WEBVTT - Tech, Banks, Markets, and Marijuana (Podcast) 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 0:00:11.520 --> 0:00:15.520 with essential market moving news. Find the Bloomberg Markets podcast 0:00:15.560 --> 0:00:18.439 called Apple Podcast or wherever you listen to podcasts, and 0:00:18.480 --> 0:00:22.680 at Bloomberg dot com slash podcast. Folks, this is going 0:00:22.760 --> 0:00:24.640 to be an interesting week for You're supposed to say 0:00:24.680 --> 0:00:26.920 good stuff when John Tucker has done. You're supposed to 0:00:26.920 --> 0:00:30.480 always say good stuff, Good stuff, John Tucker, good stuff, 0:00:30.520 --> 0:00:34.680 Justina does it? Oh my gosh, okay um. Moving on 0:00:34.880 --> 0:00:38.800 from John Tucker, also good stuff. On the Techer Innings front, 0:00:38.840 --> 0:00:40.760 We're gonna get Netflix later this week. We're gonna get 0:00:40.760 --> 0:00:43.520 a lot of MidCap names as well. And who better 0:00:43.960 --> 0:00:46.920 to dive into what to expect and all the jazz 0:00:46.960 --> 0:00:49.120 around these tech companies right now than our very own 0:00:49.159 --> 0:00:52.839 Bloomberg Technology senior analysts on Grana and man Deep sing 0:00:53.240 --> 0:00:56.160 A lot to digest here ONAG. I want to start 0:00:56.160 --> 0:00:59.000 with you on the big tech names here, because to 0:00:59.240 --> 0:01:02.920 have a ainable equity market rally, you have to have 0:01:03.680 --> 0:01:06.959 your Apples, your Microsoft's, on your side. Why aren't they 0:01:07.040 --> 0:01:09.440 right now? So the big question is what's going to 0:01:09.480 --> 0:01:11.880 be guidance for the rest of the year. Um, we 0:01:11.959 --> 0:01:14.960 all know that things are slowing down in enterprise to expending. 0:01:15.240 --> 0:01:18.039 Cloud is going to slow down. PC sales are bad. 0:01:18.560 --> 0:01:22.280 We even expect enterprise you know course software to start decelerating. 0:01:22.760 --> 0:01:24.560 But the question is, you know how much of that 0:01:24.680 --> 0:01:27.160 is already baked into the stock price. So I think 0:01:27.160 --> 0:01:29.720 guidance is going to be extremely critical when we go 0:01:29.760 --> 0:01:32.800 onto the next owning season from all these vendors, hang 0:01:32.840 --> 0:01:36.240 on when are they coming out with earnings? Microsoft's next week, 0:01:36.280 --> 0:01:38.560 Apples the week after that, and Apple is going to 0:01:38.600 --> 0:01:41.080 be very different as well because of supply chain you 0:01:41.080 --> 0:01:43.959 know issues we have seen that they may miss on 0:01:44.000 --> 0:01:46.440 the iPhone side. So the question really is how's the 0:01:46.440 --> 0:01:49.080 buy side going to treat that, because you know, in 0:01:49.120 --> 0:01:52.240 our view, whatever we lose in this quarter, we're gonna 0:01:52.240 --> 0:01:54.960 gain back in the next quarter. Mandeep, what are you 0:01:55.680 --> 0:01:57.760 looking for in the companies you I can never sort 0:01:57.800 --> 0:02:01.040 out which companies You guys cover what you do social 0:02:01.080 --> 0:02:05.200 media and like the internet stuff? More consumer tech, say 0:02:05.280 --> 0:02:09.840 more enterprise tech. So consumer tech is very different enterprise tech. 0:02:09.960 --> 0:02:13.320 Is a code word for what's enterprise tech actually means 0:02:13.360 --> 0:02:17.200 just business to business stuff. Got it. Okay, so you 0:02:17.280 --> 0:02:21.919 have Alphabet, you have Meta, Uh, Uber, Airbnb? Are they 0:02:21.919 --> 0:02:25.720 all coming out next week or in the next two weeks? 0:02:25.840 --> 0:02:29.600 And uh, Look, I think when I say it, and 0:02:29.639 --> 0:02:31.920 I mentioned this before on your show, that there was 0:02:31.960 --> 0:02:34.880 a massive pull forward when it comes to a lot 0:02:34.880 --> 0:02:39.320 of consumer tech companies during COVID times. We had a 0:02:39.360 --> 0:02:42.600 period where they are resetting the comps. Next year, the 0:02:42.639 --> 0:02:46.000 comps are going to be easier. The problem for a 0:02:46.040 --> 0:02:52.120 company like Alphabet is they're operating profit grew hud so 0:02:52.160 --> 0:02:55.520 they went from forty billion inter operating profit to eight billion. 0:02:56.040 --> 0:02:59.200 Now that is the sort of comp I mean, it 0:02:59.320 --> 0:03:02.120 will take them probably two years to reset that. So 0:03:02.240 --> 0:03:05.200 they pull forward two years of operating profit growth in 0:03:05.280 --> 0:03:07.760 one year during that COVID time, and I think that 0:03:07.960 --> 0:03:11.360 is a challenge for someone like Alphabet to an extent 0:03:11.440 --> 0:03:13.920 Meta as well. But when you say pull forward, that 0:03:14.000 --> 0:03:19.040 means they took it from two and three and put 0:03:19.040 --> 0:03:22.560 it in one. Is it really the case? I mean, 0:03:23.000 --> 0:03:27.560 are the the revenue they get from ads? Right? For 0:03:27.600 --> 0:03:29.960 the most part ad spending. It's not like companies that 0:03:30.200 --> 0:03:34.760 we're spending a lot in are gonna not spend in three. 0:03:35.040 --> 0:03:38.600 So you have a confluence of negative factors right now. 0:03:39.240 --> 0:03:41.920 Notably the Apple I d f A changes. That was 0:03:41.960 --> 0:03:46.360 a ten billion dollar drag on Meta's revenue for two 0:03:46.760 --> 0:03:49.600 same thing. It's not going to dissipate anytime soon. Then 0:03:49.720 --> 0:03:52.760 AD pricing in general is coming down because we are 0:03:52.760 --> 0:03:55.880 headed for slower growth or probably a recession. So during 0:03:55.960 --> 0:03:59.920 times like this, ad pricing compresses. It will bounce back, 0:04:00.280 --> 0:04:04.320 but it's very cyclical. And then businesses in general, small businesses, 0:04:04.320 --> 0:04:07.600 which is the bulk of Meta's ads spent, they are 0:04:07.640 --> 0:04:11.400 pulling back again a slow growth times. And that's what 0:04:11.440 --> 0:04:15.240 I mean by pull forward because during the COVID phase, 0:04:17.560 --> 0:04:22.320 Meadows revenue grew almost average. The reason why that happened 0:04:22.400 --> 0:04:25.480 is small businesses did very well. It was all online. 0:04:25.520 --> 0:04:27.240 They were spending a lot of money on ads to 0:04:27.240 --> 0:04:31.680 acquire customers. Well, you're running into tough comps. Plus, businesses 0:04:31.680 --> 0:04:34.400 are pulling back because ad spending is the easiest thing 0:04:34.440 --> 0:04:37.680 to pull back on when times are tough. So UM 0:04:37.920 --> 0:04:40.760 HONORAG we were talking earlier. There's a story in the 0:04:40.760 --> 0:04:45.160 Bloomberg about UM executives at Davos. Their expectations are for 0:04:45.680 --> 0:04:48.839 horrendous and awful recession. But that's because the survey was 0:04:48.880 --> 0:04:52.080 done in October and November. Right in December and January, 0:04:52.080 --> 0:04:55.159 we've turned a lot more positive. Um is that the 0:04:55.200 --> 0:04:58.600 case for these companies as well. So typically what happens is, 0:04:58.760 --> 0:05:02.200 you know, take spending is sometimes driven by the sentiment 0:05:02.279 --> 0:05:04.480 that we see in the NASTAC how the NASTAC performs. 0:05:04.680 --> 0:05:07.240 Now I did this correlation many many years ago, but 0:05:07.320 --> 0:05:10.119 if you look at it just on the spending side 0:05:10.120 --> 0:05:13.400 of it, last five years have been phenomenal for software spending. 0:05:13.720 --> 0:05:15.960 You know, the top twenty software companies grew at an 0:05:16.000 --> 0:05:19.280 average in that time frame. So it's going to be 0:05:19.440 --> 0:05:22.280 very difficult to come up with that level of performance 0:05:22.360 --> 0:05:26.159 again this year. Now, our big thesis is that whatever 0:05:26.200 --> 0:05:28.680 we lose this year, you know, we will recover it 0:05:28.760 --> 0:05:30.960 the next year or the year after, depending on how 0:05:31.000 --> 0:05:33.800 long this slowdown is. And and partially the reason why 0:05:33.880 --> 0:05:36.920 we think is, you know, we think there are still 0:05:36.960 --> 0:05:39.680 a lot of very old systems out there that need 0:05:39.720 --> 0:05:42.640 to be upgraded. I mean point in time, you know, Southwest, 0:05:42.760 --> 0:05:45.320 the f a A, all those things, I mean legacy, 0:05:45.520 --> 0:05:48.800 it T spending dominates total I T spending. So all 0:05:48.839 --> 0:05:51.839 those companies slowly and slowly need to upgrade their systems, 0:05:52.320 --> 0:05:55.240 which is a bull case for software, but perhaps not 0:05:55.279 --> 0:05:58.039 in three Well, that's exactly where I want to go. 0:05:58.080 --> 0:06:00.360 I think we had me and Deep on Bloomberous Valance 0:06:00.440 --> 0:06:02.640 radio months ago. I remember you coming up with a 0:06:02.680 --> 0:06:05.000 stat uh and it was something like in the next 0:06:05.000 --> 0:06:07.600 ten years. I think it's like, I can't remember, was 0:06:07.720 --> 0:06:09.720 billions or trillions? It was like four or five billion 0:06:10.040 --> 0:06:11.680 or trillion, I can't remember. I know those are different 0:06:11.720 --> 0:06:16.240 numbers UM spending on cloud infrastructure. So I'm wondering. And 0:06:16.240 --> 0:06:18.159 that's something you're hearing from these bank earnings as well. 0:06:18.200 --> 0:06:20.920 That sure, some of these compensation expenses are coming down, 0:06:20.920 --> 0:06:24.719 but the tech expenses are coming up. How long does 0:06:24.760 --> 0:06:27.279 that bowl case or that tail when A was just 0:06:27.279 --> 0:06:30.440 talking about take to actually play out. Well, I would 0:06:30.480 --> 0:06:33.279 say there are certain things that are secular in nature 0:06:33.520 --> 0:06:36.760 in this market. Cloud spending is one of them, and 0:06:36.839 --> 0:06:40.480 that when when these secular trends play out, they play 0:06:40.480 --> 0:06:43.800 out ten twenty years, It's gonna take years before we 0:06:43.839 --> 0:06:46.440 are fully migrated to cloud. And plus there is a 0:06:46.440 --> 0:06:49.400 lot of new innovation going on a lot of AI. 0:06:49.520 --> 0:06:52.640 You know, machine learning is being done on cloud. These 0:06:52.680 --> 0:06:57.200 are I mean very expensive workloades to run Chat GPT's 0:06:57.520 --> 0:06:59.600 waiting to see would bring that up a one month 0:06:59.720 --> 0:07:02.560 bill of jack chief. It would be way above then 0:07:02.640 --> 0:07:05.400 how much a traditional it costs to run. So that's 0:07:05.440 --> 0:07:08.720 where I think cloud infrastructure is a real secular tail wind. 0:07:09.120 --> 0:07:11.880 And look, there are certain structural headwinds for a lot 0:07:11.920 --> 0:07:14.400 of these companies. And that's where you're gonna pick winners 0:07:14.400 --> 0:07:17.800 and losers is which ones are exposed to the circular 0:07:17.840 --> 0:07:21.000 trends and which ones aren't. So let's go near term 0:07:21.040 --> 0:07:23.240 the man deep in the next few weeks when we 0:07:23.240 --> 0:07:25.640 get some of these earnings roll out, who's gonna get 0:07:25.680 --> 0:07:27.720 it right, who's gonna get it wrong? I think you've 0:07:27.800 --> 0:07:31.520 seen a lot of negative revisions already. So a name 0:07:31.560 --> 0:07:34.760 like Snapchat has seen top line come down, estimates come 0:07:34.760 --> 0:07:38.600 down by about consensus numbers are down a lot, same 0:07:38.640 --> 0:07:41.240 thing for a lot of other small caps like Roudblocks 0:07:41.560 --> 0:07:44.360 now with large caps, Google estimates are down ten percent. 0:07:44.800 --> 0:07:47.320 That doesn't mean they're gonna crush it or the you know, 0:07:47.360 --> 0:07:49.960 the sentiment will be positive after the report, So that's 0:07:49.960 --> 0:07:53.640 where you have to really match how far the expectations 0:07:53.640 --> 0:07:56.760 have come down. They haven't come down, and uh like 0:07:56.880 --> 0:08:00.160 for a name like Airbnb. Now, I do think there 0:08:00.200 --> 0:08:04.200 was a pope forward even with airbnbs growth because of reopening, 0:08:04.480 --> 0:08:07.160 it lasted two years. Guess what there will be a 0:08:07.160 --> 0:08:10.640 slowdown period after that, and I think that's where they're exposed. 0:08:11.880 --> 0:08:14.200 We've been waiting to hear about this a lot in 0:08:14.240 --> 0:08:15.840 the last six months as while we started this an 0:08:15.840 --> 0:08:19.240 Apple and Microsoft as well at this slowdown is already here. 0:08:19.680 --> 0:08:22.320 To what extent are we going to see more pain 0:08:22.440 --> 0:08:25.520 in the first quarter or is this is so the 0:08:25.520 --> 0:08:28.080 way we look at it right now, the estimates look fair. 0:08:28.640 --> 0:08:31.320 We don't see a bigger downdraft on that, which is 0:08:31.320 --> 0:08:34.160 why I said guidance going into the next quarter or 0:08:34.280 --> 0:08:36.800 next this earning is going to be very critical. If 0:08:36.920 --> 0:08:39.960 the count these companies are income, they come report and 0:08:40.080 --> 0:08:43.040 able to match the expectations of the buy side on 0:08:43.080 --> 0:08:45.280 the south side, and then you could see them rivers 0:08:45.320 --> 0:08:49.120 you know, the trend of the stock prices going downwards. However, 0:08:49.160 --> 0:08:50.600 if they come back and say, you know, things are 0:08:50.600 --> 0:08:53.120 really getting even worse, then you have another leg down. 0:08:53.440 --> 0:08:55.160 But one of the big things that I've said is, 0:08:55.320 --> 0:08:57.400 you know, for us, the big you know, I'm not 0:08:57.520 --> 0:09:01.280 truly concerned about the length of the cloud cycle or 0:09:01.360 --> 0:09:04.679 the funding behind it that I'm very happy or very 0:09:04.679 --> 0:09:07.040 comfortable about it. But but I do not know that 0:09:07.120 --> 0:09:08.599 where the ten year is going to be by the 0:09:08.720 --> 0:09:10.640 end of the year. If the ten year is around 0:09:10.640 --> 0:09:12.960 where it is, then tech stocks should be fine. But 0:09:13.000 --> 0:09:15.800 if it starts to go up inflation creeps back again, 0:09:16.120 --> 0:09:18.440 then tech is going to have a horrendous second half. 0:09:18.440 --> 0:09:20.800 So it's there is a lot that's tied up with 0:09:20.880 --> 0:09:24.760 the interest rates rather than just the earning side operating business. 0:09:24.760 --> 0:09:27.800 What are the typical valuations that you see on the 0:09:27.920 --> 0:09:30.800 enterprise side, So it depends on who you're looking at, 0:09:30.920 --> 0:09:33.160 and you know, you look at somebody like a Microsoft 0:09:33.280 --> 0:09:36.080 eighteen nineteen times. You know, a couple of years ago 0:09:36.080 --> 0:09:38.920 it was thirty times earnings. But that all the all 0:09:39.000 --> 0:09:41.840 the you could say, the squeeze and the valuation has 0:09:41.880 --> 0:09:43.800 to do with the with the ten year climbing up 0:09:43.880 --> 0:09:45.839 quite a bit. You could say the same thing about 0:09:46.200 --> 0:09:48.920 Apple apples. Now in eighteen nineteen times it used to 0:09:49.000 --> 0:09:51.439 be over thirty times for for a while. So if 0:09:51.559 --> 0:09:53.840 ten year keeps on going up, that number keeps on 0:09:54.120 --> 0:09:56.280 coming down. I mean that's really where we are at 0:09:56.280 --> 0:10:00.559 this point. Sorry, men Deep, you what kind of valuations 0:10:00.559 --> 0:10:02.160 do you see or does it matter? And the companies 0:10:02.200 --> 0:10:06.040 you cover because they don't necessarily make profits, well yes 0:10:06.200 --> 0:10:08.640 that is a factor. But for a name like Alphabet, 0:10:08.760 --> 0:10:10.960 you know you have to ask yourself when will they 0:10:11.000 --> 0:10:14.000 grow operating profit? Because that is going to determine the 0:10:14.040 --> 0:10:17.120 floor in terms of valuation. Right now, the market isn't clear. 0:10:17.360 --> 0:10:20.160 They aren't believing the consensus numbers that they can grow 0:10:20.160 --> 0:10:23.200 operating profit even low singles did. If they prove that, 0:10:23.320 --> 0:10:25.600 I think that may be very well. All right, Man 0:10:25.600 --> 0:10:28.720 Deep Sing Senior Analysts Technology at Bloomberg Intelligence. Honoragu Raga, 0:10:28.920 --> 0:10:31.560 also at Tech Analysts, Bloomberg Intelligence, Thanks very much, always 0:10:31.559 --> 0:10:37.880 great your round table. Speaking of four twenty, we are 0:10:37.880 --> 0:10:42.080 going to talk about weed right now. Chris Violas, the 0:10:42.080 --> 0:10:47.319 CEO of Blaze, joins us to talk about technology platform 0:10:47.600 --> 0:10:52.240 that they that they operate um or or at least 0:10:53.160 --> 0:10:58.280 get to businesses to operate in order to sell uh 0:10:58.480 --> 0:11:02.240 marijuana products. And I think it's such a fascinating story. 0:11:02.320 --> 0:11:04.120 We cover this a lot in this program because it's 0:11:04.160 --> 0:11:07.520 like we're watching the beginning of an industry, you know, 0:11:07.600 --> 0:11:11.680 the end of prohibition, and we can see the kind 0:11:11.880 --> 0:11:15.679 of revenue that this generates, not just for the businesses, 0:11:15.720 --> 0:11:19.040 but also for states. We recently covered this right the 0:11:19.160 --> 0:11:21.600 very well, the first the first one in New York. 0:11:22.160 --> 0:11:25.080 UM and I believe they use Blaze technology. Chris, let's 0:11:25.080 --> 0:11:28.079 get over Chris right now, Chris Viola's CEO Blaze. Tell 0:11:28.160 --> 0:11:31.360 us about your product, what what what do you offer 0:11:31.520 --> 0:11:36.559 that's helping this budding industry. Man. Well, thank you, Creety, 0:11:36.600 --> 0:11:38.400 thanks for having me on. I'm really excited to be here. 0:11:39.000 --> 0:11:41.840 But to get to the point, Blaze is a retail 0:11:42.160 --> 0:11:45.400 point of soap platform really empowering about sixteen percent of 0:11:45.520 --> 0:11:49.880 North America dispensaries today. So anything from inventory control to 0:11:50.160 --> 0:11:55.120 checking out and actually facilitating that transaction to the compliance 0:11:55.280 --> 0:11:57.920 that goes on behind it, that's all Blaze powering these 0:11:58.360 --> 0:12:02.320 beautiful retailers that are doing such work, including Housing Works. Yeah. 0:12:02.360 --> 0:12:05.079 Housing Works is of course the charity that opened the 0:12:05.120 --> 0:12:09.640 first marijuana dispensary, recreational dispensary in New York, and there 0:12:09.679 --> 0:12:15.680 are I think twenty three other states where marijuana is legal, um, 0:12:15.720 --> 0:12:18.600 but it's not federally and that presents a problem for 0:12:18.640 --> 0:12:21.400 these retailers in terms of taking credit cards, in terms 0:12:21.400 --> 0:12:24.760 of you know, the payment point systems, how does how 0:12:24.760 --> 0:12:26.880 does that work? How do you kind of get around 0:12:26.920 --> 0:12:31.800 the federal law. Yeah, it's obviously there's a conflict there. 0:12:31.880 --> 0:12:34.920 So when it comes to these payment types, really there's 0:12:34.920 --> 0:12:38.080 only a few options we have. UM. As with anything 0:12:38.080 --> 0:12:39.920 we do, we want to be as open and transparent 0:12:40.040 --> 0:12:43.400 and complying as possible. So credit cards are off the table. 0:12:43.640 --> 0:12:46.400 We don't touch that except for in Canada where it 0:12:46.480 --> 0:12:49.160 is federally legal. But when we're talking about the US, 0:12:49.240 --> 0:12:52.120 we really only have two options at this point. Obviously 0:12:52.160 --> 0:12:54.400 we can take cash. I guess three options. That's one. 0:12:55.160 --> 0:12:57.600 The second would be a c H So you know, 0:12:57.640 --> 0:13:00.040 this is really likened too when you go on to 0:13:00.160 --> 0:13:02.800 then though, when you connect your bank account um and 0:13:02.960 --> 0:13:06.800 start to send money either directly to a person or 0:13:06.840 --> 0:13:09.880 directly to another business. We can certainly facilitate that today. 0:13:10.000 --> 0:13:13.959 That's a direct to direct type of transaction. And then 0:13:13.960 --> 0:13:16.320 the second is our Blaze pay program, which is the 0:13:16.320 --> 0:13:20.320 pin debit based solution where the user, the consumer go 0:13:20.320 --> 0:13:23.000 ahead and insert their card with a chip, entering their 0:13:23.000 --> 0:13:26.160 pin number, and then from there we can directly transact 0:13:26.160 --> 0:13:28.880 against that specific bank account. So how does that work? 0:13:28.920 --> 0:13:32.400 More specifically, I noticed that at Empire, at the Empire 0:13:32.480 --> 0:13:38.520 Cannabis Club, if you ring up a hundred thirty five dollars, right, 0:13:38.640 --> 0:13:42.040 they'll debit you for one forty and then actually give 0:13:42.080 --> 0:13:44.520 you the five dollars and change. I don't know what's 0:13:44.559 --> 0:13:47.040 going on there, So that's a that's a different solution 0:13:47.080 --> 0:13:49.680 than what we like to to use here at Blaze. 0:13:49.720 --> 0:13:52.600 That is called cashless a t M. And essentially what 0:13:52.640 --> 0:13:56.240 they're doing with that specific solution is are actually turning 0:13:56.280 --> 0:13:58.880 that debit terminal into what we call an a a 0:13:58.960 --> 0:14:02.120 t M. And there's your round up, right, each time 0:14:02.160 --> 0:14:05.640 you withdraw from an ATM machine, it's got to be 0:14:05.960 --> 0:14:10.440 specific denominations. In this case, you know by by five, 0:14:10.480 --> 0:14:13.240 so by one forty you'll get five dollars back on 0:14:13.280 --> 0:14:17.840 that transaction. That being said, um, why that solution is functional, 0:14:18.000 --> 0:14:20.120 it's not our what we consider to be the most 0:14:20.120 --> 0:14:23.800 optimal solution requires that to spend. Sure, you carry more 0:14:23.840 --> 0:14:27.240 cash on hand to facilitate the cash back. UM, but 0:14:27.360 --> 0:14:30.440 it is relatively straightforward the same concept of a direct 0:14:30.520 --> 0:14:33.640 withdrawal from that bank, So it is an option there. 0:14:34.680 --> 0:14:37.320 So then when you're looking at the long term for 0:14:37.360 --> 0:14:39.840 you for your own company, what kind of timeline are 0:14:39.880 --> 0:14:42.560 you looking at where you don't have to have these 0:14:42.560 --> 0:14:45.640 workarounds when it comes to payments. A pretty great question. 0:14:45.720 --> 0:14:48.480 I wish I had that magic ball, m But at 0:14:48.480 --> 0:14:51.520 the end of the day, we feel that with such 0:14:51.560 --> 0:14:54.880 explosive growth in this industry, we're all trying to be compliant, 0:14:54.880 --> 0:14:57.720 both the operators and the service providers that that obviously 0:14:57.720 --> 0:15:00.360 service them. So my hope is in the next you know, 0:15:00.440 --> 0:15:04.000 three or four years, UM, we we see some movement. 0:15:04.080 --> 0:15:06.720 Obviously there's a talks from the Safe Banking Act obviously 0:15:06.720 --> 0:15:10.280 not going through this last quarter, but in general we 0:15:10.320 --> 0:15:13.360 are hopeful. Um. We really feel like Canada's also, you know, 0:15:13.400 --> 0:15:16.960 set the stage in terms of normalizing that the payment systems. 0:15:17.400 --> 0:15:19.880 So we're hopeful. Um. That being said, we still have 0:15:19.920 --> 0:15:21.560 a long way to go, and I wouldn't say we 0:15:21.640 --> 0:15:24.000 have a direct line of site just yet. But does 0:15:24.040 --> 0:15:26.280 it annoy you that we haven't gotten safe banking or 0:15:26.360 --> 0:15:30.120 is it actually better for your business? Because hear me 0:15:30.160 --> 0:15:33.440 out well, or maybe you know this is clear to you. 0:15:34.240 --> 0:15:38.080 The longer it doesn't pass, the more these dispensaries need 0:15:38.120 --> 0:15:40.120 you and you get to kind of dig your heels 0:15:40.160 --> 0:15:43.360 in in terms of market share. Yeah, look, it's a 0:15:43.360 --> 0:15:47.760 great question. Obviously we're balancing both the business ablaze as 0:15:47.760 --> 0:15:50.560 well supporting our retailers. At the end of the day, 0:15:50.560 --> 0:15:52.880 though this business was started by myself and then a 0:15:52.880 --> 0:15:56.400 few other founders were formal operators, so you know, our 0:15:56.440 --> 0:15:59.680 ethos series really to enable those retailers and make sure 0:15:59.720 --> 0:16:02.520 that as successful as possible. So I do hope you 0:16:02.520 --> 0:16:05.000 can reduce the cash I do hope we can uh 0:16:05.400 --> 0:16:07.800 reduce some of the work around. So yes, while that 0:16:07.920 --> 0:16:10.800 may not might not help our margins directly, I think 0:16:10.800 --> 0:16:12.720 it's the right thing for the industry and the right 0:16:12.720 --> 0:16:15.640 thing to really move this forward. Um you see anywhere 0:16:15.640 --> 0:16:18.880 outside of cannabis, folks being able to use Apple Pay 0:16:18.920 --> 0:16:21.880 and some of these really cool techniques to transact and 0:16:21.880 --> 0:16:25.400 obviously reduce that friction at checkout. That is really our 0:16:25.640 --> 0:16:28.120 main goal here is to help enable retailers to sell 0:16:28.200 --> 0:16:30.880 more and part of that's reducing the friction wherever the 0:16:30.880 --> 0:16:32.840 consumer wants to check out and whatever they want to 0:16:32.880 --> 0:16:35.920 check out with. So what kind of opposition are are 0:16:35.960 --> 0:16:37.720 you facing right now? I mean on your day to 0:16:37.760 --> 0:16:41.640 day how much pushback are you really getting UM with 0:16:41.760 --> 0:16:47.320 regards to the payment solutions or just competit the payments socritions. Yeah, 0:16:47.360 --> 0:16:49.800 not not much. I mean, look, these operators understand that 0:16:49.800 --> 0:16:52.840 they're in a difficult situation. It's really about finding that 0:16:52.880 --> 0:16:56.000 local banking provider that first off, go ahead and have 0:16:56.040 --> 0:16:58.280 a depository account with you and be able to to 0:16:58.960 --> 0:17:01.400 just facilitating well day to day banking needs, but at 0:17:01.400 --> 0:17:04.159 the same time UM being able to supply not just 0:17:04.280 --> 0:17:06.840 the payment side, but we also Ablaze Capital, which is 0:17:06.840 --> 0:17:10.159 an aventory finance and solutions. So we understand there's a 0:17:10.160 --> 0:17:13.520 lot of barriers for these for these retailers. So wherever 0:17:13.600 --> 0:17:15.639 we can use our economies of scale and you know, 0:17:15.680 --> 0:17:18.560 our FI plus dispensaries to help benefit and bring a 0:17:18.560 --> 0:17:21.320 solution forward, we obviously want to do that. So I 0:17:21.320 --> 0:17:23.879 would say between us and the and the retailers is 0:17:23.920 --> 0:17:26.399 not much friction. UM. They're looking for help and so 0:17:26.480 --> 0:17:28.760 whatever we can do to provide them with some assistance, 0:17:28.760 --> 0:17:32.000 I mean, they're usually pretty open to it. Any plans 0:17:32.000 --> 0:17:35.640 for an IPO what's the capital structure look like. Yeah, 0:17:35.640 --> 0:17:37.760 I know we're private today. UM have raised this in 0:17:37.840 --> 0:17:43.440 or nineteen million across the board, all through um VC 0:17:44.000 --> 0:17:47.400 type of funding. UM. But you know, as with everybody 0:17:47.400 --> 0:17:50.080 in this economy, we're really focused on profitability, and so 0:17:50.119 --> 0:17:52.919 we do a blinding site this year to profitability and 0:17:53.000 --> 0:17:55.080 we want to control our future. And so when the 0:17:55.160 --> 0:17:58.800 markets do turn, UM, do you turn around and look 0:17:58.880 --> 0:18:01.240 upward for and I on the positive, you know, it's 0:18:01.280 --> 0:18:03.480 definitely something that we're not going to rule out. But 0:18:03.560 --> 0:18:05.520 at this point, you know, I'd say it's been a 0:18:05.560 --> 0:18:08.040 benefit for us to stay private. Thank you to you 0:18:08.160 --> 0:18:10.440 next to you on our plan? All right, Chris, thanks 0:18:10.440 --> 0:18:12.800 so much for joining us. Fascinating stuff. Chris violis there, 0:18:13.119 --> 0:18:18.960 CEO of Blaze. They help cannabis dispensaries sell more WED 0:18:21.560 --> 0:18:24.080 Let's bring in our guests right now to talk about 0:18:24.119 --> 0:18:26.159 what's going on in these markets, a lot of it 0:18:26.200 --> 0:18:29.080 dictated by bank earnings. We've just seen the final of 0:18:29.119 --> 0:18:32.440 the Big six UM report. Brent Shooty joins US chief 0:18:32.480 --> 0:18:37.400 investment strategists from Northwestern Mutual UH chief investment officer, sorry 0:18:37.400 --> 0:18:40.720 from Northwestern Mutual, as well as Alice and Williams, Senior 0:18:40.760 --> 0:18:45.600 Global Banks and Asset Managers analysts from Bloomberg Intelligence. Brent, 0:18:45.720 --> 0:18:49.359 let me first ask you your take on the bank 0:18:49.400 --> 0:18:53.880 earnings UM Goldman Sachs falling by the most since well 0:18:53.920 --> 0:18:58.359 in a year, I guess today after missing UM revenue estimates. 0:18:59.280 --> 0:19:02.879 How do you see this batch of bank earnings changing 0:19:02.880 --> 0:19:06.439 your strategy or informing your strategy. Yeah, I don't think 0:19:06.480 --> 0:19:08.399 it's changing it too much. I mean, to me, the 0:19:08.440 --> 0:19:10.920 macro so what's happening in the global economy matters much 0:19:10.960 --> 0:19:13.320 much more than earnings, not to say that they're not important. 0:19:13.320 --> 0:19:15.359 They do kind of represent who's gonna win and who's 0:19:15.400 --> 0:19:18.359 going to lose from a relative perspective, But overall, the 0:19:18.400 --> 0:19:20.840 most important thing right now is where is the economy headed? 0:19:20.840 --> 0:19:23.400 In three where's inflation headed? And what is the FED 0:19:23.440 --> 0:19:26.040 going to do? And I think that the better tone 0:19:26.080 --> 0:19:28.040 that you've had to the start of the year is 0:19:28.080 --> 0:19:31.600 because you are seeing inflation come down and certainly expectations 0:19:31.640 --> 0:19:34.440 of FED future tightening is coming down against the backdrop 0:19:34.440 --> 0:19:36.520 of an economy that hasn't yet fallen into recession. I 0:19:36.520 --> 0:19:39.720 think that's where you're seeing optimism. Alison hop On in 0:19:39.800 --> 0:19:42.600 here because as Matt pointed out, the what feels like 0:19:42.640 --> 0:19:44.239 the driving story at least for the TAO is going 0:19:44.280 --> 0:19:47.320 to be those bank earnings. How much of what we've 0:19:47.680 --> 0:19:51.800 gotten from them is a sector specific story as opposed 0:19:51.800 --> 0:19:54.280 to a macroeconomic store and both. I mean they're going 0:19:54.320 --> 0:19:58.960 in completely different directions, right, Morgan Stanley is up seven. Yeah, 0:19:58.960 --> 0:20:01.120 I think the news today is a little bit more 0:20:01.160 --> 0:20:04.000 company specific UM. And to your point, Matt, it is 0:20:04.080 --> 0:20:09.120 interesting the economy and performance, and that is because Goldman 0:20:09.200 --> 0:20:12.959 Sachs reporting a comprey show which is UH the highest 0:20:12.960 --> 0:20:17.119 in several years. UH. Solomon had warned that the coast 0:20:17.200 --> 0:20:20.800 to compete was not coming in UM as much as 0:20:20.800 --> 0:20:24.240 would be expected UM, but perhaps the results were even 0:20:24.280 --> 0:20:27.760 more dramatic than we expected in terms of the increase 0:20:27.920 --> 0:20:31.080 in comp comp was down for the year, but only 0:20:31.119 --> 0:20:35.440 something like while revenue is down, and so I think 0:20:35.480 --> 0:20:38.119 comp and head count that's that's really the story of Goldman. 0:20:38.200 --> 0:20:41.680 Provision for credit costs, which is a broad MACO macro 0:20:41.800 --> 0:20:43.919 economic indicator, was a bit worse. I'll come back to 0:20:43.960 --> 0:20:47.000 that in one second. For Morgan Stanley, it was really 0:20:47.000 --> 0:20:49.920 the wealth business, which is the crown jewel for that 0:20:50.280 --> 0:20:53.480 company out performing if you will, um and and sort 0:20:53.520 --> 0:20:57.640 of negative expectations coming into the quarter. Net interest income 0:20:59.000 --> 0:21:01.320 for which we heard about last week. I don't know 0:21:01.359 --> 0:21:03.399 if I would call that macro. I mean, it is 0:21:03.440 --> 0:21:07.399 tied to monetary policy, but not interesting come coming in 0:21:07.480 --> 0:21:10.000 softer for most of the biggest lenders, and that's really 0:21:10.040 --> 0:21:13.480 just due to the costs of their deposits rising. Think 0:21:13.480 --> 0:21:15.600 of that, as their costs of good sold rates are 0:21:15.640 --> 0:21:17.600