WEBVTT - Google Earnings and Bilt Rewards 0:00:02.200 --> 0:00:05.480 From the heart of work, innovation, money and power. CALLI 0:00:06.320 --> 0:00:10.840 in Silicon Valley and beyond. This is Bloomberg Technology with 0:00:10.920 --> 0:00:26.360 Emily Jay. I'm Caroline Hyde in New York in for 0:00:26.440 --> 0:00:29.120 Emily Chang, and this is Bloomberg Technology. Coming up. In 0:00:29.160 --> 0:00:31.280 the next hour, earnings come thick and fast. We delve 0:00:31.320 --> 0:00:34.239 in on Alphabet shares full after third quarter earnings per 0:00:34.320 --> 0:00:38.080 share and sales they miss estimates, search, YouTube, the network 0:00:38.159 --> 0:00:41.199 division all full short of analyst expectations. We're going to 0:00:41.240 --> 0:00:43.000 break it all down for you in the Ripple Effects 0:00:43.200 --> 0:00:46.159 plus Built Rewards, the company that uses a point system 0:00:46.200 --> 0:00:48.240 to help you pay rent or a home down payment 0:00:48.560 --> 0:00:51.960 just for its valuation quadruple Overnight, I'll chat with the CEO, 0:00:52.159 --> 0:00:54.920 Uncle Jane, about the startups, unicorn status and what it 0:00:54.960 --> 0:00:58.000 plans to do in a tough housing market. And it 0:00:58.160 --> 0:01:01.200 is the only story you need to read about Crypto. Ever, 0:01:01.640 --> 0:01:04.880 Bloomberg's Matt Levine has written a cover to cover issue 0:01:04.920 --> 0:01:07.480 of Bloomberg Business Week, the second of its kind in 0:01:07.520 --> 0:01:10.320 the magazine's nine three year history. Us Later in the hour, 0:01:11.080 --> 0:01:13.880 we pushed towards further earnings, further fundamentals, and we bring 0:01:13.920 --> 0:01:16.280 in while the ramifications of the latest dost that we 0:01:16.360 --> 0:01:17.880 just got after the bow. I'm prettysed to say that 0:01:17.920 --> 0:01:20.319 broad Sweet Media Group CEO Daniel Newman is with us. 0:01:20.400 --> 0:01:23.000 Is also the founding part of Principal Analysts of Future 0:01:23.080 --> 0:01:25.479 and Research, basically a man who's at the cuting edge 0:01:25.520 --> 0:01:27.919 of what digital transformation means for you and your business 0:01:28.240 --> 0:01:31.920 and can analyze. Basically, we'll go with either market capitalization 0:01:32.000 --> 0:01:34.480 or market impact, and I think market impact is going 0:01:34.520 --> 0:01:37.680 to be coming from Alphabet today, and I'm interested in 0:01:37.680 --> 0:01:41.520 your perspective, Daniel, Well, it was a miss any real 0:01:41.640 --> 0:01:46.560 areas concerned, though, Well, I think we had an overall expectation, Caroline, 0:01:46.720 --> 0:01:49.000 of seeing the ad market pullback. I think the big 0:01:49.040 --> 0:01:50.760 concertain isn't as much for Google as it is for 0:01:50.800 --> 0:01:52.680 the rest of the ad space. As I said to 0:01:52.760 --> 0:01:54.720 Emily last quarter when I joined the show at the 0:01:54.760 --> 0:01:57.360 same period of time, I said, Alphabet's top of the heat. 0:01:57.520 --> 0:02:00.640 There are the technology for advertised are that is going 0:02:00.640 --> 0:02:02.600 to be the last to be removed, the last to 0:02:02.640 --> 0:02:06.120 be slowed. And this means that the advertised business is 0:02:06.160 --> 0:02:09.760 slowing significantly, and I'm worried about what this means for Meta. 0:02:09.800 --> 0:02:12.720 We already saw what happened to snap um, So that's 0:02:12.800 --> 0:02:15.720 my biggest concern. I still think that the Google business 0:02:15.720 --> 0:02:18.600 overall is robust. I think it's the best of class, 0:02:19.160 --> 0:02:22.320 and I'm still optimistic that going forward that Google is 0:02:22.360 --> 0:02:24.919 still going to offer a lot of value to its shareholders. 0:02:25.280 --> 0:02:27.040 I was also a little concerned about the slowing of 0:02:27.040 --> 0:02:29.640 the cloud business. Despite the fact that it beat, it 0:02:29.680 --> 0:02:31.600 didn't quite keep up with what we saw from Azure 0:02:31.720 --> 0:02:33.600 this quarter. And that's going to be something to watch 0:02:33.680 --> 0:02:35.920 as well, because they're pouring a lot in they're still 0:02:35.960 --> 0:02:39.360 losing money in that particular business. But I did I 0:02:39.360 --> 0:02:41.680 did attend their Google Cloud Next event. I did hear 0:02:41.720 --> 0:02:43.720 from Thomas Curry and the CEO of that group, and 0:02:44.000 --> 0:02:45.919 it does seem that that investment is going to pay 0:02:45.919 --> 0:02:49.320 off as the market continues to spend on enterprise. Of course, 0:02:49.600 --> 0:02:51.680 we know that in many ways this is a company 0:02:51.680 --> 0:02:54.280 that's backed off from some other bets, in large part 0:02:54.320 --> 0:02:56.360 because they've got to double down on where is profitable 0:02:56.400 --> 0:02:58.400 for them at the moment we've poured out. The CFO 0:02:58.560 --> 0:03:00.880 of Alphabet was speaking with her own end Ludlow a 0:03:00.919 --> 0:03:03.240 bit earlier, and she was saying in terms of YouTube 0:03:03.320 --> 0:03:05.480 for example, I would say the largest driver of the 0:03:05.520 --> 0:03:09.919 deceleration was a further pullback and spent from some advertisers 0:03:10.040 --> 0:03:14.480 that was a cross brand and direct response talk to 0:03:14.560 --> 0:03:17.560 us about whether or not this is going to be 0:03:17.600 --> 0:03:20.160 there for what we read into meta you were just 0:03:20.200 --> 0:03:22.280 saying about the impact. We heard it from Snap the 0:03:22.280 --> 0:03:25.720 Warriors about the market marketing budgets getting that little bit smaller. 0:03:25.880 --> 0:03:28.360 Is there anywhere in terms of reinvestment, in terms of 0:03:28.400 --> 0:03:30.799 doubling down YouTube shorts and they're like that you want 0:03:30.800 --> 0:03:33.280 to see to prove that still YouTube is where you 0:03:33.320 --> 0:03:35.920 have to be for eyeballs. Yeah, I think they need 0:03:35.960 --> 0:03:39.760 to stay the course on their strategy. The macroeconomic conditions 0:03:39.800 --> 0:03:42.800 are in this moment what they are, and the Google 0:03:42.840 --> 0:03:46.119 does have the best product. They are diversifying, they are innovating. 0:03:46.160 --> 0:03:49.000 The YouTube short product is interesting, and of course TikTok 0:03:49.040 --> 0:03:51.280 has the most acceleration and that's what YouTube is trying 0:03:51.320 --> 0:03:53.600 to do to answer to what TikTok has been able 0:03:53.680 --> 0:03:57.080 to to do. You know, I watched IBMS earnings last 0:03:57.080 --> 0:03:58.880 week in the strength of the enterprise, so kind of 0:03:58.920 --> 0:04:01.480 on the other side of Google will with their cloud business. 0:04:01.520 --> 0:04:03.400 I really think that investment is going to be even 0:04:03.480 --> 0:04:06.000 more critical coming out of this pandemic. Companies are going 0:04:06.040 --> 0:04:08.560 to have to adjust UH and the investment in cloud 0:04:08.600 --> 0:04:11.880 an enterprise maybe the area that provides the biggest opportunity 0:04:11.880 --> 0:04:13.640 going forward. And we also saw that with the top 0:04:13.680 --> 0:04:16.400 and bottom line beat from Microsoft. So I think that's 0:04:16.400 --> 0:04:19.240 an opportunity for Google, you said, Guy bausifually therefore, in 0:04:19.279 --> 0:04:22.480 touch discussing Microsoft, which is being dragged in lower lower 0:04:22.480 --> 0:04:24.560 and after I was training large part because of the 0:04:24.560 --> 0:04:26.520 moon music coming out of Alphabet. But this was a 0:04:26.600 --> 0:04:28.400 beat across the board. This is a company that's still 0:04:28.440 --> 0:04:30.680 posting even though it's worth more than a trillion dollars 0:04:30.720 --> 0:04:34.159 revenue growth of more than nine effects headwind s. But 0:04:34.240 --> 0:04:36.159 where did you see some of the concerns in terms 0:04:36.200 --> 0:04:40.040 of corporate spending any Well, it seemed that the biggest 0:04:40.040 --> 0:04:42.680 concern and what sort of drove this stock down after 0:04:42.760 --> 0:04:45.359 hours was more than it just didn't hit its azure number. 0:04:45.560 --> 0:04:48.920 The mark looking for closer. I think it came out 0:04:48.960 --> 0:04:52.400 at thirty five. Of course, just like Ruthport said at Google, 0:04:52.600 --> 0:04:55.359 you know, FX was an issue across the board at Google. 0:04:55.360 --> 0:04:57.560 But I actually like the fact that it was you know, 0:04:57.640 --> 0:05:00.839 diverse that the company performed in most category is in productivity. 0:05:00.920 --> 0:05:04.120 It performed in the intelligent cloud business, it performed pretty well, 0:05:04.200 --> 0:05:07.000 and even in personal computing. In on the consumer side 0:05:07.000 --> 0:05:09.120 with surface and gaming, an area that a lot of 0:05:09.120 --> 0:05:11.440 people were concerned, it came in at where it was 0:05:11.520 --> 0:05:15.839 expected to Caroline, So I actually didn't feel as negatively 0:05:15.880 --> 0:05:20.200 about the quarter. I meant growth. It's still above you know, 0:05:20.240 --> 0:05:21.800 the fold that grew a little bit faster than the 0:05:21.800 --> 0:05:24.479 Google Cloud business, and it's still indicative to me the 0:05:24.600 --> 0:05:26.800 enterprise is stronger. That's why I alluded to that IBM 0:05:26.839 --> 0:05:29.120 result last week. I think that surprised a lot of people, 0:05:29.200 --> 0:05:33.720 but enterprise seems to be where spending will continue. Advertising 0:05:33.720 --> 0:05:37.599 seemed more compression, and of course consumer, I'm really concerned 0:05:37.600 --> 0:05:39.919 about how some of the consumer tech focus brands are 0:05:39.960 --> 0:05:42.840 going to turn out this quarter. Well said, I want 0:05:42.839 --> 0:05:44.840 to double down on what sat In Adela was saying. 0:05:45.000 --> 0:05:47.000 Of course, we await what's being sent in the cools, 0:05:47.040 --> 0:05:49.360 but he on in the press release of the earnings, 0:05:49.400 --> 0:05:53.600 was talking about the world facing increasing headwinds and digital technology. 0:05:53.640 --> 0:05:59.080 We made the ultimate tailwind, basically the argument that it's defrationary. 0:05:59.240 --> 0:06:01.359 Do you buy that. Have we not just brought forward 0:06:01.440 --> 0:06:04.280 all of that spending during covid ors There's still more 0:06:04.520 --> 0:06:07.800 to come. Yes, Satia is really saying the same thing. 0:06:07.839 --> 0:06:09.760 And I've had a few other conversations. I had one 0:06:09.800 --> 0:06:11.760 with Harvin Krishna. I had one with Bill McDermott a 0:06:11.760 --> 0:06:14.360 Servant and Service Now, and both of them have used that, 0:06:14.440 --> 0:06:17.159 and I've actually really found that to be the case. 0:06:17.400 --> 0:06:21.080 Companies during this pandemic that had to spend rapidly to 0:06:21.120 --> 0:06:23.599 support their growth did a lot of hiring, added a 0:06:23.600 --> 0:06:26.120 lot of short term costs, and as long as the 0:06:26.120 --> 0:06:28.280 growth was there, they didn't necessarily need to fix that. 0:06:28.600 --> 0:06:30.960 Now that we're seeing the market compress a little bit 0:06:31.000 --> 0:06:34.359 the economy slow, some of those digital transformation investments and 0:06:34.360 --> 0:06:37.000 things like automation and AI they need to be fully 0:06:37.080 --> 0:06:40.040 implemented so that some of those costs, those hiring freezes, 0:06:40.080 --> 0:06:43.920 and those pullbacks are able to not slow customer experience 0:06:43.960 --> 0:06:47.039 and product delivery. So I think those digital investments are 0:06:47.080 --> 0:06:49.240 going to be much more robust. But I do think 0:06:49.279 --> 0:06:51.680 starting to see some of those hiring freezes, those layoffs, 0:06:51.680 --> 0:06:54.000 some of the slowing revenue and of course margin compression 0:06:54.000 --> 0:06:56.560 in the near term are going to be the continued 0:06:56.600 --> 0:06:58.640 concern for tech. But long term, it's hard to not 0:06:58.760 --> 0:07:01.320 think that Mike or Soft and companies like them are 0:07:01.320 --> 0:07:04.520 gonna be solving a lot of these problems for enterprises. Okay, Daniel. 0:07:04.560 --> 0:07:06.440 So therefore, when we look ahead to Amazon, is that 0:07:06.520 --> 0:07:08.839 going to be a fixer for this quarture? In particular, 0:07:08.920 --> 0:07:10.480 when we're looking at a metro, is that going to 0:07:10.560 --> 0:07:14.120 be a hit because of the advertising spend where line 0:07:14.160 --> 0:07:17.239 not who you're most concerned about, who your least concerned 0:07:17.240 --> 0:07:21.800 about for us, Yeah, I'm quite concerned about meta. It 0:07:21.800 --> 0:07:23.680 would It's hard to think with the big dollars being 0:07:23.680 --> 0:07:26.880 invested in their metaverse, people were already sort of nervous 0:07:26.920 --> 0:07:31.120 about that. You see Google and alphabets advertising dollars, you know, 0:07:31.200 --> 0:07:32.920 going a little bit the wrong way in terms of 0:07:32.920 --> 0:07:34.680 the markets perception, and like I said, I think they're 0:07:34.720 --> 0:07:37.240 the top of the heap for advertising. Last to be 0:07:37.280 --> 0:07:40.160 cut out. Apple is gonna be really interesting to watch 0:07:40.760 --> 0:07:44.640 because Apple it tends to have that consumer quality that 0:07:44.640 --> 0:07:47.600 that bucks some of the consumer trends in terms of 0:07:47.720 --> 0:07:50.360 people of higher affluence continue to buy even when the 0:07:50.360 --> 0:07:53.800 market gets tougher, but their iPhone fourteen specs. For some 0:07:53.840 --> 0:07:56.160 of the numbers are a bit worrying. Two people, I 0:07:56.200 --> 0:07:58.400 really want to see the a WUS cloud number. That's 0:07:58.400 --> 0:08:02.200 such a huge number. Four. Amazon's opping and despite e 0:08:02.280 --> 0:08:04.559 commerce and the holiday and some of these prime days, 0:08:04.720 --> 0:08:06.720 you know, Amazon has had a tough couple of quarters. 0:08:07.000 --> 0:08:09.240 I still believe that they're building a bigger and bigger 0:08:09.320 --> 0:08:11.360 moat for e commerce. So in the long run, it's 0:08:11.360 --> 0:08:13.560 hard to not like them. But a WS has been 0:08:13.640 --> 0:08:16.960 so instrumental, and that is the biggest cloud provider. And 0:08:17.000 --> 0:08:19.640 if my enterprise thesis is true, Caroline, then aw S 0:08:19.640 --> 0:08:21.640 should at least be seeing the same kind of growth 0:08:21.640 --> 0:08:25.440 that Asure did. Really smart conversation with you, as always, Daniel, 0:08:25.480 --> 0:08:28.000 thank you so much for pointing us forwards. Daniel Newman 0:08:28.120 --> 0:08:38.960 here of course put Sweet Media Group CEO as such 0:08:39.040 --> 0:08:41.840 in a dalla in Microsoft's sup press release just now 0:08:41.880 --> 0:08:46.160 says it is a world facing increasing headwinds. Recessionals. For example, 0:08:46.160 --> 0:08:48.440 they remain top of mind for investors this earning season, 0:08:48.920 --> 0:08:52.080 and a recently bo economics model projects the likelihood of 0:08:52.080 --> 0:08:56.079 a US recession is now and then the next twelve months. 0:08:56.280 --> 0:08:59.560 So let's put all of these earnings and valuations into 0:08:59.559 --> 0:09:02.160 contact because so far, as head of Invested strateg Sheet, 0:09:02.200 --> 0:09:04.160 li Is Young is with us some place to say, 0:09:04.240 --> 0:09:06.600 and as we get the micro data with the earnings 0:09:06.600 --> 0:09:09.120 and whether their meats or their beats, ultimately in the 0:09:09.160 --> 0:09:11.080 back of our mind is what are the valuations of 0:09:11.120 --> 0:09:14.480 these businesses and do they reflect these headwinds that they're 0:09:14.520 --> 0:09:16.240 being hit by. What do you make of the way 0:09:16.240 --> 0:09:20.000 in which you've line ourselves up for earning season. Well, look, 0:09:20.040 --> 0:09:21.920 I think we're sitting at a point in the year 0:09:21.920 --> 0:09:24.320 where we've done a lot of work and valuations have 0:09:24.400 --> 0:09:27.600 seen a decent amount of pain since January, and I 0:09:27.600 --> 0:09:30.679 think it's less about what's the right valuation for these 0:09:30.720 --> 0:09:32.679 stocks to be at, and it's more about what are 0:09:32.720 --> 0:09:35.640 people actually willing to pay for them. Knowing that we 0:09:35.720 --> 0:09:38.559 have not solved all the problems that still lie ahead, 0:09:38.880 --> 0:09:41.760 and knowing that we still have a pretty uncertainty of 0:09:41.800 --> 0:09:45.360 political backdrop, we're coming up on mid term elections, We've 0:09:45.400 --> 0:09:48.079 got all the classic kind of market signals that are 0:09:48.080 --> 0:09:51.120 saying a recession might be coming, those are all going off, 0:09:51.480 --> 0:09:54.280 So there is still a decent amount of uncertainty ahead. 0:09:54.400 --> 0:09:57.720 Not to mention that just the month of October. Despite 0:09:57.720 --> 0:10:01.320 this rally, we've seen more almost half of the days 0:10:01.400 --> 0:10:04.280 with a more than two percent swing in the SMP 0:10:04.320 --> 0:10:06.360 five hundred. That is a lot of volatility, and a 0:10:06.440 --> 0:10:09.400 VIX that's still hovering around thirty also indicates to me 0:10:09.440 --> 0:10:11.240 that the next few weeks are going to be bumpy. 0:10:11.400 --> 0:10:14.400 And what's wild is a volatility in the salt market 0:10:14.600 --> 0:10:17.120 is basically nothing in comparis into the volatility if you've 0:10:17.120 --> 0:10:19.440 seen in the bond market, in the FX market. And 0:10:19.480 --> 0:10:22.760 I'm interested in these correlations because, for example, today's trade, 0:10:22.840 --> 0:10:26.600 we saw stocks rally and tech do well because bond 0:10:26.640 --> 0:10:29.040 markets rallied and niels pushed lower. Is that the sort 0:10:29.040 --> 0:10:32.400 of correlation we're likely to keep on seeing. Well on 0:10:32.440 --> 0:10:34.360 a day like today, I think it was very much 0:10:34.360 --> 0:10:37.640 a rate story. So we got some housing data earlier 0:10:37.720 --> 0:10:39.920 in the morning, about nine am Eastern time, and if 0:10:39.960 --> 0:10:42.360 you just look at the tape and how things moved 0:10:42.360 --> 0:10:45.520 throughout the day, that nine am release of home prices 0:10:45.559 --> 0:10:49.000 coming down pretty sharply is what I think sent ten 0:10:49.080 --> 0:10:51.920 year yields down, It sent two year yields down, and 0:10:51.960 --> 0:10:54.640 everybody got sort of excited that, oh it's working. Inflation 0:10:54.679 --> 0:10:57.120 is going to go away, and then stocks rallied on 0:10:57.160 --> 0:10:59.280 the other side of that also, though you want to 0:10:59.280 --> 0:11:02.199 look at the fact not just tech rallied, but high 0:11:02.240 --> 0:11:05.679 beta stocks rallied, And that's not necessarily something that I 0:11:05.679 --> 0:11:08.680 would expect to be lasting in an environment where we have, 0:11:08.880 --> 0:11:11.240 in my opinion, more than a fifty chance of a 0:11:11.240 --> 0:11:14.240 recession in the next six to twelve months. So it 0:11:14.320 --> 0:11:16.559 really was a very risk on trade. It was sort 0:11:16.600 --> 0:11:19.000 of this, Oh, it's a big relief. We might get 0:11:19.480 --> 0:11:21.959 a solved on the inflation problem. It might be sooner 0:11:21.960 --> 0:11:24.600 than we think. But the issue is that once that 0:11:24.720 --> 0:11:28.280 boulder starts rolling down the hill, it's really difficult to 0:11:28.360 --> 0:11:31.160 stop it at a certain point and not go into 0:11:31.160 --> 0:11:34.880 contraction territory. To that end, of course, with basically all 0:11:34.920 --> 0:11:37.560 the market moves kind of being dictated by bad news 0:11:37.600 --> 0:11:40.920 being good news, the Federal Reserve perhaps not hiking quite 0:11:40.920 --> 0:11:43.320 so much as we had expected. How much of a 0:11:43.400 --> 0:11:45.120 dollar story is this all going to be? Are we 0:11:45.200 --> 0:11:47.600 likely to see? Are we now at pink dollar? This 0:11:47.679 --> 0:11:50.040 is hugely important to a lot of the micro stories. 0:11:50.080 --> 0:11:52.720 For example, a Microsoft that had highlighted the head winds 0:11:52.760 --> 0:11:56.120 of a strong dollar. Yeah, I mean, look we've thought 0:11:56.120 --> 0:11:58.160 that we were at peak dollar, and when I say we, 0:11:58.280 --> 0:12:00.480 I mean just investors at large. Think there have been 0:12:00.520 --> 0:12:02.240 a lot of people who thought were at peak dollar 0:12:02.360 --> 0:12:05.040 earlier this year, So I don't know if this is 0:12:05.080 --> 0:12:08.480 peak or not. Regardless, even if it is technically peak, 0:12:08.559 --> 0:12:10.360 that doesn't mean that it's going to come down with 0:12:10.400 --> 0:12:14.480 a quickness. So a strong dollar in general, as we know, 0:12:14.720 --> 0:12:16.840 is a headwind not only to trade, but it's a 0:12:16.840 --> 0:12:20.000 headwind to those large cap corporations that have a lot 0:12:20.040 --> 0:12:23.520 of international revenue. And those big companies are the ones 0:12:23.559 --> 0:12:26.200 that have been the market story. And if you're a 0:12:26.200 --> 0:12:29.160 newer investor, those are also the companies that have really 0:12:29.160 --> 0:12:31.719 been the winners for you in the portfolio. So it's 0:12:31.760 --> 0:12:34.320 difficult to kind of shift your mindset. But I would 0:12:34.360 --> 0:12:37.840 encourage people that even in an environment like this, you 0:12:37.920 --> 0:12:40.800 have to think about maybe where the opportunities are, and 0:12:40.840 --> 0:12:43.439 they could be in places that you wouldn't normally look. 0:12:43.720 --> 0:12:46.760 So a strong dollar is actually very good for smaller 0:12:46.800 --> 0:12:49.800 cap companies because they get a majority of their revenue 0:12:49.840 --> 0:12:52.800 from inside US borders, so they don't have that headwind. 0:12:53.080 --> 0:12:55.199 So looking at things like that, the last thing I'll 0:12:55.200 --> 0:12:58.080 say about a strong dollar. Is that from a macro perspective, 0:12:58.400 --> 0:13:00.640 the signal that you want to see is that when 0:13:00.720 --> 0:13:04.360 the dollar weakens, that tends to mean that we're nearing 0:13:04.400 --> 0:13:07.199 the end of a tightening cycle or nearing the end 0:13:07.200 --> 0:13:09.599 of a hiking cycle. The fact that the dollar is 0:13:09.640 --> 0:13:11.920 still pretty strong here, I think means that the Fed 0:13:12.200 --> 0:13:14.960 continues to hike and they right now don't have a 0:13:15.000 --> 0:13:17.360 ton of reason not to, particularly with such a strong 0:13:17.440 --> 0:13:20.240 labor market as we've seen time and time again. And 0:13:20.280 --> 0:13:23.839 what's been interesting is on an anecdotal basis, you hear 0:13:23.880 --> 0:13:27.320 of startups and actually some big tech listed companies dialing 0:13:27.320 --> 0:13:30.400 back their head count looking to actually just slow hiring 0:13:30.480 --> 0:13:34.559 or indeed fire. Are you likely to hear you anticipating 0:13:34.640 --> 0:13:38.920 more concerns being voiced by CEOs as we're in earning season, 0:13:38.960 --> 0:13:41.480 because I'm not hearing it particularly from Satya Adela or 0:13:41.520 --> 0:13:45.000 from well Ruth poor At or or soon Pitch. I. 0:13:46.360 --> 0:13:49.319 So if we look at the labor market just in particular, 0:13:49.400 --> 0:13:51.560 I would expect to see some weakness in it and 0:13:51.600 --> 0:13:54.200 see that coming through in the data closer to the 0:13:54.320 --> 0:13:56.200 end of the year. So the labor market is one 0:13:56.240 --> 0:13:58.600 of the last things if not the last thing to 0:13:58.760 --> 0:14:02.040 turn when you have an economic contraction or a slowdown. 0:14:02.280 --> 0:14:04.719 And if you just think about that logically, there's a 0:14:04.760 --> 0:14:06.560 reason we're not hearing about it from c e O 0:14:06.600 --> 0:14:09.040 S because they will do everything else they can to 0:14:09.200 --> 0:14:12.280 control costs before they have to actually lay people off 0:14:12.320 --> 0:14:14.840 and cut jobs. So what we're hearing right now is 0:14:14.840 --> 0:14:17.880 a lot of hiring freezes and that's coming through in 0:14:17.880 --> 0:14:19.920 the data. So if you just look at the job 0:14:20.000 --> 0:14:22.920 openings or the JOLTS number that we got for August, 0:14:23.160 --> 0:14:25.880 job openings came down by one point one million. That 0:14:25.960 --> 0:14:29.400 was a huge drop. So now the ratio of the 0:14:29.520 --> 0:14:33.880 number of jobs open per unemployed worker is one point seven. 0:14:34.040 --> 0:14:36.040 That's down from two. We used to have two jobs 0:14:36.040 --> 0:14:39.560 for every unemployed person. Pre pandemic, that number was one 0:14:39.600 --> 0:14:42.200 point two. So that's still that gap still has to 0:14:42.320 --> 0:14:45.440 narrow a bit. The risk is that that gap narrows 0:14:45.720 --> 0:14:48.240 and then we're in this kind of comfortable supply demand 0:14:48.280 --> 0:14:52.360 place with labor. That's when if we haven't slowed the bleeding, 0:14:52.680 --> 0:14:54.360 that's when you start to hear about layoff. So we 0:14:54.400 --> 0:14:57.280 still have some time between now and I think that point, 0:14:57.440 --> 0:14:59.400 but I do expect it to start coming through in 0:14:59.440 --> 0:15:01.880 the in the labor data, see some weakness by the 0:15:01.960 --> 0:15:05.000 end of this year. Ultimately, at this moment, is with 0:15:05.160 --> 0:15:09.360 so much you talking about recession, people thinking, since she's high, 0:15:09.360 --> 0:15:12.320 with a lot of lack of clarity, is it time 0:15:12.320 --> 0:15:14.520 to put all that cash that people have been taking 0:15:14.520 --> 0:15:16.520 out of stocks putting it into cash? Is time to 0:15:16.720 --> 0:15:21.000 reinvest or keep powder driving? Now you can think about 0:15:21.040 --> 0:15:23.800 reinvesting it and and look, nobody's going to call the 0:15:23.840 --> 0:15:26.080 bottom perfectly, and if they do, it's going to be lucky. 0:15:26.240 --> 0:15:29.200 So let's just all stop trying. Right But if you 0:15:29.240 --> 0:15:31.240 think about just where we are, you're to date with 0:15:31.280 --> 0:15:35.680 an SMP still down twenty or so year to date, 0:15:36.000 --> 0:15:38.440 that's a better entry point than it was in January. 0:15:38.520 --> 0:15:41.120 So I would start to get ready on what's the 0:15:41.120 --> 0:15:43.800 shopping list? What are the sectors and the industry groups 0:15:43.800 --> 0:15:47.160 that you would be interested in buying and drip in slowly. 0:15:47.280 --> 0:15:50.360 So in this particular moment right now, I would be 0:15:50.400 --> 0:15:54.080 looking at financials because they're still very attractively priced compared 0:15:54.120 --> 0:15:57.240 to many other sectors, and they don't have a ton 0:15:57.280 --> 0:15:59.600 of pain ahead. In my opinion, I think they've been 0:15:59.640 --> 0:16:02.360 pretty punished through this cycle, and I think they can 0:16:02.360 --> 0:16:04.200 come out well. On the other side, I'll be looking 0:16:04.240 --> 0:16:07.120 at industrials and I've been talking about healthcare for a 0:16:07.200 --> 0:16:09.640 very long time. I think that healthcare is a great 0:16:09.680 --> 0:16:12.280 long term investment. And then a little bit further down 0:16:12.280 --> 0:16:14.600 and look, I think this rally is fragile, so I 0:16:14.600 --> 0:16:17.280 would expect another correction on the other side of it. 0:16:17.680 --> 0:16:19.920 If and when that happens and you see an SMP 0:16:20.040 --> 0:16:22.920 get back down to previous levels, so let's say something 0:16:22.960 --> 0:16:26.720 like thirty or below, that's when you start to nibble 0:16:26.800 --> 0:16:30.480 on riskier things. You start to look at semiconductors, you 0:16:30.480 --> 0:16:33.200 start to look at tech again, and you start to 0:16:33.240 --> 0:16:36.440 look at other things that might be a little bit 0:16:36.480 --> 0:16:39.520 more high beata. And then later even after that, when 0:16:39.560 --> 0:16:42.320 the economy really confirms that it's weakened, so when the 0:16:42.400 --> 0:16:45.560 labor market starts to fall apart, that's when you start 0:16:45.600 --> 0:16:48.120 to look at things like home builders and you get 0:16:48.160 --> 0:16:50.560 back in on that train. You look at small caps 0:16:50.600 --> 0:16:52.680 in that environment as well. Well. We've got a great 0:16:52.720 --> 0:16:55.440 conversation to common terms of fuel, exposure to the real 0:16:55.560 --> 0:17:00.000 estate market always so small at Helping Dovetail, you'll conversation 0:17:00.320 --> 0:17:02.520 with our audience who was so interested in tech. We 0:17:02.560 --> 0:17:04.680 thank you, Lizzie young A so far of course, head 0:17:04.680 --> 0:17:08.560 of investment strategy there. Meanwhile, coming up, Amazon expands payment 0:17:08.640 --> 0:17:11.520 options including Venmo at last ahead of the holiday season 0:17:11.760 --> 0:17:26.520 or discuss the strategy, the expectations visi Blue meg off earnings. 0:17:26.560 --> 0:17:29.399 There was another key story that occurred today, Amazon adding 0:17:29.480 --> 0:17:31.960 Venmo at last as a new payment option for customers, 0:17:32.160 --> 0:17:34.160 of course, all ahead of Black Friday and the key 0:17:34.200 --> 0:17:37.639 holiday season when we expensive Sofa is actually here in 0:17:37.680 --> 0:17:39.840 New York and of course he covers Amazon for us. 0:17:39.840 --> 0:17:42.640 You know that. Wonderful to have you in the same 0:17:42.640 --> 0:17:45.840 studio spends to talk to us about. Finally, this has 0:17:45.840 --> 0:17:48.600 been in the works for what like a year already. Yeah, 0:17:48.600 --> 0:17:51.440 the Venmo Amazon tie up has been in the works 0:17:51.480 --> 0:17:54.680 for for quite some time. And then Venmo in particular 0:17:54.760 --> 0:17:57.720 PayPal has really wanted to move this, you know, a 0:17:57.840 --> 0:18:01.080 peer to peer payment system thing like Okay, we bought 0:18:01.080 --> 0:18:03.679 a pizza and you're gonna vend me ten dollars to 0:18:03.800 --> 0:18:07.040 get that beyond simply people splitting the cost of bills 0:18:07.040 --> 0:18:09.160 and things into something that they can actually make money 0:18:09.160 --> 0:18:13.120 off of, which would be you know, commerce buying things. So, yeah, 0:18:13.200 --> 0:18:15.680 this is a this is a very big deal for 0:18:15.680 --> 0:18:18.160 for PayPal and Venmo in terms of trying to nudge 0:18:18.200 --> 0:18:20.080 that along. It's something they've been working on a long time. 0:18:20.480 --> 0:18:22.880 Right now. You maybe see it, you know, for uh 0:18:23.040 --> 0:18:25.440 used by a patron at like a nail salon or 0:18:25.520 --> 0:18:27.800 some other small business like a landscape, or you're not 0:18:27.880 --> 0:18:30.760 really seeing it used you know, to buy from big retailers. 0:18:30.800 --> 0:18:32.920 So this could be a big, big symbol to sends 0:18:32.920 --> 0:18:35.320 a message Amazon is willing to do it, why why 0:18:35.320 --> 0:18:37.920 not you? And then Amazon has an incentive to try 0:18:37.920 --> 0:18:41.080 to uh you know, lower the cost of accepting any 0:18:41.119 --> 0:18:42.920 kind of payment at all. So it just gives them 0:18:42.960 --> 0:18:45.920 potential negotiating power if this were to take off, especially 0:18:45.920 --> 0:18:48.359 take off with millennials when they're negotiating rates with the 0:18:48.359 --> 0:18:50.480 big cards, you know, on how much of each transaction 0:18:50.520 --> 0:18:52.560 they share with them. We know, we remember that sounds 0:18:52.560 --> 0:18:54.280 still that they had over in the UK with Visa 0:18:54.320 --> 0:18:57.240 for example. I'm interested in, well, therefore, ahead of the 0:18:57.240 --> 0:19:01.040 holiday season, how many people do they think will actually 0:19:01.080 --> 0:19:03.399 be using this versus by now pay later that they 0:19:03.480 --> 0:19:05.280 have with the firm or just you know, in the 0:19:05.320 --> 0:19:08.040 credit card that you have on top with them. Yeah, exactly. 0:19:08.080 --> 0:19:10.480 I think that's still going to be Traditionally, the predominant 0:19:10.520 --> 0:19:12.800 way that people pay is that the credit card that 0:19:12.800 --> 0:19:16.199 they already have, and that's the problem here. Venmo has 0:19:16.240 --> 0:19:19.119 a lot of incentive to make this work. Amazon has 0:19:19.160 --> 0:19:21.520 a lot of incentive to make this work. Customers don't 0:19:21.560 --> 0:19:23.520 really have much incentive to use it. So how are 0:19:23.520 --> 0:19:26.000 they going to try to compel people to break those 0:19:26.040 --> 0:19:29.400 habits and uh and and start using Venmo to pay 0:19:29.440 --> 0:19:32.159