Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm
Speaker 1: Bloomberg Quick Takes Tim Stanebeck. We're here every day bringing
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Speaker 1: YouTube search Bloomberg Global News. Lots of things to cover today.
Speaker 1: Shares of game Stop. We know Tim raleiged again today,
Speaker 1: they also fell off some of those highs, but nonetheless
Speaker 1: we continue to see uh this volatility and it's playing
Speaker 1: out to some other names as well. She has been
Speaker 1: reporting NonStop on the market gyrations around game Stop and others.
Speaker 1: So let's get into it with Bloomberg News investing reporter
Speaker 1: Annie Massa. She is on the phone in New York City. Um, Annie,
Speaker 1: where are we? What do you think our audience at
Speaker 1: this point needs to know about what it's going out
Speaker 1: with game Stop and others. What's going on with robin hood?
Speaker 1: And it has been an absolutely wild week, as I'm
Speaker 1: sure anybody listening can tell. I guess yesterday things really
Speaker 1: came to a head because you started to see brokerages
Speaker 1: including robin Hood slamming the brakes on new purchase orders
Speaker 1: for game Stop, am C and some of these other
Speaker 1: Reddit fueled names that have been going crazy in the
Speaker 1: past couple of days, and that drew a big backlash
Speaker 1: online from users and also from some pretty unlikely pairings
Speaker 1: of people, including AOC and Ted Cruz, both of whom
Speaker 1: criticized robin Hood for preventing people from buying new shares
Speaker 1: of those companies. Jim said it yesterday's like strange bed
Speaker 1: fellows as a result of the exact Yeah, it didn't
Speaker 1: last very long. A retweeted his tweet and told him
Speaker 1: to resign. But you know, that's a conversation for a
Speaker 1: different day. Um. Look, I'm wondering what we learned about
Speaker 1: what robin hood did yesterday. There was a lot of
Speaker 1: confusion about why robin had prevented some basic functions for
Speaker 1: its users. What do we learn in the the last twenty
Speaker 1: four hours and what did Robin have to have to
Speaker 1: do in terms of getting this lifeline of a billion dollars. Yes,
Speaker 1: So when you look under the hood, what happened yesterday
Speaker 1: was there's machinery kind of underlying the market. Yeah, that's
Speaker 1: meant to manage risk. And what happened was the central
Speaker 1: clearing house asked Robin Hood and other brokers to effectively
Speaker 1: put up more collateral um that day because of all
Speaker 1: the volatility, because of all the risk in the market,
Speaker 1: and Robin Hood, as you mentioned, as a result, had
Speaker 1: to go out and raise kind of an emergency one
Speaker 1: billion dollar fundraising round from its existing investors. So there
Speaker 1: was a bit of a scramble for cash amid this
Speaker 1: this really really wild training session. So any I guess
Speaker 1: I'm still trying to figure out is was this a
Speaker 1: logistical operational problem in terms of clear clearing trades and
Speaker 1: so on, or was this traders colluding as you know
Speaker 1: Vince Signorella mentioned kind of at the top of the show.
Speaker 1: Did people break the law in terms of what you're
Speaker 1: allowed to do trading or was it again an operational
Speaker 1: problem in terms of clearing these trades. Well, it's been interesting.
Speaker 1: Robin Hood put out a statement yesterday trying to kind
Speaker 1: of assuage their investors and the people using their app, saying, listen,
Speaker 1: this was a risk management decision that we made. Um,
Speaker 1: you don't have to worry that this this decision was
Speaker 1: made at the behest of electronic traders or anyone else. Now,
Speaker 1: that wasn't really enough to calm down the wild conspiracy
Speaker 1: theories that flew around the internet yesterday. Um it was.
Speaker 1: It was a little too little, too late for that.
Speaker 1: But um, robin Hood did try to calm people's nerves
Speaker 1: and say, um, you know, it was a tough decision,
Speaker 1: but we had to make it for for risk management reasons.
Speaker 1: So what does this mean for a company like robin
Speaker 1: Hood that has really been the darling of so many
Speaker 1: REATA investors and of course also A venture capitalists. The
Speaker 1: company's supposed to have an IPO soon, yeah, zooming out.
Speaker 1: It really raises questions about how robin Hood can navigate
Speaker 1: this the hoopla of our current moment, and if it
Speaker 1: is still looking towards an I p O sometime this year,
Speaker 1: it's going to have to kind of prove that it
Speaker 1: can manage all of the reputational and financial strains frankly
Speaker 1: that this game top episode has has put upon it.
Speaker 1: So regulators are getting involved. As we said at the top, UM,
Speaker 1: where do you think this is going? What are you
Speaker 1: hearing from the financial community that you're talking to two traders,
Speaker 1: to observers to I'm sure you're going kind of too academics,
Speaker 1: you know, what are you hearing about? Kind of where
Speaker 1: this goes? Well? Now, I mean it's impossible to ignore
Speaker 1: this in Washington, So regulators have that, like they don't
Speaker 1: have a full plate or anything. Anny but okay, exactly
Speaker 1: exactly add this, add this to the list. Um. But
Speaker 1: the SEC did say today they put out a statement
Speaker 1: saying that they are watching, um the kind of insanity
Speaker 1: not there words, but of what's been happening in the
Speaker 1: past week or so, and that they will, you know,
Speaker 1: seek to identify any potential wrongdoing in the market. I
Speaker 1: mean it is worth mentioning though that, Um, it's clearly
Speaker 1: in the terms of service when you sign up for
Speaker 1: a robin Hood account that something like, you know, the
Speaker 1: broker choosing to put the brakes on UM trades in
Speaker 1: a certain security can happen. So and I talked about this,
Speaker 1: we any problem there, Tim and I were talking about
Speaker 1: this yesterday because when we were seeing things like being
Speaker 1: shut down and an account, and we thought there's gotta
Speaker 1: be some stuff in the in the fine print. And
Speaker 1: indeed last night people were tweeting images from from the
Speaker 1: from the terms of service that like that like highlight
Speaker 1: that that people don't read those of course, Um yeah,
Speaker 1: who's ever read the terms of service? I know that
Speaker 1: you should do it through it, but you want to
Speaker 1: make that trade any very fly implications for for next
Speaker 1: week and just taking it like a broader look at this, Um,
Speaker 1: what are the implications for this as we go into
Speaker 1: next week? I think the key thing to watch will
Speaker 1: be how some of this um, you know, craziness spills
Speaker 1: over to other names. We're already seeing that the chaos
Speaker 1: has spun out from just game Stop and am C. Now, um,
Speaker 1: you know, Bitcoin is having its own you know, an
Speaker 1: already volatile cryptocurrency is having its own wild day. And
Speaker 1: there are other stocks that are having uh similar issues too.
Speaker 1: So I mean, you've just seen a spiral way out
Speaker 1: from game Stop into other parts of the market. So
Speaker 1: as you continue to cover this story, Okay, what are
Speaker 1: the angles you want to know about? What is it
Speaker 1: that you're kind of watching for, especially as we are.
Speaker 1: You know, we're wrapping up this trading week, but we're
Speaker 1: gonna get ready for a new trading week in a
Speaker 1: new month next week. What are the angles and stories
Speaker 1: and you know, issues that you think we need to
Speaker 1: be kind of sensitive to. I think we'll absolutely have
Speaker 1: to watch the strain that some of this has put
Speaker 1: on the broader financial system. I mean, I think that
Speaker 1: it's pretty unexpected how we've already seen the stress that
Speaker 1: you know, the very like nuts and bolts of uh
Speaker 1: financial markets were put under by this whole episode. So
Speaker 1: that's one thing, and then the other thing I guess
Speaker 1: I would watch is how short sellers have been affected.
Speaker 1: I mean, we saw Citron research put out today that
Speaker 1: they are no longer you know, publishing short possess. That
Speaker 1: was huge, huge, yeah, huge decision and um so not
Speaker 1: publishing or not taking just not publishing not yeah, I'm yeah.
Speaker 1: I mean it's kind of up ending their strategy for
Speaker 1: the past twenty years. It's it's a huge turnaround for them. Well,
Speaker 1: how does this make other short sellers think about this? Because,
Speaker 1: as you know, a lot of people point out to
Speaker 1: Twitter on Twitter today Mark Gangla from Bloomberg Opinion. We
Speaker 1: talked about this earlier today on Quick Take. Short sellers
Speaker 1: have a role. They have a role in exposing fraud
Speaker 1: and exposing wrongdoing at companies, and they're some great examples
Speaker 1: of short sellers doing that. I mean, we think and Ron,
Speaker 1: we think wire card more. That's right. And the format always,
Speaker 1: you know, the typical format that we think of as
Speaker 1: a short seller, you know, has a short position and
Speaker 1: then does a big reveal and then the stock sells off.
Speaker 1: But you know, as we've seen when people on Reddit
Speaker 1: plan out in the open um, you know, to to
Speaker 1: kind of orchestrate a short squeeze. You know, if if
Speaker 1: this can happen regularly, short sellers might have to rethink
Speaker 1: how they go about that. That entire business. Yeah, I mean,
Speaker 1: it's just pretty amazing and things that just have moved
Speaker 1: so quickly. Um, and thank you so much, really appreciate it.
Speaker 1: Bloomberg News investing reporter any Massa check out all of
Speaker 1: our work on the Bloomberg and at Bloomberg dot com,
Speaker 1: because um, that's the thing. Like we talked about hurts
Speaker 1: last year and I think we were like, oh, but
Speaker 1: now we've seen a lot more names, and it's just
Speaker 1: the cycle has been happening much more and I think
Speaker 1: to like more widespread applications totally. I mean, it's really
Speaker 1: impacting certainly. Uh. I guess we still have yet to
Speaker 1: gauge the impact on the overall market right um, but
Speaker 1: we've definitely seen some big institutional, well known, sophisticated investors
Speaker 1: feeling an impact as a result. This is Bloomberg Business
Speaker 1: Week with Carol Messer and Bloomberg Quick Takes Tim Stinovich
Speaker 1: from Bloomberg Radio. We've got a bunch of headlines that
Speaker 1: we want to mention our thanks again to J and J.
Speaker 1: Just catching up in terms of their vaccine news today
Speaker 1: and I thought it was interesting what they talked about
Speaker 1: the variant they're upscaling already for the South African variant
Speaker 1: that has started already, so you know, managing the current situation,
Speaker 1: but also thinking about kind of where it's going. You
Speaker 1: need that to that end, Carol, the chief scientists telling
Speaker 1: us that shots are likely needed quote for the next
Speaker 1: few years, sort of thinking about it at least in
Speaker 1: the near term from their perspective of like a flu shot,
Speaker 1: because as the doctor told us, as virus is here
Speaker 1: for a while exactly, and we know we need multiple vaccines.
Speaker 1: They expect to start delivering shots in March. They told
Speaker 1: David Weston back in September, a billion shots in one
Speaker 1: and uh he reiterated at Paul Staffles again today, so
Speaker 1: uh interesting. But he did talk about the fittest variants
Speaker 1: will survive, which makes me a little terrified because that
Speaker 1: means the strong variants. Yeah, I don't like to hear that.
Speaker 1: But they were already working to adapt their vaccine to them.
Speaker 1: All right, So that's going on. We know Mexico overtook
Speaker 1: India as the country with the third highest number of
Speaker 1: fatalities after the US in Brazil. New York City can
Speaker 1: reopen indoor dining at that's going to happen on Valentine's Day.
Speaker 1: Here's the count everyone global virus cases exceeding a hundred
Speaker 1: and one point six million deaths near two point two million,
Speaker 1: with more than eighty seven point one million shots given worldwide.
Speaker 1: So let's get into it as we always like to
Speaker 1: do on our Fridays. Dr Ian Los Padre back with US,
Speaker 1: Clinical Associate Professor of Medicine at n y U Landgoing
Speaker 1: Medical Center. Back with US on the phone in New
Speaker 1: York City. Dr los Pader, nice to have you here.
Speaker 1: Don't know if you were able to hear too much
Speaker 1: of that J and J conversation that we just had.
Speaker 1: What do you make of the J and J news today?
Speaker 1: I think overall, by the way, happy Friday Friday to
Speaker 1: join you guys. So I think overall the J and
Speaker 1: J news is encouraging. I think UM people initially in
Speaker 1: the stock probably suffered a little bit based on that
Speaker 1: sixty effective against a mild and moderate disease. I think
Speaker 1: the key numbers that Paul the Chief Scientific Officer talked
Speaker 1: about UM, and I think the fact that it can
Speaker 1: be refrigerated at normal refrigeration temperatures, you know, three degrees
Speaker 1: fahrenheit makes it storable now in your local CVS or
Speaker 1: Walgreen's pharmacy, the local doctor's office. So I think it
Speaker 1: does have the potential to be distributed much more easily.
Speaker 1: The other thing that we haven't looked at, but people
Speaker 1: talk about is maybe a second shot of either that vaccine.
Speaker 1: Even though it's advertised obviously as a one shot, some
Speaker 1: people feel giving either another shot or even a different
Speaker 1: vaccine might really potentiate the antibody response. So uh, if
Speaker 1: at all her point another vaccine is developed, it could
Speaker 1: be an m R and A or something else that
Speaker 1: might really boost people's immunity for longer to come. So
Speaker 1: I think, um, I think there's a lot of good
Speaker 1: potential there, obviously, are you no, no, no no. I
Speaker 1: think the J and J shot is a very helpful
Speaker 1: addition to the armamentarium. I think if we find any
Speaker 1: issues along the way, uh, booster shots, so even of
Speaker 1: another vaccine may be very helpful. You know, it's talked
Speaker 1: about theoretically whether or not, um doing two different kinds
Speaker 1: of vaccines may even be very beneficial at least some
Speaker 1: scientists you know, talk about that. But overall, I think
Speaker 1: this is very good news. And the key metric, which
Speaker 1: is hospitalizations, was really you know that a hundred percent
Speaker 1: efficacy hospitalization, So it literally doesn't get any better than
Speaker 1: a right. And again this is not and you know,
Speaker 1: we haven't looked at this at millions of people. I
Speaker 1: mean that number may come down a bit. That was
Speaker 1: just in the study group. So overall, I think it's
Speaker 1: very good news, and I think the storage is also
Speaker 1: very good news. Um well, I just want to draw
Speaker 1: some distinctions here between the vaccines that are available right now,
Speaker 1: the MR and A vaccines from Moderna and fiser Bion Tech,
Speaker 1: and in this vaccine because I think, I think when
Speaker 1: we saw this headline number this morning, we we we've
Speaker 1: kind of been a little spoiled because we've seen numbers
Speaker 1: in terms of efficacy above nine for the m R
Speaker 1: and A vaccines. Seeing a number like sixty, um was
Speaker 1: I think to a lot of people was just like
Speaker 1: not as good. But can you kind of go through
Speaker 1: the pluses and minuses of each one here, because it
Speaker 1: seems to me the storage issues or lack thereof when
Speaker 1: it comes to the Johnson and Johnson one and the
Speaker 1: fact that it's a single shot, plus you have that
Speaker 1: figure where it prevents a hundred percent of hospitalizations and deaths, Like,
Speaker 1: that's pretty good. I'm with you, So you know, just
Speaker 1: to start more at ground zero. Each of these vaccines
Speaker 1: has a slightly different technology. The m R and A
Speaker 1: is really amazing and brand new and probably does provide
Speaker 1: us some more flexibility in modifying that if we get
Speaker 1: any mutations, which we're seeing. So we worry about some
Speaker 1: of the mutations because, uh, some of the evidence of
Speaker 1: the UK and South Africa strains, you know, make it
Speaker 1: more contagious. So what does that mean. It does seem
Speaker 1: that some of these strains bind a little more avidly
Speaker 1: to the host cells. It also makes it seem that
Speaker 1: they have a higher viral count. In other words, the
Speaker 1: way the virus may adapt is that there are fewer
Speaker 1: symptoms early on, so it gives a chance for the
Speaker 1: virus to replicate. Patients don't feel sick yet if they
Speaker 1: call for sneeze, they have a much higher amount of
Speaker 1: virus in that. So these viruses, you know, as Darwin,
Speaker 1: you know, adapt and become more effective along the way.
Speaker 1: So that's one thing that we do have to be
Speaker 1: aware of and concerned about. Those m RNA vaccines can
Speaker 1: be adjusted to some of the mutations. But I think
Speaker 1: the key metric really is how do you reduce hospitalizations?
Speaker 1: And I think the J and J really meets that
Speaker 1: metric and maybe over time even more effective than that
Speaker 1: against a severe disease, because that's really what we worry about.
Speaker 1: And I agree, I think the storage will allow it
Speaker 1: to be more distributed. I took the glad no please go.
Speaker 1: I took the two fighter shots. Um, you know, minimal
Speaker 1: side effects. I think the mRNA is great. And I
Speaker 1: think at the end of the day, whether you want,
Speaker 1: you know, the Cadillac or the or the Buik or
Speaker 1: the Mercedes. You know, these are all going to be
Speaker 1: great ways to get you to where you want to be.
Speaker 1: They're all cars. But do they all have heated seats?
Speaker 1: I'm just gonna put I don't care as long as
Speaker 1: it is a seatbelt. If it's a well that exactly
Speaker 1: it has a seatbelt. Um, now are you feeling more optimistic?
Speaker 1: And I am curious though, Ian. I always ask you,
Speaker 1: I know, Tim, and I ask you, um, what kind
Speaker 1: of patients are seeing with the virus? What kind of
Speaker 1: flows are you seeing? Because you know, we see numbers.
Speaker 1: It feels like the numbers are coming down the cases
Speaker 1: and so even though there's still at high levels around
Speaker 1: the country, what are you seeing the firsthand? So hospitalizations
Speaker 1: are up a little bit, they're nowhere near that we
Speaker 1: saw previously. So I think things are overall stable. Part
Speaker 1: of the problems that we're encountering really is availability vaccine.
Speaker 1: I think we have to do better to get vaccines
Speaker 1: to the states, and the states to get it really
Speaker 1: to the vaccine center. So we are. We're not doing
Speaker 1: as well as we should be because we really have
Speaker 1: got to just get these vaccines in people's arms in
Speaker 1: order to bend the curve. I also see a lot
Speaker 1: of patients asking me questions, you know, shall I check
Speaker 1: antibodies after I get the vaccine? No, the commercial um vaccine.
Speaker 1: The commercial test look for something called an anti nucleo
Speaker 1: capsid antibody, so it detects if you've had an infection.
Speaker 1: It doesn't routinely check for the anti spike, which is
Speaker 1: really what we're getting antibodies too. So people should not
Speaker 1: be asking about getting antibody tigers after the vaccine. Most
Speaker 1: of the commercial essays will really not detected, and people
Speaker 1: should not worry if they're negative because they're looking at
Speaker 1: the wrong thing. So I think we do need to
Speaker 1: do better with vaccine distribution. I think even one vaccine
Speaker 1: does provide some additional protection. But I do think we're
Speaker 1: gonna have to wait a little while for J and J.
Speaker 1: As we say, March is a long way to go
Speaker 1: until March, and I think we do have to be careful.
Speaker 1: But Dining New York is going to open. Can we
Speaker 1: just go there? Yeah? I was just gonna go there.
Speaker 1: Is that the right thing to do, because you know,
Speaker 1: you talk about bending the curve. It seems like we
Speaker 1: are getting some encouraging news from the West coast from
Speaker 1: here in New York, or we're starting to look like
Speaker 1: we could be coming off that peak. I don't want
Speaker 1: to say we are, because you know, we just don't know.
Speaker 1: We can't see the future. Is now really the right
Speaker 1: time to be easing these restrictions? And this is bear
Speaker 1: to Blasio saying new COVID variance could take our progress
Speaker 1: and reverse it if we don't act quickly. I think
Speaker 1: I don't know whether he was on CNBC, but like,
Speaker 1: help us out here, this doesn't make sense. So this
Speaker 1: is a new pandemic. I don't think we can say
Speaker 1: that we know are percents scientifically if you open restaurants
Speaker 1: or twenty six percent, or we just don't have that precision.
Speaker 1: I do think part of this is political, and I
Speaker 1: think part of this is keeping our businesses alive. To
Speaker 1: a degree. We know that eating outdoors and that's worked
Speaker 1: fairly successfully. We'll keep a lot of the restaurants and
Speaker 1: businesses afloat indoors. Does seem reasonable to me. There's always
Speaker 1: some risk that people take whenever there with other people,
Speaker 1: But I think if there's adequate spacing and dentilation, that
Speaker 1: is reasonable. Every restaurant is going to have to sort
Speaker 1: of do this carefully. But my senses, we're not seeing
Speaker 1: spikes from school openings, So school certainly is reasonable for
Speaker 1: kids for a variety of reasons. And I think restaurants
Speaker 1: have opened carefully can also work even in the winter
Speaker 1: withoutdoor heaters and smaller percentages and and kind of thread
Speaker 1: the needle between keeping businesses afloat that I think we
Speaker 1: need to do and keeping people safe. Yeah, I have
Speaker 1: to say that with my own daughter's school. I mean
Speaker 1: there's an occasional case. We even see it certainly in
Speaker 1: our office, but it's not like all of a sudden,
Speaker 1: you know, two cases go to ten, cases go to twenty.
Speaker 1: We aren't see that. So there is something, um, you know,
Speaker 1: I agree with you that we are seeing it more manageable.
Speaker 1: I guess it feels like I don't know, or we're
Speaker 1: just all being smarter about wearing masks and social distance.
Speaker 1: I think I'm looking at I was going to say,
Speaker 1: I mean, it's almost like masks and physical distancing net
Speaker 1: work I mean it's as simple as that. Right. The
Speaker 1: schools and restaurants I think are learning pods, hybrid and
Speaker 1: so forth. So I think they're doing a better job.
Speaker 1: And certainly if they do have cases, they can jump
Speaker 1: on that for context and maybe closing down that particular class.
Speaker 1: But overall, I think it's working fairly well. And as
Speaker 1: the Chief Scientific Officers said, we're going to have to
Speaker 1: kind of learn to deal better with this. Possibly now
Speaker 1: we thought it would be a year. I think it's
Speaker 1: certainly looking like it maybe a few years before globally
Speaker 1: we really eradicate this because you know, vaccinating um eight
Speaker 1: billion people. Uh, it's going to take some time and effort.
Speaker 1: The logistics of it went yeah, No, I mean it's
Speaker 1: it's the logistics are just uh we ask you every week,
Speaker 1: dr lust beder Um expectations have they shifted it all
Speaker 1: for a return to normalcy given the J and J news,
Speaker 1: given that we've you know, we've we've been opping o
Speaker 1: our vaccine roll out of here in the US, I'm
Speaker 1: still optimistic by end of summer life in the United
Speaker 1: States should return really two more normal. I think people
Speaker 1: will still some people want to wear masks. I think
Speaker 1: that's totally reasonable to do. It's fine to be safe. Um,
Speaker 1: I think we've reduced flu shots. Let's also remember flu
Speaker 1: is only about thirty percent effective, and everyone takes a
Speaker 1: flu shot every year and we're happy with that. So
Speaker 1: you know, let's keep it in perspective that, you know,
Speaker 1: we take the flu shots happily and they're like thirty effective,
Speaker 1: varies from year to year. Right, that's a really good point. Hey, Ian,
Speaker 1: thank you so much. Take care of yourself, Have a
Speaker 1: good weekend. Dr Ian los Beda Clinical Associate Professor Medicine
Speaker 1: at n y U Landgoing Medical Center. On the phone
Speaker 1: in New York City. This is Bloomberg Business Week with
Speaker 1: Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio.
Speaker 1: So one of our top stories of course following the vaccine,
Speaker 1: but also the Reddit boards at it again once again
Speaker 1: bidding up shares of game stop and worn with headphones
Speaker 1: by seeking out targets such as see it Financial and
Speaker 1: TWiki make our hostess brands. It continues. SEC meantime is
Speaker 1: saying it's going to look into potential misconduct and review
Speaker 1: some decisions by the brokerages to curtail transactions on certain stocks.
Speaker 1: Read it, We not read it. Um rolling hood, we
Speaker 1: saw curtail trading. We also saw it on wee bill.
Speaker 1: So let's see what the CEO we Bill has to
Speaker 1: say about all that. Anthony Denier joins us on the
Speaker 1: phone in New York City. Hey, Anthony, good to have
Speaker 1: you here with Tim and myself. So, um, why did
Speaker 1: you restrict trading? Let's just put it out there. Sure,
Speaker 1: let's get right to it. Um, thanks for having me well,
Speaker 1: Carol and Tim. We we did not have a say
Speaker 1: in the matter. We're an introducing firm. We do not
Speaker 1: operate our own clearinghouse right, so we do not put
Speaker 1: any customer, We do not put any collateral on behalf
Speaker 1: of customers to settle all the transactions that happened on
Speaker 1: our platform. We are simply a portal. So our third
Speaker 1: party clearing house called me at approximately nine eight am
Speaker 1: and informed me that they may not be able to
Speaker 1: settle new by orders in three particular names of three
Speaker 1: most popular ones that were seeing on Reddit, and I
Speaker 1: had to make the hard decision to send out a
Speaker 1: message to our users that we are not able to
Speaker 1: support by orders. Why was that a decision you had
Speaker 1: to make it. Why was that a decision you had
Speaker 1: to make? It sounds like it wasn't even a decision
Speaker 1: like you had to send that. Well, you're right, I
Speaker 1: had to send it exactly. I mean I could have.
Speaker 1: I could have went back to the clearing house and
Speaker 1: said no, I'm going to keep yours open, and what
Speaker 1: possibly could have happened is those trades would have failed,
Speaker 1: which would have cascaded into a much bigger problem. So
Speaker 1: maybe you're right, I did not have that, did not
Speaker 1: have a decision to make. Well, So so where what
Speaker 1: is the issue that needs to be fixed here in
Speaker 1: order to to to be able to actually make trades
Speaker 1: when when when your users want to make trades? What
Speaker 1: needs to be fixed? Uh? Well, first off, there's a
Speaker 1: two day to business day waiting period first settlement. Right,
Speaker 1: The systems that go into settling transactions are very antiquated.
Speaker 1: To put it lightly, they're working on techno ology that
Speaker 1: was built decades ago. Right, it used to be T
Speaker 1: plus three, now it's T plus two. There is talk
Speaker 1: that they're gonna work till T plus one. That's two
Speaker 1: whole days. That massive amounts of capital need to be
Speaker 1: allocated as collateral to deal with margin requirements as the
Speaker 1: DTC clearinghouse. So what needs to be done. We need
Speaker 1: to implement new technology i e. Blockchain, which has been
Speaker 1: talked about for a long time. But when you're taking
Speaker 1: an old system and trying to bring it into the
Speaker 1: new world, that does take time. Um, So there needs
Speaker 1: to be technology technological advances in order to ensure that
Speaker 1: this does not happen again. So that's what we're trying
Speaker 1: to get to. Like, what's the problem. Was it traders,
Speaker 1: individual retail investors, you know, doing something wrong or was
Speaker 1: it just a case that the infrastructure, the logistics just
Speaker 1: doesn't quite work as you say antiquated systems. Is that
Speaker 1: the problem? Now that's a that's a loaded question a
Speaker 1: little bit because on on the surface, I will say
Speaker 1: that that is the problem. Now, obviously I think what's
Speaker 1: going on is a little deeper than just the market
Speaker 1: mechanics of trade settlement right now. If you if you
Speaker 1: want to talk about the story of why specific brokerages
Speaker 1: stopped the new opening positions or i e. By orders
Speaker 1: of these specific stocks, yes, it was a market mechanic.
Speaker 1: It was a lack of capital right and fear of
Speaker 1: counterparty risk that was the reason for that, But more
Speaker 1: underlying is why are these masses having a populous movement
Speaker 1: going against what you know they would call, you know,
Speaker 1: the institutions, right, the hierarchy, you know, um, you know
Speaker 1: the suits. There's an unlevel playing field that's been going
Speaker 1: on for a long time and and furs like weevil
Speaker 1: have been aggressively trying. We've been trying since we started
Speaker 1: two and a half years ago, open up the playing field.
Speaker 1: I don't I'm not even gonna bother using the word
Speaker 1: democratization because it gets used too much. We're giving access
Speaker 1: two uh, not only tools, but access to markets and
Speaker 1: trading strategies that retail investors had ever had access to, right,
Speaker 1: or they did have access to they had to have
Speaker 1: huge amounts of capital at the firm, or they had
Speaker 1: to pay ridiculous fees a platform for you, subscription fees
Speaker 1: or commissions. And we removed that and that started, that
Speaker 1: started the turn. But now they want to play for
Speaker 1: level on all levels. Right. Why does what does institutions
Speaker 1: get the ability to have a ten x leverage capability
Speaker 1: with portfolio margin where regulation stops a retail investor from
Speaker 1: two x leverage. Well, you know someone would say, forgive
Speaker 1: me not my words or my assessment, but smart investor
Speaker 1: versus dumb investor. Do individual retail investors really understand the
Speaker 1: implications of that kind of leverage. I think they're really
Speaker 1: starting to. Okay, And like I said, not, um, hey, Anthony,
Speaker 1: give us some numbers from from this week. I mean,
Speaker 1: what kind of increase in action did you see on
Speaker 1: the platform? We saw some of these trading apps moved
Speaker 1: to the top of the iTunes app store, so obviously
Speaker 1: there was a lot of activity. Yeah, um, a lot
Speaker 1: of that stivity is probably putting it lightly. Um. We've
Speaker 1: we've been very fortunate to have to be growing at
Speaker 1: a at a very fast pace over the course of
Speaker 1: the past year and a half, in particularly coinciding with
Speaker 1: the whole retail trading world going to zero commission. It
Speaker 1: opened up retail investing to a whole new demographic of user.
Speaker 1: Most of those users were app based users, right, we
Speaker 1: are an app based platform. Are demographic tins to skew
Speaker 1: younger because we are so app specific. Um, so we've
Speaker 1: been very fortunate to have good growth numbers. Now that
Speaker 1: this you know, this movement has gone viral, so to speak,
Speaker 1: it's reopen that it's the new reawakening of zero commission.
Speaker 1: It's people realizing that, hey, I can take control, I
Speaker 1: can make changes, I can improve the system. So we
Speaker 1: went from you know, I we you know I would
Speaker 1: look and scroll in the finance category of app on
Speaker 1: the App Store, whether it's Android or I l S,
Speaker 1: and you know I was getting I put up a
Speaker 1: couple of posts. I was really excited did because we
Speaker 1: made the top ten in the finance section. We were
Speaker 1: nowhere near in the top thirty for overall apps compared
Speaker 1: to like TikTok and Zoom and Instagram and and now
Speaker 1: if you look for the last couple of days, it's
Speaker 1: been Robin Hood's number one. We will number two and
Speaker 1: read it number three, which tells the story of what's
Speaker 1: going on. So bottom line twenty seconds. It's just made
Speaker 1: you even that much more popular. It has increased our popularity. UM.
Speaker 1: It's also increased our need to make sure that customers
Speaker 1: are informed, educated, we're transparent about what we're doing, why
Speaker 1: we're doing it. Um. You know, these are things that
Speaker 1: that make a successful product. So you've grown. Can you
Speaker 1: give us a number? Just you get fishing for a number.
Speaker 1: I appreciate a number number number two in the app stote.
Speaker 1: That's a big deal. Hey listen, Anthony, thank you so much.
Speaker 1: And I hope we can get you back in the future. Uh,
Speaker 1: CEO of we Bill Anthony Denier joining us on the
Speaker 1: phone in New York City Journal. Yeah, but you let
Speaker 1: me drive? Oh no, no, no no, no home an please,
Speaker 1: I'll do the riding drivel. I want to drive. Just drive, baby,
Speaker 1: it's the questions drying. This is the drive to the globe. Gimmu. Thanks,
Speaker 1: We'll drying us to dawn on Bluebird Radio. Yet time
Speaker 1: for the drive to the clothes. Getting ready to wrap
Speaker 1: up the trading day, the trading week. What a week, man, right,
Speaker 1: I mean, I don't even know where to begin. Historic
Speaker 1: history making one for the history books. One we're going
Speaker 1: to remember, right, And it ain't over Like there's more
Speaker 1: to come. So let's get into the market. Talk with
Speaker 1: Tom Plum. Back with US President, Chief investment Officer Plumb
Speaker 1: Phones based in Medisone, Wisconsin. He's joining us on the
Speaker 1: phone from there, And uh, I should put out the
Speaker 1: Plumb Balanced Fund consistently a top performer. It's in percent
Speaker 1: over the past five years, just about all of its
Speaker 1: U of the other funds in that category, returning on
Speaker 1: average annually according to Bloomberg Data about a top performer. Tom,
Speaker 1: Good to have you here, Tim, and I have to
Speaker 1: start with the week that was. Um. Listen, you you
Speaker 1: have been investing for years. You know you really think
Speaker 1: about fundamentals when you, you know, pick a name and
Speaker 1: put it in your fund. What do you make of
Speaker 1: what we've seen with Game Stop AMC, the likes and
Speaker 1: and the volatility that seemed to have created in the marketplace. Well,
Speaker 1: you certainly have had something to talk about this week.
Speaker 1: I remember an old saying that sometimes the dog wigs
Speaker 1: the tail, and sometimes the tail wigs the dog and
Speaker 1: the market activity. I considered the tails. Usually people think
Speaker 1: of the fundamentals, the economics, the UH government actions and
Speaker 1: things like that being the dog, and the tail being
Speaker 1: the market. Certainly, the activities and all that stuff that's
Speaker 1: been going on in the market has really made people
Speaker 1: stop thinking about a week when Apple reported, Visa reported,
Speaker 1: MasterCard reported, Apple reported the new Biden administration had over
Speaker 1: thirty executive orders. All of that stuff is pushed to
Speaker 1: the backside because of this incredible activity that we've seen
Speaker 1: in game stock and companies like that. Um, this is
Speaker 1: a brand new one that we haven't seen. The group
Speaker 1: of people that have been retail oriented caused these shortcovers. Uh.
Speaker 1: In the past, you would have other companies do that when,
Speaker 1: especially when there was good news came out on a
Speaker 1: company that was heavily shorted and you could see some
Speaker 1: shortcovering rallies. But this one here is Uh. You know,
Speaker 1: I've been in the business for a long long time
Speaker 1: and I've never seen anything like this week. Does it
Speaker 1: Does it make you tom think any differently about your strategy?
Speaker 1: And look, I know you're not, you know, participating in
Speaker 1: anything that we saw this week, but or I would
Speaker 1: I should assume that. But um, but does it make
Speaker 1: you think differently about your overall strategy at all? Well,
Speaker 1: you know, you do wonder if the markets Obviously there's
Speaker 1: people talking for years about is the market over extended?
Speaker 1: And we had a nice round last year with some
Speaker 1: specially the companies that were in the crypto or the
Speaker 1: financial tech area being leaders. We're still feeling that we're
Speaker 1: in an economic recovery. We're going to have this incredible
Speaker 1: volatility for a while, but that it's still gonna mean
Speaker 1: that you want to own good companies that are going
Speaker 1: to participate in an expanding economy and actually have good
Speaker 1: business plans that will extend long before, long after the recovery.
Speaker 1: Well and listen your top holdings read I've said this
Speaker 1: to you before, like who's who when it comes to
Speaker 1: brands and big companies. Um. So, having said that, I
Speaker 1: mean Apple is on it. They reported earnings this week,
Speaker 1: Microsoft's reported. Uh, there were a lot of um, you
Speaker 1: know you talked about Visa and MasterCard. I mean a
Speaker 1: lot of these have reported. Um anything that you got
Speaker 1: fundamentally from many of these companies that made you, you know,
Speaker 1: think about either adding or you know, change the fundamental
Speaker 1: story for you on them, I'm guessing not. Well, No,
Speaker 1: I think that what you had last year where there
Speaker 1: were some very very good companies that continue to grow
Speaker 1: even though there's all these challenges that you think might
Speaker 1: have eliminated, especially when you look at the earnings sort
Speaker 1: of the overall s and p that it was going
Speaker 1: to be a very very tough year. But there is
Speaker 1: a lot of companies that had growth in Some of
Speaker 1: the grow that we've talked about in the past has
Speaker 1: been accelerated by the pandemic and those trends have continued.
Speaker 1: You know, if you take a for example, a company
Speaker 1: like MasterCard, which besides being involved in a lot of
Speaker 1: cryptocurrency and things now that are pretty exciting. You know,
Speaker 1: they have had uh fifty one percent now they say,
Speaker 1: of people in the United States use contactless payments in
Speaker 1: one form or another, it's up a hundred percent year
Speaker 1: over year. Those trends are going to continue. They're going
Speaker 1: to recover with the economy. A company like MasterCard was
Speaker 1: hurt last year by business t and a expense going down,
Speaker 1: by travel going down, by restaurants hospitality going down, but
Speaker 1: the business of buying online offset a lot of that.
Speaker 1: And there's still such a well managed company that they
Speaker 1: were very profitable even if profits were down last year. Hey,
Speaker 1: what did you make Tom of Apple's earnings in its
Speaker 1: most recent quarter, a hundred more than a hundred hundred
Speaker 1: billion dollar quarter. Uh And I know that Apple is
Speaker 1: one of your top holdings. Well, you know, Apples are
Speaker 1: a great example. They've for quite a while now it's
Speaker 1: been uh sell shortly on news after their report because
Speaker 1: they've been reporting very good earnings growth the last four quarters.
Speaker 1: But they also give you this cautionary appraisal of what
Speaker 1: might happen in the future. They're being a little concerned,
Speaker 1: and so the stock has typically sold off a little
Speaker 1: bit after their report. But I think after that's digested,
Speaker 1: people are going to look at this company is probably
Speaker 1: the best benefactor of the beneficiary of the five G rollout.
Speaker 1: The new generations are going to be strong for them,
Speaker 1: and they've modified their model to include much more recurring
Speaker 1: rep to do us from service and and other programs
Speaker 1: that go through their app store. So I think people
Speaker 1: are gonna look at it a couple of weeks from
Speaker 1: how they're going to digest. It had quite a run
Speaker 1: last year, but then I think it's still going to
Speaker 1: be in that same trend, right and accessories and services right,
Speaker 1: We saw certainly some pickups there. Hey Tom, thank you
Speaker 1: so much. Have a good weekend. Tom Plow and President
Speaker 1: and chief investment Officer Plumb Funds joining us on the
Speaker 1: phone from Madison, Wisconsin. Thanks for listening to Bloomberg Business Week.
Speaker 1: Download the podcast on iTunes, SoundCloud, or Bloomberg dot com,
Speaker 1: and you can also listen to our radio show at
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Speaker 1: Sarah to Bloomberg Global News,