Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside
Speaker 1: my co host Matt Miller. Every business day we bring
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
Speaker 1: at Bloomberg dot com slash podcast. Right now, I want
Speaker 1: to get a sense. Let's talk about one of the
Speaker 1: fastest growing areas UH in the financial markets MAT, which
Speaker 1: is E t F's That's where the kids are playing today.
Speaker 1: Sylvia Jablonski, chief investment officer co founder at Defiance E
Speaker 1: t F s H. Sylvia, thanks so much for joining
Speaker 1: us here. I would love to just get your thoughts
Speaker 1: here um on these markets. In two you know, Matt Night,
Speaker 1: we talked a lot about rising interest rates. We're not
Speaker 1: sure how much and how fast. We've got a slowing economy.
Speaker 1: We're not sure how much and how fast. But given
Speaker 1: that backdrop, how are you thinking about these markets? Hi,
Speaker 1: good morning and great to be here with you today. Well,
Speaker 1: you know, I think that these markets were a little
Speaker 1: bit of a wake up call from the way that
Speaker 1: we had did one in terms of UM, you know,
Speaker 1: some of the fear and panic and volatility that we've seen,
Speaker 1: you know, following a dramatic fiscal and monetary policy UM.
Speaker 1: You know, year of year of support in twenty one.
Speaker 1: The markets now in two are are sort of in
Speaker 1: a transition as some of those policies and and economies
Speaker 1: moved towards a more normalized state. And you know what
Speaker 1: we're trying to figure out is, you know, how does
Speaker 1: that look? And I think that by itself would sort
Speaker 1: of be okay, and maybe we would see you know,
Speaker 1: sort of less a little bit less liquidly, a little
Speaker 1: bit less free money things like that, maybe a little
Speaker 1: pullback on high returns. But what I think to add
Speaker 1: some some volatility and uncertainty is essentially, you know, the
Speaker 1: supply chain disruptions UM, the upsurgeon demand for for goods
Speaker 1: that's keeping implacent high and some of these other risks
Speaker 1: to the market. It's and it's not just high, right,
Speaker 1: I mean, the seven and a half percent print is
Speaker 1: getting people to flip out UM. Jim Bullard said yesterday,
Speaker 1: in another time, they would have caused called an emergency
Speaker 1: meeting and really done something about it. And there are
Speaker 1: a lot of critics out there who say, why in
Speaker 1: the heck aren't they doing that? Um, it's the highest inflations,
Speaker 1: Ben since I was eight, So you know, I think
Speaker 1: I was seven. One is the last I graduated high school.
Speaker 1: That was a fantastic year. That's awesome for you. I
Speaker 1: was also awesome being eight, But it wasn't awesome living
Speaker 1: with this much inflation for my parents, and it certainly
Speaker 1: isn't for me now or a lot of especially lower
Speaker 1: income people in this country. Um, what kind of rate
Speaker 1: hike schedule do you see as a result? I mean,
Speaker 1: are we going to see fifty basis points in March
Speaker 1: or at least one of the next few meetings because
Speaker 1: Bullard wants to see four rate hikes in the next
Speaker 1: three meetings. You know, it's it's so hard to call,
Speaker 1: right because you see what Bullard am out with, and
Speaker 1: then you know sort of the response to that that
Speaker 1: that the feed is going to wait and see and
Speaker 1: and and you know, be reactive and reactive to what's
Speaker 1: going on in the actual economy, and month by month,
Speaker 1: you know, sort of take a look and and go
Speaker 1: step by steps. So it feels like you know that
Speaker 1: the feed wants to come in for a soft landing,
Speaker 1: and you can see the reaction of the markets UM
Speaker 1: to some of his comments about you know, perhaps doing
Speaker 1: more and more quickly at higher rates and things like that.
Speaker 1: So I just, you know, my my sense of this
Speaker 1: is that it's going to be a slow and steady
Speaker 1: right hike process. And I think part of that is because, yes,
Speaker 1: inflation is at all time highs, but we still don't
Speaker 1: know how much of this, you know, supply chain disruption
Speaker 1: clearing out, you know, wages sort of easing out, UM
Speaker 1: of a full sort of reopen getting back into the
Speaker 1: market is going to pull that down where you know,
Speaker 1: we might be at all time highs there and we
Speaker 1: sort of keep saying that I thought that last month,
Speaker 1: and you know here we are a little bit higher.
Speaker 1: But I do think that we're peeking out here. UM.
Speaker 1: So you know, I would expect it to be hopefully,
Speaker 1: but you know, so so my you know, my guests
Speaker 1: will be four to five on this UM and I
Speaker 1: don't you know, see two fifty to see UM moves
Speaker 1: in a row. But we'll well, we'll sort of see
Speaker 1: how that turns out. Thirty seconds, Sylvia, what are the
Speaker 1: sectors that you like the most right here, giving that backdrop, Yeah,
Speaker 1: I really like well two things. One would be the
Speaker 1: reopen trade right. Um, we're we're kind of exaccinated. The
Speaker 1: numbers are getting better, so cruizes, hotels, airlines, and number two,
Speaker 1: disruptive technology. You've got to be invested in five G
Speaker 1: you've got to be invested in web three point oh um.
Speaker 1: It's certainly the future, and I don't think that these
Speaker 1: items issues right now are a huge factor on the
Speaker 1: future growth stories there. All right, Sylvia, thank you so
Speaker 1: much for joining us. Sylvia Jablonski, chief investment Officer, co
Speaker 1: founder Defiance et f H. I want to talk about NBC.
Speaker 1: Boy are they busy. They got a super Bowl, Matt,
Speaker 1: they got the Olympics, they got Mike Treko back and
Speaker 1: forth between the Olympics and the super Bowl. You know
Speaker 1: who follows all that media stuff? You or Bloomberg News?
Speaker 1: Yeah I did, I did it back in the day.
Speaker 1: But Jerry Smith follows it for Bloomberg News. And we've
Speaker 1: got Jerry Smith here right now. Jerry, is it a
Speaker 1: good time to be NBC right now? It's definitely a
Speaker 1: busy time to be working at NBC. Um. Yeah, they
Speaker 1: have the Super Bowl on Sunday night, and their Olympics coverage,
Speaker 1: uh started late last week. So they've got a lot
Speaker 1: of employees in Beijing, a lot of employees in Los Angeles,
Speaker 1: which is already complicated, and then you're talking about doing
Speaker 1: all this in the middle of a pandemic. So it's um,
Speaker 1: it's a busy time to be at NBC right now. Well.
Speaker 1: And are other people besides Paul watching the Olympics? I
Speaker 1: mean I barely know they're going on, although I have
Speaker 1: to say that I also go to bed at six
Speaker 1: pm every night. Um is it as popular as? Um?
Speaker 1: NBC what have hoped when they were bidding for it.
Speaker 1: It's certainly not what they hoped. The ratings so far
Speaker 1: for the Olympics are down almost from the Winter Games
Speaker 1: four years ago. UM. Well, not a lot of reasons
Speaker 1: for that. I mean, just in the last four years,
Speaker 1: a lot of people have cut the cord and are
Speaker 1: watching a lot less TV than they used to. Um.
Speaker 1: There's also just a lot of challenges NBC face with
Speaker 1: these games. The the controversy over China and their human
Speaker 1: rights record, A thirteen hour time difference between the East
Speaker 1: Coast and Beijing, so a lot of these events are
Speaker 1: happening while people are asleep. Um, you know, there's a
Speaker 1: potential fatigue factor. We just had a Summer Games. They're
Speaker 1: normally spaced out two years between summer winter. This time,
Speaker 1: there's just six months between the Summer Olympics and the
Speaker 1: Winter Olympics. So you know, there's a lot of different
Speaker 1: reasons why the ratings might be down. Jerry Is the
Speaker 1: NBC even making the argument that, oh, they're not capturing
Speaker 1: all our digital viewership. Is that are you trying to
Speaker 1: be made? Yeah? I mean NBC is is actually trying
Speaker 1: to Uh. They've been on this campaign for a while
Speaker 1: now where they're trying to replace uh Nielsen, which is
Speaker 1: the industry standard for ad deals. They feel like Nielsen
Speaker 1: isn't capturing all the viewers on outside of the TV landscape.
Speaker 1: They've been promoting data from a company called i Spot TV,
Speaker 1: which does its own sort of measurement. Um. I mean
Speaker 1: that's been the challenge for NBC is just trying to
Speaker 1: get the Olympics in front of people who are not
Speaker 1: watching TV anymore. So they've struck deals with TikTok um,
Speaker 1: you know, Snapchat, Twitter, They have pe streaming service where
Speaker 1: for four nine a month, you can watch every Olympics
Speaker 1: event for the first time. So, Jerry, there's concept in
Speaker 1: the TV world of make goods, which is, boy, if
Speaker 1: your audience comes in way below what you told me
Speaker 1: it was going to be, you gotta give me some
Speaker 1: more ads. Is that something that NBC is talking about
Speaker 1: here for the Olympics, right? I mean the I've been
Speaker 1: talking to NBC executives, an average rising executives, and no
Speaker 1: one is surprised that the ratings are down. In fact,
Speaker 1: NBC lowered um it's expectations with advertisers, um you know,
Speaker 1: by about before the games began. So ultimately, you know,
Speaker 1: and when you lower your your expectations for your audience,
Speaker 1: you also lowered pride. So NBC was charging a lot
Speaker 1: less for these ads, and they did four years ago.
Speaker 1: And the hope is is that they can make up
Speaker 1: for those lower prices with a lot more ad inventory.
Speaker 1: I mean, if you think about all the different platforms
Speaker 1: that the Olympics are on, now, that's a lot more
Speaker 1: ad inventory that NBC can sell. All right, interesting, We'll
Speaker 1: continue to pay attention to that. Plus we got a
Speaker 1: Super Bowl, maybe they can make it up there. This Sunday,
Speaker 1: because this is likely to be maybe the highest rated
Speaker 1: super Bowl in a long everyone's gonna bet, I know,
Speaker 1: everybody's bet. Everybody's got some schedrol on this thing. So
Speaker 1: we'll see. All right, Let's check in with our next guest,
Speaker 1: Dave Ellison, portfolio manager at the Hennessy Large in small
Speaker 1: cat financial funds. Dave, how are financials going to perform?
Speaker 1: And what is a rising interest rate environment? How do
Speaker 1: you think about that? You know, I, you know, I
Speaker 1: think generally the market has been you know, in lockstep,
Speaker 1: meaning that rates go up, financials go up, and vice versa.
Speaker 1: And that's been kind of a a theme that's been
Speaker 1: playing out for you know, a year or so now,
Speaker 1: and I'm not sure if that continues, depending what happens
Speaker 1: to the yield curve. But I think generally the banks
Speaker 1: in particular are you know, they've got good earnings visibility,
Speaker 1: the valuations aren't crazy relative to history, and I think
Speaker 1: they're becoming kind of a safe haven in a market
Speaker 1: where you know, it seems like daily there's blow ups,
Speaker 1: you know, not necessarily all in financial stocks, but across
Speaker 1: the board. So I generally think we are in a
Speaker 1: significant correction in the market, a significant downturn in the market.
Speaker 1: It's not showing up in the indexes, but boy, there
Speaker 1: are stocks that have just gotten absolutely hammered. I look
Speaker 1: at Bank America's up ten percent this year, and I
Speaker 1: look at, for example, of Firm Holdings, which is a
Speaker 1: by Now paid later, a finance company that's down about
Speaker 1: almost fifty this year. So there are significant things happening
Speaker 1: in the market, and I think the problem is valuation,
Speaker 1: and the problem is delivering on their you know, on
Speaker 1: what they told people they were going to do, meaning
Speaker 1: the business models aren't working and the stocks are just
Speaker 1: getting absolutely hammered. But you're not saying, oh, now a
Speaker 1: firm has a better evaluation, I want to go in
Speaker 1: and buy that by now pay lead business. Well in
Speaker 1: that in that specific case, I'm just picking out the
Speaker 1: fact that there's significant negative performance happening in the market
Speaker 1: despite the index. Is what is the sm T flat
Speaker 1: this year? This week? I I think so, I think
Speaker 1: my math is kind of correct, maybe not, And yet
Speaker 1: you've had these massive draw downs in these companies. You know,
Speaker 1: you just mentioned Goodyear Tire leading up into this into
Speaker 1: my segment here that's down. I mean, in my days
Speaker 1: of fidelity, you had a stock down, it wrecked your
Speaker 1: performance if it was a big position in the fun
Speaker 1: and it would destroy your performance for the year. So
Speaker 1: so you were having in massive, you know, performance destructive
Speaker 1: stocks in these portfolios that are not showing up in
Speaker 1: the indexes. So that this is a we are in
Speaker 1: a significant correction in the market. Well, you mentioned that,
Speaker 1: you mentioned the yield curve. I mean yesterday we saw
Speaker 1: the two year yield rise twenty five basis points in
Speaker 1: one session. I mean that right. Well, I think that
Speaker 1: the problem is, you know, the Fed governors talk too much,
Speaker 1: and they need to shut up and not talk as much.
Speaker 1: It creates these problems in the market. The market is
Speaker 1: going to go there anyway. It was going to go
Speaker 1: there anyway, meaning that I don't know it was going
Speaker 1: to go or that day. But if we do have
Speaker 1: a persistent inflation problem, we need to get rates more normalized.
Speaker 1: I don't think raising rates is gonna impact inflation that much,
Speaker 1: at least in the near term, because there are other
Speaker 1: issues impacting it. And the question, whether you know, discussion
Speaker 1: on inflation is a big one. The question is my
Speaker 1: view is that companies seem to be raising prices because
Speaker 1: they can politically get away with it and socially get
Speaker 1: away with it. And they're going to do that as
Speaker 1: long as they can. And you have examples like Tyson
Speaker 1: Foods this week where you know, they raise prices across
Speaker 1: the board and the stock is up. So every CEO
Speaker 1: sees that and says, okay, I can raise prices, it
Speaker 1: will help my stock price. I mean twenty years ago
Speaker 1: it was basically move all your production to China and
Speaker 1: the stock went up. So everybody went to China, got
Speaker 1: the cheap labor, expanded their margins, and their stock went
Speaker 1: went up. And now if we're in a trap now,
Speaker 1: where are going to raise prices to hang onto margins,
Speaker 1: You're gonna have persistent inflation despite what the FED does
Speaker 1: on rates. Hey, Dave, thanks so much for joining us.
Speaker 1: Appreciate getting your thoughts as always. Dave Ellison, portfolio manager,
Speaker 1: Hennessey Large and small cap financial funds. They're joining us
Speaker 1: all right. During this pandemic, more and more people working
Speaker 1: from home, more and more people learning from home. That
Speaker 1: means more and more data goes up into the cloud.
Speaker 1: That parent raises data security issues. Um, let's get to
Speaker 1: the bottom of that. Get some more details. Sanse Merchant Donnie.
Speaker 1: He's the CEO of Common Vault. Common Vault is a
Speaker 1: public and traded stock UM under on the NASTACS. Cv
Speaker 1: lt is the symbol for you, Sance, I think so
Speaker 1: much for joining us here. Are we seeing more security issues?
Speaker 1: Data issues again as more and more people do they're
Speaker 1: computing from remote areas now during this pandemic. Sure, hey
Speaker 1: you good to be there. The company's compolled cb lt UM.
Speaker 1: You know, is your question is is data more at risk? Well,
Speaker 1: data has never been more valuable, and I would say
Speaker 1: when more vulnerable because to your point, it's being created,
Speaker 1: you know, from remote work. Data is being used in
Speaker 1: new use cases for you know, data lakes, data warehouses, analytics,
Speaker 1: customer service and so data is in flight. There's a
Speaker 1: lot more data being created, and yes there's a lot
Speaker 1: more happening around that data. You know, if you've seen
Speaker 1: an incredible increase in cyber threat cyber attax on that
Speaker 1: data UM over the past few years, but really around
Speaker 1: the pandemic where companies had to pivot, you know, into
Speaker 1: a whole new way of working and UM and we're
Speaker 1: exposed to we help customers every day literally every day
Speaker 1: and the customers and I wonder if it just gets
Speaker 1: harder and harder. It's an uphill battle, by the way,
Speaker 1: to repeat for viewers, it's Convolt not Common Vault Systems,
Speaker 1: Paul has Paul has an issue speech issue. Yes, com
Speaker 1: Vault systems um of course. And you know, as we
Speaker 1: create and produce more and more data, I mean, we're
Speaker 1: expecting exponential climbs, right, So how much more difficult does
Speaker 1: this fight get? It gets? You know, it is it
Speaker 1: is why convolts And you know during the data we
Speaker 1: think we're in the data protection, data management, uh sort
Speaker 1: of space. We've seen a real tail willing enough business
Speaker 1: over the past couple of years because all of a sudden,
Speaker 1: um companies boards. It's at you know, see you on
Speaker 1: board levels. They're making decisions around having a uniform platform
Speaker 1: to manage all the data assets. And data assets for
Speaker 1: most companies have come over, you know, over generations literally,
Speaker 1: so you're running you have you have business applications of
Speaker 1: well built decades ago. They're still running businesses and you
Speaker 1: have to protect those as well as as well as
Speaker 1: the new workloads in the cloud, the cloud native workloads,
Speaker 1: and and that's where we commit. Just as an example,
Speaker 1: in in just in the past three years, we have
Speaker 1: moved forward two and a half exabytes of data for
Speaker 1: customers into the public cloud. And that is that has
Speaker 1: literally grown five times in the past three years. So
Speaker 1: you can see the pace at which customers are embracing
Speaker 1: public cloud services, public cloud capabilities, and that brings about
Speaker 1: a whole new way of thinking about protecting the data. Santa,
Speaker 1: what you know, I think about you know, data security, cybersecurity,
Speaker 1: and you know, oftentimes we hear from you know, big large,
Speaker 1: publicly traded corporations SMP companies. How about some of the
Speaker 1: small to mid size companies, how are they equipped to
Speaker 1: kind of secure their data, to secure their networks. It's
Speaker 1: it's a it's a it's a very important question. It's
Speaker 1: a reality because today no one's in you. No company,
Speaker 1: regardless of side, is immune to decide with threats. It
Speaker 1: doesn't matter what side you are, um what they wanted
Speaker 1: to data, what they want us to be able to
Speaker 1: hold you for ransom? And and what's happening is we,
Speaker 1: you know, the expectations become that you know, a small
Speaker 1: accounting firm with let's say fifty people have to have
Speaker 1: the same defenses as a pentagon to protect their customer information,
Speaker 1: the client information. It's hard, it's super hard. And so
Speaker 1: what we're doing is and and then there's another you know,
Speaker 1: with with ransomware, which is which is the latest sort
Speaker 1: of threat vector. What's happening is that traditional NT organizations
Speaker 1: um find themselves you know, the crosscreas of of of
Speaker 1: sort of what I call, you know, I ke collision,
Speaker 1: which is is it a security problem or is it
Speaker 1: an infrastructure problem? Who you know, who owns the backup?
Speaker 1: Is that the best way to go about it? And
Speaker 1: and so this, this whole thing is causing companies small
Speaker 1: and big to rethink data protection, which is why we've
Speaker 1: you know, we've been hard at work creating super super
Speaker 1: easy to use um stas based solutions. As an example,
Speaker 1: we've all the metallic because of the customers getting access
Speaker 1: to the world class capabilities to protect themselves. That's that's
Speaker 1: that's been our you know, our direction. So what kind
Speaker 1: of growth do you expect? You know, we we we
Speaker 1: just announced to three results. Uh and you know we
Speaker 1: we it was a record sitting quarter for us. We
Speaker 1: you know, we exceeded over twelve two hundred million dollars
Speaker 1: in quality total revenue for the first time of the company,
Speaker 1: so it was quite a quite a threshold. UM. You know,
Speaker 1: we we we we we continue to see growth. We've
Speaker 1: had UM, you know, really good results over the past
Speaker 1: couple of years, are new products which we sort of
Speaker 1: capture under the subscription and SASS A r r OUR
Speaker 1: SASS products and our subscription oriented products sort of group
Speaker 1: forty year on year and more than half of our
Speaker 1: UM total A R R M and recurring revenue. So
Speaker 1: you know, we're we're seeing great motion and there's no
Speaker 1: reason to believe that it would still down. Sanj. Thanks
Speaker 1: so much for joining us. Really appreciate your time, san J.
Speaker 1: Virgin Donnie there is the CEO of Convolt again. The
Speaker 1: ticker on the NASDAC is see v lt UM. Go
Speaker 1: ahead and check that out if you want to see
Speaker 1: more about Convolt Systems UM. The stock over the past
Speaker 1: year has UM come down a little right now six
Speaker 1: eight UM, but it had a big jump throughout one
Speaker 1: and like the rest of the market's been very vulnerable.
Speaker 1: Thanks for listening to the Bloomberg Markets podcast. You can
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Speaker 1: Podcast platform you prefer. I'm Matt Miller. I'm on Twitter
Speaker 1: at Matt Miller three. Pt on Fall Sweeney, I'm on
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