1 00:00:09,880 --> 00:00:13,800 Speaker 1: Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jailey. 2 00:00:13,960 --> 00:00:17,560 Speaker 1: We bring you insight from the best in economics, finance, investment, 3 00:00:18,000 --> 00:00:23,520 Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 4 00:00:23,600 --> 00:00:29,040 Speaker 1: Bloomberg dot Com, and of course on the Bloomberg. Let's 5 00:00:29,040 --> 00:00:31,120 Speaker 1: go to someone who's been here longer than the first 6 00:00:31,200 --> 00:00:33,440 Speaker 1: day to help me. Diana Moa thrilled that she could 7 00:00:33,520 --> 00:00:36,680 Speaker 1: join us with JP Morkan Asset Management today. Dane, if 8 00:00:36,720 --> 00:00:38,919 Speaker 1: you were writing a research note for a dummy like 9 00:00:39,040 --> 00:00:42,760 Speaker 1: me today, as Mr Farrell just mentioned, what's the salient 10 00:00:42,960 --> 00:00:47,200 Speaker 1: point indicated by yield? Right now? What's the yield thing 11 00:00:47,680 --> 00:00:53,360 Speaker 1: that our listeners need to know about. They are saying that, um, 12 00:00:53,520 --> 00:00:55,960 Speaker 1: the FED needs to act, and they need to act 13 00:00:56,240 --> 00:01:00,320 Speaker 1: um into a deeper cutting cycle. So I think um, 14 00:01:00,560 --> 00:01:04,319 Speaker 1: John's actually nailed it. It's the sense that if they're 15 00:01:04,319 --> 00:01:08,119 Speaker 1: waiting for uncertainties to be resolved come July, if those 16 00:01:08,200 --> 00:01:11,320 Speaker 1: uncertainties are unresolved, they might start to look as if 17 00:01:11,360 --> 00:01:13,520 Speaker 1: they're behind the curves. And I think the bond market 18 00:01:13,560 --> 00:01:15,399 Speaker 1: is starting to first that in a bit are we 19 00:01:15,600 --> 00:01:17,880 Speaker 1: are we really? When everything is sata and done here 20 00:01:17,880 --> 00:01:21,319 Speaker 1: with the oddities of GDP and growth, are we really 21 00:01:21,360 --> 00:01:24,720 Speaker 1: setting ourselves up for a Bruce Casman economy? I mean, 22 00:01:24,800 --> 00:01:27,959 Speaker 1: even though the FED won't admit it is the zeitgeist 23 00:01:28,040 --> 00:01:32,480 Speaker 1: now a US one point five percent, except nobody will 24 00:01:32,480 --> 00:01:37,840 Speaker 1: talk about it. Well, you can't discount that given where 25 00:01:38,280 --> 00:01:41,720 Speaker 1: bonds deals are globally, right, we have an increasing stock 26 00:01:41,760 --> 00:01:45,600 Speaker 1: of negative guielding bonds um Once more, we have ECB 27 00:01:45,800 --> 00:01:48,400 Speaker 1: indicating that they're willing to go farther into negative rates. 28 00:01:48,480 --> 00:01:50,840 Speaker 1: You have the bug against starting to state that they're 29 00:01:50,840 --> 00:01:54,560 Speaker 1: willing to consider all tools in the context of what's 30 00:01:54,560 --> 00:01:58,280 Speaker 1: happening externally. So beyond this economy, I think a low 31 00:01:58,360 --> 00:02:02,560 Speaker 1: bond yield environment is actually here for now. Yeah, wells 32 00:02:03,360 --> 00:02:05,520 Speaker 1: as John and I was wrong, you were right. So 33 00:02:06,160 --> 00:02:08,440 Speaker 1: we should cut that and replay it every morning and 34 00:02:08,480 --> 00:02:10,320 Speaker 1: put it in a highlight real Danna is great to 35 00:02:10,360 --> 00:02:12,720 Speaker 1: have you with us on the program. You run an 36 00:02:12,720 --> 00:02:14,800 Speaker 1: e M fund, You're in and out of the market. 37 00:02:14,840 --> 00:02:16,440 Speaker 1: That's why I love talking to you about what is 38 00:02:16,440 --> 00:02:19,880 Speaker 1: happening in emerging markets right now. There is a belief 39 00:02:19,919 --> 00:02:21,880 Speaker 1: that people will be staffed for income, they will be 40 00:02:21,960 --> 00:02:25,040 Speaker 1: pushed to go out somewhere Danna. Will they be pushed 41 00:02:25,040 --> 00:02:27,480 Speaker 1: to go back into em in a more pronounced way 42 00:02:27,480 --> 00:02:30,080 Speaker 1: than maybe we have seen over the last twelve months. 43 00:02:31,040 --> 00:02:33,640 Speaker 1: I think they will. We've already seen a lot of 44 00:02:33,680 --> 00:02:37,520 Speaker 1: money coming back into the hard currency so sovereign hard 45 00:02:37,520 --> 00:02:40,680 Speaker 1: currency debt in the last few months. What we're starting 46 00:02:40,720 --> 00:02:43,680 Speaker 1: to see now is with the dollar turning a lot 47 00:02:43,720 --> 00:02:46,799 Speaker 1: more interest in local markets. So that's been the bit 48 00:02:46,880 --> 00:02:50,359 Speaker 1: that's been lugging flows because of we've come from an 49 00:02:50,400 --> 00:02:54,240 Speaker 1: eight year dollar bull trend. I think as as the 50 00:02:54,280 --> 00:02:57,160 Speaker 1: belief that we've seen the pick in the dollar builds momentum, 51 00:02:57,560 --> 00:03:00,760 Speaker 1: investors will look beyond our dollars in non needed assets 52 00:03:00,760 --> 00:03:03,160 Speaker 1: and to those emergine market economies that need to be 53 00:03:03,200 --> 00:03:05,720 Speaker 1: cutting rates where you still get paid at descent pickup 54 00:03:05,720 --> 00:03:08,639 Speaker 1: in yield um. I think for me it's just pretty 55 00:03:08,680 --> 00:03:11,040 Speaker 1: much a no brainer. If you think the dollar has picked, 56 00:03:11,320 --> 00:03:13,320 Speaker 1: what kind of yield can we pick up at the moment? 57 00:03:13,360 --> 00:03:18,680 Speaker 1: Dina in local currency, so the index level yielded about 58 00:03:18,760 --> 00:03:22,639 Speaker 1: five point eight percent. But then within that these stories, um, 59 00:03:22,720 --> 00:03:25,079 Speaker 1: you can go to a market like South Africa where 60 00:03:25,080 --> 00:03:27,480 Speaker 1: you're getting paid close to temp scent. On the longer 61 00:03:27,600 --> 00:03:31,920 Speaker 1: end of the curve UM on a story that's still decent. UM. 62 00:03:31,960 --> 00:03:34,079 Speaker 1: You can look at places like Mexico, which I think 63 00:03:34,160 --> 00:03:38,120 Speaker 1: is really interesting right now. Um. Historically the Mexican rate 64 00:03:38,640 --> 00:03:40,520 Speaker 1: rate cup would move one to one with the FED. 65 00:03:40,880 --> 00:03:43,960 Speaker 1: They haven't really done that time round because of what's 66 00:03:44,000 --> 00:03:46,240 Speaker 1: been happening with the trade. So I think that's probably 67 00:03:46,280 --> 00:03:49,480 Speaker 1: one that could reply reprice quite aggressively and you get 68 00:03:49,480 --> 00:03:51,800 Speaker 1: paid around seven and a half eight percent to own 69 00:03:51,880 --> 00:03:56,200 Speaker 1: Mexican bonds. Diana very quickly. The equity market, so many 70 00:03:56,240 --> 00:03:59,200 Speaker 1: people feel so behind the railly what's the mood in 71 00:03:59,240 --> 00:04:02,440 Speaker 1: the bond market? It are people? Do they feel way 72 00:04:02,520 --> 00:04:09,920 Speaker 1: behind what the industries are doing? UM. I'd say generally 73 00:04:10,000 --> 00:04:15,560 Speaker 1: fixed income investors have traded this rally well because we 74 00:04:15,600 --> 00:04:18,839 Speaker 1: came in quite cautious into the start of the year. UM. 75 00:04:18,880 --> 00:04:22,120 Speaker 1: I think the disconnected is equities are rallying UM, and 76 00:04:22,200 --> 00:04:25,760 Speaker 1: bonds are rallying. But for you know, you'd expect these 77 00:04:25,760 --> 00:04:29,320 Speaker 1: things to move in different directions. UM. So everyone came 78 00:04:29,360 --> 00:04:32,440 Speaker 1: into the year cautious, actives kept going actives. Investors filled 79 00:04:32,440 --> 00:04:35,400 Speaker 1: they've missed that we came in cautious, we were long duration, 80 00:04:35,640 --> 00:04:39,440 Speaker 1: and that trade has worked out Dynamo. Thank you so much. 81 00:04:39,880 --> 00:04:57,520 Speaker 1: Appreciate right now we want to pause an investment. If 82 00:04:57,600 --> 00:05:02,839 Speaker 1: you are behind, if you're looking at indicas the markets. 83 00:05:03,400 --> 00:05:06,520 Speaker 1: I'm looking at sp X right now. Year to date up, 84 00:05:06,800 --> 00:05:09,320 Speaker 1: um and I got market, Kevin, Where did that? Somebody's 85 00:05:09,360 --> 00:05:13,880 Speaker 1: been playing with my screen. Um, I'm falling apart year 86 00:05:13,920 --> 00:05:18,880 Speaker 1: to date of SPX. This is the interview of the day. 87 00:05:18,960 --> 00:05:24,520 Speaker 1: William Smade buys Value. He is in the nineti percentile 88 00:05:24,720 --> 00:05:29,000 Speaker 1: plus across all sorts of timelines. He's hitting the ball 89 00:05:29,080 --> 00:05:31,640 Speaker 1: out of the hedge fund park. He joins us now 90 00:05:31,720 --> 00:05:34,960 Speaker 1: from our studios in London. Bill Smede, let's back up 91 00:05:34,960 --> 00:05:37,720 Speaker 1: and look at it. How did you perform so well? 92 00:05:37,960 --> 00:05:41,960 Speaker 1: How are you garnering double digit performance where so many 93 00:05:42,000 --> 00:05:46,640 Speaker 1: others are falling behind? Well, I I thank you very 94 00:05:46,720 --> 00:05:50,599 Speaker 1: much for the kindness. The main thing that we're doing, 95 00:05:50,600 --> 00:05:54,160 Speaker 1: I think different than most of the value community is 96 00:05:54,400 --> 00:05:56,559 Speaker 1: most value buyers going and try to buy a fifty 97 00:05:56,600 --> 00:05:59,080 Speaker 1: cent dollar and then in the next year and a 98 00:05:59,080 --> 00:06:02,680 Speaker 1: half of it goes to ninety cents they sell it automatically. 99 00:06:03,120 --> 00:06:06,159 Speaker 1: We're trying to buy outstanding companies when they get to 100 00:06:06,279 --> 00:06:09,480 Speaker 1: be a fifty cent dollar and then hope to hold 101 00:06:09,520 --> 00:06:12,200 Speaker 1: them for a long long time. And if there's anything 102 00:06:12,240 --> 00:06:14,720 Speaker 1: that's helped in the last ten years, it's holding your 103 00:06:14,720 --> 00:06:17,839 Speaker 1: winners to a fault so that that that's that's a blessing. 104 00:06:17,880 --> 00:06:19,880 Speaker 1: Once in a great while, you'll round trip a stock. 105 00:06:19,920 --> 00:06:22,359 Speaker 1: You'll you'll buy it at fifty, it'll go to a hundred, 106 00:06:22,360 --> 00:06:23,720 Speaker 1: and I'll go it all the way back to fifty. 107 00:06:23,760 --> 00:06:27,520 Speaker 1: But most of all the time, most most of the time, 108 00:06:27,839 --> 00:06:31,680 Speaker 1: the mathematics of common stock investing are that when you're wrong, 109 00:06:31,720 --> 00:06:34,080 Speaker 1: you can only lose a hundred percent of what you 110 00:06:34,120 --> 00:06:36,280 Speaker 1: put in if you paid cash. But if you're right, 111 00:06:36,400 --> 00:06:38,880 Speaker 1: you can go up many times your money. And those 112 00:06:39,000 --> 00:06:41,880 Speaker 1: three and five and seven and ten beggars make a 113 00:06:41,960 --> 00:06:44,160 Speaker 1: huge difference over a ten year times. Jenni Ferroll what 114 00:06:44,320 --> 00:06:46,760 Speaker 1: he just said there, you can take down to people 115 00:06:46,800 --> 00:06:51,640 Speaker 1: trading five intervals or five year interviews. We heard this 116 00:06:51,760 --> 00:06:56,880 Speaker 1: the other day. It's incredibly important to let your winners go. 117 00:06:57,279 --> 00:06:59,960 Speaker 1: Remember the rebalancing interview we had with a gentleman. Yeah, 118 00:07:00,040 --> 00:07:03,440 Speaker 1: number of weeks ago. Yeah, I remember, he's on your 119 00:07:03,920 --> 00:07:08,080 Speaker 1: che chevon Steve Chevalon nailed Bill Smede one a one, 120 00:07:08,120 --> 00:07:10,560 Speaker 1: so Bill. Let's talk about the smide Value Fund. It's 121 00:07:10,560 --> 00:07:13,000 Speaker 1: got about a billion dollars in assets. Just north of that. 122 00:07:13,040 --> 00:07:15,920 Speaker 1: You've returned a round about fifteen percent year today. And 123 00:07:16,000 --> 00:07:19,600 Speaker 1: what you guys do is pick fifteen to thirty companies 124 00:07:19,680 --> 00:07:22,720 Speaker 1: rather so twenty five to thirty companies within that portfolio. 125 00:07:22,840 --> 00:07:25,240 Speaker 1: But talk to me about why that's the optimal number 126 00:07:25,680 --> 00:07:29,520 Speaker 1: for you guys in that fund. Really good question, uh. 127 00:07:29,640 --> 00:07:34,400 Speaker 1: I think of the benefit of diversification and common stock 128 00:07:34,400 --> 00:07:39,720 Speaker 1: ownership comes with the twentie security. So we have over 129 00:07:39,800 --> 00:07:43,400 Speaker 1: fifty of our portfolio the top ten. Think of us 130 00:07:43,440 --> 00:07:46,160 Speaker 1: as a producer of a play or a producer of movies. 131 00:07:46,640 --> 00:07:50,440 Speaker 1: We audition actors and actresses uh, based on our eight 132 00:07:50,440 --> 00:07:54,440 Speaker 1: criteria for a common stock selection. If they enter the portfolio, 133 00:07:54,680 --> 00:07:57,040 Speaker 1: then in the first three years they're basically on probation 134 00:07:57,160 --> 00:07:59,600 Speaker 1: to see what kind of audience they can draw. And 135 00:07:59,640 --> 00:08:01,920 Speaker 1: you move move up the ladder in our portfolio by 136 00:08:01,960 --> 00:08:04,560 Speaker 1: your success because we let our winners run. So you 137 00:08:04,640 --> 00:08:07,640 Speaker 1: might think, and typically we might start with a two 138 00:08:07,680 --> 00:08:09,760 Speaker 1: percent position and maybe go up to three if we 139 00:08:09,800 --> 00:08:12,160 Speaker 1: have a lot of confidence, and then five or six 140 00:08:12,240 --> 00:08:14,320 Speaker 1: years later, if you've been successful, you might work your 141 00:08:14,360 --> 00:08:16,800 Speaker 1: way up into the top ten. How does that strategy 142 00:08:16,840 --> 00:08:20,320 Speaker 1: work in a legitimate correction, plus moving to a bear market? 143 00:08:20,560 --> 00:08:24,880 Speaker 1: Forget about the gloom and negative What does the elasticity 144 00:08:24,920 --> 00:08:30,240 Speaker 1: of your portfolio if you're down sp X? Wonderful question 145 00:08:30,840 --> 00:08:33,960 Speaker 1: by only good one of the day Bill enjoy it. Yeah. So, 146 00:08:34,400 --> 00:08:38,120 Speaker 1: our eight criteria for common stock selection are mostly qualitative, 147 00:08:38,679 --> 00:08:43,280 Speaker 1: so wide mode, long history of profitability, consistently high free 148 00:08:43,320 --> 00:08:48,320 Speaker 1: cash flow, shareholder friendliness, strong balance sheet, et cetera. So 149 00:08:48,520 --> 00:08:51,880 Speaker 1: most of the eight criteria qualitative. When you get in 150 00:08:52,040 --> 00:08:56,120 Speaker 1: difficult markets and they're virtually guaranteed to come, those qualitative 151 00:08:56,200 --> 00:09:00,400 Speaker 1: characteristics allow you to be patient in that environment. By 152 00:09:00,400 --> 00:09:02,559 Speaker 1: the way, since you asked it. The other thing that's 153 00:09:02,600 --> 00:09:05,360 Speaker 1: really helped us the last three to five years is 154 00:09:05,720 --> 00:09:08,200 Speaker 1: we're back to what we used to be before the 155 00:09:08,240 --> 00:09:10,480 Speaker 1: O seven to oh nine to bacle, because in O 156 00:09:10,640 --> 00:09:14,000 Speaker 1: seven at O nine, the normal qualitative things did not 157 00:09:14,080 --> 00:09:17,360 Speaker 1: protect you, because the hedge funds had to sell what 158 00:09:17,400 --> 00:09:19,920 Speaker 1: they could sell because they couldn't sell what they couldn't sell, 159 00:09:20,280 --> 00:09:22,800 Speaker 1: and since they had to sell what they could sell, 160 00:09:22,840 --> 00:09:26,160 Speaker 1: we owned what they could sell. Now on the decline 161 00:09:26,240 --> 00:09:30,760 Speaker 1: in August through December, of last year, we outperformed. In 162 00:09:30,760 --> 00:09:34,080 Speaker 1: in May, when the market fell sharply, we outperformed. We're 163 00:09:34,160 --> 00:09:39,280 Speaker 1: back to the normal historical ability of quality or dividend 164 00:09:39,320 --> 00:09:42,360 Speaker 1: yield to defend you on the downside, which makes us 165 00:09:42,440 --> 00:09:45,480 Speaker 1: very excited for the future because we're very positive about 166 00:09:45,559 --> 00:09:48,680 Speaker 1: what we're doing. The price rings ratio discount to the 167 00:09:48,800 --> 00:09:52,640 Speaker 1: SNP is among the highest we've had. But but we're 168 00:09:52,679 --> 00:09:54,880 Speaker 1: also conscious of fact that the chart of the day 169 00:09:54,880 --> 00:09:59,360 Speaker 1: for Bloomberg is momentum has blistered value. Uh and and 170 00:09:59,520 --> 00:10:01,520 Speaker 1: momentum is due for a come up in sometime in 171 00:10:01,559 --> 00:10:03,640 Speaker 1: the next year or two. So let's talk about where 172 00:10:03,640 --> 00:10:05,760 Speaker 1: the opportunities on right now for you guys. You want 173 00:10:05,840 --> 00:10:08,360 Speaker 1: buying small caps that people have never heard of, and 174 00:10:08,480 --> 00:10:10,800 Speaker 1: you're buying large caps, So wont me through a company 175 00:10:10,880 --> 00:10:14,160 Speaker 1: names and White you like these companies right now? Well, 176 00:10:14,320 --> 00:10:17,880 Speaker 1: let's just be in the news. Uh CBS is talking 177 00:10:17,920 --> 00:10:21,760 Speaker 1: about getting remarried to Viacom, and there are there's some 178 00:10:21,920 --> 00:10:24,440 Speaker 1: rumors out there that they would like very much for 179 00:10:24,520 --> 00:10:28,760 Speaker 1: David Zasloft that runs Discovery Inc. To To run a 180 00:10:28,760 --> 00:10:31,840 Speaker 1: a three headed monster rather than the two headed monster. 181 00:10:32,559 --> 00:10:37,000 Speaker 1: We don't necessarily think That's a great idea because the 182 00:10:37,040 --> 00:10:42,400 Speaker 1: big behemoth market compization companies, the Amazons and Apples and 183 00:10:42,400 --> 00:10:47,000 Speaker 1: and uh Netflix, their biggest problem is they're they're just 184 00:10:47,160 --> 00:10:52,359 Speaker 1: pretenders in content. They're just pretending that their content producers 185 00:10:52,720 --> 00:10:57,000 Speaker 1: and and the best UH profit margins in the entire 186 00:10:57,080 --> 00:11:02,080 Speaker 1: industry are unscripted television. UH and and UH. I might 187 00:11:02,120 --> 00:11:07,200 Speaker 1: add that, Joseph Mr. Seed, that's right. In intercom, the 188 00:11:07,240 --> 00:11:10,440 Speaker 1: guy that the manor owner of Intercom is loading the boat. 189 00:11:10,440 --> 00:11:13,240 Speaker 1: He's buying up every every share of intercomy cam, so 190 00:11:13,240 --> 00:11:17,080 Speaker 1: he agrees with you completely. So unscripted television has ten 191 00:11:17,160 --> 00:11:21,480 Speaker 1: percent of the cost of of of of scripted TV 192 00:11:21,600 --> 00:11:24,199 Speaker 1: and movies. And so here are these tech companies who 193 00:11:24,240 --> 00:11:27,160 Speaker 1: are loaded with confidence, loaded with arrogance, and they're spending 194 00:11:27,160 --> 00:11:30,320 Speaker 1: money in Hollywood like drunken sailors on leave when the 195 00:11:30,360 --> 00:11:32,880 Speaker 1: truth of it is they could pay seventy dollars a 196 00:11:32,960 --> 00:11:38,000 Speaker 1: share to buy the premier UH content UH in television, 197 00:11:38,240 --> 00:11:43,360 Speaker 1: which is h G t V, food network, travel channels, 198 00:11:43,400 --> 00:11:49,319 Speaker 1: Catch Shark week, I D You're you're on a roll bill? 199 00:11:49,360 --> 00:11:52,800 Speaker 1: I got a Bloomberg's Surveillance bill, s U. Harvey, we're 200 00:11:52,800 --> 00:11:55,840 Speaker 1: doing a direct listing, Um, Bill, I got time for 201 00:11:55,920 --> 00:11:58,959 Speaker 1: one more question. What are the hedge funds getting wrong? 202 00:11:59,200 --> 00:12:01,720 Speaker 1: You are one of those humble guys. I've ever met 203 00:12:02,000 --> 00:12:08,199 Speaker 1: your truly folks. Clock and David Harrow numbers you're likeentile percentile. 204 00:12:08,600 --> 00:12:12,280 Speaker 1: All these smart guys off Madison Avenue and Mayfair are 205 00:12:12,320 --> 00:12:19,319 Speaker 1: getting crushed. What are they doing wrong? Well, there's there 206 00:12:19,640 --> 00:12:23,040 Speaker 1: are thousands of people that want to make money in 207 00:12:23,520 --> 00:12:27,120 Speaker 1: six to twelve month durations and they all have access 208 00:12:27,160 --> 00:12:31,360 Speaker 1: to massive computer power. And the problem is the laws 209 00:12:31,360 --> 00:12:34,720 Speaker 1: of supply and demand haven't changed. There's hardly anyone that 210 00:12:34,800 --> 00:12:38,000 Speaker 1: wants to work in five to ten youre durations and 211 00:12:38,400 --> 00:12:41,640 Speaker 1: and so by what we've been left the five to 212 00:12:41,720 --> 00:12:46,000 Speaker 1: ten year duration to a few other players, and there's 213 00:12:46,160 --> 00:12:49,880 Speaker 1: not much there now. The negative is the capital should 214 00:12:49,920 --> 00:12:52,520 Speaker 1: be coming to us, and that has not been the case. 215 00:12:52,880 --> 00:12:57,160 Speaker 1: Uh that there's net outflows even among meritorious her strategies. 216 00:12:57,800 --> 00:13:04,080 Speaker 1: Yester carlike con Oxy Darko Ana Darko overpaid by Oxy. 217 00:13:04,160 --> 00:13:07,959 Speaker 1: Did you look at that transaction? Uh, we're researching it. 218 00:13:08,160 --> 00:13:11,120 Speaker 1: And by the way, Icon has been following us around 219 00:13:11,120 --> 00:13:15,360 Speaker 1: for the last five or six years and others. Yeah, 220 00:13:15,480 --> 00:13:18,679 Speaker 1: Carl's out in Central Park with his two dogs walking around. 221 00:13:18,760 --> 00:13:22,240 Speaker 1: He's not following Bill smeed, you think he's following you? No, 222 00:13:22,480 --> 00:13:24,880 Speaker 1: just kidding. He happened to be an activist in a 223 00:13:24,960 --> 00:13:28,400 Speaker 1: number of stocks that we already owned. So the bottom 224 00:13:28,480 --> 00:13:33,199 Speaker 1: line is uh, since value looks extremely attractive relative to momentum, 225 00:13:33,880 --> 00:13:37,640 Speaker 1: I don't think they overpaid for Anadarko. Thank you, Bill, 226 00:13:37,720 --> 00:13:57,040 Speaker 1: sat appreciate a huge response if you're an economist, without question, 227 00:13:57,160 --> 00:13:59,960 Speaker 1: the easy thing to do as a market economist, he's 228 00:14:00,040 --> 00:14:03,559 Speaker 1: to blame your bond guys, blame your equity guys, Jannet 229 00:14:03,600 --> 00:14:07,439 Speaker 1: Henry is professional and not doing this because our bond 230 00:14:07,480 --> 00:14:09,400 Speaker 1: guys and our equity guys have been on the edge 231 00:14:09,400 --> 00:14:13,640 Speaker 1: of perfect No one combined has that a bond equity 232 00:14:13,720 --> 00:14:18,040 Speaker 1: house call like the Hong Kong and Shanghai Banking Corporation 233 00:14:18,600 --> 00:14:20,760 Speaker 1: in the last I'm going to say eight months. She'll 234 00:14:20,760 --> 00:14:23,440 Speaker 1: tell me to the month, maybe longer than that. The 235 00:14:23,520 --> 00:14:28,560 Speaker 1: Steve Major Ben Laidler tandem has been lights out, Jane. 236 00:14:28,680 --> 00:14:31,160 Speaker 1: What is it like to work with those guys? How 237 00:14:31,200 --> 00:14:36,640 Speaker 1: did they influence Laidler's optimism on equity? Steve Major nailing 238 00:14:37,120 --> 00:14:40,200 Speaker 1: lower interest rates? What does that do to shape your 239 00:14:40,280 --> 00:14:44,680 Speaker 1: forecast day to day. Well, Tom, we all talk to 240 00:14:44,720 --> 00:14:47,200 Speaker 1: each other, you know, and I think the economic view 241 00:14:47,360 --> 00:14:50,200 Speaker 1: for the last few years, especially the lower for longer call, 242 00:14:50,320 --> 00:14:52,720 Speaker 1: we work very close with speed Major. We've been of 243 00:14:52,800 --> 00:14:54,960 Speaker 1: the view for the last five years at the pickup 244 00:14:54,960 --> 00:14:57,440 Speaker 1: and wage growth was going to be very slow, very gradual, 245 00:14:57,520 --> 00:15:00,000 Speaker 1: for a number of reasons to do with labor market disruption. 246 00:15:00,040 --> 00:15:02,760 Speaker 1: And must admit over the last year or so that 247 00:15:02,880 --> 00:15:06,000 Speaker 1: the kind of optimism on bonds and optimism on equities 248 00:15:06,280 --> 00:15:09,120 Speaker 1: seem to fit a little oddly, And to be honest, 249 00:15:09,480 --> 00:15:11,960 Speaker 1: over the last few weeks, I've been surprised myself at 250 00:15:12,000 --> 00:15:14,000 Speaker 1: the extent to which everything is good news for the 251 00:15:14,040 --> 00:15:16,720 Speaker 1: equity market. If the Fed cutting rates because things are 252 00:15:16,720 --> 00:15:19,080 Speaker 1: going wrong, that's good news for equities. But if we 253 00:15:19,120 --> 00:15:21,760 Speaker 1: get a trade deal, that's good news for equities, whereas 254 00:15:21,800 --> 00:15:25,280 Speaker 1: the bond market obviously is much more kewed towards the 255 00:15:25,280 --> 00:15:30,120 Speaker 1: downside risks on global ground. Does a traditional punchball model 256 00:15:30,400 --> 00:15:33,640 Speaker 1: work And if it is, where's the punch ball right 257 00:15:33,680 --> 00:15:40,440 Speaker 1: now overflowing on the floor. UM, I think it's it's 258 00:15:41,040 --> 00:15:44,040 Speaker 1: it's difficult, Um, you know, it's going into the meeting 259 00:15:44,120 --> 00:15:47,120 Speaker 1: yesterday of the Fed, it was how can the Fed 260 00:15:47,240 --> 00:15:50,640 Speaker 1: out of the market? What could they possibly do? Um? 261 00:15:50,680 --> 00:15:52,680 Speaker 1: You know, we thought maybe if they cut rates in June, 262 00:15:52,720 --> 00:15:55,240 Speaker 1: the market maybe even happier. But it was almost the 263 00:15:55,320 --> 00:15:59,840 Speaker 1: perfect set of dots. It's basically, are you know, suggesting 264 00:15:59,840 --> 00:16:03,560 Speaker 1: that most of the Fed, you know, nearly half of 265 00:16:03,560 --> 00:16:06,200 Speaker 1: the Fed is now ready to cut rates by fifty 266 00:16:06,200 --> 00:16:09,800 Speaker 1: basis points this year, but there's no pre commitment to 267 00:16:09,880 --> 00:16:12,440 Speaker 1: actually do it. Their growth numbers were good, they were 268 00:16:12,520 --> 00:16:15,840 Speaker 1: not downgraded, they were edged up. Unemployment rate was edged down. 269 00:16:16,320 --> 00:16:19,040 Speaker 1: But we seem to be now on their projections in 270 00:16:19,080 --> 00:16:23,360 Speaker 1: this perfect world where they're about to cut interest rates 271 00:16:23,400 --> 00:16:26,360 Speaker 1: because inflation is lower than expected. Are we yeah? I 272 00:16:26,360 --> 00:16:29,400 Speaker 1: think there's a lot of optimism priced into the equity market. 273 00:16:29,440 --> 00:16:32,720 Speaker 1: Are we too close to a liquidity trap? Or is 274 00:16:32,760 --> 00:16:39,560 Speaker 1: it something different this time? Let's say, Okay, it's premature, 275 00:16:39,560 --> 00:16:41,720 Speaker 1: I guess, but it's radio Come on, stay with me here. 276 00:16:41,720 --> 00:16:44,200 Speaker 1: It's premature, I get there. But if we get one 277 00:16:44,280 --> 00:16:47,200 Speaker 1: to nobody's looking forward. But what if it happens three 278 00:16:47,280 --> 00:16:49,800 Speaker 1: rate cuts? Are we right back to where we were 279 00:16:49,800 --> 00:16:54,280 Speaker 1: in oh eight or nine ten. I think a liquidity 280 00:16:54,320 --> 00:16:56,720 Speaker 1: trap is when no one is borrowing, no matter how 281 00:16:56,800 --> 00:17:00,440 Speaker 1: low or negative interest rate. It's very clear that corporate 282 00:17:00,480 --> 00:17:02,760 Speaker 1: sector has been borrowing in the US for the last 283 00:17:02,760 --> 00:17:06,200 Speaker 1: few years. And we've seen the resurgence in mortgage refinancing 284 00:17:06,240 --> 00:17:09,080 Speaker 1: in the US as long term interest rates have come down. 285 00:17:09,119 --> 00:17:11,720 Speaker 1: I don't think the US is in an aquidity trap. 286 00:17:11,960 --> 00:17:14,720 Speaker 1: I think what the US is seeing is that, of course, 287 00:17:14,880 --> 00:17:17,719 Speaker 1: inflation in the US is influenced by global developments. And 288 00:17:17,760 --> 00:17:19,439 Speaker 1: that was a lot of what we heard yesterday. It 289 00:17:19,480 --> 00:17:22,600 Speaker 1: was about global uncertainties, global p m s, and they 290 00:17:22,640 --> 00:17:25,879 Speaker 1: matter to what are uncertainties to me? They are less 291 00:17:26,000 --> 00:17:31,480 Speaker 1: data dependent, less function, less reaction function in much more 292 00:17:31,760 --> 00:17:37,119 Speaker 1: things tangible like trade and trade war. Is that what 293 00:17:37,160 --> 00:17:42,240 Speaker 1: we mean by modern uncertainties? I think yeah, trade is 294 00:17:42,240 --> 00:17:44,160 Speaker 1: a big part of it. And you know, a lot 295 00:17:44,200 --> 00:17:46,720 Speaker 1: of the slowed the way in which trade has impacted 296 00:17:47,000 --> 00:17:49,360 Speaker 1: the trade trade wars has impacted over the last year 297 00:17:49,440 --> 00:17:51,879 Speaker 1: has been on investments. We've seen a slowdown in demand 298 00:17:51,880 --> 00:17:54,639 Speaker 1: for capital goods. We've also seen particular things related to 299 00:17:54,680 --> 00:17:58,119 Speaker 1: the auto sector and to the semiconductor sector. Industry is 300 00:17:58,200 --> 00:18:01,359 Speaker 1: very weak, and the longer industry is weak, the greater 301 00:18:01,400 --> 00:18:05,080 Speaker 1: the likelihood that that does feed through into employment and 302 00:18:05,119 --> 00:18:08,240 Speaker 1: into consumer spending, which, let's be honest, is the real 303 00:18:08,320 --> 00:18:11,280 Speaker 1: area of resilience. Even in the Euro Area. Over the 304 00:18:11,320 --> 00:18:14,639 Speaker 1: course of last year, consumer spending has still been pretty 305 00:18:14,680 --> 00:18:18,399 Speaker 1: solid because unemployment rates and weight growth is now at 306 00:18:18,400 --> 00:18:21,760 Speaker 1: the highest level for a decade. Okay, wage growth is 307 00:18:21,760 --> 00:18:24,879 Speaker 1: the highest level, but a lot of America feels the anks. 308 00:18:24,960 --> 00:18:27,320 Speaker 1: This is a really interesting point, and that there's a 309 00:18:27,359 --> 00:18:31,680 Speaker 1: part of America not participating. And there's another part which 310 00:18:31,720 --> 00:18:35,440 Speaker 1: Chairman Paul mentioned yesterday. We're you know, consumer data is 311 00:18:35,440 --> 00:18:38,720 Speaker 1: pretty good, service sector is pretty good, etcetera. Is that 312 00:18:38,760 --> 00:18:42,480 Speaker 1: going to be the surprise staggering the September eighteenth, whatever 313 00:18:42,520 --> 00:18:45,200 Speaker 1: that two meetings out is, is that we still get 314 00:18:45,640 --> 00:18:51,280 Speaker 1: good consumer data. Maybe we get okay, unemployment numbers. Yes, 315 00:18:51,480 --> 00:18:54,720 Speaker 1: I think, well that's already in the FED Central forecast 316 00:18:54,760 --> 00:18:57,240 Speaker 1: to some degree. Of course, we just had another solid 317 00:18:57,480 --> 00:19:00,280 Speaker 1: initial jobless claims. They fell to a new lower level. 318 00:19:00,600 --> 00:19:03,040 Speaker 1: So I think what the Fed was saying yesterday is that, 319 00:19:03,200 --> 00:19:06,040 Speaker 1: you know, the lower the unemployment falls, the greater the 320 00:19:06,160 --> 00:19:08,280 Speaker 1: likelihood that more and more people who have not so 321 00:19:08,480 --> 00:19:12,000 Speaker 1: far benefited from the recovery do start to benefit. But 322 00:19:12,040 --> 00:19:14,520 Speaker 1: it would appear that just a continuation of the solid 323 00:19:14,520 --> 00:19:18,399 Speaker 1: consumer data is not for the FED to remain on hold. 324 00:19:18,600 --> 00:19:21,640 Speaker 1: It is still that global weakness and what it means 325 00:19:21,640 --> 00:19:25,760 Speaker 1: for global inflation, and therefore US inflation will be what 326 00:19:25,840 --> 00:19:28,080 Speaker 1: tips the balanced for the FED if it cuts right. So, 327 00:19:28,160 --> 00:19:31,439 Speaker 1: Jani Hearry, you're saying with our question, Jeron Pal's central 328 00:19:31,440 --> 00:19:35,400 Speaker 1: banker to the world, that's what I'm hearing. Yes, yes, 329 00:19:35,560 --> 00:19:38,600 Speaker 1: it is. And remember last year there was a lot 330 00:19:38,600 --> 00:19:41,560 Speaker 1: of the FED tightening on the back of strong US growth, 331 00:19:41,600 --> 00:19:44,399 Speaker 1: which was helped along by fiscal stimulus. Because it was 332 00:19:44,440 --> 00:19:46,720 Speaker 1: out said tightening that impacted on the rest of the 333 00:19:46,760 --> 00:19:49,040 Speaker 1: world and contributed to the slow down and growth elsewhere 334 00:19:49,040 --> 00:19:51,639 Speaker 1: in the world. My first question the Vice Chairman Clara 335 00:19:51,680 --> 00:19:56,040 Speaker 1: tomorrow has to be on his word salad. I associate 336 00:19:56,119 --> 00:19:58,880 Speaker 1: that with the vice chairman. We heard Chairman Pile talk 337 00:19:58,920 --> 00:20:02,800 Speaker 1: about salad yesterday. What would be your question, Janet Henry 338 00:20:02,840 --> 00:20:08,760 Speaker 1: for the vice chairman. My my question for the Vice 339 00:20:08,840 --> 00:20:12,520 Speaker 1: chairman is, uh, well, I suppose a lot of it 340 00:20:12,560 --> 00:20:16,199 Speaker 1: would still be to do with the labor market, and 341 00:20:16,280 --> 00:20:19,359 Speaker 1: this is something that talked about in his recent speech. 342 00:20:19,400 --> 00:20:21,880 Speaker 1: You know, economists always talk about the stars it's all 343 00:20:21,880 --> 00:20:24,920 Speaker 1: in the stars. Be our star. The neutral rate, um, 344 00:20:24,960 --> 00:20:28,280 Speaker 1: and you star is the new thing, the maximum level 345 00:20:28,320 --> 00:20:31,440 Speaker 1: of employment. They don't know what that is. Um Clarada 346 00:20:31,480 --> 00:20:33,760 Speaker 1: actually mentioned that it would be. He now think it's 347 00:20:34,000 --> 00:20:37,200 Speaker 1: you know, around four percent, possibly below. We're already below 348 00:20:37,920 --> 00:20:41,800 Speaker 1: four percent. How low does he think unemployment in the 349 00:20:41,920 --> 00:20:45,879 Speaker 1: US without wage growth picking up? Jeneen, I'm gonna give 350 00:20:45,880 --> 00:20:47,399 Speaker 1: you a shout out if I get to that question 351 00:20:47,440 --> 00:20:50,440 Speaker 1: with Vice Chairman Clarata. But this is important, folks, and 352 00:20:50,440 --> 00:20:53,520 Speaker 1: and and Jenneh Henry, this is just so key. Is 353 00:20:53,680 --> 00:20:57,480 Speaker 1: you star in this dream of a perfect unemployment rate? 354 00:20:58,080 --> 00:21:01,960 Speaker 1: Is a tangible and an agg regated basis? Or are 355 00:21:02,000 --> 00:21:04,720 Speaker 1: we so polarized that we have two or even three 356 00:21:04,800 --> 00:21:08,080 Speaker 1: Americas and we really can't get there even if we 357 00:21:08,480 --> 00:21:13,120 Speaker 1: want to get there. It is, But also it matters 358 00:21:13,800 --> 00:21:17,480 Speaker 1: for how this whole expansion plays out. You know, we've 359 00:21:17,520 --> 00:21:20,560 Speaker 1: become used to over the last few decades of most 360 00:21:21,440 --> 00:21:25,320 Speaker 1: FED tightening cycles being a response too higher than expected inflation. 361 00:21:25,560 --> 00:21:27,720 Speaker 1: They have to squeeze inflation out of the system. That 362 00:21:27,800 --> 00:21:30,439 Speaker 1: requires a sharper slowdown. If we are now back in 363 00:21:30,480 --> 00:21:32,840 Speaker 1: this world whereas you know, you're alluding to you've got 364 00:21:32,880 --> 00:21:35,960 Speaker 1: different parts of the labor market seeing some pick up 365 00:21:35,960 --> 00:21:38,600 Speaker 1: in wage growth. If that's coming through more through the 366 00:21:38,640 --> 00:21:41,520 Speaker 1: profits cycle, it's back to an old fashioned business cycle. 367 00:21:41,880 --> 00:21:44,760 Speaker 1: You could see different parts of the economy and being 368 00:21:44,760 --> 00:21:47,520 Speaker 1: affected in a different way, and that means that it's 369 00:21:47,560 --> 00:21:50,919 Speaker 1: it's not necessarily just about the response to inflation, but 370 00:21:51,040 --> 00:21:53,720 Speaker 1: we could still get areas of the economy slowing down 371 00:21:53,760 --> 00:21:56,000 Speaker 1: because they're the parts that are being hit more on 372 00:21:56,040 --> 00:21:58,400 Speaker 1: the profit snide. This has been wonderful, Jenna Henry think 373 00:21:58,400 --> 00:22:17,000 Speaker 1: of so much. Hs BC sure over day Bloomberg opinion 374 00:22:17,080 --> 00:22:20,520 Speaker 1: columnists covering all things technology really wanted to get her 375 00:22:20,560 --> 00:22:24,439 Speaker 1: thoughts on Slack. That company's raising capital today? I should 376 00:22:24,480 --> 00:22:27,440 Speaker 1: know Tom that Bloomberg Beta, the venture capital arm of 377 00:22:27,440 --> 00:22:31,359 Speaker 1: Bloomberg LP, is an investor in Slacks. Make that disclosure, 378 00:22:31,840 --> 00:22:36,359 Speaker 1: yep um So again Slack raising capital? Can you just 379 00:22:36,400 --> 00:22:38,960 Speaker 1: give it? Walk us through kind of what's happening today? 380 00:22:39,040 --> 00:22:42,240 Speaker 1: Who's raising capital? Is it? How this you know? Listening 381 00:22:42,280 --> 00:22:44,560 Speaker 1: this direct listing is different from an I P O. Well, 382 00:22:44,600 --> 00:22:47,400 Speaker 1: the way it's different is that they're actually not raising capital. 383 00:22:47,480 --> 00:22:49,520 Speaker 1: The company is not raising The company is not raising capital. 384 00:22:49,600 --> 00:22:52,879 Speaker 1: So Basically, you know, Slack over the years as a 385 00:22:52,920 --> 00:22:57,280 Speaker 1: private company has issued about five hundred million shares in 386 00:22:57,320 --> 00:23:02,359 Speaker 1: its lifetime, and basically today it declares those five million 387 00:23:02,400 --> 00:23:07,560 Speaker 1: shares are in essence available for trade. So the company 388 00:23:07,640 --> 00:23:11,080 Speaker 1: is not selling new shares to to a new crop 389 00:23:11,119 --> 00:23:13,760 Speaker 1: of investors, as typically happens in an I p O. 390 00:23:14,160 --> 00:23:17,520 Speaker 1: It's simply decides two days the day that we become 391 00:23:17,560 --> 00:23:22,040 Speaker 1: a public company, and it makes shares available for trade. 392 00:23:22,119 --> 00:23:25,280 Speaker 1: So people who previously owned Slack shares when the company 393 00:23:25,320 --> 00:23:29,200 Speaker 1: was private are now able in principle at least to 394 00:23:29,200 --> 00:23:32,199 Speaker 1: to sell those shares to willing buyers, and buyers are 395 00:23:32,240 --> 00:23:35,680 Speaker 1: going to line up potentially to purchase those shares, and 396 00:23:35,720 --> 00:23:38,639 Speaker 1: we'll see what happens. How many of million will end 397 00:23:38,720 --> 00:23:42,080 Speaker 1: up in new hands. It's a good question. So part 398 00:23:42,080 --> 00:23:44,080 Speaker 1: of the issue with a direct listing, right is that 399 00:23:44,359 --> 00:23:46,840 Speaker 1: it's a little bit less controlled than an I p O. 400 00:23:47,000 --> 00:23:50,560 Speaker 1: So it's not like the company can say we determine 401 00:23:50,560 --> 00:23:56,639 Speaker 1: that thirty million shares trading. It's not. It's manipulated. What 402 00:23:56,800 --> 00:24:02,800 Speaker 1: way is it manipulated? And in what way is an ippulia? Well, 403 00:24:02,960 --> 00:24:07,000 Speaker 1: you know, stop it, they're going out toad, They're making 404 00:24:07,000 --> 00:24:10,840 Speaker 1: a fictitious pricing up and they're launching this puppy, right, Yes, 405 00:24:10,920 --> 00:24:13,760 Speaker 1: I agree with you. I do not really see the 406 00:24:13,920 --> 00:24:17,840 Speaker 1: point yet of direct listings, thank you. Can we have 407 00:24:17,880 --> 00:24:21,600 Speaker 1: her back tomorrow? Thank you. I mean, it's supposed to 408 00:24:21,680 --> 00:24:26,200 Speaker 1: be this kind of more pure less financially manipulated process 409 00:24:26,240 --> 00:24:29,000 Speaker 1: than an IPO controlled by the masters of Wall Street. 410 00:24:29,480 --> 00:24:32,959 Speaker 1: But it's not really that. As Tom said, right the 411 00:24:33,000 --> 00:24:36,040 Speaker 1: bank there are bankers that are getting paid tens of 412 00:24:36,080 --> 00:24:38,960 Speaker 1: millions of dollars in fees by the company, and they're 413 00:24:39,000 --> 00:24:42,200 Speaker 1: going out to people who own shares of Slack and saying, 414 00:24:42,680 --> 00:24:45,159 Speaker 1: how about selling some shares? How many are you thinking? 415 00:24:45,240 --> 00:24:47,119 Speaker 1: What price are you looking for? And it's doing a 416 00:24:47,160 --> 00:24:50,760 Speaker 1: similar thing to prospective buyers, and those kinds of conversations 417 00:24:50,760 --> 00:24:52,800 Speaker 1: starts to look a lot like what happens in an 418 00:24:52,800 --> 00:24:56,280 Speaker 1: IPO process, that fake, manipulated, controlled by the masters of 419 00:24:56,280 --> 00:25:00,360 Speaker 1: Wall Street IPO process. So um to me right now, 420 00:25:00,359 --> 00:25:02,679 Speaker 1: a direct listing looks like a solution in search of 421 00:25:02,720 --> 00:25:05,960 Speaker 1: a problem. But I am open to the possibility that 422 00:25:06,000 --> 00:25:10,480 Speaker 1: there really is. Um Well already called me a cynic, 423 00:25:10,600 --> 00:25:15,159 Speaker 1: and I guess I have to live one of the 424 00:25:15,240 --> 00:25:17,080 Speaker 1: ways again. One of the ways it is different from 425 00:25:17,119 --> 00:25:21,639 Speaker 1: slacks perspective is it's less costly and the fees are 426 00:25:23,200 --> 00:25:28,880 Speaker 1: so there. Again, Slack is paying I cannot remember the number, 427 00:25:28,880 --> 00:25:31,879 Speaker 1: but it's something like five million dollars in return for 428 00:25:32,000 --> 00:25:35,640 Speaker 1: raising no new capital. Right so you're paying banker fees, 429 00:25:36,680 --> 00:25:38,919 Speaker 1: not that much less than you'd pay in an I 430 00:25:39,040 --> 00:25:42,440 Speaker 1: P O. But the company is not making any money 431 00:25:42,440 --> 00:25:46,040 Speaker 1: from this process. So again, right now, a direct listing 432 00:25:46,080 --> 00:25:48,560 Speaker 1: is a novel thing. It probably requires a little bit 433 00:25:48,560 --> 00:25:52,360 Speaker 1: more work than it might in two or three years 434 00:25:52,400 --> 00:25:56,280 Speaker 1: if this process becomes more normalized. But right now a 435 00:25:56,280 --> 00:25:59,840 Speaker 1: direct listing is not true. You have been through this, 436 00:26:00,040 --> 00:26:01,879 Speaker 1: sin sure as an expert on this, and we make 437 00:26:01,960 --> 00:26:05,919 Speaker 1: jokes folks about she's truly lights out. It's sort of 438 00:26:06,080 --> 00:26:09,320 Speaker 1: kind of like a Dutch auction where you go out 439 00:26:09,440 --> 00:26:12,920 Speaker 1: and find a price. Do we know how they actually 440 00:26:12,960 --> 00:26:17,480 Speaker 1: get to twenty six dollars? Again, if one on one, 441 00:26:18,320 --> 00:26:20,439 Speaker 1: I think a lot of it is very similar to 442 00:26:20,480 --> 00:26:23,080 Speaker 1: an I p O process that you have conversations with 443 00:26:23,520 --> 00:26:27,359 Speaker 1: potential sellers of stock and potential buyers of stock, and 444 00:26:27,400 --> 00:26:30,120 Speaker 1: you figure out what they're what it seems that they're 445 00:26:30,160 --> 00:26:33,040 Speaker 1: willing to so they're basically doing an end around SEC 446 00:26:33,280 --> 00:26:36,560 Speaker 1: process of a red herring to discover price, which is 447 00:26:36,600 --> 00:26:39,240 Speaker 1: what you do with a standard initial public golf freak. 448 00:26:40,320 --> 00:26:42,720 Speaker 1: I don't want to say that anyone's violating any rules. 449 00:26:42,880 --> 00:26:45,560 Speaker 1: You know, this is still a process. This is still 450 00:26:45,560 --> 00:26:48,000 Speaker 1: a process that is governed by a SEC rules. Like 451 00:26:48,200 --> 00:26:51,280 Speaker 1: you know, Slack filed a perspectus as they would in 452 00:26:51,359 --> 00:26:55,280 Speaker 1: an I p O. Um they have yea, you know, 453 00:26:55,320 --> 00:26:59,600 Speaker 1: they have regulated conversations with potential investors. So this is 454 00:26:59,640 --> 00:27:03,320 Speaker 1: all on the up and up. But again my issue 455 00:27:03,400 --> 00:27:06,080 Speaker 1: is just that this is supposed to be some kind 456 00:27:06,119 --> 00:27:09,199 Speaker 1: of holier than now, more pure process than an I 457 00:27:09,240 --> 00:27:12,800 Speaker 1: p O and I do not yet see those merits. 458 00:27:12,880 --> 00:27:15,560 Speaker 1: Can we ask one question about the actual company today? 459 00:27:15,680 --> 00:27:18,399 Speaker 1: The company? Yes, what makes now? This is a you know, 460 00:27:18,400 --> 00:27:20,879 Speaker 1: there's so much remote working today and you've got to 461 00:27:20,920 --> 00:27:23,879 Speaker 1: have these video conferences and Bloomer's got its own system 462 00:27:24,119 --> 00:27:28,479 Speaker 1: which works great. Um, what makes this company so special? 463 00:27:28,520 --> 00:27:33,560 Speaker 1: Their technology? Look, Slack, it is good technology, and it's 464 00:27:33,600 --> 00:27:38,320 Speaker 1: particularly useful on mobile devices, which was less true of 465 00:27:38,400 --> 00:27:41,439 Speaker 1: many of its predecessors. But I will say I was 466 00:27:41,600 --> 00:27:44,800 Speaker 1: having a conversation with somebody yesterday about Slack and the 467 00:27:44,840 --> 00:27:48,040 Speaker 1: fact that there were a number of very similar software 468 00:27:48,080 --> 00:27:51,280 Speaker 1: companies that started around the same time as Slack. Think 469 00:27:51,320 --> 00:27:55,320 Speaker 1: about companies like Yammer, which was bought by Microsoft, or 470 00:27:55,480 --> 00:27:59,000 Speaker 1: Jive Software, a company that went public um a few 471 00:27:59,080 --> 00:28:04,120 Speaker 1: years ago, or Chatter, which is owned by Salesforce. Cisco 472 00:28:04,240 --> 00:28:07,800 Speaker 1: had a workplace chat product. There were lots of these 473 00:28:07,880 --> 00:28:10,120 Speaker 1: kind of Facebook for work whatever you want to call 474 00:28:10,160 --> 00:28:13,760 Speaker 1: them products, and almost all of them either died or 475 00:28:13,960 --> 00:28:16,320 Speaker 1: essentially irrelevant in the journal did they share they had 476 00:28:16,320 --> 00:28:20,520 Speaker 1: that great compared attracts of actually paying subscriptions of d 477 00:28:20,720 --> 00:28:25,840 Speaker 1: verses two million from Microsoft. I mean, the revenue girls 478 00:28:25,920 --> 00:28:30,080 Speaker 1: vectors are declining, the grow the down, the income statement 479 00:28:30,160 --> 00:28:33,280 Speaker 1: vectors are declining. Let's let's flip it over. I'm gung 480 00:28:33,359 --> 00:28:40,880 Speaker 1: ho on Slack. Why well, look, they do have six 481 00:28:41,000 --> 00:28:45,360 Speaker 1: hundred thousand paying organizations, which is, you know, not nothing. 482 00:28:46,000 --> 00:28:50,040 Speaker 1: Even maybe it's nothing compared to Microsoft and all of 483 00:28:50,080 --> 00:28:53,120 Speaker 1: the customers that they have. But this is a software 484 00:28:53,120 --> 00:28:56,920 Speaker 1: that has caught on relatively quickly in a relatively large 485 00:28:57,000 --> 00:29:01,680 Speaker 1: number of organizations. The the advantage of software as a service, 486 00:29:01,720 --> 00:29:04,719 Speaker 1: you know, this kind of subscription software. The reason investors 487 00:29:04,880 --> 00:29:07,800 Speaker 1: love that business model so much is. It's very easy 488 00:29:07,800 --> 00:29:12,400 Speaker 1: to understand. You have companies paying money every month or 489 00:29:12,440 --> 00:29:15,640 Speaker 1: every year for a product. You can kind of model 490 00:29:15,680 --> 00:29:18,800 Speaker 1: it out. You can see the retention rates and the 491 00:29:18,840 --> 00:29:22,520 Speaker 1: ability to upgrade those customers. Look, investors may have gotten 492 00:29:22,560 --> 00:29:26,560 Speaker 1: carried away about this whole category of software, but there 493 00:29:26,720 --> 00:29:29,880 Speaker 1: is something real happening. There are new kinds of technology 494 00:29:29,920 --> 00:29:33,080 Speaker 1: that are catching on. In single best conversations, Today's shore 495 00:29:33,160 --> 00:29:38,120 Speaker 1: Overday is always thank you so much. Thanks for listening 496 00:29:38,160 --> 00:29:42,720 Speaker 1: to the Bloomberg Saveillance podcast. Subscribe and listen to interviews 497 00:29:42,720 --> 00:29:48,000 Speaker 1: on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. 498 00:29:48,520 --> 00:29:51,880 Speaker 1: I'm on Twitter at Tom Keane before the podcast. You 499 00:29:51,880 --> 00:30:02,720 Speaker 1: can always catch us worldwide. I'm Bloomberg Radio