WEBVTT - Investing, Gaming, And Cybersecurity 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day, we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.520 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.560 --> 0:00:18.479 called Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.639 at Bloomberg dot com slash podcast. Matt, I got a 0:00:22.680 --> 0:00:24.520 problem with our next guest. I'm just gonna lay it 0:00:24.560 --> 0:00:27.200 out there. He is a big time University of North 0:00:27.240 --> 0:00:30.360 Carolina Chapel Hill guy. But we we beat up on 0:00:30.400 --> 0:00:32.960 them last weekend in Chapel Hill, so I guess we 0:00:33.000 --> 0:00:35.760 can deal with it. Jake Brice and Managing Director Chief 0:00:35.800 --> 0:00:38.400 Economists at Wells Fargo. Don't put up with him, Jake. 0:00:39.560 --> 0:00:41.520 You know it's gonna be so sweet when we beat 0:00:41.560 --> 0:00:43.640 you guys in Carolin. All right, we'll see about that. 0:00:43.640 --> 0:00:45.839 That'll be fun, all right, Jay, Um, you know, we 0:00:45.960 --> 0:00:48.360 got a lot of inflation out there, whether you see 0:00:48.360 --> 0:00:50.640 it at the gas pump, you see it at the supermarket. 0:00:51.560 --> 0:00:54.240 Is this something that could really be a problem for 0:00:54.280 --> 0:01:00.880 this economy? You know? So you know, I think inflation 0:01:01.000 --> 0:01:04.280 is going to be stickier than many people, I think 0:01:04.319 --> 0:01:07.080 appreciate uh, this year, you know, by the end So 0:01:07.280 --> 0:01:09.480 right now, if you look at the overall rate of 0:01:09.560 --> 0:01:12.800 CPI inflation, it's running about seven percent or so, we 0:01:12.880 --> 0:01:15.480 get a print tomorrow, we think by the end of 0:01:15.480 --> 0:01:17.640 the year it will still be running close before per 0:01:17.640 --> 0:01:19.559 cent or so. I mean, that's just that's a high 0:01:19.600 --> 0:01:22.319 number for most people. So I don't think that this 0:01:22.400 --> 0:01:26.399 is we're on the cusp of the seventy seven in 0:01:26.480 --> 0:01:29.360 terms of you're looking at double digit growth rates and inflation. 0:01:29.440 --> 0:01:32.679 But I do believe it's going to be higher and 0:01:32.720 --> 0:01:35.880 that then the problem comes in is how does the 0:01:35.920 --> 0:01:38.240 Federal Reserve react to that? Right, if they really start 0:01:38.240 --> 0:01:40.800 to clamp down on the brakes, you potentially could have 0:01:40.840 --> 0:01:44.080 a big slowdown later this year going into next year. 0:01:44.680 --> 0:01:47.640 So how hard do you think they will step on 0:01:47.680 --> 0:01:53.400 the brakes? Because this Fed seemed very dovish before UM J. 0:01:53.560 --> 0:01:59.000 Powell's reconfirmation a renomination, and all of a sudden, they 0:01:59.040 --> 0:02:02.600 seem pretty hawkish, even the doves, even the candidates that 0:02:02.640 --> 0:02:06.600 the left wanted to replace Powell, seem pretty hawk ish 0:02:06.640 --> 0:02:09.960 on this inflation. Now, that's that's right, They're all singing 0:02:10.000 --> 0:02:12.760 from the same hypno right now, although I would point 0:02:12.760 --> 0:02:16.880 out that the hawkish members in recent weeks have kind of, 0:02:17.160 --> 0:02:19.280 you know, dialed it back a little bit. I mean, 0:02:19.320 --> 0:02:21.520 I think they're even recognizing that we don't need to 0:02:21.520 --> 0:02:23.720 really step on or want to step on the breaks here. 0:02:24.040 --> 0:02:26.600 That said, I mean, we're looking for the markets more 0:02:26.680 --> 0:02:29.280 or less priced for five rate hikes over the course 0:02:29.320 --> 0:02:31.639 of this year. We also think the FED will take 0:02:31.720 --> 0:02:36.600 steps to start to unwind its balance sheet probably in 0:02:36.600 --> 0:02:39.000 the middle of the year. That's a form of tightening 0:02:39.040 --> 0:02:42.240 as well. And so I mean there is you know, 0:02:42.280 --> 0:02:46.240 there there's tightening coming up. That said, the underlying fundamentals 0:02:46.240 --> 0:02:49.080 of the economy, and you look at balance sheets of households, 0:02:49.200 --> 0:02:53.480 you look at balance sheets of individuals, uh or or businesses. 0:02:53.680 --> 0:02:56.800 They're all pretty solid right now. So the underlying fundamentals 0:02:56.800 --> 0:02:59.120 of the economy remade pretty good it should, you know, 0:02:59.120 --> 0:03:04.320 and pretty inducive to I'll call it solid growth this year, 0:03:04.400 --> 0:03:06.520 you know, nothing like we saw last year. But we 0:03:06.560 --> 0:03:08.359 also don't think we're looking at a you know, a 0:03:08.480 --> 0:03:13.119 recession in the foreseeable future. By the way, ju Um, 0:03:13.200 --> 0:03:17.720 expect inflation to continue through not at seven percent levels 0:03:17.760 --> 0:03:21.000 you just said, but maybe four percent, that's still twice UM. 0:03:21.160 --> 0:03:25.200 The FED target black Rock a couple of days ago 0:03:25.280 --> 0:03:29.160 put out a research report saying the problem is that 0:03:29.200 --> 0:03:33.400 people are buying more stuff. I love dope stuff. My 0:03:33.440 --> 0:03:37.080 wife loves experiences and services. She would rather go on 0:03:37.080 --> 0:03:39.120 a trip and get a massage. I would rather buy 0:03:40.000 --> 0:03:43.880 a motorcycle or a car. UM is the issue that 0:03:43.960 --> 0:03:47.720 more and more people, through the pandemic UH put away 0:03:47.760 --> 0:03:54.760 their UM services needs and replaced it with stuff. Yeah, 0:03:54.880 --> 0:03:57.520 so with you know, so what has been really strong 0:03:57.800 --> 0:04:01.120 has been good spending and so and look at the 0:04:01.240 --> 0:04:05.800 CPI again. It's euryear rate of seven percent right now. 0:04:06.280 --> 0:04:09.800 Roughly five percentage points of that seven is coming from 0:04:09.840 --> 0:04:14.120 good so two thirds is coming from goods. And we 0:04:14.200 --> 0:04:17.520 only spend a sermat of our money on goods, So 0:04:17.640 --> 0:04:20.799 goods are punching well above their fighting way right now. Now. 0:04:21.360 --> 0:04:24.279 You know, there's also been a probably a fair amount 0:04:24.360 --> 0:04:28.040 of good spending that has been pulled forward, right I mean, 0:04:28.120 --> 0:04:30.600 you know, during the pandemic, everyone went out and they 0:04:30.640 --> 0:04:33.119 bought a trampoline or a basketball groups for the kids. 0:04:33.360 --> 0:04:35.320 We don't have to replace that every year. You know, 0:04:35.360 --> 0:04:37.599 the same thing for cars and things of that nature. 0:04:37.680 --> 0:04:40.600 So as you go forward, which we're you know, what 0:04:40.600 --> 0:04:42.559 we expect to see and we're kind of actually seeing 0:04:42.600 --> 0:04:46.280 it is a pivot from good spending that should slow down. 0:04:46.360 --> 0:04:50.600 The supply chains will become unclogged, and so you know 0:04:50.720 --> 0:04:53.559 that the impulse to inflation coming from goods should start 0:04:53.560 --> 0:04:55.760 to cool off a little bit. But we still do 0:04:55.920 --> 0:05:00.599 have some pipeline inflationary pressures in terms of services coming through, 0:05:00.880 --> 0:05:02.720 and so that's one of the reasons why we think 0:05:02.760 --> 0:05:05.840 inflation is going to remain elevated. You know, again, I 0:05:05.839 --> 0:05:08.280 don't think it's going to go up significantly from here. 0:05:08.360 --> 0:05:10.520 We're not. I don't think we're going from seven percent 0:05:10.600 --> 0:05:13.280 to ten percent. But you know, at the end of 0:05:13.279 --> 0:05:15.520 the year, if you're still running four percent, that's still 0:05:15.600 --> 0:05:18.160 kind of hot for many folks. Jay, what's the risk 0:05:18.240 --> 0:05:21.280 that our federal Reserve makes a mistake here and make 0:05:21.240 --> 0:05:23.560 it just goes too fast, too far, whether it's a 0:05:23.560 --> 0:05:26.440 fifty rate hike in March, or whether the the tightening 0:05:26.480 --> 0:05:28.560 is more aggressive than the market thinks. It seems like 0:05:28.600 --> 0:05:31.120 they've been telegraphing things pretty well. But what's the chance 0:05:31.160 --> 0:05:35.320 of a mistake. You know, it's not insignificant. Um. You 0:05:35.360 --> 0:05:37.640 know the problem. The problem is when you start to move, 0:05:37.680 --> 0:05:40.800 and when the Fed moves. Historically, when it moves, it 0:05:40.839 --> 0:05:45.480 continues to move in the same direction for a while. Okay, Um, 0:05:45.520 --> 0:05:47.640 you know, so we don't think we're going to see 0:05:47.640 --> 0:05:49.560 a fifty basis on rate hike in March, but we 0:05:49.560 --> 0:05:51.719 think we'll see twenty five in March, twenty five and 0:05:51.960 --> 0:05:54.279 twenty five in June, and then start to wind down 0:05:54.279 --> 0:05:57.440 the balance she July. You know. The issue is that 0:05:57.760 --> 0:06:01.160 it takes a while for that policy heightening to actually 0:06:01.160 --> 0:06:04.200 start to show up in the economic data. And so 0:06:04.560 --> 0:06:06.919 whenever they start to move, you know, in a in 0:06:07.000 --> 0:06:09.599 a tightening sort of direction, there's always going to be 0:06:09.640 --> 0:06:12.640 the rest that they potentially could move um too fast 0:06:12.920 --> 0:06:15.160 now you know, you know, forceline, the market does tend 0:06:15.160 --> 0:06:18.040 to send signals, um. You know, if you know, if 0:06:18.040 --> 0:06:19.680 they do start to move a little too fast with 0:06:19.800 --> 0:06:23.160 the stock market, probably is gonna wabble bond yields. Uh, 0:06:23.320 --> 0:06:25.640 you know, you could get a potentially inverted yield could 0:06:26.200 --> 0:06:29.479 in that And you know, so the Center Reserve does 0:06:29.560 --> 0:06:32.920 pay attention to the signals that the market is sending 0:06:32.960 --> 0:06:35.359 out and so all right, we'll keep it saying that, 0:06:35.720 --> 0:06:37.640 all right, Jay, thank you so much for joining us. 0:06:37.839 --> 0:06:41.680 Jay Bryson, Managing Director, Chief Economists for Wells Fargo, and 0:06:41.800 --> 0:06:44.440 Jay knows that I root for Duke and for whoever 0:06:44.560 --> 0:06:47.440 is playing Carolina, but he's been pretty well there for 0:06:47.640 --> 0:06:54.720 Carolina and grad J Brison Walls Fargo. Let's continue our 0:06:54.720 --> 0:06:58.120 discussion and the gaming space, this time on the hardware side. 0:06:58.120 --> 0:07:00.600 We're joined by Andy Paul CEO and founder. Of course, 0:07:00.640 --> 0:07:04.520 They're Gaming That is a publicly treated company on nastack 0:07:04.680 --> 0:07:08.080 c R. S R is the ticker. It's about a 0:07:08.080 --> 0:07:10.520 two billion dollar market cap. Stock is pretty flat for 0:07:10.560 --> 0:07:12.960 the year, down about over the trailing twelve months. They 0:07:12.960 --> 0:07:14.640 reported some numbers last night, a little bit better and 0:07:14.640 --> 0:07:17.520 expected on the EPs line. Let's get the latest. Andy, 0:07:17.560 --> 0:07:19.400 thanks so much for joining us here. What's the key 0:07:19.440 --> 0:07:24.440 takeaway from the quarter that you reported last night? Well, 0:07:24.480 --> 0:07:27.160 as you mentioned, uh, it was a great quarter. We're 0:07:27.200 --> 0:07:30.240 pretty happy with the results. And um, I think what 0:07:30.280 --> 0:07:34.480 everyone's starting to understand now is that because of the 0:07:34.560 --> 0:07:39.320 surgeon activity from gamers during the shelter at home period, 0:07:39.920 --> 0:07:43.320 But now we have to compare a post pandemic quarter 0:07:43.640 --> 0:07:46.600 which was Q four it's just just finished. Compared that 0:07:46.720 --> 0:07:52.720 with Q four and that represented about fifty growth, So 0:07:53.040 --> 0:07:55.960 we're pretty pleased with that. Yeah, listen, I mean, you 0:07:56.680 --> 0:07:58.960 can't do anything about the fact that your business got 0:07:58.960 --> 0:08:02.400 a huge boost during lockdown. We were just talking about 0:08:02.400 --> 0:08:06.000 other companies that in a way faced the same curse, 0:08:06.080 --> 0:08:09.320 because when that lockdown lifts, UM, you don't have the 0:08:09.360 --> 0:08:12.880 same kind of tailwind behind you that you that you 0:08:13.040 --> 0:08:15.920 all of a sudden did what what can you do 0:08:16.000 --> 0:08:17.960 or what did you do during that period that you 0:08:18.000 --> 0:08:22.680 think is really important? Well, firstly, UM, let me just 0:08:22.680 --> 0:08:26.440 correct one thing, because the nice thing about people that 0:08:26.600 --> 0:08:30.440 buy UM gear for any kind of sport, including gaming, 0:08:30.520 --> 0:08:33.040 is as a pretty short refresh cycle, and so all 0:08:33.080 --> 0:08:36.440 the new gamers that started to buy a gear in 0:08:37.720 --> 0:08:41.800 the first one UM, you know, we'll look at about 0:08:41.800 --> 0:08:44.559 a two to four year refresh cycle. So we'll see 0:08:44.679 --> 0:08:50.000 a repeat of this in uh, you know late So 0:08:50.040 --> 0:08:52.800 that's what we're pretty excited about. Now. What we did 0:08:52.960 --> 0:08:58.240 during that surge of activity was obviously scramble against massive 0:08:58.280 --> 0:09:02.440 supply chaining issues and so you know, most of the 0:09:02.440 --> 0:09:05.680 effort was around the operations of just getting stuff onto 0:09:05.679 --> 0:09:08.480 the water and into the country, as you know, massive 0:09:08.920 --> 0:09:12.920 increases in lead times of costs from containershipments from as 0:09:13.240 --> 0:09:15.439 I want to get back to the supply chain. But 0:09:16.120 --> 0:09:19.800 with all due respect, I have to say, even as 0:09:19.840 --> 0:09:23.200 someone who spends thousands of dollars playing video games and 0:09:23.240 --> 0:09:26.839 waste countless hours, I don't understand how can you call 0:09:26.880 --> 0:09:30.280 it a sport. I mean I will sit there with 0:09:30.360 --> 0:09:33.280 the full bag of Doritos in a six pack playing 0:09:33.360 --> 0:09:35.800 Call of Duty and I don't feel like I worked 0:09:35.840 --> 0:09:39.199 out much. You know, well yeah, maybe maybe not in 0:09:39.240 --> 0:09:41.719 your in your physical body. But here's the interesting thing 0:09:41.720 --> 0:09:44.319 that is making it more like sports. You know, everyone 0:09:44.400 --> 0:09:47.240 started to talk now about metaverse and what the options are, 0:09:47.360 --> 0:09:50.640 what the opportunities are in there. And what's clear to 0:09:50.679 --> 0:09:55.320 me is that most sports involve social interaction. So if 0:09:55.320 --> 0:09:57.120 you think about any sport you do, whether you get 0:09:57.160 --> 0:09:59.560 mountain biking or skiing with friends, there's a lot of 0:09:59.559 --> 0:10:02.080 social action, probably more time than they actually spent on 0:10:02.120 --> 0:10:05.320 the sport. And that's what we're starting to see gaming 0:10:05.360 --> 0:10:08.600 turn into. And so you see these platforms like Roadblocks 0:10:08.720 --> 0:10:12.520 like Fortnite, what people are spending as much time socializing 0:10:12.520 --> 0:10:15.320 with each other as they are. You know, playing the 0:10:15.480 --> 0:10:17.760 playing the game. So I think that's what we've got 0:10:17.760 --> 0:10:20.960 to look forward to. So, you know, Mark Zuckerberg has 0:10:21.000 --> 0:10:23.559 really kind of raised the bar in terms of awareness 0:10:23.679 --> 0:10:26.840 on the metaverse, and I think I'm just starting to 0:10:26.920 --> 0:10:29.280 kind of come to grips of what that could be, 0:10:29.480 --> 0:10:32.760 what that could look like. Um, but but I do 0:10:32.840 --> 0:10:35.079 get the gaming aspect. How do you guys think about 0:10:35.200 --> 0:10:37.720 the metaverse as a you know, a's a growth driver 0:10:37.800 --> 0:10:40.760 for just gaming in general. Yeah, so I think I 0:10:40.800 --> 0:10:42.760 think it's a trend that's already happening. I mean, I 0:10:42.800 --> 0:10:45.560 know Mark's coined the latest label, but but there's a 0:10:45.559 --> 0:10:47.560 growth trend that's been going on for a while. Um, 0:10:47.600 --> 0:10:49.520 and this was you know, now we've got the hindsight 0:10:49.679 --> 0:10:52.240 it should have been expected that, um, you know, people 0:10:52.240 --> 0:10:54.280 would want to spend a lot of time, you know, 0:10:54.440 --> 0:10:56.360 with each other in a social environment. Now, the good 0:10:56.360 --> 0:10:59.320 thing for us is that any time spent in recorded 0:10:59.360 --> 0:11:03.440 the metaverse, this conversation, But anytime you spend interactive entertainment 0:11:03.440 --> 0:11:06.960 through the Internet, you need to buy gear to do that. 0:11:07.120 --> 0:11:10.920 So you need a platform, whether it's a constantal game PC, 0:11:11.080 --> 0:11:15.559 and you need keyboards, mice, headsets, controllers. Um, so it's 0:11:15.600 --> 0:11:19.160 more people spend more time, then we would expect to 0:11:19.240 --> 0:11:22.120 continue to send more, sell more gear. Well, what's your 0:11:22.320 --> 0:11:27.599 expectation for how we uh live in the metaverse and 0:11:28.360 --> 0:11:33.120 in the future. I mean, typically people think UM VR 0:11:33.240 --> 0:11:37.080 headset and I just can't buy into that. I would 0:11:37.200 --> 0:11:40.560 much prefer to be in a room with you know, 0:11:40.640 --> 0:11:44.000 our all four walls or monitors or something different than 0:11:44.040 --> 0:11:47.280 a VR headset. But how does it look to you? Yeah, 0:11:47.360 --> 0:11:49.439 well that's true. I can't imagine people are gonna spend 0:11:49.480 --> 0:11:51.360 a lot of time walking around with big, heavy goggles 0:11:51.360 --> 0:11:55.000 on them, So I think that that part of it, um, 0:11:55.040 --> 0:11:59.880 you know, in terms of the virtual UM aspect, I 0:12:00.000 --> 0:12:02.040 think he's more like everyone I know is talking about. 0:12:02.080 --> 0:12:05.400 They are augmented reality rather than virtual reality, which you 0:12:05.440 --> 0:12:08.920 can do with just some some fairly lightweight glasses. But 0:12:09.040 --> 0:12:10.599 I think the important thing is not so much of 0:12:10.640 --> 0:12:13.800 that aspect, but the fact that, you know, people are 0:12:13.800 --> 0:12:16.160 gonna live spend a lot of time in a virtual world, 0:12:16.600 --> 0:12:20.520 and they're gonna want to have a digital personal, digital personality, 0:12:20.600 --> 0:12:22.520 but in many ways it's a little different from their 0:12:22.520 --> 0:12:25.079 physical personality. And that's why I think a lot of 0:12:25.120 --> 0:12:28.959 the opportunities are in terms of um, you know, how 0:12:29.000 --> 0:12:32.199 people acquire those digital personalities. You should see my character 0:12:32.280 --> 0:12:35.600 and red dead redemption. I have no idea where he's awesome, 0:12:36.240 --> 0:12:39.960 he's better than me? Um, does you have a name? 0:12:41.360 --> 0:12:44.960 And Andy? Let's get back to the day to day 0:12:45.640 --> 0:12:50.040 boring business of UM running your company. Uh, not that 0:12:50.080 --> 0:12:52.120 it's boring, but you know, the supply chain issues have 0:12:52.240 --> 0:12:55.720 been probably frustrating, let's put it that way. Do you 0:12:55.800 --> 0:12:59.400 see them alleviating now? I mean, um in you know, 0:12:59.480 --> 0:13:03.120 post endemic cours their are you able to get your 0:13:03.120 --> 0:13:09.920 hands on materials and chips faster better? Yeah? Yeah? So, UM, 0:13:09.960 --> 0:13:12.200 I think that there's the several parts of this right. 0:13:12.280 --> 0:13:14.520 One is the semiic nup to shortage, and that's certainly 0:13:14.520 --> 0:13:18.000 affected a lot of our higher end, more complex products 0:13:18.160 --> 0:13:23.280 that we've largely taken care of by just adjusting inventory. Um. 0:13:23.320 --> 0:13:25.720 And so that that you know, in finding alternate supplieres 0:13:25.720 --> 0:13:29.360 and massive thing UM. So that's not really an issue anymore. 0:13:29.400 --> 0:13:33.360 The bigger issue is that container costs, which used to 0:13:33.400 --> 0:13:35.959 be sort of a few years ago three thousand dollars 0:13:36.040 --> 0:13:38.680 to bring a container from Astion to the US, is 0:13:38.760 --> 0:13:44.400 now two dollars, so when you've got some and quite honestly, 0:13:44.440 --> 0:13:47.400 there's no reason for that. Um. I mean I look 0:13:47.440 --> 0:13:49.160 at this and I think, okay, either those prices are 0:13:49.160 --> 0:13:52.319 going to go down or every private equery company is 0:13:52.360 --> 0:13:56.160 going to start investing in container companies. So we know 0:13:56.280 --> 0:13:59.000 that's going to normalize. We hope we're going to see 0:13:59.040 --> 0:14:02.400 more of that this year. Uh, there's other issues that 0:14:02.440 --> 0:14:05.520 are related to not just cost, but you know, the 0:14:06.120 --> 0:14:11.920 COVID situation, especially recently with Omicron, has caused a massive 0:14:11.960 --> 0:14:15.240 shortage of labor, and so the big hold up now 0:14:15.280 --> 0:14:17.960 in terms of time, you know, it doesn't take any 0:14:18.000 --> 0:14:21.520 longer for ships to go across the ocean, but getting unloaded, 0:14:21.560 --> 0:14:24.360 getting onto trucks, getting them drivers to take them too, 0:14:25.280 --> 0:14:27.240 hubs and stores, that's the biggest issue we have at 0:14:27.240 --> 0:14:29.120 the moment. All right, Andy, thank you so much for 0:14:29.200 --> 0:14:31.400 joining us. I really appreciate your time and you Paul 0:14:31.480 --> 0:14:37.400 CEO and founder. Of course they're gaming all right. You know, 0:14:37.560 --> 0:14:39.640 before we got the SMP up one point three, it 0:14:39.680 --> 0:14:41.920 looks like it's just another those buy on the dips. 0:14:41.960 --> 0:14:45.320 We had the SMP down around you know, and here 0:14:45.320 --> 0:14:47.800 we are making moves higher for you know the last 0:14:47.840 --> 0:14:50.840 several days. Let's bring in somebody who does this stuff 0:14:50.880 --> 0:14:54.160 for a living, Guy Davis, Managing director and portfolio manager 0:14:54.440 --> 0:14:59.040 for g c I Investors. Guy, you know, maybe maybe 0:14:59.040 --> 0:15:01.120 I'm just getting lazy. I just buy the dips and 0:15:01.160 --> 0:15:03.120 I don't think much more than that. What are you 0:15:03.160 --> 0:15:06.960 seeing in these markets? I had been morning everyone, Thanks 0:15:07.000 --> 0:15:09.440 for having me. Um. Certainly, yeah, I would say we've 0:15:09.480 --> 0:15:11.920 been in a situation for quite some period of time 0:15:11.960 --> 0:15:16.040 where the buy the dip mantra continues to hold. I 0:15:16.040 --> 0:15:17.840 know there are some people saying that, you know, the 0:15:17.840 --> 0:15:21.440 FED puts about to disappear as interesting trade starts going up. 0:15:21.440 --> 0:15:24.880 But honestly, I think, you know, we've seen such volatile 0:15:24.920 --> 0:15:27.720 markets just in the first few weeks at the beginning 0:15:27.760 --> 0:15:31.200 of two U One of the things I always think 0:15:31.200 --> 0:15:35.080 back to is that I think, basically there's not real 0:15:35.080 --> 0:15:37.600 anybody who really knows where where markets are going in 0:15:37.640 --> 0:15:40.600 the short time, and certainly our approach is always the 0:15:40.800 --> 0:15:45.000 peerage like this typically provide a huge amount of opportunity, 0:15:45.440 --> 0:15:48.720 and where you're con clined is some very attractive companies 0:15:48.760 --> 0:15:52.520 get end up getting settled off quite aggressively, even even 0:15:52.520 --> 0:15:54.720 when they don't necessarily need to. And certainly as we 0:15:54.760 --> 0:15:57.160 go through this earning season, there's a couple of stocks 0:15:57.160 --> 0:15:58.960 that I'd love to pick out and talk about in 0:15:58.960 --> 0:16:03.560 a little more detail. But you're seeing very significant punishment 0:16:03.800 --> 0:16:07.680 of individual names on specific ending days if there's the 0:16:07.720 --> 0:16:12.040 slightest whiff of increased capex or lower guidance to the 0:16:12.040 --> 0:16:14.520 next couple of quarters. That's a real theme that we've 0:16:14.560 --> 0:16:17.040 been seeing a certain season. Is Facebook one of those. 0:16:17.080 --> 0:16:20.400 I've just been looking at the DS page and notice 0:16:20.480 --> 0:16:23.600 the market cap is just six hundred billion dollars, which 0:16:23.720 --> 0:16:29.480 in the age of these mega caps feels minuscule, right, Yeah, Yeah, 0:16:29.560 --> 0:16:33.200 I mean Facebook has been a fascinating company over the 0:16:33.280 --> 0:16:35.560 last you know, I'd say ten years, but certainly in 0:16:35.560 --> 0:16:38.000 the last twelve eighteen months. I mean, do you think 0:16:38.080 --> 0:16:43.960 fundamentally Facebook owns the largest and deepest network. They're trading 0:16:43.960 --> 0:16:48.880 it like three dollars per user exactly, and there is 0:16:48.920 --> 0:16:53.240 a Yeah, I think Facebook is a great example of 0:16:53.360 --> 0:16:57.160 you know, I mentioned the difference between kind of individual 0:16:57.160 --> 0:17:00.720 stock price moves and business value. To thirty billion was 0:17:00.720 --> 0:17:04.680 wiped off Facebook on earnings day recently. Now, in terms 0:17:04.720 --> 0:17:06.959 of kind of efficient market hypothesis, It's kind of hard 0:17:07.000 --> 0:17:09.359 to justify the fact that the value of Facebook as 0:17:09.359 --> 0:17:13.440 an entity changed to in a single day. Now, realistically, 0:17:13.480 --> 0:17:16.000 what was happening in the earnings was, you know, there's 0:17:16.040 --> 0:17:18.080 a there was a It was to me it was 0:17:18.080 --> 0:17:21.280 a very kind of politically and regulatory for focused earling. 0:17:21.280 --> 0:17:25.080 This call you could hear from from Mark and from Cheryl. 0:17:25.480 --> 0:17:28.520 There was a real focus on, Hey, we're being being 0:17:28.560 --> 0:17:31.120 we're being beaten down here. TikTok's beating us in reels. 0:17:32.000 --> 0:17:34.640 Apple and Google have colluded against us. When it comes 0:17:34.680 --> 0:17:37.959 to the iOS changes, we saw a big jump in 0:17:38.160 --> 0:17:40.520 kind of cap ex spending for the likes of Facebook 0:17:40.560 --> 0:17:42.680 from this having to spend a huge amount of money 0:17:42.720 --> 0:17:45.320 to try and replicate the same sort of analytics that 0:17:45.320 --> 0:17:47.440 they used to get from iOS and they now don't 0:17:47.440 --> 0:17:49.520 get anymore. That's a big costo them and it's going 0:17:49.560 --> 0:17:51.720 to roll through for the next few years. You're also 0:17:51.720 --> 0:17:55.879 seeing a massive amount of capex going through from the metaverse. Honestly, 0:17:55.920 --> 0:17:59.160 I think Facebook as an entity, I think is arguably 0:17:59.480 --> 0:18:02.960 presenting fantastic value today in a sense that it's trading 0:18:03.520 --> 0:18:06.919 and are cheaper multiple than IBM. It's trading in one 0:18:06.960 --> 0:18:09.160 of the cheapest multiples we've seen for a considerable period 0:18:09.200 --> 0:18:11.240 of time, and it's still a company that's growing on 0:18:12.560 --> 0:18:14.800 plus a year, and it's still a company that's generating 0:18:15.320 --> 0:18:19.360 plus incremental margins. The real question mark comes with all 0:18:19.400 --> 0:18:22.280 of this additional capect is going spend into the metaverse 0:18:22.800 --> 0:18:24.840 is a significant kind of question mark as to how 0:18:24.840 --> 0:18:26.639 easy is that going to monetize and how is that 0:18:26.720 --> 0:18:28.200 going to play out? That to me is the big 0:18:28.280 --> 0:18:31.760 risk factor. Even accounting for that, you've got core Facebook, 0:18:31.760 --> 0:18:36.520 which to me is cheap as we stand today. Interesting. Yeah, 0:18:36.600 --> 0:18:39.720 interesting potential entry point for some folks that feel like 0:18:39.760 --> 0:18:42.920 maybe they missed as some of the upside for Facebook 0:18:42.960 --> 0:18:46.840 slash Metta Guy Davis, Managing director and portfolio manager for 0:18:47.160 --> 0:18:50.080 g c I Investors, giving us his thoughts on these markets, 0:18:50.080 --> 0:18:57.480 which we appreciate. All right, Let's talk cyberge security ransomwhere 0:18:57.600 --> 0:19:00.159 it is everywhere and it pops up everyone in a 0:19:00.200 --> 0:19:02.720 while with a high profile story, but we know it's 0:19:02.720 --> 0:19:06.680 out there every single day. Christy Wyatt's CEO and president 0:19:07.000 --> 0:19:11.040 of Absolute Software that's a NASAC listed security stock a 0:19:11.119 --> 0:19:14.800 b s T is this ticker symbol um Christie, thanks 0:19:14.800 --> 0:19:16.840 so much, for joining us here. I'd love to just 0:19:16.880 --> 0:19:19.280 get a thirty thousand foot view of how you guys 0:19:19.359 --> 0:19:23.679 view cybersecurity, the size of it, the growth rate, what 0:19:23.760 --> 0:19:25.040 are some of the big issues that you guys are 0:19:25.040 --> 0:19:30.160 looking at. Well, good morning, um, So, I think you've 0:19:30.240 --> 0:19:33.360 entered into a whole new era of cyber security, especially 0:19:33.400 --> 0:19:36.800 for enterprise rights as everybody's employees that are now working 0:19:36.840 --> 0:19:40.639 from home. It's it's had a rethink almost everything we 0:19:40.720 --> 0:19:42.639 knew about how to protect the employee, and that just 0:19:42.720 --> 0:19:46.560 makes employees incredibly vulnerable to things like ransomware. And that's 0:19:46.560 --> 0:19:50.120 why you're seeing this acceleration of attacks around these topics. 0:19:50.480 --> 0:19:55.360 It's because these organizations are more vulnerable right now. Yeah, so, um, 0:19:55.400 --> 0:19:59.879 are we able to defend ourselves as well as our 0:20:00.160 --> 0:20:05.320 creating defenses UM that keep up with the attacks, or 0:20:05.440 --> 0:20:08.320 or are the criminals kind of um, you know, out 0:20:08.320 --> 0:20:12.560 maneuvering the the police in this. I think it's more 0:20:12.600 --> 0:20:14.959 of the shift, right, I think I think we definitely 0:20:15.119 --> 0:20:17.359 organizations are doing their very best to keep up and 0:20:17.359 --> 0:20:20.240 there's no lack of spending. We've seen the investment in 0:20:20.280 --> 0:20:23.240 cybersecurity accelerate over a year. I think we we talked 0:20:23.280 --> 0:20:28.359 about a is the investment Christie, is the investment growth 0:20:28.359 --> 0:20:32.520 consistent with because it strikes me and this is your point, 0:20:32.520 --> 0:20:35.719 and I think it's a great one. We had everybody 0:20:35.800 --> 0:20:38.760 kind of moving out of the prison and into the wild. 0:20:38.960 --> 0:20:43.119 You know, everyone has taken her or his company laptop 0:20:43.600 --> 0:20:46.240 out of the out of the building and home, and 0:20:46.320 --> 0:20:49.920 now they're on their own WiFi networks which aren't protected. 0:20:50.119 --> 0:20:52.800 And now they're you know, at Starbucks and you can 0:20:52.800 --> 0:20:56.720 look over their shoulder like every every security measure is 0:20:56.800 --> 0:21:00.919 gone all of a sudden. So yeah, and so and 0:21:00.960 --> 0:21:02.560 so a lot of the things that we used to 0:21:02.600 --> 0:21:05.600 rely on to protect users, like protecting the network. I 0:21:05.600 --> 0:21:08.480 know people use the castle and the moat analogy. When 0:21:08.880 --> 0:21:11.080 the previous regime, we all seem you were in the 0:21:11.080 --> 0:21:13.040 building and we could protect you by watching you, and 0:21:13.040 --> 0:21:15.480 now you're at home. And so you hear people talk 0:21:15.520 --> 0:21:18.040 a lot about things like zero trust and moving a 0:21:18.040 --> 0:21:20.280 lot more of the intelligence out to the device so 0:21:20.320 --> 0:21:23.240 that your security is at home with you. And so 0:21:23.400 --> 0:21:25.560 I think this is a massive shift and it's driving 0:21:25.560 --> 0:21:28.920 a tremendous amount of change and investment. I think across 0:21:29.119 --> 0:21:32.680 organizations that need to revamp their security strategy based on 0:21:33.240 --> 0:21:36.000 the risk profile changing and the landscape of what they 0:21:36.000 --> 0:21:39.000 need to protect is changed dramatically, and so there's a 0:21:39.040 --> 0:21:40.800 lot of you know, this is one of those pivotal 0:21:40.840 --> 0:21:44.639 moments in the cyber landscape where everybody's making this massive 0:21:44.680 --> 0:21:48.560 shift all at the same time. How can small uh 0:21:48.560 --> 0:21:52.119 and mid sized businesses afford to do this? I wonder. 0:21:52.200 --> 0:21:54.520