,320 --> 00:05:49,160 Speaker 4: Did you guys see what happened with Taylor Swift and 117 00:05:49,440 --> 00:05:52,520 Speaker 4: X the AI sort of renditions of her and that 118 00:05:52,640 --> 00:05:56,119 Speaker 4: basically it was preventing you from googling Taylor Swift search 119 00:05:56,279 --> 00:06:00,560 Speaker 4: and search on X because there are pornographic, artificially intelligence 120 00:06:00,600 --> 00:06:02,599 Speaker 4: generated images. But it sort of shows you some of 121 00:06:02,640 --> 00:06:06,440 Speaker 4: the challenges in misinformation or just a false videos. I 122 00:06:06,480 --> 00:06:08,920 Speaker 4: am curious how many companies that are planning to IPO 123 00:06:09,560 --> 00:06:11,520 Speaker 4: our tech companies are building themselves as such. I mean, 124 00:06:11,600 --> 00:06:13,920 Speaker 4: is it like one hundred percent their tech company, even 125 00:06:13,920 --> 00:06:14,960 Speaker 4: if they sell furniture. 126 00:06:15,440 --> 00:06:19,880 Speaker 3: You know, in this digital age, everyone uses technology. Everyone's 127 00:06:19,880 --> 00:06:22,640 Speaker 3: a technology company. You sort of missed the boat. If 128 00:06:22,680 --> 00:06:26,520 Speaker 3: you're not employing technology in some way, shape or form 129 00:06:26,600 --> 00:06:29,080 Speaker 3: to drive your business forward, who do you. 130 00:06:29,080 --> 00:06:31,279 Speaker 4: Think right now is your biggest competitor? Though, I mean, 131 00:06:31,360 --> 00:06:34,000 Speaker 4: to John's point, the private markets. We've been talking about 132 00:06:34,000 --> 00:06:36,320 Speaker 4: that for a long time, and there was a discussion. 133 00:06:35,880 --> 00:06:37,240 Speaker 2: About some sort of transfer. 134 00:06:38,080 --> 00:06:40,720 Speaker 4: Is it just, you know, another stock exchange, or is 135 00:06:40,760 --> 00:06:42,320 Speaker 4: it another avenue of financing? 136 00:06:42,600 --> 00:06:44,920 Speaker 3: You know, I don't really think we have a competitor 137 00:06:44,920 --> 00:06:46,839 Speaker 3: because the role of the New York Stock Exchange is 138 00:06:46,880 --> 00:06:51,680 Speaker 3: just very different than a traditional stock exchange or a 139 00:06:51,760 --> 00:06:52,560 Speaker 3: listing's venue. 140 00:06:52,600 --> 00:06:54,599 Speaker 2: Our job is to be the stewards. 141 00:06:54,120 --> 00:06:57,640 Speaker 3: Of the US capital markets, and since the US is 142 00:06:57,640 --> 00:07:00,800 Speaker 3: such an important part of the global capital markets, we 143 00:07:00,880 --> 00:07:04,040 Speaker 3: really are the stewards of the global capital markets, allowing 144 00:07:04,360 --> 00:07:09,039 Speaker 3: entrepreneurs and innovators to tap the markets to raise the 145 00:07:09,040 --> 00:07:12,120 Speaker 3: capital they need in a cost efficient fashion and to 146 00:07:12,200 --> 00:07:13,800 Speaker 3: democratize investing. 147 00:07:14,080 --> 00:07:16,760 Speaker 4: You expect there to be a much more active year 148 00:07:16,880 --> 00:07:18,720 Speaker 4: in the IPO world. We have seen this with a 149 00:07:18,720 --> 00:07:22,400 Speaker 4: lot of banks predicting much more active capital markets activity 150 00:07:22,440 --> 00:07:25,640 Speaker 4: this year. How much is that predicated on significant rate 151 00:07:25,640 --> 00:07:28,080 Speaker 4: cuts by the Federal Reserve It. 152 00:07:28,320 --> 00:07:31,000 Speaker 3: I think the market's already pricing in the rate cuts 153 00:07:31,040 --> 00:07:32,120 Speaker 3: to a certain extent. 154 00:07:32,520 --> 00:07:34,720 Speaker 2: The one thing that I'm watching. 155 00:07:34,600 --> 00:07:37,840 Speaker 3: Is the discrepancy between the US equity markets and how 156 00:07:37,840 --> 00:07:40,640 Speaker 3: it's pricing in call it two or three rate cuts, 157 00:07:40,640 --> 00:07:42,480 Speaker 3: and then you look at the Fed fund futures markets. 158 00:07:42,480 --> 00:07:44,520 Speaker 3: If you go further out in the curve. Towards the 159 00:07:44,600 --> 00:07:46,560 Speaker 3: end of the year, it's pricing in probably five or 160 00:07:46,600 --> 00:07:48,600 Speaker 3: six rate cuts, so there's a bit. 161 00:07:48,440 --> 00:07:49,320 Speaker 2: Of discrepancy there. 162 00:07:49,320 --> 00:07:51,000 Speaker 3: The reason why I'm watching this is because that's what's 163 00:07:51,000 --> 00:07:55,760 Speaker 3: going to impact volatility. Really, volatility is what's going to 164 00:07:56,360 --> 00:08:00,440 Speaker 3: I would say impact the IPO markets. But for the 165 00:08:00,520 --> 00:08:02,840 Speaker 3: short to medium term, I think we're going to see 166 00:08:02,840 --> 00:08:04,000 Speaker 3: some good IPOs. 167 00:08:04,360 --> 00:08:07,240 Speaker 4: You wrote last year that seventy percent of IPOs executed 168 00:08:07,400 --> 00:08:09,800 Speaker 4: actually couldn't meet the provisions on the New York section. 169 00:08:10,040 --> 00:08:11,760 Speaker 4: What is the biggest provision that's holding some of these 170 00:08:11,800 --> 00:08:13,760 Speaker 4: companies back from going to the NICY. 171 00:08:13,920 --> 00:08:17,960 Speaker 3: Yeah, So we've got a variety of quantitative standards. A 172 00:08:18,000 --> 00:08:21,480 Speaker 3: lot of those are focused on the minimum amount of shareholders, 173 00:08:22,080 --> 00:08:25,680 Speaker 3: the size of a company's float that they actually put 174 00:08:25,800 --> 00:08:30,520 Speaker 3: into the public markets, as well as the minimum. 175 00:08:30,160 --> 00:08:33,640 Speaker 2: Market cap of a company. And you're right, more. 176 00:08:33,520 --> 00:08:36,040 Speaker 3: Than seventy percent didn't qualify for US last year, and 177 00:08:36,040 --> 00:08:38,360 Speaker 3: that number was even higher in twenty twenty two. 178 00:08:38,559 --> 00:08:41,319 Speaker 1: New York Stock Exchange President Limartin alongside maybe we talked 179 00:08:41,320 --> 00:08:43,560 Speaker 1: about politics, remember and Davos, and the whole room just 180 00:08:43,559 --> 00:08:46,120 Speaker 1: went quiet. No one wanted to discuss does this changed 181 00:08:46,160 --> 00:08:47,680 Speaker 1: your world, this race this year. 182 00:08:48,240 --> 00:08:50,160 Speaker 3: You know, the only way it changes our world is 183 00:08:50,280 --> 00:08:53,240 Speaker 3: it's impacting volatility and the IPO window. 184 00:08:54,040 --> 00:08:55,160 Speaker 2: So our job is to. 185 00:08:55,160 --> 00:08:59,000 Speaker 3: Make sure that, particularly in years like twenty twenty four, 186 00:08:59,160 --> 00:09:03,439 Speaker 3: our systems are are reliable, resilient and open so that 187 00:09:03,480 --> 00:09:05,440 Speaker 3: people can efficiently manage risk. 188 00:09:05,679 --> 00:09:09,000 Speaker 1: That's how you diplomatically sort of dodge that question without 189 00:09:09,000 --> 00:09:09,680 Speaker 1: addressing it. 190 00:09:09,760 --> 00:09:11,520 Speaker 4: Basically, they're going to look at the markets and not 191 00:09:11,559 --> 00:09:13,440 Speaker 4: address the politics of it. I will just say Saturday 192 00:09:13,480 --> 00:09:15,360 Speaker 4: Night Live will get funnier because they seem to really 193 00:09:15,440 --> 00:09:18,480 Speaker 4: enjoy this Lynn. When you talk about volatility, how much 194 00:09:18,720 --> 00:09:22,199 Speaker 4: is really driven by an unexpected weakening in the economy. 195 00:09:22,280 --> 00:09:25,160 Speaker 4: Is that what you're really referring to that is potentially 196 00:09:25,160 --> 00:09:28,640 Speaker 4: the greatest supplier of volatility or is it a lot 197 00:09:28,720 --> 00:09:29,440 Speaker 4: of different things? 198 00:09:29,559 --> 00:09:31,000 Speaker 2: You know, it's a lot of different things. 199 00:09:31,040 --> 00:09:33,280 Speaker 3: And the important thing to look at when you think 200 00:09:33,280 --> 00:09:36,400 Speaker 3: about volatility. So there's the VIX, which is clearly the 201 00:09:36,400 --> 00:09:38,439 Speaker 3: measure of equity vall. But then there's also the MOVE, 202 00:09:38,600 --> 00:09:41,640 Speaker 3: which is our index, which is the Treasury market ball, 203 00:09:41,760 --> 00:09:46,520 Speaker 3: and those levels are still elevated. It's still above one hundred. 204 00:09:46,559 --> 00:09:48,319 Speaker 3: If I look at the move Index, which I do 205 00:09:48,400 --> 00:09:49,000 Speaker 3: every day. 206 00:09:49,360 --> 00:09:52,480 Speaker 1: Said thank you to be brilliant. Lynn Martin, the NYSC President, 207 00:09:52,559 --> 00:09:53,560 Speaker 1: joining us around the table.