WEBVTT - WeWork Withdraws IPO, Repo Strains, AI in Hiring 0:00:02.640 --> 0:00:05.320 Welcome to the Bloomberg PENL podcast. I'm Paul swing you 0:00:05.360 --> 0:00:07.680 along with my co host Lisa Brahma Waits. Each day 0:00:07.720 --> 0:00:10.240 we bring you the most noteworthy and useful interviews for 0:00:10.280 --> 0:00:12.520 you and your money. Whether at the grocery store or 0:00:12.560 --> 0:00:15.480 the trading floor. Find a Bloomberg Penl podcast on Apple 0:00:15.520 --> 0:00:17.959 podcast or wherever you listen to podcasts, as well as 0:00:17.960 --> 0:00:21.279 at Bloomberg dot com. We want to stick with we 0:00:21.440 --> 0:00:26.360 work withdrawing its initial public offering perspectives. After a tumultuous month, 0:00:26.480 --> 0:00:29.360 we are seeing some movement in the bonds going lower 0:00:30.080 --> 0:00:33.760 now at their lowest levels. Wow, at eight seven cents 0:00:33.920 --> 0:00:37.080 uh and a quarter uh per on the dollar. And this, 0:00:37.280 --> 0:00:39.320 you know, comes at a time when borrowing casts are 0:00:39.320 --> 0:00:42.160 supposedly lower. Not for we work joining us nationally, boss 0:00:42.760 --> 0:00:45.760 who covers all things up finance for us here at Bloomberg. 0:00:46.479 --> 0:00:49.800 I'm wondering this doesn't come as a surprise. No, no, 0:00:49.960 --> 0:00:52.279 I mean this is this is something that's been known exactly, 0:00:52.880 --> 0:00:55.560 so it's not a shocker, right. I mean that they 0:00:55.600 --> 0:00:58.240 were going to delay their I p O. The question 0:00:58.280 --> 0:01:02.160 that's looming over everyone's minds two things is when will 0:01:02.200 --> 0:01:04.720 this happen, Will it ever happen? And how are they 0:01:04.760 --> 0:01:08.360 going to raise money without a happening? So what is 0:01:08.360 --> 0:01:10.319 the thinking here? Because I know that they had a 0:01:10.319 --> 0:01:13.920 big debt financing that was gonna was contingent upon them 0:01:13.959 --> 0:01:17.000 going public, that obviously is not going to happen. And 0:01:17.040 --> 0:01:19.440 is Leasa's point out earlier they are going to need 0:01:19.480 --> 0:01:22.240 cash in the relative near term? Is there a plan 0:01:22.280 --> 0:01:23.920 out there for this company? So right now they're in 0:01:23.959 --> 0:01:28.320 talks for multiple things potentially happening here. H soft Bank 0:01:28.360 --> 0:01:32.000 may make another equity injection, but with the ft actually 0:01:32.040 --> 0:01:34.480 reporting that it could be more than a billion dollars, 0:01:34.520 --> 0:01:36.920 I mean that that is huge. Remember, the interesting thing 0:01:36.920 --> 0:01:39.800 about soft Bank making another injection is we're waiting right 0:01:39.800 --> 0:01:41.800 now on whether soft Bank is going to write down 0:01:41.840 --> 0:01:44.559 the stake of their we Work investment. And soft Bank 0:01:44.640 --> 0:01:47.280 is already bleeding right now from a lot of different 0:01:47.600 --> 0:01:50.360 investments that are that are troubled right now. Just to 0:01:50.400 --> 0:01:53.080 put this in a perspective, when Jefferies took a write 0:01:53.120 --> 0:01:56.320 down on their we Work stake of less than one percent, 0:01:57.000 --> 0:02:00.480 it was over a hundred million dollars. And so the 0:02:00.640 --> 0:02:05.440 we Work right down with the stake of almost maybe 0:02:05.480 --> 0:02:07.080 a little more. When you count how much they have 0:02:07.280 --> 0:02:11.120 in UM convertible shares, it could be very significant. So 0:02:11.160 --> 0:02:13.720 how are they going to make another equity injection when 0:02:13.760 --> 0:02:17.040 they're already writing down their existing stake? Could be really 0:02:17.080 --> 0:02:20.360 interesting tension. Another interesting tension is what's going on in 0:02:20.400 --> 0:02:23.720 the C suite at JP Morgan, which I believe was 0:02:23.800 --> 0:02:26.480 going to be the lead banker on the I p OH. 0:02:27.120 --> 0:02:29.400 How big of a liability is this for them? So 0:02:29.520 --> 0:02:33.600 think about how many aspects they have connections to we work, right, 0:02:33.680 --> 0:02:36.880 they have the it's it's something like a margin loan. 0:02:36.960 --> 0:02:39.919 So Adam Newman took out a loan based on his 0:02:39.919 --> 0:02:43.200 his stock hundreds of millions of dollars led by JP Morgan. 0:02:43.520 --> 0:02:46.440 JP Morgan also is responsible for the mortgages for Adam 0:02:46.480 --> 0:02:48.920 Newman's own homes. They also have exposure to a lot 0:02:48.960 --> 0:02:51.399 of the buildings that we work as exposed to and 0:02:51.480 --> 0:02:55.120 so they have some and that's on top of helping 0:02:55.200 --> 0:02:57.320 lead this loan as well as the I p O 0:02:57.400 --> 0:02:59.400 that's not happening. So those are fees you're not going 0:02:59.440 --> 0:03:01.520 to see for J P. Morgan in their upcoming earnings 0:03:01.520 --> 0:03:04.040 report because the I p O obviously never happened. But 0:03:04.120 --> 0:03:06.480 then you also have to wonder how these other moving 0:03:06.560 --> 0:03:11.120 parts affects JP Morgan. Their own investors are also invested 0:03:11.120 --> 0:03:13.480 in early we Work stock. Some of those investors have 0:03:13.560 --> 0:03:15.560 told me that they're not thrilled with the right ups 0:03:15.600 --> 0:03:18.280 and the right downs that maybe UM embedded in JP 0:03:18.400 --> 0:03:22.120 Morgan funds that have we Work shares in them. So 0:03:22.600 --> 0:03:25.440 brought it out from JP Morgan and we work here. 0:03:25.440 --> 0:03:28.160 I mean, there's been a lot of big disappointing deals 0:03:28.160 --> 0:03:31.160 here in twenty nine Uber Lift and just on and 0:03:31.200 --> 0:03:32.600 on the list goes. And this was supposed to be 0:03:32.600 --> 0:03:34.800 the year when the bankers got fat and happy and 0:03:34.920 --> 0:03:37.000 I PO investors got fat and happy. It hasn't worked 0:03:37.000 --> 0:03:40.480 out that way. Has there been any meaningful pushback on 0:03:40.720 --> 0:03:43.520 the bankers and saying, you guys just haven't done a 0:03:43.600 --> 0:03:47.400 very good job this year. Totally, so get this. Tomorrow 0:03:47.600 --> 0:03:49.720 is the day in Silicon Valley that all the big 0:03:49.800 --> 0:03:53.080 venture capitalists will be meeting, and the bankers are not 0:03:53.320 --> 0:03:56.520 invited because they are looking to change the I p 0:03:56.600 --> 0:03:58.880 O model as we know it. They don't like the 0:03:58.960 --> 0:04:01.200 initial pop that got in an I p O and 0:04:01.200 --> 0:04:04.200 they certainly don't like the first day fall you get 0:04:04.920 --> 0:04:09.520 lately with Smile Direct, Club and and Peloton were two 0:04:09.680 --> 0:04:12.680 of the very rare companies to fall on their first 0:04:12.720 --> 0:04:14.600 day of trading that are that big and raise how 0:04:14.640 --> 0:04:16.920 much money? How much is the banker's fault? How much 0:04:17.000 --> 0:04:19.920 is the venture capitalists fault for valuing these companies as 0:04:19.960 --> 0:04:21.600 highly as they have? Well, if you talk to the 0:04:21.680 --> 0:04:23.600 ventral capitalists, what they're gonna do is they're going to 0:04:23.720 --> 0:04:27.920 deflect the responsibility not just away from the venture capitalists, 0:04:27.960 --> 0:04:31.520 but over to soft Bank, which has been really inflating 0:04:31.600 --> 0:04:35.080 some of these um silicon value valuations. And you know, 0:04:35.120 --> 0:04:36.520 there's a lot of people that say a lot of 0:04:36.560 --> 0:04:39.039 these new big fundraisers we're seeing is in response to 0:04:39.080 --> 0:04:41.520 soft Bank really changing the dynamics of the market. Least 0:04:41.520 --> 0:04:44.440 you've covered this a lot too, But the bankers are 0:04:44.520 --> 0:04:47.520 not without blame here for certain. The next big one 0:04:47.640 --> 0:04:50.320 that I think we were waiting on was Airbnb. What's 0:04:50.400 --> 0:04:53.640 the status of that TBD? The thing that's nice. The 0:04:53.680 --> 0:04:56.599 thing that's nice about airbnb is that it does turn 0:04:56.640 --> 0:04:59.599 a profit. It is kind of a darling and you 0:04:59.680 --> 0:05:01.360 no matter you can think about it, when the I 0:05:01.480 --> 0:05:04.880 P O market's bad, it's not that it closes up completely. 0:05:05.120 --> 0:05:07.760 People still want listings and so they're going to look 0:05:07.800 --> 0:05:10.400 for the best possible ones. And so I think Airbnb 0:05:10.560 --> 0:05:12.520 still dangles a little bit of hope in front of 0:05:12.560 --> 0:05:15.479 investors and in front of UM, in front of in 0:05:15.520 --> 0:05:18.080 front of banks as well. Shinali Bassett, thank you so 0:05:18.160 --> 0:05:22.080 much for joining a Shonali's investment banking reporting for Bloomberg News. 0:05:22.160 --> 0:05:24.520 Journey us here on our Bloomberg Interactive Broker studio, bringing 0:05:24.560 --> 0:05:26.120 us up to date on that news that we work 0:05:26.440 --> 0:05:30.240 UH plans to withdraw its I p O perspectives as expected, 0:05:30.279 --> 0:05:33.280 but still a shocking formative for a company that just 0:05:33.320 --> 0:05:34.800 a couple of weeks ago I was looking to raise, 0:05:34.880 --> 0:05:37.760 you know, a huge amount on a very high valuation. 0:05:37.880 --> 0:05:40.800 A lot of questions now Number one, where will we 0:05:40.839 --> 0:05:43.560 work raise money? Number two? What does this to to 0:05:43.720 --> 0:05:46.320 investment bankers? And a sort of tom was a year 0:05:46.560 --> 0:05:49.800 generally for I p O s sale was was was 0:05:49.920 --> 0:05:53.040 putting out there? And number three for soft bank at 0:05:53.080 --> 0:05:56.240 what point do they just say forget it, We're gonna 0:05:56.320 --> 0:06:15.240 let you fail. Exactly right time to check in with 0:06:15.240 --> 0:06:18.919 Bloomberg Opinion. We're joined by opinion columnists Brian Cheppetta. Brian 0:06:19.240 --> 0:06:21.560 is a debt markets calumnist. He joins us here in 0:06:21.640 --> 0:06:24.280 our Bloomberg Interactive Broker Studio. So, Brian, I know you're 0:06:24.279 --> 0:06:26.440 out with a column and you're basically saying it could 0:06:26.480 --> 0:06:30.039 be a shaky time for the bond market, but investment 0:06:30.040 --> 0:06:32.960 grade issues are just flooding the market here. So what's 0:06:32.960 --> 0:06:35.880 going on in your side of the credit markets? Yeah, 0:06:35.880 --> 0:06:37.680 I thought it was really fascinating to see that a 0:06:38.000 --> 0:06:41.200 D seven investment grade bond deals cluded the market as 0:06:41.240 --> 0:06:44.200 of the end of last week, which is a record high. UH. 0:06:44.440 --> 0:06:48.200 No month has ever seen so many investment grade companies 0:06:48.200 --> 0:06:51.159 come and borrow, And it's just it's really surprising because 0:06:51.160 --> 0:06:55.520 you saw all this different, tumultuous activity in various corners 0:06:55.960 --> 0:06:58.160 of the markets. But it was steady as she goes. 0:06:58.200 --> 0:07:01.480 I guess uh for corporate And even though they're down 0:07:01.520 --> 0:07:04.880 a little bit this month, first monthly loss this year 0:07:05.640 --> 0:07:09.279 because of yields rising, UH, still out performing treasuries and 0:07:09.600 --> 0:07:13.080 still up year data, pretty strong, pretty strong year. So 0:07:13.240 --> 0:07:15.560 this is this is such a fascinating area because there 0:07:15.600 --> 0:07:18.000 seems to be a flood of cash coming from overseas 0:07:18.080 --> 0:07:20.560 into the US investment grade bond market trying to get 0:07:20.600 --> 0:07:23.600 some yield. Uh, since there is still some yield in 0:07:23.640 --> 0:07:27.280 the United States. That said, Morgan Stanley crunched the data 0:07:27.320 --> 0:07:30.760 and found that liabilities that the event of debt versus 0:07:30.880 --> 0:07:34.000 income have reached their highest level in the investment grade 0:07:34.040 --> 0:07:38.080 corporate sector since two thousand and nine. And they were 0:07:38.120 --> 0:07:41.840 talking about how forty of all investment grade issuers now 0:07:42.120 --> 0:07:47.160 have debt levels more equivalent to junk ratings, even though 0:07:47.160 --> 0:07:49.520 they are still rated with the with the top tiers 0:07:49.680 --> 0:07:54.040 of credit grades. Should people be concerned? Well, I guess 0:07:54.040 --> 0:07:56.640 when I see that all the pushback, I always have 0:07:56.760 --> 0:07:59.119 the thing I always want to see, and maybe maybe 0:07:59.120 --> 0:08:02.280 there is some data out on that is sort of Okay, 0:08:02.400 --> 0:08:05.600 the debt levels are high, but what are the borrowing costs? 0:08:05.720 --> 0:08:08.160 Because yes, it's the highest since two thousand nine, But 0:08:08.160 --> 0:08:09.640 you have to sort of look at where yield levels 0:08:09.680 --> 0:08:12.760 are now relative to where they were ten years ago. 0:08:12.840 --> 0:08:16.200 Because you can borrow, you can refinance, and yes you 0:08:16.280 --> 0:08:19.360 have higher debt, but it's it's cheaper to borrow, So 0:08:19.600 --> 0:08:22.080 I mean sort of the question is the corporate structure, 0:08:22.120 --> 0:08:25.640 I mean, is it is it economically more feasible and 0:08:25.800 --> 0:08:28.920 and better to to actually have have some debt if 0:08:28.960 --> 0:08:32.160 you can borrow it. I'll push back on that. I 0:08:32.200 --> 0:08:35.200 think that you know you're right that it net interest 0:08:35.240 --> 0:08:38.760 costs are coming down, right just simply math, because rates 0:08:38.800 --> 0:08:41.000 are lower and there is so much money and interest 0:08:41.120 --> 0:08:44.880 coming into this market. That's said. The reason why leverage 0:08:44.880 --> 0:08:47.280 picked up to such degree, according to this Morgan Stanley 0:08:47.320 --> 0:08:50.560 analysis was twofold. It was because the borrowing more and 0:08:50.920 --> 0:08:54.800 the revenues are coming down. Right there. The extra debt 0:08:54.920 --> 0:08:59.479 that they are borrowing is not helping them boost their profits. 0:09:00.120 --> 0:09:02.959 And so at what point is debt for debt's sake 0:09:03.360 --> 0:09:06.880 really going to potentially crimp companies as we head into 0:09:06.920 --> 0:09:09.280 potentially another downturn. Yeah, I mean I think that's a 0:09:09.360 --> 0:09:11.440 fair I mean, I think everything that we sort of 0:09:11.480 --> 0:09:15.400 know about this cycle and what companies have been doing 0:09:15.720 --> 0:09:18.920 effectively taking on more debt, doing more share buy backs 0:09:18.920 --> 0:09:21.560 to boost their equity price, I mean, all those things 0:09:21.640 --> 0:09:24.960 are not what you would ideally like to see. But 0:09:25.040 --> 0:09:27.560 I guess the question going forward that people have to 0:09:27.559 --> 0:09:30.480 think about is what else do you do in an 0:09:30.480 --> 0:09:34.080 economy that's growing but not growing that fast? I mean, 0:09:34.480 --> 0:09:37.360 it seems like all of these executives sort of have 0:09:37.800 --> 0:09:40.280 come to the decision that this is the way that 0:09:40.320 --> 0:09:42.680 we go. We we take out debt to maybe finance 0:09:42.800 --> 0:09:46.560 murders and acquisitions, or even just to buy back our shares. 0:09:47.160 --> 0:09:49.080 So what are we seeing in terms of credit quality 0:09:49.080 --> 0:09:51.800 out there? Are we seeing any signs of a deterioration 0:09:52.120 --> 0:09:55.040 in credit quality? Well, I think that the high yield 0:09:55.040 --> 0:09:57.080 market is where you're starting to see a lot of 0:09:57.160 --> 0:10:00.160 investor pushback and some deals had to be show l 0:10:00.360 --> 0:10:03.960 that aren't getting done. I mean there have been downgrades, um. 0:10:04.080 --> 0:10:06.800 I think that Tupperware was the one that was mentioned 0:10:07.360 --> 0:10:12.280 in the Bloomberg News story today being cut to junk UM. 0:10:12.320 --> 0:10:16.880 But overall, UH, downgrades are happening, but not quite at 0:10:16.920 --> 0:10:19.600 the clip. I think that people were really worried about. 0:10:19.880 --> 0:10:22.440 The question will be obviously if for some reason the 0:10:22.440 --> 0:10:27.280 economy gets worse, we head into even even more slow down. 0:10:27.400 --> 0:10:29.840 If that will change, UH, you want to shift gears 0:10:29.880 --> 0:10:31.800 a little bit to the repo market. Since we are 0:10:31.800 --> 0:10:33.520 reaching quarter end and this has been the time that 0:10:33.600 --> 0:10:37.160 people really were worried about, we are seeing overnight repo 0:10:37.280 --> 0:10:40.600 costs go up. How big of a concern is that. 0:10:41.040 --> 0:10:44.360 I think a lot of people are sort of thinking that, Okay, 0:10:44.400 --> 0:10:48.080 the repo market is a problem area and the FED 0:10:48.120 --> 0:10:50.760 doesn't have a quick fix. They're in there doing their 0:10:50.800 --> 0:10:55.240 temporary repo operations for now, and it'll be generally okay, 0:10:55.280 --> 0:10:58.000 we'll muddle through now. But I think everyone's really focused 0:10:58.000 --> 0:11:00.800 on what will the FED come out with UH in 0:11:00.840 --> 0:11:02.920 there are after there are October meeting. What sort of 0:11:02.960 --> 0:11:05.880 permanent solution is there? Are we going back to buying 0:11:05.920 --> 0:11:08.840 more treasuries uh in an attempt to sort of flood 0:11:08.840 --> 0:11:11.680 the system with more reserves, or will they have some 0:11:11.760 --> 0:11:14.319 standing repo facility, But it sounds like they're not as 0:11:14.360 --> 0:11:17.160 close to that as people might expect, So it sounds 0:11:17.200 --> 0:11:18.840 like they might go back to sort of organic growth 0:11:18.880 --> 0:11:21.520 of the balance sheet. Brian Chabot, thank you so much 0:11:21.520 --> 0:11:23.360 for being with us. Thank you. Brian Chabot is a 0:11:23.360 --> 0:11:26.000 Bloomberg Opinion columnist, joining us here in our Bloomberg Gotter 0:11:26.040 --> 0:11:28.320 Active Broker Studios. You can read all of his columns 0:11:28.480 --> 0:11:31.560 at O, P, I N GO, on the Bloomberg Terminal 0:11:31.640 --> 0:11:35.560 or Bloomberg dot com Slash Opinion. His columns are great, 0:11:35.720 --> 0:11:38.000 so are those of his colleague and you can catch 0:11:38.040 --> 0:11:59.040 them all there. Let's shift gears to what's been going 0:11:59.040 --> 0:12:01.320 on in Washington, D see some of the political turmoil 0:12:01.360 --> 0:12:04.839 with respect to the impeachment probe and the hearings last week. 0:12:05.120 --> 0:12:08.280 How much does that trickle into markets? Jeff Powell, managing 0:12:08.280 --> 0:12:11.600 partner at Polari's gray Stone Financial Group, joining us now 0:12:11.640 --> 0:12:14.200 by phone from San Francisco. Jeff, how much did you 0:12:14.280 --> 0:12:16.920 care and pay attention to the political tumult that we 0:12:16.960 --> 0:12:20.120 saw over the past week. Well, I mean, obviously we 0:12:20.240 --> 0:12:23.840 have to pay attention to headline news, and obviously something 0:12:23.880 --> 0:12:29.120 like an impeachment inquiry is a very serious thing. Um. Personally, 0:12:29.160 --> 0:12:33.520 I don't think that a impeachment walk her under the circumstances, 0:12:33.559 --> 0:12:36.760 but it certainly plays into sentiment of marketplace, and it's 0:12:36.760 --> 0:12:40.560 certainly complicates what's going on with our trade negotiations with China. 0:12:41.040 --> 0:12:44.200 So it's a very important thing for us to consider 0:12:44.280 --> 0:12:47.079 to track progress of what's going on there and also 0:12:47.160 --> 0:12:51.000 the impacts of it as in other areas of the marketplace. Yeah, Jeff, 0:12:51.000 --> 0:12:53.840 I've actually been I guess a little bit surprised at 0:12:53.840 --> 0:12:57.679 the market has kind of taken this news in stride um, 0:12:57.720 --> 0:12:59.800 and but I guess the question investors are just trying 0:12:59.800 --> 0:13:02.080 to get a sense of where could this really hit 0:13:02.120 --> 0:13:04.080 me in terms of the economy, And I guess you 0:13:04.120 --> 0:13:07.200 mentioned one area is trade and that's clearly been the 0:13:07.200 --> 0:13:09.880 big driver this market over the last year. So so 0:13:10.440 --> 0:13:11.720 give us your thoughts to kind of how do you 0:13:11.720 --> 0:13:17.479 think this may impact trade negotiations if at all? Well, yeah, absolutely, 0:13:17.559 --> 0:13:19.560 I mean if you think back to May when we 0:13:19.920 --> 0:13:24.680 heard Donald Trump tweet about how he was unhappy with 0:13:25.000 --> 0:13:27.640 the Fed and if the Fed had been more aggressive 0:13:27.640 --> 0:13:30.120 about cuts that we would have as strong in an 0:13:30.120 --> 0:13:32.680 economy as China had, And all of a sudden, we 0:13:32.720 --> 0:13:38.360 had China rethinking what was going on with our trade negotiations. So, uh, Premier, 0:13:38.440 --> 0:13:43.240 she obviously is a lifetime position for him. We obviously 0:13:43.280 --> 0:13:48.080 don't have lifetime positions for our leaders, and so when 0:13:48.080 --> 0:13:50.280 you look at it, I believe the Chinese kind of 0:13:50.320 --> 0:13:53.520 negotiate on kind of a different calendar than we do, 0:13:53.720 --> 0:13:56.560 so they may be in a situation where they tried 0:13:56.559 --> 0:14:01.640 to outweigh outweight President Trump under these circumstances, but it 0:14:01.720 --> 0:14:06.400 certainly weakens his position with trade negotiations with China. Do 0:14:06.440 --> 0:14:09.760 you trade on the headlines, No, we don't at all. 0:14:09.840 --> 0:14:13.720 I mean, but I mean obviously you know things, things spiral, 0:14:13.920 --> 0:14:17.880 and so uncertainty is a major factor. I mean, if 0:14:17.920 --> 0:14:19.800 you just look at what happened in the fourth quarter 0:14:19.840 --> 0:14:22.920 of last year, almost everything that was going on during 0:14:23.000 --> 0:14:26.040 fourth quarter was sentiment of and everybody was worried about 0:14:26.080 --> 0:14:30.680 the potential of a of having an economy that was 0:14:30.760 --> 0:14:33.960 weakening or even going into recession, when there was really 0:14:33.960 --> 0:14:36.840 no evidence of it. We had a strong economy, we 0:14:36.880 --> 0:14:40.400 had really strong earnings. You have the markets drop during 0:14:40.400 --> 0:14:43.560 that time period. So really we're looking at headlines and 0:14:43.600 --> 0:14:46.840 their impact. I mean, you can run into circumstances that 0:14:46.920 --> 0:14:51.280 become self fulfilling prophecies where you have people become more 0:14:51.280 --> 0:14:54.000 and more worried about what's going on economically as a 0:14:54.080 --> 0:14:57.320 result of headlines, which would be a driving factor for 0:14:57.400 --> 0:15:01.720 us to make a decision to get more defensive and portfolios. So, Jeff, 0:15:01.760 --> 0:15:04.280 we are, um, you know, at or near this the 0:15:04.320 --> 0:15:06.560 all time high for the smp fived. You talk a 0:15:06.560 --> 0:15:09.840 little bit about getting defensive. How are you thinking about 0:15:09.880 --> 0:15:12.600 your positioning right here, given where we are in the 0:15:12.680 --> 0:15:16.440 economic cycle, given where the FED is, are you taking 0:15:16.440 --> 0:15:19.640 on additional risk here? Are or are you getting more defensive? 0:15:21.720 --> 0:15:23.480 It's kind of funny you bring that up, but it's 0:15:23.480 --> 0:15:26.160 it's more of a neutral stance right now, more of 0:15:26.200 --> 0:15:30.160 a wait and see um. When we talk about economic cycles, 0:15:30.200 --> 0:15:33.560 I mean I have a very hard time really gauging that. 0:15:33.800 --> 0:15:36.120 I mean, we talked about how long the economy has 0:15:36.120 --> 0:15:40.040 been expanding, yet you've had government intervention going on until 0:15:40.080 --> 0:15:43.160 they'll end the part of two thousand fourteen, we dealt 0:15:43.200 --> 0:15:46.640 with three different quantitative easing time periods in which you 0:15:46.720 --> 0:15:50.480 had the government stepping in and really pressing yields down 0:15:50.720 --> 0:15:54.680 very low as a result of quantitative easing. How do 0:15:54.760 --> 0:15:59.880 you gauge true economic expansion when the government was being 0:16:00.120 --> 0:16:03.320 was involved basically for seven of the years of that expansion. 0:16:03.880 --> 0:16:06.960 So it's challenging. It's it's very challenging to sit there 0:16:07.120 --> 0:16:09.840 and and really step in hard with this. I think 0:16:09.880 --> 0:16:14.840 that we are going to see a a smattering of 0:16:14.880 --> 0:16:18.800 disappointments going into earning season, especially with what's going on 0:16:18.840 --> 0:16:21.080 with tariffs in the trade war that we have going on. 0:16:22.080 --> 0:16:25.360 I think it's hard to get really really aggressive with 0:16:25.360 --> 0:16:29.120 within the markets based upon that. So we're going in, 0:16:29.240 --> 0:16:33.520 we're being we're market weight with what we would typically 0:16:33.560 --> 0:16:36.320 be for a client and their risk levels and so on. 0:16:37.080 --> 0:16:40.560 That being said, we are lower beta stocks more so 0:16:40.600 --> 0:16:43.080 than we would be in a normal circumstance with the 0:16:43.120 --> 0:16:46.000 allocations that we're in. Are you boosting your allocation to 0:16:46.120 --> 0:16:52.800 cash we did about a month ago. We're holding tight 0:16:52.840 --> 0:16:56.920 with what we are now. We have our laundry list 0:16:56.960 --> 0:17:01.240 of names that we like, and we're looking or the 0:17:01.360 --> 0:17:04.040 right opportunity to step back into the market a little 0:17:04.080 --> 0:17:07.200 bit more heavily and get into an overweight position should 0:17:07.200 --> 0:17:10.120 the need arise. So, Jeff, one of the issues I've 0:17:10.119 --> 0:17:13.480 heard about getting a little bit more cautious is utilities reads. 0:17:13.800 --> 0:17:17.040 You know, consumer staples by historical standards, they're not cheap. 0:17:18.880 --> 0:17:22.400 You're absolutely correct, and so, I mean we are market 0:17:22.440 --> 0:17:25.280 weight and all three of those categories, but we are 0:17:25.280 --> 0:17:29.399 not overweighted into them. Uh So, it is something that 0:17:29.480 --> 0:17:32.280 is a little bit more challenging to sit there and 0:17:32.280 --> 0:17:34.639 and chase that kind of performance. I mean, if you 0:17:34.680 --> 0:17:37.920 look at what utilities have done in particular, I mean, 0:17:38.040 --> 0:17:41.679 they've had an amazing run, an amazing year for that 0:17:41.760 --> 0:17:44.639 particular category. But you're absolutely correct, it makes it very 0:17:44.720 --> 0:17:48.480 challenging to go into an area of the marketplace that 0:17:48.720 --> 0:17:51.720 is considered to be expensive even though it's considered to 0:17:51.760 --> 0:17:55.000 be defensive. Jeff pal thanks so much for joining us. 0:17:55.040 --> 0:17:58.240 Jeff's a managing partner for Polarist gray Stone Financial Group 0:17:58.560 --> 0:18:01.840 based in San Francisco. Jeff and just via phone from 0:18:01.840 --> 0:18:16.960 San Francisco giving us his thoughts on the market. A 0:18:17.040 --> 0:18:21.000 lot of workplaces talk about the difficulties of hiring qualified 0:18:21.040 --> 0:18:24.159 people are frankly hiring people in general. There is a 0:18:24.240 --> 0:18:27.040 question of what role artificial intelligence can play in that. 0:18:27.200 --> 0:18:29.640 Joining us now is A L. Graevsky. He's chief executive 0:18:29.640 --> 0:18:32.840 officer of Maya Systems, joining us from San Francisco. I 0:18:33.080 --> 0:18:35.119 can you just talk a little bit about what Maya 0:18:35.200 --> 0:18:40.119 Systems is. Yeah, So, Maya Systems is a recruitment automation 0:18:40.200 --> 0:18:44.360 platform using conversational AI. So we built this conversational AI 0:18:44.440 --> 0:18:48.440 assistant named Maya, who engages with candidates through natural language 0:18:48.440 --> 0:18:51.359 and helps guide them through the recruiting process, helps source 0:18:51.400 --> 0:18:55.000 passive leads for hiring teams, and manage many different phases 0:18:55.040 --> 0:18:58.520 of the process. So I'll just give us a sense 0:18:58.560 --> 0:19:04.480 of you know, what types of companies use your system. Yeah, 0:19:04.480 --> 0:19:06.960 so we work with some of the largest enterprises and 0:19:07.080 --> 0:19:09.600 staffing companies in the world, so six of the eight 0:19:09.720 --> 0:19:13.520 largest staffing businesses, as well as organizations like the Lloyd 0:19:14.000 --> 0:19:18.840 Laureal a b M BEV, very large enterprises like Singapore 0:19:18.880 --> 0:19:23.080 Airlines that leverage the technology to both manage their talent 0:19:23.119 --> 0:19:26.840 pools as well as automate and guide candidates through the 0:19:26.920 --> 0:19:30.040 recruiting process. What's the goal, I mean, why did you 0:19:30.119 --> 0:19:34.560 create this company? Yeah? So what I learned from the 0:19:34.640 --> 0:19:37.480 many years working as a recruiter is that the recruiting 0:19:37.480 --> 0:19:42.040 process is still wildly manual, and you see recruiters spent 0:19:42.119 --> 0:19:46.000 about seventy of their time on what we call repetitive tasks, 0:19:46.000 --> 0:19:49.520 which really slows them down. And later when I actually 0:19:49.560 --> 0:19:52.200 went out and started searching for jobs early in my career, 0:19:52.280 --> 0:19:55.360 I applied about forty jobs her back from two companies. 0:19:55.400 --> 0:19:59.840 It's incredibly frustrating of applications fall into the black hole. 0:20:00.280 --> 0:20:02.399 You have about a fifty seven to one chance of 0:20:02.440 --> 0:20:05.080 getting a job when you apply, so it's a very 0:20:05.240 --> 0:20:08.960 inefficient process. And what we saw was an opportunity to 0:20:09.440 --> 0:20:12.920 build a technology that can really engage and communicate with 0:20:13.080 --> 0:20:15.960 people at a large scale so that we can learn 0:20:16.040 --> 0:20:19.679 about those individuals and then in building that profile and 0:20:19.800 --> 0:20:23.080 understanding their interests, we can help guide them and convert 0:20:23.160 --> 0:20:26.440 them into their next job. So we really saw that 0:20:26.560 --> 0:20:30.119 unique opportunity to bridge the communications gap. It's interesting, you know, 0:20:30.160 --> 0:20:34.600 I think the LinkedIn is really emerged as a recruiting tool. 0:20:34.680 --> 0:20:36.200 Give us a sense of kind of how you either 0:20:36.320 --> 0:20:41.960 compete with or complementary to a LinkedIn type of service. Yea, 0:20:42.040 --> 0:20:45.080 So we we be viewed complementary and that LinkedIn is 0:20:45.200 --> 0:20:47.480 very much a marketplace, and of course they have a 0:20:47.520 --> 0:20:52.680 platform that organizations can um used to source and engage 0:20:52.760 --> 0:20:56.159 passive candidates and and so forth. What we are is 0:20:56.880 --> 0:21:00.800 really an enterprise staff business. We integrate into our clients 0:21:00.800 --> 0:21:06.800 systems and we support recruitment across many different sources. So 0:21:07.000 --> 0:21:10.159 LinkedIn might be one of the sources that are generating 0:21:10.280 --> 0:21:13.720 leads where Maya might engage that candidate and convert them 0:21:13.720 --> 0:21:17.280 through the funnel. Uh, and then of course Maya. The 0:21:17.359 --> 0:21:19.960 really interesting thing about what we're doing is we can 0:21:20.119 --> 0:21:24.200 use the technology to engage our customers database of candidates, 0:21:24.280 --> 0:21:27.080 people that they've engaged within the past. Many of our 0:21:27.119 --> 0:21:31.040 customers have millions of candidates that they've acquired over the 0:21:31.119 --> 0:21:34.920 years and maya can really engage, re engage and surface 0:21:35.040 --> 0:21:40.240 leads directly within your existing pool. So um, in that way, 0:21:40.600 --> 0:21:44.280 sometimes we use the reliance on external sources like LinkedIn. 0:21:44.720 --> 0:21:47.720 So given the fact that you you probably have conversations 0:21:47.760 --> 0:21:49.520 with a lot of different companies, they are trying to 0:21:49.560 --> 0:21:53.720 tailor this to their specific needs. Are you getting any 0:21:53.880 --> 0:21:57.080 sense that there is a shift in what employers are 0:21:57.119 --> 0:21:59.920 looking for in terms of the skills that will determine 0:22:00.119 --> 0:22:02.919 whether a candidate will be successful and will stick around 0:22:03.480 --> 0:22:10.679 versus not. Yeah, so, um, there's absolutely shifts in in 0:22:10.880 --> 0:22:15.640 perspective and how employers are making decisions on candidates and 0:22:15.640 --> 0:22:20.280 and that's probably gonna change on an employer to employer basis. Um. 0:22:20.320 --> 0:22:23.000 You know, really our goal as a as a product 0:22:23.080 --> 0:22:26.000 is is to really learn and understand the candidate and 0:22:26.400 --> 0:22:30.439 surface those insights that might be hidden not on the resume, 0:22:30.600 --> 0:22:33.720 not in the LinkedIn profile. You know, these are insights 0:22:33.720 --> 0:22:36.679 that typically our surfaced from like a phone screen, and 0:22:36.720 --> 0:22:40.240