WEBVTT - Alphabet Earnings And A Look Ahead To Facebook 0:00:00.800 --> 0:00:04.040 Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside 0:00:04.040 --> 0:00:06.920 my co host Matt Miller. Every business day we bring 0:00:06.960 --> 0:00:11.520 you interviews from CEOs, market pros, and Bloomberg experts, along 0:00:11.560 --> 0:00:15.560 with essential market moving news. Find the Bloomberg Markets Podcast 0:00:15.640 --> 0:00:18.479 on Apple Podcasts or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:21.840 at Bloomberg dot com slash podcast. All right, we are 0:00:21.920 --> 0:00:24.239 smack dev in the middle of earnings, particularly tech earnings. 0:00:24.280 --> 0:00:27.520 Had some monster names last night, Apple, Google, Microsoft. Today 0:00:27.520 --> 0:00:32.159 we've got Facebook after the close and some really strong numbers. 0:00:32.400 --> 0:00:35.560 Um let's check in with Man Deep, seeing he possibly 0:00:35.680 --> 0:00:38.519 is the most overeducated tech analysts on Wall Street. He's 0:00:38.560 --> 0:00:42.120 a tech anast for Bloomberg Intelligence. Um Man Deep the 0:00:42.200 --> 0:00:44.519 story last night, I looked at the Google numbers and 0:00:44.680 --> 0:00:48.280 this is an alphabet free studio here, we're all about Google. 0:00:48.280 --> 0:00:50.600 I don't care how much they paid for the consultants 0:00:50.600 --> 0:00:53.400 to come up with the alphabet name. UM Google to 0:00:53.560 --> 0:00:57.040 some monster numbers on the top line digital advertising. I 0:00:57.120 --> 0:00:58.800 guess that kind of follows up with what we saw 0:00:58.840 --> 0:01:01.880 from snap in Twitter. But that's the story. It seems like, 0:01:01.960 --> 0:01:05.240 right digital advertising is just on fire. It did and 0:01:05.280 --> 0:01:08.680 I think the real standout for me was YouTube. So 0:01:08.720 --> 0:01:12.720 if you look at the YouTube print growth, I get 0:01:12.720 --> 0:01:16.199 it the comps were easier, but the magnitude of the 0:01:16.240 --> 0:01:19.640 beat really stood out. And I think what it goes 0:01:19.680 --> 0:01:23.680 to show if you compare YouTube to Netflix and Spotify, 0:01:24.200 --> 0:01:28.039 Netflix and Spotify both had a deceleration and subscriber growth. 0:01:28.080 --> 0:01:31.440 YouTube ad growth is growing, and it's growing in proportion 0:01:31.520 --> 0:01:36.280 to the time spent on their platform. So because people 0:01:36.319 --> 0:01:40.080 are spending more time on YouTube, it's translating into more 0:01:40.160 --> 0:01:43.920 ad dollars. And then there's a pricing Kaleman, because every 0:01:43.959 --> 0:01:47.800 small business is advertising on a YouTube. So why are 0:01:48.080 --> 0:01:50.200 I've noticed that I spend a heck of a lot 0:01:50.240 --> 0:01:52.840 more time on YouTube? And for me, the reason is 0:01:52.920 --> 0:01:56.040 that they've just got the algorithm right. When I'm watching 0:01:56.040 --> 0:01:58.360 a video, I'll go there, how to change a clutch 0:01:58.400 --> 0:02:03.160 on a nineteen seventy two BMW or and then but 0:02:03.240 --> 0:02:06.400 then they pop up SNL videos on my you know, 0:02:06.440 --> 0:02:08.360 having nothing to do with changing a clutch, but that 0:02:08.480 --> 0:02:10.720 I want to see, so I start clicking through them, 0:02:10.720 --> 0:02:13.639 you know, so they know what I want even when 0:02:13.639 --> 0:02:17.280 I'm not searching for it. Well, so that's where the 0:02:17.400 --> 0:02:21.239 AI element comes into play. They keep emphasizing how critical 0:02:21.320 --> 0:02:25.320 AI is to search YouTube and it really, I mean, 0:02:25.440 --> 0:02:28.440 there is nobody out there who can compete with YouTube 0:02:28.720 --> 0:02:31.360 just in terms of, you know, bringing all the content 0:02:31.400 --> 0:02:34.400 together that you want to watch. And I think that's 0:02:34.440 --> 0:02:37.600 what's translating into add dollars. We did some numbers. So 0:02:37.639 --> 0:02:40.720 if you look at you know, Netflix are poo, that's 0:02:40.760 --> 0:02:45.200 like a average revenue per user. It's like, at best 0:02:45.440 --> 0:02:49.679 seventeen dollars per user. Guess what in case of YouTube 0:02:49.919 --> 0:02:53.040 or Facebook for that matter, that are poo. In case 0:02:53.080 --> 0:02:55.800 of Facebook, it's around two hundred dollars in North America. 0:02:55.880 --> 0:02:58.880 In case of YouTube, it's close to fifty dollars. And 0:02:58.960 --> 0:03:02.120 that just goes to show it. AD model is much 0:03:02.160 --> 0:03:05.200 better when it comes to monetizing. The user based subscription 0:03:05.280 --> 0:03:07.799 kind of puts the ceiling in terms of how well 0:03:07.880 --> 0:03:10.360 you can monetize, but not in case of ads. It's 0:03:10.400 --> 0:03:14.280 Facebook has a two R poo yes in North America, 0:03:14.600 --> 0:03:17.960 and you're gonna see it in the results tonight. All right, So, 0:03:18.120 --> 0:03:21.240 just finishing up on YouTube, I'm putting my investment banker 0:03:21.280 --> 0:03:24.440 hat on. I'm making a phone call out to the 0:03:24.440 --> 0:03:27.280 folks there and saying, let's spin this thing out. You're 0:03:27.280 --> 0:03:30.720 gonna get a monster multiple on this thing. Is there 0:03:30.760 --> 0:03:33.799 any scenario where they spin out YouTube? I mean, if 0:03:33.840 --> 0:03:38.320 the regulatory landscape, you know, gets the better of them 0:03:38.440 --> 0:03:41.000 in terms of splitting the other than that, they're not. 0:03:41.040 --> 0:03:42.680 They're not. There's not much to talk about that because 0:03:42.720 --> 0:03:44.960 but I would argue if they spin it out, it 0:03:45.000 --> 0:03:47.720 will be a market cap that's equal to the market 0:03:47.760 --> 0:03:52.440 cap of Spotify and Netflix combined at least. See, that's 0:03:52.480 --> 0:03:54.360 all I think, Mad. You gotta create value, you gotta 0:03:54.440 --> 0:03:56.400 gotta generate those feast all right, Well that's why you 0:03:56.400 --> 0:03:58.400 were the banker, you know. I just think about what 0:03:58.520 --> 0:04:01.200 videos I want to watch on YouTube now? And you 0:04:01.240 --> 0:04:05.280 know why others are you know how others are losing ground? 0:04:05.320 --> 0:04:09.720 For example, why isn't Netflix stepping up to meet the challenge? 0:04:09.760 --> 0:04:12.440 Why isn't you know, Hulu or what do you watch? 0:04:12.440 --> 0:04:15.840 You watch the Disney Plus thing, right, Mandalorian, I just 0:04:15.840 --> 0:04:19.479 watched sports. Yeah, there's not a great sports you know 0:04:19.600 --> 0:04:22.320 in Europe we have does Zone, D A Z and 0:04:22.760 --> 0:04:24.599 I don't know what you have here, but that covers 0:04:24.680 --> 0:04:28.000 all Europe. PSP plus is kind of getting there. So 0:04:28.000 --> 0:04:31.159 so in terms of tech earnings, well, in terms of 0:04:31.160 --> 0:04:33.080 all earnings. Man Deep we were talking earlier on the 0:04:33.080 --> 0:04:36.159 program a D eight point five percent of companies that 0:04:36.160 --> 0:04:39.080 have reported so far have beaten the streets estimates. And 0:04:39.120 --> 0:04:40.920 if you look at what was the chart I was 0:04:41.000 --> 0:04:43.080 pulling up earlier, I'll find it in one second. But 0:04:43.720 --> 0:04:47.679 it's it's unbelievable. How more every year, more and more 0:04:48.400 --> 0:04:51.920 um companies beat the streets estimates. So it looks like 0:04:51.960 --> 0:04:54.960 the Street just isn't doing a very good job estimating earnings. 0:04:55.000 --> 0:04:57.520 And it's not like they getting it wrong on both sides, right, 0:04:57.600 --> 0:05:02.960 it's asymmetric. They're always forecasting too little revenue and too 0:05:03.080 --> 0:05:05.560 little earnings. Why do you think that is? I mean 0:05:05.600 --> 0:05:11.400 the secular trends that we are seeing out there, you know, cloud, online, advertising, online, 0:05:11.400 --> 0:05:13.640 you're logged in? Are you logged in over there? No? 0:05:13.720 --> 0:05:16.160 He's not Okay. I just want to say the chart is. 0:05:17.160 --> 0:05:19.560 I keep telling people because for listeners that have a 0:05:19.640 --> 0:05:21.880 terminal in front of them, to me, this is shocking. 0:05:21.960 --> 0:05:25.000 It goes back to the nineties, g hashtag, b TV. 0:05:26.760 --> 0:05:30.720 Back then, only fifty percent of companies were beating In 0:05:30.960 --> 0:05:35.279 the two thousand odds we're beating in the last ten years. 0:05:35.520 --> 0:05:39.040 You know, it's climbed higher and higher. Now almost everyone's beating. 0:05:39.080 --> 0:05:42.480 Why can't analysts get it right? Like I said, these 0:05:42.560 --> 0:05:47.080 trends are very powerful, you know, the online advertising trend, cloud, 0:05:47.480 --> 0:05:51.440 online streaming. No one really expected the change to happen 0:05:51.520 --> 0:05:54.279 this quickly. E commerce. Everyone talks about how we have 0:05:54.320 --> 0:05:57.760 pulled forward five years worth of e commerce penetration in 0:05:57.800 --> 0:06:00.320 one year because of the pandemic. So that is the 0:06:00.360 --> 0:06:05.120 reason Facebook. After the close tonight, are we gonna be 0:06:05.120 --> 0:06:08.159 blown away what we're looking for? Yes? I I think 0:06:08.200 --> 0:06:10.600 the nature of the beat will be somewhat different. This 0:06:10.640 --> 0:06:14.040 will be more of an ad pricing beat as opposed 0:06:14.080 --> 0:06:17.479 to a YouTube which was really ad impressions because of 0:06:17.520 --> 0:06:21.400 the time spent way more than what people expected. So 0:06:21.440 --> 0:06:23.920 in this in Facebook's case, it's going to be driven 0:06:23.920 --> 0:06:27.839 by ad pricing because advertisers see value in advertising on Facebook. 0:06:27.880 --> 0:06:30.560 Is there anything sweet happening on the peripherals when you 0:06:30.600 --> 0:06:33.159 look at Google at the moon shots, any of those 0:06:33.200 --> 0:06:35.599 doing well? Where you look at Facebook, like Libra is 0:06:35.640 --> 0:06:38.200 that's going to start to take off? So Facebook has 0:06:38.240 --> 0:06:41.800 pivoted to their own payments now they launched Facebook pay 0:06:41.960 --> 0:06:45.640 not no connection to Libra, and that's where you're gonna 0:06:45.720 --> 0:06:49.000 see that transition that it will be e commerce within 0:06:49.080 --> 0:06:51.760 the app and that's where the payments will come into. 0:06:51.880 --> 0:06:54.400 Still blockchain based or is it no? No, it's just 0:06:54.600 --> 0:06:58.159 any other payments like or uh, you know, behind the 0:06:58.160 --> 0:07:00.919 scenes they're using PayPal. But it's very similar in concept 0:07:00.920 --> 0:07:04.119 to Venmo. What's the disappointed? What's their chat thing again? 0:07:04.320 --> 0:07:07.919 What's their chat service? What's happened? Dude? What's everybody in 0:07:07.960 --> 0:07:12.800 the world? America uses What's App? That and Russia don't 0:07:12.880 --> 0:07:15.880 use What's App? Are we going to monetize What'sapp yet? Yes, 0:07:16.040 --> 0:07:19.240 they are looking to make it more enterprise oriented. There 0:07:19.280 --> 0:07:23.320 are businesses that are exclusively using What'sapp to communicate with 0:07:23.360 --> 0:07:26.920 their customers. So, but I think the monetization will still 0:07:26.960 --> 0:07:30.560 be slow. If you compare the other businesses for end 0:07:30.680 --> 0:07:35.640 encryption Instagram. Instagram will be another blowout when it comes 0:07:35.640 --> 0:07:38.960 to Facebook. I g Insta, what do you call it? 0:07:38.960 --> 0:07:41.960 I use Insta you know a lot. But What's App 0:07:42.080 --> 0:07:44.560 is like the way I communicate with everybody. And the 0:07:44.640 --> 0:07:46.880 interesting thing is, although it's end to end encryption, if 0:07:46.880 --> 0:07:49.680 I start what's apping you about Arames Ties. I'm gonna 0:07:49.720 --> 0:07:51.720 start getting ads in my feet for after That's the 0:07:51.760 --> 0:07:53.960 way they do it, all right. Mendep Singh, a senior 0:07:53.960 --> 0:07:57.200 tech analyst for Bloomberg Intelligence, giving us his thoughts on 0:07:57.240 --> 0:08:00.400 all these tech stuff again Facebook after the close expected 0:08:00.440 --> 0:08:06.720 to be another blowout quarter. Let's get over to uh 0:08:06.960 --> 0:08:10.000 Jeffrey Cleveland right now, Chief Economy is of Payton and Regal, 0:08:10.320 --> 0:08:14.560 talking to us about what to expect from the Fed today. Jeff, 0:08:14.600 --> 0:08:17.880 We've had a lot of guests say, um, probably not 0:08:19.320 --> 0:08:23.080 a big change in policy. But will j Powell have 0:08:23.280 --> 0:08:28.239 to justify continuing to um spend a hundred twenty billion 0:08:28.240 --> 0:08:31.160 dollars a month in his asset to purchase program? You 0:08:31.200 --> 0:08:33.400 had no change in policy, but yeah, I think he's 0:08:33.400 --> 0:08:37.400 gonna get grilled, probably the assembled masses there on some 0:08:37.640 --> 0:08:40.520 important questions. You know, for me, probably the most important 0:08:40.559 --> 0:08:44.160 question is this whole substantial further progress? And and have 0:08:44.280 --> 0:08:48.000 we made substantial further progress? The classic these I love 0:08:48.040 --> 0:08:52.640 these phrases. It keeps me employed Fed watchers. But you know, 0:08:52.679 --> 0:08:54.199 if you look, we like to look at employment to 0:08:54.240 --> 0:08:58.120 population four year olds. We on that ratio or that 0:08:58.160 --> 0:09:02.160 on percentage. We were seventies six three back in December 0:09:02.200 --> 0:09:04.760 when the Fed started saying they wanted to see substantial 0:09:04.800 --> 0:09:09.240 further progress. It's now climbed, I guess crawled back to 0:09:09.280 --> 0:09:13.560 seventies seven point two um for comparison that that that 0:09:13.679 --> 0:09:17.040 percentage was eight point five before COVID, So I don't 0:09:17.080 --> 0:09:18.880 know if that counts. In my mind, that doesn't count 0:09:18.880 --> 0:09:22.480 a substantial further progress, But I'm curious what Chair Powell 0:09:22.520 --> 0:09:25.199 has to say. So that would be the I guess 0:09:25.200 --> 0:09:27.199 if I was the reporter, that's the first thing I 0:09:27.240 --> 0:09:29.520 would ask to get an update on that, and then 0:09:29.960 --> 0:09:33.520 forward that question to Michael McKean, Yeah, please do. And 0:09:33.559 --> 0:09:35.959 then I suppose after that, I want I would want 0:09:36.000 --> 0:09:38.280 to see what the different disagreements are, you know, kind 0:09:38.280 --> 0:09:40.679 of kind of tease that out. What are what are? 0:09:40.760 --> 0:09:42.760 And I think maybe one for me would be, you know, 0:09:42.800 --> 0:09:47.559 why continuing to buy the mortgage backed securities given how 0:09:47.600 --> 0:09:50.920 far we are into the recovery and the fact that 0:09:51.000 --> 0:09:54.720 the housing market is, I mean, it's on fire for 0:09:54.720 --> 0:09:56.920 for lack of a better term, So I don't know 0:09:56.960 --> 0:09:59.280 if that is necessary at this point. So I guess 0:09:59.320 --> 0:10:01.480 that would be if you put me in charge, I 0:10:01.559 --> 0:10:05.920 might cut back or curtail those purchases before I curtailed 0:10:05.920 --> 0:10:08.400 the treasury purchases. So questions around that I think would 0:10:08.400 --> 0:10:12.040 be interesting to bring up at the press conference. So, Jeffrey, 0:10:12.280 --> 0:10:16.400 when tapering begins, what's it gonna look like? How is 0:10:16.400 --> 0:10:19.760 there going to be a big signaling event? Is that 0:10:19.760 --> 0:10:21.360 what I'm is that why I'm going to go out 0:10:21.360 --> 0:10:22.959 to Jackson Hole if in fact I do go out 0:10:22.960 --> 0:10:25.840 to Jackson Hole in August. I think, you know, tapering 0:10:25.920 --> 0:10:29.960 was so interested last interesting last cycle because it had 0:10:30.040 --> 0:10:32.240 such a huge impact on the fixed income markets. But 0:10:32.360 --> 0:10:35.400 bond traders jumped to the conclusion that if the FED 0:10:35.480 --> 0:10:37.960 was tapering, that they were going to soon high rates. 0:10:38.040 --> 0:10:40.720 That's why we saw such volatility in the spring and 0:10:40.720 --> 0:10:44.600 summer of this time around. I don't know, I feel 0:10:44.600 --> 0:10:46.640 like it should be far less interesting. The Fed has 0:10:46.720 --> 0:10:48.920 done a pretty good job of trying to disconnect the 0:10:48.960 --> 0:10:52.760 two decisions, the tapering decision from the rate high decision. 0:10:52.760 --> 0:10:55.760 There they're two distinct things. So it shouldn't have it 0:10:55.800 --> 0:10:59.240 shouldn't have the impact. It shouldn't be the signal for 0:10:59.240 --> 0:11:02.720 for overnight rate that it played last cycle. So I 0:11:02.720 --> 0:11:05.840 don't know, maybe we're just looking for something to talk about, 0:11:05.880 --> 0:11:07.559 and that's what we're talking so much about taper. It 0:11:07.679 --> 0:11:09.520 will be more of a non event this time around. 0:11:09.760 --> 0:11:13.280 That's kind of my gut instinct here. Um, you know, 0:11:13.280 --> 0:11:19.400 I'm looking at real yields here, and uh, we're seeing 0:11:19.480 --> 0:11:22.520 yesterday we saw a tickdown to negative one hundred fifteen 0:11:22.559 --> 0:11:28.319 basis points, and I want, I'm starting to wonder, um, 0:11:28.440 --> 0:11:32.520 no longer why but um, if this is just part 0:11:32.520 --> 0:11:37.400 of the government strategy to I don't know, monetize debt 0:11:37.480 --> 0:11:40.680 to somehow inflate its way out of the situation that 0:11:40.679 --> 0:11:45.240 we've got ourselves into. That's historically what we do, right. Yeah. 0:11:45.280 --> 0:11:48.160 I mean, I think what's happening here is that you 0:11:48.160 --> 0:11:52.080 you had a huge surgeon inflation expectations in the springtime, 0:11:52.240 --> 0:11:54.320 and that really peeked out in in the March and 0:11:54.360 --> 0:11:57.560 April period sort of like by the rumor or sell 0:11:57.640 --> 0:12:00.240 the news kind of we got some strong inflationary means 0:12:00.360 --> 0:12:02.320 and now but I think by and large, the market 0:12:02.400 --> 0:12:05.040 is bought into this idea that the inflation we're seeing 0:12:05.080 --> 0:12:07.199 is going to be somewhat transitory, and you're seeing that 0:12:07.240 --> 0:12:09.760 work is way through the markets. So I think that's 0:12:09.840 --> 0:12:11.640 you know, really what's going on as far as the 0:12:11.640 --> 0:12:14.640 bigger plot beyond the scenes, I I don't know. I mean, 0:12:14.640 --> 0:12:18.200 I guess in general it benefits the market to keep sorry, 0:12:18.200 --> 0:12:20.760 the government to keep right slow. Um, you know, the 0:12:20.800 --> 0:12:24.200 effective interest on on the dead burden is quite low. 0:12:24.480 --> 0:12:26.760 But I don't know if there's a grand strategy. Well 0:12:27.400 --> 0:12:28.720 you know what made me think of it? And this 0:12:28.800 --> 0:12:32.880 is weird. Um, even I know this is weird. I've 0:12:32.880 --> 0:12:38.040 been reading a book, um called Cannibalism. Oh, it's it's 0:12:38.080 --> 0:12:41.240 a great book. I highly recommend people pick it up. Um, 0:12:41.280 --> 0:12:44.120 it's totally has nothing to do with economics. But the 0:12:44.559 --> 0:12:48.720 guy the author quotes um Friedrich Hyak, who says, I 0:12:48.720 --> 0:12:51.080 did not think it's an exaggeration to say history is 0:12:51.120 --> 0:12:55.560 largely a history of inflation, usually inflations engineered by governments 0:12:55.640 --> 0:12:58.240 for the gain of governments. Now clearly this is a 0:12:58.320 --> 0:13:01.800 very Austrian thing to say, obviously, but it just made 0:13:01.800 --> 0:13:04.280 me think. You know, um, we're we keep asking why 0:13:04.400 --> 0:13:06.640 yields are so low, but maybe this is just a 0:13:06.679 --> 0:13:11.280 way to um, you know, get out of the debt 0:13:11.320 --> 0:13:14.280 that we've had to spend, had to borrow U to 0:13:14.360 --> 0:13:17.800 fight COVID. Yeah, I think you know high is correct. 0:13:17.840 --> 0:13:20.240 You know, history tells you the story of of inflations 0:13:20.240 --> 0:13:23.600 and government inflations and and in wartime the role of 0:13:23.640 --> 0:13:26.680 central banks. So I think that's that's important historically. I 0:13:26.679 --> 0:13:29.440 think right now, though, why are rates low? We have 0:13:29.520 --> 0:13:33.400 a huge amount of demand for fixed income security relative 0:13:33.440 --> 0:13:35.439 to supply. Part of the reason for that is that 0:13:35.480 --> 0:13:37.800 the FED has taken a big chunk of the supply 0:13:38.080 --> 0:13:40.559 off off the table. That's why we're talking about taper. 0:13:40.720 --> 0:13:43.000 They've been purchasing under in twenty billion a month, so 0:13:43.040 --> 0:13:45.920 they've taken on supply. If they were to taper, you know, 0:13:45.960 --> 0:13:48.240 I would put more securities back in the market. But 0:13:48.320 --> 0:13:51.560 I I still think the overwhelming story here is not 0:13:51.640 --> 0:13:54.079 so much a central bank or government conspiracy. It's just 0:13:54.240 --> 0:13:58.920 this mundane supply and demand. All right, Jeffrey, thank you 0:13:58.920 --> 0:14:01.000 so much for joining us. Jeffre Cleveland, chief econress for 0:14:01.040 --> 0:14:06.680 paid in regal. Well, we've got a big i PO 0:14:06.760 --> 0:14:11.040 coming up, particularly for retail investors that are Reddit investors 0:14:11.080 --> 0:14:13.880 or meme investors that have been just really having an 0:14:13.880 --> 0:14:18.079 outsize impact on markets over the past several quarters. UM 0:14:18.080 --> 0:14:21.520 talking about Robin Hood Annie Massa, she's an investing reporter 0:14:21.600 --> 0:14:24.360 for Bloomberg News. She joins us here, any, we've got 0:14:24.360 --> 0:14:27.240 this robin Hood ip I think it's pricing tomorrow. What's 0:14:27.320 --> 0:14:30.920 the latest here on this I p O. That's right, 0:14:30.960 --> 0:14:34.360 Its chairs will begin trading tomorrow publicly. And one of 0:14:34.400 --> 0:14:37.200 the biggest things that we're watching and thinking about is 0:14:37.280 --> 0:14:40.120 that robin Hood says that this is one of the 0:14:40.200 --> 0:14:44.760 largest allocations to retail investors in an I p O. Ever, 0:14:45.040 --> 0:14:48.160 it's setting aside up to about thirty five percent of 0:14:48.160 --> 0:14:52.200 its shares for investors on its own platform for robin 0:14:52.240 --> 0:14:55.920 Hood app users, and they get access to the pre 0:14:56.000 --> 0:15:00.200 i p O shares um, which is unusual in uh 0:15:00.440 --> 0:15:02.640 an I p O process. So it's trying to show 0:15:02.680 --> 0:15:05.920 that it's opening up this piece of the I p 0:15:06.040 --> 0:15:09.720 O process to regular investors. What kind of pops have 0:15:09.840 --> 0:15:13.600 we been seeing this year, Annie, and what's expected for tomorrow. 0:15:13.640 --> 0:15:18.040 You know, there have been moments in history when it 0:15:18.080 --> 0:15:20.480 was in vogue to have, you know, a doubling of 0:15:20.520 --> 0:15:22.680 the stock on the first day, and there have been 0:15:23.160 --> 0:15:26.280 times when UM companies have said that's leaving way too 0:15:26.360 --> 0:15:29.240 much money on the table. That is one of the 0:15:29.520 --> 0:15:33.520 definite kind of cushion pull type situations with an I 0:15:33.680 --> 0:15:37.120 p O. I mean, any company is usually looking for 0:15:37.160 --> 0:15:41.440 that nice like price pop above cent or so in 0:15:41.480 --> 0:15:43.600 an I p O in most cases, but that question 0:15:43.640 --> 0:15:45.720 of whether you're leaving money on the table in the 0:15:45.760 --> 0:15:49.200 process is an important one, And Robin Hood has the 0:15:49.240 --> 0:15:54.560 additional pressure of having such a large slice relatively speaking 0:15:55.040 --> 0:15:58.479 of this i p O being allocated to retail investors. 0:15:58.640 --> 0:16:02.320 So in an ideal world, you can see how they 0:16:02.400 --> 0:16:05.120 might want to see that big pop in price so 0:16:05.160 --> 0:16:10.160 that they can show how they've created value for those retails. 0:16:10.160 --> 0:16:14.040 But you're saying is basically the sweet spot. That's where 0:16:14.040 --> 0:16:17.960 people think you're not going too far, that you've lost 0:16:18.000 --> 0:16:23.480 a lot of um potential capital. But you also have 0:16:23.800 --> 0:16:26.560 the what do they what do they call that? The hype? 0:16:26.920 --> 0:16:29.000 The hype that you that you want for your IPO. 0:16:29.840 --> 0:16:32.360 The hype factor is definitely something you want with And 0:16:32.400 --> 0:16:36.400 I'm not the it's not to me to exactly decide 0:16:36.400 --> 0:16:39.560 where they would want to be, but they certainly want 0:16:39.560 --> 0:16:42.960 to see the price rise having allocated so much onto 0:16:43.080 --> 0:16:48.080 IPO to their own customers, and either's to me at 0:16:48.120 --> 0:16:51.440 least a fair amount of regulatory risk to this company 0:16:51.560 --> 0:16:54.000 to this deal. The whole payment for order flow was 0:16:54.040 --> 0:16:56.280 an issue, um that I think is going to get 0:16:56.320 --> 0:17:00.240 a lot of regulatory uh scrutiny here. Um just you know, 0:17:00.360 --> 0:17:04.719 kind of meme stock trading in general getting some SEC scrutiny. 0:17:05.240 --> 0:17:07.840 How's the market kind of thinking about some of the risk, 0:17:07.920 --> 0:17:11.639 the regulatory risk for this company in this IPO. In 0:17:11.720 --> 0:17:13.720 the wind up to this i p O, there have 0:17:13.880 --> 0:17:17.720 definitely been multiple regulatory inquides that have come to light, 0:17:17.840 --> 0:17:20.720 some of them still ongoing. Just this week we found 0:17:20.760 --> 0:17:24.639 out about two new inquiries from regulators, One having to 0:17:24.680 --> 0:17:27.200 do with the fact that the chief executive officer and 0:17:27.240 --> 0:17:29.800 chief creative officer, the two co founders of robin Hood, 0:17:30.000 --> 0:17:32.960 are not registered with FINRA, so Finner has been asking 0:17:33.000 --> 0:17:36.240 some questions around that. And then separately, FINNRA and the 0:17:36.359 --> 0:17:40.480 SEC have been asking about employee trades ahead of that 0:17:40.720 --> 0:17:44.879 game stop those was that break on game stop trading 0:17:44.920 --> 0:17:48.080 that robin Hood put into place in late January. So 0:17:48.480 --> 0:17:52.240 those are two new lines of examination that we just 0:17:52.320 --> 0:17:54.840 found out about this week. Of course, that adds to 0:17:55.000 --> 0:17:58.520 other spines of sixty million dollar fine from the SEC 0:17:58.720 --> 0:18:01.760 and a seventy almost seven million dollar fine from FINRA 0:18:02.000 --> 0:18:04.520 that we knew about and that have been settled already. 0:18:04.640 --> 0:18:09.120 So those issues are piling up for robin Hood, and uh, 0:18:09.160 --> 0:18:12.680 they'll certainly be something that investors will be looking at 0:18:12.760 --> 0:18:16.640 as the company becomes public. What just got thirty seconds here? 0:18:16.720 --> 0:18:21.680 What time can we reasonably expect Hood to start trading tomorrow? 0:18:22.760 --> 0:18:25.520 We'll have to watch for it tomorrow, but it won't 0:18:25.560 --> 0:18:29.120 be right, you know, right at nine thirty. Necessarily you'd 0:18:29.119 --> 0:18:30.680 have to wait a little bit later in the day 0:18:30.680 --> 0:18:33.639 for those shares to begin trading. That's what I figured, alright, 0:18:33.680 --> 0:18:38.240 and so long these days, we used to get them 0:18:38.280 --> 0:18:40.800 done ten ten, ten thirty if it was if it 0:18:40.880 --> 0:18:43.399 was a hot deal, hard to kind of price. But 0:18:43.440 --> 0:18:45.080 if it was just a running the mill, we'd get 0:18:45.119 --> 0:18:46.920 it open, you know. Within the first third was down 0:18:46.920 --> 0:18:48.600 on the floor at the n y s E for 0:18:48.720 --> 0:18:52.960 Ferrari and they got it done in about thirty forty minutes. Yep. 0:18:53.080 --> 0:18:55.040 So anyway, but we'll see how how hot this deal is. 0:18:55.080 --> 0:18:58.320 Any massive investing reporter for Bloomberg News joining us on 0:18:58.359 --> 0:19:00.560 the pholde will be paying attention to that. Robin Hood 0:19:00.600 --> 0:19:07.879 I p O U tomorrow now the FED is coming 0:19:08.160 --> 0:19:10.760 shortly with the statement and the interview, We're all going 0:19:10.800 --> 0:19:14.080 to be paying very close attention here. To help us, 0:19:14.359 --> 0:19:16.520 uh decide what to look for? Is a j Oden 0:19:16.600 --> 0:19:20.159 investment strategist b n Y melon invest your solutions or 0:19:20.160 --> 0:19:23.560 at least a J give us what you're looking for, 0:19:23.600 --> 0:19:26.000 what you're hoping to hear from J Pale on the FED? 0:19:27.359 --> 0:19:29.240 Thanks for having me here. I think on what we're 0:19:29.240 --> 0:19:33.159 looking for is really the tone and some of the 0:19:33.240 --> 0:19:36.240 language that they're using. Obviously, we we don't expect interest 0:19:36.359 --> 0:19:40.000 rates to you know, any any conversation about interest rates changing, 0:19:40.280 --> 0:19:44.240 But it's really just about what their sentiment is around inflation, 0:19:44.400 --> 0:19:46.639 you know, do they still see it as transitory and 0:19:46.680 --> 0:19:50.959 any sort of indication of any change from the um 0:19:51.040 --> 0:19:53.440 expectations of of interest rates moving. I think that's really 0:19:53.480 --> 0:19:56.560 what we're gonna be looking for today. Alright, So a 0:19:56.720 --> 0:19:59.920 J let's assume it's kind of steady. She goes low 0:20:00.200 --> 0:20:03.800 for longer. Some people would say lower forever again, just 0:20:03.800 --> 0:20:05.800 just picked a ten year at one point to five. 0:20:07.040 --> 0:20:10.840 How are you and your team's at bn Y allocating capital. 0:20:11.320 --> 0:20:14.760 I'm thinking equity, fixed income alternatives. How are you thinking 0:20:14.760 --> 0:20:18.120 about that in this market, well, in this market, because 0:20:18.160 --> 0:20:21.240 interest rates are solo, we're really looking at the equities 0:20:21.400 --> 0:20:23.560 and real lasses. The commodities is where the place to be, 0:20:23.720 --> 0:20:26.600 right I mean, with interest rates you know, near zero 0:20:26.800 --> 0:20:29.399 and we don't see the FED moving right now in 0:20:29.400 --> 0:20:31.800 the near future, it makes sense to be in those 0:20:31.800 --> 0:20:34.000 spaces to get a sort of a return on your investment. 0:20:34.240 --> 0:20:37.000 And ultimately we like US equities right now. I mean 0:20:37.040 --> 0:20:40.040 we're seeing some dollar stability. Um. Typically, when we were 0:20:40.080 --> 0:20:42.440 earlier in the part of the year, we were looking 0:20:42.480 --> 0:20:45.760 at more non dollar developed markets as well as PM. 0:20:46.000 --> 0:20:47.960 But when we when you start to factor in things 0:20:48.000 --> 0:20:51.040 about you know, factor and earnings as well as the 0:20:51.240 --> 0:20:53.199 COVID Night Team pandemic and looking at some of the 0:20:53.280 --> 0:20:57.920 variants and how vaccination raids and inoculations are impacting those markets, 0:20:58.040 --> 0:21:00.199 we really like US equities right now. We have a 0:21:00.480 --> 0:21:03.840 overweight to the developed markets Europe and in UK, but 0:21:03.960 --> 0:21:06.600 really have a more of a tilt to US markets 0:21:06.640 --> 0:21:09.280 over UH than those non dollar US equities. Do you 0:21:09.280 --> 0:21:13.640 expect that to change as vaccination rates pick up elsewhere? Um, 0:21:13.760 --> 0:21:16.439 you know, at some point we could see a tilt 0:21:16.480 --> 0:21:18.800 to to move back if there's any sort of indication 0:21:18.840 --> 0:21:20.359 that dollar is going to get a little bit weaker 0:21:20.359 --> 0:21:21.960 than we would like, we'd have a more of a 0:21:22.000 --> 0:21:25.440 preference likely to Europe and UK. But I mean when 0:21:25.440 --> 0:21:28.080 we're seeing uh, you know, in e M countries, I believe, 0:21:28.600 --> 0:21:31.280 uh you know, the rates their vaccination rates are so low, 0:21:31.320 --> 0:21:33.560 and then a lot of the I guess the struggle 0:21:33.640 --> 0:21:35.800 that they're having with variants, and I guess if you 0:21:35.880 --> 0:21:38.840 not even look at the the delta variant, but also 0:21:38.920 --> 0:21:41.640 the potential for other variants to come to come up 0:21:42.040 --> 0:21:45.600 um and how they haven't moved to to a reopen. 0:21:45.760 --> 0:21:48.000 I think that's really sort of the fear that we 0:21:48.040 --> 0:21:50.520 have or not that's the fear, But are our tilt 0:21:50.560 --> 0:21:53.200