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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside

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Speaker 1: my co host Matt Miller. Every business day we bring

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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along

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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast

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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and

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Speaker 1: at Bloomberg dot com slash podcast. We want to go

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Speaker 1: deep into technology critic because I mean, tech is you know,

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Speaker 1: just It's been a leader for this market for as

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Speaker 1: long as I can remember, almost and my question is

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Speaker 1: as we come out of this, is tech going to

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Speaker 1: be a leader going forward as a sector. We had

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Speaker 1: some week numbers of a week or than expected numbers

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Speaker 1: I guess we would say across the tech sector over

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Speaker 1: this past earning periods. Let's dive deep into tech. Let's

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Speaker 1: round table this and we're gonna do it for a

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Speaker 1: couple of segments. Here, Dan, I've senior equity ANALYSTO web

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Speaker 1: Bush Securities. Uh joins us here very casual attire. I

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Speaker 1: will point out Uh and Man Deep Sing Bloomberg Intelligence

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Speaker 1: Senior Tech analyst. Uh. They're both joining us here in

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Speaker 1: Bloomberg Interactive Broker Studio, which is good, so we can

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Speaker 1: just kind of bat it around for a while. So damn,

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Speaker 1: You've been in this business a long time as self

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Speaker 1: side analysts, you've been one of the leading voices in

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Speaker 1: promoting technology on Wall Street. How do you think about

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Speaker 1: this tech sector going forward? I mean over the last

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Speaker 1: I would say, since the Great Financial Crisis, it's been

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Speaker 1: a leader in this marketplace in terms of stock performance.

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Speaker 1: How about the next ten years? Look, I think the

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Speaker 1: hyper growth story in tech, I mean the clock struck midnight,

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Speaker 1: and I think that's why you're seeing layoffs from Amazon

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Speaker 1: to Meta and others. But my view is that you're

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Speaker 1: gonna have trillions spent in what I used the Fourth

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Speaker 1: Industrial Revolution, and that's not ending because of this recession

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Speaker 1: next three to six months. So my view is, especially

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Speaker 1: on high quality tech, this is more of a fourth

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Speaker 1: fifth inning rather than the eighth ninth inning in terms

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Speaker 1: of attack, and I think that's why we've been bullish

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Speaker 1: on it, you know, even as we go, you know,

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Speaker 1: into year into two thousand and twenty three, in terms

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Speaker 1: of where we are in the cycle. Mandyp hop on

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Speaker 1: in here because I think when I look at tech,

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Speaker 1: I mean, it's such a broad sector naturally we think

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Speaker 1: of the metas the Amazons and Microsoft, But then there's

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Speaker 1: kind of this other lens of chips, and it feels

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Speaker 1: like chips are kind of this magnified response of tech,

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Speaker 1: and you have the chip equipment makers, which are an

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Speaker 1: even bigger magnified response. Are all of these spheres of

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Speaker 1: tech on the same page right now? Well, so think

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Speaker 1: of you know where the spend is going when it

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Speaker 1: comes to topics. So all these companies you mentioned, Meta, Amazon, Alphabet,

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Speaker 1: they're spending you know, thirty forty billion dollars fifty billion

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Speaker 1: dollars a year on topics. Where is that spend going

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Speaker 1: in terms of building data center? In fact, n video

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Speaker 1: like you look at their data center growth, they have

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Speaker 1: gone from almost nothing to fifteen billion dollar run rate

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Speaker 1: in a span of five years. That's phenomenal for a

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Speaker 1: chip company. And so that gives you a sense of

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Speaker 1: where the next leg of investments will be. Is it

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Speaker 1: will be an AI and you know, building cloud capacity

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Speaker 1: and and chips is at the forefront. That's why there's

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Speaker 1: so much geopolitical tension around chips, you know, the China

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Speaker 1: US aspect of it. And I think you just can't

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Speaker 1: take that out of the equation. Even if you're in

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Speaker 1: a downturn, when we come out of it, the focal

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Speaker 1: point will still be semiconductors, AI, machine learning, cloud. These

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Speaker 1: are the trends. So you have job securities what you're

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Speaker 1: telling me, I hope. So alright, hey, then you know

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Speaker 1: talk to us. You know, I need to get into

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Speaker 1: this story here, this whole Elon Musk Twitter thing. I'd

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Speaker 1: love to get your opinion here because you've been on

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Speaker 1: top of the Tesla story since day one, Elon Musk

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Speaker 1: since day one, And what do you make of Elon

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Speaker 1: and Tesla has has his you know, efforts at Twitter

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Speaker 1: change your view of Tesla as a company, as a

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Speaker 1: stock and Elon as as an owner. Look, I mean

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Speaker 1: I think it's been a circus show, you know, as

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Speaker 1: we've all seen. And I think there was a view

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Speaker 1: as a Tesla holder that once Must finally bought Twitter

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Speaker 1: and ultimately was forced into because he knew legally he

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Speaker 1: was gonna have to win it one way or another,

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Speaker 1: that it would start to die down in terms of

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Speaker 1: just this horror show that continues to play out. But

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Speaker 1: instead it hasn't right. I mean, since he's bought it,

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Speaker 1: it's kind of been a train wreck situation. He's trying

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Speaker 1: to turn around. You know what's really been a treadmill

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Speaker 1: Stock and Company for years. He's not someone culturally that's

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Speaker 1: gonna be playing ping pong in the Twitter cafeteria or

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Speaker 1: you know, doing parties on the rooftop. And I think

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Speaker 1: now as a testa investor, you want to see him

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Speaker 1: give reins to others that ultimately could operate social media

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Speaker 1: because in terms of Tessa, forget the selling of the stock.

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Speaker 1: Musk is the gold standard. That's why Tessa trades where

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Speaker 1: it is. There's key man risk, we'll call it. You

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Speaker 1: don't want to see his attention focus too much on

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Speaker 1: Twitter because it comes down to he has diamonds on

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Speaker 1: one hand and Tessa has two Dour Slice in New

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Speaker 1: York Pizza and the other one whatever. And I think

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Speaker 1: that's the frustration for test investors. Well, okay, let's go

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Speaker 1: into then the social media space a little bit more

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Speaker 1: than I've wondered. If this potential bankruptcy or decline that

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Speaker 1: you're seeing in Twitter, does that then create some sort

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Speaker 1: of tailwind for the likes of Meta for example. I

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Speaker 1: think right now, I mean all those ships are going

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Speaker 1: down right. So it's one where there could be some

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Speaker 1: life rafts here and there, but books social media is

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Speaker 1: that the best growth is in the rear view mirror.

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Speaker 1: And that's why Zuckerberg ultimately, once Apple IOLs came out

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Speaker 1: with cook and the shot across the bout, I think

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Speaker 1: Zuckerberg and Facebook knew, okay, like clock Struck Midnight, it

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Speaker 1: was basically time that they were gonna have to transform

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Speaker 1: the business model. I think the death of social media.

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Speaker 1: I think what's happened is is that it's a it's

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Speaker 1: a maturity of social media, and that's really what's happened

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Speaker 1: is that how do you monetize? I think the problem

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Speaker 1: from us someone that basically has created rockets and electric vehicles.

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Speaker 1: He goes in Twitter and he's like, we got two

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Speaker 1: d forty million users. Engagement, as we all know, is

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Speaker 1: extremely high. How do you monetize it? That's been the

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Speaker 1: problem for Twitter. They need to monetize it. And again

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Speaker 1: they were spending money like rock stars, so they needed

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Speaker 1: to cut cost. That was clear, and now it's about

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Speaker 1: ken you turnaround. Penn State's playing at Rutger's this weekend.

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Speaker 1: I think I'm gonna get some tickets and go we

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Speaker 1: are we are? Are you going? Okay? Alright? So I

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Speaker 1: think I might join you there, And we got Mandep

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Speaker 1: saying he does all this tech stuff for Bloomberg Intelligence. Man, Deep,

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Speaker 1: I want to start with you Meta. When I was

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Speaker 1: a kid, it was Facebook, Okay, it was a phenomenal

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Speaker 1: growth story. It had so many revenue growth levers to pull,

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Speaker 1: whether it's Facebook or the Graham as kids call it,

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Speaker 1: or What'sapp or Messenger? Stuck can't buy a friend? Right here?

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Speaker 1: What's the call in Meta right here? Well, so clearly

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Speaker 1: they have a lot of headmans from Apple as like

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Speaker 1: changes that they made and you know the ad pricing

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Speaker 1: impact that had on Meta. But the biggest one is

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Speaker 1: what are they doing with reality labs and how long

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Speaker 1: are they going to spend? So even though they announced

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Speaker 1: the job cuts and that actually did help the stock,

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Speaker 1: it's still not clear. You know, what is the endgame there, Venville.

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Speaker 1: They're leg commercial success. What kind of revenue growth can

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Speaker 1: reality labs generate? Because in terms of the installed base

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Speaker 1: and unit sales, that's trending down and still Meta is

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Speaker 1: talking about losing almost fifteen billion dollars on reality labs

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Speaker 1: next year. So how am I supposed to buy stock

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Speaker 1: when the top line revenue growth is slowing and these

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Speaker 1: expenses on this business I don't even understand are going

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Speaker 1: up dramatically. Is that kind of what investors are saying.

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Speaker 1: If they start winning against TikTok, or TikTok gets banned

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Speaker 1: in the US, that will certainly be a big catalyst

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Speaker 1: for the stock as well as for their growth. Because

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Speaker 1: think of it this way. If you are an advertiser

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Speaker 1: who wants to spend their add dollars, there are only

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Speaker 1: so many places you can go to, whether it's Google

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Speaker 1: Search or Meta or TikTok or Snap or pinterest. So

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Speaker 1: they only handful of platforms, and if TikTok goes out

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Speaker 1: of the equation, that will certainly be a booze for

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Speaker 1: meta reels. That's the other big investment they're making. We'll

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Speaker 1: hop on in here, Dan and talk to us a

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Speaker 1: little bit about the ripple effect from meta Specifically, you've

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Speaker 1: seen a little bit of tail winds going to and

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Speaker 1: video advanced micro devices. This idea that if Facebook now

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Speaker 1: Meta is going to power the metaverse, you need the

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Speaker 1: chips to do it. Is that a logical tailwinds that

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Speaker 1: a sustainable tailwind for some of these other big tech players. Yeah,

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Speaker 1: I don't think it is. Look, I think Zuckerberg, it's

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Speaker 1: sort of been a Ted Striker from the movie Airplane situation,

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Speaker 1: and I think that's you know, you go back to

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Speaker 1: that last conference call investors have really you know, the

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Speaker 1: patients is worn thin because I think in terms of

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Speaker 1: the metaverse strategy in this type market, that's not what

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Speaker 1: you want to see. That's why they had to cut

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Speaker 1: back to cost. And I think ultimately gonna have to

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Speaker 1: do more and more of a U turn in terms

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Speaker 1: of metaverse. Facebook look as a stock, you know, we'd

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Speaker 1: be more cautious on it, just because right now you

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Speaker 1: feel like from a social media perspective you must see

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Speaker 1: them doubled down. There still massive headwinds you as we

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Speaker 1: talked about in terms of what we see with Apple IOLs.

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Speaker 1: All right, let's go to Apple because I need your

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Speaker 1: call at Dan, you've been one of the most vocal

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Speaker 1: UH analysts on Apple here. Um, it's only down sixteen

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Speaker 1: year to date, so it's beating the SMP. It's way

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Speaker 1: beating the NASTAC here. So it feels like kind of

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Speaker 1: a safe port in a in a storm here. What's

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Speaker 1: the what are the growth stories for this one going forward?

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Speaker 1: Do I have to wait for the next cool phone

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Speaker 1: or what's the story? It's a rocket Gibraltar stock. And

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Speaker 1: I think the heaters continue to hate the you know,

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Speaker 1: fire in a crowd theater every quarter. Yet look with demand,

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Speaker 1: I was held up, and I think if you look

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Speaker 1: at the services business, doc continues to play out, and

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Speaker 1: I think we have a re acceleration going to next year.

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Speaker 1: Look in macro, it's going to hit everyone including Apple

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Speaker 1: and of course supply chains in issue. But I believe

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Speaker 1: it's very negative out there in from an investor perspective,

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Speaker 1: and I believe numbers the decks being cleared, and I

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Speaker 1: think there's a stock that can continues to move higher

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Speaker 1: as we go in next six and nine months. That's

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Speaker 1: why intact, Apple, Microsoft, you'll continue to be our favorite names.

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Speaker 1: You've been a real expert on cloud and the switch

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Speaker 1: to cloud. Will Apple ever enter that game? Now? They

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Speaker 1: will always be a consumer focused company. And look, they

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Speaker 1: will keep building the back back in infrastructure in terms

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Speaker 1: of supporting the services revenue that Dan was talking about.

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Speaker 1: But Apple is not an enterprise sales company. You know,

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Speaker 1: they will continue to focus on devices, and I think

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Speaker 1: they will enter the VR market as well. They will

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Speaker 1: launch a headset that could drive the next leg of growth,

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Speaker 1: like look at what air pods have done in a

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Speaker 1: span of you know, three or four years. So but

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Speaker 1: I I do think they will always be consumer focused.

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Speaker 1: And if I know, you and the tech team at

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Speaker 1: Bloomberg Intelligence kind of look at the industry as a

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Speaker 1: whole as well, talk about tech spending in the last

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Speaker 1: couple of years and what it might look like a

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Speaker 1: a kind of recession or environment maybe for the next

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Speaker 1: year or so. Yes, so we definitely were in above

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Speaker 1: historical growth rate environment when it comes to tech spending,

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Speaker 1: and we probably pulled forward some of the data centers

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Speaker 1: spend over the last couple of years, given everyone was

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Speaker 1: talking about digital transformation and you know, the shifting work

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Speaker 1: clothes to cloud. But still I think, you know, when

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Speaker 1: it comes to I T spending, you break it apart

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Speaker 1: into software and services, it will still be high single digits. Yes,

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Speaker 1: semiconductor is more cyclical, so the hardware and semiconductor component

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Speaker 1: will slow down, but overall tech spending will continue to

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Speaker 1: be you know, at least two times GDP. Yeah, I'm

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Speaker 1: sticking with it. I mean, I don't know. I mean,

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Speaker 1: it's been good for me for the last twelve years,

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Speaker 1: don't you think, I mean you know, so you know

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Speaker 1: when you were a kid. Yeah, exactly, exactly, all right,

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Speaker 1: Mandy seeing Bloomberg Intelligence tech analyst Dan I's web Bush

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Speaker 1: securities are covering all things on the TMT space for

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Speaker 1: web Bush. We appreciate them coming into the studio round

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Speaker 1: tabling a couple of segments here talking about tech um.

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Speaker 1: It's going to continue to be a solid growth story

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Speaker 1: going forward. Look at a bitcoint pretty I mean finally

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Speaker 1: getting a little bit of stability here. It's up about

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Speaker 1: a four tenths of one percent here sixteen thousand, five ninety.

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Speaker 1: But the world of crypto, I mean you talk about

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Speaker 1: the crypto winter, Okay, I guess the asset class a

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Speaker 1: little bit out of favors. What I take you the

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Speaker 1: term crypto winter. But then we got f t X

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Speaker 1: blowing up. This is like the nasdacs saying we're going

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Speaker 1: out of business. This is crazy and it is an

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Speaker 1: ever ever changing story on a daily and hourly a

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Speaker 1: minute basis. And Bloomberg has got some great, great reporting,

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Speaker 1: uh and on this story and part of that reporting

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Speaker 1: team is Annie Massa. She's an investigating reporter, investing reporter

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Speaker 1: for Bloomberg News. He joins us here in our Bloomberg

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Speaker 1: Interactive Broker studio. She's not mailing in, phoning it in,

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Speaker 1: She's in the studio exactly. So Annie, the Sam Bankman

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Speaker 1: freed guy. What do we know about him and what

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Speaker 1: kind of happened here? We know a lot about him.

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Speaker 1: We've all been very exposed to Sam Bankman Freed over

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Speaker 1: the past year or two years. But what is coming

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Speaker 1: to light is that he's a totally different kind of

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Speaker 1: person than many people really thought. In the bankruptcy documents

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Speaker 1: that came out today, there is a trove of information

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Speaker 1: about how he ran f t X and his affiliated

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Speaker 1: hedge fund, Ali Alima Research, and how there was no

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Speaker 1: there was no internal system, no controls, and actually a

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Speaker 1: pretty flagrant um sense of uh. I mean, it's it

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Speaker 1: goes beyond lack of oversight to to really irresponsibility. Is

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Speaker 1: there anybody talking fraud at this point? That's that's a

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Speaker 1: big suspicion. I mean, when when you talk to people

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Speaker 1: in the industry, they're like, yeah, this guy's going to jail,

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Speaker 1: But I mean, who's to say, like it's still playing out,

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Speaker 1: but there's uh, there's certainly not a good feeling about

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Speaker 1: what's next. Well, I think one of the issues in

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Speaker 1: crypto broadly has been the story of credibility. It's almost

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Speaker 1: a experiment that's taking place in crypto that we've seen

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Speaker 1: in other markets, in the bond market, in the equity

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Speaker 1: market as well. The new f t X CEO saying

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Speaker 1: there's a complete failure of corporate controls. How does a

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Speaker 1: company like f t X, for example, regain some of

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Speaker 1: the credibility scene, say, the equity markets. Yeah, I mean,

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Speaker 1: I just want to underscore what you just said. The

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Speaker 1: man overseeing the bankruptcy of f t X and its

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Speaker 1: affiliated entities oversaw the end Ron bankruptcy. And this is

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Speaker 1: a guy who said, I have never in my career

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Speaker 1: seen such a lack of trustworthy financial information um and

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Speaker 1: complete lack of corporate control. So even he is shaken

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Speaker 1: to his core as far as I can tell, and

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Speaker 1: says throughout the document that some of the financial information

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Speaker 1: provided to him anything provided to him while the company

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Speaker 1: was understand Bankman Freed, he doesn't even necessarily trust Sam

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Speaker 1: Bankman Freed, I just wonder why is he not sitting

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Speaker 1: in an FBI office in Washington or in New york Y?

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Speaker 1: Is he? I mean, he's the center of all this

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Speaker 1: and there are billions of dollars that have been lost.

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Speaker 1: Why is he still hanging out in the Bahamas? A

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Speaker 1: great question for regulators when they come on the show

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Speaker 1: next time. But it's it's true. So um, he's been

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Speaker 1: questioned by authorities in the Bahamas, and I think it

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Speaker 1: speaks to why was he in the Bahamas in the

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Speaker 1: first place? Right, it was no secret that he based

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Speaker 1: his business in the Bahamas. Both of these businesses, by

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Speaker 1: the way, Alameda and f t X. And you know

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Speaker 1: this is a guy who ran these companies. You know,

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Speaker 1: Alameda started in no surprise, Alameda County in California, then

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Speaker 1: moved to Hong Kong, then moved to the Bahamas. It's like,

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Speaker 1: why did this corporate entity have to hop around the

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Speaker 1: world to the Caribbean ultimately to UH to survive? So,

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Speaker 1: I mean, clearly he was trying to stay out of

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Speaker 1: the reaches of US authorities. We know now, I mean,

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Speaker 1: but we see this now right in retrospect. Hindsight is

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Speaker 1: always but I have to for for the viewers who

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Speaker 1: are listeners, I should say, who aren't as familiar with

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Speaker 1: the rise of Sam Bankman Freed. How did f t

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Speaker 1: X get so big so quickly? Yeah, um, well, it's

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Speaker 1: a good point because or it's a good question because

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Speaker 1: f t X hasn't been around that long. It was

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Speaker 1: the second largest crypto exchange before the bankruptcy. But it's

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Speaker 1: not that old. Um. Alameda started first of all. I

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Speaker 1: want to underscore that Alameda started first. Alameda started as

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Speaker 1: his crypto trading hedge fund in f t X emerged

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Speaker 1: as an offshoot of that in Okay, so we're talking

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Speaker 1: just a few years this this company rises to be

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Speaker 1: the second largest player in all of crypto in the world.

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Speaker 1: How did that happen? Well, he was a master manipulator,

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Speaker 1: but knew how to access people. He knew how to

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Speaker 1: get people on the platform, and he uh and he

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Speaker 1: put ads like he got all this VC backing. He

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Speaker 1: was able to charm vcs. Raised two billion dollars, right,

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Speaker 1: you can. You can throw your weight around with that

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Speaker 1: kind of money. And we all saw the Super Bowl

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Speaker 1: commercials Um, you know ft X plastered on the sides

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Speaker 1: of stadiums. He knew how to get in front of

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Speaker 1: retail investors, and I think it started this cycle this

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Speaker 1: like flywheel almost where. Um, once the vcs saw all

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Speaker 1: the people on trading on the ft X platform, then

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Speaker 1: they're like, hey, wait a minute, like everybody else is

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Speaker 1: you know in this investment? Why am I not? And

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Speaker 1: it's snowballed from there Binance. They seem to be I

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Speaker 1: guess the winners here and their founders c z I

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Speaker 1: just known by his I'm not sure his name. Um,

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Speaker 1: they seem to be the winner here. Is anybody looking

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Speaker 1: at them because I know they sold some bitcoin I

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Speaker 1: guess last weekend, which would have been the weekend before,

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Speaker 1: which kind of accelerated the demise of the ft X platforms.

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Speaker 1: Anybody looking at them in any way, shape or form,

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Speaker 1: or are they just the winners here? I would be

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Speaker 1: cautious to say there are any winners in this story,

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Speaker 1: at least now, because it is hard to overstate how

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Speaker 1: seismic this event has been in the cryptocurrency industry. Yeah,

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Speaker 1: we've spoken to CEOs of other entities within the crypto

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Speaker 1: space and they are shaken to their core. They're almost

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Speaker 1: they can't believe this happened. Because Sam Bankman Fried was,

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Speaker 1: if nothing else, the savior of the industry. He was

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Speaker 1: the voice, voice, and face to Washington, d C in

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Speaker 1: terms of creating credibility. It's a highly destabilizing event and

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Speaker 1: there's been a huge loss of trust in the space.

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Speaker 1: So we'll see what emerges from this. But I'm not

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Speaker 1: declaring any winners at this point. I'm still shocked that

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Speaker 1: and Paul met this point I believe earlier is that

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Speaker 1: crypto is actually still sixteen thousand literally at Bitcoin at

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Speaker 1: a level of sixteen thousand, uh five, fifteen ish, we'll

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Speaker 1: call it at the moment um. I'm surprised that there

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Speaker 1: isn't an even bigger reaction to a collapse of the

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Speaker 1: second largest crypto exchange, because if he saw that and

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Speaker 1: say the equity market, there would definitely be a massive collapse.

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Speaker 1: And um Crypto, I felt like, was a growing um entity.

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Speaker 1: You've covered exchanges, You've covered accent managers. Do you think

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Speaker 1: I get worse from here? I think it absolutely can

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Speaker 1: and will get worse from here. I think that we're

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Speaker 1: we're still kind of waiting to see the full effects

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Speaker 1: of what will happen. This is going to have ripple

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Speaker 1: effects in the crypto lending space. It already is. Um,

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Speaker 1: the effects are going to ripple out from here. Um.

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Speaker 1: To your point about bitcoin, Uh, it's interesting bitcoin. I mean,

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Speaker 1: crypto gets all lumped together, right, but but bitcoin is

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Speaker 1: different from some of these like fantasy Land tokens that

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Speaker 1: were just being minted by f t X. So it's

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Speaker 1: seen as more of like a safer bet among the

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Speaker 1: speaking of I need a final for my poker table.

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Speaker 1: Are you available? Are you? I sure do? Yeah. She's

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Speaker 1: a champion to the champions. So if we had brought

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Speaker 1: you in, you would have cleaned us out, is what

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Speaker 1: you're telling Usily, all right, I didn't know that, Thank

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Speaker 1: you very much. That's interesting. Alright, any massive investing reporter,

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Speaker 1: poker player for bloo Bo Bourber News, and we appreciate

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Speaker 1: her bringing a summer her reporting chops here on this

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Speaker 1: whole FTX story in crypto ever evolving. We know that

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Speaker 1: the consumer it's about of the US economy, it's pretty big.

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Speaker 1: So Bloomberg Intelligence, which is the research arm of Bloomberg LP,

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Speaker 1: we allocate a lot of top resources to covering retail

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Speaker 1: and the consumer. We've got Punum Goyle, she covers retail.

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Speaker 1: Jen bartashes covers retail. Lindsay Dutch also covers retail. We've

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Speaker 1: got Lindsay here on the line to give us a

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Speaker 1: sense of what's going on out there with the retail

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Speaker 1: space and the consumer. And she has her BS and

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Speaker 1: math from Lafayette College. She's a leopard. Did you know

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Speaker 1: that the Lafayette left with a mathematician? Yeah? Does that

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Speaker 1: BS and math at Lafiat College. I mean, I mean

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Speaker 1: I would not go up to Lindsay at a cock

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Speaker 1: de party, I mean, math person. Why don't they is

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Speaker 1: going to come out with formulas and the small talk? Hey, Lindsay,

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Speaker 1: thanks so much for joining us here. Of the retail

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Speaker 1: companies you cover, what have you been seeing here over

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Speaker 1: you know, this quarter? What are they telling you about

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Speaker 1: the consumer? About recession all that kind of stuff? Hi, Paul,

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Speaker 1: thanks for having me. Um. My focus is on the

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Speaker 1: hard lines, and we haven't had too many report but

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Speaker 1: there is sort of, you know, a common thread that

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Speaker 1: I'm seeing sort of across my space and some of

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Speaker 1: the other retailers is you know, obviously, you know, the

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Speaker 1: consumers are focused on value. They're very price sensitive, and

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Speaker 1: that is driving an extremely promotional environment for these retailers.

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Speaker 1: Heading into the key fourth quarter. You know, we see

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Speaker 1: that with Bath and body Works, UM And I think

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Speaker 1: that the other thing is like managing inventory. These retailers

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Speaker 1: are don't want to get over inventory, some of them

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Speaker 1: already are there, and that's also really driving these promotions

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Speaker 1: UM and we expect them to continue and be elevated

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Speaker 1: in the fourth quarter. You mentioned Beth and Body Works,

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Speaker 1: it starts up nine today. I mean this is a

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Speaker 1: big company, eight and a half billion dollar market cap.

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Speaker 1: Tell us what happened with their their numbers? Yes, so

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Speaker 1: they basically beat from the top to the bottom line

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Speaker 1: UM with results, and they raised their outlook for the

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Speaker 1: year after they sort of drastically cut it back in

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Speaker 1: July when everyone started really questioning what was going on

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Speaker 1: with the consumer and where the pullbacks were going to be.

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Speaker 1: And Bath and body really does sell discretionary item, so

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Speaker 1: you know, the gut feel, you know, the initial reaction

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Speaker 1: might be like that they would be severely hurt in

428
00:22:46,000 --> 00:22:50,720
Speaker 1: this environment, but I think their results really show how

429
00:22:51,040 --> 00:22:57,800
Speaker 1: loyal they're following is and their customers really go to

430
00:22:57,840 --> 00:23:02,440
Speaker 1: their products as sort of state items, especially for the

431
00:23:03,080 --> 00:23:07,360
Speaker 1: the key holiday season. UM. There they use them as gifts.

432
00:23:07,720 --> 00:23:12,760
Speaker 1: You know, people incorporate their their products, their candles, their

433
00:23:12,760 --> 00:23:16,600
Speaker 1: body care into you know, their holiday season. So I

434
00:23:16,680 --> 00:23:20,199
Speaker 1: do think, Um, you know, the results were great, but

435
00:23:20,280 --> 00:23:24,000
Speaker 1: it also demonstrates the future with this company and the

436
00:23:24,080 --> 00:23:28,119
Speaker 1: growth potential that they have with this loyal base. What

437
00:23:28,160 --> 00:23:31,800
Speaker 1: does that then mean for this divergence that I feel

438
00:23:31,840 --> 00:23:34,800
Speaker 1: like a lot of people expected to narrow a little

439
00:23:34,800 --> 00:23:37,240
Speaker 1: bit between perhaps some of the luxury shoppers and then

440
00:23:37,320 --> 00:23:41,280
Speaker 1: some of the uh not luxury shoppers for lack of

441
00:23:41,320 --> 00:23:43,240
Speaker 1: a better term. But essentially what I'm referring to is

442
00:23:43,280 --> 00:23:46,280
Speaker 1: this kind of divergence you saw in Macy's versus Coals,

443
00:23:46,320 --> 00:23:50,800
Speaker 1: in um, even Walmart versus Target. Arguably, what are the

444
00:23:50,880 --> 00:23:54,800
Speaker 1: share shifts that are happening in this space? So for

445
00:23:54,920 --> 00:23:57,320
Speaker 1: bet the body work, because their customer base, you know,

446
00:23:57,480 --> 00:24:02,000
Speaker 1: really does align pretty l with you know, the demographics

447
00:24:02,040 --> 00:24:06,159
Speaker 1: across the US nationally, So they have some high income

448
00:24:06,200 --> 00:24:09,240
Speaker 1: shoppers and they have some low income shoppers, and you know,

449
00:24:09,280 --> 00:24:13,800
Speaker 1: they consider their products sort of affordable luxury. Um, if

450
00:24:13,840 --> 00:24:17,679
Speaker 1: you will, Um, But I think again, it comes back

451
00:24:17,880 --> 00:24:21,119
Speaker 1: to my point of you would kind of expect, you know,

452
00:24:21,160 --> 00:24:23,040
Speaker 1: if people are going to cut back and people are

453
00:24:23,119 --> 00:24:27,399
Speaker 1: cutting back, you know, cutting back on body lotion or

454
00:24:27,480 --> 00:24:31,080
Speaker 1: sprays seems like an obvious thing, right, you may not

455
00:24:31,280 --> 00:24:34,160
Speaker 1: need that item, but I think you know, people are

456
00:24:34,320 --> 00:24:39,359
Speaker 1: very focused on self care and these items are important

457
00:24:39,359 --> 00:24:43,960
Speaker 1: to them and they're basically willing to spend on them. Um.

458
00:24:44,119 --> 00:24:45,800
Speaker 1: But the one thing we did see is they do

459
00:24:45,880 --> 00:24:48,280
Speaker 1: want a deal. So so they want these products, but

460
00:24:48,320 --> 00:24:50,359
Speaker 1: they want a deal. And I think that in the

461
00:24:50,440 --> 00:24:54,879
Speaker 1: fourth quarter, you know, especially Black Friday, Cyber Monday, you know,

462
00:24:54,920 --> 00:24:56,800
Speaker 1: some of the deals are going to be very, very good,

463
00:24:56,840 --> 00:24:59,600
Speaker 1: and I think you know where there was some pullback

464
00:24:59,640 --> 00:25:03,119
Speaker 1: and that lower income consumer in the third quarter, I

465
00:25:03,160 --> 00:25:06,440
Speaker 1: think we're going to see some transactions from that customer

466
00:25:06,480 --> 00:25:09,560
Speaker 1: because they want the items, They're going to come into

467
00:25:09,600 --> 00:25:12,119
Speaker 1: the store and they're gonna stock up when the price

468
00:25:12,200 --> 00:25:14,880
Speaker 1: is low. So little line for the companies you cover

469
00:25:14,920 --> 00:25:17,960
Speaker 1: in retail, are shoppers coming back to the store. Are

470
00:25:17,960 --> 00:25:22,639
Speaker 1: they still just clicking from their couch so? Um. You know,

471
00:25:22,880 --> 00:25:26,280
Speaker 1: since stores sort of started reopening in one you know,

472
00:25:26,320 --> 00:25:29,000
Speaker 1: we've seen a resurgence of brick and mortar. Right the

473
00:25:29,520 --> 00:25:35,960
Speaker 1: storefront is essential to drawing people, um to buy your products. UM,

474
00:25:36,040 --> 00:25:38,800
Speaker 1: and we are seeing people back in the stores. I think,

475
00:25:38,840 --> 00:25:42,320
Speaker 1: you know, Black Friday is going to look a lot

476
00:25:42,440 --> 00:25:46,880
Speaker 1: more like pre pandemic UM, where you know, people are

477
00:25:46,960 --> 00:25:49,320
Speaker 1: waiting a little bit to do their shopping, and I

478
00:25:49,359 --> 00:25:52,320
Speaker 1: think they are going to go in person to these

479
00:25:52,359 --> 00:25:56,720
Speaker 1: stores and explore the products um and and try to

480
00:25:56,760 --> 00:26:00,280
Speaker 1: take advantage of the deals out there, not me sitting

481
00:26:00,280 --> 00:26:02,120
Speaker 1: on the count and I'm clicking if I can't buy

482
00:26:02,200 --> 00:26:04,320
Speaker 1: with my phone, it in happen it, Lindsay, thank you

483
00:26:04,400 --> 00:26:06,800
Speaker 1: so much for joining us. Appreciate it. Lindsay Dutch. She's

484
00:26:06,840 --> 00:26:09,800
Speaker 1: an analyst at Bloomberg Intelligence. Comes lots of things, but

485
00:26:09,840 --> 00:26:12,440
Speaker 1: she really does a great job on the retail space.

486
00:26:12,480 --> 00:26:15,520
Speaker 1: We've got a strong team there at Bloomberg Intelligence because hey,

487
00:26:15,520 --> 00:26:17,720
Speaker 1: there's a lot of companies out there in the retail

488
00:26:17,760 --> 00:26:20,320
Speaker 1: space UH and be the consumers such a big part

489
00:26:20,960 --> 00:26:22,919
Speaker 1: of this economy. And it's interesting to see how the

490
00:26:22,960 --> 00:26:28,199
Speaker 1: consumer UH is faring here with high inflation, appending recession.

491
00:26:28,520 --> 00:26:30,440
Speaker 1: Yet the retail sales numbers we saw come out we're

492
00:26:30,440 --> 00:26:32,879
Speaker 1: pretty darn good. UM, So we'll have to keep on

493
00:26:32,960 --> 00:26:38,199
Speaker 1: top of that. We need to get the latest on

494
00:26:38,480 --> 00:26:42,000
Speaker 1: the Ukraine. This is a fluid situation, of course, but

495
00:26:42,119 --> 00:26:44,840
Speaker 1: we need to speak to some experts and get the real,

496
00:26:45,080 --> 00:26:47,320
Speaker 1: uh sense of what's going on there, and we do

497
00:26:47,400 --> 00:26:50,280
Speaker 1: that right now with Dr Ariel Cohen. He's a senior

498
00:26:50,320 --> 00:26:54,200
Speaker 1: fellow at the Atlantic Council Eurasia Center. UH. He also

499
00:26:54,240 --> 00:26:56,600
Speaker 1: served as a Senior research fellow in Russian and Eurasian

500
00:26:56,640 --> 00:27:00,200
Speaker 1: studies and International Energy policy at the Heritage Foundation. The

501
00:27:00,280 --> 00:27:02,239
Speaker 1: author of six books, He's been doing his stuff a

502
00:27:02,240 --> 00:27:05,000
Speaker 1: long time. Folks, Um, Dr Colin, thanks so much for

503
00:27:05,160 --> 00:27:08,119
Speaker 1: joining us here. Boy, I guess I think about the

504
00:27:08,160 --> 00:27:11,760
Speaker 1: last fourty eight hours, it seems like the world kind

505
00:27:11,760 --> 00:27:14,639
Speaker 1: of dodged the bullet, if you will, in that this

506
00:27:14,760 --> 00:27:17,720
Speaker 1: missile strike in Poland. You know, perhaps was not a

507
00:27:17,760 --> 00:27:20,520
Speaker 1: premeditated act on the part of Russia, but boy, it

508
00:27:20,640 --> 00:27:24,359
Speaker 1: just highlights how risky things are over there and maybe

509
00:27:24,480 --> 00:27:28,400
Speaker 1: potentially getting even worse. What's your current state of affairs

510
00:27:28,440 --> 00:27:35,120
Speaker 1: over there? Absolutely? Uh. This is probably the worst deterioration

511
00:27:35,960 --> 00:27:41,160
Speaker 1: UH in the global security field since the Cuban missile crisis.

512
00:27:41,560 --> 00:27:45,439
Speaker 1: But the Cuban missile crisis was resolved quickly. Both the

513
00:27:45,560 --> 00:27:48,800
Speaker 1: US and the Soviet Union did not want the nuclear war. Here,

514
00:27:49,400 --> 00:27:53,760
Speaker 1: it's different because Jima puts in deliberately threatened the use

515
00:27:53,880 --> 00:27:59,159
Speaker 1: of tactical nuclear weapons in Ukraine and wanted the world

516
00:27:59,280 --> 00:28:04,000
Speaker 1: to walk him back from the break. And he really

517
00:28:04,080 --> 00:28:08,000
Speaker 1: really wanted attention. He got it. UH. Now it looks

518
00:28:08,040 --> 00:28:12,600
Speaker 1: like China and India a sort of distancing in different ways,

519
00:28:12,680 --> 00:28:17,359
Speaker 1: but distancing themselves from Russia, including in the recent G

520
00:28:17,480 --> 00:28:23,520
Speaker 1: twenty summit. Um Chairman C who just won the power

521
00:28:23,560 --> 00:28:29,520
Speaker 1: struggle in Beijing, was very careful not to criticize Russia directly,

522
00:28:29,960 --> 00:28:33,359
Speaker 1: but the statement about the necessity to avoid the nuclear

523
00:28:33,400 --> 00:28:35,960
Speaker 1: war was their front and center. Of course, Russia said

524
00:28:36,280 --> 00:28:40,560
Speaker 1: they are against the nuclear war as well, but what

525
00:28:40,640 --> 00:28:44,880
Speaker 1: you see here is a prolonged, protracted conflict in Ukraine.

526
00:28:45,000 --> 00:28:47,960
Speaker 1: Russia things that time is on its side because it

527
00:28:48,040 --> 00:28:53,920
Speaker 1: has more human resources and a greater UH industrial capacity,

528
00:28:54,040 --> 00:28:59,080
Speaker 1: whereas the Moscow power Circle thing that the West will

529
00:28:59,120 --> 00:29:03,560
Speaker 1: lose interest. UH. They hope that the Republicans would win

530
00:29:03,680 --> 00:29:07,520
Speaker 1: both houses, and mistakenly, in my opinion, I thought that

531
00:29:07,560 --> 00:29:11,040
Speaker 1: the Republicans will not support Ukraine. UH. And with the

532
00:29:11,040 --> 00:29:15,400
Speaker 1: exception of some fringe figures who got reelected recently, the

533
00:29:15,440 --> 00:29:19,280
Speaker 1: majority of the Republican Party and Republican voters do support

534
00:29:19,320 --> 00:29:24,480
Speaker 1: our aid to the struggle of the Ukrainian people for

535
00:29:24,520 --> 00:29:27,600
Speaker 1: their freedom. So, but this into some perspective for us

536
00:29:27,640 --> 00:29:30,760
Speaker 1: when it comes to the situation with Poland. At the moment,

537
00:29:30,800 --> 00:29:34,040
Speaker 1: I believe the investigation is still ongoing in terms of OH,

538
00:29:34,080 --> 00:29:36,880
Speaker 1: I believe what has been called a stray missile that

539
00:29:36,920 --> 00:29:40,360
Speaker 1: then hit Polish territory, and I should add NATO territory

540
00:29:40,440 --> 00:29:43,120
Speaker 1: as well. Present Biden has been very vocal about saying

541
00:29:43,640 --> 00:29:46,080
Speaker 1: any inch of NATO, the United States will of course

542
00:29:46,320 --> 00:29:51,120
Speaker 1: go to defend. But there are historical dynamics between Poland

543
00:29:51,320 --> 00:29:55,000
Speaker 1: Ukraine and then Poland Russia. Highlight to our audience why

544
00:29:55,040 --> 00:30:01,480
Speaker 1: that's so important. The missile fell in the Polish territory

545
00:30:01,520 --> 00:30:06,760
Speaker 1: close to the Ukrainian border. UM. The missile appeared to

546
00:30:06,880 --> 00:30:11,320
Speaker 1: missiles appeared to be at this moment the Ukrainian anti

547
00:30:11,320 --> 00:30:18,200
Speaker 1: aircraft missiles that hit air Russian UM missile that was

548
00:30:18,320 --> 00:30:25,880
Speaker 1: flying towards UM a Ukrainian target probably and energy target.

549
00:30:26,320 --> 00:30:31,320
Speaker 1: And UH. President Biden said that because Russia started this war, UH,

550
00:30:31,360 --> 00:30:35,920
Speaker 1: the ultimate responsibility is with Russia. Two people were killed

551
00:30:35,920 --> 00:30:38,960
Speaker 1: in Poland. For a moment, it looked at like a

552
00:30:39,040 --> 00:30:43,520
Speaker 1: Russian strike against Polish territory that would of course escalate

553
00:30:43,600 --> 00:30:47,080
Speaker 1: this war to a whole new level. But looks like,

554
00:30:47,200 --> 00:30:50,160
Speaker 1: thankfully this is not the case, and we very much

555
00:30:50,200 --> 00:30:53,920
Speaker 1: hope that this is not going to be a step

556
00:30:54,640 --> 00:30:59,080
Speaker 1: in escalation. But the escalation is deliberate Russian destruction of

557
00:30:59,160 --> 00:31:03,880
Speaker 1: the Ukrainian energy infrastructure, in which hundreds of thousands of

558
00:31:03,960 --> 00:31:07,840
Speaker 1: civilians remain without electricity and heat in the middle of

559
00:31:07,960 --> 00:31:11,160
Speaker 1: the war. So the Russians are trying to break the

560
00:31:11,320 --> 00:31:15,280
Speaker 1: spirit of resistance in Ukrap Dr Cohen, you know, we're

561
00:31:15,280 --> 00:31:18,360
Speaker 1: now many months into this war in Ukraine, we're coming

562
00:31:18,440 --> 00:31:21,680
Speaker 1: upon you know, uh, the winter season in that part

563
00:31:21,800 --> 00:31:25,600
Speaker 1: of the world. Based upon your experience, how do you

564
00:31:25,720 --> 00:31:29,520
Speaker 1: think this war resolves itself? How do you how do

565
00:31:29,520 --> 00:31:31,480
Speaker 1: you think it plays out? And maybe over what time frame?

566
00:31:33,160 --> 00:31:37,120
Speaker 1: I think we are going to see fighting in winter,

567
00:31:37,360 --> 00:31:42,680
Speaker 1: which is brutal. Um, it will get into the negative

568
00:31:43,080 --> 00:31:49,080
Speaker 1: tens and twenties occasionally there or the thaw maybe freezing,

569
00:31:49,840 --> 00:31:55,240
Speaker 1: but it's still December through March is quite nasty. Then

570
00:31:55,280 --> 00:32:00,200
Speaker 1: there'll be a little hiatus when the mud season strikes

571
00:32:00,640 --> 00:32:04,239
Speaker 1: late March early April, and then into the summer. So

572
00:32:04,360 --> 00:32:08,960
Speaker 1: I I see probably close to another year unless something

573
00:32:09,040 --> 00:32:12,680
Speaker 1: major happens. Look, Russian history teaches us at every tar

574
00:32:13,360 --> 00:32:18,280
Speaker 1: every ruler that loses war loses power. And Mr Putsen

575
00:32:18,680 --> 00:32:22,360
Speaker 1: is a great student of Russian history. He knows he

576
00:32:22,440 --> 00:32:25,680
Speaker 1: will not be an exception. All right, Dr Ariel Cohen,

577
00:32:25,720 --> 00:32:28,120
Speaker 1: thank you so much for joining us there. We appreciate

578
00:32:28,120 --> 00:32:31,440
Speaker 1: getting your thoughts in your perspective. Dr Errol Cohen, he's

579
00:32:31,440 --> 00:32:35,200
Speaker 1: a senior fellow at the Atlantic Council Eurasia Center. Getting

580
00:32:35,240 --> 00:32:38,040
Speaker 1: the latest on the fighting in Ukraine, and Dr Cohen

581
00:32:38,240 --> 00:32:41,200
Speaker 1: was saying, pretty it doesn't seem to be any resolution

582
00:32:41,280 --> 00:32:43,640
Speaker 1: in sight at this point. Yeah, and even I believe

583
00:32:43,640 --> 00:32:46,600
Speaker 1: the joint chis to have the Pentagon yesterday is talking about, well,

584
00:32:46,680 --> 00:32:49,240
Speaker 1: the timeline is going to extend certainly into the winter.

585
00:32:52,600 --> 00:32:55,760
Speaker 1: I had a lot of retail data come out over

586
00:32:55,800 --> 00:32:58,160
Speaker 1: the last week or so. We had some retail sales

587
00:32:58,400 --> 00:33:00,400
Speaker 1: government figures come out little bit better than a expected.

588
00:33:00,440 --> 00:33:03,280
Speaker 1: We've had some pretty good earnings numbers from most of

589
00:33:03,280 --> 00:33:06,080
Speaker 1: the retailers, and Macy's today with some good number stocks

590
00:33:06,160 --> 00:33:10,479
Speaker 1: up um, so we're starting to see getting some decent

591
00:33:10,600 --> 00:33:13,840
Speaker 1: figures of how the consumers really faring. To get some

592
00:33:13,840 --> 00:33:16,640
Speaker 1: more color We've checked in with Harley Finkelstein, president of

593
00:33:16,720 --> 00:33:21,680
Speaker 1: Shopify Shopify trades on the NASDAC under the simple s

594
00:33:21,840 --> 00:33:24,239
Speaker 1: H O P. That makes sense, Hardy, thanks so much

595
00:33:24,280 --> 00:33:27,160
Speaker 1: for joining us here, UM to tell us what's happening

596
00:33:27,160 --> 00:33:30,320
Speaker 1: with your business here, because there is concern about the

597
00:33:30,360 --> 00:33:33,400
Speaker 1: consumer as we potentially head into recession over the next

598
00:33:33,400 --> 00:33:36,880
Speaker 1: several quarters. Hey, Paul, Yeah, thanks for having me. Well,

599
00:33:36,880 --> 00:33:38,800
Speaker 1: it's like I think the UH, if the past few

600
00:33:38,880 --> 00:33:41,080
Speaker 1: years have proven anything, it's that changes is kind of

601
00:33:41,120 --> 00:33:44,040
Speaker 1: the only constant in commerce in general. UM. But we're

602
00:33:44,040 --> 00:33:47,440
Speaker 1: heading into you know, the biggest shopping moments of the year. UM.

603
00:33:47,560 --> 00:33:49,320
Speaker 1: And and there are still some notes in the in

604
00:33:49,320 --> 00:33:52,960
Speaker 1: the landscape. UH surveys are telling us at eight of

605
00:33:53,040 --> 00:33:56,640
Speaker 1: US businesses are planning for a big Black Friday, Cyber

606
00:33:56,640 --> 00:33:58,960
Speaker 1: Monday sales weekend. So that's that we think is really

607
00:33:58,960 --> 00:34:01,520
Speaker 1: really great. UM. And one of the things that you know,

608
00:34:01,520 --> 00:34:03,640
Speaker 1: we're seeing is that there are a couple of trends

609
00:34:03,720 --> 00:34:06,480
Speaker 1: happening bote both for the consumer but also for the

610
00:34:06,520 --> 00:34:08,759
Speaker 1: merchant and and uh, you know, if you compare it

611
00:34:08,800 --> 00:34:11,600
Speaker 1: to last year. Last year we saw but forty seven

612
00:34:11,640 --> 00:34:15,000
Speaker 1: million shoppers buying from Shopify brands over the forty weekend

613
00:34:15,400 --> 00:34:17,799
Speaker 1: UM that felt like it was a vote with their

614
00:34:17,800 --> 00:34:20,960
Speaker 1: wallets to support these amazing independent brands as opposed to

615
00:34:21,000 --> 00:34:23,040
Speaker 1: go to department stores. And so we'll see what happens there.

616
00:34:23,040 --> 00:34:25,239
Speaker 1: But peak sales last year, we're at three point one

617
00:34:25,280 --> 00:34:28,520
Speaker 1: million dollars permitted on Black Friday on Shopify and uh

618
00:34:28,600 --> 00:34:30,760
Speaker 1: and for the weekend we saw were six billion dollars

619
00:34:30,760 --> 00:34:33,120
Speaker 1: sold on our platform. So we'll see what happens this year.

620
00:34:33,160 --> 00:34:34,880
Speaker 1: But there's certainly some optimism in the in the air.

621
00:34:36,920 --> 00:34:40,480
Speaker 1: I heard that Shopify is building out their logistics arm,

622
00:34:40,640 --> 00:34:44,360
Speaker 1: which is interesting is usually something we associate with Amazon

623
00:34:44,520 --> 00:34:47,440
Speaker 1: for example, walk us through perhaps some of the challenges

624
00:34:47,480 --> 00:34:50,560
Speaker 1: at least a vision for that. Yeah, I mean a

625
00:34:50,600 --> 00:34:54,319
Speaker 1: couple of things, I think for the relationship that our

626
00:34:54,360 --> 00:34:56,640
Speaker 1: merchants have. We have millions of merchants on our platform.

627
00:34:56,840 --> 00:34:59,720
Speaker 1: Shopify is now about ten percent of total e commerce

628
00:34:59,760 --> 00:35:02,759
Speaker 1: in the US alone. UM and and so if you're

629
00:35:02,800 --> 00:35:04,800
Speaker 1: a consumer and you're buying from a from a great

630
00:35:04,880 --> 00:35:07,880
Speaker 1: brand direct on their online storey even offline store and

631
00:35:07,960 --> 00:35:10,880
Speaker 1: experiences is wonderful, there's a really good chance Shopify his

632
00:35:10,880 --> 00:35:13,480
Speaker 1: power and that experience one of the things that we

633
00:35:13,560 --> 00:35:15,560
Speaker 1: know that our merchants are looking for is is they

634
00:35:15,600 --> 00:35:17,480
Speaker 1: want us to help with more of their their retail

635
00:35:18,040 --> 00:35:20,800
Speaker 1: and their commerce issues. And so years ago we introduce

636
00:35:20,880 --> 00:35:23,240
Speaker 1: Shopify payments make it easier for him to exact payments.

637
00:35:23,440 --> 00:35:25,719
Speaker 1: We then introduced things like Shopify Capital. We've now given

638
00:35:25,719 --> 00:35:28,400
Speaker 1: out more than four billion dollars worth of cash advances

639
00:35:28,400 --> 00:35:31,640
Speaker 1: and loan store merchants, and more recently we introduced Shopify Fulfillment.

640
00:35:31,920 --> 00:35:36,480
Speaker 1: And really the idea is so because the consumers expectations

641
00:35:36,520 --> 00:35:39,480
Speaker 1: around fulfillment and shipping have been reset, we want to

642
00:35:39,480 --> 00:35:42,400
Speaker 1: give every merchant that uses Shopify the same effectively the

643
00:35:42,440 --> 00:35:45,040
Speaker 1: same ability to delight them with you know, to day

644
00:35:45,040 --> 00:35:48,160
Speaker 1: affordable shipping uh and that that the big retailers do.

645
00:35:48,239 --> 00:35:50,080
Speaker 1: And we think we can do that with shop by fulfilment.

646
00:35:50,440 --> 00:35:53,080
Speaker 1: But it's not just about one particular product, whether it's

647
00:35:53,080 --> 00:35:55,319
Speaker 1: a film that oar, payments or capital. The ideas we

648
00:35:55,360 --> 00:35:58,000
Speaker 1: are becoming the most important piece of software that these

649
00:35:58,040 --> 00:36:01,239
Speaker 1: millions of stores and merchants use and and to do so,

650
00:36:01,440 --> 00:36:04,400
Speaker 1: we really are are transitioning from just being e commerce

651
00:36:04,400 --> 00:36:07,439
Speaker 1: provider to being a retail operating system. And I think

652
00:36:07,480 --> 00:36:09,400
Speaker 1: a lot of our merchants would say that shopify is

653
00:36:09,480 --> 00:36:13,080
Speaker 1: their business for the most part. Harley, talk to us

654
00:36:13,080 --> 00:36:15,600
Speaker 1: about the pandemic over the last three years. A lot

655
00:36:15,640 --> 00:36:17,799
Speaker 1: of folks, I think it's kind of suggested to me

656
00:36:17,880 --> 00:36:21,200
Speaker 1: that maybe it's that has pulled forward maybe you know,

657
00:36:21,600 --> 00:36:27,360
Speaker 1: five years of market share gains for e commerce forward. Um,

658
00:36:27,480 --> 00:36:29,319
Speaker 1: A do you do you agree with that? Do you

659
00:36:29,360 --> 00:36:32,080
Speaker 1: think e commerce will louse share? Is? Maybe people start

660
00:36:32,080 --> 00:36:33,640
Speaker 1: going back to stores. How do you an you think

661
00:36:33,640 --> 00:36:36,279
Speaker 1: about that? What are your merchants telling you? Yeah, I mean,

662
00:36:36,320 --> 00:36:38,360
Speaker 1: it's it's a great question. What the pandemic did was

663
00:36:38,440 --> 00:36:41,360
Speaker 1: it certainly did pull forward some some acceleration in e

664
00:36:41,400 --> 00:36:44,799
Speaker 1: commerce penetration. Um, you know, uh, just just to be

665
00:36:44,920 --> 00:36:48,200
Speaker 1: just to be clear, Um, the metric or the vector

666
00:36:48,280 --> 00:36:50,759
Speaker 1: that most people are looking at is e commerce penetration

667
00:36:51,040 --> 00:36:53,840
Speaker 1: as a percentage of total retail. What happened during the

668
00:36:53,840 --> 00:36:57,319
Speaker 1: pandemic is if the equation simple, then the numerator is

669
00:36:57,360 --> 00:37:00,759
Speaker 1: e commerce sales. The denominator is total retail sales. When

670
00:37:00,760 --> 00:37:03,480
Speaker 1: the pandemic hit, you saw two things happen. The numerator

671
00:37:03,560 --> 00:37:06,279
Speaker 1: went up, of course e commerce was higher, but the

672
00:37:06,320 --> 00:37:09,239
Speaker 1: denominator you lost all physical retail, and so you saw

673
00:37:09,280 --> 00:37:12,319
Speaker 1: this massive growth rate and now that we're settling back

674
00:37:12,360 --> 00:37:15,040
Speaker 1: in sort of this you know, post pandemic world, what

675
00:37:15,080 --> 00:37:17,600
Speaker 1: you're seeing is all the gains and e commerce have

676
00:37:17,600 --> 00:37:19,960
Speaker 1: have sustained. We still have all those games, but the

677
00:37:20,000 --> 00:37:22,320
Speaker 1: growth rate is now closer to what we saw in

678
00:37:22,320 --> 00:37:24,959
Speaker 1: two thousand nineteen, but on a much much higher base.

679
00:37:25,160 --> 00:37:28,400
Speaker 1: And so I think the macro tail winds of e

680
00:37:28,520 --> 00:37:31,480
Speaker 1: commerce is is still very very healthy. In fact, e

681
00:37:31,560 --> 00:37:33,759
Speaker 1: commerce will you need to grow over time. We're still

682
00:37:33,880 --> 00:37:36,840
Speaker 1: sub in the US, it's a little bit less in Canada,

683
00:37:36,840 --> 00:37:39,000
Speaker 1: a little bit more in the UK, but e commerce

684
00:37:39,160 --> 00:37:40,960
Speaker 1: generally is still quite small and there's a lot of

685
00:37:41,040 --> 00:37:43,000
Speaker 1: room to grow. Now. The other thing I think that

686
00:37:43,120 --> 00:37:46,080
Speaker 1: is is becoming apparent to to us and certainly to

687
00:37:46,120 --> 00:37:48,279
Speaker 1: the merchants that you shopify you know, uh, you know,

688
00:37:48,360 --> 00:37:51,360
Speaker 1: great brands, whether it's you know, All Birds or its Figs,

689
00:37:51,480 --> 00:37:54,400
Speaker 1: or it's Fashion Nova or Gym Shark. Uh. You know

690
00:37:55,400 --> 00:37:58,120
Speaker 1: I mentioned on the Earnings called Glossy is now Shopify

691
00:37:58,160 --> 00:38:00,640
Speaker 1: and thetels banks these incredible to use this. One of

692
00:38:00,640 --> 00:38:02,000
Speaker 1: the things that we are seeing is that the future

693
00:38:02,040 --> 00:38:04,279
Speaker 1: of retail is not just going to be online, nor

694
00:38:04,400 --> 00:38:05,920
Speaker 1: is it going to be offline. There's sort of this

695
00:38:06,000 --> 00:38:08,680
Speaker 1: talk about is offline coming back? Well, of course, and

696
00:38:08,719 --> 00:38:10,560
Speaker 1: the reason is the future of retail is going to

697
00:38:10,600 --> 00:38:13,040
Speaker 1: be all about consumer choice and the brands that will

698
00:38:13,080 --> 00:38:15,359
Speaker 1: be most successful. I just tweeted about this about an

699
00:38:15,360 --> 00:38:17,759
Speaker 1: hour ago. But you know, Kim Kardashian, her new skin line,

700
00:38:18,080 --> 00:38:20,840
Speaker 1: cosmetic line we know, has a pop up powered by Shopify,

701
00:38:20,880 --> 00:38:23,520
Speaker 1: and so it's all coming together around e commerce and

702
00:38:23,520 --> 00:38:27,600
Speaker 1: commerce colliding and commerce being everywhere. Yep, it certainly seems

703
00:38:27,640 --> 00:38:29,480
Speaker 1: that is the case. Hardy, thank you so much for

704
00:38:29,560 --> 00:38:32,200
Speaker 1: joining us. We'll always appreciate getting the latest from you

705
00:38:32,440 --> 00:38:35,960
Speaker 1: on retail and on Shopify. Harley Finkelstein, he's the president

706
00:38:35,960 --> 00:38:39,000
Speaker 1: and at Shopify. Again, that is a NASTAC traded stock.

707
00:38:39,080 --> 00:38:41,399
Speaker 1: You can type in s h o P, go into

708
00:38:41,440 --> 00:38:45,360
Speaker 1: your Bloomberg terminally get all the latest there forty billion

709
00:38:45,400 --> 00:38:49,279
Speaker 1: dollars market cap there. So again, Black Friday coming up

710
00:38:49,640 --> 00:38:54,280
Speaker 1: big for the retailers. Thanks for listening to the Bloomberg

711
00:38:54,360 --> 00:38:57,759
Speaker 1: Markets podcast. You can subscribe and listen to interviews with

712
00:38:57,840 --> 00:39:02,600
Speaker 1: Apple Podcasts or whatever podcast platform you prefer. I'm Matt Miller.

713
00:39:02,880 --> 00:39:07,160
Speaker 1: I'm on Twitter. At Matt Miller three and I'm fall Sweeney.

714
00:39:07,160 --> 00:39:09,799
Speaker 1: I'm on Twitter at pt Sweeney Before the podcast. You

715
00:39:09,840 --> 00:39:12,239
Speaker 1: can always catch us worldwide at Bloomberg Radio