Speaker 1: This is Bloomberg Business Wait inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business finance and tech news. The Bloomberg Business Week
Speaker 1: podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2: Among those stops on the decline today two point six
Speaker 2: percent lower. In fact, is Walmart's staying at its worst levels.
Speaker 2: That despite the world's largest retailer lifting its annual profit
Speaker 2: outlook again. But you know what else was with it? Tim,
Speaker 2: a bit of a cautious tone.
Speaker 3: Yeah, it's always good to look at the commentary, and
Speaker 3: perhaps this is why the stock is lower. The cautious
Speaker 3: tone on consumers in the US economy. Walmart said that
Speaker 3: the rising borrowing costs, Okay, we know that those are
Speaker 3: hitting consumers. Look at what's happening to you know, credit
Speaker 3: card loans, people having to pay off those, and then
Speaker 3: of course mortgage rates as well, and the resumption of
Speaker 3: student loan repayments will add to the strain on US
Speaker 3: household budgets in the coming months. We've got a great
Speaker 3: guest with us this afternoon. It is with more on
Speaker 3: the results outlook and on the company that is the
Speaker 3: world's largest retailer. We got Bloomberg Intelligence senior retail staples
Speaker 3: and packaged food analysts Jen bartashis. She is joining us
Speaker 3: from New Jersey this afternoon. So why are shares of
Speaker 3: Walmart lower?
Speaker 4: Jen? Well, I think you nailed it when you were
Speaker 4: talking about this in the intro, and it's really just
Speaker 4: that conservative outlook. And you have to remember, for retail,
Speaker 4: back to school and holiday are the most important seasons
Speaker 4: of the year. So if Walmart's striking a cautious tone
Speaker 4: headed into those key seasons, that's probably what's pulling the
Speaker 4: stock down a little bit this afternoon.
Speaker 2: It's like one of those like, uh, what was the
Speaker 2: cautious Was the cautionary?
Speaker 3: Was the caution with the actual outlook when it came
Speaker 3: to numbers, or was it the commentary that we repeated
Speaker 3: there about student loan repayments and borrowing costs.
Speaker 4: It's more about the commentary about the state of the consumer.
Speaker 4: Because Walmart's numbers were great, and you know, the appeal
Speaker 4: of their value proposition is continuing to grow. So when
Speaker 4: you listen to what management's talking about their gaining share
Speaker 4: in some critical areas like grocery, and you know, but
Speaker 4: it's that cautious tone. And the problem is that grocery
Speaker 4: is a great business, but it's not a high margin business.
Speaker 4: And so for Walmart to really be successful, they want
Speaker 4: to incorporate some of more of that general merchandise sales.
Speaker 4: And those are the things that are important to back
Speaker 4: to school and holidays.
Speaker 2: And for those who missed, and I bet Jen heard
Speaker 2: at first hand the CEO Doug McMillan of Walmart said
Speaker 2: on that conference call with investors and analysts, the good stuff, jobs, wages,
Speaker 2: and pockets of a disinflation are helping our customers. That's
Speaker 2: the good stuff. The bad stuff, but rising energy prices,
Speaker 2: resuming student loan payments, higher borrowing costs and tightening lending
Speaker 2: standards and a draw down in excess savings mean that
Speaker 2: household budgets are still under pressure. I mean, Jen, that's
Speaker 2: a big laundry list. And especially for customers that typically
Speaker 2: shop at Walmart, I mean, you're talking about a lot
Speaker 2: of Americans. This is where they shop and that's a big,
Speaker 2: you know, stress list, if you.
Speaker 4: Will, It really is. And what we're seeing and what
Speaker 4: the patterns so far the year has been is that
Speaker 4: people do want to spend, but they're being super selective
Speaker 4: on where they're doing it, which means that they're saving
Speaker 4: everywhere else that they can. And so where you know,
Speaker 4: you do see that people are still going on trips,
Speaker 4: they're still going on vacation, they're still going out to
Speaker 4: dinner for special occasions. That's where they're choosing to do
Speaker 4: that little bit of splurge. But they're making up for
Speaker 4: that splurge by saving and saving, saving, cutting down on
Speaker 4: other expenditures. And that's part of what the behavior that
Speaker 4: we're seeing happen at Walmart as well.
Speaker 2: Go ahead, Carol, Well, Tim and I constantly talk about, well,
Speaker 2: you know Amazon, I need something, go to Amazon. I
Speaker 2: just did a big thing last night because I know
Speaker 2: it's easy to return and stuff.
Speaker 3: But tell us what, Well, I was going to say,
Speaker 3: I heard Jen, I heard you this morning on surveillance
Speaker 3: and you were like speaking to me. I think you
Speaker 3: said everybody goes to Walmart for something? Is that what
Speaker 3: you said?
Speaker 4: It is?
Speaker 2: It is?
Speaker 3: And it's true, so true, Carol, because I do the
Speaker 3: vast majority of our shopping at Amazon. But because I
Speaker 3: have American Express, I'm able to join like the Walmart
Speaker 3: Amazon Prime thing whatever it's called for free, like you
Speaker 3: can join that for free, and if we need something
Speaker 3: that's not available on Amazon, we do it at Walmart.
Speaker 3: And it's like the same thing as Prime.
Speaker 2: So Jen talked to us about Walmart Plus, how big
Speaker 2: a deal is it and how much of a growth
Speaker 2: engine it potentially is or will be for Walmart.
Speaker 4: So Walmart Plus started about two years ago, so it's
Speaker 4: still a pretty new program, but it does compete with
Speaker 4: Amazon Prime, and I think it is going to really
Speaker 4: become a very powerful driver for both sales and profit
Speaker 4: for the company over the next five years. We actually
Speaker 4: published a research piece on this earlier this week where
Speaker 4: we think over the next five years it can add
Speaker 4: one hundred to one hundred and sixty billion dollars in
Speaker 4: revenue for Walmart. And that's just on that's just on
Speaker 4: that on that program, and if you put it in perspective,
Speaker 4: that's the size of target, right. So it has the
Speaker 4: potential to really be a differentiator for Walmart. And part
Speaker 4: of the reason for that is that it appeals exactly
Speaker 4: to what people want, which is convenience and access to
Speaker 4: low prices. And so the fact that you can have
Speaker 4: deliveries of groceries or things that are in store to
Speaker 4: your house on the same day with no fee associated
Speaker 4: with it is a pretty powerful engine for them to
Speaker 4: build off of.
Speaker 3: Can they do it in a way that gives them margins?
Speaker 4: Yeah? And you know, if you think about the way
Speaker 4: a retailer makes the most margin, it's when somebody comes
Speaker 4: into the store, buy something and takes it out to
Speaker 4: their current takes it home themselves. The next most profitable
Speaker 4: thing is when somebody comes and they pick it up
Speaker 4: at the store curbside and then take it home. And
Speaker 4: then the third is one it's shipped to your house. Right,
Speaker 4: So what Walmart has done is that part of the
Speaker 4: value proposition is that curbside pickup and so that business
Speaker 4: has been growing very quickly for Walmart and is getting
Speaker 4: a lot of adoption. So that's actually a pretty a
Speaker 4: pretty good way to engage digital customers without having a
Speaker 4: margin drag that you would associate with things that have
Speaker 4: to be shipped to your home.
Speaker 3: We live so Caroly and I live in Carroll's in
Speaker 3: New Jersey. I'm in Brooklyn, which just outside, so you're
Speaker 3: in the sun. What I'm saying is you're in the city,
Speaker 3: You're not like driving to these places to actually pick
Speaker 3: stuff up. Now, when I was on printal leave while
Speaker 3: we were visiting my parents in California, and my sister
Speaker 3: was like ordering stuff from Target and we'd go, we'd
Speaker 3: drive there, they would I mean, anyone listening who has
Speaker 3: a car is actually laughing at me the fact that
Speaker 3: I'm like talking about this. But it's such a we're
Speaker 3: such strange animals in New York City because we don't
Speaker 3: take advantage of these programs. But I will tell you
Speaker 3: it is so easy to order something on one of
Speaker 3: these apps and then drive up to the curb and
Speaker 3: they literally bring it out to your car.
Speaker 2: I will tell you my daughter who goes to school
Speaker 2: six hours outside of New York City in a southern state,
Speaker 2: it's much more like residential and so and so forth.
Speaker 2: I remember one of the years we were driving to
Speaker 2: her school and Jen along the way, we kept ordering
Speaker 2: from Target, like she's like, oh, I need this, So
Speaker 2: we'll be like, okay, well in an hour, we'll be
Speaker 2: at this Target and we would just pick up curbside,
Speaker 2: and it was incredible.
Speaker 4: And it's that convenience that's really driving the success of
Speaker 4: these retailers because they're not only offering value, but it's convenience.
Speaker 4: And this is where for Walmart's perspective. You know, Amazon
Speaker 4: is a behemoth and they're very good at what they do.
Speaker 4: But Walmart has been building out the size of its marketplace.
Speaker 4: The number of sellers on its marketplace is becoming more competitive,
Speaker 4: and that powerful engine of being able to pick things
Speaker 4: up at the store at your convenience or have it
Speaker 4: delivered to your home same day is a pretty good
Speaker 4: strategy that they're following.
Speaker 3: What's that stat Jen with the X percentage of the
Speaker 3: US population lives within you know, just a couple miles
Speaker 3: of a Walmart.
Speaker 4: It's like over eighty five percent of the US population
Speaker 4: lives within a ten mile radius of a Walmart.
Speaker 3: I believe is what incredible the company has said.
Speaker 2: All right, so you were sitting down with Doug McMillan
Speaker 2: and you wanted to I don't know, you had two
Speaker 2: minutes with him. What would be the question you would
Speaker 2: ask him?
Speaker 4: Well, I would ask him about things for the company
Speaker 4: hasn't really given a lot of disclosure. I would ask
Speaker 4: him about the size of their membership for Walmart. Plus,
Speaker 4: I would ask him about the current profitability level of
Speaker 4: their of their online business. These are things that we
Speaker 4: know they're building, things that we know that they're working on,
Speaker 4: but we don't have a lot of detail behind it
Speaker 4: yet to understand how profitable it is or will be
Speaker 4: for the company long term.
Speaker 2: Ye, and it's matth I'm like, look at your research
Speaker 2: to about you know, advertising revenue at Walmart. Like it's
Speaker 2: just this company that the broad reach by just evolving.
Speaker 3: Jen, you're the best you've been up since, like you know,
Speaker 3: the crack of dawn covering this stuff. We love it
Speaker 3: when you join us and we get to talk. Also,
Speaker 3: just be honest, do Carol and I just sound like
Speaker 3: complete luttites the fact that we just found out about
Speaker 3: this curb side pickup.
Speaker 2: At a little while.
Speaker 4: Not in the least.
Speaker 2: Okay, goody, Jen, And no worry, it's just back to
Speaker 2: school shopping is next and oh yeah the holiday shopping season,
Speaker 2: so you'll get plenty of rest or not listen, we do.
Speaker 4: I think it's going to be a busy second half
Speaker 4: of the year, let's put it that way.
Speaker 2: Well, we'll be checking in with you, no doubt about it.
Speaker 2: Jen Bartasha's she's Bloomberg Intelligence Senior Retail Stables and package
Speaker 2: food analysts really a must read among our Bloomberg Intelligence team,
Speaker 2: and so appreciate her finding some time Walmart chairs, though
Speaker 2: still under pressure. In today's straight.
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Speaker 2: I don't know if he would pall, but Bill Gates
Speaker 2: back in March talked about seeing an artificial intelligence system
Speaker 2: ac tricky medical examination and how it represented the most
Speaker 2: important advance in technology since the graphical user interface. The
Speaker 2: guy uh. He said that software that, of course lets
Speaker 2: people to more easily interact with computers, and in the
Speaker 2: nineteen eighty set the standard for modern operating systems, including
Speaker 2: Microsoft's Windows.
Speaker 3: That's the gooey Carol, that gooey gewey.
Speaker 2: I said that, I know, gueye wooey.
Speaker 3: Gooey wooey, but keep it in mind. Incredible statement.
Speaker 2: Well, it is right you think about how game changing
Speaker 2: that was. Keep in mind, Microsoft has an app. It's
Speaker 2: called the DAX app. It's powered by AI. It's from
Speaker 2: the company's Nuanced division, and it transcribes doctors and patients comments,
Speaker 2: then creates a clinical physician summary formatted for an electronic
Speaker 2: health record. So AI in helping out doctors.
Speaker 3: It's an episode actually of the Bloomer Originals video series
Speaker 3: AI I RL earlier this year. It can be found
Speaker 3: on our streaming surface service. With more on the topic
Speaker 3: and curious if AI is yet penetrating his world, We
Speaker 3: got back with us doctor Ian Luspader. He's clinical professor
Speaker 3: of Medicine at NYU Lango and Medical Center. He joins
Speaker 3: us on Zoom from New York City, Doctor Lusbater, How
Speaker 3: are you.
Speaker 5: Great to see you guys, Carol and Tim. Tim, congratulations
Speaker 5: on the new born. Hope ball is going well.
Speaker 3: Yeah, all is going well. Thank you very much. Hey,
Speaker 3: how is that AI hitting your world? I mean, the
Speaker 3: medical community is one where I got to tell you
Speaker 3: sometimes I'm still required to send faxes.
Speaker 2: Right.
Speaker 5: Well, well, we're not there yet, but AI has tremendous potential,
Speaker 5: and AI functions in many ways like a person or
Speaker 5: a doctorate takes a lot of data points, analyzes it
Speaker 5: and process it and comes up with some conclusions. We're
Speaker 5: still not quite there integrating in every way. But the
Speaker 5: potential is enormous, from scheduling appointments, to pre interviewing patients
Speaker 5: to find out what they're coming in for, assisting with
Speaker 5: a diagnosis in the exam room.
Speaker 3: Well, talk about that part, assisting with the diagnosis. That's
Speaker 3: that's really interesting to me because what you guys as
Speaker 3: doctors try to do. And look, I didn't go to
Speaker 3: medical school, but I've been to plenty of doctors. You
Speaker 3: ask so many questions about symptoms, and each time somebody
Speaker 3: answers a question about that symptom, you know, there's sort
Speaker 3: of this calculation that goes on inside a doctor's head. Okay,
Speaker 3: it could be this, or it could be this, and
Speaker 3: you keep investigating. So how do you use how do
Speaker 3: you use you know, first the internet or databases right now?
Speaker 3: And how do you think that can be aided AI.
Speaker 5: So we, in a very similar way, extract information. A
Speaker 5: patient comes in with a complaint or an issue. We
Speaker 5: review a variety of questions that helps us hone in
Speaker 5: eliminate certain things and gives us the most likely diagnosis
Speaker 5: based on history, and then we get additional information from
Speaker 5: tests or labs to try and make a specific diagnosis.
Speaker 5: And then a specific treatment. AI can be very helpful
Speaker 5: because it can also process a lot of questions, either
Speaker 5: interrogate the patient or review lab data and kind of
Speaker 5: synthesize the information. And we see this most helpfully for example,
Speaker 5: with X rays. If you're comparing a series of cat scans,
Speaker 5: tremendous amount of data and subtle abnormalities can be picked up.
Speaker 5: Same for lab data we're using it for example with colonoscopy,
Speaker 5: where AI picks up subtle abnormality such as a polyp.
Speaker 5: Now it can't really tell if that is a polyp
Speaker 5: or necessarily maybe a clump of mucus. The doctor still
Speaker 5: has to irrigate it away and say, oh, yes, you're right,
Speaker 5: and is pursuing it. So AI can be very helpful
Speaker 5: to say, hey, have you thought about this? Is this relevant?
Speaker 5: Do we need to explore it further? And whether it's
Speaker 5: developing new drugs, whether it's processing a lot of lab
Speaker 5: data to say, hey, it looks like this blood count
Speaker 5: has slowly been trickling down. Do we have to worry
Speaker 5: about bleeding somewhere? Could there be a cancer? So it's
Speaker 5: not really integrated yet into the medical record system. It's
Speaker 5: not in the office helping us. Yet it's really more
Speaker 5: scheduling appointments. It's more helping with cat scans or diagnostic tests,
Speaker 5: even robotic surgery. But eventually, I think it will come
Speaker 5: into the office to really help extract important questions from patients,
Speaker 5: tact important data, and help us make a diagnosis and
Speaker 5: a treatment plan.
Speaker 2: Ian how long does it take for it to come
Speaker 2: in you think in a really significant way.
Speaker 5: You know, a lot of that is based on doing trials,
Speaker 5: A lot of it is based on the developer of
Speaker 5: the electronic medical record. We spend probably fifty percent of
Speaker 5: our time documenting, so if we can expand our patient
Speaker 5: contact time and thinking time and reducing our documentation time,
Speaker 5: that will definitely improve our ability to get information. I
Speaker 5: think within the next few years it's going to be
Speaker 5: in the office, but it's not certainly next month.
Speaker 3: Do you see this from the incumbent players in medicine
Speaker 3: right now? And I think of one, I mean Epic
Speaker 3: Medical Systems is like, if you go anywhere EPIC owns,
Speaker 3: the room is are they going to do it?
Speaker 6: Epic?
Speaker 3: It is the behemor it's the behemor well.
Speaker 5: They're talking about it, yep, it's the behemoth. All the
Speaker 5: major medical centers. They've been able in a few short
Speaker 5: years to really dominate it, and basically everyone has to
Speaker 5: join now because all the big players are on it
Speaker 5: and it is actually a pretty good medical record system.
Speaker 5: They are working on it and we're working with them
Speaker 5: to develop different algorithms. But it is not yet interviewing
Speaker 5: the patient. It is not yet documenting helping us document.
Speaker 5: We still have to dictate the charter or type the note,
Speaker 5: and it is not at the end of the day
Speaker 5: helping us process the information and say, hey, you missed
Speaker 5: this low blood count or high liver enzyme. Maybe we
Speaker 5: should look into it. I think that's going to happen,
Speaker 5: but I don't think it's going to happen in the
Speaker 5: next year.
Speaker 2: Do we need one system though, for this to really work.
Speaker 5: Yes, we've talked about this before for many years, having
Speaker 5: a national system where if someone goes to a hospital
Speaker 5: across the street or us the country, we have all
Speaker 5: the information integrated so we can do less tests and
Speaker 5: have to be less redundant in what we do. But
Speaker 5: that is a problem with administration and hip and privacy violations.
Speaker 5: We really would need the government to say, look, we're
Speaker 5: mandating that everyone have one system that puts everyone on
Speaker 5: one platform. So that's also a few years away. But
Speaker 5: we should have done that years ago. It's really been
Speaker 5: a waste of time having all these separate systems that
Speaker 5: don't really talk to each other.
Speaker 3: So, doctor Lespater, how does this end up in the
Speaker 3: operating room in the future.
Speaker 5: Well, we're already doing it for robotic surgery, which is
Speaker 5: a tremendous advance small incisions. The robots really help us
Speaker 5: do very technically delicate procedures. There are better outcomes. It's
Speaker 5: helping with drug development, it's helping with analyzing studies, so
Speaker 5: it can take all our information.
Speaker 3: So Carol, go back to what you were saying. When
Speaker 3: it comes to medical imaging, right, you know, it's only
Speaker 3: as perfect as the person reading the image.
Speaker 2: Right, What if somebody has a bad day or is tired,
Speaker 2: or they just miss it. It's not judge. I'm not
Speaker 2: being judgy.
Speaker 3: It happens.
Speaker 2: It's life.
Speaker 3: It happens. Happens to people in my family, like and
Speaker 3: you know what happens is there can be serious consequences
Speaker 3: to that. What if you were able to use AI
Speaker 3: and I know they're working on this. There was an
Speaker 3: article in times just a few months ago when it
Speaker 3: comes to mammograms using AI technology to try to find
Speaker 3: masses and mammograms.
Speaker 2: And just if it's a case of able to go
Speaker 2: through stuff and then just say listen, we got some
Speaker 2: questions about this, and then a radiologist or a doctor
Speaker 2: comes in and says, okay, let me take another look
Speaker 2: at this, and just it's another layer of really making
Speaker 2: sure that you don't miss something that's truly truly important.
Speaker 3: I mean it's in a hybrid way, right, working hand
Speaker 3: in hand, right.
Speaker 2: And in terms of medicine, right, it's never necessarily an
Speaker 2: exact science. So if you are able to have some
Speaker 2: kind of database that pulls in all the kind of
Speaker 2: different variations, if either an A or reading on a
Speaker 2: scan that shows when there could be potential problems, I think,
Speaker 2: think about how valuable and important that could be. Ian
Speaker 2: ls Beta, We always look forward to it. Doctor Ian
Speaker 2: las Beta over at NYU Lango Medical Center.
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Speaker 2: Thirty tim Some data last month a came out from
Speaker 2: the research from Pitchbook. It showed VC venture capital funding
Speaker 2: globally almost halved in the first six months of twenty
Speaker 2: twenty three, so showing investors just not interested. Also some
Speaker 2: less demand amid sharply higher interest rates. And this is though,
Speaker 2: despite huge interest in AI startups sparked by the success
Speaker 2: of open AI's Chatchipe. That's where money is going.
Speaker 3: Yeah, Investors report more than forty billion dollars into AI
Speaker 3: startups in the past six months. That's according to the data,
Speaker 3: including the ten billion dollar investment by Microsoft and open
Speaker 3: Ai and one point three billion dollars in funding for
Speaker 3: rival Inflection AI.
Speaker 2: All right, so let's get to it. Because back with
Speaker 2: us to talk about what's going on when it comes
Speaker 2: to the VC world. And we're delighted to have her
Speaker 2: back with us. Shila Patel. She's vice chairgeneral partner of
Speaker 2: b Capital. She's former chairman of Goldman Saccesset Management. She's
Speaker 2: with us on Zoom from Park City, Utah. Sheila, Nice
Speaker 2: to be talking with you again. Last time I think
Speaker 2: it was at the Milken Institute Global Conference in May.
Speaker 2: How are you and talk to us about your world
Speaker 2: and how things have changed.
Speaker 7: I'm great, Thank you so much, and it's so great
Speaker 7: to chat with you again. You know, I think the
Speaker 7: world since Milkin has had some good news, had some
Speaker 7: rougher news, but overall, I think it's been a fascinating
Speaker 7: period to see how investor sentiment hasn't necessarily responded to
Speaker 7: some of the good news we're seeing on the economy
Speaker 7: and particularly among public companies on profits and so on.
Speaker 7: So there's a lot out there to look to. But
Speaker 7: as you pointed out in opening this, when it comes
Speaker 7: to venture there are definitely some challenges and it'll be
Speaker 7: fun to chat about them with you.
Speaker 3: Well, let's talk about the challenges first, and then I
Speaker 3: want to talk about the opportunities. So it's been choppy
Speaker 3: waters certainly given higher interest rates and pullback on funding,
Speaker 3: and we've seen some venture backed companies wealth cease to exist,
Speaker 3: cease to operate. It's a different world than it was
Speaker 3: in twenty twenty and twenty twenty one. What are the
Speaker 3: challenges that you're seeing at the capital.
Speaker 7: Well, I think you know, along with the entire VC community.
Speaker 7: We certainly see challenges as you mentioned, in terms of
Speaker 7: investor interest, and I think institutional investors data a survey
Speaker 7: of about forty four LPs show that almost three quarters
Speaker 7: would allocate less to VC next year. Now, many of
Speaker 7: them have been strong allocators and supporters, and I think
Speaker 7: they'll be back, but I think there's definitely concern over valuations,
Speaker 7: and that's where sometimes challenging news can end up being
Speaker 7: good news. We've been very fortunate in being able to
Speaker 7: raise our latest fun Growth fund three and beat our
Speaker 7: goals with that, and you have seen several VC firms,
Speaker 7: particularly some of the largest, have some success raising money.
Speaker 7: I think because of those other themes that you mentioned,
Speaker 7: the interest in AI, the focus on areas where tech
Speaker 7: really can be additive in up and down markets, and
Speaker 7: that in many cases is enterprise and fintech, which are
Speaker 7: areas in which the capital operates. So I think there
Speaker 7: are some high points, but in particular, investors are looking
Speaker 7: to really make sure that the people they give money
Speaker 7: too are focused on these questions of valuations, and that's
Speaker 7: where the data has really been stark and is the
Speaker 7: opportunity maybe the silver lining to the cloud, so to speak,
Speaker 7: because valuations have come in and it means there are
Speaker 7: great opportunities to find good tech companies at much more
Speaker 7: reasonable and appropriate valuation.
Speaker 2: Hey, CILA, is AI actually helping you guys find better
Speaker 2: opportunities right now and able to go through maybe a
Speaker 2: lot more deals and figure out what really makes sense.
Speaker 8: Yeah.
Speaker 7: I think applying AI to deal flow and to analysis
Speaker 7: goes hand in hand with looking at how our companies
Speaker 7: are using AI. And certainly I would say it's been
Speaker 7: an amazing partnership talking about AI with our strategic partner BCG.
Speaker 7: When you look at the work that BCG has put
Speaker 7: in at all levels of Corporate America and global corporates
Speaker 7: and thought about how to apply AI to solving some
Speaker 7: of the problems they're facing, it has really helped us
Speaker 7: take it in house and think about ways to apply
Speaker 7: it in our own investing, in our application of analyzing
Speaker 7: potential portfolio companies.
Speaker 2: But I guess what I'm also wondering too, has something
Speaker 2: fundamentally It's interesting to hear what you say about, you know,
Speaker 2: investor interest when it comes to VC. Is there something
Speaker 2: fundamentally structurally going on? We talk a lot about I know,
Speaker 2: I think we did it milk, you know, the private
Speaker 2: credit markets and the amount of money that's out there.
Speaker 2: I mean, is there something structurally fundamentally going on that's
Speaker 2: changing the VC world like it was, like it's always been.
Speaker 7: Yeah, Look, I actually I guess I'll I'll put my
Speaker 7: longer term hat on it. To me, is the maturation
Speaker 7: of a segment of investing, just like we've seen other
Speaker 7: areas go through. There was a moment when index investing
Speaker 7: was young and new, and some crazy you know, evaluation,
Speaker 7: some crazy structures, lots of things went on, and now
Speaker 7: it's a typical part of people's investment in portfolios. I
Speaker 7: think when I look at venture and I compare it
Speaker 7: to the history my twenty years at Goldman, my thirty
Speaker 7: years in the industry, and watching various areas come into
Speaker 7: their own such as quant even hedge funds and private equity.
Speaker 7: They go through a maturation process, and I think it's
Speaker 7: a natural evolution to me, you know, I look at
Speaker 7: venture and maybe it's because I'm one of the old
Speaker 7: people in venture. That's how young an industry it is.
Speaker 7: It's filled with amazing technology experts, but maybe you haven't
Speaker 7: seen as many market cycles and at the end of
Speaker 7: the day BC has to perform the same as other areas,
Speaker 7: and that maturation is part of why you see some
Speaker 7: funds able to cope with the changing environment, the same
Speaker 7: as you see some portfolio companies coping better with a
Speaker 7: more difficult funding environment.
Speaker 3: Okay, you know, we only have a couple of minutes left,
Speaker 3: and I wanted to get to the opportunities that you're
Speaker 3: seeing right now. Sheila's so, so talk to me about
Speaker 3: two opportunities in two senses of the word. One geographically,
Speaker 3: where are you deploying money? And then also what types
Speaker 3: of companies excite you right now?
Speaker 7: Sure, well, maybe I'll start with the last first, because
Speaker 7: I think it ties into that question of AI. I
Speaker 7: think that we spend so much time and maybe this
Speaker 7: is a trend in general on the downside of certain
Speaker 7: technologies or of things in general, that the upsides sometimes
Speaker 7: get missed. And when I look at AI, I look
Speaker 7: at the way a can turbo boost drug discovery and
Speaker 7: research in areas that will be really important in a
Speaker 7: climate changing world, like crop protection. So a company like
Speaker 7: atom Wise, which is one of our portfolio company, a
Speaker 7: small molecule expert partnering with the world's leading pharmaceuticals, biotechs,
Speaker 7: agrochemical companies to discover new ways and new treatments, whether
Speaker 7: drug treatments or whether crop protection, et cetera. So I
Speaker 7: think that's an incredible area for focus for AI is
Speaker 7: drug discovery, small molecule work that can go beyond medications
Speaker 7: into other applications, industrial applications. That's amazing to me. And
Speaker 7: then when I think about that broader question on opportunity,
Speaker 7: I think that what we have to look to is
Speaker 7: the longer term prospect for some of these companies when
Speaker 7: you have a lower valuation to start with, and that
Speaker 7: means from an investor perspective, you want to be sure
Speaker 7: where the challenging valuations, you're challenging companies on the levels
Speaker 7: they're looking to raise.
Speaker 2: Super stuff. So appreciated. Shila Patel, Vice Chair, General Partner
Speaker 2: be Capital, joining us on Zoom from Park City, Utah.
Speaker 2: As we said from a chairman of Goldman Sachs Asset
Speaker 2: Manage talking about the VC space.
Speaker 1: If you're listening to the Bloomberg Business Week podcast, catch
Speaker 1: us live weekday afternoons from three to six Eastern Listen
Speaker 1: on Bloomberg dot com, the iHeartRadio app, and the Bloomberg
Speaker 1: Business app or watch us live on YouTube.
Speaker 3: Carol Ifuber get those textounts to just from unknown numbers.
Speaker 3: Sometimes they say just hello, or maybe they have something
Speaker 3: more like, Hi David, I'm Vicky Hoe. Don't you remember me?
Speaker 2: I run in the other direction.
Speaker 3: Okay, well that's probably a pretty smart thing to do.
Speaker 3: I mean I get them all the time, but unlike Bloomberg,
Speaker 3: Zeke Fox, and probably like most people who are just
Speaker 3: a bit technologically savvy, I ignore them. We're grateful that
Speaker 3: Zeke didn't, though, because even if it meant there was
Speaker 3: a risk he'd be led to what's known as pig butchering.
Speaker 3: If you're a little confused, don't worry. This is all
Speaker 3: part of Zeke's brand new book. It's called Number Go Up.
Speaker 3: Inside Crypto's Wild Rise and Staggering Fall, in which he
Speaker 3: uncovers a crypto powered human trafficking ring in Cambodia.
Speaker 2: Yeah, Zeke's new book coming out September twelfth. The excerpt
Speaker 2: is the domestic cover story of the new issue of Bloomberg
Speaker 2: Business Week on stands right as we speak online a
Speaker 2: Bloomberg dot com slash businessweeknd on the Bloomberg with more
Speaker 2: Zeke is with us. He is financial investigations reporter at
Speaker 2: Bloomberg News. He's on Zoom in New York City. Also
Speaker 2: here the editor of Bloomberg BusinessWeek, Jill Weber. Here in
Speaker 2: our Bloomberg Interactive Brokers studio. Hi, Joel High, Vicky Hei Zee.
Speaker 9: Only two of those three characters are real. So so
Speaker 9: this is an amazing excerpt. I'm so excited for Zeke
Speaker 9: in this book.
Speaker 3: Number go up.
Speaker 9: You can pre order your copy right now on Amazon
Speaker 9: dot com. Right Zeke, And uh, this is a little
Speaker 9: sneak peak of where some of the book goes. And
Speaker 9: we're just so tickled to have it as an excerpt
Speaker 9: in this current issue and as our cover story. And
Speaker 9: you know we're talking about Zeke here and uh, you
Speaker 9: know it all begins with this text that he got,
Speaker 9: uh from a person named quote unquote Vicky. Who was
Speaker 9: Who is Vicky? And what text did you get?
Speaker 3: Zeke?
Speaker 6: Yeah, so Vicky gave me and sent me a text
Speaker 6: out of nowhere saying like Hi, David, how's it going
Speaker 6: or something like that, and like I'm not David obviously,
Speaker 6: So I've been getting a lot of these. I'm been
Speaker 6: kind of curious about that I decided to me.
Speaker 9: Yeah, Tim says he gets like Carol, get them, Yeah,
Speaker 9: I ignored delete reporter of spam if you can, right,
Speaker 9: but you you wrote.
Speaker 6: Back, yeah, And the first part of this, like, it's
Speaker 6: probably about what you would assume. Where Vicky. She tries
Speaker 6: to make friends with me. She's flirting a little bit,
Speaker 6: she's sending me suggestive pictures and she's like a beautiful,
Speaker 6: heavily airshed young woman who claims to be in New
Speaker 6: York like me, but does not want to meet up,
Speaker 6: and none of her pictures actually look like she's in
Speaker 6: New York. And after I'm waiting for her to try
Speaker 6: to scam me because I wanted to know how it works,
Speaker 6: and it takes like days before she's very patient before
Speaker 6: her true mission comes out, and she starts telling me
Speaker 6: about how good she is at bitcoin trading and that
Speaker 6: I gotta try to well. She doesn't even say like
Speaker 6: you got a trade like me. She really plays it slow.
Speaker 6: She's like, you know, I'm just just real busy today.
Speaker 6: I can't talk. I got to make like thousands of
Speaker 6: dollars on my bitcoin trades. And then finally, after like
Speaker 6: a lot of trying, she's like Okay, I'll let you
Speaker 6: in on it, download this app and send me some
Speaker 6: of this cryptocurrency called Tetor. And that's what I was
Speaker 6: really waiting to hear.
Speaker 9: What I love about it, though, is how how slow
Speaker 9: she is. It's like, I mean, and this comes through
Speaker 9: in the excerpt, is like you're like encouraging her along
Speaker 9: to like, come on, get to the point where you're
Speaker 9: trying me.
Speaker 6: I even I had to tell her that, like I
Speaker 6: really wanted a tesla, like I need to make money,
Speaker 6: like she just she was really wanted to make sure
Speaker 6: I was hooked before she went for the scam. And
Speaker 6: once so I sent her Tether is like it's a
Speaker 6: stable coin. It always costs a dollar because it's supposedly
Speaker 6: backed by real dollars in the bank. And you can
Speaker 6: go on any of your normal crypto apps like coinbase
Speaker 6: or crypto dot com or whatever, you can buy tether
Speaker 6: and then you send them to Vicky at her supposedly
Speaker 6: like magiccoin trading app. And so all that involves is
Speaker 6: getting Vicky said. Vicky gave me her address. I mean,
Speaker 6: she walked me through it very carefully, and I sent
Speaker 6: her a hundred tethers from like a normal trading app
Speaker 6: to her special app where I was going to get
Speaker 6: make this like big score. But as soon as I
Speaker 6: sent it, she started telling me like I needed to
Speaker 6: send more, at which point I felt like it had
Speaker 6: gone far enough. I told her I was a reporter,
Speaker 6: and she disappeared. But the part where the story gets
Speaker 6: really dark and really weird is when I tried to
Speaker 6: figure out who is on the other end of these messages,
Speaker 6: like who could Vicky b.
Speaker 3: So?
Speaker 6: And it turns out.
Speaker 9: That that I want to I want to slow you
Speaker 9: down before I let.
Speaker 2: You go there, Uh the great revel Yeah, Which that's it, right.
Speaker 9: You know part part of what the book is so
Speaker 9: much bigger than just this, right. Keep in mind this
Speaker 9: is an excerpt, and Zeke, I do want to just
Speaker 9: like back up for a second and talk about, uh,
Speaker 9: how you ended up having this book at all?
Speaker 6: Well, I was I was hoping that I was hoping
Speaker 6: that you would because good this really started. This started like, uh,
Speaker 6: you know, it's almost two years ago, maybe even a
Speaker 6: little more than two years ago. Joel came by my
Speaker 6: desk and I had not been reporting on crypto at all.
Speaker 6: I tend to write about like weird stuff going on
Speaker 6: on Wall Street. But I've sort of resisted crypto as
Speaker 6: a topic. I like most of you listening to this,
Speaker 6: you probably feel like I'm never going to get it,
Speaker 6: and like the constant like boosterisms of a turn off.
Speaker 6: But Joel said, hey, what do you know about stable
Speaker 6: coins like Tether? And I thought, huh, I mean, maybe
Speaker 6: like this wants I mean, if Joel wants the story,
Speaker 6: it might be kind of fun to look into it.
Speaker 6: And but I mean, I don't think I'm sure that
Speaker 6: neither of us had any idea where looking into Tether
Speaker 6: was was going to take us now.
Speaker 9: Certainly not me. And we've had you know, great reporting
Speaker 9: from Zeke on on Tether and more crypto along the way.
Speaker 9: So yeah, just a little pop up my own car
Speaker 9: there for helping Zeke get inspired to write and get
Speaker 9: interested in Tether, because the Tether part is ultimately where
Speaker 9: this this other side of your your story about you know,
Speaker 9: quote unquote Vicky takes you. And I will say, this
Speaker 9: is where it gets dark. We've been kind of laughing,
Speaker 9: ha ha, it gets dark really quickly here, Zeke. And
Speaker 9: why don't you take us to this human rights catastrophe
Speaker 9: that you discovered yeah, on the other side of the world.
Speaker 6: I mean, the truth, as I learned through activists and
Speaker 6: reporters on the ground in Southeast Asia, is that the
Speaker 6: people who send these text messages are themselves often victims
Speaker 6: of human trafficking. And there's whole office buildings of people
Speaker 6: who've been learned to say, like Cambodia is a popular
Speaker 6: spot for this, and they've been learned there with the
Speaker 6: promise of a good job. Once they arrive, they're trapped
Speaker 6: and they're forced to scam people under with the threat
Speaker 6: of beatings or torture or even worse. And it sounds
Speaker 6: like some sort of like QAnon conspiracy thing, but like
Speaker 6: it's real. These messages are often coming from people who
Speaker 6: are suffering like horrible abuses and can't leave unless they
Speaker 6: pay essentially like a large ransom to the gangs that
Speaker 6: run these scam compounds.
Speaker 3: Can you Zeke talk about who you met in Ho
Speaker 3: Chi Minh City and how he was able to escape
Speaker 3: from this one of these uh, one of these sort
Speaker 3: of prison like structures.
Speaker 6: So over a video chat with the translator, I started
Speaker 6: interviewing people who had escaped from these compounds. One of
Speaker 6: them his name is twee. He's twenty nine years old.
Speaker 6: The first time we speak on Zoom's it's like a
Speaker 6: rainy night in ho Chi Minh city. He's walking down
Speaker 6: the street smoking a cigarette. I can see that he's
Speaker 6: missing quite a few teeth, and he tells me that
Speaker 6: these were he lost them in like a horrible beating
Speaker 6: by his captors. And it was truly a desperate situation.
Speaker 6: He'd been tricked into, tricked into going to Cambodia, and
Speaker 6: he was only able to escape by stealing a guard's
Speaker 6: phone then hiding it in his rectum, which was a
Speaker 6: trick that he'd learned in prison. Then and like he's
Speaker 6: telling me this stuff and it's it's pretty hard to believe.
Speaker 6: He told me that he was able to take the
Speaker 6: phone apart with no tools, and then since he didn't
Speaker 6: have a charger, he hot wired the battery to a
Speaker 6: fluorescent light fixture in the ceiling of the room where
Speaker 6: he's being held. So he had been a great source
Speaker 6: of information about these schemes and about these scam compounds
Speaker 6: and Cambodia. But I wasn't quite sure about this part
Speaker 6: of the story. So I went to Hochi min the
Speaker 6: city I met hup with him. I told him like
Speaker 6: tweet like, I'm so sorry for what's happened to you.
Speaker 6: I hate to say this though, but like, is that
Speaker 6: even really possible to charge an iPhone like that? And
Speaker 6: with no hesitation? Well he said yeah, he said, I'll
Speaker 6: show you right now, went to the store, bought like
Speaker 6: a old iPhone for about fifty bucks, and with no
Speaker 6: hesitation he took it apart. Took apart a lamp at
Speaker 6: an LED light bulb in my room hotel room, wired
Speaker 6: it to the battery and got should turn on.
Speaker 3: So it was so you can do that?
Speaker 6: Incredibly impressed.
Speaker 9: Yes, so, and so bring it back to to so
Speaker 9: we if we if you have firsthand experience from these
Speaker 9: people and what they've endured and what they've endured to
Speaker 9: get their freedom back, what did you learn from talking
Speaker 9: to them about what was on the other side of
Speaker 9: these let's call it like a modified a hotel, shall
Speaker 9: we say?
Speaker 6: Well, we had been held in se Anookville, which is
Speaker 6: a city in southwestern Cambodia that had an incredible casino
Speaker 6: building boom fueled by Chinese investors in recent years. Then
Speaker 6: like a horrible bust win the during COVID and also
Speaker 6: due to a change in the law about online gambling
Speaker 6: in Cambodia, so there was now all this empty space,
Speaker 6: all these people who specialized in gam online gambling, and
Speaker 6: he'd been held in this one area called Chinatown, which
Speaker 6: is like the most like evil office park on Earth,
Speaker 6: like twenty maybe like fifty towers, where there were credible
Speaker 6: reports and also at local media and other press that
Speaker 6: were saying that these were sites of where there were
Speaker 6: thousands and thousands of people who were forced to scam.
Speaker 6: But I felt like this was one of those stories
Speaker 6: that you had to see to believe. And also the
Speaker 6: people who covered it, understandably were not that interested in
Speaker 6: the in the crypto angle, but I felt like crypto
Speaker 6: was I wanted to know how crypto was really fueling
Speaker 6: these these scams, because at the heart of it, like
Speaker 6: people in the US or other well off countries need
Speaker 6: to send money to like Chinese gangsters in Cambodia, And
Speaker 6: if you tried to do that with like your visa card,
Speaker 6: like that's not going to work for very long, Like
Speaker 6: there's going to be charge. Visa would cut you off
Speaker 6: in a minute, and uh Bank of America is going
Speaker 6: to like flag that transfer, but if you do it
Speaker 6: using crypto, it's instant, it's irreversible. And it's also it's
Speaker 6: kind of plausible that there could be this like great
Speaker 6: bitcoin trading strategy, I mean plausible for if you're like
Speaker 6: not that well informed. So and what I saw when
Speaker 6: I went to Cambodia was that at I went to
Speaker 6: Chinatown and it was just as twe and the other
Speaker 6: escapees had described and right although by the time that
Speaker 6: I went to visit, it had largely been shut down
Speaker 6: by become like an international embarrassment and Camponian authorities had
Speaker 6: closed down most of the scam compounds there. But right
Speaker 6: at the entrance, there was a store that had closed.
Speaker 6: There's a money changing store, and it had a sign
Speaker 6: on its billboard advertising that you could change your tether
Speaker 6: for US dollars there, which is not something I'd seen
Speaker 6: like anywhere else in the real world. So that was
Speaker 6: a big shock to me.
Speaker 2: So we have about a minute left here, Zeke, and
Speaker 2: there's we know so much more in your book, but
Speaker 2: this particular excerpt, I mean, how does it make you
Speaker 2: think kind of about you know, this the crypto world
Speaker 2: where we are a lot of questions out there.
Speaker 6: I mean, to me, this is like the one I
Speaker 6: looked all over the world from like El Salvador, Philippines, Bahamas,
Speaker 6: everywhere I went. Crypto was not really living up to
Speaker 6: the hype here. Sadly, it was extremely useful for these scammers,
Speaker 6: and to me it explained, uh it could. These types
Speaker 6: of illicit uses could explain a big part of Crypto's
Speaker 6: continued popularity in the face of like so many reasons
Speaker 6: to avoid it.
Speaker 2: Now, all right, we're gonna leave it on that note. Unbelievable, Jill,
Speaker 2: what are.
Speaker 9: Your I'm just so proud of proud of the zequ
Speaker 9: Fox for this, for this book, and grateful for this excerpt.
Speaker 9: And just remember to pre order your copy of Number
Speaker 9: Go up now so that you you get one of
Speaker 9: the first ones off the press.
Speaker 2: And all we're going to say is there's more of
Speaker 2: Zeke Fox. We're going to cover this book certainly again
Speaker 2: in September and cover more of it, So looking forward
Speaker 2: to that. Ze Fox check out his book. As Jiell
Speaker 2: just mentioned, he is financial invest gations reporter at Bloomberg,
Speaker 2: and of course Jill Webber the editor of Bloomberg Business Week.
Speaker 2: This is the domestic cover of Business Week.
Speaker 1: M a journal.
Speaker 4: Now about you let me drive?
Speaker 8: Oh no, no, no, no, please, honey, please, I'll do the
Speaker 8: riding gravel.
Speaker 7: Let's wat I want to drive.
Speaker 2: It's a good question.
Speaker 3: This is the drive to the globe down thing.
Speaker 1: We'll buyer on Bloomberg Radio.
Speaker 2: All right, TikTok, everybody, About eighteen minutes left in today's
Speaker 2: trading session. It's been safe to say for at least
Speaker 2: the second half of the day decidedly lower. As you
Speaker 2: just heard from Bill and Charlie tracking the trade here.
Speaker 2: Really the Nasdaq down the most on a percentage basis.
Speaker 2: So stocks are down, bonds are down two as yield
Speaker 2: have moved up to.
Speaker 3: Nasdak is down seven percent just this month, Carol.
Speaker 2: Yeah, August has been a bummer. Yeah, it is, except
Speaker 2: if you're a mayor then you're like, hey, finally my
Speaker 2: time has come.
Speaker 3: Weather's pretty good. No, okay, that's true.
Speaker 2: All right, So let's get to it. Let's talk about
Speaker 2: the trade. Back with us is John Augustine. He is
Speaker 2: CIO of Huntington Private Bank, joining us on zoom from Cincinnati, Ohio. John, Hey,
Speaker 2: nice to have you back here with Tim and myself.
Speaker 2: If we may first up because you are at Huntington
Speaker 2: Private Bank. You are bank. Talk to us though about
Speaker 2: the banking trends and what you guys are seeing stress points.
Speaker 2: I don't know what you can tell us about loan demand.
Speaker 2: What are you seeing just in general about the lending environment,
Speaker 2: what it tells you about the overall macro environment.
Speaker 8: Well, from my perspective, at least healthy bank the environment is.
Speaker 8: You know, business spend on capex in the second quarter.
Speaker 8: I don't have any numbers for the third quarter so far,
Speaker 8: but one of the surprises in the overall economy been
Speaker 8: around the Great Lakes. Businesses were spending on capex in
Speaker 8: the second quarter, and arguably that's good news for the economy.
Speaker 3: What do you think it's going to look like this
Speaker 3: quarter though.
Speaker 8: Probably slows down a little bit. I mean, they go
Speaker 8: through cycles, just like you and I would buy endurable goods.
Speaker 8: But it'll probably slow down. But so far, not a
Speaker 8: lot based on the economic reports this week.
Speaker 3: So the people who want to go out and borrow money,
Speaker 3: the business owners who need to go out and borrow money,
Speaker 3: even at these high interest rates, they're still doing it.
Speaker 8: There's probably more cash. They're using more cash, just like
Speaker 8: you and I. Consumers are using more cash, paying cash
Speaker 8: for high dollar items. Businesses are doing the same thing.
Speaker 8: We're still, you know, three and a half trillion dollars
Speaker 8: in cash levels above where we were pre COVID.
Speaker 3: Wow.
Speaker 8: Well as a country, as a country.
Speaker 3: Yeah, not just you and Mary.
Speaker 8: Yeah, Carroll might be.
Speaker 3: But not you and I.
Speaker 2: Hey, so, John, you showed with our producer Paul Reddan
Speaker 2: a top list of items on your mind. Of them,
Speaker 2: what is the one thing that you think and talk
Speaker 2: about the most and that you think we should all
Speaker 2: be paying the most at attention to as investors?
Speaker 8: The Fed? You know, we thought, we erroneously thought the
Speaker 8: Fed would be done at their June twentieth meeting, and
Speaker 8: they're not. They'll probably skip in September, but probably raising
Speaker 8: in November. So it's the Fed that's still on our mind.
Speaker 8: We thought they'd be off our mind by now, but
Speaker 8: that's not the case.
Speaker 3: Why do you think they'll raise again in November?
Speaker 8: GDP, you know, inflation is probably going their way enough,
Speaker 8: even though we get another report in August before excuse me,
Speaker 8: in September, before they meet, but GDP is not going
Speaker 8: their way. In other words, GDP maybe according to the
Speaker 8: Atlanta Fed accelerating in the third quarter. That will come
Speaker 8: out about a week before they meet in November. That's
Speaker 8: probably why they raise in November.
Speaker 3: You're talking about the Just so everyone is aware, you're
Speaker 3: talking about the Atlanta Fed's GDP now index, right.
Speaker 8: Yeah, Yeah, it rose now tracker with over five percent.
Speaker 3: It rose yesterday a five point seven six percent, Carol,
Speaker 3: from five point oh three percent in third quarter versus
Speaker 3: it's previous release on.
Speaker 8: All that's impressive. That is impressive.
Speaker 2: It can move around, though, John, Right.
Speaker 8: Oh, no, it's just this week. Think about this week though, Carol.
Speaker 8: We were three for three. This week was activity economic reports,
Speaker 8: and we were three for three that those came in
Speaker 8: higher than expected.
Speaker 2: Yeah, you know, it's it's kind of the good conundrum,
Speaker 2: if you will, if you're the Fed, right, you're kind
Speaker 2: of glad that the economy hasn't fallen apart and people
Speaker 2: are still working. But it also means that they're still
Speaker 2: momentum for people to go out and buy or invest
Speaker 2: and continue to kind of keep inflation either at these
Speaker 2: levels or even potentially higher. That's the conundrum we live in.
Speaker 8: Yeah, I mean, and you see that in markets, right.
Speaker 8: The story about in August so far has been about
Speaker 8: yields moving back up, and the economy is part of that.
Speaker 8: We would say, the economy is part of that. Stocks
Speaker 8: aren't quite sure what to do with it yet. But
Speaker 8: good news, we would say, we agree with you. Good news.
Speaker 8: Employment is staying high and GDP growth is arguably staying high.
Speaker 8: But the Fed keeps referencing it and they're going to
Speaker 8: probably talk about it again at their September meeting.
Speaker 2: So, John, you've got new money. Tim O's always asked us,
Speaker 2: and I think it's a good question when we have
Speaker 2: folks like you on But if you've got new money,
Speaker 2: do you commit to the fixed income world where you
Speaker 2: can get decent yields or the equity world where there
Speaker 2: are questions about valuations, but if you think the outlook
Speaker 2: is good and growth momentum continues, that kind of makes sense,
Speaker 2: or would you prefer alternatives of some sort.
Speaker 8: Well, what we talked about internally with our portfolio managers yesterday.
Speaker 8: We have about seventy portfolio managers through the Great Lakes
Speaker 8: region and then out west, and what we said was
Speaker 8: probably buy bonds now and do three months to step
Speaker 8: into stocks. We're in the scary season for stocks August, September, October,
Speaker 8: So step into stocks, be a little bit more aggressive
Speaker 8: buying bonds right now, and so far that's that's working.
Speaker 2: How far out though, in terms of bonds are you
Speaker 2: comfortable to go?
Speaker 7: Not far.
Speaker 8: We have a short term bias, so we're generally think
Speaker 8: of the three to five year space. Think of the
Speaker 8: three to five year space.
Speaker 3: So going back to the Fed, is there a chance
Speaker 3: that the Fed isn't done after November?
Speaker 8: Yeah, I mean there's always a chance. We hope they're
Speaker 8: done after November. Obviously the futures market thinks they're going
Speaker 8: to be done. But if the economy, what they're worried about,
Speaker 8: let me back up is the seventies where inflation decelerated
Speaker 8: but then everything's sped back up and they had to
Speaker 8: raise rates again. And that's what they're fixated on right now,
Speaker 8: even though we're obviously in a much different economic situation.
Speaker 3: But what that could mean is on the seventies. But
Speaker 3: maybe we can interpret that as holding rates higher for
Speaker 3: longer rather than cutting or rather than raising again.
Speaker 8: We hope, Yeah, we don't know, raising again, but holding
Speaker 8: higher for longer. They're finally getting to by the way
Speaker 8: the futures market.
Speaker 2: With that thought, Hey, John, just got about forty five
Speaker 2: seconds left here. You guys recently edited Adobe, Amex, American Express,
Speaker 2: Rockwell Automation, Parkerhannafen, T Mobile, Netflix, Tarbuck Salesforce. It's a
Speaker 2: variety of companies. Is there any kind of commonality meaning?
Speaker 2: Was it a fundamental play, valuation play, technical plane a
Speaker 2: play or was it kind of a stock pickers market?
Speaker 2: And again got about forty seconds.
Speaker 8: Sure, stock pickers market. What our equity team generally does
Speaker 8: is make their buy and sell decisions after earning season.
Speaker 8: So there's something in that, either in the conference call
Speaker 8: or in the earnings report that triggers them. So that
Speaker 8: those were some names there that you talked about, but
Speaker 8: they'll generally do their trims and ads after earning season.
Speaker 8: We like that. Actually, that gives a little bit more
Speaker 8: let's say, conviction to our thoughts there, even though they
Speaker 8: may not work out the very short term. We like
Speaker 8: what the actuity team does.
Speaker 2: All right, great conversation, John, Thank you so much. You well,
Speaker 2: John Augustine, He's CIO over at Huntington Private Bank. Joinning
Speaker 2: us on zoom from Cincinnati, Ohio.
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