Speaker 1: Welcome to the Bloomberg Penl podcast on Paul Swing You.
Speaker 1: Along with my co host Lisa Brahma Waits, each day
Speaker 1: we bring you the most noteworthy and useful interviews for
Speaker 1: you and your money, whether at the grocery store or
Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple
Speaker 1: podcast or wherever you listen to podcasts, as well as
Speaker 1: at Bloomberg dot com. Let's talk about the effect of
Speaker 1: the ongoing trade war between the US and China on
Speaker 1: medals that are used in for industrial purposes, in particular Steele.
Speaker 1: Joining us now from Bangkok is Gordon Johnson, managing director
Speaker 1: at Vertical Group, who is in Bangkok to present at
Speaker 1: a conference, but it is taking time out to join
Speaker 1: us today. Thank you so much Gordon for being with us.
Speaker 1: I want us talk about steel because it is used
Speaker 1: in so much construction, and that is some areas that
Speaker 1: would take a hit potentially, especially in China given the
Speaker 1: slowdown there and in light of the trade war. So
Speaker 1: what do you see there? We're seeing about a five
Speaker 1: percent to client so far you're to date in steel.
Speaker 1: How much further do have? Yes, so we think there's
Speaker 1: significant downside for still prices. And if you look at
Speaker 1: just the data points, if you look at the major
Speaker 1: economies and specifically p m I, sixty seven of the
Speaker 1: major economy p m I s are in contraction right now,
Speaker 1: and specifically with China. And the reason why China is
Speaker 1: so important. They consume fifty of the world still, so
Speaker 1: as goes China, as goes global still prices. And if
Speaker 1: you look at the tax and p m I, the
Speaker 1: China official p m I or the Hong Kong p
Speaker 1: m I, all of them are in contraction right now.
Speaker 1: And that's despite stimulus efforts, significant stimulus efforts from China recently.
Speaker 1: It's not working anymore. And the reason is because the
Speaker 1: debt service is so high, so they have to stimulate
Speaker 1: even more just to run. You know, they basically keep
Speaker 1: running on the same treadmill. So the last thing we'd
Speaker 1: say is um. You know, China is clearly devaluing their currency,
Speaker 1: so that means they're going to export their devaluation or
Speaker 1: depreciation to the rest of the world. And keep in
Speaker 1: mind remember in two thousand fifteen, in the first quarter
Speaker 1: of sixteen, China's currency devalued. We had the Great balk
Speaker 1: commodity scare where you had still prices really collapsed down
Speaker 1: to the three hundred and sixty four dollar per short
Speaker 1: ton level, and we think we're headed back to those levels.
Speaker 1: Not there yet, So Gordon Barish on the demand side
Speaker 1: of the equation, talk to us about the supply side
Speaker 1: of steel globally. Yeah, so that's a great question. So
Speaker 1: with Trump's tariffs, we saw a unprecedented spike and still
Speaker 1: prices in the US. Still price in the U S
Speaker 1: were five hundred dollars. Trump implemented the tariffs, they went
Speaker 1: up to nine, you know, just under nine hundred dollars
Speaker 1: per short ton um. And on that increase in prices,
Speaker 1: a lot of US still mills decided they were going
Speaker 1: to announce capacity additions. So you have all these capacity
Speaker 1: editions that have been announced. But now if you look
Speaker 1: at the US market, whether it's agriculture which is in
Speaker 1: a state of UM disarray, UM, the energy sector which
Speaker 1: is also suffering, and clearly autos which is a key
Speaker 1: to driver of demand for still which is suffering. The
Speaker 1: problem is U S still can't implement a trade case
Speaker 1: against js W and Ohio. So this still is being
Speaker 1: added and there's nothing the U S still mills can
Speaker 1: do other than capacity, and you're seeing that from some
Speaker 1: of the blast furnace guys, but you're not seeing it
Speaker 1: from the E A F guys. So again we see
Speaker 1: big problems ahead. Look, it's it's really driven by China
Speaker 1: because China drives us still prices, um, but you also
Speaker 1: have this dynamic in the U S where you have
Speaker 1: capacity that's being added that you know, these guys can't
Speaker 1: issue trade cases against each other, so it's kind of
Speaker 1: backfired in a way, if you will. So what does
Speaker 1: this mean for the investment case? I mean in terms
Speaker 1: of how do you position around this? Right? So we
Speaker 1: we think that um, you know, there's gonna be further downside,
Speaker 1: uh for a lot of stocks. Think about this right
Speaker 1: that we were presenting. We were doing two presentations at
Speaker 1: this conference. If you look at from the early eighties
Speaker 1: until two thousand four, iron ore prices average between twenty
Speaker 1: five dollars and thirty five dollars per metric tun. Iron
Speaker 1: or prices are sitting at eighty two dollars right now.
Speaker 1: The point is what happened in two thousand four is
Speaker 1: the Chinese economy had a debt to GDP ratio of
Speaker 1: a it's now above. A lot of that debt went
Speaker 1: to build empty office buildings to the sky, which are
Speaker 1: very still intensive. The point is once we mean revert
Speaker 1: back to where China was pre two thousand four, given
Speaker 1: they consume such a large percent of the world still,
Speaker 1: we think iron old prices probably dropped back down to
Speaker 1: those levels. Iron ore and coking coal are used to
Speaker 1: make still. So when you have iron ore and coking
Speaker 1: coal prices, coken coal prices down in April, UM revert
Speaker 1: back down to the levels they were pre China stimulus,
Speaker 1: we think you're also gonna have still prices revert back
Speaker 1: down the levels that I think people don't see as
Speaker 1: possible today. So we think the way to position UM
Speaker 1: is to be short in general still in iron ore stocks.
Speaker 1: So it's interesting, Gordon, as I look at the on
Speaker 1: the Bloomberg terminal, the A n R function for your coverage,
Speaker 1: I see one by two holes and ten cells. So
Speaker 1: I think I understand the bear case that you're suggesting here.
Speaker 1: Been pretty consistent. Why the bion United States steal? What's
Speaker 1: different about those guys? Well, we had to we we
Speaker 1: have a bio in United States still because um, you
Speaker 1: know about a month ago. UM. You know, we thought
Speaker 1: that the cut and capacity from US STILL as well
Speaker 1: as UM A K S UM was going to drive
Speaker 1: some upside sentiment in the space. And it did. UM.
Speaker 1: But you know, since we've made that call, you had
Speaker 1: that kind of short term positivity UM, and now you're
Speaker 1: seeing the negative negativity feed back in so UM still
Speaker 1: by rated Uh. But UM, you know the negativity is
Speaker 1: starting to outweigh UM. You know, those those those capacity cuts.
Speaker 1: So how much is your sort of base case disrupted
Speaker 1: if there is some sort of trade agreement between the
Speaker 1: U S and China. Yeah, so, I mean there will
Speaker 1: clearly be a knee jerk effect UM if there's a
Speaker 1: trade agreement between the U S and China. UM. But
Speaker 1: we think this is structural. Uh. The real issue here
Speaker 1: is not a trade war between the U S and China.
Speaker 1: We think the real issue here is special typically China. UM.
Speaker 1: If you think about this, right, if you look at
Speaker 1: trillion twelve months UM UH liquidity to GDP in China
Speaker 1: UM in two thousand, fourteen and fifteen, that ratio declined
Speaker 1: sixty three basis points, and that basically was the precursor
Speaker 1: to the Big Balk commodity scare we had in the
Speaker 1: second half of fifteen. In the first quarter of sixteen,
Speaker 1: that ratio is down a three basis point, meaning liquidity
Speaker 1: in China is just not there as it used to be,
Speaker 1: and we think that is the major driver of global
Speaker 1: bulk commodity prices UM. And if you look at the
Speaker 1: credit it's being extended to China, it's just not enough.
Speaker 1: You need about two trillion per month in credit. You know,
Speaker 1: in July you had just one trillion of credit extended.
Speaker 1: China is just not issuing enough credit to drive the
Speaker 1: um uh. You know the build out of these you know,
Speaker 1: construction essentially, whether it's bad investment or good investment, we
Speaker 1: think it's bad. Uh. They're just not issuing the credit
Speaker 1: needed to drive that build out. So we think China
Speaker 1: is the real driver again a US trade war um uh,
Speaker 1: you know, m agreement. We think we'll call the knee
Speaker 1: jerk reaction, but we think this structural decline involved commodity
Speaker 1: prices um is the name of the game. Gordon Johnson,
Speaker 1: thank you so much. Gordon Johnson's managing director at Vertigo
Speaker 1: Group talking to us about to steal business. Calling in
Speaker 1: from Bangkokery's attending a graphite electrode conference. That sounds interesting.
Speaker 1: I guess if you're into that whole metals thing, the
Speaker 1: yield curve is inverted. We continue to have uncertainty persisting
Speaker 1: around the continued continued trade tension. So the question for
Speaker 1: a lot of investors is do the confluence of these
Speaker 1: events kind of suggest at a recession might be in
Speaker 1: the offering for the US economy. To answer that question,
Speaker 1: we welcome our good friend Jim Paulson, Chief Investment Strategies
Speaker 1: from the Lootole Group. Lootole Group has about one point
Speaker 1: two billion dollars under management, based in Minneapolis. Jim, thanks
Speaker 1: so much for joining us. So let's start off right
Speaker 1: away with your thoughts about what seems to be some
Speaker 1: growing talk about ever recession over the next twelve months. Yeah.
Speaker 1: I have to say, Paul, I don't remember if we
Speaker 1: if we are headed eminently for recession, it's gonna be
Speaker 1: one of the most widely anticipated and best forecasting ones
Speaker 1: we've ever had. Um, it's just so covered out there,
Speaker 1: not only the media, that Wall Street commentary as well
Speaker 1: as just all over this. UM. I think that, um,
Speaker 1: you know, the two events, I think we make far
Speaker 1: too much of the trade um issue. I think it's
Speaker 1: a mild negative for the United States recovery, not a
Speaker 1: not a recovery killer UM. And the yield curve UH
Speaker 1: concerns me much more. I think that the signal that's
Speaker 1: it's been so good historically is is frightening to me
Speaker 1: as an old, old investment guy. But I think there's
Speaker 1: reasons to suspect the signal, maybe a little more this time,
Speaker 1: given that we've screwed up monetary policy so badly in
Speaker 1: this cycle with quantitative easing and negative yields UM and
Speaker 1: if I go away from that, what I think doesn't
Speaker 1: get enough attention, Paul, is the amount of stimulus that's
Speaker 1: being devoted to this recovery now, and not only here
Speaker 1: but globally. We've just had a tremendous amount. We worry
Speaker 1: about whether the FED is going to cut rates at
Speaker 1: quarter point on the funds rate, but the the tenuere
Speaker 1: treasury yield has fallen from three and a quarter last
Speaker 1: October to one this morning. That's a drop more than
Speaker 1: one half and most of the yield curve in the
Speaker 1: last nine months or ten months or so. Follow that
Speaker 1: up with the annual growth of the real money supply
Speaker 1: going from below one percent last year to about three
Speaker 1: and a half percent now, and followed up with fiscal
Speaker 1: juice deficit. Federal defic percent of GDP is one percent
Speaker 1: greater today than it was a little over a year ago.
Speaker 1: So we're getting three gun goose er here of stimulus
Speaker 1: that you normally only see in the pit of a recession,
Speaker 1: and it doesn't get much uh much weight in people's outlooks. Normally,
Speaker 1: with this much stimulus, with about a nine month leg
Speaker 1: or twillmut leg, you'd see a course of economists suggesting
Speaker 1: the economy is probably, you know, poised to pick up,
Speaker 1: but you're hard to hear anyone talk about that. I
Speaker 1: think it comes down, does fear freeze up the financial
Speaker 1: markets or the stimulus ultimately win. And I'm worried about
Speaker 1: a confidence freeze, but I think, uh, the odds favor
Speaker 1: that stimulus is gonna win. And I'm already seeing some
Speaker 1: events of pick up in the economy that might be
Speaker 1: starting to respond to legged impact of all this easy.
Speaker 1: I still am I still at least I paul I,
Speaker 1: I believe that, uh, you know, we've we've done a
Speaker 1: lot of things here since UH last year that I
Speaker 1: think sort of rebuilds or helps the helps the stock market,
Speaker 1: making it look a little more attractive. The current P
Speaker 1: modile now on the trailing people and the s below
Speaker 1: average in the last third year since nineteen the competitive
Speaker 1: tenure yield is less than half of what it was
Speaker 1: last October, so we've got a lower much lower motible
Speaker 1: and much lower competitive yield. Financial liquidity growth that is
Speaker 1: the excess of M two money growth over a nominal
Speaker 1: GDP just went positive for the first time in the
Speaker 1: second quarter since two thousand seventeen. UM, the advance in
Speaker 1: the SMP this year is more broad base, more sectors
Speaker 1: are participating as opposed to the concentrated nature of the
Speaker 1: advanced last year. UM. Overall, we've got, as I said,
Speaker 1: full on policy support. We've got, we've eliminated the overheat
Speaker 1: pressures that we were struggling with last year. And I
Speaker 1: would argue that fear is very pronounced and prevalent. That
Speaker 1: is a wall of worry this year as opposed to
Speaker 1: what it was last year. So in many regards, UM,
Speaker 1: I think the fundamentals have been improving in the last year,
Speaker 1: while the market has been roughly flat, earnings have slowly
Speaker 1: gone up and yields have come down. So um, Jim,
Speaker 1: given where we are in the cycle, and you mentioned
Speaker 1: kind of markets kind of flat on a trailing twelve
Speaker 1: months basis, Um. You know, people that are still constructive
Speaker 1: on the equity markets sometimes will suggest you need to
Speaker 1: get a defensive however, and is that kind of where
Speaker 1: you are? Are you willing to go out a little
Speaker 1: bit more on the risk and you know, maybe uh
Speaker 1: not necessarily go back into or staying utilities or reads
Speaker 1: or some of those defensive sectors. Well, I wouldn't. I
Speaker 1: think it's a good point. Well, I I would not
Speaker 1: be maximum risk on. I'd be somewhere between neutral and
Speaker 1: halfway to max risk on right now in terms of
Speaker 1: my bullish tilled overall. But I I I would not.
Speaker 1: I don't really favor that you only own defensive stocks
Speaker 1: right now. I think defensive stocks are overpriced, overpopularized, and
Speaker 1: probably have a fair amount of risk, at least on
Speaker 1: a relative basis, if we decide we're not headed for
Speaker 1: an imminent recession. Jim Paulson, chief investment strategist at the
Speaker 1: Luthld Group, talking to us about why he remains bullish
Speaker 1: on stocks well, as has become the norm. It seems
Speaker 1: like over the course of the summer, lots of news
Speaker 1: out of Europe. Again, Let's start with what's going on
Speaker 1: in the UK the Bars Johnson and the parliament gambit
Speaker 1: that he is playing right now in order to try
Speaker 1: to make the October thirty one deadline for Brexit. Let's
Speaker 1: welcome Alberto Gallo, partner and portfolio manager for the Algebras
Speaker 1: Macro Credit Fund UH, also a Bloomberg Opinion opinion columnists,
Speaker 1: joins us from our based in London at Thanks so
Speaker 1: much for joining us. First, let's to start with what's
Speaker 1: going on with the Brexit situation here and Bars Johnson
Speaker 1: and moving to suspend parliament temporarily. What do you what
Speaker 1: do you make of what's going on there? The situation
Speaker 1: is very confused even on the ground. There is three
Speaker 1: to four scenarios here. One of them is, as you know,
Speaker 1: Parliament is suspended. There can be a no confidence vote.
Speaker 1: Depending on this result, you may have new elections or
Speaker 1: you may have a continuation of the current government, which
Speaker 1: then we'll have to decide whether to negotiate or go
Speaker 1: into a hard Brexit. Scenario. The general view we have
Speaker 1: is that this is more a symptom, a symptom of
Speaker 1: the problem than than the cause of the problem. And
Speaker 1: the issue with the UK is the growth model the
Speaker 1: country had for the last twenty thirty years, which was
Speaker 1: importing capital, goods and people on exporting services. This growth
Speaker 1: model no longer works with the United Europe. So the
Speaker 1: UK needs to re engineer itself. There's too much inequality,
Speaker 1: lack of productivity, and unfortunately the various political parties are
Speaker 1: are proposing very quick uh fixes which are not going
Speaker 1: to work. So in any case, we see a start
Speaker 1: inflationary environment. You see inflation going up and growth slowly
Speaker 1: declining in the UK, and some companies are getting hurt.
Speaker 1: So Alberto, I want to talk about I mean, it's
Speaker 1: clear that the uncertainty in Europe persists, as it does
Speaker 1: in the US, as it does in China. This is
Speaker 1: sort of the theme of and perhaps beyond. But I'm
Speaker 1: trying to figure out how an investor positions here, and
Speaker 1: I'm wondering how you can justify lending money to Italy
Speaker 1: for less than a percent uh, just simply on the
Speaker 1: hope that they can actually get a government together please explain.
Speaker 1: I think the I think the Italian new coalition is
Speaker 1: a done deal. It will be announced in our view
Speaker 1: later today, and it will be a better coalition that
Speaker 1: what we had before, more moderate with the Democrats and
Speaker 1: the Five Star Movement UM uniting forces, but potentially less
Speaker 1: populist economic measures than before. As you know, the Northern
Speaker 1: League UM led by Salvini, wanted to uh not only
Speaker 1: stopped migrants, but also had a very strong stance against
Speaker 1: the European Union, potentially with the threat of exiting the Euro.
Speaker 1: This is no longer the case, UM, so we have
Speaker 1: you know, it's true we have less than one percent
Speaker 1: kneeled on Italian tenure. GOVI is, but we have zero Spain, zero,
Speaker 1: Portugal minus seventy beats on German boons and hedged back
Speaker 1: into Euros. You know, the US treasuries also our minus
Speaker 1: sixty beats. So you're investing in Italy? Are you investing
Speaker 1: in Italian? But we've been buying in August when the
Speaker 1: Sylvini had lines that you know, broke the coalition and
Speaker 1: b DPS widened. So we've been buying and we think
Speaker 1: there's still value compared to everything else. We don't think
Speaker 1: the spread over bonds is um it's justifiable compared to
Speaker 1: zero yield everywhere else. Obviously, we live in a queue
Speaker 1: infinity world, in a yield desert that there's no more
Speaker 1: yield in anything that's safe. We see a bit more
Speaker 1: valuing in corporate bonds and in bank bonds than there
Speaker 1: is in sovereign bonds. At the moment, sovereign bonds are
Speaker 1: getting to two crazy levels where it's almost better to
Speaker 1: to buy gold or put your cushion in the mattress
Speaker 1: rather than getting a negative yield. So Alberto is used said,
Speaker 1: we only buy positive yield bonds here, right, So albertis used. Fact,
Speaker 1: your front has about twelve point three billion pounds under management.
Speaker 1: You obviously think about the macro side of investing. What
Speaker 1: is just kind of your overall view about Western eube.
Speaker 1: I mean, it just seems like there are headwinds everywhere
Speaker 1: you look. Are you This year has been and we
Speaker 1: continues to be able to kick the can. World of
Speaker 1: a world that becomes closer to Japan, where growth and
Speaker 1: productivity are still positive but more sluggish, where companies and
Speaker 1: banks kick the can thanks to Dobvish monetary policy. But
Speaker 1: we don't have an acceleration in growth. So we've been
Speaker 1: buying tresory bonds with positive yield across the US, across Australia,
Speaker 1: across Europe, across countries where central banks have to throw
Speaker 1: the towel and become more dovish. We've been buying the
Speaker 1: bonds of corporates and banks which are surviving with relatively
Speaker 1: stronger capital structures. And we've been, um, we've been short
Speaker 1: on small caps, on cyclical equities, on things that basically
Speaker 1: need a pick up a momentum to do well. And
Speaker 1: this continues in our view to be to be a
Speaker 1: good set up. Um. We think there's more value in
Speaker 1: corporate bonds rather than sovereign bonds now. Um, but you
Speaker 1: know we obviously it does depend on what growth will do.
Speaker 1: When growth is becoming increasingly fragile, right become increasing fragile
Speaker 1: over the past months. Alberto Gallo, thank you so much
Speaker 1: for being with us. Alberto Gallo as partner and portfolio
Speaker 1: manager for the Algebras Macro Credit Fund Algebras Investments over
Speaker 1: in London, overseeing twelve point three billion pounds from wide
Speaker 1: talking about what is going on over in Western Europe.
Speaker 1: Italian BONDI yields falling to all time lows today. But
Speaker 1: you have a very interesting I PO that I'll hopefully
Speaker 1: coming to the market later this year. Peloton, the I
Speaker 1: would call exercise leisure company coming public just followed its
Speaker 1: I p O prospectus. Help us dig down a little
Speaker 1: bit deeper, we welcome Drew Singer drews and IPO reporter
Speaker 1: for Bloomberg News. Uh, Drew. One of the things I
Speaker 1: noticed when I first opened the s one is this company.
Speaker 1: I'm not sure they really know what they are? Who
Speaker 1: they are? Are they a tech company? Are a leisure company?
Speaker 1: What do you do? What did you see? I think
Speaker 1: that's the big question. I mean, maybe even the ten
Speaker 1: billion dollar question if that's what this I p O
Speaker 1: ends up valuing the company. Yet, as we hear it
Speaker 1: might I mean, you have investors who are going to
Speaker 1: be spending their labor day vacations trying to figure out
Speaker 1: the answer to that exact question. And everybody's going to
Speaker 1: kind of have their own take. I mean, some people
Speaker 1: are going to look at this like AI, a fit
Speaker 1: Bit or a go pro and their i TS went
Speaker 1: went really badly, if you remember, other people might see
Speaker 1: it more like a Canada goose or a YETI and
Speaker 1: their i ts went went great. So the bulls and
Speaker 1: the bears both have a lot of ammo here. I
Speaker 1: love the soul searching sort of kind of the language
Speaker 1: that we use around some of these tech I p
Speaker 1: o s. What is this company? It's sort of like
Speaker 1: we work, you know, I mean, Drew, I guess can
Speaker 1: we put this in a perspective in terms of I
Speaker 1: p o s in general? How much are this sort
Speaker 1: of tech darlings? Yes, this is an exercise tech sort
Speaker 1: of version of it. How different is that from the
Speaker 1: rest of the industries that try to do I p
Speaker 1: o s in terms of the sort of soul searching
Speaker 1: aspect of what they are. It's a good question because
Speaker 1: some of these companies are so large, and they've raised
Speaker 1: already so much money in both equity and debt that
Speaker 1: in order for them to be uh successful, in order
Speaker 1: for them to return money to all of these investors,
Speaker 1: they need to become massive, just absolutely gigantic, like something
Speaker 1: out of Black Mirror gigantic. That's what we Work seems
Speaker 1: to be talking about, where a million people per city
Speaker 1: are going to be going to these we Work offices.
Speaker 1: And and and changing their their vision for the world. Uh,
Speaker 1: you need the company to be absolutely gigantic, and in
Speaker 1: order to do that, you don't really know what the
Speaker 1: company is going to look like at that stage and
Speaker 1: its maturity just because of how relatively immature the companies
Speaker 1: are at the point of their I p O. Right,
Speaker 1: which is a reason why we hear things like it's
Speaker 1: a lifestyle, it's community, it's the concept of life. We
Speaker 1: are everything to you and you will pay us for it. Exactly. So, Drew,
Speaker 1: what does this company? Let's go ask the easy questions. First,
Speaker 1: does this company make money? No, they don't make money,
Speaker 1: and they're they're very similar to some other large ip
Speaker 1: as we've seen, like Uber and like we work in
Speaker 1: that regard. They they are not yet profitable. So this
Speaker 1: is another really big bet on a company that hasn't
Speaker 1: yet reached a point where they've figured out how to
Speaker 1: turn a profit. Well, technology companies coming public that are
Speaker 1: unprofitable is not necessarily, you know, a new thing. The markets,
Speaker 1: you know, generally been pretty comfortable that. But the issue
Speaker 1: is can they do they have a path of profitability
Speaker 1: that they can really sell to investors. And the reason
Speaker 1: I asked that is because a lot of tech companies
Speaker 1: have been able to do that, including the Amazons of
Speaker 1: the world and the Google's of the world and so on. UM,
Speaker 1: but some notable companies recently like Lift and Uber have
Speaker 1: not been able to sell that path of profitability. What's
Speaker 1: kind of early thinking here with UM this peloton? You're
Speaker 1: reight in that that's such an important question because I
Speaker 1: think people, you know, when when they're looking for the
Speaker 1: next big thing in the I p O market, they
Speaker 1: are thinking about Amazon or or Google. But the truth is,
Speaker 1: most these companies don't figure it out, and they don't
Speaker 1: find a way to become profitable. This filing has been
Speaker 1: out for less than twenty four hours now, so it's
Speaker 1: still a little too early to say whether or not
Speaker 1: it's crystal clear or more murky in terms of their
Speaker 1: path to profitability. But you can rest assured that the
Speaker 1: coming days and weeks are gonna be very very busy
Speaker 1: for I p O investors and some other analysts as
Speaker 1: they try to figure out that question. What are they
Speaker 1: hoping to do with the money that they raise? Potentially? Yeah,
Speaker 1: so let's see here, I mean this they're looking to
Speaker 1: raise We don't know exactly how much they're gonna raise.
Speaker 1: At first of all, the figure, remember in the initial filing,
Speaker 1: is just a placeholder. Um. But they're pretty vague in
Speaker 1: the filing about what exactly they're going to use the
Speaker 1: money for. I mean, this is a quote from the filing.
Speaker 1: We will have broad discretion over the use in that
Speaker 1: proceeds and this offerings. I mean they talk about, you know,
Speaker 1: maybe uh, short term holding, things like that, but they
Speaker 1: say the main purpose of the I p O they're
Speaker 1: just trying to create financial flexibility. So maybe they're gonna
Speaker 1: turn around and and just support some of that profitable
Speaker 1: growth that they've been having, or maybe they can go
Speaker 1: make murders and acquisitions. Uh. They just call it general
Speaker 1: corporate purposes, which is that good old fashioned vague language
Speaker 1: you see in somebody's I p F filings. Paul, I
Speaker 1: love it. Just general financial flexibility for the owners and
Speaker 1: the founders who can then go off and go to
Speaker 1: a beach and drink a peanut clada. I mean to me,
Speaker 1: I think that this is a fascinating story. It is.
Speaker 1: I think it is too so it's interesting. We'll have
Speaker 1: to see how it goes. Drew Singer, thanks so much
Speaker 1: for joining us. Drew's ip, a reporter for Bloomberg News,
Speaker 1: giving us some thoughts on uh this peloton. I p oh,
Speaker 1: it's one of those companies that, again, I think it's
Speaker 1: a I think Drew made a great point. Is it
Speaker 1: a fit bit kind of company where it's just kind
Speaker 1: of a one product and if some of something else
Speaker 1: comes along you kind of lose interest? Or is it
Speaker 1: more you know of a more day to day lifestyle
Speaker 1: type of company, like a Jetti, like a you know, Canada,
Speaker 1: a Goose, And I think that's really gonna be an issue.
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