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Speaker 1: This is Bloomberg business Week inside from the reporters and

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

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

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

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Speaker 1: All Right, the heat is definitely, but what's really interesting

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Speaker 1: is you look at the bank trade is You've got

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Speaker 1: some stocks doing well, some regionals, some not same with

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Speaker 1: the big banks, although it feels like most of the

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Speaker 1: big banks holding up. So lots of news coming out.

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Speaker 1: You've got UBS's plans to take over Credit Suite with

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Speaker 1: an assist we know about that. We've got New York

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Speaker 1: Community Bank Corps surging by record, leading that broader rally

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Speaker 1: and regional bank stocks after the letter was upgraded by

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Speaker 1: at least two Alice following its agreement to take over

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Speaker 1: Signature Banks, deposits in some of its loans, metime First

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Speaker 1: Republic Bank still having a tough time extending its route

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Speaker 1: to an all time intraday load. So let's get to it.

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Speaker 1: Carol Master here with Jess Metton, and let's get to

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Speaker 1: our roundtable. Back with us is Alison Williams, Senior Global

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Speaker 1: Banks analyst on the phone, Herman Chan, senior analyst for

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Speaker 1: US regional Banks up both part of our Bloomberg Intelligence team.

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Speaker 1: Herman here in our Bloomberg Interactive Broker studio. I want

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Speaker 1: to start with you, Herman, only because we did have

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Speaker 1: some headlines a short time ago, first Citizens saying it's

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Speaker 1: continuing its pursuit of Silicon Valley Bank. Remember about s

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Speaker 1: Phoebe that's still out there. Tell us about this as

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Speaker 1: significance of this and the importance of this, and maybe

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Speaker 1: starting to calm things down. Yeah, I think what we're

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Speaker 1: seeing is that we live in a capitalist society and

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Speaker 1: banks will fail. That's natural, Yes, exactly. Let's banks take

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Speaker 1: risks and inherently sometimes those risks will up end the

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Speaker 1: bank and they fail. So what we're seeing is natural

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Speaker 1: where other stronger, you know, supposedly stronger banks will come

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Speaker 1: in and take over the institution, which I think is

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Speaker 1: a vote of confidence that the system still works. And

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Speaker 1: if there's a bank out there that feels comfortable enough

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Speaker 1: to do it, exactly, and the regulators feel comfortable with

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Speaker 1: that bank to take over. So what we're seeing with

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Speaker 1: SVB and for Citizens is it seems like for citizens

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Speaker 1: really wants to expand. They've been in expansion mode for

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Speaker 1: a bit now. They bought CIA not too long ago,

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Speaker 1: a specially lender here based in New York and New Jersey,

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Speaker 1: so they have wider ambitions and I think SBB fulfills

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Speaker 1: those potential ambitions. But we'll see if the regulators let

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Speaker 1: them close that transaction. Alison, I want to bring you

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Speaker 1: in the conversation because when we're talking about New York

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Speaker 1: Bank ORPS and then Signature Bank, is this a guide

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Speaker 1: for how more banking deals can be reached? I mean,

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Speaker 1: I think to Hermann's point, it could be a great

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Speaker 1: opportunity for both banks, for those that have gotten themselves

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Speaker 1: in trouble with mismanagement being taken over by a stronger,

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Speaker 1: healthier bank that perhaps has a little bit more pro

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Speaker 1: west in terms of managing those risks. Um, it's good

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Speaker 1: for good for both of those banks and good for

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Speaker 1: the system. Alison, how do you see like Jiffian Morgan

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Speaker 1: holding up certainly eight tens of a percent higher in

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Speaker 1: today's trade and bringing up being of America's down a

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Speaker 1: little bit? Goldman sacks what's going on? Up one point

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Speaker 1: six percent? And let me just pull up City City

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Speaker 1: just down about six tens of a percent. How are

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Speaker 1: you looking at it from the big bank perspective as

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Speaker 1: we are focusing so much on the regionals, So I think, um,

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Speaker 1: certainly this time around, if you will, the the crux

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Speaker 1: of the issue, which really relates to mismanagement of bond portfolios,

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Speaker 1: mismanagement of uh you know, sort of we have this

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Speaker 1: big blow up of deposits and the bond portfolios. This

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Speaker 1: has really been to um centered on the regional banks.

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Speaker 1: For the largest banks, they're actually benefiting from some of

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Speaker 1: the deposits. A couple of them are very unlikely to

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Speaker 1: be acquirers because once you're over ten percent of deposits,

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Speaker 1: you are not allowed to you know, the understanding is

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Speaker 1: that during a crisis they will be allowed. We did

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Speaker 1: see a few deals happened last crisis where that tempercent

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Speaker 1: was breached, although others some of the launches around those,

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Speaker 1: But for the bigger banks, credit sweets was really I

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Speaker 1: think the one that people were watching. That's really when

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Speaker 1: you started to see the bigger banks selling off last

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Speaker 1: week was when you know, there started to be rumors

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Speaker 1: about credit sweezes outflows. People weren't concerned about counterparty risk,

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Speaker 1: But since that was such a longer developing story, unlike

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Speaker 1: Silicon Valley, which happened in the day or so, most

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Speaker 1: of the banks had managed down that risk successfully. Herman,

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Speaker 1: I wanted to ask you specifically, because this was a

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Speaker 1: striking number, looking at the seventeen billion dollars of credit sweezes,

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Speaker 1: risky bonds that are now basically worthless, what are the

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Speaker 1: wider implication for bond markets moving forward it because it

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Speaker 1: seems like a controversial deal if you're a shareholder versus

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Speaker 1: if you're a bondholder. Right, Yeah, the AT one issue

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Speaker 1: I think is unique to Europe. Historically, when you do

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Speaker 1: finance one oh one, if something happens with the company

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Speaker 1: that you own, the equity holders usually get wiped out.

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Speaker 1: In the bondholders get a certain percentage based on your

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Speaker 1: seniority a priority in your capital stack. So it seems

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Speaker 1: very unique. I know my colleague Arnold Cacuda had mentioned

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Speaker 1: that the Swiss regulators and the Swiss version of these

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Speaker 1: AT one bonds are a bit unique versus the rest

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Speaker 1: of Europe. So that's something I would point to. Hey, Herman,

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Speaker 1: first republic down forty five, So what's the likely scenario

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Speaker 1: and this is after what you know, credit rating lowered

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Speaker 1: again by S and P thirty billion dollars infusion. Last

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Speaker 1: week we got some more clarity about how many times

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Speaker 1: it's been tapping right into funds. I mean, do we

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Speaker 1: know what the likely outcome is here? I was expecting

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Speaker 1: some sort of news from from First Republic or the

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Speaker 1: regulators over the weekend that didn't happen. From what I've read,

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Speaker 1: it seems like, um, you know, management is a very

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Speaker 1: proud sort right. The CEO is the founder of the company,

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Speaker 1: has been through multiple cycles nurtured this company to become

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Speaker 1: one of the biggest US banks in the unit banks, right.

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Speaker 1: So is so is that the problem that you've got

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Speaker 1: leaders that are proud? I think so, because the issue

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Speaker 1: is the hope was that this thirty billion dollars deposit

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Speaker 1: injection would calm the markets. Obviously that hasn't happened, and

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Speaker 1: your management, I feel like, is now put into a

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Speaker 1: corner and they really have to make a decision on

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Speaker 1: what's really best for their customer and the bank, both

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Speaker 1: of you. I want to ask you. You know, there's

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Speaker 1: a great quote this morning about bank failures. I think

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Speaker 1: it was on surveillance and it was liking somebody, I

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Speaker 1: guess said linking them to cockroaches and basically say, when

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Speaker 1: you see one, even if you don't see another, you

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Speaker 1: know that there's hundreds behind the walls. And I guess

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Speaker 1: our mission all of us right now is to figure

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Speaker 1: out if that's the case when it comes to more

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Speaker 1: bank failures. So, Alison, how are you thinking about your

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Speaker 1: sector or you know, the counterparty, you know, exposures if

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Speaker 1: you will, to figure out exposure, what could go wrong next?

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Speaker 1: In other words, finding that next cockroach. Well, I think

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Speaker 1: what's worrisome at this point is just that the market

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Speaker 1: sentiment can drive reality, and so I think that that's

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Speaker 1: the concern. So if we look at Credit Suite, you know,

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Speaker 1: the regulators were in there. The capital is fine, the

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Speaker 1: liquidity was fine, but if the rest of the market worries,

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Speaker 1: it creates an issue. And the Swiss regulators pointed to

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Speaker 1: the fact that they were that it was really the

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Speaker 1: outflows they were seeing that caused them to step in.

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Speaker 1: There were reports of them receiving about ten million of

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Speaker 1: outflows that jets, So obviously that's signific again, and so

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Speaker 1: I think that you know, to your point, investors are

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Speaker 1: looking for sort of the next bank at risk each

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Speaker 1: time something happens. And I think that it's tricky for

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Speaker 1: regulators because they do you to come out and do

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Speaker 1: something that's enough to make people's steady sentiment, but not

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Speaker 1: too much that makes people nervous that there's more to

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Speaker 1: be worried about. So sentiment, sentiment is a tricky thing.

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Speaker 1: Same question to you, Herman, like, how do you think

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Speaker 1: about what could go wrong next? And I feel like,

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Speaker 1: you know, it isn't quite whackamole right when it comes

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Speaker 1: to the regional banks. Maybe it's a slow moving game

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Speaker 1: of whackamle. I think initially it was whackamle with SBB

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Speaker 1: in signature. Now it's more of a okay, we know

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Speaker 1: first Republic is the main issue now that the market

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Speaker 1: is focused on is there is there anything else? Is there?

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Speaker 1: Investor Alliance are not worried about or anything. Western Alliance

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Speaker 1: is a name that continues to come up up quest

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Speaker 1: pack West is a name that continues to come up,

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Speaker 1: but to banks that operate in California and the West Coast.

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Speaker 1: I know Western lines a bit better. They offered a

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Speaker 1: pretty decent update in terms of their balance sheet and

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Speaker 1: their cast position on Friday. So I think that placated

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Speaker 1: some folks. So really, what's the next you to drop?

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Speaker 1: I think what Alison Suggs and market sentimen creates reality.

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Speaker 1: And you'll look at a bank's typical balance sheet. You

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Speaker 1: don't mark to market there healthy matual securities. You don't

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Speaker 1: mark to market their loans. That's a feature of bank

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Speaker 1: accounting it. But that's the market is saying that's a bug.

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Speaker 1: And so we're in this weird position where we have

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Speaker 1: to question, you know, what was inherent acceptance of how

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Speaker 1: banks managed our balance sheet and that that's really upended

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Speaker 1: with what's what's happened with SBB and First Republican. We've

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Speaker 1: definitely had regulators coming out and just throwing it feels

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Speaker 1: like a lot of money thoughtfully into the system, Allison,

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Speaker 1: just about twenty five seconds, the big banks just get

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Speaker 1: even bigger and bolder and more powerful they do. I mean,

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Speaker 1: that does seem to be what's happening. And I think

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Speaker 1: again what everyone's waiting to see is if there will

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Speaker 1: be some kind of announcement on deposit insurance, which will

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Speaker 1: really make things interesting, especially because the big banks pay

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Speaker 1: the most for that. But regulators are going to want to,

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Speaker 1: you know, protect the smaller banks and then globally, what

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Speaker 1: does that mean for global deposits? If the US effectively

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Speaker 1: ensures higher amounts, does that attract even more to those

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Speaker 1: big institutions? And if your boss has told you guys,

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Speaker 1: but you guys get this big Caribbean vacation after all

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Speaker 1: of this is over because you're working in so I

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Speaker 1: areed sources. According to Alson Williams, thank you so much

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Speaker 1: of Bloomberg Intelligence and Herman Chan of our Bloomberg Intelligence team.

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Speaker 1: Following the big banks and the regionals. You're listening and

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Speaker 1: watching Bloomberg Radio. You're listening to the Bloomberg Business Week podcast.

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Speaker 1: Catch us Live week do afternoons from three to six

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Speaker 1: Eastern Listen on Bloomberg dot com, the iHeart Radio app,

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Speaker 1: and the Bloomberg Business app, or watch us live on YouTube.

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Speaker 1: Hell yeah, we're gonna talk a little bit about Teddy Bears. Um,

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Speaker 1: let's sten back for a moment. I'm all our focus

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Speaker 1: on banking, and rightfully so, but let's get a feel

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Speaker 1: of how this change and sentiment over the past couple

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Speaker 1: of weeks, or at least this new narrative, if you will,

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Speaker 1: might be impacting consumers and retail with us right now

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Speaker 1: is Sharon Price John. She's president CEO of the publicly

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Speaker 1: held small cap Build a Bear Workshop back with us

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Speaker 1: via zoom in New York City. Sharon, nice to have

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Speaker 1: you here with justin myself. Um, last and we talked,

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Speaker 1: it was more than a year ago, December twenty twenty one.

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Speaker 1: What's changed for you in your business and what's on

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Speaker 1: your per view if you will, in the last twelve

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Speaker 1: to fifteen months. What's changed? Yeah, well, we've continued to

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Speaker 1: post record results. I mean, we just announced our year

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Speaker 1: in on March ninth, and we're happy to be able

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Speaker 1: to share double digit improvement in both the top line

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Speaker 1: and the pretax profit line, with our top line up

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Speaker 1: about fourteen percent and our bottom line up about twenty

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Speaker 1: two percent, and that we had seen at that point

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Speaker 1: continued momentum in the business at first quarter a year

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Speaker 1: to date. And but that's so that's not what's changed.

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Speaker 1: That's what's remained the same, and that last year, twenty

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Speaker 1: twenty one was a record profitability year for us, and

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Speaker 1: we eclipse that in twenty twenty two with another record

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Speaker 1: profitability year. What's changed is that we've evolved so much

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Speaker 1: as a company and that we have a much broader

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Speaker 1: addressable market. We appeal to consumers for different reasons for opping,

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Speaker 1: not just which would be a typical type of event

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Speaker 1: for us, which would be a birthday for a child.

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Speaker 1: But now from the adult consumer what's called adulting. A

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Speaker 1: big trend with gifting and adult to adult gifts. A

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Speaker 1: lot going on with build a Bear, a lot of collectibles.

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Speaker 1: We have a lot of fun licenses, like most recently

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Speaker 1: announced ted Lasso Bear, but things like a Deadpool Bear

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Speaker 1: or Matrix Bears, Friends Bears. How well did those kind

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Speaker 1: of bears do really fun? Like? How well? I mean

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Speaker 1: is it? Are they profit drivers? Or give me an idea. Well,

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Speaker 1: I'm as a publicly traded company, clearly, you know one

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Speaker 1: of our objectives is that we choose to do things

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Speaker 1: that hopefully are profit drivers. But the kid that the

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Speaker 1: business now has, as I noted, when I speak about

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Speaker 1: it having a broader addressable market, I don't mean that

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Speaker 1: that's not meaningful for us. About forty percent of our

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Speaker 1: sales are now to teens and adults, and yes, those

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Speaker 1: licenses often had Clearly they're going to have a royalty

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Speaker 1: associated with them, if that's the emphatus for the question,

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Speaker 1: But they also generate generally a little higher price point

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Speaker 1: as well, because that consumer has more latitude and the

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Speaker 1: way they think about it. At the same time, we

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Speaker 1: balanced the portfolio with a very accessible prices, with very

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Speaker 1: accessible prices for kids, particularly with our Birthday treat Bear,

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Speaker 1: where you can come in at the month of your

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Speaker 1: birthday and pay your age to get the Birthday Treat Bear.

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Speaker 1: So if you're turning two years old, you can get

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Speaker 1: an entire Build the Bear special one thermoney stopping experience

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Speaker 1: for two bucks. That's pretty cool. Your products have definitely

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Speaker 1: evolved with the tastes of children today, So when you

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Speaker 1: think of Super Mario Brothers or Paul Patrol, Harry Potter

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Speaker 1: and I know, a lot of the accessories can definitely

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Speaker 1: add up quick. So with the straws earning out look ahead,

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Speaker 1: what do you think this really tells us about the

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Speaker 1: direction of the economy if consumers are still willing to

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Speaker 1: spend on discretionary items at specialty retailers like yours. Well,

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Speaker 1: first of all, we don't think of ourselves is just

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Speaker 1: a specialty retailer. We think of ourselves as an experiential brand,

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Speaker 1: an opportunity for families to come together to share memories.

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Speaker 1: We're multigenerational, like twenty five years old, and yes we

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Speaker 1: do evolve our licenses with the times, as you mentioned,

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Speaker 1: but things that are evergreen, like a Harry Potter that

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Speaker 1: appeals to a broad broad range of consumers. To your question, though,

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Speaker 1: our accessories business is, you know, to be able to

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Speaker 1: address your bear and make it very much your own.

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Speaker 1: That's just a part of our creative process. That's how

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Speaker 1: kids and adults feel empowered by making it incredibly unique.

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Speaker 1: And you can even put the sound in the bear,

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Speaker 1: so it's a one of a kind in many cases,

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Speaker 1: and that's you know, And when you think about that

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Speaker 1: as the experience and the takeaway and the importance that

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Speaker 1: Teddy Bears play in the lives of children, particularly as

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Speaker 1: comfort animals, a lot of psychological background on the need

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Speaker 1: for that type of special, kind of special relationship with

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Speaker 1: a stuffed animal. Um. I don't know if you can

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Speaker 1: consider us completely discretionary. I gotta say for my daughter

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Speaker 1: it was a discretionary which was a little kid. Hey

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Speaker 1: I say that. I say that from a vantage point

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Speaker 1: of a mom of three. So you know, some of

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Speaker 1: it could be tongue in cheek, you know, as a CEO,

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Speaker 1: but there's some reality to that. I remember going on

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Speaker 1: a trip and we forgot we forgot our stuffy and

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Speaker 1: man we had to get a new one in front

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Speaker 1: of replacement one really quickly. Hey, m One thing I

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Speaker 1: want to ask you, Sharon is um and I want

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Speaker 1: to step back just to some of the bigger, broader

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Speaker 1: macro that's going on. As a CEO of a company,

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Speaker 1: you have to think about recession, consumer retail in general.

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Speaker 1: But the recent market volatility and concerns about our banking system.

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Speaker 1: How has that impacted you at all? Yeah, of course

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Speaker 1: that's very concerning. I mean, we want to see a

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Speaker 1: strong economy, We want to see people in you know,

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Speaker 1: good financial situations. I can also say, though, on looking

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Speaker 1: back on the last few years, there's certainly been a

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Speaker 1: lot of volatility. I think some of the most MULTIPLEUS

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Speaker 1: economic times in our modern history, clearly inclusive of the

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Speaker 1: COVID outbreak and even prior to that in retail, the

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Speaker 1: retail apocalypse. So constant feels like a lot of constant

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Speaker 1: changes and uncertainty. And I think that you know, families

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Speaker 1: and businesses have to be prepared for that. You know,

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Speaker 1: we're in a strong financial situation. We have very prudent

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Speaker 1: financial control. We finished this year with forty million dollars

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Speaker 1: in cash and return seventy million over the last two

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Speaker 1: years to our shareholders, announced a special dividend, and have

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Speaker 1: no borrowings on our credit facility. So with all of

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Speaker 1: that in mind, and that we did mention that we

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Speaker 1: expect are in the guidance that we provided from a

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Speaker 1: range perspective, another five to seven percent on the top line,

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Speaker 1: another ten to fifteen percent profit expansion through twenty twenty three.

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Speaker 1: But the reason that we feel and shared that and

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Speaker 1: feel like that there's some confidence. Clearly that's excluding anything

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Speaker 1: entirely appeaving, but we've been able to manage as a

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Speaker 1: team and as a company that that brand relationship that

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Speaker 1: we have with guests and be able to pull the

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Speaker 1: proper levers when needed to manage through some of these

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Speaker 1: uncertain economic times. Clearly you've probably heard as well, I've

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Speaker 1: we already been in a recession or we undersid a recession.

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Speaker 1: Now are we going into a recession? Right? It's um,

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Speaker 1: you know, I don't know that we you know, there's

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Speaker 1: a lot of different I would say earmarks that are

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Speaker 1: pointing in different directions, and I think that the key

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Speaker 1: is to be diversified and flexible, and that's what we've

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Speaker 1: been attempting to do by pivoting the company to have

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Speaker 1: revenue streams in traditional retail as well as e com entertainment,

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Speaker 1: looking for different ways to meet the needs of guests

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Speaker 1: for different reasons. Hang on very second, just quickly, did

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Speaker 1: you shift around your banking at all because of the

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Speaker 1: nervousness within the banking system. We have a very strong

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Speaker 1: relationship with our banking partners. Okay, that's what I wanted

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Speaker 1: to know. You talk about expanding your revenue stream and

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Speaker 1: these strategies. You've got the metaverse that you guys are

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Speaker 1: certainly embracing. You're also thinking about content and linking up

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Speaker 1: with Rheese Witherspoon and her media company. Just got about

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Speaker 1: forty five fifty seconds. Just talk to us a little

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Speaker 1: bit about these strategies if you could. Yeah, in a

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Speaker 1: brand that has sold two hundred and twenty five million

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Speaker 1: Furrey Friends over the last twenty five years, and when

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Speaker 1: you understand that each one of those very friends represents

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Speaker 1: a story, we're really a storytelling company. So when you

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Speaker 1: think about the extension and expansion of our brand and

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Speaker 1: our business into the entertainment arm and the content driven arm,

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Speaker 1: it's not really that much of a stretch from that perspective. Yes, Hello, Sunshines,

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Speaker 1: Freese Witherspoon's company. We did announce a feature film deal.

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Speaker 1: We also have Mary Mission our Christmas holiday and holiday.

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Speaker 1: This is a particular property that we launched years ago

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Speaker 1: starring Glisten. We'll be out this holiday as well in

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Speaker 1: an animated feature, and we're we'll be in launching the

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Speaker 1: Build Abair feature documentary with award winning documentary and Taylor

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Speaker 1: more than later this year. So we have a lot

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Speaker 1: of different ways to connect again with a broad base

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Speaker 1: of consumers yep, and to monetize the value and enormous

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Speaker 1: quity of the build Away Ram. Sharon's so good to

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Speaker 1: check in with you. Sharon Price, John CEO of Build

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Speaker 1: a Bear Workshop, joining us right here on Bloomberg Business Week.

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

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Speaker 1: live weekday afternoons from three to six Eastern on Bloomberg Radio,

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Speaker 1: the Bloomberg Business app and YouTube. You can also listen

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Speaker 1: live on Amazon Alexa from our flagship New York station,

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Speaker 1: jo say Alexa playing Bloomberg eleven thirty. All right, folks,

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Speaker 1: we've seen this movie before. Big tech company cutting jobs again.

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Speaker 1: Last week it was Meta. This week it's Amazon laying

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Speaker 1: off an additional nine thousand employees, adding to cuts that

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Speaker 1: were already the largest round of firings in the company's history.

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Speaker 1: Stuck down on the news, down about one and a

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Speaker 1: quarter percent in today's sessions, still up roughly sixteen percent

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Speaker 1: year to date. So let's get to it with the

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Speaker 1: latest down the company. Bloomberg's Intelligence senior technology analyst, annoag

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Speaker 1: Granta joins us via zoom from Chicago. Annorag, good to

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Speaker 1: have you here with Jess Metten and myself. So I'm

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Speaker 1: trying to think, first of all, let's get through the news.

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Speaker 1: Why did they have to cut another round of jobs.

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Speaker 1: Futt of the update that they gave that they were

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Speaker 1: going through an operational planning and trying to figure out

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Speaker 1: how much excess capacity do they have? And they did,

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Speaker 1: you know, the first round a couple of months ago,

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Speaker 1: and then the other review wasn't completed. One it was completed,

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Speaker 1: they found out they could you know, eliminate another nine

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Speaker 1: thousand jobs. That's really the rationale that was given by

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Speaker 1: the company. So is this smart management in your view,

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Speaker 1: saying Okay, we still have too many workers, we had

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Speaker 1: to cut back, rather than doing a massive layoff and

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Speaker 1: maybe figuring out they cut too much. One could argue

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Speaker 1: that they just took their time in making sure that

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Speaker 1: they don't overreact at the first goal. You know, our

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Speaker 1: read on this is we don't think the fundamentals of

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Speaker 1: the cloud business are recovering at this point, which is

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Speaker 1: partially the reason why they had to go undergo another

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Speaker 1: random layoff. You know, they may have avoided it if

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Speaker 1: we saw a rebound and talk growth, I mean the

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Speaker 1: cloud growth, I would say, I mean, that could be

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Speaker 1: a reason, but we won't know that. You know, the

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Speaker 1: end of April, when they announced their results on a

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Speaker 1: rock we're specifically were jobs cut in this latest round

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Speaker 1: versus compared to what we saw earlier this year. Yeah.

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Speaker 1: So they highlighted four divisions, AWS being one of them,

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Speaker 1: at advertising being one of them, Twitch, and PXT, which

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Speaker 1: is their human employee experience segment. Now, from our revenue

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Speaker 1: side of it, AW is just far bigger than anything

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Speaker 1: else we think the majority of the cuts could be

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Speaker 1: in that area. They didn't break up by a segment,

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Speaker 1: but you know, our thesis is that that's where we

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Speaker 1: saw a bulk of the cuts. Is that troubling to

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Speaker 1: you because we talk about AWS how important that is

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Speaker 1: to Amazon certainly tap in bottom line and growth. Yeah,

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Speaker 1: but if you were to say that over the last

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Speaker 1: few years, the revenue is more than doubled and their

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Speaker 1: employee cases, you know, base would have doubled as well

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Speaker 1: in order to keep up with that. You know, again,

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Speaker 1: you know if they let's say, for the sake of argument,

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Speaker 1: they have hundred thousand employees and they you know, let's

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Speaker 1: go let's say ten percent of that. I mean, it

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Speaker 1: is logical if you see the rate of sales growths

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Speaker 1: go down. Our argument is if the you know, cloud

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Speaker 1: still has a long runway in the long run, when

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Speaker 1: that growth comes back, they're going to go out a

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Speaker 1: lot of people back again. And if you look at

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Speaker 1: it Stark today it was down a little more than

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Speaker 1: one percent, but still a year to date up about

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Speaker 1: sixteen percent. Do you think it's start price will potentially

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Speaker 1: remain challenge in the near term due to slowing AWS

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Speaker 1: sales inflation or do you think it might be a

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Speaker 1: little bit counter to that. I mean, we've seen even

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Speaker 1: Meta had quite the rally since obviously it announced more

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Speaker 1: job cuts last week, but even since November, Metas stock

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Speaker 1: had been up more than eighty percent. I'm wondering kind

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Speaker 1: of what this means for the trajectory for Amazon stock price.

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Speaker 1: One of the things you have to look really locate

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Speaker 1: to its relative evaluation. I mean, the Meta is a

429
00:24:29,680 --> 00:24:32,600
Speaker 1: far more profitable company. It's trading at a much different

430
00:24:32,640 --> 00:24:36,120
Speaker 1: marketple than what Amazon's trading at. You know, amazto Amazon

431
00:24:36,240 --> 00:24:39,040
Speaker 1: to you know, turn around from a stock point of view,

432
00:24:39,080 --> 00:24:40,960
Speaker 1: one of the things they have to really do is

433
00:24:40,960 --> 00:24:44,960
Speaker 1: to really look at the profitability of some of their segments.

434
00:24:45,000 --> 00:24:46,960
Speaker 1: And no, we have no idea when that's going to

435
00:24:47,000 --> 00:24:50,000
Speaker 1: turn around. Frankly, you know, it's interesting. I was looking

436
00:24:50,000 --> 00:24:54,760
Speaker 1: at what Jassy, the CEO of Amazon, said in a

437
00:24:54,760 --> 00:24:59,000
Speaker 1: memo that was published to Amazon's corporate blog. Here's the quote.

438
00:24:59,000 --> 00:25:01,639
Speaker 1: Given the uncertain an economy in which we reside, in

439
00:25:01,640 --> 00:25:04,280
Speaker 1: the uncertainty that exists in the near future, we've chosen

440
00:25:04,359 --> 00:25:08,560
Speaker 1: to be more streamlined in our costs and headcount. You know,

441
00:25:08,560 --> 00:25:12,439
Speaker 1: when a CEO I always find it so important in

442
00:25:12,520 --> 00:25:15,200
Speaker 1: terms of what the CEOs have to say, certainly in

443
00:25:15,240 --> 00:25:17,439
Speaker 1: an environment where we're you know, worried about banks and

444
00:25:17,480 --> 00:25:19,639
Speaker 1: bank stress and just trying to figure out what happens

445
00:25:19,680 --> 00:25:23,320
Speaker 1: to the economy and recession no recession, landing, no landing.

446
00:25:23,359 --> 00:25:25,600
Speaker 1: We're waiting on that FED meeting this week. When a

447
00:25:25,680 --> 00:25:29,600
Speaker 1: CEO like any Jazzy says that and uses uncertain and

448
00:25:29,800 --> 00:25:33,520
Speaker 1: certainty twice in a sentence, how do you read it

449
00:25:33,560 --> 00:25:36,400
Speaker 1: and then cross that against the fundamentals at the economy

450
00:25:36,440 --> 00:25:39,960
Speaker 1: and the balance sheet. Yeah, I would argue that over

451
00:25:40,000 --> 00:25:42,040
Speaker 1: the last five years, or it would take more than

452
00:25:42,080 --> 00:25:44,480
Speaker 1: three and a half to fourdeos, tech companies have hired

453
00:25:44,600 --> 00:25:48,600
Speaker 1: very aggressively thinking that this particular growth cycle will never stop,

454
00:25:48,640 --> 00:25:50,680
Speaker 1: and that's I think most of them are kind of

455
00:25:50,720 --> 00:25:55,000
Speaker 1: paying for, you know, certain abrupt spending in technology right now.

456
00:25:55,359 --> 00:25:57,960
Speaker 1: If you go back to the history of Amazon, really

457
00:25:57,960 --> 00:26:00,320
Speaker 1: the ethos of the company, it has been a very

458
00:26:00,320 --> 00:26:03,359
Speaker 1: frugal company in terms of spending since the founding of

459
00:26:03,359 --> 00:26:05,840
Speaker 1: the company. I think and Andy has been around with

460
00:26:05,960 --> 00:26:08,680
Speaker 1: Jeff Basil since the beginning or near around the beginning,

461
00:26:08,720 --> 00:26:10,960
Speaker 1: so I think, you know, he's reminding people that we've

462
00:26:10,960 --> 00:26:12,959
Speaker 1: got to be very cost conscious when we are not

463
00:26:13,040 --> 00:26:17,159
Speaker 1: looking at revenue growth that is in the same that

464
00:26:17,240 --> 00:26:19,360
Speaker 1: it was in the last few years. We just set

465
00:26:19,440 --> 00:26:22,439
Speaker 1: to mind out expenses. And frankly speaking, he's right. Nobody

466
00:26:22,520 --> 00:26:24,800
Speaker 1: knows what's going to happen to enterprise tax spending in

467
00:26:24,800 --> 00:26:26,840
Speaker 1: the second half of this year, whether we're going to

468
00:26:26,920 --> 00:26:30,199
Speaker 1: see any recovery or you know, no recovery at all,

469
00:26:30,240 --> 00:26:32,119
Speaker 1: and whether this is going to be either a twenty

470
00:26:32,160 --> 00:26:35,400
Speaker 1: twenty fourth story or a twenty five story. And we've

471
00:26:35,400 --> 00:26:38,160
Speaker 1: seen so many cost cutting efforts, whether we're talking about

472
00:26:38,200 --> 00:26:41,360
Speaker 1: Amazon or met A, Microsoft, Salesforce, Intel, you can name

473
00:26:41,359 --> 00:26:43,680
Speaker 1: your big tech company this year, we've seen it or

474
00:26:43,720 --> 00:26:46,240
Speaker 1: in the past six months. I'm wondering how much further

475
00:26:46,400 --> 00:26:49,760
Speaker 1: do those efforts have to go to shore up investor

476
00:26:49,840 --> 00:26:52,480
Speaker 1: confidence about these cost cutting measures. And we are talking

477
00:26:52,520 --> 00:26:56,399
Speaker 1: about big tech companies and growth stocks to one of

478
00:26:56,400 --> 00:26:58,920
Speaker 1: the arguments would be, if growth doesn't come back, you're

479
00:26:58,920 --> 00:27:01,479
Speaker 1: going to see another round of day off from a

480
00:27:01,480 --> 00:27:03,200
Speaker 1: lot of them. And there is you know, there is

481
00:27:03,280 --> 00:27:06,080
Speaker 1: no one size bit all over here. If you look

482
00:27:06,119 --> 00:27:09,000
Speaker 1: at a company like Microsoft, in the last five years,

483
00:27:09,000 --> 00:27:11,720
Speaker 1: they've doubled their headcount from one hundred thousand to two

484
00:27:11,800 --> 00:27:14,280
Speaker 1: hundred and twenty one thousand before they announced a five

485
00:27:14,280 --> 00:27:17,600
Speaker 1: percent layoff. That's a ten thousand person layoff. So if

486
00:27:17,600 --> 00:27:19,439
Speaker 1: you are, you know, going out and looking at a

487
00:27:19,560 --> 00:27:22,600
Speaker 1: timeframe of slightly longer than just one one and a

488
00:27:22,640 --> 00:27:25,720
Speaker 1: half years that these companies have hired very aggressively, you

489
00:27:25,760 --> 00:27:28,560
Speaker 1: know this is bound to happen. Yeah, I do feel

490
00:27:28,560 --> 00:27:31,679
Speaker 1: like you know, Anarag, and the conversations that we certainly

491
00:27:31,680 --> 00:27:33,240
Speaker 1: have had over the last year or so, it does

492
00:27:33,280 --> 00:27:36,080
Speaker 1: feel like many of the company, especially within the tech universe,

493
00:27:36,119 --> 00:27:38,320
Speaker 1: it's it's a bit of a reset post pandemic. Is

494
00:27:38,320 --> 00:27:42,359
Speaker 1: that fair to saying just got about twenty seconds left? Yeah? Absolutely, reset.

495
00:27:42,400 --> 00:27:45,320
Speaker 1: This is really a reset because we thought this is

496
00:27:45,359 --> 00:27:47,199
Speaker 1: now not going to stop. For the first time in

497
00:27:47,240 --> 00:27:50,040
Speaker 1: five to six years, we are seeing some slowdown and

498
00:27:50,280 --> 00:27:52,040
Speaker 1: you know, job cuts are just a part of reality

499
00:27:52,080 --> 00:27:54,320
Speaker 1: at this point. All right, Well, good perspective and just

500
00:27:54,320 --> 00:27:57,159
Speaker 1: putting this in check. Anaag, thank you so much. Anag Grana.

501
00:27:57,359 --> 00:28:00,399
Speaker 1: He's senior technology analyst at Bloomberg Intelligence. I guess be

502
00:28:00,400 --> 00:28:04,560
Speaker 1: a zoom. You're listening to the Bloomberg Business Week podcast

503
00:28:04,800 --> 00:28:08,040
Speaker 1: catch us live weekday afternoons from three to six Eastern

504
00:28:08,200 --> 00:28:11,320
Speaker 1: Listen on Bloomberg dot com, the iHeart Radio app and

505
00:28:11,400 --> 00:28:14,720
Speaker 1: the Bloomberg Business app, or watch us live on YouTube.

506
00:28:15,720 --> 00:28:22,120
Speaker 1: I'm bloom a journal Now, bet you let me drive?

507
00:28:22,359 --> 00:28:26,280
Speaker 1: Oh no, no, no no no, who's gonna drive home? Honey? Please,

508
00:28:26,359 --> 00:28:32,080
Speaker 1: I'll do the riding drivel. I'm want to drive. It's

509
00:28:32,160 --> 00:28:40,120
Speaker 1: good question. This is the Drive to the Clothes coming well,

510
00:28:40,200 --> 00:28:45,240
Speaker 1: driver up shop down on Bloomberg Radio. All right, everybody,

511
00:28:45,440 --> 00:28:47,480
Speaker 1: we are counting down to the close. Just about seventeen

512
00:28:47,480 --> 00:28:50,160
Speaker 1: minutes left in today's trading session. Carol Mass along with

513
00:28:50,240 --> 00:28:52,400
Speaker 1: Jess Manton. So let's get to it. Let's get to

514
00:28:52,440 --> 00:28:55,000
Speaker 1: our Drive to the Clothes. Guest. Paul Biyaki is with us.

515
00:28:55,000 --> 00:28:58,920
Speaker 1: He's chief ETF strategist at SSNC Apps Advisors, a registered

516
00:28:58,960 --> 00:29:02,800
Speaker 1: investment advisor. They've got some nineteen billion in assets, over

517
00:29:02,960 --> 00:29:06,120
Speaker 1: nineteen billion in assets under management. They are based in Denver.

518
00:29:06,280 --> 00:29:08,840
Speaker 1: Paul joining us though in our Bloomberg Interactive Brokers studio.

519
00:29:08,840 --> 00:29:11,840
Speaker 1: It's so nice to have you here in studio. First

520
00:29:11,840 --> 00:29:14,080
Speaker 1: of all, you come to New York. How does the

521
00:29:14,120 --> 00:29:18,480
Speaker 1: conversations differ from one you are back at headquarters in Denver.

522
00:29:18,600 --> 00:29:20,400
Speaker 1: I always love when people are coming from different parts

523
00:29:20,400 --> 00:29:24,560
Speaker 1: of the country. Well, I would say broadly, the conversations

524
00:29:24,600 --> 00:29:29,320
Speaker 1: are similar. You know, Denver has people nervous, people are nervous.

525
00:29:29,440 --> 00:29:32,280
Speaker 1: I think the reality is Denver's grown. It's one of

526
00:29:32,280 --> 00:29:35,160
Speaker 1: these cities like Boise or Nashville that you hear a

527
00:29:35,160 --> 00:29:37,880
Speaker 1: lot about people moving from the coasts to some of

528
00:29:37,880 --> 00:29:40,880
Speaker 1: these cities. And so I think there's been a diversity

529
00:29:41,120 --> 00:29:45,040
Speaker 1: of the population that maybe didn't exist five, ten, fifteen

530
00:29:45,080 --> 00:29:47,240
Speaker 1: years ago, not just in terms of demographics, but in

531
00:29:47,320 --> 00:29:50,800
Speaker 1: terms of background and in terms of the places where

532
00:29:50,800 --> 00:29:53,480
Speaker 1: people grew up. And so I think that feeds into it.

533
00:29:53,560 --> 00:29:55,320
Speaker 1: But you come to New York and there's just this

534
00:29:55,640 --> 00:29:58,920
Speaker 1: energy here in this city that doesn't exist in other places.

535
00:29:59,160 --> 00:30:02,880
Speaker 1: And because you're having conversations with people who grew up

536
00:30:02,960 --> 00:30:06,120
Speaker 1: here in many cases or who have spent years in

537
00:30:06,160 --> 00:30:10,080
Speaker 1: the business here, there's a seasoned nature to some of

538
00:30:10,120 --> 00:30:11,920
Speaker 1: the people you talk to about some of these things.

539
00:30:11,960 --> 00:30:13,880
Speaker 1: Been there, done that sort of thing. So, as you

540
00:30:13,960 --> 00:30:16,240
Speaker 1: come to New York and you're having meetings, are people

541
00:30:16,280 --> 00:30:19,760
Speaker 1: pretty calm about this environment or they suspect, well, we'll

542
00:30:19,800 --> 00:30:21,400
Speaker 1: see I mean, I flow in last night, so I've

543
00:30:21,400 --> 00:30:23,200
Speaker 1: got some meetings the rest of the week. We'll see,

544
00:30:23,280 --> 00:30:27,120
Speaker 1: but I think that's the tone when even internally we've

545
00:30:27,160 --> 00:30:29,000
Speaker 1: had some calls. We had one of our fixed income

546
00:30:29,040 --> 00:30:32,520
Speaker 1: managers going through their outlook. We had a commodities manager

547
00:30:32,560 --> 00:30:34,800
Speaker 1: going through an internal call this morning, and I think

548
00:30:34,800 --> 00:30:40,080
Speaker 1: the idea is, look, these are in some cases idiosyncratic dynamics,

549
00:30:40,160 --> 00:30:43,880
Speaker 1: but in other cases they're a symptom of what has

550
00:30:43,960 --> 00:30:47,640
Speaker 1: been a pretty dramatic change in capital markets dynamics that

551
00:30:47,680 --> 00:30:49,280
Speaker 1: we haven't seen for quite some time. And so I

552
00:30:49,320 --> 00:30:50,920
Speaker 1: think some people are just sort of in wait and

553
00:30:50,920 --> 00:30:55,600
Speaker 1: ce mode. And especially because you are a strategist for ETFs,

554
00:30:55,640 --> 00:30:57,600
Speaker 1: I was curious as for is what are the flows

555
00:30:57,720 --> 00:31:01,360
Speaker 1: telling us. Do you have exposure were banks? And if so,

556
00:31:01,600 --> 00:31:03,719
Speaker 1: what is it showing us so far as far as

557
00:31:03,840 --> 00:31:06,680
Speaker 1: like following the money at that point, Yeah, so we

558
00:31:06,720 --> 00:31:09,720
Speaker 1: have the we're a distributor for the select sector spiders,

559
00:31:09,720 --> 00:31:13,000
Speaker 1: which are the largest most liquid sector ETFs in the marketplace,

560
00:31:13,040 --> 00:31:16,000
Speaker 1: and last week we saw a lot of flows into XLF.

561
00:31:16,080 --> 00:31:19,040
Speaker 1: Believe it or not. I think you think about what

562
00:31:19,240 --> 00:31:22,520
Speaker 1: XLF is and it pulls from the largest financial companies

563
00:31:22,560 --> 00:31:25,040
Speaker 1: in the United States in the SMP five hundred, and

564
00:31:25,320 --> 00:31:28,280
Speaker 1: what we've heard anecdotally is people who had deposits at

565
00:31:28,320 --> 00:31:31,360
Speaker 1: smaller regional banks starting to move their money to some

566
00:31:31,440 --> 00:31:34,520
Speaker 1: of these larger banks. We heard Congress talking about it,

567
00:31:34,600 --> 00:31:37,240
Speaker 1: concerned about it and what the impact might be. Bigger

568
00:31:37,240 --> 00:31:40,680
Speaker 1: banks becoming bigger, and we saw some people perhaps moving

569
00:31:40,680 --> 00:31:45,440
Speaker 1: out of their regional banking exposure into these larger financial companies.

570
00:31:45,440 --> 00:31:48,280
Speaker 1: Within XLF, what we do have some other products that

571
00:31:48,320 --> 00:31:52,000
Speaker 1: are more diversified that have some finance exposure but by

572
00:31:52,040 --> 00:31:55,200
Speaker 1: design don't have that regional banking exposure. So one that

573
00:31:55,200 --> 00:31:57,920
Speaker 1: we were talking about on the TV side earlier was OUSM,

574
00:31:57,920 --> 00:32:03,040
Speaker 1: which is a small cap strategy focused on quality, income oriented,

575
00:32:03,080 --> 00:32:06,520
Speaker 1: low volatility stocks in the small and MidCap segment. And

576
00:32:06,520 --> 00:32:08,720
Speaker 1: if you look at the Russell two thousand, which is

577
00:32:08,720 --> 00:32:12,480
Speaker 1: the benchmark most people using a small cap category, about

578
00:32:13,520 --> 00:32:17,680
Speaker 1: nine percent of that portfolios in regional banks, and OUSM,

579
00:32:17,720 --> 00:32:21,160
Speaker 1: relative to that index is underweight financials but doesn't have

580
00:32:21,160 --> 00:32:24,800
Speaker 1: any regional banking exposure. It's got capital markets and insurance companies.

581
00:32:24,840 --> 00:32:27,040
Speaker 1: If you look at the Russell two thousand value, it's

582
00:32:27,080 --> 00:32:31,600
Speaker 1: got eighteen percent in regional banks. So it really comes

583
00:32:31,600 --> 00:32:34,840
Speaker 1: down to investors waking up to the reality that in

584
00:32:34,880 --> 00:32:37,320
Speaker 1: some cases they don't know they have exposure to some

585
00:32:37,360 --> 00:32:39,560
Speaker 1: of these companies. They don't know that they have exposure

586
00:32:39,600 --> 00:32:42,760
Speaker 1: to some of these segments of the financial sector in

587
00:32:43,320 --> 00:32:47,560
Speaker 1: portfolio categories that they didn't anticipate, and that's part of

588
00:32:47,600 --> 00:32:49,600
Speaker 1: the know what you own and why you own it well.

589
00:32:49,600 --> 00:32:51,640
Speaker 1: And it's interesting going back to flows. As you said,

590
00:32:51,680 --> 00:32:54,080
Speaker 1: there was money coming into the XLF. Is it continuing

591
00:32:54,120 --> 00:32:56,320
Speaker 1: to come in The longer this goes on and the

592
00:32:56,360 --> 00:33:00,440
Speaker 1: more that we are the continuation that we are talking

593
00:33:00,520 --> 00:33:04,520
Speaker 1: about what's going on in banking, does it still come in? Well,

594
00:33:04,640 --> 00:33:07,120
Speaker 1: it's a challenge because XLF is one of those products

595
00:33:07,160 --> 00:33:09,440
Speaker 1: that used by such a wide range of investors. You've

596
00:33:09,480 --> 00:33:14,280
Speaker 1: got hedge funds, to use, a pensions, endowments, retail investors, advisors,

597
00:33:14,680 --> 00:33:17,040
Speaker 1: and so it's hard to get a gauge day to day,

598
00:33:17,120 --> 00:33:19,480
Speaker 1: week to week on what's actually happening. But what we

599
00:33:19,560 --> 00:33:22,160
Speaker 1: saw last year was a lot of money coming into

600
00:33:22,280 --> 00:33:24,560
Speaker 1: XLF at the beginning of the year, and then middle

601
00:33:24,560 --> 00:33:27,000
Speaker 1: of the year we started to see a lot of outflows.

602
00:33:27,000 --> 00:33:28,680
Speaker 1: And if you think about what happened last year. There

603
00:33:28,760 --> 00:33:31,760
Speaker 1: was this anticipation that interest rates were going to rise

604
00:33:32,280 --> 00:33:36,000
Speaker 1: that should benefit an interest margins, and so therefore financials

605
00:33:36,000 --> 00:33:38,720
Speaker 1: would be an interesting trade. What we saw was that yes,

606
00:33:38,800 --> 00:33:41,560
Speaker 1: interest rates rose, but we didn't get a steepening of

607
00:33:41,600 --> 00:33:44,160
Speaker 1: the yield curve. In fact, we got inversions in different

608
00:33:44,200 --> 00:33:46,200
Speaker 1: parts of the yield curve, which is not positive for

609
00:33:46,240 --> 00:33:49,000
Speaker 1: an interest margins. And then people started to move out

610
00:33:49,000 --> 00:33:51,840
Speaker 1: of financials last year. So it remains to be seen

611
00:33:51,880 --> 00:33:57,200
Speaker 1: if we see flows from banking stocks into broad based

612
00:33:57,240 --> 00:34:00,680
Speaker 1: financial stocks. And I think more importantly, the net interest

613
00:34:00,680 --> 00:34:03,120
Speaker 1: margins story is interesting because that's ultimately what was the

614
00:34:03,160 --> 00:34:06,200
Speaker 1: undoing of Silicon Valley Bank is net interest margins went

615
00:34:06,240 --> 00:34:09,480
Speaker 1: against them. They weren't beneficial when interest rates are rising.

616
00:34:09,520 --> 00:34:11,800
Speaker 1: So but it was interesting because we were often talking

617
00:34:11,840 --> 00:34:15,520
Speaker 1: about here that the assumption that as rates go up,

618
00:34:15,520 --> 00:34:17,280
Speaker 1: this is good for the big banks, but they weren't

619
00:34:17,280 --> 00:34:20,440
Speaker 1: necessarily rallying, and it was a little bit, not a

620
00:34:20,440 --> 00:34:22,680
Speaker 1: little bit, that was a lot of a disconnect. It

621
00:34:22,719 --> 00:34:27,160
Speaker 1: didn't quite make sense. Sure. So the core business model

622
00:34:27,200 --> 00:34:29,920
Speaker 1: of a bank is you borrow short, you land long.

623
00:34:30,160 --> 00:34:32,959
Speaker 1: But if you've already lent a lot of money long

624
00:34:33,120 --> 00:34:36,719
Speaker 1: by buying bonds with really low interest rates, and then

625
00:34:36,760 --> 00:34:40,040
Speaker 1: you're borrowing at higher rates than what you've lent. That's

626
00:34:40,080 --> 00:34:43,440
Speaker 1: not good. And the benefit of being a large diversified

627
00:34:43,440 --> 00:34:47,000
Speaker 1: financial institution is you have capital markets businesses, you have

628
00:34:47,239 --> 00:34:51,160
Speaker 1: other businesses to augment that traditional lending business, and in

629
00:34:51,239 --> 00:34:55,319
Speaker 1: theory you have sophisticated risk management in the form of

630
00:34:55,360 --> 00:34:59,400
Speaker 1: swaps and other various mechanisms. Right, And you brought up

631
00:34:59,440 --> 00:35:02,560
Speaker 1: the ou M for small caps, and that I thought

632
00:35:02,680 --> 00:35:05,680
Speaker 1: was interesting because we keep talking about how how small

633
00:35:05,719 --> 00:35:08,040
Speaker 1: caps perform, what that could mean for large caps? What

634
00:35:08,160 --> 00:35:09,960
Speaker 1: is it telling us when you're looking at the flows

635
00:35:09,960 --> 00:35:12,319
Speaker 1: specifically for small cap and just how about twenty five

636
00:35:12,400 --> 00:35:15,319
Speaker 1: thirty seconds? Okay? So I think the idea is is

637
00:35:15,360 --> 00:35:18,600
Speaker 1: that small caps in theory are less exposed to international markets.

638
00:35:18,600 --> 00:35:21,040
Speaker 1: So with the dollar having been strong, there was a

639
00:35:21,120 --> 00:35:25,360
Speaker 1: small cap trade on. Historically, small caps can be very risky.

640
00:35:25,440 --> 00:35:27,800
Speaker 1: Thirty percent of the russell too just doesn't make money.

641
00:35:27,840 --> 00:35:30,680
Speaker 1: So if interest rates are higher, then investors need to

642
00:35:30,680 --> 00:35:34,120
Speaker 1: maybe take that passive exposure to small caps and start

643
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Speaker 1: to reevaluate and filter that universe down from the quality

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Speaker 1: years well focus get some time right here and hope

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Speaker 1: you'll come back. Called Bayaki, He's Chief ETF Strategist at

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Speaker 1: SSNC ALPS Advisors, Joining us here in our interactive broker studio.

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Speaker 1: This is the Bloomberg Business Week podcast of a Little Apple, Spotify,

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00:35:52,520 --> 00:35:56,040
Speaker 1: and anywhere else you get your podcast. Listen live week

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00:35:56,239 --> 00:36:00,000
Speaker 1: afternoons from three to six Eastern on Bloomberg dot com,

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Speaker 1: the iHeartRadio app tune In, and the Bloomberg Business App.

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Speaker 1: You can also watch us live every weekday on YouTube

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Speaker 1: and always on the Bloomberg terminal