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Speaker 1: This is Bloomberg Business Wait inside from the reporters and

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Speaker 1: editors who bring you America's most trusted business magazine, plus

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Speaker 1: global business finance and tech news. The Bloomberg Business Week

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Speaker 1: Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.

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Speaker 2: Carol, you know that I am so excited to talk

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Speaker 2: about this story. It's a mon our, most read obviously,

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Speaker 2: it's among the most talked about on none other platform

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Speaker 2: than Twitter. We're talking about Meta's new app, Threads, the

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Speaker 2: rhinebol to Twitter, right, real threat to Elon Musk and

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Speaker 2: his social media platform that's already been struggling quite a

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Speaker 2: bit since he perhaps overpaid just a touch according to

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Speaker 2: some for the platform. Someone who knows the company very

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Speaker 2: very well is joining us to discuss this. We've got

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Speaker 2: Bloomberg News Big Tech team leader Sarah Fryar, also the

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Speaker 2: author of No Filter, The Inside Story of Instagram, and

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Speaker 2: she joins us from the San Francisco Bureau. Sarah, thanks

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Speaker 2: so much for coming on, and uh, pick your poison

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Speaker 2: for me here in terms of hot takes to tell

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Speaker 2: me about Threads, what do we need to know?

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Speaker 3: I mean, the most incredible thing is just the amount

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Speaker 3: of attention. It's getting the amount of people who who

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Speaker 3: actually wanted Meta to copy a product this time and

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Speaker 3: are signing up and trying it out, and the engagement there,

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Speaker 3: the amount of people who are are posting and replying

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Speaker 3: and following people like there is there is pent up

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Speaker 3: demand for this thing, which is which you know, I

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Speaker 3: expect it a little bit, but to see it in

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Speaker 3: action is another thing. And then and then you know,

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Speaker 3: it just goes to show that having that existing network,

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Speaker 3: that existing Instagram network that they can connect to this

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Speaker 3: new product really made a difference. We've seen so many

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Speaker 3: Twitter competitors, We've seen Blue Sky mass it on posts

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Speaker 3: t too. Like the list goes on, and this is

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Speaker 3: the one where people don't have to do as much

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Speaker 3: work to get started because they can port over what

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Speaker 3: they already have from Instagram, and that barrier to entry

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Speaker 3: is really making a big difference. Frustrating some people for sure,

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Speaker 3: but for others, cutting down the time to make this

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Speaker 3: useful by a lot.

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Speaker 2: Well, Sara, you bring up such a great point that

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Speaker 2: this is perhaps the first time that people wanted Meta

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Speaker 2: to copy something. Obviously, what comes to mind is when

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Speaker 2: they copied Snapchat through Instagram Stories, rolling out. This has

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Speaker 2: happened time and time again with them. What do you

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Speaker 2: think was the catalyst behind users being so excited about

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Speaker 2: this copycat move? Is it because of Elon's takeover of Twitter?

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Speaker 2: Or have people been itching for a better version of

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Speaker 2: Twitter for a while.

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Speaker 3: Now it's because of the takeover, no doubt, I mean,

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Speaker 3: and that is what I've been hearing from my sources,

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Speaker 3: is it came down to the celebrities and brands and

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Speaker 3: folks who were relying on Twitter who have become solutions

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Speaker 3: with a lot of the changes that Musk has has

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Speaker 3: brought upon it, whether it's it's technical difficulties, like over

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Speaker 3: the weekend he was limiting the amount of posts that

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Speaker 3: people could see. There are still rate limits on Twitter,

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Speaker 3: or the content moderation changes. He's losing the rules. He's

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Speaker 3: made it more possible to see violent content, content that

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Speaker 3: could be harmful or hateful, and people don't Brands, for one,

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Speaker 3: don't want to be in that kind of environment, and

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Speaker 3: they've been asking Meta for an alternative. So here we are.

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Speaker 3: And I think that building off Instagram is smart because

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Speaker 3: on Instagram you do have those two billion users and

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Speaker 3: you have that existing network of public figures, celebrities, influencers,

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Speaker 3: people in the music industry and the sports industry that

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Speaker 3: can all easily pourt over to Threads as a starting

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Speaker 3: light for this new community. The big thing that we're

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Speaker 3: looking at now is not just does the launch because

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Speaker 3: it's possible to get a launch right and create a fad,

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Speaker 3: but does it create a habit when you have news

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Speaker 3: to share, when you have a thought, when you have

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Speaker 3: a good meme, are you opening up Twitter first or

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Speaker 3: are you opening up Threads or neither?

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Speaker 4: Are you?

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Speaker 3: Are you just over this now?

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Speaker 5: So Sar for someone who really understands this space, I mean,

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Speaker 5: how do you see it? And I'm assuming you've played

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Speaker 5: with threads? So give us an idea of what it's

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Speaker 5: like and could it possibly be a real threat to Twitter?

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Speaker 3: Well, I definitely think that it could, not just because

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Speaker 3: of the Twitter users coming over, but because they're also

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Speaker 3: answering a need that I think Instagram and Meta users

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Speaker 3: have right now. If you think about how Meta and

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Speaker 3: Instagram if sorry, Facebook and Instagram have changed over the

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Speaker 3: past couple of years, It's become more about content from

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Speaker 3: people that you don't follow, who aren't your friends. It's

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Speaker 3: become more about video more about reels, those short form

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Speaker 3: videos that are meant to copy TikTok. It's more of

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Speaker 3: a passive experience. It's more about entertainment. And so the

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Speaker 3: thing that excites me about Threads is it a place

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Speaker 3: where people can actually share their thoughts again on social media,

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Speaker 3: and sharing your thoughts on social media only works to

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Speaker 3: a certain point when people have communities that are nice

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Speaker 3: and small, like they used to have on Instagram and Facebook.

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Speaker 3: It's very easy to be personal. But when your community

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Speaker 3: balloons into you know, thousands of people, then you don't

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Speaker 3: want to be personal anymore, and especially as you start

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Speaker 3: to use those those profiles for professional reasons. I think

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Speaker 3: that a lot of activity has been moving to group chat,

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Speaker 3: and then that kind of more public facing activity I

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Speaker 3: think will move to Threads.

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Speaker 2: Yeah, it's like once the adults enter, it no longer

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Speaker 2: becomes a safe space, which is what we've seen TikTok

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Speaker 2: kind of be used for. Sarah talk to me about

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Speaker 2: what happens if Threads goes the way of Facebook and

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Speaker 2: sort of becomes seen as a platform for people who

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Speaker 2: are perhaps in an older demographic to kind of air

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Speaker 2: out their hot takes on politics and things like that.

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Speaker 2: Do you foresee that happening? And how is meta gonna

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Speaker 2: hedge against that?

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Speaker 6: Well?

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Speaker 3: I think I think Listen, every network has a demographic

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Speaker 3: that they start with, and I think right now, because

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Speaker 3: Threads is built off of Instagram, it's going to very

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Speaker 3: closely mirror who uses Instagram.

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Speaker 2: Excuse me, Yeah, that's a really good point. Actually, because

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Speaker 2: the users are younger, they might be they might be

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Speaker 2: able to kind of keep the Instagram audience as opposed

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Speaker 2: to catching more of the Facebook audience, which is aiming

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Speaker 2: a little bit older.

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Speaker 3: So I do think that Instagram is becoming a little

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Speaker 3: bit older, It is becoming more of a a you know,

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Speaker 3: millennial demographic place. But a new program, a new place

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Speaker 3: to share is always going to catch on with people

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Speaker 3: who want to build a following.

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Speaker 5: But I do wonder, you know, it's interesting because I

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Speaker 5: think about, you know, Maddie, that we're so entrenched on

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Speaker 5: the news business that Twitter is fun. I find it

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Speaker 5: really fun and helpful when when stories are coming out,

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Speaker 5: And I do wonder, you know, Sarah, would potentially Threads

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Speaker 5: be as useful in that regard for folks like us.

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Speaker 3: Well, that all comes down to the habit that we build.

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Speaker 3: If people start sharing news there, if they start sharing

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Speaker 3: their insights there, if that becomes a place that we

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Speaker 3: have to go see competitors and what they're doing, we

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Speaker 3: will be there too.

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Speaker 2: Yeah.

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Speaker 7: Yeah, do you think Elon's ticked? I wonder if Elon's

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Speaker 7: ticked about this?

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Speaker 5: I wonder, you know, the Elon zuck thing, you know,

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Speaker 5: I just wish they would go to the mats and

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Speaker 5: just you.

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Speaker 7: Know, take it to find it out. Do you think

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Speaker 7: Elon's a little little myft here?

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Speaker 6: Oh?

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Speaker 3: Absolutely? I mean I think you know, we saw a

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Speaker 3: report by Semaphore just now that that Elon's lawyer is

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Speaker 3: threatening to sue Meta metas as some the claims in

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Speaker 3: that letter are are not valid. So this is just

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Speaker 3: the beginning. I mean, we asked for a cage match.

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Speaker 3: This is the business version of the Elon Musk Mark

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Speaker 3: Zuckerberg cage match. They are certainly seeing each other as

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Speaker 3: rivals in this moment.

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Speaker 7: God gotta love this.

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Speaker 5: Sarah Friar's so glad we could check in with her.

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Speaker 5: She's our big tech team leader.

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Speaker 7: Here at Bloomberg News.

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Speaker 5: Her book No Filter or the Inside Story of Instagram,

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Speaker 5: so she really understands the space. But in particular Facebook,

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Speaker 5: Meta Instagram and how this continues to evolve. And I

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Speaker 5: guess time will tell what everybody signs up for it.

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Speaker 5: Why haven't you signed up for your like social queen.

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Speaker 2: No, it's completely like I was in DC yesterday. I'm

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Speaker 2: blaming it on that, but I think I also, like,

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Speaker 2: really don't want to have to do another one.

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Speaker 7: Well that's the thing, but I.

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Speaker 2: Have to, so I just need to do it.

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Speaker 7: We're just good, I.

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Speaker 5: Know, right right, But I agree with you, it's just

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Speaker 5: like another thing to keep up.

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Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us

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Speaker 1: live weekday afternoons from three to six Eastern Listen on

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Speaker 1: or watch us live on YouTube.

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Speaker 8: May not then like the main not then like the thing?

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Speaker 7: All right, everybody. Carol Master along with Madison Mills live.

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Speaker 5: Here in our Boomberg Interactive Broker Studio on YouTube.

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Speaker 7: And of course Bloomberger Originals.

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Speaker 9: Well.

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Speaker 5: The Private Real Estate Strategy via Liquid Reads etf at

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Speaker 5: launched last month a little change, I believe, since it's.

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Speaker 7: Debut on June fourteenth.

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Speaker 5: When I before the market clothes, I was looking at

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Speaker 5: it versus about a one point eight percent return in

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Speaker 5: the Dow Jones Equity red Total Return Index. Not necessary

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Speaker 5: apples to apples, but just to give you a little

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Speaker 5: bit of a measure. The actively managed GTF investment apartments,

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Speaker 5: single family rentals, manufactured housing, and senior housing reads. So

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Speaker 5: with more on the fund and the strategy, we were

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Speaker 5: delighted to have with us David Auerback, he's managing director

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Speaker 5: at Armada ETF Advisors. Here in our Bloomberg Interactive Broker studio.

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Speaker 5: Forget me, forgive me.

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Speaker 7: I'm rushing to get to you. Welcome, Welcome, Thank you

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Speaker 7: so much.

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Speaker 4: Time to vibe into reads.

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Speaker 5: Now, let's vibe into reads. I love real estate and

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Speaker 5: it was interesting at Milkin this year. I did a

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Speaker 5: panel that was just about basically focusing on office real

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Speaker 5: estate and trying to get an idea, and we heard

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Speaker 5: a lot about if you're at a top tier property,

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Speaker 5: you're probably okay, but lower tier it might be having

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Speaker 5: some problems. Talk to us, though, David, about your strategy.

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Speaker 10: Sure, so private real estate and the private real estate

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Speaker 10: strategy b I like with RETTF is more than residential. Right,

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Speaker 10: We're taking the portfolios of the largest private real estate

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Speaker 10: sponsors Blackstone, star Wood, and we can replicate those portfolios

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Speaker 10: using publicly traded reads down to the percentage in terms

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Speaker 10: of sector type and geographic location. So if you look

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Speaker 10: at the weighted average of those portfolios, it's more than

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Speaker 10: half over fifty percent in residential in those sectors. Twenty

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Speaker 10: five percent or so it's an industrial, and then you've

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Speaker 10: got several percent that are in sectors such as data centers, lodging,

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Speaker 10: office and lab space, strip centers. It kind of sprands

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Speaker 10: across all the other real estate sectors. Remember, these guys

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Speaker 10: have assembled very smart management team rights building great portfolio.

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Speaker 7: So you're like, they did the work, let me just

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Speaker 7: mimic well.

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Speaker 4: Using publicly traded reads.

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Speaker 10: So the reason is really there's three issues that are

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Speaker 10: at stake here, cost, liquidity, and the valuation cost.

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Speaker 4: The average private.

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Speaker 10: Real estate fund. When you add in the layered investment fees,

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Speaker 10: including the management fee, the selling and servicing fee, the

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Speaker 10: annual performance the performance fee over a certain hurdle return,

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Speaker 10: those can have to be about three and a half

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Speaker 10: percent a year for an average investor. Those fees add

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Speaker 10: up liquidity. We've seen the headlines about the private responsors

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Speaker 10: where investors can't get their money out. They've gated redemptions

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Speaker 10: versus an ETF go ahead.

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Speaker 5: So when you're active, you're actively managed, So you're picking

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Speaker 5: what you want to do, but you're not going above

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Speaker 5: and beyond.

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Speaker 7: You're trusting what they are.

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Speaker 10: Well, they disclosed their portfolios and a quarterly basis, so

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Speaker 10: we can use their portfolios. But one example, there are

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Speaker 10: no more student housing reads in the public market. So

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Speaker 10: because of that, we can allocate that percentage towards another

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Speaker 10: publicly traded residential rate, or we could use our know

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Speaker 10: how and our expertise to potentially allocate it towards let's

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Speaker 10: say a company like VICH Properties in Las Vegas that

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Speaker 10: owns the Las Vegas Strip.

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Speaker 4: That's another way to diversify.

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Speaker 2: So what are the clients looking for and what are

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Speaker 2: they asking you?

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Speaker 4: Well, that's a great question.

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Speaker 10: Clients are looking for yield, I mean, especially in this market,

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Speaker 10: in this volatile you know, real estate tried and true,

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Speaker 10: the long term performance of real estate, where they're looking

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Speaker 10: for a good opportunity. We feel that PRVT could either

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Speaker 10: be a good compliment to that private real estate allocation.

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Speaker 10: But more importantly, it goes back to the third point,

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Speaker 10: which is valuation. The valuation gap between the listed rates

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Speaker 10: and the private real estate funds has never been wider,

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Speaker 10: and there's recent reports out of NAYREATE, the National Association

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Speaker 10: of Real Estate Investment Trusts, that shows that that divergence

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Speaker 10: does come back, and the larger the divergence, basically, the

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Speaker 10: more significance of the performance of the listed reads coming

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Speaker 10: out of that divergence. So we feel right now, because

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Speaker 10: of this wide delta, it's the perfect time for investors

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Speaker 10: to pivot towards those listed.

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Speaker 7: Reads because there's opportunity.

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Speaker 4: Because there's opportunities, so prop it on that gap.

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Speaker 10: But it's for advisors, it's for investors, high net worth investors,

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Speaker 10: institutional guys. It's giving everybody a chance to play into

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Speaker 10: the listed reed market. David net Worth specifically, no, no,

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Speaker 10: not necessarily high net worth. Again, the average investor who

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Speaker 10: may be shut out of the private reads could benefit

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Speaker 10: from these smart management teams and use a publicly traded

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Speaker 10: red proxy that represents those portfolios.

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Speaker 7: Two things.

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Speaker 5: So you said twenty five percent industrial fifty residences, and

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Speaker 5: then twenty five percent was like a mix of commercial.

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Speaker 4: It would be several other sectors that's correct.

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Speaker 5: Can you play around with those or is that the

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Speaker 5: is that the percentage?

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Speaker 10: We can play around this, but again we're using the

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Speaker 10: private real estate sponsors kind of as the bogie.

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Speaker 4: So as they update their.

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Speaker 10: Quarterly holdings, like as a good example, one of the

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Speaker 10: guys is selling a big portfolio, like two thirds of

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Speaker 10: their portfolio of single family rentals, one of the publicly

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Speaker 10: traded reads is rumored to be buying it. You guys

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Speaker 10: published a story on it, and so as a result,

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Speaker 10: as that private read sponsor allocation reduces in single family

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Speaker 10: rental overall, our portfolio may change a little.

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Speaker 4: Bit of you're going to mimic it, because we're going

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Speaker 4: to try to mimic it.

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Speaker 7: How much money is coming in.

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Speaker 10: We just launched a few weeks ago, so we're you know, hovering,

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Speaker 10: you know, a few hundred thousand dollars. We think that

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Speaker 10: again because of what's these private responsors have over eighty plus.

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Speaker 4: Billion dollars of assets into them. If you add including the.

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Speaker 10: Leverage and that they properties they own, you're talking one

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Speaker 10: hundred and fifty plus million dollars of real estate that

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Speaker 10: these guys are sitting on. There's a huge opportunity for

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Speaker 10: the average investor to benefit from those private real estate funds.

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Speaker 2: Talk to me about office reads. Have we seen a

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Speaker 2: bottom yet?

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Speaker 10: Well, you know, it's a good good example is kind

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Speaker 10: of what we saw last week with SA Green announcing

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Speaker 10: that minority station.

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Speaker 4: Two billion dollar price to their balance sheet.

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Speaker 7: And just for the industry.

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Speaker 4: Overall here and you know again and not to not

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Speaker 4: to forty five Park.

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Speaker 10: When you think of trophy office buildings in Manhattan, personally,

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Speaker 10: two forty five Park is not the first property you

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Speaker 10: think of. You think of one Vandor built, the GM building,

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Speaker 10: the Empire State Building, right, And so I've been saying, look,

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Speaker 10: if they're vowing two forty five at Park, it two

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Speaker 10: doing and I'm sure there's numbers that are going to

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Speaker 10: that number. How much does the Empire State Building work?

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Speaker 9: Right?

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Speaker 7: It was a good sign.

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Speaker 4: And the other thing.

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Speaker 10: Is these guys have deep sponsors. Remember you have Government

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Speaker 10: of Singapore, candid Pension, more Trust Asian investors. These guys

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Speaker 10: have a long term vision of the value of these properties,

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Speaker 10: and so you know it's an odd lot for them.

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Speaker 5: David, I want to ask you about the time and

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Speaker 5: Maddie and I have spent so much time today you's

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Speaker 5: certainly talking about the move up in rates again and

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Speaker 5: the concerns here, and the FED expected to probably raise

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Speaker 5: rates again at the next meeting and then probably hover

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Speaker 5: for a while.

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Speaker 7: So how does that.

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Speaker 5: Necessarily like I think real estate, and I think about

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Speaker 5: the costs of servicing for these properties, and you know,

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Speaker 5: depending on how much leverage is certainly into it too,

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Speaker 5: So is that problematic potentially?

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Speaker 10: You know, I want a caution that a read is

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Speaker 10: not a read is not a read. There are so

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Speaker 10: many different sectors that are out there that using a

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Speaker 10: cell phone have a conversation. What does the FED raising

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Speaker 10: interest rates next month have to do with a cell

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Speaker 10: tower rate and having a conversation? Or if you place

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Speaker 10: an order on your cell phone from Amazon and that

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Speaker 10: utilizes three different reate sectors in case you didn't know,

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Speaker 10: industrial rates, data center reds, and a tower read Right,

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Speaker 10: how does that transaction impacted by the FED raising interest rates?

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Speaker 5: And the answer is prob So you have a lot

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Speaker 5: of residential is residential, but again that doesn't get impact.

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Speaker 10: But that benefits the single family rental players, the rental landlords.

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Speaker 10: In fact, we're sitting in one of the hottest apartment

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Speaker 10: markets in the country right now in New York City.

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Speaker 10: So as a result, because the demand.

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Speaker 4: Is through the roof.

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Speaker 10: If you're in the market for a seven percent mortgage,

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Speaker 10: that's the new normal that's out there right now. But

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Speaker 10: at the end of the day, there's simply not enough

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Speaker 10: housing inventory for want be buyers that are out there.

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Speaker 10: You're not concerned, I would say, we're minimally concerned.

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Speaker 4: It's again, we have to focus on the long term picture.

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Speaker 7: Recession. Would that be more problematic? Potentially?

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Speaker 4: Again depends on the sector and the story.

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Speaker 2: Okay, to what extent do you envision your client changing

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Speaker 2: as it gets harder and harder for work young folks

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Speaker 2: like myself to ever buy a home.

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Speaker 10: I think again, from the rental perspective, the single family

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Speaker 10: landlords that are out there that are growing their portfolios nationwide,

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Speaker 10: are gearing those portfolios towards the next generation. The apartments

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Speaker 10: that are being developed right now, it's not gear really

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Speaker 10: for you know who's there now. It's for the coming

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Speaker 10: in college crowd that's going to be out there. It's

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Speaker 10: that next wave of demand. If you think about it,

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Speaker 10: if you take a you know, a Class B property

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Speaker 10: put on a flatbed in New York and drop it

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Speaker 10: off in Farga and North Dakota. That's a Class A

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Speaker 10: property up there. So you're bringing that desirable product to

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Speaker 10: where that puck is going. And so as a result,

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Speaker 10: until we see a massive reset in New York prices,

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Speaker 10: and sorry to be the bear bad news, I don't

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Speaker 10: think we're going to be seeing something affordable. You know,

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Speaker 10: sadly there are people in New York that rent their

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Speaker 10: entire lives that don't get to achieve the American dream.

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Speaker 10: But you can rent from a single family landlord have

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Speaker 10: that four four bedroom, three bathroom house and even though

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Speaker 10: you're paying the rent to the landlord instead.

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Speaker 5: If you had to say the hottest play in real

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Speaker 5: estate right now, what would you say?

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Speaker 10: Probably in Dush because we had this price point with

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Speaker 10: pro Logist in Blackstone earlier this week.

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Speaker 7: So data or warehousing or a little bit, I think.

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Speaker 4: A little bit of both.

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Speaker 10: I still think the growth of towers and data centers,

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Speaker 10: especially with how much.

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Speaker 4: We're doing more and more online.

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Speaker 10: I mean, I use, I watched Bloomberg twenty four seven,

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Speaker 10: so I'm using my internet stream that you know, if

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Speaker 10: I place some all flows up through the south to

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Speaker 10: the towers, all.

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Speaker 6: Right, we got to run.

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Speaker 5: David, thank you so much.

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Speaker 1: Thank you.

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Speaker 7: Let'sen know how it goes.

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Speaker 5: David our Back, managing director at Armada ETF Advisors.

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Speaker 7: Here in studio.

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Speaker 1: Right here on Bloomberg, you're listening to the Bloomberg Business

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Speaker 1: Week podcast. Catch us live weekday afternoons from three to

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00:18:34,080 --> 00:18:38,440
Speaker 1: six Easter on Bloomberg Radio, the Bloomberg Business App and YouTube.

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00:18:38,560 --> 00:18:41,399
Speaker 1: You can also listen live on Amazon Alexa from our

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00:18:41,440 --> 00:18:45,919
Speaker 1: flagship New York station. Just say Alexa play Bloomberg eleven thirty.

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Speaker 5: You remember all the regional banking turmoil that we saw

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Speaker 5: back in March, I mean it was a lot. Now

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Speaker 5: the FED is still thinking about it. We know that

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Speaker 5: Maddie SVB coming up in yesterday's FOMC meeting minutes with

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Speaker 5: credit tightening among the Fed's concerns when they look at

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Speaker 5: the overall economy. Our next guest says, there are better

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Speaker 5: alternatives to traditional banks, and I have to say, Matt

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Speaker 5: Miller came over and it's like you're gonna love David Dindie.

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Speaker 5: He is co founder and CEO of Atomic invest. They

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Speaker 5: provide an investment platform to third party companies that offer

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Speaker 5: up digital investment advice. He joins us on Zoom from Vienna, Austria. David,

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Speaker 5: it's a pleasure to have you here with Maddie and myself.

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Speaker 7: Welcome, Welcome.

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Speaker 5: Tell us a little bit about your company and your platform,

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Speaker 5: who is using it, what it does, give us some background,

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Speaker 5: if you would.

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Speaker 4: Thank you.

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Speaker 11: So we provide wide labeled wealth management and treasury management

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Speaker 11: services to FinTechs, banks.

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Speaker 4: And credit unions.

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Speaker 11: So that's to say, if you're a fintech and you're

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Speaker 11: looking to offer treasury solutions to make it very easy

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Speaker 11: for companies to invest in money market funds and tea boilts,

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Speaker 11: we would essentially provide you with infrastructure as well as

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Speaker 11: the regulatory solutions to be able to offer that use

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Speaker 11: case to your customers.

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Speaker 5: This is for investors, but is it also for somebody

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Speaker 5: who runs a business you provide these services?

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Speaker 11: Well, we operate in a B to B to be

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Speaker 11: manor or B to be so we help both individual

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Speaker 11: investors as well as institutional investors and corporations to manage

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Speaker 11: their assets.

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Speaker 2: And are you seeing a lot of global demand, particularly

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Speaker 2: from emerging markets. I feel like that's a space that's

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Speaker 2: becoming increasingly interested in this.

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Speaker 11: Yes, We're seeing a lot of demand not only in

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Speaker 11: the US, but also in Latin in specificuristictions like Brazil

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Speaker 11: and Argentina. We're also seeing quite a bit of demand

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Speaker 11: in the Apec region as well to be able to

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Speaker 11: get access to US securities as well as US treasuries.

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Speaker 7: So give us an example.

444
00:20:46,440 --> 00:20:49,320
Speaker 5: I'm thinking of somebody's listening, so how they would use

445
00:20:49,359 --> 00:20:51,560
Speaker 5: your platform specifically.

446
00:20:52,320 --> 00:20:54,760
Speaker 11: So you would go to one of our partners. We

447
00:20:54,840 --> 00:20:58,560
Speaker 11: have close to fifty partners today, and you'd be able

448
00:20:58,600 --> 00:21:02,600
Speaker 11: to onboard through their interface. And through their interface, you'll

449
00:21:02,600 --> 00:21:05,520
Speaker 11: also be able to purchase stocks if you're looking to

450
00:21:05,560 --> 00:21:08,200
Speaker 11: trade inequities, or to purchase tea belts if you're looking

451
00:21:08,240 --> 00:21:11,080
Speaker 11: to trade in tea bolts, and so the interface would

452
00:21:11,080 --> 00:21:14,639
Speaker 11: really be owned by the partner, but the underlying service

453
00:21:14,680 --> 00:21:20,320
Speaker 11: provider is atomic enabling those individuals to purchase securities in

454
00:21:20,400 --> 00:21:21,760
Speaker 11: that respect.

455
00:21:21,359 --> 00:21:23,960
Speaker 7: Why did you start this business? I am curious what

456
00:21:24,000 --> 00:21:24,600
Speaker 7: you saw.

457
00:21:25,320 --> 00:21:28,439
Speaker 5: Or Levine, who was on a co founder of Ways, said,

458
00:21:28,480 --> 00:21:31,160
Speaker 5: you know, figure out the problem and then go create

459
00:21:31,200 --> 00:21:33,359
Speaker 5: a solution. So what was the problem in that you

460
00:21:33,400 --> 00:21:34,800
Speaker 5: thought you could do better?

461
00:21:36,119 --> 00:21:40,920
Speaker 11: Well, I'm originally from Kenya and in Austria, and moved

462
00:21:40,960 --> 00:21:43,719
Speaker 11: to the States, and in places like Kenya, it's very

463
00:21:43,720 --> 00:21:46,560
Speaker 11: difficult to get access to the capital markets the same

464
00:21:46,560 --> 00:21:48,800
Speaker 11: way you can get access to the capital markets in

465
00:21:48,840 --> 00:21:51,639
Speaker 11: the US. And so we built Atomic with the mission

466
00:21:51,680 --> 00:21:55,040
Speaker 11: of making wealth building accessible to every single human being

467
00:21:55,640 --> 00:21:58,600
Speaker 11: and realize that the best way to actually actually accomplish

468
00:21:58,600 --> 00:22:02,240
Speaker 11: this mission is not by providing our services directly to individuals,

469
00:22:02,560 --> 00:22:06,040
Speaker 11: but instead by partnering with companies that are already serving thousands,

470
00:22:06,080 --> 00:22:08,919
Speaker 11: if not millions of customers and making it very easy

471
00:22:08,920 --> 00:22:11,639
Speaker 11: for them to deliver these value propositions to them. And

472
00:22:11,680 --> 00:22:13,840
Speaker 11: so we found it automically on the basis of how

473
00:22:13,840 --> 00:22:17,000
Speaker 11: can we make wealth building a lot more accessible to everyone,

474
00:22:17,080 --> 00:22:19,280
Speaker 11: regardless of where you are and regardless of where you're

475
00:22:19,320 --> 00:22:20,000
Speaker 11: starting from.

476
00:22:20,640 --> 00:22:22,800
Speaker 2: And like you said, you're already doing that work in

477
00:22:22,840 --> 00:22:25,199
Speaker 2: the US. Can you talk to me about a partnership

478
00:22:25,240 --> 00:22:28,400
Speaker 2: that's been particularly meaningful to you and your work so far.

479
00:22:29,760 --> 00:22:33,600
Speaker 11: Yes, So we actually power a number of the treasury

480
00:22:33,640 --> 00:22:37,840
Speaker 11: management platforms in the US today. This was particularly meaningful,

481
00:22:37,920 --> 00:22:42,000
Speaker 11: especially in light of the sub crisis, where many individuals

482
00:22:42,000 --> 00:22:45,200
Speaker 11: and many companies software different alternative providers for them to

483
00:22:45,240 --> 00:22:47,960
Speaker 11: be able to park their assets and so in that

484
00:22:48,080 --> 00:22:53,040
Speaker 11: space we power companies ranging from early stage treasury management

485
00:22:53,040 --> 00:22:56,240
Speaker 11: platforms as well as lead stage business banking and business

486
00:22:56,280 --> 00:22:57,560
Speaker 11: band management platforms.

487
00:22:58,320 --> 00:23:00,760
Speaker 5: You know what's interesting too, and you know, in talking

488
00:23:00,760 --> 00:23:03,199
Speaker 5: with Matt a little bit, knowing that you were coming on,

489
00:23:04,320 --> 00:23:07,840
Speaker 5: I was curious about for individuals moving into their brokerage,

490
00:23:08,000 --> 00:23:10,800
Speaker 5: the safety security versus what we perceive as the safety

491
00:23:10,840 --> 00:23:14,080
Speaker 5: security of kind of your traditional banking and banks.

492
00:23:15,760 --> 00:23:15,960
Speaker 1: Yeah.

493
00:23:16,040 --> 00:23:19,040
Speaker 11: I think one of the benefits of custoding assets with

494
00:23:19,119 --> 00:23:21,760
Speaker 11: a broker dealer as opposed to custoding.

495
00:23:21,320 --> 00:23:23,960
Speaker 4: Assets with a bank, is that you have.

496
00:23:23,920 --> 00:23:27,840
Speaker 11: The ability to hold your assets in government securities like

497
00:23:27,880 --> 00:23:31,040
Speaker 11: tea builts, where your capital is fully backed by the

498
00:23:31,160 --> 00:23:35,280
Speaker 11: US government. This stands in contrast to the limited protections

499
00:23:35,320 --> 00:23:38,040
Speaker 11: that you would get through FDIC insurance with a back.

500
00:23:38,640 --> 00:23:40,840
Speaker 11: If you're a small depositor, let's say you're a retail

501
00:23:40,880 --> 00:23:43,800
Speaker 11: investor with several thousands or hundreds of thousands of dollars

502
00:23:43,880 --> 00:23:46,720
Speaker 11: in deposits, it's not that big of an issue. But

503
00:23:46,760 --> 00:23:50,760
Speaker 11: if you're a large depositor holding millions of dollars, only

504
00:23:50,840 --> 00:23:53,719
Speaker 11: having two hundred and fifty thousand dollars insured is something

505
00:23:53,760 --> 00:23:57,359
Speaker 11: that is risky, and so we think that the better

506
00:23:57,440 --> 00:24:01,280
Speaker 11: alternative for large depositors to cost their assets is with

507
00:24:01,440 --> 00:24:04,399
Speaker 11: providers like broker dealers, where they have the ability to

508
00:24:04,440 --> 00:24:07,760
Speaker 11: invest directly in these securities where their capital is fully banned.

509
00:24:09,040 --> 00:24:13,080
Speaker 2: Have you seen any change in the demand for your

510
00:24:13,119 --> 00:24:16,919
Speaker 2: platform following the collapse of SVB and also because of

511
00:24:17,000 --> 00:24:21,440
Speaker 2: like exactly what you're saying, the renewed interest and importance

512
00:24:21,600 --> 00:24:26,080
Speaker 2: of the FDIC regulations there.

513
00:24:26,960 --> 00:24:30,720
Speaker 11: Yes, and the aftermath of the crisis, we've seen significant

514
00:24:30,800 --> 00:24:36,239
Speaker 11: shift in how custody is performed, where many people are

515
00:24:36,240 --> 00:24:40,160
Speaker 11: actually moving away from commercial banks towards broker dealers as

516
00:24:40,200 --> 00:24:43,679
Speaker 11: well as mutual fund companies. I just saw a stat

517
00:24:43,800 --> 00:24:47,600
Speaker 11: recently that about one trillion dollars of assets have left

518
00:24:48,160 --> 00:24:50,960
Speaker 11: commercial banks in the last four months to these alternative

519
00:24:52,520 --> 00:24:55,720
Speaker 11: custody providers. And I think this is really driven by

520
00:24:55,880 --> 00:24:59,680
Speaker 11: three main things. The first is, as we talked about, safety,

521
00:25:00,280 --> 00:25:03,920
Speaker 11: being able to ensure that your full capital is protected.

522
00:25:04,359 --> 00:25:07,400
Speaker 11: The second is yield with interest rates, where there are

523
00:25:07,440 --> 00:25:11,399
Speaker 11: today investing in fixed income and in government securities can

524
00:25:11,440 --> 00:25:14,520
Speaker 11: give you five percent return, which is significantly larger than

525
00:25:14,800 --> 00:25:18,000
Speaker 11: what most commercial banks are providing. And the third is

526
00:25:18,119 --> 00:25:21,159
Speaker 11: just ux in the sense that many FinTechs that we

527
00:25:21,200 --> 00:25:25,240
Speaker 11: partner with have a product focused approach where they're able

528
00:25:25,280 --> 00:25:28,720
Speaker 11: to deliver a really unique experience that makes it very

529
00:25:28,720 --> 00:25:32,399
Speaker 11: easy for commercial depositors to solve their issues in a

530
00:25:32,480 --> 00:25:36,159
Speaker 11: self service way, an area where traditionally commercial banks have

531
00:25:36,240 --> 00:25:37,600
Speaker 11: not been as strong in.

532
00:25:38,240 --> 00:25:40,719
Speaker 5: So, David, did you directly though, see it uptick in

533
00:25:40,800 --> 00:25:43,960
Speaker 5: terms of applications or use or demand of your platform

534
00:25:44,320 --> 00:25:47,800
Speaker 5: in the wake of SVB and a handful of other

535
00:25:48,280 --> 00:25:51,720
Speaker 5: financial institutions in the regional banking space, the collapse.

536
00:25:51,359 --> 00:25:55,879
Speaker 11: Of Yes, we quadruple the number of customers that we

537
00:25:55,960 --> 00:26:00,439
Speaker 11: serve really in that post SVB, we'll also double the

538
00:26:00,840 --> 00:26:05,239
Speaker 11: total assets that we manage. And in light of the

539
00:26:05,320 --> 00:26:08,600
Speaker 11: SMB crisis, we've also had a number of partnerships that

540
00:26:08,640 --> 00:26:12,240
Speaker 11: have formed with other business banking and B to B

541
00:26:12,359 --> 00:26:16,760
Speaker 11: platforms that are now looking to leverage our infrastructure to

542
00:26:16,800 --> 00:26:20,520
Speaker 11: be able to offer a different, alternative, different custody model

543
00:26:20,560 --> 00:26:21,400
Speaker 11: to their customers.

544
00:26:21,600 --> 00:26:24,760
Speaker 5: Can I ask you where the biggest activity level is happening.

545
00:26:24,840 --> 00:26:27,159
Speaker 5: Is it US develop markets or is it in the

546
00:26:27,200 --> 00:26:28,440
Speaker 5: developing world.

547
00:26:29,600 --> 00:26:35,160
Speaker 11: So we're seeing hotspots in the US because very high there,

548
00:26:35,320 --> 00:26:37,320
Speaker 11: we're also seeing hotspots in Brazil.

549
00:26:38,040 --> 00:26:39,320
Speaker 4: Brazil has its own.

550
00:26:39,200 --> 00:26:44,639
Speaker 11: Unique characteristics related to how people perceive holding assets and

551
00:26:44,680 --> 00:26:49,320
Speaker 11: dollars versus holding assets in REI. We're also starting to

552
00:26:49,320 --> 00:26:52,160
Speaker 11: see optics in the EU and in the UK as

553
00:26:52,160 --> 00:26:55,920
Speaker 11: a result of most recent rate hikes by the ECB

554
00:26:56,160 --> 00:26:59,040
Speaker 11: as well as the Central Bank of England, and.

555
00:26:59,080 --> 00:27:03,680
Speaker 2: Really quickly here. How big do you see not just fintech,

556
00:27:03,760 --> 00:27:06,480
Speaker 2: but your firm specifically getting.

557
00:27:07,680 --> 00:27:11,000
Speaker 11: That's a good question. I do think that there is

558
00:27:11,040 --> 00:27:14,320
Speaker 11: a world in which our firm and the companies that

559
00:27:14,440 --> 00:27:18,320
Speaker 11: work with us introduce a novel approach to custody that

560
00:27:18,520 --> 00:27:21,960
Speaker 11: can rival the traditional forms of custody today.

561
00:27:22,040 --> 00:27:23,720
Speaker 4: So the ability to.

562
00:27:23,280 --> 00:27:26,960
Speaker 11: Pull assets in a safe, secure manner, I think that

563
00:27:27,119 --> 00:27:30,040
Speaker 11: model itself is something that can span not only in

564
00:27:30,080 --> 00:27:33,119
Speaker 11: the US, but also in other jurisdictions. As we're seeing today, I.

565
00:27:33,119 --> 00:27:35,320
Speaker 7: Mean as big as big as a JP Morgan or

566
00:27:35,320 --> 00:27:36,080
Speaker 7: a city.

567
00:27:37,400 --> 00:27:40,840
Speaker 11: Well, I will say that, I would say that just

568
00:27:40,880 --> 00:27:43,280
Speaker 11: given what we're seeing, and given the types of platforms

569
00:27:43,280 --> 00:27:46,280
Speaker 11: that we're partnered with, I wouldn't be surprised if in

570
00:27:46,440 --> 00:27:49,960
Speaker 11: several years time we will receive will end up being

571
00:27:50,000 --> 00:27:51,520
Speaker 11: as large as those institutions.

572
00:27:51,640 --> 00:27:54,000
Speaker 5: Well, so appreciate getting some time with you. David Dindy,

573
00:27:54,119 --> 00:27:56,800
Speaker 5: co founder and chief executive officer of Atomic Invest on

574
00:27:56,880 --> 00:27:57,880
Speaker 5: Zoom from Vienna.

575
00:27:59,359 --> 00:28:02,959
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us

576
00:28:03,000 --> 00:28:07,120
Speaker 1: live weekday afternoons from three to six Easter on Bloomberg Radio,

577
00:28:07,200 --> 00:28:10,520
Speaker 1: the Bloomberg Business App, and YouTube. You can also listen

578
00:28:10,600 --> 00:28:13,720
Speaker 1: live on Amazon Alexa from our flagship New York station

579
00:28:14,160 --> 00:28:16,920
Speaker 1: Just Say Alexa playing Bloomberg eleven thirty.

580
00:28:18,600 --> 00:28:18,840
Speaker 6: Well.

581
00:28:18,880 --> 00:28:21,320
Speaker 5: One story definitely caught our attention on this Thursday. It's

582
00:28:21,320 --> 00:28:24,480
Speaker 5: about anti woke brands and the platform helping to get

583
00:28:24,480 --> 00:28:26,920
Speaker 5: their message and products out to consumers. This was really

584
00:28:27,000 --> 00:28:28,840
Speaker 5: on your radar in a big way, Maddie.

585
00:28:28,840 --> 00:28:31,400
Speaker 2: Well, I love this story so much because it points

586
00:28:31,480 --> 00:28:35,439
Speaker 2: to the perfect kind of threading between the worlds that

587
00:28:35,520 --> 00:28:37,760
Speaker 2: I love to live in of politics and business, and

588
00:28:37,800 --> 00:28:39,880
Speaker 2: they're increasingly getting closer and closer.

589
00:28:40,040 --> 00:28:40,800
Speaker 7: Yeah, that's a really.

590
00:28:40,720 --> 00:28:42,120
Speaker 5: Good way to put it, all, right, So let's get

591
00:28:42,120 --> 00:28:44,320
Speaker 5: to it. Joining us with more on the story that

592
00:28:44,400 --> 00:28:46,840
Speaker 5: was written by Clara Hudson and David Hood. David, by

593
00:28:46,880 --> 00:28:49,360
Speaker 5: the way, is Bloomberg Law Senior reporter, and he's on

594
00:28:49,440 --> 00:28:52,520
Speaker 5: Zoom from Washington DC David, First up, what do you

595
00:28:52,560 --> 00:28:54,800
Speaker 5: consider an ant First of all, thank you for being here.

596
00:28:55,240 --> 00:28:55,640
Speaker 7: Maddie.

597
00:28:55,720 --> 00:28:57,640
Speaker 5: On our morning call this morning, she's like, we gotta

598
00:28:57,640 --> 00:28:58,840
Speaker 5: do the story. We gotta do the story, and she

599
00:28:58,920 --> 00:29:01,640
Speaker 5: was right. So an anti woke brand.

600
00:29:01,680 --> 00:29:04,680
Speaker 8: First of all, well, thanks for having me and thanks

601
00:29:04,720 --> 00:29:10,400
Speaker 8: thanks for the read. Uh yeah, I mean they come

602
00:29:10,600 --> 00:29:16,000
Speaker 8: in in all sorts of forms, right, but but the

603
00:29:16,040 --> 00:29:20,760
Speaker 8: common thread, the common thread is sort of a a

604
00:29:20,880 --> 00:29:26,600
Speaker 8: stance against anti e s G or environmental social corporate governance.

605
00:29:28,600 --> 00:29:34,560
Speaker 8: Uh uh, I guess perspective, and it's it's what makes

606
00:29:34,600 --> 00:29:37,760
Speaker 8: these brands is like I think it's it comes down

607
00:29:37,800 --> 00:29:40,200
Speaker 8: to about three things. One is like the sort of

608
00:29:40,240 --> 00:29:47,080
Speaker 8: marketing market themselves is like pro America, pro family, pro conservative,

609
00:29:47,160 --> 00:29:54,120
Speaker 8: like these very conservative values, and that's that's the one thing.

610
00:29:54,160 --> 00:29:58,280
Speaker 8: But they're also want to they also push back against

611
00:29:59,120 --> 00:30:02,200
Speaker 8: when I say anti e SG really talking about diversity,

612
00:30:02,240 --> 00:30:06,120
Speaker 8: equity and inclusion. I really think that that companies that

613
00:30:06,320 --> 00:30:13,120
Speaker 8: have DEI programs or the initiatives or the use ESG

614
00:30:13,280 --> 00:30:18,240
Speaker 8: to to to evaluate risk in their businesses is really

615
00:30:19,680 --> 00:30:23,320
Speaker 8: imposing an ideology. That's how they view ESG. And so

616
00:30:23,480 --> 00:30:28,200
Speaker 8: when you see anti woke that really just means like

617
00:30:28,920 --> 00:30:34,959
Speaker 8: they don't want it's to impose their beliefs on use customers,

618
00:30:35,000 --> 00:30:35,400
Speaker 8: et cetera.

619
00:30:35,600 --> 00:30:38,680
Speaker 2: We saw this with Target and with bud Light recently, right,

620
00:30:38,720 --> 00:30:40,560
Speaker 2: So I know that this has been on your radar

621
00:30:40,600 --> 00:30:42,920
Speaker 2: obviously before them, but just as a reminder to folks,

622
00:30:42,960 --> 00:30:46,320
Speaker 2: Target had a lot of trouble with their Pride products

623
00:30:46,320 --> 00:30:49,080
Speaker 2: over the summer, employees getting harassed, and also bud Light

624
00:30:49,120 --> 00:30:54,400
Speaker 2: obviously has been a huge financial declines following their work

625
00:30:54,440 --> 00:30:59,400
Speaker 2: with Dylan mulvany, a trans content creator who recently said

626
00:30:59,400 --> 00:31:02,080
Speaker 2: that she had no has not heard from bud Light

627
00:31:02,240 --> 00:31:06,280
Speaker 2: since all of the kind of controversy surrounding her. So, David,

628
00:31:06,320 --> 00:31:09,160
Speaker 2: going back to you here to what extent, is this

629
00:31:09,360 --> 00:31:14,080
Speaker 2: a move against some of these classic American brands going

630
00:31:14,200 --> 00:31:18,280
Speaker 2: closer and closer to a more diverse and inclusive product offering,

631
00:31:18,440 --> 00:31:23,200
Speaker 2: brand offering versus you know, people wanting to specifically go

632
00:31:23,400 --> 00:31:27,240
Speaker 2: to a conservative company. Is it more just choosing an alternative?

633
00:31:28,320 --> 00:31:32,760
Speaker 8: Yeah, I mean, I mean the the alternative or parallel

634
00:31:32,800 --> 00:31:37,560
Speaker 8: economy as as some folks called it. It was really

635
00:31:37,880 --> 00:31:41,480
Speaker 8: born out of there's nowhere else to go. Like these

636
00:31:41,480 --> 00:31:47,040
Speaker 8: companies they see as customers don't represent them and don't

637
00:31:47,320 --> 00:31:51,720
Speaker 8: represent them, whether it be because of Pride Month or

638
00:31:51,840 --> 00:31:56,160
Speaker 8: because of you know, merchandise, or because of from an

639
00:31:56,120 --> 00:32:01,680
Speaker 8: employee's perspective, it's having to sit through DEI trainings or whatever.

640
00:32:01,960 --> 00:32:06,520
Speaker 8: It's like they feel like that these companies don't represent

641
00:32:06,600 --> 00:32:08,880
Speaker 8: them anymore, and there's nowhere for them to go because

642
00:32:08,880 --> 00:32:12,160
Speaker 8: they're really looking for validation. We're looking for validation of

643
00:32:12,200 --> 00:32:16,400
Speaker 8: their values of who they are, their identities and so

644
00:32:17,560 --> 00:32:20,680
Speaker 8: and so that that's sort of created a sort of

645
00:32:20,760 --> 00:32:24,640
Speaker 8: market opportunity, uh, to create alternatives.

646
00:32:25,040 --> 00:32:27,440
Speaker 5: And well, so let's let's let's get to it, because

647
00:32:27,440 --> 00:32:30,320
Speaker 5: you've got about three minutes left, and where you talk

648
00:32:30,400 --> 00:32:33,720
Speaker 5: about and you talk about one company, Old Guard, which

649
00:32:33,800 --> 00:32:38,800
Speaker 5: was a pet food company and basically was nutritious product,

650
00:32:39,760 --> 00:32:44,640
Speaker 5: nutritious products created with traditional American value. So maybe it

651
00:32:44,680 --> 00:32:46,040
Speaker 5: wasn't so concerned about the.

652
00:32:46,040 --> 00:32:47,960
Speaker 7: Environment or vegan or what have you.

653
00:32:48,600 --> 00:32:51,240
Speaker 5: But they used a platform called Public Square.

654
00:32:51,360 --> 00:32:52,840
Speaker 7: Tell us about that, because.

655
00:32:52,520 --> 00:32:57,000
Speaker 8: That's yeah, public Square. Public Square is uh, you know,

656
00:32:57,040 --> 00:33:01,920
Speaker 8: when they stumbled across Public Square. That's really, from as

657
00:33:01,960 --> 00:33:04,160
Speaker 8: far as we know, is like the largest sort of

658
00:33:04,200 --> 00:33:09,880
Speaker 8: collection of these of these businesses and it's going it's

659
00:33:09,880 --> 00:33:16,120
Speaker 8: going public via vias back next quarter. It's it's grown

660
00:33:16,200 --> 00:33:21,400
Speaker 8: to about a million customers and it's got about fifty

661
00:33:21,480 --> 00:33:25,080
Speaker 8: thousand of these businesses. And to sign up on the

662
00:33:25,560 --> 00:33:29,200
Speaker 8: platform from the businesses, they have to you have to

663
00:33:29,240 --> 00:33:32,360
Speaker 8: sort of sign a pledge of like sort of like

664
00:33:32,400 --> 00:33:36,160
Speaker 8: a five point pledge, and they they consider those to

665
00:33:36,240 --> 00:33:40,719
Speaker 8: be sort of pro America, pro family. I think one

666
00:33:40,720 --> 00:33:44,560
Speaker 8: of them is like defending the Constitution, or another one

667
00:33:44,640 --> 00:33:50,800
Speaker 8: is fighting for the sanctity of life. And and so

668
00:33:50,880 --> 00:33:55,000
Speaker 8: Public Square Public Square is a massive collection of these

669
00:33:55,080 --> 00:33:57,840
Speaker 8: of of these companies. I mean there are banks, there

670
00:33:57,880 --> 00:34:01,520
Speaker 8: are insurance companies, there are asset manager, there's there's coffee companies.

671
00:34:01,520 --> 00:34:06,520
Speaker 8: There's this dog food company, there's I mean, there's there's

672
00:34:07,240 --> 00:34:10,640
Speaker 8: clothing brands. I mean, it's it's you think of it.

673
00:34:10,640 --> 00:34:15,600
Speaker 8: It's probably on on Public Square platforms, right, yeah, yes, yes,

674
00:34:15,680 --> 00:34:19,240
Speaker 8: exactly exactly. There's a there's a there's a job search

675
00:34:19,320 --> 00:34:23,359
Speaker 8: and uh platform as well, and so it's it's it's

676
00:34:23,400 --> 00:34:26,520
Speaker 8: this massive collection. And and when I talked to the CEO,

677
00:34:26,600 --> 00:34:29,600
Speaker 8: Michael Seaffert, you know, he told me it's like it's

678
00:34:29,640 --> 00:34:33,600
Speaker 8: that these companies and customers sort of come together to

679
00:34:33,760 --> 00:34:39,799
Speaker 8: say that mainstream companies like Target, like Amazon, like bud

680
00:34:39,880 --> 00:34:45,440
Speaker 8: Light have shifted leftward and they know long they no

681
00:34:45,520 --> 00:34:48,360
Speaker 8: longer feel represented, and that sort of created this market

682
00:34:48,360 --> 00:34:51,960
Speaker 8: opportunity and seaffert it's interesting.

683
00:34:52,080 --> 00:34:52,680
Speaker 7: It's interesting.

684
00:34:52,680 --> 00:34:55,560
Speaker 5: So it's another online shopping mall, as you say, and

685
00:34:55,760 --> 00:34:59,080
Speaker 5: in the reporting you and Clara for the right leaning consumers.

686
00:34:59,200 --> 00:35:02,400
Speaker 5: So h interesting, just another platform where folks who maybe

687
00:35:02,440 --> 00:35:04,440
Speaker 5: are are tired of all the wokeness.

688
00:35:04,719 --> 00:35:06,040
Speaker 7: Is that a word. I don't know if it's a word,

689
00:35:06,080 --> 00:35:10,680
Speaker 7: but I get it. It's an alternative. It's an alternative. David,

690
00:35:10,719 --> 00:35:11,440
Speaker 7: thank you so much.

691
00:35:11,480 --> 00:35:13,960
Speaker 5: Glad we could bring this to our listeners and viewers.

692
00:35:14,000 --> 00:35:17,040
Speaker 5: David Hood is senior reporter at Bloomberg News on Zoom

693
00:35:17,040 --> 00:35:17,879
Speaker 5: from Washington, DC.

694
00:35:18,000 --> 00:35:20,040
Speaker 7: But it is interesting. I get it, Maddie, right, It's

695
00:35:20,080 --> 00:35:21,120
Speaker 7: just like another community.

696
00:35:21,360 --> 00:35:24,120
Speaker 5: Yeah that maybe you feel more a lot or somebody

697
00:35:24,120 --> 00:35:25,040
Speaker 5: feels more aligned with.

698
00:35:25,239 --> 00:35:28,759
Speaker 2: Yeah, And it's just moving closer and closer towards what

699
00:35:28,920 --> 00:35:32,280
Speaker 2: he says in the story, belief driven buying is continuing.

700
00:35:32,480 --> 00:35:34,000
Speaker 7: I love reffords, which I hadn't heard.

701
00:35:34,080 --> 00:35:38,160
Speaker 5: Yeah driven, so well said, all right, anyways, find out

702
00:35:38,160 --> 00:35:44,200
Speaker 5: more just head to Bloomberg dot Com.

703
00:35:41,520 --> 00:35:47,839
Speaker 2: A bromackle, a journal now about you let me drive?

704
00:35:48,360 --> 00:35:53,400
Speaker 1: No, no, honey, please, I'll do the gravel.

705
00:35:53,760 --> 00:35:55,319
Speaker 4: Excuse mate, I want to drive.

706
00:35:55,320 --> 00:35:59,480
Speaker 11: It's a good question time.

707
00:36:02,320 --> 00:36:04,640
Speaker 1: This is the drive to the globe.

708
00:36:04,760 --> 00:36:05,560
Speaker 4: Con trimular thing.

709
00:36:05,680 --> 00:36:08,800
Speaker 1: Well Dad on Bloomberg.

710
00:36:08,440 --> 00:36:11,120
Speaker 5: Radio, all right, everybody, just about seventeen minutes, seventeen and

711
00:36:11,120 --> 00:36:12,320
Speaker 5: a half minutes to be exact.

712
00:36:12,480 --> 00:36:13,880
Speaker 7: Left in today's creating session.

713
00:36:13,920 --> 00:36:16,640
Speaker 5: Carol Mass along with Madison Mills live in our Bloomberg

714
00:36:16,680 --> 00:36:21,040
Speaker 5: Interact and Broker Studio on YouTube and on Bloomberg Originals.

715
00:36:21,160 --> 00:36:23,080
Speaker 5: And you know, Maddie, you know, we have seen a

716
00:36:23,120 --> 00:36:25,279
Speaker 5: lot of pressure on the equity side of things, a

717
00:36:25,320 --> 00:36:27,600
Speaker 5: bunch of selling, but we're off our lows. But we've

718
00:36:27,640 --> 00:36:30,680
Speaker 5: really seen some big movements in treasury yields today.

719
00:36:30,880 --> 00:36:32,880
Speaker 2: Yeah, it seems like that is the place to be

720
00:36:33,520 --> 00:36:36,400
Speaker 2: right now, particularly when you look at the two year again,

721
00:36:36,560 --> 00:36:40,080
Speaker 2: just those highs since two thousand and seven, which feels like,

722
00:36:40,160 --> 00:36:42,880
Speaker 2: you know, it feels like when it's that high, it

723
00:36:43,080 --> 00:36:45,520
Speaker 2: just seems like something's going on that I don't feel

724
00:36:45,520 --> 00:36:45,960
Speaker 2: good about.

725
00:36:46,200 --> 00:36:48,800
Speaker 5: It's definitely well, I'm definitely reacting though, to the good

726
00:36:49,000 --> 00:36:51,680
Speaker 5: like labor data, right economic data. All right, let's see

727
00:36:51,719 --> 00:36:53,920
Speaker 5: what Cole Smead has to say. He is president and

728
00:36:53,960 --> 00:36:57,000
Speaker 5: portfolio manager at SMED Capital Management. He joins us on

729
00:36:57,040 --> 00:36:59,440
Speaker 5: Zoom from Phoenix, Arizona. The Speed Value Fund is a

730
00:36:59,520 --> 00:37:01,840
Speaker 5: top or four for the past five years in the

731
00:37:01,920 --> 00:37:05,239
Speaker 5: ninety ninth percentile, returning on average twelve percent annually.

732
00:37:05,600 --> 00:37:06,479
Speaker 7: In those five years.

733
00:37:06,480 --> 00:37:08,520
Speaker 5: You to date the fund is up about three percent.

734
00:37:08,800 --> 00:37:13,640
Speaker 5: Hay Smeed, I mean, hey Smeed, Sorry, Hey Cole. Nice

735
00:37:13,680 --> 00:37:16,400
Speaker 5: to have you here with us on this Thursday. And

736
00:37:16,440 --> 00:37:18,680
Speaker 5: I know you are really great on names, but is

737
00:37:18,719 --> 00:37:21,480
Speaker 5: there a macro theme right now that you find is

738
00:37:21,520 --> 00:37:24,640
Speaker 5: really interesting and that is guiding some of your investment decisions.

739
00:37:25,960 --> 00:37:28,480
Speaker 9: Yeah, and thanks for having me. By the way, Carol,

740
00:37:28,520 --> 00:37:31,239
Speaker 9: that's what my fraternity brothers might call me, so I

741
00:37:31,280 --> 00:37:37,600
Speaker 9: appreciate that that's a familial statement. So yeah, I think

742
00:37:37,640 --> 00:37:40,000
Speaker 9: there's a lot of confusion in the stock market, and

743
00:37:40,000 --> 00:37:41,600
Speaker 9: we were just talking about this earlier today.

744
00:37:42,000 --> 00:37:43,600
Speaker 6: Use the credit market as an example.

745
00:37:43,640 --> 00:37:45,680
Speaker 9: If you look at the TRIPA a bond rate, you

746
00:37:45,719 --> 00:37:47,480
Speaker 9: get paid in the mid fores I think it's four

747
00:37:47,520 --> 00:37:49,960
Speaker 9: point seven, and if you go to short term treasures

748
00:37:49,960 --> 00:37:51,480
Speaker 9: you get paid over five.

749
00:37:52,880 --> 00:37:53,799
Speaker 6: That's riskless.

750
00:37:53,880 --> 00:37:57,080
Speaker 9: The corporate bond rate is longer in term, but obviously

751
00:37:57,120 --> 00:37:58,160
Speaker 9: there's more risk with that.

752
00:37:59,680 --> 00:38:01,160
Speaker 6: It's a very strange world.

753
00:38:01,000 --> 00:38:03,399
Speaker 9: Where people are really siding on a bed of either

754
00:38:03,480 --> 00:38:05,960
Speaker 9: they're going to deal with lower rates, they're going to

755
00:38:06,040 --> 00:38:07,160
Speaker 9: deal with low inflation, or not.

756
00:38:07,320 --> 00:38:08,520
Speaker 6: It's either one or the other.

757
00:38:09,040 --> 00:38:11,319
Speaker 9: And I think we find it really interesting because these

758
00:38:11,320 --> 00:38:14,520
Speaker 9: problems are manifesting themselves not because of a weak economy.

759
00:38:14,560 --> 00:38:17,440
Speaker 9: It's because of a horrendously strong economy. You mentioned the

760
00:38:17,520 --> 00:38:20,120
Speaker 9: jobs data as an example to that. So I'm kind

761
00:38:20,160 --> 00:38:23,000
Speaker 9: of working on an idea where this is Jay Powell syndrome.

762
00:38:23,719 --> 00:38:26,680
Speaker 9: It's not the weakness of the economy like we dealt

763
00:38:26,719 --> 00:38:29,040
Speaker 9: with in the twenty tens. It's the strength of the patient.

764
00:38:29,360 --> 00:38:32,239
Speaker 9: And what it's doing is it's causing the strength of

765
00:38:32,280 --> 00:38:35,640
Speaker 9: the patient to hurt other organs like the credit market

766
00:38:35,640 --> 00:38:37,960
Speaker 9: plumbing and the bank plumbing that we've.

767
00:38:37,760 --> 00:38:39,319
Speaker 6: Seen in the recent year.

768
00:38:40,120 --> 00:38:42,640
Speaker 9: The weird part is, to your point just a second ago,

769
00:38:42,960 --> 00:38:46,520
Speaker 9: I'm talking about markets, is it hasn't fully affected stock

770
00:38:46,600 --> 00:38:48,200
Speaker 9: markets like it damage credit.

771
00:38:48,719 --> 00:38:50,000
Speaker 6: And that's the interesting part.

772
00:38:50,200 --> 00:38:51,719
Speaker 2: And Cole, that's what I want to follow up with

773
00:38:51,760 --> 00:38:54,880
Speaker 2: you on because we saw record breaking first half of

774
00:38:54,880 --> 00:38:57,200
Speaker 2: the year in terms of performance on the NASDAC and

775
00:38:57,360 --> 00:38:59,600
Speaker 2: great performance in the S and P as well. What

776
00:39:00,040 --> 00:39:02,359
Speaker 2: stops that catalyst in the second half of the year.

777
00:39:03,840 --> 00:39:06,640
Speaker 9: Well, I think the rates do have a lot to

778
00:39:06,680 --> 00:39:09,880
Speaker 9: do with it, because the Fed's blunt policy tool is

779
00:39:10,160 --> 00:39:12,160
Speaker 9: price of money on the short end of the curve,

780
00:39:12,520 --> 00:39:14,520
Speaker 9: with the long end of the curve set by markets.

781
00:39:14,560 --> 00:39:19,200
Speaker 9: Ultimately more so now that QWE is disappearing. So the

782
00:39:19,320 --> 00:39:21,960
Speaker 9: problem with that is though as we can see, you know,

783
00:39:22,000 --> 00:39:24,120
Speaker 9: short term rates don't affect the labor market.

784
00:39:24,360 --> 00:39:25,759
Speaker 6: They're having no effect on the labor market.

785
00:39:25,760 --> 00:39:28,000
Speaker 9: They're really not having an effect on the overall economic

786
00:39:28,040 --> 00:39:31,279
Speaker 9: growth picture. But what we do know is they can

787
00:39:31,400 --> 00:39:34,280
Speaker 9: affect asset markets fairly quickly, and that's what we did see.

788
00:39:34,719 --> 00:39:37,160
Speaker 9: So can you imagine a world where you could wake

789
00:39:37,239 --> 00:39:40,799
Speaker 9: up getting paid six percent short term for ninety day

790
00:39:40,840 --> 00:39:43,680
Speaker 9: paper from the US government? What does that cause you

791
00:39:43,719 --> 00:39:45,799
Speaker 9: to look at other assets? And it becomes a game

792
00:39:45,800 --> 00:39:48,399
Speaker 9: of opportunity costs in weighing those things against each other.

793
00:39:48,840 --> 00:39:52,200
Speaker 9: It just doesn't bode well for risk assets and it

794
00:39:52,239 --> 00:39:55,480
Speaker 9: will upset the apple cart because people have forgotten what

795
00:39:55,560 --> 00:39:59,439
Speaker 9: that risk free return can do to asset prices because

796
00:39:59,440 --> 00:40:00,600
Speaker 9: we haven't had a for so long.

797
00:40:00,760 --> 00:40:03,040
Speaker 5: But it's amazing the resilience that we've seen, certainly on

798
00:40:03,040 --> 00:40:06,799
Speaker 5: the equity side of things, pretty pretty remarkable. Having said that,

799
00:40:06,840 --> 00:40:09,839
Speaker 5: you do make you know, picks within the equity universe. Coal,

800
00:40:10,160 --> 00:40:12,720
Speaker 5: let's talk about it, because you do like energy stocks,

801
00:40:12,719 --> 00:40:14,840
Speaker 5: both oil and gas in the US and Canada and

802
00:40:14,880 --> 00:40:17,880
Speaker 5: some coal stocks in Australia and South Africa.

803
00:40:18,160 --> 00:40:20,879
Speaker 7: Is it just that supply demand? Ultimately when it comes

804
00:40:20,920 --> 00:40:22,439
Speaker 7: to energy going forward.

805
00:40:23,000 --> 00:40:23,880
Speaker 6: It is Carol.

806
00:40:23,920 --> 00:40:26,200
Speaker 9: But also I think the underlying assumption again, what do

807
00:40:26,239 --> 00:40:28,520
Speaker 9: you have to assume based on what we're looking at

808
00:40:28,520 --> 00:40:31,719
Speaker 9: in markets and things of that nature. The main assumption

809
00:40:31,880 --> 00:40:33,840
Speaker 9: made by a lot of market participants in it and

810
00:40:33,880 --> 00:40:37,439
Speaker 9: a lot of economists in central government planners is that

811
00:40:37,520 --> 00:40:39,959
Speaker 9: we really have too much energy. The world we're going

812
00:40:39,960 --> 00:40:42,760
Speaker 9: to in the future is going to require a lot less.

813
00:40:43,520 --> 00:40:46,680
Speaker 9: Therefore the price of these things should be fairly low.

814
00:40:47,280 --> 00:40:50,040
Speaker 9: And the risk in my lifetime has never been, you know,

815
00:40:50,120 --> 00:40:52,240
Speaker 9: we have too much, it's that we have too little.

816
00:40:52,880 --> 00:40:55,680
Speaker 9: And so again we're breaking all of economic history to

817
00:40:55,680 --> 00:40:57,040
Speaker 9: say that we have too much energy.

818
00:40:58,040 --> 00:41:00,359
Speaker 6: You know, be fruitful multiplies subdue the earth and have.

819
00:41:00,280 --> 00:41:03,440
Speaker 9: Dominion was the mandate that God laid out, and I

820
00:41:03,440 --> 00:41:06,360
Speaker 9: find it interesting that his creation thinks that we need less,

821
00:41:06,600 --> 00:41:09,400
Speaker 9: so we think energy solves that. But also it's a

822
00:41:09,400 --> 00:41:12,040
Speaker 9: difference of the Western world versus the emerging world. In

823
00:41:12,080 --> 00:41:15,719
Speaker 9: the emerging world, available energy supply for your electricity day

824
00:41:15,760 --> 00:41:17,640
Speaker 9: to day would be really great to have. It just

825
00:41:17,640 --> 00:41:20,200
Speaker 9: doesn't happen in the West. We're so wealthy that we

826
00:41:20,200 --> 00:41:23,200
Speaker 9: can choose our energy supply. That's a different problem to have.

827
00:41:24,280 --> 00:41:27,400
Speaker 9: I think we ultimately have Western wealth looking at the

828
00:41:27,400 --> 00:41:30,000
Speaker 9: rest of the world and dictating terms that probably won't

829
00:41:30,040 --> 00:41:32,520
Speaker 9: be sustained or met in the other parts of the world.

830
00:41:32,719 --> 00:41:35,760
Speaker 2: Can you talk specific names with me for the energy

831
00:41:35,840 --> 00:41:39,960
Speaker 2: space I'm thinking today in particular, Exxon really struggling. Do

832
00:41:40,040 --> 00:41:42,000
Speaker 2: you look at news like that and think this is

833
00:41:42,000 --> 00:41:42,640
Speaker 2: a day to buy?

834
00:41:44,040 --> 00:41:44,239
Speaker 6: Yeah.

835
00:41:44,280 --> 00:41:47,719
Speaker 9: So we think the biggot, the big majors broadly, whether

836
00:41:47,719 --> 00:41:50,640
Speaker 9: we're talking Europe or the US, are the most unattractive

837
00:41:50,680 --> 00:41:54,000
Speaker 9: because if you're the large asset management shop, which we

838
00:41:54,000 --> 00:41:56,040
Speaker 9: have these big asset managers that we've really never had.

839
00:41:56,239 --> 00:41:57,600
Speaker 9: They want to go and buy a billion or two

840
00:41:57,640 --> 00:42:00,479
Speaker 9: billion or five billion dollars of oil equities. Only certain

841
00:42:00,520 --> 00:42:02,279
Speaker 9: names they can go to do that. And so the

842
00:42:02,320 --> 00:42:04,520
Speaker 9: opportunity I think really sits in kind of like a

843
00:42:04,560 --> 00:42:08,000
Speaker 9: sub say seventy billion or sub fifty billion dollar world

844
00:42:08,360 --> 00:42:10,480
Speaker 9: where you can get plenty of liquidity for someone that

845
00:42:10,640 --> 00:42:13,279
Speaker 9: likes big equities like us, but you're not paying the

846
00:42:13,320 --> 00:42:16,000
Speaker 9: premium for that liquidity. So you know, we own names

847
00:42:16,000 --> 00:42:19,520
Speaker 9: like Oventive, we own names like Apache APA, and in

848
00:42:19,560 --> 00:42:21,840
Speaker 9: our US equity portfolio up in Canada, we've been buying

849
00:42:21,880 --> 00:42:25,640
Speaker 9: the meg energies of the world, the so novass because

850
00:42:25,640 --> 00:42:27,960
Speaker 9: we just get so so much more attractive terms as

851
00:42:27,960 --> 00:42:30,560
Speaker 9: an investor, and it is not coming with balance sheet

852
00:42:30,640 --> 00:42:32,520
Speaker 9: risk like it had prior. It's free cash flow, it's

853
00:42:32,600 --> 00:42:35,680
Speaker 9: larger turn of equity. Yeah, and that's it's seventy dollars WTI.

854
00:42:35,960 --> 00:42:40,680
Speaker 5: You're still in on Occidental and Konco Phillips, that's still.

855
00:42:40,520 --> 00:42:44,080
Speaker 9: We still we own, still still own Oxy but Buffett

856
00:42:44,120 --> 00:42:47,480
Speaker 9: buying that on a regular basis. There's just no question

857
00:42:47,680 --> 00:42:49,760
Speaker 9: why would I buy it out if I can continue

858
00:42:49,760 --> 00:42:51,880
Speaker 9: to let the open market allow me to buy this

859
00:42:52,000 --> 00:42:52,840
Speaker 9: share of the company.

860
00:42:52,920 --> 00:42:55,959
Speaker 5: Cole speaking supply demand Metrics and just got about thirty

861
00:42:56,040 --> 00:42:59,160
Speaker 5: thirty five seconds here. You also, at least based on

862
00:42:59,200 --> 00:43:04,200
Speaker 5: your late filings, d R Horton, NVR homebuilders still buying

863
00:43:04,200 --> 00:43:04,960
Speaker 5: into that space.

864
00:43:05,719 --> 00:43:08,160
Speaker 9: Yeah, we still own large stakes in those builders, NVR

865
00:43:08,320 --> 00:43:11,360
Speaker 9: Lennar and Dr Horton. I mean, we just watched the

866
00:43:11,600 --> 00:43:13,640
Speaker 9: rally that no one thought could be possible at over

867
00:43:13,719 --> 00:43:16,160
Speaker 9: six percent mortgage rates. So what I love is the

868
00:43:16,160 --> 00:43:18,640
Speaker 9: market was completely confused of that the credit market damage

869
00:43:18,640 --> 00:43:20,719
Speaker 9: they thought was going to ruin housing, and yet the

870
00:43:20,760 --> 00:43:24,720
Speaker 9: scarcity of housing wins overall.

871
00:43:24,880 --> 00:43:28,279
Speaker 5: Yeah, really interesting, and I I think I saw a

872
00:43:28,280 --> 00:43:32,120
Speaker 5: story earlier right about the mortgage mortgage market in particular

873
00:43:32,400 --> 00:43:35,400
Speaker 5: rates in US jump climbing to the highest since November.

874
00:43:35,560 --> 00:43:38,200
Speaker 5: So just watching that space as well.

875
00:43:38,200 --> 00:43:41,080
Speaker 7: In the impact up. Hey call always fun or Smed?

876
00:43:41,160 --> 00:43:42,040
Speaker 7: Can I call you Smed?

877
00:43:44,480 --> 00:43:47,160
Speaker 5: I think he's saying yes, cal Speed. He's president portfolio

878
00:43:47,160 --> 00:43:48,600
Speaker 5: manager at Smeed Capital Manager.

879
00:43:48,680 --> 00:43:50,080
Speaker 7: Be well. Always good to get.

880
00:43:50,040 --> 00:43:52,879
Speaker 5: Him on on Zoom from Phoenix, Arizona. Just about ten

881
00:43:52,920 --> 00:43:53,839
Speaker 5: minutes left in the tree.

882
00:43:53,920 --> 00:43:54,680
Speaker 6: This is Bloomberg.

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Speaker 1: This is the Bloomberg Business Week podcast Apple, Spotify and

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Speaker 1: anywhere else you get your podcast. Listen live weekday afternoons

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Speaker 1: from three to six Eastern on Bloomberg dot com, the

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Speaker 1: iHeartRadio app tune In, and the Bloomberg Business app. You

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Speaker 1: always on the Bloomberg terminal