WEBVTT - First Day of Trading for Chinese EV Maker Zeekr 0:00:02.920 --> 0:00:10.719 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business 0:00:10.720 --> 0:00:13.960 Wait inside from the reporters and editors who bring you 0:00:14.000 --> 0:00:18.200 America's most trusted business magazine, plus gloom Ol Business, finance 0:00:18.239 --> 0:00:22.280 and tech news. The Bloomberg Business Week Podcast with Carol 0:00:22.360 --> 0:00:26.079 Messer and Tim Stenebek from Bloomberg Radio. 0:00:27.400 --> 0:00:30.440 Decker ZK. It's definitely on our minds today. We said 0:00:30.440 --> 0:00:32.360 we've got a theme of China this hour, and we're 0:00:32.400 --> 0:00:35.800 going to continue with that. Shares of Zeker Intelligent Technology Holding, 0:00:36.080 --> 0:00:39.040 the high end electric car brand under Jilly Holding Group, 0:00:39.680 --> 0:00:42.839 rising as much as forty percent after an expanded initial 0:00:42.840 --> 0:00:45.520 public offering. That's the biggest US listing by a China 0:00:45.520 --> 0:00:48.640 based company since twenty twenty one. And we're looking at 0:00:48.720 --> 0:00:51.160 Zecer up right now, Tim Jashi of thirty three percent. 0:00:51.280 --> 0:00:53.920 Okay, so let's get to our roundtable, because we got 0:00:53.920 --> 0:00:55.440 a great one. We got Amy Or with us. She's 0:00:55.440 --> 0:00:58.320 Bloomberg News Equity capital market supporter. You know when we 0:00:58.360 --> 0:01:01.880 see her in our studio IPOs. 0:01:01.480 --> 0:01:03.680 Also with those last year. 0:01:04.040 --> 0:01:06.400 She's you know, she's been busy with this one, also 0:01:06.400 --> 0:01:09.360 with us as Bloomberg Intelligence, Global Autos and industrials research 0:01:09.360 --> 0:01:11.560 analysts Steve Man, Steve, I do want to start with 0:01:11.560 --> 0:01:13.959 you because this is an IPO, but it's also a 0:01:14.000 --> 0:01:16.080 story about the auto industry, and especially comes at a 0:01:16.080 --> 0:01:20.720 really interesting time given that demand for electric vehicles, especially 0:01:20.720 --> 0:01:23.360 here in the US but also globally is not what 0:01:23.760 --> 0:01:25.720 a lot of investors and a lot of analysts thought 0:01:25.720 --> 0:01:28.320 it would be in twenty twenty four. Talk to us 0:01:28.319 --> 0:01:31.240 about the timing of this company coming to market against 0:01:31.240 --> 0:01:32.280 these headwinds. 0:01:32.680 --> 0:01:35.679 Yeah, it is very interesting, very interesting. If you look 0:01:35.720 --> 0:01:41.080 at Neil x, pung Li Auto, all three are Chinese 0:01:41.120 --> 0:01:44.400 automakers listening to us, they've you know, they've been down 0:01:44.600 --> 0:01:48.040 twenty seven to forty five percent year to day, So 0:01:48.080 --> 0:01:54.080 the timing doesn't seems very timely. But I think globally 0:01:54.120 --> 0:01:57.640 auto sales are down, especially in Europe in the US, 0:01:58.320 --> 0:02:00.440 but the Chinese are still doing all Hey, in the 0:02:00.520 --> 0:02:04.640 last couple of months, sales have gone up. And I think, 0:02:04.680 --> 0:02:07.080 I think Zeker, you know, they don't. I don't think 0:02:07.120 --> 0:02:11.120 I have plans to sell in the US, maybe in Europe, 0:02:11.600 --> 0:02:14.920 but this is going to help build brand cachet for 0:02:15.000 --> 0:02:17.480 the brand locally in their home market. 0:02:17.600 --> 0:02:18.920 All Right, We're going to dig into that little bit 0:02:18.960 --> 0:02:21.560 more because it sounds like they're gunning for Tesla because 0:02:21.560 --> 0:02:23.040 it's a little bit more of a higher end play. 0:02:23.040 --> 0:02:24.720 But hang on for a second. I do want to 0:02:24.720 --> 0:02:27.959 bring in Amy or who follows the IPO market for us. Amy, 0:02:28.000 --> 0:02:30.360 as we mentioned out of the gate Strong showing, how 0:02:30.400 --> 0:02:34.239 would you characterize this and get into that Jeli has 0:02:34.280 --> 0:02:36.480 indicated that it is going to subscribe to more than 0:02:36.560 --> 0:02:38.440 ninety percent of the stock, so they're going to own 0:02:38.440 --> 0:02:39.960 a lot of it. It sounds so put it all 0:02:40.000 --> 0:02:41.480 in perspective for us well. 0:02:41.480 --> 0:02:43.240 So to start off with, I would say that this 0:02:43.520 --> 0:02:45.680 is one of those deals that we've been waiting for 0:02:45.720 --> 0:02:50.600 a very long time because a is ev Ipo, but 0:02:50.720 --> 0:02:54.200 is also a Chinese company of sizeable size that we 0:02:54.240 --> 0:02:57.359 haven't seen in a very long time. And so it's 0:02:57.400 --> 0:03:00.600 great that it's going up. And as you mentioned, ninety 0:03:00.600 --> 0:03:02.760 percent of it, it was already sold like before it 0:03:02.840 --> 0:03:05.480 actually started the road show, So which is good to 0:03:05.639 --> 0:03:09.040 actually provide a good base and foundation for the stock 0:03:09.440 --> 0:03:12.040 to go up at a time when, like Steve was 0:03:12.080 --> 0:03:14.839 mentioning that ev is not actually particularly kind of doing 0:03:14.880 --> 0:03:16.080 well across. 0:03:15.760 --> 0:03:18.000 The But does it show that Jilie was a little 0:03:18.080 --> 0:03:19.640 am I saying it right too. We had some debate 0:03:19.760 --> 0:03:22.200 Jill Jillie, Jillie, Okay, we want to make sure we've 0:03:22.200 --> 0:03:23.799 got it correct because there was a little bit of 0:03:23.840 --> 0:03:26.799 a debate in the newsroom. But is it assigned to that? 0:03:26.880 --> 0:03:30.800 Jillie was a little concerned about maybe the interest amid 0:03:30.919 --> 0:03:32.400 kind of the broader EV backdrop. 0:03:32.720 --> 0:03:36.000 To be honest, I would say that just IPOs as 0:03:36.040 --> 0:03:39.120 a whole has been kind of choppy, and then particularly EV. 0:03:39.320 --> 0:03:41.960 And then given that at the time of the pricing 0:03:42.000 --> 0:03:44.800 it was only five point two billion in market cap 0:03:45.000 --> 0:03:47.440 and then now it's went up to around seven billion or. 0:03:47.440 --> 0:03:49.680 So billion they were talking about a year a. 0:03:50.320 --> 0:03:53.400 Far away from that. I'm sure there were conservatism right there, 0:03:53.520 --> 0:03:55.520 just to make sure that there is a good base 0:03:55.600 --> 0:03:58.040 that it was not like three or even below. So 0:03:58.400 --> 0:04:00.800 definitely there is a bit of that, and probably also 0:04:00.880 --> 0:04:03.160 Jilly wants to continue to hold a little bit more 0:04:03.200 --> 0:04:06.000 of that looking at the future growth of the company. 0:04:06.280 --> 0:04:08.920 Especially we're talking about this is the high end side 0:04:08.960 --> 0:04:12.200 of the market. It's not the math market that we've seen. 0:04:13.200 --> 0:04:15.920 Bradbrick has reported before that there were some headwinds there 0:04:16.200 --> 0:04:19.440 as well, so, yeah, and how to go beyond the 0:04:19.520 --> 0:04:22.200 Europe market and beyond the Chinese market, going to Europe 0:04:22.240 --> 0:04:23.240 and other places as well. 0:04:23.360 --> 0:04:24.840 So Steve, talk a little bit about that, because it's 0:04:24.880 --> 0:04:27.040 kind of the perfect segue to what you cover as 0:04:27.080 --> 0:04:32.039 Bloomberg Intelligence Global Autos and Industrial Research analysts. What exactly 0:04:32.160 --> 0:04:34.719 are the vehicles that are being offered. Carol did allude 0:04:34.720 --> 0:04:36.640 to the idea that they do compete with Tesla, but 0:04:37.000 --> 0:04:39.360 but paint a picture of this company for a lot 0:04:39.360 --> 0:04:41.960 of people I think listening and watching right now who 0:04:42.000 --> 0:04:44.400 have probably never before today heard of this company. 0:04:45.360 --> 0:04:49.880 Yeah, Zeeker is born out of jil the It's you know, 0:04:50.080 --> 0:04:52.360 it's it's one. It's the parent company Dredge and Gil. 0:04:53.800 --> 0:04:55.840 You know, it's it's related to the one seven to 0:04:55.960 --> 0:05:01.200 five HK that's listed in Hong Hong. I mean a 0:05:01.240 --> 0:05:03.560 lot of They offer two vehicles right now. One is 0:05:03.560 --> 0:05:05.800 an SUV. One is to sit there. It's a pure 0:05:05.880 --> 0:05:11.000 battery ev It's selling at around thirty seven to forty 0:05:11.080 --> 0:05:15.760 thousand US dollars in China. That's about the same price 0:05:15.800 --> 0:05:18.680 as the Model three and Model Y over there. I 0:05:18.680 --> 0:05:21.640 think what's really unique about Zeker and a lot of 0:05:21.640 --> 0:05:25.039 the Chinese brands over there is there can They're all 0:05:25.080 --> 0:05:32.520 called considered smart cars okay, with great connectivity apps that 0:05:32.680 --> 0:05:37.159 resonate with the consumers. Very different consumer base over there. 0:05:37.839 --> 0:05:40.760 So I think they're going to try to export that 0:05:40.760 --> 0:05:45.000 that type of UH offering to the globe. And I 0:05:45.000 --> 0:05:49.520 think listing the shares here it's gonna it's gonna help 0:05:49.680 --> 0:05:53.480 bring the brand cachet not only in China, but it's 0:05:53.480 --> 0:05:55.919 gonna get the name out there on a global basis. 0:05:56.080 --> 0:06:00.120 Hey, Steve, people here Zili and they think, I think 0:06:00.600 --> 0:06:03.359 Volvo here in the US, then maybe they hear Volvo, 0:06:03.440 --> 0:06:05.520 they think cole Star, which is, you know, an EV 0:06:05.680 --> 0:06:08.160 that is sold here in the US, a pretty high 0:06:08.200 --> 0:06:08.760 performing lie. 0:06:08.760 --> 0:06:10.560 I was in a cool Star out on the West Coast. 0:06:10.360 --> 0:06:15.200 Pretty cool. What's the Polestar relationship with Zeker, Like, how 0:06:15.520 --> 0:06:17.160 can we think about it like a corollary? 0:06:17.960 --> 0:06:20.400 Yeah, that's a good question. I think if I think 0:06:20.680 --> 0:06:24.440 a lot of the design cues that's UH that's in 0:06:24.480 --> 0:06:28.440 the Zeker, A lot of technology within the Zeker brand, 0:06:28.520 --> 0:06:34.160 e V brand it's actually shared between JE, between Polestar, 0:06:34.560 --> 0:06:38.880 uh And and Vovo. And there's actually another another brand 0:06:38.920 --> 0:06:42.640 called Lincoln co that's it's not available. I else swear 0:06:42.720 --> 0:06:46.320 only in China. And uh so all all those companies 0:06:46.360 --> 0:06:50.760 are actually related. Zeker's actually Zeker's R and D headquarters 0:06:50.800 --> 0:06:52.400 actually is in Gothenburg, Sweden. 0:06:53.720 --> 0:06:55.200 Hey, listen, one more in the company than I want 0:06:55.200 --> 0:06:57.520 to go back to amy. But I do think about 0:06:57.520 --> 0:07:01.400 the Chinese EV market. How crowded, Steve, is it getting? 0:07:02.720 --> 0:07:06.039 Oh, it's very crowded. It's a hyper competitive market. As 0:07:06.120 --> 0:07:11.440 you probably heard, deep discountings happening, been happening in the 0:07:11.520 --> 0:07:16.760 last year and a half. Uh And it's it's it's 0:07:16.800 --> 0:07:21.840 it's interesting because the auto industry, the EV makers, the 0:07:21.920 --> 0:07:26.480 Chinese event makers, are very much vertically integrated over there, 0:07:26.560 --> 0:07:30.800 so they they mine the lithium, they make the batteries 0:07:31.120 --> 0:07:34.280 and then as well as the software, quite different than 0:07:34.320 --> 0:07:36.760 how it works here. And I think in the earlier 0:07:36.760 --> 0:07:40.560 segment you talked about tariffs in the US, and that's 0:07:41.240 --> 0:07:44.480 it's really necessary that the US put these policies in 0:07:44.560 --> 0:07:48.720 place because to compete effective with the Chinese. Uh, the 0:07:48.760 --> 0:07:52.200 auto industry needs to be vertically much more vertically integrated. 0:07:52.240 --> 0:07:54.880 The supply chain needs to be much more vertically integrated 0:07:55.040 --> 0:07:58.840 than it is now. To really compete effectively with the 0:07:58.920 --> 0:08:00.520 Chinese really important. 0:08:00.560 --> 0:08:02.880 You mentioned the price cuts though, Chinese best selling car 0:08:02.960 --> 0:08:07.280 maker Buid slashing prices across much of its lineup this year, 0:08:07.360 --> 0:08:09.280 so that is certainly the backdrop there. Amy come on 0:08:09.400 --> 0:08:13.120 back in an IPO market out at Milkin. We talked 0:08:13.120 --> 0:08:15.280 with the M and A guys. They think it's starting 0:08:15.320 --> 0:08:19.040 to come and you know, come a little bit more activity. 0:08:19.080 --> 0:08:21.120 The significance of this one actually doing well out of 0:08:21.120 --> 0:08:23.920 the gate, is it something particular that it's Chinese, that 0:08:23.960 --> 0:08:26.520 it's an ev maker, or is it just kind of 0:08:26.520 --> 0:08:28.560 good to just see an issue come out and actually 0:08:28.560 --> 0:08:29.920 do well in its first day of trading. 0:08:30.160 --> 0:08:33.520 Definitely, we just want any ipo to trade well at 0:08:33.520 --> 0:08:35.839 this point I kind of feel. But then, like as 0:08:35.880 --> 0:08:38.760 a Chinese IPO, I would say that the biggest hurdle 0:08:38.800 --> 0:08:41.240 is not for a Chinese company to actually do well. 0:08:41.240 --> 0:08:44.320 It's really about whether Chinese government is going to really 0:08:44.360 --> 0:08:47.480 release the kind of flood of Chinese companies waiting to 0:08:47.520 --> 0:08:51.600 actually get listed here and is there a lot just waiting? Definitely, 0:08:51.800 --> 0:08:55.560 And essentially Chinese companies used to actually form the bulk 0:08:55.640 --> 0:08:58.320 of US listings as well. And also the fact that 0:08:58.600 --> 0:09:01.720 I think reut is, if I remember correctly reported this 0:09:01.840 --> 0:09:04.520 earlier this morning, that she is actually going for London 0:09:04.559 --> 0:09:07.160 as well. So essentially, these are the kind of headwinds 0:09:07.200 --> 0:09:10.200 political headwinds that we're feeling that is going to hamper 0:09:10.360 --> 0:09:12.640 the kind of Chinese companies coming to the US. 0:09:13.600 --> 0:09:15.840 So what are you watching in the next few weeks, 0:09:15.840 --> 0:09:18.400 in the next few months as an indication from the 0:09:18.520 --> 0:09:21.960 Chinese government from the way that investors receive Zeeker, that 0:09:22.080 --> 0:09:25.120 might indicate that we could see more IPOs from China 0:09:25.160 --> 0:09:25.960 listed companies. 0:09:26.440 --> 0:09:30.920 Steve mentioned that this company technically is not headquartered in China, 0:09:31.000 --> 0:09:33.280 but it's got very strong ties with China that we 0:09:33.360 --> 0:09:35.920 always kind of see it as a Chinese company per se. 0:09:36.000 --> 0:09:37.719 But there are also quite a few like I think 0:09:37.760 --> 0:09:39.880 san Is in the same bucket as well, Bite Dance 0:09:39.920 --> 0:09:42.720 in the same bucket as well, that they're headquartered elsewhere, 0:09:42.760 --> 0:09:45.480 but then we generally just see them as Chinese companies. 0:09:45.720 --> 0:09:49.000 But I don't feel that there is a yeah, a 0:09:49.040 --> 0:09:52.880 floodgate being opened right now is still kind of yeah, trickle, 0:09:53.679 --> 0:09:56.400 it's on a date case my case basis. 0:09:56.000 --> 0:09:58.920 Hey, Steve, just twenty five seconds here, Joe Matthew tried 0:09:58.960 --> 0:10:04.439 to push this the official over at Zeker about Chinese 0:10:04.440 --> 0:10:07.400 government involvement in this in this company in Zeker, what 0:10:07.480 --> 0:10:09.240 do we know and forgive me just got about twenty 0:10:09.280 --> 0:10:10.320 five seconds. 0:10:10.640 --> 0:10:14.720 Yeah, it's actually a private company, Julie. So I mean 0:10:14.880 --> 0:10:20.040 there's yeah, always giving subsidies. Yeah, so you know, there 0:10:20.080 --> 0:10:23.240 are some ties, but it's a private company, all right. 0:10:23.320 --> 0:10:25.160 Gonna leave it on that note. Guys, thanks, We came 0:10:25.200 --> 0:10:27.760 at it from different sides, so so appreciate it. Steve 0:10:27.800 --> 0:10:30.560 Mann out there at our Bloomberg Intelligence headquarters in Princeton, 0:10:30.600 --> 0:10:33.920 New Jersey, Steve is global Autos and industrials research analysts. 0:10:33.960 --> 0:10:36.200 And then right here in our studio, our Amy or 0:10:36.240 --> 0:10:39.480 equity capital markets reporter, as we said, watching the IPO 0:10:39.559 --> 0:10:42.080 market this as we see Zeker shares, they're uptim roughly 0:10:42.120 --> 0:10:43.240 about thirty three percent. 0:10:44.040 --> 0:10:47.559 You're listening to the Bloomberg Business Week podcast. Catch us 0:10:47.600 --> 0:10:50.839 live weekday afternoons from two to five pm Eastern Listen 0:10:50.880 --> 0:10:53.040 on Apple car Play and then brout Auto with a 0:10:53.040 --> 0:10:57.199 Bloomberg Business ACP, or watch us live on YouTube. 0:10:58.280 --> 0:11:00.959 As we talked about earlier our Bloomberg exclusive about President 0:11:01.000 --> 0:11:04.319 Biden getting ready to hit hard on China EV's with 0:11:04.440 --> 0:11:06.480 tariffs as soon as next week. That's according to folks 0:11:06.520 --> 0:11:08.520 familiar at the Wall Street Journal doing some reporting on 0:11:08.600 --> 0:11:12.560 this as well, saying those tariffs could quadruple. So it's 0:11:12.600 --> 0:11:14.240 one of our big stories certainly on this Friday. 0:11:14.320 --> 0:11:16.520 Yeah, Bloomberg News reporting today that China is losing its 0:11:16.600 --> 0:11:18.680 luster is a top country to invest in a sperm 0:11:18.760 --> 0:11:22.079 seek to avoid geopolitical risks and turn to Southeast Asia 0:11:22.120 --> 0:11:24.520 and Europe, according to a survey by the European Union 0:11:24.640 --> 0:11:27.719 Chamber of Commerce in China. So we thought we'd get 0:11:27.720 --> 0:11:30.960 a perspective from Ben Harberg. He's founder in portfolio manager 0:11:30.960 --> 0:11:33.000 at Core Values Alpha. He joins us where it is 0:11:33.160 --> 0:11:36.120 very early in the morning in Beijing, the Core Values 0:11:36.120 --> 0:11:38.880 Alpha Great China Growth ETF. It's got about eight million 0:11:38.880 --> 0:11:41.400 dollars in total assets. It's ked about six percent so 0:11:41.559 --> 0:11:42.280 far here to date. 0:11:42.440 --> 0:11:44.439 Normal people would be asleep. I'm just going to put 0:11:44.440 --> 0:11:47.559 that out there, Ben. Anyway, we appreciate you getting up. 0:11:48.040 --> 0:11:50.920 It is hard to get your head and hands around 0:11:51.000 --> 0:11:54.760 if you will, China being investible investible today, especially on 0:11:54.840 --> 0:11:57.800 a day like today where you've got a very successful 0:11:58.760 --> 0:12:03.319 Chinese ev MA ipoing here in the United States, and 0:12:03.400 --> 0:12:05.240 then you've got, of course, what seems to be more 0:12:05.280 --> 0:12:09.040 tariffs coming on that market, pushed back on Chinese made 0:12:09.080 --> 0:12:11.760 goods coming to the United States, if you will. So, 0:12:12.120 --> 0:12:15.800 having said that, why is China investible in your view? 0:12:15.840 --> 0:12:18.960 Because it looks like, you know, there isn't a lot 0:12:19.000 --> 0:12:22.040 of investor interest, I think you. 0:12:22.040 --> 0:12:24.599 Have to separate the tariffs from the realities on the 0:12:24.679 --> 0:12:28.079 ground and the scale and growth of Chinese businesses and 0:12:28.120 --> 0:12:28.840 the demand. 0:12:28.559 --> 0:12:29.480 Of Chinese consumers. 0:12:29.559 --> 0:12:32.920 So, if anything, the tariffs are the direct result of 0:12:32.960 --> 0:12:36.400 the success of Chinese companies. If I were the Biden administration, 0:12:36.440 --> 0:12:42.000 I'd also be looking to bolster American auto industry support, 0:12:42.559 --> 0:12:45.800 if that's domestic subsidies in the United States or hitting 0:12:45.880 --> 0:12:50.640 hard on Chinese exports because because they're falling behind, the 0:12:50.720 --> 0:12:54.199 Americans simply don't have that kind of vertical integration that 0:12:54.800 --> 0:12:56.720 the Chinese evs and the kind of the case study 0:12:56.760 --> 0:12:59.079 that we're talking about have. And so the net result 0:12:59.120 --> 0:13:01.200 of all that is I think that that actually belies 0:13:01.240 --> 0:13:04.320 a really strong Chinese market a significant threat to incumbent 0:13:04.400 --> 0:13:07.200 interests across a lot of the key verticals. One would 0:13:07.200 --> 0:13:10.040 say that, for instance, a lot of the pushback against 0:13:10.040 --> 0:13:14.160 the likes of Tencent or TikTok is again driven by 0:13:14.320 --> 0:13:17.080 that by you know, the success it's had against incumbents 0:13:17.160 --> 0:13:20.360 like Meta or Snap or others. So I wouldn't look 0:13:20.400 --> 0:13:23.440 too too deeply into tariffs to explain the challenges facing 0:13:23.480 --> 0:13:26.280 the Chinese market, only that they might ultimately scare away 0:13:26.720 --> 0:13:29.400 some investors who see that type of headline risk. 0:13:29.760 --> 0:13:31.719 Then, is that the way that this is presented in 0:13:32.000 --> 0:13:34.120 Chinese media? Is it the way that that you view 0:13:34.200 --> 0:13:37.800 it within China? That these tariffs and the reaction that 0:13:37.920 --> 0:13:41.520 lawmakers here in the US have to TikTok parent Byte 0:13:41.600 --> 0:13:45.840 Dance is the result of success of those companies. 0:13:47.760 --> 0:13:48.280 I think they do. 0:13:48.640 --> 0:13:50.719 I think they perceived that. I mean, and you know, 0:13:50.800 --> 0:13:53.160 there was leaked internal audio from you know, the likes 0:13:53.160 --> 0:13:55.199 of Mark Zuckerberg, who was just simply stunned by the 0:13:55.280 --> 0:13:58.640 success of TikTok against his platform and even tried to 0:13:58.720 --> 0:14:01.360 create a replica and named Last So that just absolutely 0:14:01.800 --> 0:14:02.760 got demolished by it. 0:14:02.880 --> 0:14:04.720 And we're going to see this across all verticals. 0:14:04.760 --> 0:14:08.280 It's not just electric vehicles, it's not just a social 0:14:08.400 --> 0:14:11.719 media and short form video. The likes of Shean and 0:14:11.800 --> 0:14:16.200 Tembu are penetrating deeply into American fast fashion brands, American 0:14:16.360 --> 0:14:19.720 online incumbents like Amazon, or even offline retailers like a 0:14:19.840 --> 0:14:23.640 Dollar General, and so I think that necessitates action from 0:14:23.680 --> 0:14:26.880 the US side to protect those incumbent industries. But it 0:14:27.800 --> 0:14:29.960 says nothing about the success of those Chinese business where 0:14:29.960 --> 0:14:32.160 I think are doing very well in their own right. 0:14:32.240 --> 0:14:34.280 And China, as you know, builds companies that are built 0:14:34.640 --> 0:14:37.840 for that digital native population, that next generation of consumers, 0:14:37.880 --> 0:14:39.680 and that's why the likes of TikTok and Shean are 0:14:39.680 --> 0:14:42.280 doing so well against their American incumbents, which are more 0:14:42.280 --> 0:14:44.760 built for folks like us that went through this longer 0:14:44.840 --> 0:14:46.280 retail online evolution. 0:14:46.480 --> 0:14:48.600 So Ben talk to us about the core values alpha 0:14:48.640 --> 0:14:51.760 Great China Growth. Atf It's got about eight million dollars 0:14:51.760 --> 0:14:54.280 in total assets. It's up about six percent year to date. 0:14:54.680 --> 0:14:57.920 So is the idea of the fund and the opportunity 0:14:58.320 --> 0:15:01.880 that you're betting on Chinese domestic growth and those Chinese 0:15:01.920 --> 0:15:05.240 companies that sell domestically or is it the Chinese company 0:15:05.280 --> 0:15:08.040 that sells to the rest of the world. 0:15:09.600 --> 0:15:10.280 So we do both. 0:15:11.120 --> 0:15:14.520 We see huge continued demand from the Chinese domestic consumer, 0:15:14.600 --> 0:15:18.360 and so we're investing in that kind of what we'd 0:15:18.440 --> 0:15:22.120 call kind of down consumption, downgrade and re shoring of 0:15:22.480 --> 0:15:27.400 domestic behavior. And so that includes domestic brands, so domestic 0:15:27.840 --> 0:15:33.800 cosmetics brands, domestic quick service restaurants, domestic FMCG brands, but 0:15:33.920 --> 0:15:36.760 also that includes domestic travel and other things that are 0:15:36.800 --> 0:15:39.520 benefiting from people staying home rather than going abroad. Then 0:15:39.600 --> 0:15:43.000 of course we invest in those cross border players, both 0:15:43.080 --> 0:15:45.840 that are integrated on the hardware side, like the voids 0:15:45.880 --> 0:15:49.360 of the world, as well as those that I mentioned previously, 0:15:49.440 --> 0:15:52.200 the likes of Temu and their parent company, Pinduo Duo, 0:15:52.440 --> 0:15:54.040 which is doing incredibly well well. 0:15:54.160 --> 0:15:56.120 But tell me about okay, so tell me about your 0:15:56.240 --> 0:15:59.840 cap raise. Your fundraising eight million dollars in assets does 0:16:00.080 --> 0:16:02.000 seem like a lot of money under management, So talk 0:16:02.040 --> 0:16:04.600 to me. You know, we talked last time in February. 0:16:05.920 --> 0:16:08.160 What kind of flow are you getting in terms of assets, 0:16:08.200 --> 0:16:11.440 because it does feel like investors are pretty tentative still. 0:16:12.720 --> 0:16:14.960 So again, you know, our background is on the private side, 0:16:14.960 --> 0:16:17.240 where we manage over two billion dollars, so certainly fry 0:16:17.280 --> 0:16:20.560 our standards. This is a small AUM as well. I 0:16:20.640 --> 0:16:23.880 think it is largely different by American sentiment towards China 0:16:23.920 --> 0:16:26.800 and particularly global sentiment of folks that would invest in ETFs. 0:16:26.840 --> 0:16:29.040 And I think we're starting to now see that our 0:16:29.080 --> 0:16:31.440 etf uh, you know, for one of the months of 0:16:31.480 --> 0:16:35.040 this already beat the SMP. It's beating all the other 0:16:35.160 --> 0:16:38.160 kind of China ETFs since it's since it's launched as well, 0:16:38.240 --> 0:16:40.440 and so but we've still got to see that kind 0:16:40.440 --> 0:16:42.560 of investor sentiment toward and towards China. And I think 0:16:42.600 --> 0:16:45.480 that's less about geopolitics and more about returns. If I 0:16:45.560 --> 0:16:47.320 was an investor to day, I would have kept my 0:16:47.400 --> 0:16:49.880 money closer to home because the Nasdaq and NYC have 0:16:49.920 --> 0:16:52.680 been ripping, and there's no reason not to continue to 0:16:52.800 --> 0:16:55.320 keep to do that because all the geopolitical noise is, 0:16:55.440 --> 0:16:58.120 you know, is irrelevant if the if the if, the 0:16:58.240 --> 0:17:00.440 returns are there. And so our belief is that as 0:17:00.480 --> 0:17:02.360 we're starting to see these markets botton me and you 0:17:02.520 --> 0:17:05.480 finally saw a lot of that capital was flowing to 0:17:05.600 --> 0:17:08.120 Japan and else, we're finally coming back into China, coming 0:17:08.160 --> 0:17:10.640 back into Hong Kong. I think that rising title lift 0:17:10.680 --> 0:17:12.399 all boats, and then we really like our head to 0:17:12.440 --> 0:17:15.400 head chances against the other Chinese TF because we're actively managed, 0:17:15.600 --> 0:17:18.080 and we also try to filter out, you know, geopolitical 0:17:18.200 --> 0:17:20.640 risk or threats to American national security. 0:17:21.119 --> 0:17:24.040 Hey, Ben, China. Carol just mentioned the idea that China, 0:17:24.480 --> 0:17:27.880 you know, quote unquote uninvestible. It's a question that we've 0:17:28.000 --> 0:17:31.200 been asking for a couple of years now, since a 0:17:31.320 --> 0:17:33.240 prominent bank brought it up a few years ago, and 0:17:33.280 --> 0:17:36.520 even at Milkin this year one of the panels, one 0:17:36.560 --> 0:17:38.200 of the panelists was asked, I think it was the 0:17:38.280 --> 0:17:41.360 CEO of Capitol Group was asked, if China is uninvestable 0:17:41.440 --> 0:17:44.399 right now? What would you say to somebody who argues 0:17:44.440 --> 0:17:47.879 with you and says, you know what, given the geopolitical concerns, 0:17:48.200 --> 0:17:51.920 given the domestic concerns, given what's happening with the government there, 0:17:52.200 --> 0:17:54.440 I don't believe that China's investible. What would you say 0:17:54.480 --> 0:17:55.000 to that person? 0:17:56.760 --> 0:17:58.560 The numbers would tell you that's not the case, right, 0:17:58.640 --> 0:18:00.240 So the numbers would tell you that China is growing 0:18:00.240 --> 0:18:02.800 at about double the pace of the United States. If 0:18:02.840 --> 0:18:05.359 you're interested to know their emerging markets, let's say Southeast Asia, 0:18:05.359 --> 0:18:07.760 which you guys mentioned earlier on the program. China is 0:18:07.840 --> 0:18:12.440 the process of urbanizing people from rural communities and second 0:18:12.480 --> 0:18:15.560 third tier cities. The first tier cities that urbanization alone 0:18:15.600 --> 0:18:18.000 and generate a customer base that's two times the size 0:18:18.000 --> 0:18:18.480 of Indonesia. 0:18:18.560 --> 0:18:19.920 Ben, sorry, I want to jump in real quick because 0:18:19.920 --> 0:18:22.600 we only have thirty seconds left. Does that growth number 0:18:22.640 --> 0:18:25.720 even matter if the government can intervene at the drop 0:18:25.760 --> 0:18:26.160 of a hat. 0:18:27.960 --> 0:18:30.600 The government had made changes over the last few years 0:18:30.600 --> 0:18:33.480 that were more to defend against what they believed were 0:18:33.600 --> 0:18:38.680 antitrust or other monopolistic actions by large Chinese technology companies. 0:18:38.920 --> 0:18:41.119 But overall, the Chinese government is still very much growth 0:18:41.160 --> 0:18:43.800 friendly and has now turned all of its attention on 0:18:43.880 --> 0:18:46.520 improving global investor companies in its public markets. 0:18:46.920 --> 0:18:48.400 All right, we're going to leave it there. Hey listen, 0:18:48.480 --> 0:18:51.199 thanks so much, and again thanks. We know it's three 0:18:51.359 --> 0:18:55.000 hours there in China, so we appreciate you getting up 0:18:55.040 --> 0:18:57.400 for us. Ben Harberg, founder and portfolio manager at Core 0:18:57.520 --> 0:19:01.040 Values Alpha, joining us from Beijing. As we mentioned, the 0:19:01.040 --> 0:19:04.040 Core Values Alpha Great China Growth ETF about eight million 0:19:04.200 --> 0:19:06.840 in total assets. It's up about six percent so far 0:19:06.960 --> 0:19:08.160 here in twenty twenty four. 0:19:10.600 --> 0:19:14.400 You're listening to the Bloomberg Business Week podcast. Listen live 0:19:14.520 --> 0:19:17.680 each weekday starting at two PM Eastern not Applecar Play 0:19:17.760 --> 0:19:20.600 and Android Auto with the Bloomberg Business App. You can 0:19:20.640 --> 0:19:23.879 also listen live on Amazon Alexa from our flagship New 0:19:23.960 --> 0:19:30.520 York station Just Say Alexa playing Bloomberg eleven Thirty's the 0:19:30.920 --> 0:19:35.760 Jersey's Fun and where You're Headborner. 0:19:36.640 --> 0:19:38.520 The Jersey Bounce Well. 0:19:38.560 --> 0:19:40.639 New Jersey is known for a lot of things. I 0:19:40.680 --> 0:19:42.320 think it's fair to say the best tomatoes in the 0:19:42.400 --> 0:19:43.480 nation is that true. 0:19:43.640 --> 0:19:48.240 Horse farms, incredible beaches, great public education in some areas. 0:19:48.320 --> 0:19:51.520 Bruce Springsteen, and I was born there the Jersey Shore. 0:19:51.640 --> 0:19:54.159 I was born there, Bell Labs and a lot of 0:19:54.200 --> 0:19:55.680 stuff Ferrel Master's home stage. 0:19:55.760 --> 0:19:56.320 Yes, indeed. 0:19:56.520 --> 0:19:58.240 Our next guest, though, wants to make it known for 0:19:58.359 --> 0:20:01.400 even more, including the Hall of the East as well 0:20:01.480 --> 0:20:04.439 as an exemplar for clean energy. We got with us 0:20:04.480 --> 0:20:07.439 Tim Sullivan, CEO of the New Jersey Economic Development Authority, 0:20:07.520 --> 0:20:11.800 also known as NJEDA. It's the agency responsible for driving 0:20:11.960 --> 0:20:14.920 economic growth and development and to create jobs in the 0:20:15.040 --> 0:20:18.560 Garden State. Tim here in the Bloomberg Interactive at Brokers Studio. Welcome, 0:20:18.600 --> 0:20:18.960 how are you. 0:20:19.080 --> 0:20:20.760 I'm doing great? Thanks much for having me over. Well, 0:20:20.800 --> 0:20:21.119 thanks for. 0:20:21.440 --> 0:20:23.800 Joining us here, And we should say just full disclosure. 0:20:23.840 --> 0:20:25.680 You actually worked with Mike Bloomberg. 0:20:25.800 --> 0:20:27.720 Right four is a better word for it. He was 0:20:27.760 --> 0:20:29.360 the mayor and I was on the staff. But yeah, 0:20:29.600 --> 0:20:31.639 it was a great career highlight to be part of 0:20:31.640 --> 0:20:32.200 the mayor's team. 0:20:32.280 --> 0:20:34.680 So from city Hall in New York to Connecticut, then 0:20:34.720 --> 0:20:36.000 to the state of New Jersey, back. 0:20:35.840 --> 0:20:38.080 To my home state. When Governor Murphy became governor, I 0:20:38.160 --> 0:20:40.760 got elected in late twenty seventeen, I got a chance 0:20:40.800 --> 0:20:41.840 to come home and work for the home team. 0:20:41.920 --> 0:20:44.119 Yeah, so talk to us about not just the biggest 0:20:44.240 --> 0:20:46.440 challenge when it comes to economic development, but what you 0:20:46.600 --> 0:20:49.199 see as the biggest opportunity for the state of New 0:20:49.280 --> 0:20:50.760 Jersey when it comes to economic development. 0:20:50.800 --> 0:20:53.080 Yeah, we see Governor Murphy sees huge opportunities in front 0:20:53.080 --> 0:20:54.880 of us. You mentioned a couple in the intro film 0:20:54.920 --> 0:20:57.760 and TV for sure, clean Energy and Officer wind Ai 0:20:57.960 --> 0:20:59.320 and what that means for New Jersey and what that 0:20:59.359 --> 0:21:01.840 means for the world. Those are three, you know, huge 0:21:01.840 --> 0:21:03.560 opportunities that we're attacking pretty agressively. 0:21:03.640 --> 0:21:05.399 I think it's really interesting. You know, New Jersey has 0:21:05.440 --> 0:21:07.080 also been known, you know, a big time for the 0:21:07.119 --> 0:21:09.920 pharmaceutical industry. But I do feel like a reboot is 0:21:10.040 --> 0:21:12.520 kind of needed and necessary. Tell us how you see it, 0:21:12.520 --> 0:21:14.720 Give us the backdrop of what's been going on in 0:21:14.840 --> 0:21:17.080 terms of economic development in New Jersey and kind of 0:21:17.160 --> 0:21:19.280 what needs to be doing, how you're hoping to change it. 0:21:19.359 --> 0:21:21.280 Yeah, one of the big priorities for Governor Murphy's is 0:21:22.040 --> 0:21:24.960 economic diversification. So you know, farm and life sciences is 0:21:25.000 --> 0:21:26.920 still a huge calling card for us. We're home to 0:21:27.000 --> 0:21:30.320 a huge concentration of you know, global headquarters and US 0:21:30.359 --> 0:21:32.960 headquarters for big multinational farming companies, and we've seen a 0:21:33.040 --> 0:21:35.639 huge continued surge in that industry. But we want to 0:21:35.680 --> 0:21:37.520 diversify as well. So film and TV is a great 0:21:37.520 --> 0:21:41.240 example of that. You know, the motion picture camera was 0:21:41.280 --> 0:21:43.639 invented by Thomas Edison in New Jersey. Fort Lee was 0:21:43.640 --> 0:21:46.320 Hollywood before there was Hollywood. We're trying to win it 0:21:46.400 --> 0:21:50.919 back and we're not alone in that journey. So Netflix 0:21:51.000 --> 0:21:53.639 is committed to building a billion dollar production facility in 0:21:54.240 --> 0:21:57.560 Mammoth County at the Old Fort Mammoth. We just announced 0:21:57.560 --> 0:22:00.240 plans to see another major facility built in bay Own. 0:22:01.280 --> 0:22:04.040 There's a bye A developer that's going to build a 0:22:04.040 --> 0:22:06.000 prouct called eighteen eighty eight Studios. Eighteen eighty eight was 0:22:06.000 --> 0:22:08.399 when Thomas Edison invented the motion picture camera. Y, so 0:22:08.440 --> 0:22:09.960 it's a bit of a nod to our history. And 0:22:10.040 --> 0:22:12.560 then in the southward of rep by Newark Airport is 0:22:12.600 --> 0:22:15.919 another product by Lionsgate to develop a world class studio 0:22:15.960 --> 0:22:17.560 as well. So we're on the cusp of something big. 0:22:17.840 --> 0:22:20.560 Joe was just a Newark Airport earlier this morning, so real, Yeah, 0:22:20.600 --> 0:22:20.879 me too. 0:22:21.040 --> 0:22:21.840 It was a little quiet. 0:22:21.920 --> 0:22:22.640 It was a little quiet. 0:22:22.680 --> 0:22:24.000 There's not a quient when I was there. There's actually 0:22:24.000 --> 0:22:25.480 a lot of traffic coming into the city when I 0:22:25.560 --> 0:22:25.840 came in. 0:22:26.520 --> 0:22:28.880 Well, it's because everybody was going to work, Yes, exactly, tim. 0:22:28.880 --> 0:22:30.560 One thing I want to ask, what is taken that 0:22:30.720 --> 0:22:32.479 I have done. I remember early in my career doing 0:22:32.520 --> 0:22:36.000 a piece about does it really pay to develop kind 0:22:36.040 --> 0:22:39.240 of movie entertainment that industry because the tax breaks that 0:22:39.280 --> 0:22:42.000 are often necessary to bring the business in tell us 0:22:42.000 --> 0:22:43.080 about the business model there. 0:22:43.320 --> 0:22:45.680 Yeah, we see huge upside here. It does absolutely require 0:22:45.760 --> 0:22:47.480 upfront investment. You know, we have a tax credit program 0:22:47.560 --> 0:22:49.760 that Governor Murphy brought back, which we think is most 0:22:50.280 --> 0:22:52.200 combination of the most competitive and most progressive. So it 0:22:52.280 --> 0:22:55.320 does things like in awards and rewards, diversity both in 0:22:55.359 --> 0:22:57.280 front of them behind the camera, but the returns we 0:22:57.359 --> 0:22:59.000 see on the job side, So you know we're going 0:22:59.080 --> 0:23:01.840 to see and particularly our incentive program in the sonthing, 0:23:01.880 --> 0:23:03.800 Governor Murphy's spent a lot of time making sure we're 0:23:03.800 --> 0:23:07.080 emphasizing is encouraging brick and mortar construction because that's how 0:23:07.080 --> 0:23:09.280 you're going to get development of facilities that are going 0:23:09.320 --> 0:23:10.840 to be full all the time. So Netflix is going 0:23:10.880 --> 0:23:12.760 to is going to build this billion dollar facility. They're 0:23:12.760 --> 0:23:14.240 going to keep that thing hum and that means lots 0:23:14.280 --> 0:23:15.880 of permanent jobs, not in front of the camera. 0:23:16.080 --> 0:23:17.600 It's a case of bringing a movie in for six 0:23:17.640 --> 0:23:18.840 months and then having them gone correct. 0:23:18.840 --> 0:23:20.920 Those are permanent careers. And that's not just you know 0:23:21.000 --> 0:23:23.080 that's in film production, but that's in hair and makeup, 0:23:23.160 --> 0:23:26.240 that's in craft services, that's in carpentry and electric electrician 0:23:26.320 --> 0:23:28.760 work and all that overwhelmingly union jobs as well. So 0:23:28.840 --> 0:23:29.879 we see huge upside there. 0:23:29.960 --> 0:23:31.200 How do you make sure that it's not a race 0:23:31.240 --> 0:23:33.880 to the bottom, because you're competing with not just New York, 0:23:33.920 --> 0:23:36.159 which is so close and also very well known when 0:23:36.200 --> 0:23:39.119 it comes to entertainment, you have big stuff happening in 0:23:39.200 --> 0:23:41.840 Queens and Brooklyn right now when it comes to this 0:23:42.000 --> 0:23:45.560 type of stuff Silver Cup Studios for example, and then 0:23:45.960 --> 0:23:48.920 also in Canada, which is just a huge place for 0:23:49.119 --> 0:23:52.359 filming movies and TV shows right now. How do you 0:23:52.440 --> 0:23:54.679 make sure that you know the incentives that you're offering 0:23:55.119 --> 0:23:58.200 in the long run are actually beneficial rather than taxing 0:23:58.359 --> 0:23:58.879 New Jersey. 0:23:59.280 --> 0:24:02.600 Yeah, Again, the returns we think we're going to see 0:24:03.240 --> 0:24:05.679 are significant on the job side. So again, the permanent 0:24:05.760 --> 0:24:07.720 jobs that we hope to see be built and the 0:24:07.760 --> 0:24:10.000 construction jobs we'll see in the development these facilities as well. 0:24:10.160 --> 0:24:12.480 We also see an opportunity to take share from other. 0:24:12.359 --> 0:24:16.360 Places, but those jobs don't necessarily lead to economic development 0:24:17.240 --> 0:24:20.359 if nobody comes and uses those studios. Oh sure, yeah, no, 0:24:20.480 --> 0:24:22.360 we think that's what I mean, Like you're you're competing 0:24:22.400 --> 0:24:23.320 for every moment there. 0:24:23.480 --> 0:24:25.200 Absolutely, But that's why, you know, having a partnership with 0:24:25.240 --> 0:24:26.960 someone like Netflix who is going to build and develop 0:24:27.000 --> 0:24:28.800 their own studio and personally going to keep it fill 0:24:28.960 --> 0:24:31.440 full with their own stuff, and they're you know, they're 0:24:31.640 --> 0:24:34.400 certainly a partner we're thrilled to be betting on because 0:24:34.400 --> 0:24:36.240 they're we think they're you know, one of, if not 0:24:36.320 --> 0:24:38.159 the leaders of the streaming kind of revolution and the 0:24:38.200 --> 0:24:40.440 winners of the streaming wars and all that. And so 0:24:40.880 --> 0:24:43.879 we see huge, huge, permanent job creation opportunities. And then 0:24:43.880 --> 0:24:46.040 also you know there's you know, we will continue to 0:24:46.160 --> 0:24:47.520 have to you know, be on our front foot and 0:24:47.600 --> 0:24:49.639 be competitive on the tax credit side. Our program. One 0:24:49.640 --> 0:24:51.960 of the things that's important about our program is it's 0:24:52.000 --> 0:24:53.840 on the books until twenty thirty nine. So from a 0:24:53.920 --> 0:24:56.479 predictability perspective, if you're putting on the TV side, if 0:24:56.480 --> 0:24:58.199 you're a show runner and you hope to do four 0:24:58.280 --> 0:25:01.360 or five, six, seven, eight, nine, tens seasons, which they're 0:25:01.359 --> 0:25:04.440 all hoping for, our program will be there for them. 0:25:04.640 --> 0:25:06.720 So they so they understand they have till twenty thirty 0:25:06.800 --> 0:25:07.920 nine that they get those benefits. 0:25:08.080 --> 0:25:10.159 Yeah. Absolutely, And it's an important part of our of 0:25:10.240 --> 0:25:10.680 our marketing. 0:25:11.119 --> 0:25:13.359 How quickly do the benefits though, Okay, so there's the 0:25:13.440 --> 0:25:17.440 benefit outlay, how quickly does the kind of payback come 0:25:17.560 --> 0:25:18.560 to the state of New Jersey. 0:25:18.600 --> 0:25:20.480 PAYDA happens almost right away. It's one of the exciting 0:25:20.520 --> 0:25:22.159 things about you know, film and TV. You know, you 0:25:22.240 --> 0:25:23.879 have a movie, even if it is just coming for 0:25:23.920 --> 0:25:25.440 a couple of months to shoot. You know, there's a 0:25:25.480 --> 0:25:27.720 movie shooting right now. That's a pretty high profile movie 0:25:27.760 --> 0:25:30.440 that's shooting all throughout the state. They're they're spending a 0:25:30.480 --> 0:25:32.000 lot of money. They eat a lot of pizza, They 0:25:32.040 --> 0:25:34.119 do a lot of dry cleaning. Which movie is this, 0:25:34.680 --> 0:25:37.159 It's called a Complete Unknown. Timothy Shallon is in it. 0:25:37.720 --> 0:25:38.600 It's a Bob Dylan bio. 0:25:38.840 --> 0:25:40.439 Yeah, they're also filly in New York. 0:25:40.560 --> 0:25:41.639 They film a bit of a New York city. If 0:25:41.640 --> 0:25:43.560 it's not that we're competitive, but it's more in Jersey 0:25:43.600 --> 0:25:44.040 than New York. 0:25:45.480 --> 0:25:46.880 We're competitive, always competitive. 0:25:47.080 --> 0:25:47.880 We're really competitive. 0:25:47.920 --> 0:25:49.040 Who really owns the statue? 0:25:49.080 --> 0:25:50.800 Let's just like talk to actual liberty. Is a Jersey girl. 0:25:51.160 --> 0:25:54.320 I know, I know, you can have an emotional argument 0:25:54.400 --> 0:25:55.920 some other way, but she lives in New Jersey. 0:25:56.480 --> 0:25:58.480 You can't see you can't see this, Yes, you can't 0:25:59.240 --> 0:26:02.000 in favor of it. A Jersey card, I know, but 0:26:02.080 --> 0:26:04.000 it's like I got, you know, two I'm surrounded by 0:26:04.040 --> 0:26:04.400 two New. 0:26:04.359 --> 0:26:05.280 Jersey people right here. 0:26:05.359 --> 0:26:09.200 So and a California guy. Let's talk about alternative energy, 0:26:09.240 --> 0:26:12.800 renewable renewables coming back from milk and another big theme 0:26:12.960 --> 0:26:15.760 and a lot of it has to do with artificial intelligence. 0:26:15.880 --> 0:26:18.240 All the data centers that are going to be needed 0:26:18.280 --> 0:26:20.480 to do all of that really kind of amped up 0:26:20.520 --> 0:26:24.440 computing necessary for AI machine learning, if you will, a 0:26:24.560 --> 0:26:27.560 lot of investments going into the data centers. But tell 0:26:27.640 --> 0:26:29.639 us what the strategy is for New Jersey. 0:26:30.119 --> 0:26:33.960 Well, around energy. You know, our biggest initiative is offshore wind. 0:26:34.280 --> 0:26:36.720 New Jersey has a huge opportunity and the Governor murphya 0:26:36.760 --> 0:26:39.440 set the most aggressive target for offshore winded option in 0:26:39.520 --> 0:26:41.080 America in New Jersey. So we're going to hope to 0:26:41.520 --> 0:26:45.359 or plan to generate eleven giga wats of power from 0:26:45.400 --> 0:26:48.040 off of our shores. That's enough to fuel or power 0:26:48.359 --> 0:26:50.080 every home in most businesses in New Jersey. So it's 0:26:50.080 --> 0:26:52.800 a huge incremental energy generation framework. And we're right now 0:26:52.920 --> 0:26:57.320 net importers for every home and business enough power too. 0:26:57.400 --> 0:26:59.200 How long does it take until that we hit that 0:26:59.240 --> 0:27:01.760 goal p Twenty three somewhere in that range the goals 0:27:01.840 --> 0:27:05.119 twenty thirty five, okay, and so that that's contingent on 0:27:05.240 --> 0:27:07.160 you know, the development of lots of wind farms over 0:27:07.200 --> 0:27:11.359 the next decade or two. Governor Murphy has provided all 0:27:11.400 --> 0:27:13.879 the resources we think these companies need to build these farms, 0:27:14.400 --> 0:27:16.359 these wind farms as including things like building import in 0:27:16.440 --> 0:27:18.480 South Jersey to support the development of it. 0:27:18.880 --> 0:27:22.200 What happens if former President Trump wins in November to 0:27:22.800 --> 0:27:25.680 the state's ambitions when it comes to wind, And here's 0:27:25.680 --> 0:27:28.040 why I ask our own gender Lui's got a story 0:27:28.119 --> 0:27:31.520 out today about wind farmers bracing for Trump's next salvo 0:27:31.600 --> 0:27:34.359 as he visits the New Jersey Shore formn President Trump's 0:27:34.440 --> 0:27:37.320 vocal disdain for wind farms is another worry for developers 0:27:37.359 --> 0:27:41.280 who faced high costs and supply chain woes. President Trump 0:27:41.359 --> 0:27:42.879 is going FORGM. President Trump is going to hold a 0:27:42.960 --> 0:27:46.040 rally on the beach in Wildwood, New Jersey this weekend, 0:27:46.119 --> 0:27:48.320 a state that's become the frontline for fights over the 0:27:48.359 --> 0:27:49.480 future of offshore wind. 0:27:50.119 --> 0:27:51.639 It'd be hard to argue that it will be helpful 0:27:52.080 --> 0:27:54.600 to the to the wind industry, you know. That being said, 0:27:54.640 --> 0:27:56.639 I think one of the things that we're encouraged by 0:27:58.680 --> 0:28:01.600 as we think about the future offshore wind is the 0:28:01.840 --> 0:28:04.080 is the folks who are investing in Officer Wind are 0:28:04.119 --> 0:28:06.720 actually the big global energy players. So we have a 0:28:06.760 --> 0:28:09.800 wind farm that's poised to start construction soon that's backed. 0:28:10.000 --> 0:28:13.199 It's called Atlantic shores. It's back, it's half owned by Shell. Right, 0:28:13.520 --> 0:28:15.600 that is not a fly by night concern, nor is 0:28:15.640 --> 0:28:19.440 it someone who's it's committed to clean energy. 0:28:19.520 --> 0:28:21.080 Yeah, it's got its permits, it's all ready to go. 0:28:21.520 --> 0:28:23.080 It has a few more permits to get through that 0:28:23.280 --> 0:28:25.720 those will hopefully happen this year. And so you know, 0:28:25.800 --> 0:28:28.280 there's a huge amount of capital that wants to invest 0:28:28.320 --> 0:28:31.200 in offshore wind, and generally speaking, I think the country 0:28:31.240 --> 0:28:33.440 has not failed to figure out ways to harness energy 0:28:33.480 --> 0:28:36.440 that's been out there. This is an industry that's has 0:28:36.480 --> 0:28:38.640 been through fits and starts. It'll be through go through 0:28:38.720 --> 0:28:40.480 more fits and starts, but we think the thirty fifty 0:28:40.560 --> 0:28:43.080 year trajectory of this industry and the sector is too 0:28:43.120 --> 0:28:45.880 important Strategically. Again, we're talking about controlling our energy future, 0:28:45.920 --> 0:28:47.720 not just as a state, but as a country. We're 0:28:47.720 --> 0:28:51.960 talking about tons of manufacturing jobs, talking about renewable energy 0:28:52.120 --> 0:28:55.000 and clean energy. There's too many reasons to care about this. 0:28:55.120 --> 0:28:58.720 So certainly, one of the reasons I think our administration 0:28:58.840 --> 0:29:00.480 is a big fan of the Biden administration approach on 0:29:00.520 --> 0:29:02.440 this is that he's all in on wind. You know, 0:29:02.520 --> 0:29:05.400 we'll see what happens in November. But it's an industry 0:29:05.440 --> 0:29:07.680 that has been through challenges, and like any new industry 0:29:07.720 --> 0:29:11.120 that's capital intensive, regulatorially complex, it's going to go through 0:29:11.160 --> 0:29:13.200 fits and starts. But we think the long term opportunity 0:29:13.240 --> 0:29:15.160 for New Jersey, for the Northeast as far down as 0:29:15.240 --> 0:29:17.400 Virginia and the Carolina is by the way, we're also 0:29:17.480 --> 0:29:19.320 pursuing offshore wind is too big. 0:29:20.040 --> 0:29:23.479 So could be some you know, starts and stops if 0:29:23.560 --> 0:29:25.400 we see someone else in the White House or a 0:29:25.400 --> 0:29:27.880 different if a turnover. But having said that, you're saying 0:29:27.880 --> 0:29:29.880 the long, longer term trends are in place. So even 0:29:29.880 --> 0:29:32.120 if there's a slow in permitting for wind farms in 0:29:32.120 --> 0:29:34.440 New Jersey, you're saying tim that longer term, that that's 0:29:34.520 --> 0:29:35.880 the push you can see it happening. 0:29:36.240 --> 0:29:36.400 Yeah. 0:29:36.520 --> 0:29:39.400 Again, I think the rationale for energy independence, for the 0:29:39.440 --> 0:29:42.560 emissions framework, for the job creation and economic development impact, 0:29:42.880 --> 0:29:44.520 it's too big. There's too many there's too many reasons 0:29:44.560 --> 0:29:47.160 to like offshore wind to turn our back on it 0:29:47.200 --> 0:29:49.120 long term. And some of these wind farms that were 0:29:49.160 --> 0:29:51.920 just approved in New Jersey about six months ago are 0:29:51.960 --> 0:29:54.120 as far as forty miles off the shore. So unless 0:29:54.120 --> 0:29:56.360 you have access to the Hubble telescope. You cannot see 0:29:56.400 --> 0:29:57.920 that from the from the shore. 0:29:58.000 --> 0:30:00.440 I'm a sailor and for the first time of off 0:30:00.440 --> 0:30:02.560 of Long Island sound coming up like on Block Island, 0:30:02.640 --> 0:30:04.520 like to see them. I really haven't seen them in 0:30:04.560 --> 0:30:06.160 the past, and it was kind of interesting. I mean, 0:30:06.160 --> 0:30:09.480 they're they're way off shore and it's kind of interesting. 0:30:09.600 --> 0:30:10.719 But they were they spinning. 0:30:10.760 --> 0:30:12.960 They were spinning. I didn't get that close. Yeah, you 0:30:13.040 --> 0:30:14.880 want to get something so from a distance, but it 0:30:15.000 --> 0:30:16.560 was like, what is that? Then you realize that those 0:30:16.600 --> 0:30:21.000 are wind farms out there and you're listen. I am 0:30:21.120 --> 0:30:23.440 full of transparency. I'm all in unclean energy. 0:30:23.800 --> 0:30:23.960 Hey. 0:30:24.480 --> 0:30:25.920 One thing that I wanted to ask you about, Tim 0:30:26.160 --> 0:30:29.200 was congestion pricing, because it's a huge topic here in 0:30:29.280 --> 0:30:31.479 New York City. If you don't if you walk, uh, 0:30:31.680 --> 0:30:35.320 not too far from here, you'll actually see the infrastructure 0:30:35.360 --> 0:30:38.760 in place to charge commuters who come from it come 0:30:38.840 --> 0:30:41.040 into the city in certain parts of it each day. 0:30:41.080 --> 0:30:43.920 When that program is launched later this year, how do 0:30:43.960 --> 0:30:46.920 you think about that from a New Jersey economic development perspective? 0:30:46.960 --> 0:30:50.920 Because the governor has made no secret about his opposition 0:30:51.000 --> 0:30:53.360 to it, Does it affect your world at all. 0:30:54.200 --> 0:30:57.480 Yeah, I think, you know, those comments mostly the Governor Murphy, 0:30:57.480 --> 0:30:59.000 who's who's not been shy about his take on this. 0:30:59.040 --> 0:31:01.040 There's some there's an actively a gation underway that is 0:31:01.160 --> 0:31:03.360 not a good thing for me to comment on. Yeah, 0:31:03.480 --> 0:31:06.960 I think it's certainly, you know, it changes the framework 0:31:07.120 --> 0:31:08.920 of you know, how people think. If it's gets more 0:31:08.960 --> 0:31:11.360 expensive to go somewhere and do something, it gets harder 0:31:11.400 --> 0:31:13.680 to do it usually, And so you know, if you're 0:31:13.680 --> 0:31:15.520 a business in New York City that's thinking about you know, 0:31:15.800 --> 0:31:19.080 it's customers, it's suppliers, it's trucks. You know, we think 0:31:19.080 --> 0:31:21.640 it makes New Jersey all the more attractive. That's interesting, 0:31:22.520 --> 0:31:24.600 we you know, So I think it's you know, we'll 0:31:24.600 --> 0:31:26.760 see how this all plays out. But again, I think 0:31:26.760 --> 0:31:28.600 the Governor has also been clear he does not oppose 0:31:28.840 --> 0:31:31.840 congestion pricing, you know, in all, in any form. And 0:31:31.920 --> 0:31:34.240 I think the way this was gone about has met 0:31:34.280 --> 0:31:36.320 with some concern from from him and from our administration. 0:31:36.440 --> 0:31:38.400 But you know, he's not a hell no on all 0:31:38.440 --> 0:31:41.640 and congestion pricing. But I think the way this has 0:31:41.680 --> 0:31:43.959 been proposed, you know, we think is detrimental to New 0:31:44.040 --> 0:31:47.800 Jersey from a health and other perspective, other perspectives. But yeah, 0:31:47.960 --> 0:31:49.440 I think it's certainly. I don't think it's going to 0:31:49.480 --> 0:31:53.160 be a revolutionary impact on the economic development framework. But 0:31:53.240 --> 0:31:57.600 then the competition between the usually friendly competition between you know, 0:31:57.720 --> 0:31:59.520 New York and New Jersey and the tri state area. 0:31:59.600 --> 0:32:03.640 But it's it's certainly probably it's a it's a pebble 0:32:03.680 --> 0:32:05.120 on the stone on the scale on our side. 0:32:05.240 --> 0:32:07.200 We started, you know, and we talked a little bit 0:32:07.200 --> 0:32:10.720 about you know, healthcare, pharmaceuticals. It's been such a backbone 0:32:10.760 --> 0:32:13.360 I feel like, or an important part uh in terms 0:32:13.440 --> 0:32:16.280 of New Jersey when it comes to business development. What's 0:32:16.360 --> 0:32:18.400 new on that front and what are you seeing, whether 0:32:18.440 --> 0:32:20.760 it's AI again coming back from Milkin and people talking 0:32:20.760 --> 0:32:23.880 about artificial intelligence, how it impacts things like drug development. 0:32:23.920 --> 0:32:25.440 So I'm just curious what you're seeing on that front. 0:32:25.520 --> 0:32:27.640 The arm momentum in life sciences is really good. Probably 0:32:27.640 --> 0:32:29.480 the best example of that is ken View, who just 0:32:29.520 --> 0:32:31.840 spin off, split spin off, was spun off or split. 0:32:31.680 --> 0:32:33.600 Off Friday, you can say anything. 0:32:34.600 --> 0:32:36.280 They just were separated out what the right word is 0:32:36.320 --> 0:32:39.800 from Johnson and Johnson. But they did a global search 0:32:39.800 --> 0:32:41.960 where they're gonna put their headquarters. They chose Summit, New Jersey. 0:32:42.000 --> 0:32:44.800 We just did a groundbreaking for that new facility that 0:32:44.840 --> 0:32:46.320 they're going to develop out there. So that's a good 0:32:46.320 --> 0:32:49.720 example of momentum. So band Aids and Listerine and isn't 0:32:49.720 --> 0:32:52.720 going anywhere from New Jersey. And then we've also seen 0:32:52.760 --> 0:32:55.040 you know, companies like ASI out of Japan have made 0:32:55.080 --> 0:32:57.440 big commitments to New Jersey. Gilead out of the West 0:32:57.440 --> 0:32:59.360 Coast is built its East Coast headquarters in New Jersey. 0:32:59.400 --> 0:33:01.280 So not just the you know Merks and Jay and 0:33:01.320 --> 0:33:03.160 Jays of the world, which we're thrilled to have continue 0:33:03.160 --> 0:33:04.959 to be headquartered in Jersey, but lots of new companies 0:33:05.080 --> 0:33:05.800 choosing New Jersey. 0:33:05.800 --> 0:33:07.040 Okay, you know where I'm going to go. We got 0:33:07.080 --> 0:33:09.440 thirty thirty forty seconds. So Tim, you're a tax payer 0:33:09.480 --> 0:33:11.040 in New Jersey. I'm a tax payer in New Jersey. 0:33:11.120 --> 0:33:13.240 Any of these that are they going to pay for 0:33:13.320 --> 0:33:15.080 themselves or am I going to be looking at paying 0:33:15.120 --> 0:33:15.640 more taxes? 0:33:17.520 --> 0:33:19.320 Yeah? You know, we think the one of the keys 0:33:19.320 --> 0:33:21.480 I think to our long term success in the state 0:33:21.560 --> 0:33:23.080 is growing in the pie and grow You're having more 0:33:23.120 --> 0:33:26.080 revenue you know coming into the state, more jobs, more employment, 0:33:26.120 --> 0:33:28.040 so that you know, it only provides either the resources 0:33:28.080 --> 0:33:29.760 to invest in things we need to invest in, because 0:33:29.760 --> 0:33:31.600 we've we're still catching up from a period of under 0:33:31.640 --> 0:33:33.920 investment before Governor Murphy was governors and things. Yeah, and 0:33:34.000 --> 0:33:37.120 things like infrastructure in our schools and our pension system. 0:33:37.480 --> 0:33:39.280 We catch up to do their on the fiscal side, 0:33:39.800 --> 0:33:42.040 so I think we'll continue to plow forward on growing 0:33:42.080 --> 0:33:42.640 as best we can. 0:33:43.400 --> 0:33:46.320 Are the taxes high? Are the taxes high? 0:33:46.400 --> 0:33:50.240 They have come pretty high for me, Tim, this was great. 0:33:50.320 --> 0:33:52.560 We really covered a lot. Thank you so much. It 0:33:52.640 --> 0:33:55.080 was interesting. Tim Sullivan, chief Executive Officer of the New 0:33:55.160 --> 0:33:58.160 Jersey Economic Development Authority, joining us here in our Bloomberg 0:33:58.240 --> 0:34:01.120 Interactive Brokers studio. You are listening in watching Bloomberg Business Week. 0:34:01.120 --> 0:34:04.760 I'm Carol Masser along with Tim Stanevik, and this is Bloomberg. 0:34:08.280 --> 0:34:11.719 You're listening to the Bloomberg Business Week podcast. Can't just 0:34:11.880 --> 0:34:15.040 live weekday afternoons from two to five pm Eastern Listen 0:34:15.120 --> 0:34:17.800 on Apple car Play and Androut Auto with a Bloomberg 0:34:17.840 --> 0:34:20.320 Business act or watch us live on YouTube. 0:34:27.880 --> 0:34:31.760 Oh that's right. Everybody check the calendar man, because Mother's 0:34:31.840 --> 0:34:32.800 Day this weekend. 0:34:33.520 --> 0:34:36.719 I know it's no I didn't forget. I'm actually traveling 0:34:36.760 --> 0:34:37.680 this weekend, are you? 0:34:38.040 --> 0:34:38.279 Yeah? 0:34:38.719 --> 0:34:40.200 Oh yeah, away? 0:34:40.360 --> 0:34:41.040 Yeah, I'm going away. 0:34:41.040 --> 0:34:43.040 I'm going to Are you going to spend time with Mom? No, 0:34:43.600 --> 0:34:45.640 I'm not. Are you actually going to go spend time. 0:34:45.560 --> 0:34:47.040 With my wife? No, I'm not. 0:34:47.880 --> 0:34:48.399 It's bad. 0:34:48.520 --> 0:34:51.160 It's very, very bad. Christina. We got to help him out. 0:34:52.120 --> 0:34:54.000 Actually, I was actually, as I was burying this segment, 0:34:54.040 --> 0:34:55.880 I was like, is it too late for me to 0:34:55.960 --> 0:34:58.000 call Christina and get some flowers? 0:34:58.040 --> 0:34:58.960 Shift to Brooklyn. 0:34:59.080 --> 0:35:00.680 I don't know, I don't think it all right. 0:35:00.760 --> 0:35:02.680 Christina Stemble is back with us. She's found her in 0:35:02.760 --> 0:35:05.279 ceo farm Girl Flowers. She joins us from it looks 0:35:05.360 --> 0:35:08.120 like gorgeous where you are, gig Harbor, Washington, just outside 0:35:08.120 --> 0:35:10.560 of Seattle. So good to have you back with us. 0:35:11.560 --> 0:35:14.680 It is the super Bowl of the flower industry. Tell 0:35:14.760 --> 0:35:18.160 us how important. Just remind our folks how important this 0:35:18.320 --> 0:35:19.319 day is for you guys. 0:35:20.440 --> 0:35:22.719 Yes, thanks for having me back. Carroll and Tim and 0:35:22.800 --> 0:35:27.320 Tim we got to talk after this. No, Mom, we 0:35:27.440 --> 0:35:29.120 did just all out fifteen minutes ago. I might build 0:35:29.120 --> 0:35:31.239 to make an exception, but this is our definitely our 0:35:31.320 --> 0:35:33.319 super Bowl. We like to call it of our year. 0:35:33.920 --> 0:35:36.560 We do more revenue and more profit in this month 0:35:36.600 --> 0:35:38.960 than any other month of the year by a significant amount. 0:35:39.640 --> 0:35:41.440 You know, I think I talked about Valentine's Day with you. 0:35:41.560 --> 0:35:44.000 We do Mother's Days, you know, even more important than 0:35:44.040 --> 0:35:47.680 Valentine's Day, which really surprises people. We do usually double 0:35:47.800 --> 0:35:50.839 the revenue, but significantly somemost three to four times more 0:35:50.880 --> 0:35:54.239 in profit than Valentine's Day because flowers are you know, 0:35:54.520 --> 0:35:57.080 better priced around Mother's Day because it's not winter and 0:35:57.160 --> 0:35:59.320 there's less storms for redeliveries and things like that. 0:36:00.239 --> 0:36:02.759 You less to get the flowers, But the prices are 0:36:03.440 --> 0:36:05.319 the same for consumers or is there a little bit 0:36:05.320 --> 0:36:05.879 of wiggle room. 0:36:06.640 --> 0:36:08.399 Yeah, there's a little wiggle room. We can get more 0:36:08.480 --> 0:36:11.360 varieties now so we can offer different price points. So 0:36:11.440 --> 0:36:13.880 some flowers like pa andies are still super high priced. 0:36:14.080 --> 0:36:16.399 We pay usually double before Mother's Day what we'll pay 0:36:16.440 --> 0:36:18.719 after Mother's Day for the same stems one week makes 0:36:18.719 --> 0:36:21.960 a huge difference, so buying demand right at its best. 0:36:22.520 --> 0:36:23.120 But we can hear. 0:36:24.800 --> 0:36:26.600 Pa andies your favorite flower totally. 0:36:26.680 --> 0:36:29.360 Yeah night. We pulled our consumers. Ninety two percent of 0:36:29.400 --> 0:36:30.920 them say peonies are their favorite flowers. 0:36:30.960 --> 0:36:32.880 I used to grow them, my mom, my grandmother, Like, 0:36:33.239 --> 0:36:36.320 they're just incredible flowers. I have a statistic for everybody. 0:36:36.360 --> 0:36:39.040 Consumers are expected to spend three point two billion dollars 0:36:39.080 --> 0:36:41.800 in flowers, while spending on greeting cards is expected to 0:36:41.840 --> 0:36:44.600 reach one point one billion. More money is spent from 0:36:44.640 --> 0:36:47.319 moms on Mother's Day than dad's on Father's Day. That's 0:36:47.360 --> 0:36:47.600 a lot. 0:36:47.719 --> 0:36:49.440 Sounds good to me, Christina. 0:36:49.640 --> 0:36:51.880 Fine, what we love is you kind of make the 0:36:51.960 --> 0:36:53.879 sausage for us a little bit, you know, or tell 0:36:53.960 --> 0:36:56.560 us what's involved in the flower business. It's not so easy. 0:36:56.640 --> 0:36:58.680 It looks so beautiful you get flowers. You're like, that 0:36:58.840 --> 0:37:00.680 was easy. It's not as easy though. 0:37:02.080 --> 0:37:02.120 No. 0:37:02.320 --> 0:37:04.040 Parish ability is so hard. I wish I would have 0:37:04.080 --> 0:37:06.319 known that back in twenty ten when I started farm Girl. 0:37:06.920 --> 0:37:08.640 It's so much harder. I wish, you know. I constantly 0:37:08.640 --> 0:37:10.319 talk about I wish we sold sweaters, so we could 0:37:10.320 --> 0:37:13.120 even put them on sale in June, but we can't. 0:37:13.200 --> 0:37:15.000 We have to We have to guess a full year 0:37:15.040 --> 0:37:18.000 in advance on what consumer spending is going to be 0:37:18.040 --> 0:37:19.600 the next year. And as you're just talking about, you know, 0:37:19.680 --> 0:37:21.760 the markets right now, we have no idea what environmental 0:37:21.800 --> 0:37:24.799 conditions we'll be in coming into play. You know, this year, 0:37:25.480 --> 0:37:28.080 most strict consumer businesses are really hurting, and so we're 0:37:28.160 --> 0:37:29.960 you know trying to figure out like what should our 0:37:30.000 --> 0:37:32.160 goal be, what should our productions be, But we have 0:37:32.239 --> 0:37:34.400 to do that so far in advance. So for this year, 0:37:34.440 --> 0:37:37.120 we were playing it safe. And thankfully, because we're bootstrapped, 0:37:37.200 --> 0:37:39.480 we can do that. We don't have to show you know, 0:37:39.680 --> 0:37:43.319 huge growth numbers for our investors and board. So I'm 0:37:43.360 --> 0:37:46.480 so great, so thankful and grateful for that. So we 0:37:46.600 --> 0:37:48.440 were just you know, I was gonna went into this 0:37:48.520 --> 0:37:50.480 holiday just saying, if we have a flat holiday, I 0:37:50.520 --> 0:37:51.920 said this to my team, if we have flat holiday, 0:37:51.920 --> 0:37:53.640 I'm gonna count that as successful. And we did have 0:37:53.719 --> 0:37:57.360 a better holiday than last year. So we're definitely counting 0:37:57.400 --> 0:37:59.480 our blessings right now. But it is such a risk. 0:37:59.520 --> 0:38:01.560 We always like we're standing at like a craps table 0:38:01.680 --> 0:38:04.240 rolling dice when we're putting in those pa andy orders, 0:38:04.320 --> 0:38:07.239 you know, nine months in advance sometimes to you know, 0:38:07.360 --> 0:38:09.280 we don't know how mother nature is going to react. 0:38:09.640 --> 0:38:12.239 This year actually was the first year and twenty years 0:38:12.280 --> 0:38:15.200 that we had domestic paeonies in time for Mother's Day. 0:38:15.360 --> 0:38:17.399 Why is that just because of the warm weather we've had. 0:38:18.000 --> 0:38:20.680 Yes, Yeah, because with the warm weather it made them 0:38:20.719 --> 0:38:23.200 pop earlier. Usually they come on with the week after 0:38:23.360 --> 0:38:26.520 Mother's Day. But that definitely threw wrenching things because domestic 0:38:26.600 --> 0:38:29.719 peenies are better than shipping them in from Europe and 0:38:29.760 --> 0:38:32.680 other locations, but we'd already placed orders further away. So 0:38:32.800 --> 0:38:34.080 then it's trying to figure out, like, how can we 0:38:34.160 --> 0:38:36.880 also incorporate some domestic penies and since we can get 0:38:36.920 --> 0:38:38.759 them this year, very last minutes, how do. 0:38:38.800 --> 0:38:42.040 You compete with the bigger players on this Christina? Because 0:38:42.120 --> 0:38:45.239 let's say, you know, it's is one hundred Flowers having 0:38:45.280 --> 0:38:47.840 the same challenges that you have for example, or are 0:38:47.920 --> 0:38:50.520 they able to mitigate it more because of their scale. 0:38:51.840 --> 0:38:52.080 Both. 0:38:52.200 --> 0:38:53.840 I think they have some of the same challenges that 0:38:53.920 --> 0:38:58.160 are you know, mother nature related or shipping partner related. 0:38:58.239 --> 0:39:01.759 We you know, I talked to our competitors often, and 0:39:02.360 --> 0:39:05.640 you know, we complain about, you know, the shipping delays 0:39:05.640 --> 0:39:07.080 and things like that that we're all trying to figure 0:39:07.120 --> 0:39:10.200 out last minute together, you know, Like you know, for 0:39:10.280 --> 0:39:13.680 our companies, that's we're not unique in that way. They 0:39:13.840 --> 0:39:16.160 one one hundred Flowers also has those same issues. You know, 0:39:16.200 --> 0:39:18.560 they don't have their own planes delivering other flowers, but 0:39:18.719 --> 0:39:20.560 they do have better you know, buying power than us, 0:39:20.600 --> 0:39:23.680 so I'm sure their flower costs are significantly cheaper than us, 0:39:24.120 --> 0:39:26.160 and they get probably first right refusal on a lot 0:39:26.200 --> 0:39:28.920 of them as well. So we don't, you know, we'll 0:39:29.000 --> 0:39:30.920 never be able to compete unless we're you know, doing 0:39:31.080 --> 0:39:33.160 hundreds and hundreds of millions of dollars. I think they 0:39:33.200 --> 0:39:35.839 did two point one six billion company wide last year, 0:39:35.920 --> 0:39:38.279 so we're not that scale, but with some of the 0:39:38.320 --> 0:39:40.480 same issues and some different ones well, And I also do. 0:39:40.560 --> 0:39:42.759 Think about, you know, I'm curious. I want to get 0:39:42.760 --> 0:39:44.640 your take on how the consumer's doing because I do 0:39:44.719 --> 0:39:46.439 think when it's something like Mother's Day, like we don't 0:39:46.480 --> 0:39:50.400 scamp typically, but I do wonder. But sometimes there are 0:39:50.480 --> 0:39:51.960 years that are tougher and you're like, I'm still going 0:39:52.040 --> 0:39:53.799 to do something, but maybe not as much. So give 0:39:53.880 --> 0:39:56.359 us an idea of what you're seeing in consumer buying 0:39:56.440 --> 0:39:58.920 trends for the holiday, maybe more broadly as well. 0:40:00.120 --> 0:40:03.719 Yeah, we have found over many years of research on this, 0:40:03.880 --> 0:40:06.520 that people spend more on their lovers than their mothers, 0:40:06.560 --> 0:40:09.279 so they actually spend way more on Valentine's Day than 0:40:09.280 --> 0:40:12.040 they do Mother's Day, maybe because they're buying for two 0:40:12.120 --> 0:40:13.560 of them. You know, they might buying for a mother 0:40:13.800 --> 0:40:17.680 in law and a mother. So we typically dower some 0:40:17.800 --> 0:40:20.640 lower price point options for Mother's Day more so than 0:40:20.680 --> 0:40:22.680 we do for Valentine's Day. And we thought that would 0:40:22.680 --> 0:40:26.080 be the case this this holiday. We you know, thought 0:40:26.120 --> 0:40:28.920 that people would be going because the economic climate right now. 0:40:28.960 --> 0:40:31.759 We thought that lower priced options would be the first 0:40:31.880 --> 0:40:34.719 to go. But we were wrong that way. We had 0:40:34.760 --> 0:40:38.280 a lot more people spending more than we anticipated this holiday. 0:40:39.440 --> 0:40:41.759 That was great but also bad because we didn't plan 0:40:41.880 --> 0:40:43.840 for that. So we had a lot more smaller options 0:40:43.880 --> 0:40:46.160 that were available on our site later, while the bigger 0:40:46.200 --> 0:40:47.160 ones sold out quickly. 0:40:48.000 --> 0:40:49.359 Wow, that's really interesting to hear. 0:40:49.640 --> 0:40:52.480 Yeah, right, because right if something changes last minute, you've 0:40:52.480 --> 0:40:54.279 already had your orders in, Right, you can't just like 0:40:54.400 --> 0:40:56.880 call up I don't know Costco and say hey I 0:40:56.960 --> 0:40:59.480 need right Like, that's not how it works in your business. 0:41:00.360 --> 0:41:02.239 Yeah, we're very flexible. So that's something that we are 0:41:02.320 --> 0:41:05.919 different than the big guys. We're more adaptable than any 0:41:05.960 --> 0:41:09.000 other company. I think at our scale in Flowers, we're 0:41:09.040 --> 0:41:10.719 told that by our partners, and we all use kind 0:41:10.719 --> 0:41:11.480 of the same partners. 0:41:12.880 --> 0:41:14.960 We can we change things quickly. 0:41:15.600 --> 0:41:17.839 Well, sometimes, if you know, one of our partners will 0:41:17.880 --> 0:41:19.239 cause one of our farms or costs and say that 0:41:19.280 --> 0:41:21.759 they have, you know, a huge flush of something, will 0:41:21.800 --> 0:41:23.640 be like, Okay, no problem, we'll take a photo of 0:41:23.719 --> 0:41:25.080 it that day with our cell phone, we'll put it 0:41:25.120 --> 0:41:26.760 on the site, and we'll be selling it by tomorrow. 0:41:27.200 --> 0:41:29.880 Where our bigger competitors plan way further out than we 0:41:30.000 --> 0:41:32.600 do and can't kind of adapt to that. So I 0:41:32.719 --> 0:41:34.680 really like that about our company. We try to stay 0:41:34.719 --> 0:41:35.440 agile that way. 0:41:35.520 --> 0:41:37.239 Hey, Christina, one of the things that we love just 0:41:37.320 --> 0:41:39.160 about talking to you is how candid you are when 0:41:39.200 --> 0:41:41.880 it comes to not just the successes that you've had, 0:41:41.920 --> 0:41:44.480 but also the challenges that you had, especially through COVID 0:41:44.600 --> 0:41:46.960 and what you saw post COVID as well. So just 0:41:47.040 --> 0:41:49.319 give us an update on how the company is doing 0:41:49.400 --> 0:41:50.560 and how you guys are doing. 0:41:51.800 --> 0:41:52.040 Nice. 0:41:52.200 --> 0:41:54.439 Yeah, yeah, I just tell you straight. 0:41:54.480 --> 0:41:56.680 I think it's our most saying that they consider a 0:41:56.800 --> 0:41:58.080 flat year success. 0:41:58.880 --> 0:42:00.399 You know, I went into this year with our team 0:42:00.800 --> 0:42:02.400 knowing it was going to be a hard year, and 0:42:02.520 --> 0:42:06.040 it has been. It's definitely been more challenging, you know, 0:42:06.400 --> 0:42:09.399 so I kept our expectations really low, like flat, will 0:42:09.400 --> 0:42:11.600 be happy if we do flat to last year. Really 0:42:11.680 --> 0:42:14.800 focus on profitability. Everybody's kind of gotten into the game of, 0:42:14.960 --> 0:42:17.600 you know, having to over discount everything and then they 0:42:17.680 --> 0:42:19.440 lose money. And a lot of our competitors I think 0:42:19.520 --> 0:42:21.080 might be in that boat a little bit, spending too 0:42:21.120 --> 0:42:23.600 much on marketing, marketing dollars. Oh, it's cost so much 0:42:23.640 --> 0:42:27.160 to acquire a customer now. So we've just decided, like 0:42:27.239 --> 0:42:29.200 I said earlier, we can do this because I don't 0:42:29.239 --> 0:42:32.279 have to report into a board or investors that we're 0:42:32.400 --> 0:42:35.520 just going to stay small. If we need to stay 0:42:35.680 --> 0:42:37.920 flat to last year. We'll even go down if we 0:42:38.000 --> 0:42:40.279 need to from last year, although thankfully we haven't had 0:42:40.320 --> 0:42:43.200 to do that yet this year. But really focus on 0:42:43.520 --> 0:42:46.960 making that bottom line on the spreadsheet black so we 0:42:47.000 --> 0:42:49.680 can stay in this long long term. So you know, 0:42:49.719 --> 0:42:51.480 if we need to be smaller for the next you know, 0:42:51.600 --> 0:42:53.840 two or three years until the economy comes back, we 0:42:53.880 --> 0:42:54.920 can do that and make it through. 0:42:55.080 --> 0:42:56.920 All right. Do I have to send you flowers soon 0:42:57.000 --> 0:43:00.799 because you're gonna maybe sell or you just still still 0:43:00.840 --> 0:43:01.480 going alone? 0:43:02.840 --> 0:43:04.680 Probably still going alone. I did think. You know, I 0:43:04.760 --> 0:43:08.080 never thought i'd be fourteen years in still talking flower 0:43:08.160 --> 0:43:10.000 business because I thought I would have sold my ten 0:43:10.200 --> 0:43:10.960 to raise your ten. 0:43:11.200 --> 0:43:11.399 Yeah. 0:43:11.920 --> 0:43:14.520 Yeah, but I've changed my mindset a lot. I think 0:43:14.560 --> 0:43:17.680 that that we don't talk enough about, you know, being 0:43:17.719 --> 0:43:20.279 a long term sustainable business and that's a success, and 0:43:20.400 --> 0:43:23.520 so changed my mindset to be that we can provide 0:43:23.560 --> 0:43:25.520 great jobs, tax dollars, things like that. 0:43:25.800 --> 0:43:27.759 I got to tell you, I did an interview with 0:43:27.880 --> 0:43:31.080 the administrator of the Small Business Administration is about Guzman 0:43:31.760 --> 0:43:33.520 at Milkin, and we just one of the big things 0:43:33.560 --> 0:43:36.479 we talked about was viability of small businesses. It's tough. 0:43:36.920 --> 0:43:40.160 So fourteen years in counting, you should feel pretty good 0:43:40.160 --> 0:43:43.440 about that. So always great to check in with you. 0:43:43.600 --> 0:43:46.919 Happy Mother's Day or ahead of Happy Mother's Day. Yeah, 0:43:47.000 --> 0:43:49.640 good stuff, Christina, Thank you so much. Christina Stanbele, founder 0:43:49.680 --> 0:43:52.200 and CEO farm Girl Flowers. I always like talking with Yeah. 0:43:52.000 --> 0:43:54.160 And reminder everybody get the Mother's day stuff done. 0:43:54.360 --> 0:43:55.960 Reminder then later. 0:43:57.880 --> 0:44:03.960 Brother journal. How about you let me drive? 0:44:04.239 --> 0:44:05.680 Oh no, no, no, no, who's. 0:44:07.320 --> 0:44:07.600 Honey? 0:44:07.800 --> 0:44:09.719 Please gravels. 0:44:10.120 --> 0:44:11.480 Let's make I want to drive. 0:44:13.760 --> 0:44:14.600 It's a good question. 0:44:15.120 --> 0:44:21.719 Good this is the drive to the globe. Do think 0:44:21.800 --> 0:44:24.920 well by around on Bluemberg. 0:44:24.560 --> 0:44:26.920 Radio, right, TikTok everybody, not like Tim and I are 0:44:26.960 --> 0:44:30.080 counting or anything. But we've got about eighteen wait, eighteen 0:44:30.320 --> 0:44:32.480 eighteen minutes left till we wrap up the trading day. 0:44:32.640 --> 0:44:33.440 That's maths for you. 0:44:34.040 --> 0:44:38.040 That it's been a packed week, a good week. Feel 0:44:38.080 --> 0:44:39.799 like we've really picked up on some trends. Whether it's 0:44:39.840 --> 0:44:42.759 in the technology world, they're the investment world. So let's 0:44:42.760 --> 0:44:44.480 get to it because it's a great backdrop for us 0:44:44.560 --> 0:44:47.560 to dig into it all. With Alan Zaffron, founding partner 0:44:47.640 --> 0:44:50.400 and co CEO at i EQ Capital, joining us from 0:44:50.400 --> 0:44:53.000 Foster City, California, just south of San Francisco, we were 0:44:53.239 --> 0:44:53.560 just there. 0:44:53.760 --> 0:44:53.960 Yeah. 0:44:54.000 --> 0:44:57.120 We really hot day yesterday, Alan, kind of unseasonably warm 0:44:57.400 --> 0:44:59.000 in your neck of the woods. How is it today? 0:45:00.239 --> 0:45:03.440 Loving it today? Sunny and warm? It's it's fantastic. 0:45:03.560 --> 0:45:04.160 Couldn't be better. 0:45:04.320 --> 0:45:05.640 Why we pay the high taxes out here? 0:45:05.719 --> 0:45:06.960 Yeah, I was gonna say, sounds like a day that 0:45:07.080 --> 0:45:09.360 ends in Why in California? Carol pays high taxes in 0:45:09.440 --> 0:45:11.200 New Jersey but doesn't have the same weather. 0:45:11.400 --> 0:45:12.000 That's weird. 0:45:12.239 --> 0:45:15.360 Yeah, it's a little kicky January February. 0:45:16.480 --> 0:45:19.480 Still kind of now a month that's months that end 0:45:19.560 --> 0:45:20.400 and why yeah. 0:45:20.480 --> 0:45:20.799 All right? 0:45:20.840 --> 0:45:22.879 So what do you make of the month of May? 0:45:23.040 --> 0:45:24.719 Here we are it used to be what sell and 0:45:24.760 --> 0:45:26.960 may go away? And maybe I don't know, it hasn't 0:45:26.960 --> 0:45:29.320 happened yet, but we are seeing some upward momentum on 0:45:29.360 --> 0:45:32.320 the equity side of things here in May. Does it 0:45:32.400 --> 0:45:32.880 stick for you? 0:45:33.040 --> 0:45:37.920 Alan it sticks for me as long as interest rates 0:45:38.120 --> 0:45:39.759 don't get too high. And I don't know where the 0:45:39.920 --> 0:45:42.760 trigger is. Maybe it's a ten year yield over five percent, 0:45:42.920 --> 0:45:46.880 But I think what's happened it's fascinating this year. Everyone's 0:45:46.880 --> 0:45:49.120 been worried about the Fed's getting cut rates, cut rates, 0:45:49.120 --> 0:45:50.640 so it won't cut rates. Oh my gosh, I have 0:45:50.719 --> 0:45:54.000 to reprice my models. But stocks keep going up anyway, 0:45:54.040 --> 0:45:57.040 And I think the lesson learned is the economy isn't 0:45:57.120 --> 0:46:00.040 as interest rates sensitive as it used to be, and 0:46:00.120 --> 0:46:03.520 there was so much money thrown at corporations and individuals 0:46:03.560 --> 0:46:06.279 through COVID that it has a lot of pent up 0:46:06.480 --> 0:46:09.239 cash on the sidelines, ready to buy any asset at 0:46:09.280 --> 0:46:11.600 any drop. And that's I think been the story, and 0:46:11.680 --> 0:46:13.560 I think it's going to stick through the balance of 0:46:13.600 --> 0:46:17.160 this year. Unless we get rate shocks meaningfully higher, I 0:46:17.239 --> 0:46:19.560 think that we are going to keep working this way, 0:46:19.719 --> 0:46:20.759 grinding our way higher. 0:46:20.960 --> 0:46:23.160 All right, so meaningful higher, like you said, up above 0:46:23.200 --> 0:46:24.920 five percent? I think you said on the ten year. 0:46:25.040 --> 0:46:27.279 Was that what you said, because it's interesting coming back 0:46:27.320 --> 0:46:28.719 from Milk, and most folks were like, you know, if 0:46:28.760 --> 0:46:30.200 we go up a little bit, if we go down 0:46:30.239 --> 0:46:32.759 a little bit in terms of what the Fed does, 0:46:32.840 --> 0:46:35.759 it's really not going to impact my investment decision. So 0:46:36.239 --> 0:46:39.000 it has to be something more than that in your view. 0:46:39.960 --> 0:46:43.120 Well, it does. Let's just take the economy. Okay, on 0:46:43.480 --> 0:46:47.320 an in interest rate sensitivity front, any company or individual 0:46:47.360 --> 0:46:50.040 who could refinance their balance sheet did when rates were 0:46:50.120 --> 0:46:54.080 really low through COVID. So as a fact, forty percent 0:46:54.160 --> 0:46:56.600 of homeowners in America do not have a mortgage, and 0:46:56.760 --> 0:46:59.600 ninety five percent of the mortgages are thirty year fixed. 0:47:00.280 --> 0:47:02.520 So the notion that rates going up is going to 0:47:02.560 --> 0:47:05.440 impair people's ability to pay their mortgage is kind of flawed. 0:47:05.840 --> 0:47:09.879 And a lot of the purchases today are software, it's intangibles, 0:47:10.200 --> 0:47:13.520 it's not it's not capital leases tied to equipment. So 0:47:13.719 --> 0:47:16.560 this notion that interest rates are driving behavior. It's not 0:47:16.880 --> 0:47:18.920 nearly the way it used to be long ago. And 0:47:19.000 --> 0:47:21.920 then you take into account everybody has already refinanced, and 0:47:22.000 --> 0:47:24.680 there's still a tremendous amount of money sitting in CDs 0:47:24.800 --> 0:47:28.480 and treasury bills and money market funds, all sitting and 0:47:28.600 --> 0:47:32.480 waiting on acid drops to make purchases of assets. So 0:47:32.960 --> 0:47:35.919 no matter where you're talking, stocks, bonds, even real estate 0:47:36.480 --> 0:47:38.600 buyers are ready to buy when and if they fill, 0:47:38.680 --> 0:47:41.279 the prices are at attractive points of purchase. And that's 0:47:41.280 --> 0:47:44.320 why I think we're in this funny situation that we 0:47:44.400 --> 0:47:45.880 can watch the FED all we want. I don't know 0:47:45.880 --> 0:47:46.560 if it matters that. 0:47:46.640 --> 0:47:48.320 Much, Heyll. And one thing I wanted to talk to 0:47:48.360 --> 0:47:50.120 you about that was really interesting in the notes that 0:47:50.160 --> 0:47:51.840 you sent to us ahead of time. Thanks as always 0:47:51.880 --> 0:47:55.360 for doing that, is you're bullish when it comes to 0:47:55.400 --> 0:47:58.439 private equity right now, and I think that's a little 0:47:58.480 --> 0:48:01.040 bit contrarian, especially when it comes to some of the 0:48:01.440 --> 0:48:03.839 articles that we've seen about private equity and a higher 0:48:03.920 --> 0:48:07.120 rate environment. We have a Bloomberg opinion piece. It's a video, 0:48:07.160 --> 0:48:10.560 it's great by a near Casar that's just out this week, 0:48:10.840 --> 0:48:13.680 and it's all about the concerns of private equity and 0:48:13.719 --> 0:48:17.000 a high rate environment, the idea that there are many 0:48:17.080 --> 0:48:19.319 deals to be had, there aren't many businesses to be bought. 0:48:19.560 --> 0:48:22.439 The leverage that was typically used in a low interest 0:48:22.480 --> 0:48:25.960 rate environment is so much more difficult to do nowadays. 0:48:27.120 --> 0:48:29.920 Why do you think private equity is an opportunity for 0:48:30.000 --> 0:48:32.000 you and your clients? 0:48:33.080 --> 0:48:35.200 Well, of course it begins on your starting point. But 0:48:35.320 --> 0:48:37.120 now if you're in a world where the interest rates 0:48:37.160 --> 0:48:40.280 at which we're starting to place valuations on businesses are higher, 0:48:40.920 --> 0:48:43.720 that means the discount rate which I used to discount 0:48:43.840 --> 0:48:46.400 future cash flows and pushing it back to a present 0:48:46.480 --> 0:48:49.640 price creates the purchase price to be more attractive or lower. 0:48:50.120 --> 0:48:52.359 And so I think that a couple with the fact 0:48:52.400 --> 0:48:55.080 that bank lendings less available than it used to be, 0:48:55.200 --> 0:48:58.040 the demise of First Republic Banks, Silicon Valley Bank, and others, 0:48:58.480 --> 0:49:01.120 has it made it more difficult for business owners to 0:49:01.160 --> 0:49:04.840 get conventional borrowing. I think there are opportunities for craftful 0:49:05.280 --> 0:49:08.120 individuals that work at private cotyfirms who can actually source 0:49:08.680 --> 0:49:12.719 access to buying ownership stakes in private companies for the 0:49:12.800 --> 0:49:15.440 right price. There are some incredibly attractive businesses and in 0:49:15.520 --> 0:49:19.439 the absence of conventional bank lending, their equity isn't quite 0:49:19.520 --> 0:49:22.400 as expensive role as to debt as at once was. 0:49:22.520 --> 0:49:24.600 So I think it's an interesting time to be a 0:49:24.640 --> 0:49:25.800 buyer of private companies. 0:49:26.000 --> 0:49:27.719 Well, that's what you know. It's interesting At MILK and 0:49:27.760 --> 0:49:29.560 we talked about that the buyers and sellers in terms 0:49:29.600 --> 0:49:31.799 of price are coming much closer together, and that that's 0:49:31.840 --> 0:49:35.240 been a big disconnect and kind of really the sellers 0:49:35.280 --> 0:49:37.400 are having a reality check of like, Okay, here's what 0:49:37.480 --> 0:49:39.600 we really need to do to maybe have some kind 0:49:39.640 --> 0:49:44.560 of deal actually happen. Having said that, when I think 0:49:44.600 --> 0:49:50.080 about the broader investing landscape, why is kind of focusing 0:49:50.120 --> 0:49:53.440 on the PE area so important to you? Is it 0:49:53.480 --> 0:49:55.560 because you think there's going to be IPOs? Like why 0:49:55.760 --> 0:49:58.200 more broadly, why is that so important in terms of 0:49:58.239 --> 0:49:59.600 the broader investment landscape. 0:50:00.640 --> 0:50:03.400 Well, I just think in the big picture, private equity 0:50:03.480 --> 0:50:05.800 is one of many different arrays in which to be invested. 0:50:05.880 --> 0:50:09.439 So you should always be incredibly well diversified cash bond 0:50:09.520 --> 0:50:13.400 stocks publicly, let alone potentially if you're qualified purchaser or 0:50:13.400 --> 0:50:16.000 an a credited investor, getting some private equity exposure or 0:50:16.040 --> 0:50:20.680 other forms of risk public equities have historically generated higher 0:50:20.719 --> 0:50:24.120 returns than public equities, but it's come along with greater volatility, 0:50:24.600 --> 0:50:26.360 and there's a greater degree of risk that you end 0:50:26.440 --> 0:50:28.400 up in the right private equity fund. So you've got 0:50:28.480 --> 0:50:31.000 to be careful about that. But if you think you 0:50:31.080 --> 0:50:32.759 have access to the right manager and you have a 0:50:32.880 --> 0:50:36.160 long enough time frame for investment horizon, now it's not 0:50:36.280 --> 0:50:38.120 a bad time to be beginning to look at that 0:50:38.239 --> 0:50:40.640 as a potential asset class. To put a small question 0:50:40.760 --> 0:50:41.720 for campies. 0:50:41.440 --> 0:50:45.200 Credit investors, yeah exactly, although they all pe private credit 0:50:45.239 --> 0:50:47.000 as well, would love to kind of maybe even open 0:50:47.040 --> 0:50:47.720 it up more widely. 0:50:47.960 --> 0:50:49.319 I think you talked a little bit about that at 0:50:49.360 --> 0:50:52.880 Milk Yeah, yeah, and we talked about that before, Carolynton. 0:50:52.960 --> 0:50:55.480 We actually think private credit is a very attractive asset 0:50:55.520 --> 0:50:58.720 class because private credit is generally priced as a floating 0:50:58.800 --> 0:51:02.000 rate plus a spread. So today's floating rate, right, the 0:51:02.080 --> 0:51:04.880 structured overnight finance rate is where the Fed funds basically 0:51:05.040 --> 0:51:06.799 is at five and a half percent. If you throw 0:51:06.840 --> 0:51:09.560 another seven percent on top of that in order to 0:51:09.680 --> 0:51:11.480 get Alan making loans at twelve percent. 0:51:11.920 --> 0:51:14.000 What do you make of the kind of wall of 0:51:14.239 --> 0:51:17.120 debt corporate debt that's going to be facing the markets 0:51:17.280 --> 0:51:19.640 probably starting you know, obviously next year and then out 0:51:19.719 --> 0:51:22.479 into twenty twenty six and so on and so forth. 0:51:22.560 --> 0:51:24.920 The implications of that, especially as companies private equity or 0:51:24.960 --> 0:51:28.239 other you know, potentially have to refinance that debt at 0:51:28.320 --> 0:51:30.960 much higher rates, do you anticipate a wave of defaults? 0:51:30.960 --> 0:51:33.200 And just got about thirty seconds left here. 0:51:33.680 --> 0:51:37.040 I think we'll have a slightly elevated amount of the faults. 0:51:37.080 --> 0:51:39.040 But I think managers that are proven, were well in 0:51:39.120 --> 0:51:41.880 advance could identify the companies that have those debt maturities 0:51:41.920 --> 0:51:43.720 that they'll have to be refinanced. And if you're sitting 0:51:43.840 --> 0:51:48.120 things like private credit, which are floating rate short term loans, 0:51:48.160 --> 0:51:52.080 they don't face the debt problems that fixed rate corporate 0:51:52.920 --> 0:51:53.920 borrowers faced. 0:51:55.840 --> 0:51:57.839 All right, kind of leave it on that note, Hey, listen, 0:51:57.920 --> 0:52:01.440 thank you so much. Alan really appreci Allen Zaffron, founding 0:52:01.480 --> 0:52:04.400 partner and co CEO at IQ Capital joining us of 0:52:04.480 --> 0:52:08.560 course there from Foster City, California, said Foster It sounds 0:52:08.560 --> 0:52:10.320 pretty gorgeous there, California. 0:52:11.000 --> 0:52:15.600 This is the Bloomberg Business Week podcast, available on Apple, Spotify, 0:52:15.760 --> 0:52:19.480 and anywhere else you get your podcasts. 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