Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Tim Stanevik. We're here every day bringing you the latest
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Speaker 1: or stream us live on YouTube and Bloomberg dot com. Alright,
Speaker 1: the guys, the team, they have been talking about the
Speaker 1: big bank earnings. We got a bunch of last week,
Speaker 1: we got some this morning, some key ones kind of
Speaker 1: getting ready to really wrap up this sector and start
Speaker 1: to look forward at other earnings. But we've got to
Speaker 1: talk a bit more about Goldman Sachs having their worst
Speaker 1: day in terms of the stock price since this after
Speaker 1: the bank reported worse than expected net revenue for the
Speaker 1: fourth quarter. It's compensation ratio hitting a decade high. Tim, Yeah, well,
Speaker 1: let's see how Alison Williams, a senior global bank analysts
Speaker 1: for Bloomberg Intelligence characterizes the quarter. She's here in our
Speaker 1: Bloomberg Interactive at Broker's studio. Allison, good to have you
Speaker 1: with us. Now you've been up since the early hours
Speaker 1: following these Can you say whatever Core I called? Oh yeah,
Speaker 1: I did. I did have this in the intro. Ever
Speaker 1: Core I s I. Analyst Glenn Shore called the results
Speaker 1: they quote un characteristic dud. Do you agree? I listen.
Speaker 1: I mean, I think I think there are some positive
Speaker 1: in the results. I think the main negative is costs
Speaker 1: and saw them and had sort of signaled this. UM.
Speaker 1: You know, obviously, as the markets have been tougher this year,
Speaker 1: analysts have been expecting, including myself, some of the competitive
Speaker 1: compensation pressures to ease a bit, and that just has
Speaker 1: not happened as much as we would have thought. I
Speaker 1: think part of that is the boutiques are hiring. I
Speaker 1: think that Wall Street has been slow to throw in
Speaker 1: the towel on UM invested banking fees, even though we've
Speaker 1: had UM it was like the worst equities year since
Speaker 1: in twenty years. UM. It was a tough it was
Speaker 1: that was a characteristic UM. But it doesn't. Yeah, And
Speaker 1: so when I look at the revenue line. They're trading.
Speaker 1: We you know, we look at their trading just to
Speaker 1: see how their market share is going. That they still
Speaker 1: earn more from trading than anyone else. That's a for business.
Speaker 1: It's they've stuck to that franchise even when others have
Speaker 1: pulled back, they're continuing to gain chair and their advisory revenue.
Speaker 1: As as we said, fees are down, like you know,
Speaker 1: they're about half, but within fees, Goldman is the advisory
Speaker 1: fee leader and revenue there was much more resilient. We thought.
Speaker 1: So those are the two positives that they are overwhelmed
Speaker 1: by the cost side of things and the returns um
Speaker 1: you know, single digit returns is not something that investors
Speaker 1: want to say some One of the things I always
Speaker 1: wondered too is, you know, we had Morgan Stanley right
Speaker 1: that seemed to do really well. Today. I think of JP,
Speaker 1: Morgan b of A, Wells like last week. They're not
Speaker 1: all apples to apples. We know that. So I guess,
Speaker 1: how do you look at Goldman's say yeah, they were
Speaker 1: just fine, or like, how do you characterize it? So
Speaker 1: I would say it's kind of the bigger, broader backdrop.
Speaker 1: So so if we look across the core themes. Uh,
Speaker 1: you know, in general, trade fees were very weak. Goldman
Speaker 1: did better on that UM and Goldman did better on
Speaker 1: the trading side of things. So those are their core businesses.
Speaker 1: So UM fixed strong equities week, fees week are the
Speaker 1: themes of the quarter. Relative to that UM, I would
Speaker 1: say Goldman did a little bit better. JP, Morgan did
Speaker 1: what worse? Morgan Stanley mixed UM as I said, the
Speaker 1: costs were really the big negative for Goldman. That that's
Speaker 1: really negative. We're gonna want to hear more about that
Speaker 1: investor day, Morgan Stanley. UM, it was really about their
Speaker 1: wealth business and that interest income, which was really disappointing
Speaker 1: last week, holding up better than expected. And of course
Speaker 1: we know it's all about the act. You know, how
Speaker 1: are they how do they do versus expectations? And so
Speaker 1: I think a lot of that is also the setup
Speaker 1: also relates to how the stocks are reacting. How are
Speaker 1: costs still such an issue right now? Allison, because I
Speaker 1: thought we were at a point where you know, these
Speaker 1: companies are you know, they're saying okay, well Goldman for example,
Speaker 1: people right, people getting laid off, and then you know
Speaker 1: you have other companies out there doing layoffs as well,
Speaker 1: So it's not exactly you know, end of one in
Speaker 1: terms of the fight for talent, So it's not. But
Speaker 1: we also did see, um, you know, we saw the
Speaker 1: competitive cost parcture. Pressure is also at JP Morgan, um
Speaker 1: also at Morgan Stanley. We're seeing it, just not as acute.
Speaker 1: And I think it is because um, as I said, so,
Speaker 1: we heard a lot about the Goldman job cuts that
Speaker 1: did not happen until this year, So that's event they
Speaker 1: did say, Um, you know, it's something like uh, you know,
Speaker 1: I want to say four hundred or five hundred million
Speaker 1: of severance expenses. I don't recall the exact number of hand,
Speaker 1: but adding to some cost saves and all of that
Speaker 1: will come into effect this year. They're having an investor
Speaker 1: day at the end of February. I think we'll hear
Speaker 1: a lot more on that and then, um, it's just that,
Speaker 1: even though there are some pressures using right, the the
Speaker 1: hiring pressure from fintech is not as acute. Obviously, they're
Speaker 1: their cost of capital has gone up a lot. Things
Speaker 1: are tougher there. It's like almost every other day we're
Speaker 1: hearing about fintech layoffs, right, But macro hedge funds did
Speaker 1: very well last year, so there's still competition from from
Speaker 1: those firms. And then, as I said, if you look
Speaker 1: at the boutique carring firms and there's a lot more
Speaker 1: of those companies that are public now. Um, the pressure
Speaker 1: is still on and it's not like you know, crypto
Speaker 1: firms are coming out stealing workers like they were a
Speaker 1: couple of years ago. But I do think about you
Speaker 1: got an MBA Columbia, like I I think about do
Speaker 1: people still get an m b A and say I
Speaker 1: want to go to Goldman, I want to go to
Speaker 1: JP Morgan or maybe maybe not? Like is it different
Speaker 1: so that they do have to compete that much more?
Speaker 1: I think they. I think they do. But I would
Speaker 1: say that, you know, perhaps versus a couple of years
Speaker 1: ago we talked about you know, you talked about crypto,
Speaker 1: maybe the job opportunity is intact, might not seem so lucrative.
Speaker 1: Stock options are a little less attractive. Um coming off
Speaker 1: a year like last year. Um, And certainly the past
Speaker 1: doesn't guarantee the future. But um, but but I think
Speaker 1: that that does, you know, the most recent performance does
Speaker 1: tend to stick into people's heads. Goldman and JP Morgan
Speaker 1: will always give statistics about how competitive it is to
Speaker 1: work for their firms, and certainly across Wall Street, it's
Speaker 1: the numbers like, yeah, I think, I think, but I
Speaker 1: do think it might be Goldman or it was it's
Speaker 1: one of the firms that has given that staff that
Speaker 1: they're harder to get into than some of the IVY leagues.
Speaker 1: So we've heard from four banks last week, two big
Speaker 1: banks today. How would you characterize in a few sentences
Speaker 1: the commonalities between how these companies are seeing three in
Speaker 1: the environment, costs are going to continue to be a
Speaker 1: pressure and something that has to matter and not just compensation.
Speaker 1: So we talked a lot about in the last few
Speaker 1: men's competition but compensation, but there's also inflation and there's
Speaker 1: also technology spending. Um, you know, banks have to invest
Speaker 1: to compete. But then there is this question of business mixed.
Speaker 1: So net interest income, even though there was some disappointment
Speaker 1: in the guidance, some people were disappointed, still growth, they're
Speaker 1: still expecting very good growth in net interest income after
Speaker 1: amazing growth that we saw. So yeah, so there's there's sorry,
Speaker 1: Like there's a pretty big top line to fund that
Speaker 1: bottom line. But I think the differences who has you know,
Speaker 1: the companies that are more Main Street versus Wall Street. Right,
Speaker 1: so mainStreet interest income, there's a lot more to fund
Speaker 1: those costs. That makes your overall profitability look better. JP
Speaker 1: Morgan had huge costs increases last year, huge investments and
Speaker 1: still managed to meet their over the cycle return on
Speaker 1: equity tangile equity target, whereas Goldman Sachs, which is much
Speaker 1: more focused on the markets. Um. You know, they kept
Speaker 1: saying on their call several times today, it's it's the
Speaker 1: first time in a few years that we saw equity
Speaker 1: and bonds both get hit like this, you know. Morgan
Speaker 1: Stanley CEO also say talking about like how many years
Speaker 1: has offend since we saw this inflation, since we saw war.
Speaker 1: So tough time for capital markets, tougher time for the
Speaker 1: two that we reported today. So smart. Alison Williams, Senior
Speaker 1: Global Banks analyst for Bloomberg Intelligence. Right here in studio
Speaker 1: these is Bloomberg Business Week with Carol Messer and Tim
Speaker 1: Stenavic on Bloomberg Radio. Well, the forty one year old
Speaker 1: Winkelvoss twins I believe it's pronouncer Win also known as
Speaker 1: Camera and Cameron and Tyler Uh. They went head to
Speaker 1: head with Facebook founder Mark Zuckerberg, and they are now
Speaker 1: part of the crypto collapse conversation. Now they're going after
Speaker 1: a lot of others. I feel like this story just
Speaker 1: as a reminder tim of kind of all the cryptic
Speaker 1: kids out there saying I didn't do it, I didn't
Speaker 1: do it. Well, that's exactly what Max Chafkin, Bloomberg Business
Speaker 1: We calumnist writes about it. He notes that the winkel
Speaker 1: By are the latest crypto founders to dodge blame. Let's
Speaker 1: get into the story. We got Max on zoom along
Speaker 1: with the editor of Bloomberg Business Week, Joel Webber. Joel's
Speaker 1: with us in our Bloomberg Interactive Broker's studio. Joel. It's
Speaker 1: it's all good in crypto when the price keeps going up.
Speaker 1: All good, all good, and then it gets just more entertaining,
Speaker 1: I guess. Uh. And and look the winkle Vye plural
Speaker 1: um boy. They just I love them so much, like
Speaker 1: it never gets old. Uh And obviously um yeah they
Speaker 1: we we know them for for their Facebook days, but
Speaker 1: the crypto stuff. They went all in on crypto. They
Speaker 1: went talking their band, Well there's the band too, And
Speaker 1: but they you know what Max, Max right, fall off
Speaker 1: your chair. They're laughing. Um, is that you know they're
Speaker 1: in a they're in the spotlight. Now they've got um
Speaker 1: uh sec breathing down them and they have chosen to
Speaker 1: go scorched earth on everyone. Yeah, and we're seeing this
Speaker 1: a lot from from the world of crypto basically, uh,
Speaker 1: you know, starting starting with standbank than free to of
Speaker 1: course dropped aw sub stack uh last week Uh, kind
Speaker 1: of going down the line and the winkelvye uh bosses it.
Speaker 1: It is kind of one of the richer ones, just
Speaker 1: because they spent you know, basically the last few years
Speaker 1: when they weren't rocking out in their band um, which
Speaker 1: is topic we should we should, we should explore. UM.
Speaker 1: They were talking about just how sober minded they were.
Speaker 1: You know, they had these ads um that that you know,
Speaker 1: we're all over New York that said the revolution needs rules.
Speaker 1: They were talking about how they were the only regulated
Speaker 1: crypto exchange UM, which was true, um, although they weren't
Speaker 1: regulated in every aspect. And this product Gemini Earn, which
Speaker 1: you know we Business Week wrote about this and similar
Speaker 1: things two years ago as as a potential area of
Speaker 1: you know, exposure regulatory risk and so on, and you know,
Speaker 1: the SEC has been investigating, and of course they finally
Speaker 1: moved Cameron and Tyler, the two Winkle boss Brow There's
Speaker 1: are acting as if this was sprung on them. This
Speaker 1: was some kind of uh you know, political act by
Speaker 1: the SEC, which I'm sure you know, I'm sure on
Speaker 1: some levels political. You know, we're talking about the government here, um,
Speaker 1: But this is something that was a long time coming.
Speaker 1: This is not a surprise. The SEC had gone after
Speaker 1: very similar groups, including one that the Winkelvoss you know,
Speaker 1: had invested in. Uh So, so I don't think we
Speaker 1: should be surprised by this at all. Okay, So, Jim
Speaker 1: and I earn actually is the root of where the
Speaker 1: current ire is directed. Right, So, so what what's going
Speaker 1: on there? What? What do they what do the government
Speaker 1: say they were doing? Well, the government has gone after Gemini,
Speaker 1: which is the Winkel Bross Voss brothers, and Genesis, which
Speaker 1: is Barry Silbert's digital currency group is the is the
Speaker 1: parent um and they together, according to the government, we're
Speaker 1: basically offering on registered securities. What they were doing is
Speaker 1: offering this product that kind of looked like a bank account.
Speaker 1: They would sort of talk about it as interest rate
Speaker 1: and and talk about it as a you know, competitor
Speaker 1: to like your savings account. Of course the interest rates
Speaker 1: were much higher. It was not a bank, and as
Speaker 1: the SEC is saying, you know, it was not security either,
Speaker 1: and and so that's that's where we are now. So
Speaker 1: I guess the question is what happens since all these
Speaker 1: folks are kind of like, you know, I don't even
Speaker 1: want to call them frenemies anymore. They're they're really going
Speaker 1: after one another. And these are people who were, you know,
Speaker 1: in the world of in the context of crypto, you know,
Speaker 1: quote unquote longtime partners, Max. How do you see this
Speaker 1: kind of thing shaking out? And it's also is this
Speaker 1: kind of when in the early life cycle of new technologies,
Speaker 1: because you've written about this this a lot in your
Speaker 1: books and other things, is this kind of how things work? Well?
Speaker 1: I do think they're parallels here in terms of the
Speaker 1: like the approach that that these crypto guys followed to
Speaker 1: two Silicon Valley um. You know, when I think back
Speaker 1: to Uber right where Uber basically rolled out this um
Speaker 1: service that was largely illegal, uh, you know in most
Speaker 1: localities and essentially dared regulators to make it legal. Um.
Speaker 1: And I think the crypto guys, including the Winklevoss brothers,
Speaker 1: basically did the same thing. And and they have been
Speaker 1: in for years kind of maneuvering and trying to create
Speaker 1: basically trying to romance uh DC while also maybe putting
Speaker 1: pressure on d C, playing regulators off, you know, off
Speaker 1: one another. We saw a lot of this from Sam
Speaker 1: bankmun Freed. And now that the music has stopped, now
Speaker 1: that we've seen some serious issues, we have a real slowdown.
Speaker 1: We have you know, you know, investor pain that you know,
Speaker 1: people lost money that who probably didn't deserve it. Um.
Speaker 1: Now that story is getting harder, and I think that's
Speaker 1: part of why they're getting more aggressive, basically looking you know,
Speaker 1: hopefully the government will focus on the other guy. That's
Speaker 1: that's the basic idea here. You know what, Matt, I'm
Speaker 1: curious Max, rather, is there something generational you think going
Speaker 1: on in terms of kind of a younger bunch of
Speaker 1: folks in this industry and and very involved in developing it.
Speaker 1: Is there something like I said, generational that causes so
Speaker 1: many to say I didn't do it, you did it,
Speaker 1: or or just point the finger and it wasn't. I mean,
Speaker 1: I don't know if it's I don't know if it
Speaker 1: is generational, or if it's just a response to like,
Speaker 1: this looks bad. I mean, you know, you've got I
Speaker 1: don't really know. The Winklevoss brothers kind of frame their
Speaker 1: company as this super safe, super secure thing, and now
Speaker 1: you have customers, hundreds of thousands of customers who can
Speaker 1: access their money, and so I don't I think maybe strategically,
Speaker 1: you know, this is their their only option is to
Speaker 1: try to try to pin it on somebody else. We've
Speaker 1: you know, we I've talked about this, I think on
Speaker 1: this show earlier. You know, maybe it's this SECS fault.
Speaker 1: Maybe it's Sam Meg than Free. It's fault. It's gotta
Speaker 1: be somebody's fault, as long as it's not me, um.
Speaker 1: And I think really that's to deal with the brand
Speaker 1: damage that they've caused themselves. And and you know, and
Speaker 1: this is of course some of this stuff Um the
Speaker 1: Winkle boss Uh brothers could not control. However, when you
Speaker 1: promote something as safe and which which I think they did,
Speaker 1: and you and your customers lose your money, I mean,
Speaker 1: I think it's reasonable ask you know what happened. Okay,
Speaker 1: what I really want to know, Max has how much
Speaker 1: of their bands music you listen to to to report
Speaker 1: on this story? You know, I did not suffer that much,
Speaker 1: I'll say, but although I have listened listen to some tunes,
Speaker 1: I guess this was part of a you know, n
Speaker 1: f T promotion scheme. I tried to figure out, like,
Speaker 1: were they paying their uh the audiences because the music
Speaker 1: sounds so bad. It's hard to imagine somebody like going
Speaker 1: to you know, you know, going to the show on purpose.
Speaker 1: They're they're billionaires and and maybe it's possible I guess
Speaker 1: that the allure here was like, Wow, we're going to
Speaker 1: see these like cryptomobiles pretend to be rock stars, and uh,
Speaker 1: it's hard to imagine that would draw huge crowds. But
Speaker 1: either way, I mean, it really feels unfortunate. It feels
Speaker 1: like at a time when they really should have been
Speaker 1: paying attention, you know, to things like risk and and
Speaker 1: you know what they were doing their money. They were
Speaker 1: you know, rocking out, and we all need to rock
Speaker 1: out sometimes, I guess, But but again it's not the
Speaker 1: best look at this. Okay, if I was going to
Speaker 1: rock out, which cover would you recommend uh that I
Speaker 1: check out first, just quickly the journey. Don't stop. Believe
Speaker 1: I was hoping. It's a little it's it's a little bit.
Speaker 1: I'll be back in, but we'll put We're gonna put
Speaker 1: out the link alright. This, by the way, is today's
Speaker 1: Bloomberg Business Week daily newsletter. In the newsletter, it's also
Speaker 1: in the upcoming new issue of Bloomberg Business Week. Thanks
Speaker 1: to Max and to Joel. You're listening to Bloomberg Business
Speaker 1: Week with Carol Messer and Tim Stenovic on Bloomberg Radio.
Speaker 1: One is raising money at an ever rising valuation, the
Speaker 1: other has been pummeled by the market. One as a
Speaker 1: highly capable number two exact keeping it on track, the
Speaker 1: other under fire about succession planning, What are we talking about?
Speaker 1: SpaceX and Tesla. First of all, that's what we're talking about,
Speaker 1: and they both count elon Musk CEO. Here's here's the thing, though,
Speaker 1: Whereas Tesla has withered since the Boss embarked on his
Speaker 1: takeover of Twitter, SpaceX is flourishing. Some even suggest this
Speaker 1: is because of, rather than in spite of its CEO
Speaker 1: playing a less active role. These are all the words
Speaker 1: of Lauren Grush she's a blue Berg News space reporter.
Speaker 1: She's got any feature out today, it's a fantastic one,
Speaker 1: talking all about what's going on at SpaceX and the
Speaker 1: success that the company has had of late and even
Speaker 1: over the last few years. She joins us now via
Speaker 1: zoom from Austin, Texas. Lauren, good to have you with
Speaker 1: us this afternoon. So why is SpaceX doing so well? Well?
Speaker 1: I think the biggest thing is that, you know, SpaceX
Speaker 1: has really well positioned executives. They have a very capable
Speaker 1: president and CEO, Gwen Shotwell, and they also have a
Speaker 1: lot of vps that are already in place with these
Speaker 1: various big projects that they're working on. I make a
Speaker 1: note of Mark Jenkoza recently took over Starship, which is
Speaker 1: SpaceX is big, big program to create a massive new
Speaker 1: vehicle to send humans to the Moon and Mars. And
Speaker 1: it's not just Mark. There are other vps that are,
Speaker 1: you know, in key positions that that standardize the workflow
Speaker 1: and make sure the company is running and Elon isn't
Speaker 1: isn't around, you know. It's so this is such an
Speaker 1: interesting story because I do feel like is this almost
Speaker 1: a b school case study of like Okay, here's what
Speaker 1: Ellen can do when he puts you to certain people
Speaker 1: in charge, because he has so much under you know,
Speaker 1: his umbrella at this point, Um, what is interesting about
Speaker 1: the executives who brought them in? Was it all Ellen's doing? Yeah?
Speaker 1: I mean these are handpicked by Elon and and let's
Speaker 1: let's be clear here. I mean this isn't to say
Speaker 1: that Ellen doesn't have a profound influence on SpaceX and
Speaker 1: SpaceX culture. I mean he is the one at the
Speaker 1: set it in the article, He sets the long term vision,
Speaker 1: the long term goals. I mean the express purpose of
Speaker 1: SpaceX is to get some Mars right, that is still
Speaker 1: very much the long term goal of the company. And
Speaker 1: when it comes to various design design decisions, you know
Speaker 1: Ellen makes puts his stamp on those things as well. Um,
Speaker 1: you know the push to reuse rockets, um, you know,
Speaker 1: even he and that, and it also has a lasting
Speaker 1: impact on the design of certain vehicles. Right. One former
Speaker 1: employee was telling me that, you know, there there were
Speaker 1: plans to propulsively land the Crew Dragon, and while that
Speaker 1: was scrapped, those plans are still in the bones of
Speaker 1: that vehicle. So space So Ellen still is very critical
Speaker 1: when it comes to guiding the company and also the
Speaker 1: people that he puts in charge. But when it comes
Speaker 1: to the day to day interactions the design and you know,
Speaker 1: scheduled decisions, that's where um, you know, he's not as
Speaker 1: necessary to make move those things forward. So how is
Speaker 1: And I know this is a story about SpaceX more
Speaker 1: so than it is about about Tesla or about Twitter,
Speaker 1: but but how does that management style differ from what
Speaker 1: Musk shows at the other companies that he's at the
Speaker 1: helm of. Well, I'm not as well versed in Tesla,
Speaker 1: but I have been following the Twitter stuff, and a
Speaker 1: lot of the company employees that I spoke to say that,
Speaker 1: you know, watching the Twitter stuff play out online, and
Speaker 1: the me feels very similar to some of the things
Speaker 1: that happened at SpaceX. Is a lot of chaos when
Speaker 1: it comes to meetings being scheduled and then canceled. Also, um,
Speaker 1: you know, just him inserting himself into things and making demands.
Speaker 1: You know, there was a lot of talk about how
Speaker 1: he likes to make design decisions that you know, create
Speaker 1: all of this work, like something might have too many wires.
Speaker 1: He's always in service of simplifying design, whether or not
Speaker 1: that that is actually helpful to the design at the
Speaker 1: in the long term is up for debate. But you know,
Speaker 1: he likes to come in and say, you know, let's
Speaker 1: get rid of this part, let's get rid of this component,
Speaker 1: let's get rid of these wires, and then that creates
Speaker 1: a lot of work for people. And then sometimes that
Speaker 1: stuff needs to be added back in at the end
Speaker 1: of the day, and and that work will have all
Speaker 1: been kind of reversed in the law. So Lord, can
Speaker 1: we go as far as to say, um, the folks
Speaker 1: at space X are kind of happy that he's been
Speaker 1: distracted with Twitter right now. Obviously didn't speak to every
Speaker 1: single employee at SpaceX, but of the people I spoke with, yes,
Speaker 1: there is a general sense of relief, uh, and just
Speaker 1: that you know, it's less less unexpected meetings, less unexpected,
Speaker 1: you know, having to rework their designs. You know, it's
Speaker 1: more of a semblance of calm because you know, he's
Speaker 1: not inserting himself into these workflows that have become standardized
Speaker 1: and and you know, schedules that are pretty that are
Speaker 1: more or less routine. Hey, can you talk to us
Speaker 1: a little bit more about Gwen shot Well, she's the
Speaker 1: president and CEO of SpaceX, and she's a name that
Speaker 1: comes up a lot when you read about the success
Speaker 1: of SpaceX. Yeah. Absolutely, I think from from both internal
Speaker 1: and external perspectives, Guenn is kind of seen as the
Speaker 1: one running the show, especially when Elon is not around.
Speaker 1: She's very much involved in the business side of things
Speaker 1: as the CEO, and she's just kind of, you know,
Speaker 1: this pillar of strength for most of the Space Sex employees.
Speaker 1: But it's also important to remember that she does, you know,
Speaker 1: report to Elon, and so every now and then you'll
Speaker 1: see her having to execute Elon's vision at the end
Speaker 1: of the day. She does report to him, so you know,
Speaker 1: if he makes the demand, she's got to do it.
Speaker 1: And also, you know you saw that with Sometimes she
Speaker 1: can take on Ellen's role a bit when you know
Speaker 1: negative things are happening in with the company. We saw this,
Speaker 1: uh last year, when you know, a bunch of employees
Speaker 1: had penned an open letter denouncing Elon's tactics and our
Speaker 1: antics online, and you know, she took it upon herself
Speaker 1: to fire those employees. So sometimes she can she can
Speaker 1: take on a bit of an Elon rolls as well,
Speaker 1: But more or less she's kind of the steady hand
Speaker 1: at the company. I wonder too, Lauren. And you know
Speaker 1: you've done so much reporting on SpaceX, but it's a
Speaker 1: private company, and we do see the valuation because you know,
Speaker 1: the company has recently raised money, so we see what
Speaker 1: the market is valuing the company yet, but we don't see,
Speaker 1: you know, quarterly earnings from the company. We don't see
Speaker 1: updates that are required as a result of being a
Speaker 1: publicly traded company like we do with Tesla, you know,
Speaker 1: before Elon Musk bought it, like we saw with with Twitter.
Speaker 1: And I'm wondering if that has anything to do with
Speaker 1: the success of SpaceX. UM. You know, I would love
Speaker 1: to know more financials of SpaceX. I think everybody would. UM.
Speaker 1: I know there's been talk about whether or not that
Speaker 1: valuation is warranted or if it's overhyped. UM. I'll just
Speaker 1: say this, and we're talking about billion dollar valuation right
Speaker 1: right exactly. UM, I'll say this, SpaceX is a has
Speaker 1: become a major, if not the most dominant player in
Speaker 1: the US launch market right now. I mean they are
Speaker 1: a valuable NASA partner. I mean they are the starship.
Speaker 1: The vehicle I mentioned is has a NASA contract to
Speaker 1: eventually land NASA astronauts on the Moon this decade. And
Speaker 1: you know they are working. They have these crazy goals
Speaker 1: of launching up to a hundred flights this year. Many
Speaker 1: of those will be Starlink launches to build out the
Speaker 1: company's Internet from Space initiative, which now boasts a million subscribers.
Speaker 1: And they and as we wait for ul A to
Speaker 1: create its next to transition to its new vehicle, the Vulcan,
Speaker 1: SpaceX is kind of the main launch provider at the moment,
Speaker 1: constantly racking up contracts with the Defense Department and NASA.
Speaker 1: So I mean, there can be debate over whether the
Speaker 1: numbers are right for the valuation, but ultimately SpaceX is
Speaker 1: a critical us A company in the space industry. Right now, Hey, listen,
Speaker 1: just one last question, Lauren, Like I think of back
Speaker 1: in eighteen, it was in the summer of Max Jeffkin
Speaker 1: and Dana Hall put out a story. It was Business
Speaker 1: Week the Space Issue and space X a secret weapon?
Speaker 1: Is Quinn Chutwell? And I do you think about you know,
Speaker 1: her role and her success. She's not been there for
Speaker 1: several years, and you know, does the investment communities say,
Speaker 1: you know, as goes Gwynn as goes you know, SpaceX,
Speaker 1: Like how important is she? As you say, Ellen puts
Speaker 1: his stamp on it, and he gets involved in the
Speaker 1: long vision. But also how you know important is the future?
Speaker 1: You know, how much of it is gwyn connected to
Speaker 1: that company? I'm just curious what you hear generally. I mean,
Speaker 1: I think it's certainly a major part, you know, and
Speaker 1: you see this with his other companies, like with Tesla
Speaker 1: for instance, doesn't really have a Gwen equivalent. I mean,
Speaker 1: obviously they have their own executives, but no one quite
Speaker 1: liked Gwen in this in the sense of, you know,
Speaker 1: how she runs things and handles things. So I think
Speaker 1: she's definitely a very big part of the successful equation.
Speaker 1: But it's also has to do with, you know, the
Speaker 1: engineers and the workflows that they've established at the company,
Speaker 1: So there is that as well. We think about STEM
Speaker 1: company news, right, this is really truly a STEM company,
Speaker 1: doesn't get Yeah, exactly, Um, great stuff. So glad we
Speaker 1: got some time with you. Lauren Grush she space reporter
Speaker 1: at Bloomberg News, joining us via Zoom from Austin, Texas,
Speaker 1: which we of course knows where Tesla is headquartered. Everything right. Yeah, well,
Speaker 1: I wouldn't say everything well. I mean it was the
Speaker 1: theme of what was two Carol World. His companies were
Speaker 1: moving from California. But isn't that he shifted his headquarters
Speaker 1: solo his real estate Elon Muskin said, you know, yeah,
Speaker 1: but you know, reminds us there are significant operations for
Speaker 1: for Tesla in California. Still, that's facility. That is a
Speaker 1: really good point. Um, great story. Check it out. Just
Speaker 1: head to Bloomberg dot com or check out Lauren at
Speaker 1: Lauren Grush on Twitter, Carol Mass, Tim Stanovic, Bloomberg Business Week,
Speaker 1: right here on Bloomberg Radio Road Journal. Yeah but you
Speaker 1: let me drive, no, no, no, all right, please album
Speaker 1: goody revels. I want to drive. It's a good question.
Speaker 1: This is the Drive to the Clothes on Bluebird Radio.
Speaker 1: All right, everybody, we've got seventeen minutes left to today's
Speaker 1: trading session, getting ready to wrap up the first trading
Speaker 1: day here in the US of the week, and of
Speaker 1: course Charlie breaking down. Equities were offer highs and lows
Speaker 1: of the session. Got a lot of economic news, a
Speaker 1: lot of earnings to get through. I feel like we're
Speaker 1: gonna trade from day to day based on the tone
Speaker 1: and the news. Tim, Yeah, I think so too, and
Speaker 1: I mean I certainly see that playing out today with
Speaker 1: what Goldman sack, what's happening to Goldman Sachs shares as well.
Speaker 1: Let's get into it with Data. Doria, the co c
Speaker 1: i O of the independent investment advisor invest net Data,
Speaker 1: joins us this afternoon via zoom from Pennsylvania. Dana, Good
Speaker 1: to have you back with us. How are you great?
Speaker 1: Thanks for bringing me on. Yeah, thanks so much for
Speaker 1: joining us. So what's your outlook for for the year? Igain?
Speaker 1: I want to kind of move be on today's trade
Speaker 1: and get an idea on on what you're thinking for well.
Speaker 1: I think the consensus at this point has been first
Speaker 1: half of the year is going to be difficult. Still,
Speaker 1: We've got a lot that the markets still have to
Speaker 1: work through. Um. Not not the least of which of course,
Speaker 1: is becoming debt ceiling fight, but also you know, continued
Speaker 1: need for the Fed to sort of stay firm on rates,
Speaker 1: even if hiking can be reduced a little bit. Um.
Speaker 1: The notion of a pivot is probably unlikely at least
Speaker 1: until the second half of the year, but there is
Speaker 1: a growing chorus. I think around the notion that you know,
Speaker 1: second half of the year could be could pick up,
Speaker 1: and so you know, kind of UH in our space
Speaker 1: talking to advisors, talking to UM you know, home offices.
Speaker 1: It really is about sort of having the discipline, hanging
Speaker 1: on and and hopefully looking forward to that comeback. Hey, Danny,
Speaker 1: your firm, You guys offer investors et f mutual funds,
Speaker 1: liquid all portfolios. You also do UH fund strategies, portfolios
Speaker 1: that combine a bunch of strategies in our manner by
Speaker 1: independent firms. Where are you moving money to? Where you're
Speaker 1: allocating more new money to right now? And why give
Speaker 1: me an idea of where it's all going. So I
Speaker 1: would say, you know, of course, we facilitate UM portfolios
Speaker 1: across any number of different types of strategies, and you know,
Speaker 1: very strategic. For the most part, advisors look to keep
Speaker 1: their clients and portfolios that are are allocated around their
Speaker 1: risk tolerance right their discipline. But what I'll say is,
Speaker 1: at a high level, in answer to your question, fixed
Speaker 1: income is where a lot of interest is being pointed
Speaker 1: right now. And of course it's because we've experienced a
Speaker 1: lot of the pain of rising rates already last year.
Speaker 1: You know, much of what we expect is going to
Speaker 1: happen in fixed income has already been priced in at
Speaker 1: this point. And you know, whereas fixed income took a
Speaker 1: real beating, you're now in a position where there's concerned
Speaker 1: about recession. You know, you're that standard sixty forty that
Speaker 1: that was really had a problem last year and you know,
Speaker 1: sort of historically precedented. Um, you know, double digit losses
Speaker 1: on both sides of that sixty that forty the equity
Speaker 1: fixed income. Now we're in the market that's that looks
Speaker 1: more you know, traditional to what we would expect in
Speaker 1: terms of Okay, the fixed incomposition provides ballast to that portfolio.
Speaker 1: We're not expecting huge losses there anymore because rate increase
Speaker 1: is already there. And I think a lot of clients too,
Speaker 1: you know, in the in the run up proceeding all
Speaker 1: of this, you get overweighted inequities and it's time to
Speaker 1: take a look at you know what that mixes and
Speaker 1: and do you have enough fixed income in the portfolio?
Speaker 1: What about when it comes to reasons of the world
Speaker 1: where you're advising clients right now to to put their money. Yeah,
Speaker 1: I think valuations favor and international look. So I mean,
Speaker 1: of course, you know, markets are cyclical. What's worked in
Speaker 1: the last ten years doesn't necessarily tend to be the
Speaker 1: best place to be for the next ten years. UM.
Speaker 1: So when you're looking at these portfolios that have become
Speaker 1: very US biased, and you know the notion that, hey, um,
Speaker 1: how much international do we need? So many conversations over
Speaker 1: the last you know, five years around do I even
Speaker 1: need international stocks in the portfolio? Um? You know what,
Speaker 1: what's the real outlook there? I think we're increasingly seeing
Speaker 1: an interest now in exactly what you're saying, you know,
Speaker 1: and I would recommend, of course, and diversified view on
Speaker 1: international markets. You know, we can talk about specific regions
Speaker 1: and China is always one that, um, you know, there's
Speaker 1: a there's a large interest. If you have international developed
Speaker 1: and emerging markets, you probably have a big position in China.
Speaker 1: So I might say, had your bets on that, and
Speaker 1: you know, have a little bit of a cap or
Speaker 1: a cap on the Chinese position, but US to international
Speaker 1: you really should be looking at having that um overseas
Speaker 1: diversification in the portfolio. That's interesting. Yeah, maybe you know
Speaker 1: we were I was talking about China earlier, because I
Speaker 1: do feel like we continue to get these mixed signals
Speaker 1: about people saying whoa kind of reopening, what the opportunity
Speaker 1: for China going forward this year as well as globally.
Speaker 1: But then at the same time, you know, there are
Speaker 1: concerns that it's not going to be a straight move
Speaker 1: forward if you will, Um you mentioned international emerging though,
Speaker 1: if we you know, kind of put China side emerging
Speaker 1: international or do you like the developed play internationally? I do.
Speaker 1: I do think it's both. Okay, you know, so you're
Speaker 1: you're you know, emerging has the benefit of still being
Speaker 1: somewhat lower correlation to the US than an international developed
Speaker 1: In fact, there's been some pretty good research around the
Speaker 1: fact that if you're doing an international focus and retail
Speaker 1: investors right there, they're probably investing in areas of that
Speaker 1: market that are large cap for the most part. Um
Speaker 1: you're getting a high correlation to US stocks, Are you
Speaker 1: really getting the diversification benefits that you're looking for? Really,
Speaker 1: if you want to be if you want to have
Speaker 1: a diversefied exposure where you're actually hedging your bets on
Speaker 1: the U S side a little bit, you think about
Speaker 1: these large international companies right their multinational um you know,
Speaker 1: the revenue that's coming, whether the US or overseas. You know,
Speaker 1: in these large companies, it's very high correlation. But if
Speaker 1: you get into international, smaller mid two smaller stocks, international
Speaker 1: small value and emerging markets, you start to now get
Speaker 1: to areas of the market where, um you're seeing the
Speaker 1: correlation is a little bit lower and you're getting some
Speaker 1: of that diversification benefit. We also, you know, there's an
Speaker 1: expectation that the dollar is not you know, strengthening this
Speaker 1: year the way that it was last year, and that
Speaker 1: of course helps your translated returns. All Right, we're gonna
Speaker 1: leave it on that note, Dana, thanks so much for
Speaker 1: weighing in. Dana diora co chief investment Officer to Investment
Speaker 1: joining us via zoom from Pennsylvania on this Tuesday. Thanks
Speaker 1: for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud,
Speaker 1: or Bloomberg dot com. You can also listen to our
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