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

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

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

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

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

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Speaker 1: at Bloomberg dot com slash podcast. We've got the threat

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Speaker 1: of recession either here or looming. But on the other hand,

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Speaker 1: we have pretty much a fully employed economy. The consumer

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Speaker 1: seems pretty decent. I like to look to the retailers

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Speaker 1: to get a sense of how the consumers doing, and

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Speaker 1: we've got a great round table now. Pudum Goyle analysts

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Speaker 1: for e commerce at leisure whatever that is an off

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Speaker 1: price retail for Bloomberg Intelligence here in the U S.

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Speaker 1: And Deb Bacon. She's a senior analyst of luxury goods

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Speaker 1: and beauty home care with Bloomberg Intelligence. She's based in London. Deb.

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Speaker 1: I want to talk start with you Audie Das as

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Speaker 1: we say it in Europe, okay, named for Addie Dosler.

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Speaker 1: Thank you very much for pronouncing correctly. You're very You're

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Speaker 1: very welcome. Starts are today They had their earnings were

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Speaker 1: a little disappointing. Give us the latest on Adidas debin

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Speaker 1: you there, deb dear deb Hello, Hello, Hello, I am

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Speaker 1: I am. But actually that punum stock and she's online,

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Speaker 1: so excellent. Yeah, yeah, we'll just start. Let's start with

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Speaker 1: you in Europe. How are things going through the consumer?

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Speaker 1: Tell Gucci we can go to Gucci. Then Gucci had

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Speaker 1: something because yeah we can't. Sorry, I right, okay, so

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Speaker 1: UM if I if I focused on Karen, Um, so

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Speaker 1: scaring is the order of Gucci for those listeners who

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Speaker 1: don't know. I didn't know that. Yeah, yes, so Karen

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Speaker 1: makes well over Sorry, so Gucci makes well over fifty

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Speaker 1: of UM sales at the Kuren group. And then you

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Speaker 1: have the brands in there like San Lauran, Balence, t Jaga, Botego, Vanetta.

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Speaker 1: But Gucci is by far the biggest brand and also

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Speaker 1: very much so the biggest mix in terms of profitability.

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Speaker 1: So um, what we saw last night from Paris was

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Speaker 1: fourteen percent organic sales growth and even twenty three percent

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Speaker 1: when we add in Forex game, which looked great on

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Speaker 1: the top line and was beat stock down today, UM

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Speaker 1: stocked down and soft overall, bringing the sector down and

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Speaker 1: very much it's overshadowed by Gucci brand softness. The idea

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Speaker 1: here is that there was a question in the market

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Speaker 1: place on where the Gucci became too much fashion orientated.

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Speaker 1: So the idea is really to elevate the brand to

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Speaker 1: the levels that we see within some of the LVMH

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Speaker 1: with a ton another portfolio as Christian Your and also MS.

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Speaker 1: Both of those had knockout results in the last week

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Speaker 1: or so. Has been a problem, not just this quarter right,

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Speaker 1: It's been a problem for a number of reporting periods.

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Speaker 1: It has And if we look pre COVID, they went

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Speaker 1: through a two year program where they really reorganized Gucci,

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Speaker 1: had big collaborations, lots and lots the new design very

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Speaker 1: good and ready to wear and footbear and others, and

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Speaker 1: they were seeing four percent plus growth. So when you

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Speaker 1: look at it on a three year stack base, it's

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Speaker 1: still very very solid growth. But what we saw in

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Speaker 1: the Q three overall is that actually Gucci came in

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Speaker 1: at nine percent growth and if I give you two

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Speaker 1: comps on that, that compares against your major nine and

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Speaker 1: them as a percent. And the view is that it's

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Speaker 1: going to be costly for them to really bring this

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Speaker 1: brand back up to day. It's not passing on the

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Speaker 1: price in the US though Europe was huge for them

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Speaker 1: because the US are traveling there and using dollar benefit.

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Speaker 1: And then in China, it's got a new team coming

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Speaker 1: in and the branch just seems to have lost its fears.

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Speaker 1: So I put them want to bring you in here

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Speaker 1: on Adidas, I see the start trading afterday some problems

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Speaker 1: with China. Yeah, absolutely no. China continues to be an

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Speaker 1: important area for the ath leisure companies Adidas as well,

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Speaker 1: and um, it's continued to be weak. Um, there's no

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Speaker 1: sign of recovery there, which is a big risk for

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Speaker 1: not only Adidas but also Nike and the other brands

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Speaker 1: that have a larger presence there for growth. Um, we

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Speaker 1: don't know when China will recover, but we do know

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Speaker 1: that comparisons get easier as we move into the next

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Speaker 1: fiscal year and hopefully that should help at least show

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Speaker 1: better numbers. But that said, with the COVID lockdowns, China

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Speaker 1: still remains a big wild card for these retailers. But

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Speaker 1: it's not just China that's a concern for Adidas here.

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Speaker 1: I think the bigger concern really for US is the

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Speaker 1: weakness that we're seeing in the Western markets with the

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Speaker 1: inventory build up and and that's causing some major concern

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Speaker 1: um for the brand and also for rivals. By the way,

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Speaker 1: are they still working together with ya formerly known as

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Speaker 1: Kanye West tweets At the moment, the collaboration is still

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Speaker 1: intact and under review, so we know that. You know,

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Speaker 1: he has seen a lot of collaborations kind of go

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Speaker 1: off recently and Adidas was reviewing that. So but so

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Speaker 1: far as the Germans are willing to work with him

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Speaker 1: at the moment, it's under review. Yes, Hey, talk to

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Speaker 1: us about just luxury in general by thirty seconds, so

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Speaker 1: dependent upon China. But if China is not going to

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Speaker 1: be China for a while during this covered lockdowns, how

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Speaker 1: big of a head winners after just luxury in general?

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Speaker 1: I think, Um, you know, if you've got the brands

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Speaker 1: out in China, then there are ways for the consumer.

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Speaker 1: If the brand is hot, the consumer is picking up.

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Speaker 1: So for UM, if we think about for Louisa, Tom

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Speaker 1: for the Yore, for UM, for MS brand overalls, they

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Speaker 1: were really positive on China. What they're saying though is

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Speaker 1: that there are some lockdown still, but where stores are

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Speaker 1: open it's back to double digit growth and that started

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Speaker 1: up from June through July. But if I think about

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Speaker 1: other areas, um, we also had last night. Loreal, for example,

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Speaker 1: have big skincare market in China and it's still not

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Speaker 1: back the market. They said it's down three for beauty.

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Speaker 1: Um there are there are positive eight there are still

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Speaker 1: issues in this brand by brand right good stuff? All right?

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Speaker 1: Love getting that retail round up if you will put

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Speaker 1: them goil She's retail analyst for Bloomberg Intelligence based in Princeton,

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Speaker 1: New Jersey, and deb Ache and retail analysts for Bloomberg

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Speaker 1: Intelligence based in London, covering all things retail over there,

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Speaker 1: plus the luxury sector, which it just continues to chug on.

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Speaker 1: Think about this group, your principal investment banking and Morgan

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Speaker 1: Stanley are a pretty standard job head of investment banking

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Speaker 1: a's c IBC. It's a good standard job. That's a

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Speaker 1: good gig. But then you go your portfolio manager at

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Speaker 1: s A C Capital. I mean it's like you're a banker,

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Speaker 1: but then you're a trader with Stevie Cohen Master. Who

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Speaker 1: does that? I mean, who does that? Our next guest

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Speaker 1: did that, Jay Hatfield CEO, founder and portfolio manager Infrastructure

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Speaker 1: Capital Management. I have no idea what this guy does

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Speaker 1: for a living, but I want to. I know they've

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Speaker 1: got a lot of eats. They make e t f s,

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Speaker 1: and one of the e t f s is the

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Speaker 1: I don't know, they do energy stuff like that. The

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Speaker 1: energy space has been so out of favor J for

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Speaker 1: so long and it's like a minuscule four percent of

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Speaker 1: the SMP five fund. When I started the business, it

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Speaker 1: was rocking energy. Now it's nothing, but it's had a

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Speaker 1: couple of good years here. How do you think about

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Speaker 1: the energy space, Well, there's two major developments that UM

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Speaker 1: have benefited the sector. The first is they started to

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Speaker 1: manage their capital structures appropriately so and also their investment

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Speaker 1: so instead of just trying to grow, they tried to

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Speaker 1: generate earnings, which I learned as an undergrad is really critical.

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Speaker 1: Actual book earnings do matter. And if somebody says they do,

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Speaker 1: count Davis by the way you count Davis, so that

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Speaker 1: I think is a pretty good law of investing. So

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Speaker 1: they's finally started to try to generate actual profits and

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Speaker 1: also dividends, which is our core of what we do.

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Speaker 1: And then, unfortunately for Europe. They have a failed energy

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Speaker 1: policy of not securing enough natural gas even before the

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Speaker 1: Ukraine War and then finally after the Ukraine War having

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Speaker 1: that cut off. So that's why US energy prices are

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Speaker 1: relatively resilient even though we're in the shoulder months and

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Speaker 1: global growth is obviously challenged. And that's because natural gas

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Speaker 1: is treating at the oil equivalent of a eighty dollars

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Speaker 1: a barrel, which draws in all other hydrocarbons into Europe.

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Speaker 1: So we have the all time record refining margins for

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Speaker 1: distill it because you can ship distill it easily. So

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Speaker 1: those two factors are really supporting, of course, the recovery

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Speaker 1: from the pandemic, supporting the energy sector and making it

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Speaker 1: outperform in these tough markets. But by the way, with

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Speaker 1: your experience in the energy industry, UM, which is significant,

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Speaker 1: and obviously you're still you know, working with it at infrastructure, UM,

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Speaker 1: how likely is it that President Biden is able to

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Speaker 1: actually get prices down at the pump by releasing barrels

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Speaker 1: from the spr It helps a little bit the margin,

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Speaker 1: but you just have to think of the oil market

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Speaker 1: as being global, So it's a hundred million barrels per

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Speaker 1: day consumed, and so anything that comes out of the

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Speaker 1: spr is just going to operate at the margin. So

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Speaker 1: it's a gigantic market and it's fungible. So all the

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Speaker 1: discussions of limiting Russian oil prices and these other constraints

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Speaker 1: really don't work because it's a true commodity market. And

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Speaker 1: I was hearing it as too far upstream because we've

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Speaker 1: heard um that the problem really is the refining capacity

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Speaker 1: and that even if you were to give them fifty

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Speaker 1: million barrels of oil a day for free, it's still

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Speaker 1: difficult to get that turned into gasoline and diesel absolutely well,

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Speaker 1: and particularly diesel because diesel hit eighty dollars of barrel,

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Speaker 1: which is almost unfathomable. So it's actually you get more

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Speaker 1: margin than the cost of the oil, So that's eating

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Speaker 1: at one eight. So that really demonstrates that that's the

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Speaker 1: issue is a shortage of distillate to replace the natural

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Speaker 1: gas in Europe. So you know when we had the

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Speaker 1: syenergy crisis development with the Russian invasion of Ukraine and

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Speaker 1: then the reopening of the global economy, and that kind

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Speaker 1: of created this energy shortage. If you will, my question

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Speaker 1: to all my buddies done in Texas and Oklahoma is like,

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Speaker 1: we just start start up the refineries, start pumping. You know,

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Speaker 1: we we've got lots of oil, we've got shale. Just

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Speaker 1: start finding this stuff and if we have to liquify

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Speaker 1: and send it to Europe, we can do that. But

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Speaker 1: apparently it's we don't have a lot of refining capacity

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Speaker 1: out there, do we know? We definitely don't. It hadn't

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Speaker 1: been a great business for years, so there was less

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Speaker 1: investment and it doesn't really pay. Most of the new

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Speaker 1: refineries are coming in the Middle East. There's really been

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Speaker 1: no new refineries. In fact, there is one ship down

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Speaker 1: that that blew up in Philadelphia, so you can't really

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Speaker 1: just poof of a refinery out there. And it's highly

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Speaker 1: imprudent because over time the returns won't be great, so

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Speaker 1: you just have to kind of mint money while the

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Speaker 1: markets are good and then wait. So it's an Unfortunately,

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Speaker 1: I don't like the discipline. I mean, the energy guys

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Speaker 1: are now preaching discipline to their equity shareholders and to

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Speaker 1: their bondholders and things like that, when in reality I

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Speaker 1: need them to build more capacity, but they're not doing it.

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Speaker 1: They are, in fact disciplined with their capital you need

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Speaker 1: them to as a consumer, yes, as an okay, as

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Speaker 1: an investor, j um. Where would you go right now?

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Speaker 1: There are a lot of ets out there to play,

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Speaker 1: you know, exploration, production, infrastructure, refining. Where do you think

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Speaker 1: is the right place to be? Well, we always like

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Speaker 1: to have, particularly in these sort of horrific markets, with

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Speaker 1: the bond market crashing every day, UM in more conservative,

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Speaker 1: Like if you're gonna do energy, do the most conservative,

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Speaker 1: so that would be pipelines. Um. Definitely, the yield six

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Speaker 1: to eight percent, the super majors have substantial yields, and

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Speaker 1: of course we just discussed that the refiners are just

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Speaker 1: printing money and trade it ridiculously multiples and have good dividends,

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Speaker 1: So that's the better way. We wouldn't And there's a

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Speaker 1: few of the e MP companies that have like eight

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Speaker 1: nine percent dividends, but they don't need to go after

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Speaker 1: the most risky small cop gambling type. You get plenty

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Speaker 1: of risk already if you're an energy, so you don't

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Speaker 1: need to go small caps. We go ultra large cap

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Speaker 1: and dividends. Sorry, well, I'm just um. You mentioned the

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Speaker 1: bond market crashing every day, right, which is not great

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Speaker 1: if you're a holder. But if you want return, it's

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Speaker 1: not bad. Um, where's the tenure right now? Four point

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Speaker 1: three four point four on the tenure, but you're getting

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Speaker 1: more on the two year and you know everywhere you

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Speaker 1: look yields are high. Is that bad for MLP demand?

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Speaker 1: I mean, um, do those rates become competitive? Well? Definitely.

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Speaker 1: In the last month, all really large cap um value

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Speaker 1: dividend stocks got smashed because rates were crashed, and we

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Speaker 1: went from two e d to four and two and

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Speaker 1: a half once the biggest sell off in you know,

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Speaker 1: recent memory at least, and so that really caused most

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Speaker 1: of those stocks to sell off. But we don't mind

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Speaker 1: that so much because when you're getting paid substantial dividends,

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Speaker 1: not like two percent at eight that's still a good spread.

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Speaker 1: And those dividends are growing now with the pipeline companies,

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Speaker 1: so they're not that raid sensitive. They're just mostly oil sensitive.

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Speaker 1: J stick around just when we have some breaking news

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Speaker 1: we want to get to. But Jay Haltfield, CEO, Founder

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Speaker 1: Portfolio Management Infrastructure Capital Advisors, you're gonna stick with us.

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Speaker 1: I got some interesting news coming over the Bloomberg terminal.

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Speaker 1: Apple in the news again, the design chief is going

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Speaker 1: to leave the company three years after replacing Umster Ivy.

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Speaker 1: Evans Hanky, vice President Industrial Design, used it depart. This

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Speaker 1: is a big news, Ed Ludlow from Bloomberg News. He's

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Speaker 1: usually based on the West Coast and has his tentacles

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Speaker 1: and all things Silicon Valley, but he's here in New

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Speaker 1: York on a Bloomberg Interactive broker studio. Some pretty big news. Head. Yeah,

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Speaker 1: it's big. Is you go back to the history of

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Speaker 1: this company in the nineties when Steve Jobs kind of

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Speaker 1: came back in and made Apple what it is today.

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Speaker 1: This is the first time that they won't have a

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Speaker 1: kind of de facto design chief. I think what's also

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Speaker 1: interesting is she's only been in the role since two

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Speaker 1: thousand nineteen, and you know, to all our global audience

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Speaker 1: that have an iPhone, the reason that it's sleek and

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Speaker 1: get sleeker and thinner and more beautiful each year. Well,

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Speaker 1: this person has a role in evans Hanky leads the

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Speaker 1: team of designers that do that. And we talk a

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Speaker 1: lot about the macro how Apple performs the high end

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Speaker 1: of the market, particularly in markets like China, for the

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Speaker 1: middle and upper upper class income bracket. UM but they're

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Speaker 1: also working on these new products for its future right

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Speaker 1: a r VR, headsets and EV potentially, and she would

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Speaker 1: have had a role in that. What we know, according

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Speaker 1: to sources is she told everyone she's leaving this week,

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Speaker 1: but we'll stay for six months and crucially, the software

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Speaker 1: chief is staying. Okay, but I mean turnover an Apple

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Speaker 1: doesn't seem like a typical right, They just fired their

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Speaker 1: production she you for like well, quoting a line from

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Speaker 1: the movie Arthur. Okay, I know you haven't seen, but

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Speaker 1: you know we grew up with that movie. Okay, two things.

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Speaker 1: First of all, their supply chain chief did depart the

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Speaker 1: company for some colorful comments that he made in a

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Speaker 1: viral social media It's pretty direct quote. I'm surprised you

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Speaker 1: remember the movie. So I'm just not going to say

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Speaker 1: on this program. One high area of turnover has been

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Speaker 1: the very secretive EV program. Apple's attempt to make a

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Speaker 1: self driving electric vehicle has had names from all across

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Speaker 1: the industry, from legacy auto too failed names where they

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Speaker 1: went startups and work out turnover, turnover. But yes, Paul,

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Speaker 1: this is a company where continuity is king. Is this

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Speaker 1: design chief specifically focused on, um, you know, the iPhone

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Speaker 1: or would a design chief be looking at also the Mac,

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Speaker 1: the watch, even the e V Yes. So I guess

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Speaker 1: the way that I put it is that she focused

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Speaker 1: on the hardware, what it looked like, how it felt

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Speaker 1: to the consumer, how how it is, and that not

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Speaker 1: just the phone, I pad, everything exactly. You know, That's

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Speaker 1: why I flag how crucial it is that Allan Dy,

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Speaker 1: who's the head of design for software in ux or

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Speaker 1: user interface, is staying because the other big part of

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Speaker 1: the tech I've got an iPhone in my hand is iOS, right,

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Speaker 1: the operating platform, how how that works across its different things,

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Speaker 1: So continuity in that sense. But again she led what

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Speaker 1: was a relatively big team, a few dozen very senior

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Speaker 1: industrial engineers who we assume we'll stay in place. It's

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Speaker 1: just that their chief is leaving after three years and

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Speaker 1: that doesn't happen. Just looking at the start greater Apple

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Speaker 1: Star kind of unchanged on the day, up about six

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Speaker 1: tenths of one percent of the news, so upmarket in

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Speaker 1: an upmarket absolutely is any reason is there is this

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Speaker 1: signal greater I don't know, uncertainty, turmoil, distraction at the

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Speaker 1: at what is a crucial part of the company. You

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Speaker 1: know that there's always a question every now and then

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Speaker 1: to Tim Cook about succession, just as there is for

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Speaker 1: any long tenured executive of a company of that size. Um,

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Speaker 1: it's been a rough year for Apple, right, you know,

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Speaker 1: they did show nimbleness with the supply chain for a

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Speaker 1: big portion of the last eighteen months, but they still

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Speaker 1: face headwinds. They faced the the head wind of a

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Speaker 1: stronger dollar. They face issues of demand in China, just

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Speaker 1: like everyone else. And if your topic, secutives and talent

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Speaker 1: are leaving the company for whatever reason, we actually, you know,

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Speaker 1: we don't have a good reason why. In this case,

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Speaker 1: it's not good. I mean, the the one caveat really

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Speaker 1: is that she's only been there for three years and

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Speaker 1: we don't know exactly why she left. But she replaced

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Speaker 1: a giant in the world of design. She replaced Johnny I,

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Speaker 1: who was there for two decades, who was arguably as

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Speaker 1: important to Apple success as Steve Jopps. And that's why

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Speaker 1: context is king. So first of all, I think I

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Speaker 1: said this, but evans Hanki is going to stay for

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Speaker 1: six months, so there's a kind of handover period. She

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Speaker 1: was appointed to this role in two thousand nineteen, but

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Speaker 1: she had worked for Johnny I. For years and years

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Speaker 1: and years, you know, a designer in her own right.

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Speaker 1: But again it's just a changing of history for Apple.

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Speaker 1: The first megastar design chief, Johnny I is twenty years

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Speaker 1: of the company. His success is there for three years

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Speaker 1: tool intensive purposes. What happens next, you know, that's always

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Speaker 1: the question. Alright, good stuff. Ed Ludlow joining us here

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Speaker 1: in our Bloomberg interactior broker studio at Ludlow for Bloomberg

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Speaker 1: News breaking down some news here. Apple design chief to

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Speaker 1: leave three years after replacing the icon Johnny, I've all right,

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Speaker 1: this is what we're gonna do, folks. We're gonna get

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Speaker 1: a Bloomber business class, reset everything. They're gonna come back

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Speaker 1: with a j Hatfield and we're going to get another

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Speaker 1: person coming darkening the door as we speak, Dryden Pennce

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Speaker 1: ce I, O of Pence Wealth Management. We're around table.

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Speaker 1: Even before today we were up to in a third percent. Yes,

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Speaker 1: so that was just Monday and Tuesday. We were down

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Speaker 1: Wednesday and Thursday, and now when we're up today, that

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Speaker 1: just adds to it. I don't know what's going on

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Speaker 1: until the options expiration, Yeah, exactly. All right, let's bring

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Speaker 1: it back talk some stocks in this segment. J Halfield

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Speaker 1: he's still with a CEO at Infrastructure Capital Management, and

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Speaker 1: we're joined by Dryden Pence ce I oh for Pence

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Speaker 1: Capital Management. Both in our Bloomberg Interactive Broker studio. We

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Speaker 1: can't get a Bloomberg employee to come into our studio

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Speaker 1: time on a Friday. You know, that's the new world

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Speaker 1: we live in. Dried In, what do you make of

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Speaker 1: this market? It's been brutal this year. My sixty portfolios

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Speaker 1: in the toilet, what do you make of it? I

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Speaker 1: think the market right now is is what I call

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Speaker 1: the frazzled cat. Everybody's overreacting to whatever piece of information

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Speaker 1: comes out, and I think that we're it's a very

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Speaker 1: emotional market and it's trading and moving on the multiple.

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Speaker 1: So we think it's a tail of two years. This

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Speaker 1: year is going to be about the multiple, next year

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Speaker 1: will be about fundamentals. But I think that that really

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Speaker 1: everybody is overreacting to every piece of news that comes out,

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Speaker 1: and folks need to kind of step back and have

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Speaker 1: a little better perspective. Well, I mean, look, the problem

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Speaker 1: is it's not just what's happening here in the US

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Speaker 1: right we have more than ten percent inflation in the UK. UM.

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Speaker 1: Germany is looking at a situation where they may have

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Speaker 1: to start rationing goods. Um uh. Are we in a

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Speaker 1: different situation? Ja, Do you think the US is the

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Speaker 1: cleanest dirty shirt? Will we avoid a major recession? Absolutely?

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Speaker 1: And it's really related to the conversation we're having before

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Speaker 1: about energy, is that Europe's problem is our opportunity. So

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Speaker 1: we have manufacturing cost advantage, not just with l G

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Speaker 1: and UM refined products, but chemicals steal even there's a

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Speaker 1: story about textiles where energy is critical, so we think

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Speaker 1: that's a tail wind. And also we the housing sector,

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Speaker 1: even though it's going to decline, has limited inventory, and

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Speaker 1: that's usually where you get the layoffs in the deepercession,

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Speaker 1: it's fed raises rates, layoff all the construction workers, layoff

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Speaker 1: auto workers. But because of the pandemic, we don't have that.

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Speaker 1: So we're forecasting a mild recession here, but a deepercession

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Speaker 1: in Europe. Alright, So driving given that background, I mean,

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Speaker 1: when I think about the you know, do you agree, Yeah,

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Speaker 1: tend to agree with the idea of a mild recession.

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Speaker 1: We're probably on our way, probably on our out of it.

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Speaker 1: Before we know what we're in it, So it's more

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Speaker 1: of a shallow mild recession because you can lose five

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Speaker 1: million jobs and you still have full employment because we've

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Speaker 1: got more demand for jobs and we than we actually

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Speaker 1: have people. So do I buy kind of the sickles

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Speaker 1: that do well if we're you know, mild recession thinking

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Speaker 1: about the other side, or do I just stick with

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Speaker 1: the big growth stocks that have been so good for

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Speaker 1: me since I don't know two thousand eight or something

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Speaker 1: like that. Well, I think that that going into the

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Speaker 1: end of the year, we're probably gonna have a little

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Speaker 1: bit of a rally, and that's good to kind of

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Speaker 1: reposition portfolios to stronger more earnings and fundamentals getting into

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Speaker 1: next year. We do see that this inflation is going

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Speaker 1: to bifurcate certain sectors. Uh. It's kind of like it's

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Speaker 1: Walmart and Louis Atom versus Macy's and uh and maybe

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Speaker 1: Nords from and Target. The people in the middle are

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Speaker 1: actually seeing inflation go faster than wage growth, but the

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Speaker 1: people on other end, at the lower end of the

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Speaker 1: sectum are seeing wage growth faster than inflation. UH. And

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Speaker 1: that's been a positive that's come through this and that

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Speaker 1: the upper end. Uh, they're still you know, spending prolifically

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Speaker 1: because they've got plenty of money and they're able to

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Speaker 1: overcome it. You had an interesting point j on the

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Speaker 1: the outlook for inflation, especially as it pertains to the

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Speaker 1: repos that we saw. Remember the end of last year

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Speaker 1: we started getting insane repo numbers out of the Fed,

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Speaker 1: and that just I mean, when a trillion seemed like

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Speaker 1: a lot, now we're at what over to trillion, right,

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Speaker 1: the two point six trillion, and it's it's sort of

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Speaker 1: strangely bullish because what the Fed was doing is to

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Speaker 1: keep rates within a band. So in Europe they let

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Speaker 1: rates go negative. The Fed had to neutralize all of

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Speaker 1: the bond purchases and or they were doing versus most

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Speaker 1: of two thousand one and this year they shranked the

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Speaker 1: money supply by a trillion through this reverse repo. And

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Speaker 1: that's why the dollars skyrocketed and why we're optimistic inflation

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Speaker 1: will drop because the leading indicators of the Fed tends

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Speaker 1: ignore show that dropping commodity prices, skyrocketing mortgage rates, all

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Speaker 1: these were caused by that reverse refo, which really shrinks

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Speaker 1: the money supply. So how I mean how much do

427
00:23:05,040 --> 00:23:06,880
Speaker 1: you think inflation is going to drop in by when?

428
00:23:07,160 --> 00:23:10,679
Speaker 1: Because we're trying to figure out every single move. Obviously,

429
00:23:10,760 --> 00:23:13,440
Speaker 1: seventy five basis points this month. Um, it looks like

430
00:23:13,480 --> 00:23:15,199
Speaker 1: there is a Wall Street journal piece which is kind

431
00:23:15,240 --> 00:23:17,480
Speaker 1: of the new mouthpiece for the Fed. I guess said

432
00:23:17,520 --> 00:23:19,720
Speaker 1: they want to try and figure out a way to

433
00:23:19,760 --> 00:23:22,760
Speaker 1: sell a fifty basis point hike, a smaller hike in

434
00:23:22,880 --> 00:23:25,480
Speaker 1: December to the markets without you know, the stock market

435
00:23:25,520 --> 00:23:28,720
Speaker 1: going crazy again. Um, will they be able to hold

436
00:23:28,840 --> 00:23:31,760
Speaker 1: at the beginning of Well, we think they get hold

437
00:23:31,840 --> 00:23:34,560
Speaker 1: now because you have to be patient for two reasons.

438
00:23:34,680 --> 00:23:38,920
Speaker 1: One is that you do anniversary inflation, so that that's

439
00:23:38,920 --> 00:23:41,440
Speaker 1: a benefit, and to the cp I just isn't really

440
00:23:41,520 --> 00:23:45,400
Speaker 1: properly calculated, so Shelter has a six month Every six

441
00:23:45,520 --> 00:23:49,400
Speaker 1: months they do a survey, so doesn't incorporate real time data.

442
00:23:49,480 --> 00:23:51,320
Speaker 1: So you do have to be patient. So that's really

443
00:23:51,359 --> 00:23:54,640
Speaker 1: the mistake we think the FEDS making is ignoring one

444
00:23:55,000 --> 00:23:58,720
Speaker 1: you know, obvious point that almost economists except, which is

445
00:23:59,040 --> 00:24:03,200
Speaker 1: monetary policy os with long and variable legs. Ye, and

446
00:24:03,480 --> 00:24:05,440
Speaker 1: I think there's a lot of there's a lot of

447
00:24:05,480 --> 00:24:08,400
Speaker 1: folks saying that, yeah, there's a lot of people saying

448
00:24:08,760 --> 00:24:10,679
Speaker 1: to fetch paulse because we don't really know what these

449
00:24:10,720 --> 00:24:14,160
Speaker 1: FED rate increases will in fact have on the economy.

450
00:24:14,240 --> 00:24:16,960
Speaker 1: I think the pauses the key word one that will

451
00:24:17,080 --> 00:24:19,960
Speaker 1: that will give you rise to the market probably, But

452
00:24:20,080 --> 00:24:24,280
Speaker 1: I think also it's also it's humans don't adjust as

453
00:24:24,400 --> 00:24:28,439
Speaker 1: fast as markets do. Markets suggests instantaneously, but human demand

454
00:24:28,840 --> 00:24:32,640
Speaker 1: and consumer demand takes a while, and our behavior suggests

455
00:24:32,760 --> 00:24:35,080
Speaker 1: much more slowly than than the FED would like them too.

456
00:24:35,160 --> 00:24:37,920
Speaker 1: And then certainly the market's discounting. So I think a

457
00:24:38,040 --> 00:24:40,280
Speaker 1: pause and kind of let consumers catch up. It takes

458
00:24:40,320 --> 00:24:43,200
Speaker 1: about six or eight months uh for behaviors to begin

459
00:24:43,280 --> 00:24:45,760
Speaker 1: to really change, because you just have you have commitments

460
00:24:45,800 --> 00:24:47,320
Speaker 1: and what you're doing and stuff. So I think that

461
00:24:47,600 --> 00:24:50,399
Speaker 1: that they've got to think about slowing this down, and

462
00:24:50,480 --> 00:24:52,240
Speaker 1: they could risk breaking it. It took this market a

463
00:24:52,320 --> 00:24:55,080
Speaker 1: long time to adjust to the fact that the FED

464
00:24:55,200 --> 00:24:57,720
Speaker 1: is going to actually continue to raise rates. I mean,

465
00:24:57,760 --> 00:25:00,800
Speaker 1: it seemed like every excuse that this market could uh

466
00:25:00,920 --> 00:25:03,760
Speaker 1: could could get for maybe a pause it's coming, maybe

467
00:25:03,800 --> 00:25:06,600
Speaker 1: even a pivot is coming, they took it. Why are

468
00:25:06,680 --> 00:25:09,800
Speaker 1: they so reluctant to believe that the FED is going

469
00:25:09,840 --> 00:25:14,520
Speaker 1: to do whatever it takes. Humans are naturally optimistic that

470
00:25:14,640 --> 00:25:16,840
Speaker 1: that we it is our it is our normal case

471
00:25:16,920 --> 00:25:19,280
Speaker 1: that we are optimistic people. Otherwise why would anybody get

472
00:25:19,280 --> 00:25:22,760
Speaker 1: an airplane? But I mean the key issue here is

473
00:25:22,880 --> 00:25:25,560
Speaker 1: that that people are looking for the market to go up.

474
00:25:25,600 --> 00:25:29,360
Speaker 1: Markets probably oversold at this point. If it's driven on emotion,

475
00:25:29,440 --> 00:25:32,680
Speaker 1: it's driven on on this you know, over gloomy scenario

476
00:25:32,920 --> 00:25:35,080
Speaker 1: that we have. But the fundamentals are We've got more

477
00:25:35,119 --> 00:25:38,360
Speaker 1: people working than we've ever had in our history. We've

478
00:25:38,400 --> 00:25:40,520
Speaker 1: got more more people are making more money than at

479
00:25:40,520 --> 00:25:42,480
Speaker 1: any other time in our history. And I think that

480
00:25:42,560 --> 00:25:45,120
Speaker 1: that carries and we're still the low relatively low labor

481
00:25:45,200 --> 00:25:47,680
Speaker 1: force participation, right, So I think that you have some

482
00:25:48,080 --> 00:25:51,360
Speaker 1: some tail winds to the economy. That this is why

483
00:25:51,480 --> 00:25:53,920
Speaker 1: I agree with the the speaker here that if we

484
00:25:54,000 --> 00:25:57,200
Speaker 1: have recession smiled uh, and that we kind of power

485
00:25:57,280 --> 00:25:59,440
Speaker 1: our way through it. But I think that we're overly

486
00:26:00,080 --> 00:26:03,320
Speaker 1: negative at this point, uh, you know, because we overreact

487
00:26:03,359 --> 00:26:05,560
Speaker 1: to everything the FED does. Right. We overreacted to the

488
00:26:05,600 --> 00:26:07,119
Speaker 1: fact now that they said, yeah, we really mean it

489
00:26:07,520 --> 00:26:10,240
Speaker 1: and people are believing it. Now, we're overreacting to the downside.

490
00:26:10,280 --> 00:26:12,520
Speaker 1: I just kind of wonder if the idea of a

491
00:26:12,600 --> 00:26:15,800
Speaker 1: FED put is finally dead. Right, I mean, anyone who's

492
00:26:15,800 --> 00:26:18,120
Speaker 1: been in this market for as long as Paul has

493
00:26:18,800 --> 00:26:21,800
Speaker 1: Um just counts on the FED to come in and

494
00:26:21,880 --> 00:26:27,640
Speaker 1: save the day every time, Right, was your first job? Yeah?

495
00:26:28,160 --> 00:26:30,760
Speaker 1: So do you think the FED put is gone? Is it?

496
00:26:31,040 --> 00:26:34,239
Speaker 1: Is it? Is it taken? Is it successfully taken off

497
00:26:34,320 --> 00:26:36,800
Speaker 1: the table? I think it's been nuclear exploded. It's more

498
00:26:36,840 --> 00:26:39,639
Speaker 1: like the FED short It's almost like they're working with

499
00:26:39,680 --> 00:26:42,480
Speaker 1: the hedge funds to drive the market lower because they're

500
00:26:42,520 --> 00:26:45,480
Speaker 1: just they're terrible forecasters. And the other thing that I

501
00:26:45,560 --> 00:26:48,479
Speaker 1: think will be discussed more is the two percent target

502
00:26:48,600 --> 00:26:51,520
Speaker 1: is completely made up. It was made up by New

503
00:26:51,600 --> 00:26:55,119
Speaker 1: Zealand in the seventies to inflation rate target. Yeah, the target,

504
00:26:55,600 --> 00:26:58,560
Speaker 1: so they treated the FED treats it like it was

505
00:26:58,680 --> 00:27:02,159
Speaker 1: chiseled on a tow lit by God and then it descended.

506
00:27:02,640 --> 00:27:05,240
Speaker 1: But it's proven to be horrendous if you think about it,

507
00:27:05,320 --> 00:27:08,800
Speaker 1: really precipitated. You mean targeting that targeting too, it should

508
00:27:08,840 --> 00:27:11,000
Speaker 1: be three or four. Obviously we don't want eight or nine.

509
00:27:11,160 --> 00:27:13,479
Speaker 1: That's terrible. But I think you're going to see more

510
00:27:13,520 --> 00:27:16,680
Speaker 1: discussion of that because there is no empirical evidence that

511
00:27:16,720 --> 00:27:18,639
Speaker 1: says two is better than three. It was better than

512
00:27:18,680 --> 00:27:22,280
Speaker 1: four or three or four. Why do you want it

513
00:27:22,320 --> 00:27:25,040
Speaker 1: to be? Why would we want That's what did Ronald

514
00:27:25,080 --> 00:27:27,959
Speaker 1: Reagan say? It's a scarier than an armed robber, more

515
00:27:28,040 --> 00:27:31,320
Speaker 1: dangerous than a murder or something like that. And well,

516
00:27:31,359 --> 00:27:35,159
Speaker 1: the eighties and nineties were boom times, great times to

517
00:27:35,240 --> 00:27:39,480
Speaker 1: be an investment banker, definitely, and inflation was pretty high.

518
00:27:39,680 --> 00:27:41,960
Speaker 1: It was average about three and a half percent. And

519
00:27:42,560 --> 00:27:46,879
Speaker 1: here's the real point. Nominal wages grew about over six percent.

520
00:27:47,760 --> 00:27:51,240
Speaker 1: And really middle class people care about nominal rate wages

521
00:27:51,359 --> 00:27:53,600
Speaker 1: because then they can decide what to buy. They don't

522
00:27:53,640 --> 00:27:57,240
Speaker 1: want a one percent real growth rate and zero pcent inflation.

523
00:27:57,640 --> 00:28:00,960
Speaker 1: So when some level inflation, I leave is very healthy

524
00:28:01,000 --> 00:28:03,840
Speaker 1: for the economy. And you can just look historically. And

525
00:28:03,920 --> 00:28:05,879
Speaker 1: so the burden is on the Fed to prove this

526
00:28:06,000 --> 00:28:08,959
Speaker 1: two percent number that they completely made up. If I mean,

527
00:28:08,960 --> 00:28:11,720
Speaker 1: if you if you think about it, since nineteen sixty,

528
00:28:12,040 --> 00:28:14,480
Speaker 1: or just about fifty percent of the time, we've had

529
00:28:14,560 --> 00:28:18,040
Speaker 1: a FED funds rate about four percent above four percent

530
00:28:18,320 --> 00:28:20,520
Speaker 1: or higher, we've had an inflation rate above three percent

531
00:28:20,600 --> 00:28:23,919
Speaker 1: or higher. I mean for most of the economic lifespan

532
00:28:24,080 --> 00:28:26,800
Speaker 1: of people that are out out there in this industry,

533
00:28:27,240 --> 00:28:30,160
Speaker 1: you've had numbers like this and everything's been all right.

534
00:28:30,280 --> 00:28:31,960
Speaker 1: It's the fact that the last the people in the

535
00:28:32,080 --> 00:28:35,800
Speaker 1: last ten years have only had a zero percent interest

536
00:28:35,920 --> 00:28:38,120
Speaker 1: rate and they've seen these these low inflation numbers. So

537
00:28:38,360 --> 00:28:39,960
Speaker 1: I think that we kind of have to step back

538
00:28:40,000 --> 00:28:43,720
Speaker 1: and recognize that, you know, the United States economy worked

539
00:28:44,120 --> 00:28:46,440
Speaker 1: pretty darn well for a long period of time with

540
00:28:46,520 --> 00:28:48,719
Speaker 1: a four percent fed funds rate and and a three

541
00:28:48,800 --> 00:28:51,720
Speaker 1: or four percent inflation rate, and so we've we've kind

542
00:28:51,760 --> 00:28:54,440
Speaker 1: of lived through this before and we just kind of

543
00:28:54,480 --> 00:28:56,600
Speaker 1: have to you know, that's going to It's not a

544
00:28:56,840 --> 00:29:00,040
Speaker 1: it's not that's not abnormal the last fifteen years and

545
00:29:00,080 --> 00:29:02,960
Speaker 1: add normal, we're getting back to what a normal relationship

546
00:29:03,000 --> 00:29:05,040
Speaker 1: should be tried. And when you talk to your clients,

547
00:29:05,120 --> 00:29:07,479
Speaker 1: did they want you taking risk now? Do they want

548
00:29:07,520 --> 00:29:10,240
Speaker 1: to say, my bonds are wiped out, my stocks are

549
00:29:10,280 --> 00:29:12,200
Speaker 1: wiped up, now it's time to get in or are

550
00:29:12,240 --> 00:29:15,240
Speaker 1: they shell shocked? I I think everybody is a little

551
00:29:15,240 --> 00:29:17,560
Speaker 1: shell shocked. But most importantly, what people want to know

552
00:29:17,640 --> 00:29:20,080
Speaker 1: what clients when it was? When does it end? You?

553
00:29:20,200 --> 00:29:23,120
Speaker 1: Can you can be really endure and endure a lot

554
00:29:23,200 --> 00:29:25,120
Speaker 1: of pain if you know when it's going to end.

555
00:29:25,440 --> 00:29:27,320
Speaker 1: And so we talk about it's gonna end. When three

556
00:29:27,360 --> 00:29:30,800
Speaker 1: peas happen. You have you probably have a pause, uh,

557
00:29:30,920 --> 00:29:32,760
Speaker 1: you have peak inflation, have a pause from the feder

558
00:29:32,800 --> 00:29:34,360
Speaker 1: You end up with peace in Ukraine, which kind of

559
00:29:34,600 --> 00:29:36,280
Speaker 1: triggered a lot of these things. So we're looking for

560
00:29:36,800 --> 00:29:39,400
Speaker 1: language around at least two of those three peas, and

561
00:29:39,480 --> 00:29:41,840
Speaker 1: then we have an election coming up, and historically after

562
00:29:42,040 --> 00:29:43,720
Speaker 1: you can see about an eight percent rise in the

563
00:29:43,800 --> 00:29:46,520
Speaker 1: market after the mid turns. Regardless of the results. It's

564
00:29:46,520 --> 00:29:48,120
Speaker 1: just that you know, you get some certainty in it.

565
00:29:48,240 --> 00:29:49,840
Speaker 1: And and so we looked at that to the end

566
00:29:49,840 --> 00:29:52,760
Speaker 1: of the year. But I think what what retail clients

567
00:29:52,800 --> 00:29:56,200
Speaker 1: are really wanting to hear from us is when does

568
00:29:56,320 --> 00:29:59,800
Speaker 1: the pain end? How soon? How long must I endure this?

569
00:30:00,000 --> 00:30:01,480
Speaker 1: Because most of them been around long enough. Now you

570
00:30:01,560 --> 00:30:05,360
Speaker 1: get through it. I wanted to ask about your service

571
00:30:05,760 --> 00:30:08,480
Speaker 1: because you're an economist and you're a markets guy. Um

572
00:30:08,960 --> 00:30:11,440
Speaker 1: went to Harvard m I T. But I see that

573
00:30:11,560 --> 00:30:14,920
Speaker 1: you also served in the U. S. Army, got a

574
00:30:15,080 --> 00:30:18,080
Speaker 1: commendation medal with a V for valor and combat earned

575
00:30:18,080 --> 00:30:20,000
Speaker 1: a Bronze Star and Knowlton Award. I don't even know

576
00:30:20,040 --> 00:30:23,120
Speaker 1: what that is, but UM tell us about that because

577
00:30:23,120 --> 00:30:25,800
Speaker 1: I think it's fascinating and obviously we appreciate it. Sure. Well,

578
00:30:25,880 --> 00:30:29,440
Speaker 1: I'm I'm a retired full colonel and I my expertise

579
00:30:29,520 --> 00:30:35,200
Speaker 1: with psychological warfare. So, uh, this sounds nice. Well they

580
00:30:35,240 --> 00:30:37,920
Speaker 1: now call it information operations, but what but what that what?

581
00:30:38,040 --> 00:30:40,040
Speaker 1: It really give it a nicer name, but what it

582
00:30:40,080 --> 00:30:43,080
Speaker 1: really was psychological warfare. And so in what we do

583
00:30:43,760 --> 00:30:46,160
Speaker 1: as an investors, we, as you've heard of my comments,

584
00:30:46,280 --> 00:30:49,200
Speaker 1: we really think about human behavior. Nobody makes a you know,

585
00:30:49,520 --> 00:30:52,400
Speaker 1: human behavior drives consumption. Nobody makes a penny until someone

586
00:30:52,440 --> 00:30:54,760
Speaker 1: decides to buy. So if you can try to get

587
00:30:54,840 --> 00:30:57,600
Speaker 1: forward and what people are thinking, what they what their

588
00:30:57,640 --> 00:31:00,800
Speaker 1: fundamental desires are, you can be predictive about what they're

589
00:31:00,800 --> 00:31:02,720
Speaker 1: gonna buy and who they're gonna buy it from. So

590
00:31:02,800 --> 00:31:05,320
Speaker 1: we kind of meld these two things together. And it's

591
00:31:05,360 --> 00:31:07,840
Speaker 1: been very interesting with clients because you know, now that

592
00:31:07,960 --> 00:31:10,560
Speaker 1: we have a war going on, uh, and different kind

593
00:31:10,600 --> 00:31:12,680
Speaker 1: of perspective of things like that. Those those are things

594
00:31:12,720 --> 00:31:14,080
Speaker 1: that a lot of people want to talk about. How

595
00:31:14,160 --> 00:31:16,000
Speaker 1: do how do these things relate so well. Thank you

596
00:31:16,160 --> 00:31:20,240
Speaker 1: very much for your service. Thank you for paying your taxes. No,

597
00:31:20,520 --> 00:31:23,680
Speaker 1: I'm serious. You know if no one has ever thanked

598
00:31:23,680 --> 00:31:26,959
Speaker 1: you for paying your taxes, I'm doing it right now

599
00:31:27,120 --> 00:31:30,400
Speaker 1: because you need to remember. You buy body armor that

600
00:31:30,600 --> 00:31:34,080
Speaker 1: keeps soldiers safe and you save lives. So when people

601
00:31:34,120 --> 00:31:37,200
Speaker 1: get mad about paying their taxes, just please remember that

602
00:31:37,400 --> 00:31:40,200
Speaker 1: you actually are buying body armor that saves soldiers lives.

603
00:31:44,400 --> 00:31:46,680
Speaker 1: I think better paying for it. I think our country

604
00:31:46,720 --> 00:31:48,440
Speaker 1: is all the better for it. All right, good stuff

605
00:31:48,480 --> 00:31:52,400
Speaker 1: at Dry and Pence, Chief Investment Officer, Pence Capital Management.

606
00:31:52,720 --> 00:31:55,760
Speaker 1: Jay Hatfield, CEO Infrastructure Capital Management. Thank you, gentlemen, for

607
00:31:56,080 --> 00:31:58,520
Speaker 1: doing a quick roundtable here on kind of what's going

608
00:31:58,600 --> 00:32:01,720
Speaker 1: on in the markets. There again, we have some green

609
00:32:01,880 --> 00:32:08,280
Speaker 1: on the screen right now. Okay, let's talk about Twitter.

610
00:32:08,520 --> 00:32:12,280
Speaker 1: Let's talk about Snap. I mean, Snap just got crushed

611
00:32:12,400 --> 00:32:16,320
Speaker 1: today down you know, um is that? What's it mean

612
00:32:16,400 --> 00:32:20,600
Speaker 1: for all these social media? The PM yesterday during the

613
00:32:20,640 --> 00:32:22,560
Speaker 1: market say I'm gonna buy Snap because I can't go

614
00:32:22,600 --> 00:32:27,080
Speaker 1: any lower. All right, let's stack up with Man Deep

615
00:32:27,080 --> 00:32:30,600
Speaker 1: seeing he's our senior technology and also for Bloomberg Intelligence. Mandy,

616
00:32:30,680 --> 00:32:33,240
Speaker 1: thanks much for joining US year, appreciate you phoning it in,

617
00:32:33,800 --> 00:32:38,440
Speaker 1: which we notated, uh, snap, what's the story there? We also,

618
00:32:38,760 --> 00:32:43,480
Speaker 1: as Matt was saying, you know, everyone taught evaluation has droft,

619
00:32:44,320 --> 00:32:47,959
Speaker 1: you know down Guess what you know? They came out

620
00:32:48,040 --> 00:32:51,880
Speaker 1: with another bad print and I would say it was

621
00:32:51,960 --> 00:32:55,880
Speaker 1: a mixed report. The user based continues to hold steady.

622
00:32:56,000 --> 00:32:59,480
Speaker 1: But you know they didn't give any guidance. They said

623
00:32:59,520 --> 00:33:02,120
Speaker 1: the engage you when in the US decline five percent,

624
00:33:02,360 --> 00:33:04,920
Speaker 1: and they didn't come out clean in terms of why

625
00:33:05,040 --> 00:33:09,280
Speaker 1: that's happening, whether it's because of competition from TikTok or

626
00:33:09,440 --> 00:33:13,640
Speaker 1: just you know, people traveling more. I will go to

627
00:33:13,720 --> 00:33:16,120
Speaker 1: the TikTok issue. Man frame that now for me, I'm

628
00:33:16,120 --> 00:33:19,280
Speaker 1: not a TikTok or Matt very well might be. But no,

629
00:33:19,560 --> 00:33:24,480
Speaker 1: man is big and what is it? How? Who does

630
00:33:24,520 --> 00:33:26,960
Speaker 1: it really take compete with? Who does it? Is it

631
00:33:27,040 --> 00:33:29,320
Speaker 1: gigantic or do Paul and I just think it's gigantic

632
00:33:29,360 --> 00:33:33,760
Speaker 1: because we are too old to understand. Well, it's really

633
00:33:34,440 --> 00:33:37,880
Speaker 1: big now in terms of the time spent, not as

634
00:33:38,000 --> 00:33:40,840
Speaker 1: much in terms of the advertising revenue, although it is

635
00:33:41,280 --> 00:33:45,920
Speaker 1: the fastest growing advertising company. But right now it's taking

636
00:33:46,480 --> 00:33:49,160
Speaker 1: a line share in terms of the time spend. When

637
00:33:49,200 --> 00:33:52,600
Speaker 1: it comes to the ten to twenty five year olds,

638
00:33:52,720 --> 00:33:56,840
Speaker 1: I think they are the predominant user base, although I

639
00:33:56,920 --> 00:33:59,640
Speaker 1: think all using it. Is it like every twenty year

640
00:33:59,680 --> 00:34:03,760
Speaker 1: old kid has TikTok At this point you can assume, Yeah,

641
00:34:03,880 --> 00:34:06,800
Speaker 1: they have a daily active user base of over a

642
00:34:06,920 --> 00:34:09,880
Speaker 1: hundred million in the US. So yes, I would say

643
00:34:09,920 --> 00:34:13,440
Speaker 1: at this point everybody in that demographic is using TikTok

644
00:34:13,560 --> 00:34:15,440
Speaker 1: and they're using Do we have a sense of kind

645
00:34:15,480 --> 00:34:17,640
Speaker 1: of what they're advertising revenue is? I mean, is it

646
00:34:17,800 --> 00:34:21,839
Speaker 1: really a competitor for those ad dollars out there? Absolutely?

647
00:34:21,920 --> 00:34:25,920
Speaker 1: I mean, based on our work, it's over ten billion

648
00:34:26,000 --> 00:34:29,600
Speaker 1: dollars and growing at a very healthy sixty sevent clip.

649
00:34:29,760 --> 00:34:34,919
Speaker 1: So yes, it surpassed Snap interest, Twitter, everyone already. It's

650
00:34:35,040 --> 00:34:38,000
Speaker 1: giving Instagram a tough time in terms of, you know,

651
00:34:38,200 --> 00:34:41,200
Speaker 1: just the time spent. And as I said, uh, they

652
00:34:41,280 --> 00:34:44,239
Speaker 1: have a very new approach in terms of how they

653
00:34:44,920 --> 00:34:47,360
Speaker 1: you know, show content to the users. It's more AI

654
00:34:47,520 --> 00:34:51,759
Speaker 1: driven and it's more videos, and that's what Mark Zuckerbert said.

655
00:34:51,840 --> 00:34:55,160
Speaker 1: They're gonna make this big pivot to videos and reels

656
00:34:55,719 --> 00:34:59,080
Speaker 1: and really changed to more AI driven feed as opposed

657
00:34:59,120 --> 00:35:01,640
Speaker 1: to user driven feed, which has always been the case

658
00:35:01,760 --> 00:35:04,880
Speaker 1: with you know, Facebook and Instagram. How much room is

659
00:35:04,960 --> 00:35:07,320
Speaker 1: there for all this stuff in the market, Mandyve. I

660
00:35:07,360 --> 00:35:15,680
Speaker 1: mean if you've got Twitter, Snap, Pinterest, Um, TikTok, Facebook,

661
00:35:16,000 --> 00:35:18,440
Speaker 1: I mean, how much room is there for one twenty

662
00:35:18,560 --> 00:35:21,960
Speaker 1: year old kid to um? How many apps can you

663
00:35:22,200 --> 00:35:24,600
Speaker 1: can you be on and and addicted to and spending

664
00:35:24,640 --> 00:35:27,000
Speaker 1: a half hour or an hour a day on. No,

665
00:35:27,200 --> 00:35:30,239
Speaker 1: You're absolutely right that in the end, you know, you're

666
00:35:30,320 --> 00:35:33,040
Speaker 1: competing for that two to three hours of time that

667
00:35:33,200 --> 00:35:36,440
Speaker 1: every consumer can spend max on these apps, whether it's

668
00:35:36,440 --> 00:35:38,920
Speaker 1: and you can you know, even bring in Netflix as well.

669
00:35:39,040 --> 00:35:42,080
Speaker 1: You know, like this is all entertainment, and so if

670
00:35:42,200 --> 00:35:45,239
Speaker 1: somebody is spending more time on Netflix or TikTok, then

671
00:35:45,280 --> 00:35:49,040
Speaker 1: it's taking time away from Facebook and Instagram. Which is

672
00:35:49,120 --> 00:35:52,600
Speaker 1: the challenge that all consumer internet companies have as eyeballs

673
00:35:52,960 --> 00:35:55,600
Speaker 1: and how do I make sure that consumers are using

674
00:35:55,640 --> 00:35:59,200
Speaker 1: my platform and eventually I'll monetize it. In the case

675
00:35:59,280 --> 00:36:03,160
Speaker 1: of Twitter, that eventually has been too long. But I

676
00:36:03,480 --> 00:36:06,560
Speaker 1: think for other platforms the hope is like roadblocks is

677
00:36:06,560 --> 00:36:09,800
Speaker 1: another example. You know, they are taking a good amount

678
00:36:09,840 --> 00:36:13,000
Speaker 1: of share when it comes to the nine year old demographic,

679
00:36:13,160 --> 00:36:17,560
Speaker 1: and so everyone is wine for that, uh, consumer time

680
00:36:17,680 --> 00:36:20,360
Speaker 1: spent on their platform, and the hope is, you know,

681
00:36:20,480 --> 00:36:24,520
Speaker 1: you will monetize it eventually. So ment if we are

682
00:36:24,640 --> 00:36:29,920
Speaker 1: either in or heading into a recession, Uh, that's generally

683
00:36:30,040 --> 00:36:33,920
Speaker 1: not good for advertising spending. What are the digital media

684
00:36:34,040 --> 00:36:39,720
Speaker 1: companies saying about how they expect to perform in a recession. Also,

685
00:36:40,000 --> 00:36:44,400
Speaker 1: that's why you saw Snap not giving guidance last night,

686
00:36:44,520 --> 00:36:47,399
Speaker 1: is because they said brand advertising. We don't know if

687
00:36:47,520 --> 00:36:51,279
Speaker 1: advertisers really want to spend on brand advertising. They're still

688
00:36:51,360 --> 00:36:54,520
Speaker 1: spending on direct response and performance advertising, which is your

689
00:36:54,600 --> 00:36:58,520
Speaker 1: search and you know, uh, direct app download type of advertising,

690
00:36:58,600 --> 00:37:01,560
Speaker 1: but they're not spending as much brand. On the other hand,

691
00:37:01,600 --> 00:37:05,680
Speaker 1: the ad agencies like Omnicon and Publicists, their results have

692
00:37:06,160 --> 00:37:11,120
Speaker 1: kind of been stable. So from my standpoint, the fact

693
00:37:11,200 --> 00:37:14,880
Speaker 1: that ad agencies have done well this quarter shows to

694
00:37:14,960 --> 00:37:18,640
Speaker 1: me that Apple's privacy changes have had some sort of

695
00:37:18,719 --> 00:37:22,000
Speaker 1: an impact in terms of social media targeting, and which

696
00:37:22,080 --> 00:37:24,800
Speaker 1: is why the advertisers are a little reluctant to allocate

697
00:37:24,880 --> 00:37:28,600
Speaker 1: those brand ad dollars on social media right now compared

698
00:37:28,640 --> 00:37:31,480
Speaker 1: to what the ad agencies are doing. By the way,

699
00:37:31,560 --> 00:37:35,080
Speaker 1: how big a deal is it that Apple is losing

700
00:37:35,120 --> 00:37:39,960
Speaker 1: an industrial design chief evans Hankey gonna leave? Um, you

701
00:37:40,040 --> 00:37:44,520
Speaker 1: know this was she was the replacement for Johnny I've

702
00:37:44,719 --> 00:37:48,520
Speaker 1: like one of the most iconic I guess uh design

703
00:37:48,600 --> 00:37:51,520
Speaker 1: chiefs of the digital age. So it couldn't have been easy,

704
00:37:52,080 --> 00:37:54,960
Speaker 1: uh difficult shoes to fill, let's say, but how big

705
00:37:55,000 --> 00:37:56,399
Speaker 1: of a deal is it that she's going to leave?

706
00:37:57,200 --> 00:38:01,160
Speaker 1: I mean, attrition is always, you know, a big deal

707
00:38:01,239 --> 00:38:04,480
Speaker 1: for any tech company Snatch that also has had a

708
00:38:04,600 --> 00:38:06,880
Speaker 1: fair amount of attrition. You know, a couple of the

709
00:38:07,000 --> 00:38:10,799
Speaker 1: key executives left left for Netflix, and you know they

710
00:38:10,840 --> 00:38:14,000
Speaker 1: will be building their ad business for Netflix. So anytime

711
00:38:14,120 --> 00:38:17,480
Speaker 1: you see an executive departure, especially you know in the

712
00:38:17,560 --> 00:38:20,879
Speaker 1: UH management ranks, yes, it can be a big deal.

713
00:38:20,960 --> 00:38:23,320
Speaker 1: But in the case of Apple, you know, they still

714
00:38:24,120 --> 00:38:27,400
Speaker 1: can make any changes to the platform, and if they

715
00:38:27,480 --> 00:38:29,960
Speaker 1: want to become a big player in the ad space,

716
00:38:30,000 --> 00:38:32,359
Speaker 1: they could potentially do that. I mean some people are

717
00:38:32,560 --> 00:38:35,360
Speaker 1: calling that. You know, they are the biggest beneficiaries of

718
00:38:35,440 --> 00:38:38,759
Speaker 1: the privacy changes they've made because a lot of those

719
00:38:38,880 --> 00:38:42,200
Speaker 1: AD dollars could flow to Apple and uh so, I

720
00:38:42,239 --> 00:38:47,080
Speaker 1: I think Apple's advantages they have got so many opportunities.

721
00:38:47,160 --> 00:38:49,400
Speaker 1: They could come up with, you know, a mixed reality

722
00:38:49,520 --> 00:38:52,319
Speaker 1: headset next year, and that could open up a lot

723
00:38:52,360 --> 00:38:55,400
Speaker 1: of opportunities. So I don't think that's it's going to

724
00:38:55,560 --> 00:38:59,480
Speaker 1: change anything in terms of how people perceive Apple. I

725
00:38:59,520 --> 00:39:01,960
Speaker 1: think the big guess risk for them is a China aspect,

726
00:39:02,120 --> 00:39:05,319
Speaker 1: and and that I think is the one that which

727
00:39:05,400 --> 00:39:07,960
Speaker 1: is which is investor, which is what that they can't

728
00:39:08,000 --> 00:39:09,480
Speaker 1: get the right chips so that they can't get the

729
00:39:09,520 --> 00:39:13,360
Speaker 1: production they need there. The production I mean eight percent

730
00:39:13,440 --> 00:39:17,560
Speaker 1: of their you know everything here and when it comes

731
00:39:17,640 --> 00:39:21,560
Speaker 1: to phones or air pods or they're assembled in China.

732
00:39:21,840 --> 00:39:25,480
Speaker 1: So so Mande, I mean all the big name text

733
00:39:25,520 --> 00:39:29,080
Speaker 1: docs that you cover on a rock ronic covers, I mean,

734
00:39:29,160 --> 00:39:31,040
Speaker 1: these have been the darlings. I mean I could have

735
00:39:31,120 --> 00:39:34,040
Speaker 1: been an analyst covering these things and made money. I mean,

736
00:39:34,360 --> 00:39:37,040
Speaker 1: so you know, I hate to give you any credit

737
00:39:37,080 --> 00:39:39,440
Speaker 1: for this because they all went up. But has it

738
00:39:39,600 --> 00:39:43,160
Speaker 1: changed now? Are our investors like they're not I don't

739
00:39:43,239 --> 00:39:45,759
Speaker 1: have to own these things this year? Yeah? Exactly, I

740
00:39:45,800 --> 00:39:50,719
Speaker 1: mean it's changed. I would say consumer internet always has

741
00:39:50,800 --> 00:39:53,400
Speaker 1: a small life in terms of you know, who stays

742
00:39:53,440 --> 00:39:55,320
Speaker 1: at the top. And when you think about you know,

743
00:39:55,480 --> 00:39:59,479
Speaker 1: edwarding digital advertising being a duopoli first with Alphabet and Meta,

744
00:39:59,640 --> 00:40:02,960
Speaker 1: then Amazon being that third player. Now, I think it's

745
00:40:03,000 --> 00:40:06,399
Speaker 1: going to get even more fragmented. Every company out there

746
00:40:06,520 --> 00:40:09,000
Speaker 1: is looking to become an ad network, even you know,

747
00:40:09,440 --> 00:40:13,920
Speaker 1: Kroger and Albertson Murder could be uh could open up

748
00:40:13,960 --> 00:40:16,920
Speaker 1: a new platform around ads that retailers could use to

749
00:40:17,000 --> 00:40:20,080
Speaker 1: show digital ads. So I think you're going to see

750
00:40:20,120 --> 00:40:23,400
Speaker 1: more fragmentation on the ad side because you know, the

751
00:40:23,480 --> 00:40:27,480
Speaker 1: likes of allmar target They're already showing display ads on

752
00:40:27,520 --> 00:40:30,680
Speaker 1: their platform, they have a sizeable e commerce business, and

753
00:40:31,320 --> 00:40:34,520
Speaker 1: more and more ad dollars I think are gonna spread

754
00:40:34,600 --> 00:40:37,480
Speaker 1: out as opposed to you know, only three companies controlling

755
00:40:37,520 --> 00:40:39,960
Speaker 1: all the digital ad platforms. And I think Apple has

756
00:40:40,080 --> 00:40:43,560
Speaker 1: really kind of made that level playing field now that

757
00:40:43,680 --> 00:40:45,719
Speaker 1: no one has an unto advantage in terms of the

758
00:40:45,840 --> 00:40:48,279
Speaker 1: data that they're gathering or the targeting they have. But

759
00:40:48,680 --> 00:40:53,560
Speaker 1: Apple doesn't get any ad dollars, do they? Where could they? Now?

760
00:40:53,680 --> 00:40:56,920
Speaker 1: Apple has about a two to three billion dollar digital

761
00:40:57,000 --> 00:40:59,600
Speaker 1: ad business right now. They show you ads when it

762
00:40:59,719 --> 00:41:03,120
Speaker 1: comes to searches on the app store. Hey man, deep

763
00:41:03,560 --> 00:41:06,319
Speaker 1: Matt's all set to join the metaverse. I'm a little

764
00:41:06,360 --> 00:41:09,080
Speaker 1: bit more skeptical as soon as some as soon as

765
00:41:09,120 --> 00:41:12,759
Speaker 1: some twelve year old builds the metaverse on roadblocks. So

766
00:41:13,680 --> 00:41:16,120
Speaker 1: what's the market really feel about this? Man Deep, And

767
00:41:16,160 --> 00:41:18,880
Speaker 1: you talk to institutional investors, this is something that Facebook

768
00:41:18,880 --> 00:41:22,799
Speaker 1: should be doing well. So Facebook is in a very

769
00:41:22,880 --> 00:41:26,080
Speaker 1: tough spot because they're losing engagement and they have this

770
00:41:26,239 --> 00:41:29,520
Speaker 1: hundred billion dollar plus business that's gonna that's moving away

771
00:41:29,600 --> 00:41:32,640
Speaker 1: from them because they're losing engagement. So Meta worse is

772
00:41:32,719 --> 00:41:36,759
Speaker 1: their play to keep consumers on their platform. And I

773
00:41:36,880 --> 00:41:39,840
Speaker 1: don't know if they should be doing their own hardware,

774
00:41:40,239 --> 00:41:43,160
Speaker 1: but really they don't want to depend on an Apple

775
00:41:43,360 --> 00:41:46,000
Speaker 1: or an alphabet controlling the platform. So that is why

776
00:41:46,120 --> 00:41:49,520
Speaker 1: Mark Zuckerbert is so passionate. Whether it will be successful,

777
00:41:49,719 --> 00:41:52,640
Speaker 1: time will tell. I think hardware is a challenge for

778
00:41:52,760 --> 00:41:55,200
Speaker 1: any company that's doing it for the first time. All right,

779
00:41:55,239 --> 00:41:58,279
Speaker 1: Man Deep, great stuff. As always. I love that Man

780
00:41:58,360 --> 00:42:02,640
Speaker 1: Deep seeing Bloomberg Intelligence can talk anything technology, hard work, software,

781
00:42:02,719 --> 00:42:08,279
Speaker 1: the Internet, all that stuff. Uh, Heat knows it. Matt.

782
00:42:08,320 --> 00:42:10,600
Speaker 1: We talk a lot about electric vehicles here and int

783
00:42:10,640 --> 00:42:13,520
Speaker 1: of your obviously you're the gear head uh in the

784
00:42:13,640 --> 00:42:16,040
Speaker 1: studio here. But when you talk electric vehicles, don't we

785
00:42:16,080 --> 00:42:18,520
Speaker 1: have to talk about batteries? I mean, isn't that like

786
00:42:18,680 --> 00:42:21,640
Speaker 1: the key thing that you have to have a call

787
00:42:21,760 --> 00:42:23,759
Speaker 1: on You have to have a good sense of Dr

788
00:42:23,920 --> 00:42:28,120
Speaker 1: kang Son joins us a CEO of Ampreus. Uh. Ampreus

789
00:42:28,200 --> 00:42:30,160
Speaker 1: is in New York stock a change listed company. A

790
00:42:30,440 --> 00:42:34,520
Speaker 1: mp X is the symbol put into your Bloomberg terminal. Uh.

791
00:42:35,000 --> 00:42:36,960
Speaker 1: DR's Son thanks so much for joining us here. I'd

792
00:42:36,960 --> 00:42:39,360
Speaker 1: love to get just you give us a kind of

793
00:42:39,440 --> 00:42:42,080
Speaker 1: a real overview of what Amprius is, what you do,

794
00:42:42,320 --> 00:42:46,600
Speaker 1: how you uh participate in this electric vehicle revolution has

795
00:42:46,640 --> 00:42:51,200
Speaker 1: taken a place, Paul, thanks for having me. I'm previously

796
00:42:51,400 --> 00:42:54,800
Speaker 1: the vedoper and the manufacturer of higher energy dnsity and

797
00:42:54,920 --> 00:42:58,200
Speaker 1: the higher power dnsity. Bet you my own batteries. Yeah,

798
00:42:58,280 --> 00:43:04,880
Speaker 1: imvious pays you high capacity Cilican as an annal that

799
00:43:05,000 --> 00:43:08,040
Speaker 1: it has a ten times capacity then graph and or

800
00:43:08,120 --> 00:43:13,160
Speaker 1: that industry is currently using. So the future mobility is

801
00:43:13,320 --> 00:43:19,160
Speaker 1: heavily depends on battery performance in sift energy, power, trodging time,

802
00:43:19,560 --> 00:43:23,480
Speaker 1: and the audating tenures. Today, I'm batteries that leader to

803
00:43:23,520 --> 00:43:27,919
Speaker 1: performance in all those properties. So are we gonna see

804
00:43:28,680 --> 00:43:32,840
Speaker 1: you know in the future when um, everyone's making and

805
00:43:33,200 --> 00:43:38,799
Speaker 1: buying and driving electric vehicles. M Is one say, two

806
00:43:39,120 --> 00:43:43,239
Speaker 1: d kilowatt hour battery Uh going to be better or

807
00:43:43,400 --> 00:43:49,320
Speaker 1: different than another two kilott our battery? Yes? Yeah, it

808
00:43:49,480 --> 00:43:54,719
Speaker 1: will depends on the battery material components they will have

809
00:43:55,040 --> 00:44:00,239
Speaker 1: offer different performance. Today I's battery have been used the

810
00:44:00,560 --> 00:44:05,560
Speaker 1: evasion industry, were actually power many flying devices today in

811
00:44:05,640 --> 00:44:10,399
Speaker 1: commercial market. So but what what what's gonna make it better? Um?

812
00:44:11,320 --> 00:44:13,600
Speaker 1: Do you try and make batteries that are smaller? Do

813
00:44:13,640 --> 00:44:15,160
Speaker 1: you want to make batteries that are lighter? Do you

814
00:44:15,200 --> 00:44:17,080
Speaker 1: want to make batteries that charge faster? Do you want

815
00:44:17,080 --> 00:44:19,600
Speaker 1: to make batteries that last longer? What's what are the

816
00:44:19,680 --> 00:44:24,640
Speaker 1: main advantages that you're after? Yeah, we have this called

817
00:44:24,680 --> 00:44:28,000
Speaker 1: city and non water animal batteries. As I mentioned earlier,

818
00:44:28,320 --> 00:44:31,360
Speaker 1: city has a ten times higher energy density than the

819
00:44:31,440 --> 00:44:36,760
Speaker 1: GRAPHI feature industry is currently using. So our battery offer

820
00:44:37,280 --> 00:44:42,120
Speaker 1: much higher energy density. We offer er uh anergy density

821
00:44:42,680 --> 00:44:49,600
Speaker 1: almost twice higher than the current commercial available commercial batteries. Yeah.

822
00:44:49,680 --> 00:44:54,440
Speaker 1: So uh we double the travel time and the mission

823
00:44:54,840 --> 00:45:00,960
Speaker 1: time UH today, So who are your customers? Who are

824
00:45:01,000 --> 00:45:03,520
Speaker 1: your biggest customers today and and kind of where do

825
00:45:03,560 --> 00:45:06,839
Speaker 1: you think the opportunities are going forward? Yeah, we are

826
00:45:06,920 --> 00:45:12,640
Speaker 1: focused on aviation. Will customer including air buss addan flur uh.

827
00:45:12,760 --> 00:45:19,200
Speaker 1: Those are the company MAGA the flying devices. In the future,

828
00:45:19,480 --> 00:45:23,960
Speaker 1: once our logy scale capacity available, we'd like to explore

829
00:45:24,000 --> 00:45:29,120
Speaker 1: other Markey applications, including easy. All right, Dr tanks Son,

830
00:45:29,160 --> 00:45:31,759
Speaker 1: thank you so much for joining us. Dr Kank Sung,

831
00:45:31,840 --> 00:45:35,320
Speaker 1: CEO of ampreus again the New York stock Stange traded

832
00:45:36,040 --> 00:45:40,640
Speaker 1: company a mp X is a symbol. Thanks for listening

833
00:45:40,680 --> 00:45:44,120
Speaker 1: to the Bloomberg Markets podcast. You can subscribe and listen

834
00:45:44,200 --> 00:45:48,439
Speaker 1: to interviews of Apple podcasts or whatever podcast platform you prefer.

835
00:45:48,880 --> 00:45:52,839
Speaker 1: I'm Matt Miller. I'm on Twitter at Matt Miller three.

836
00:45:53,480 --> 00:45:56,040
Speaker 1: On Ball Sweeney, I'm on Twitter at pt Sweeney Before

837
00:45:56,120 --> 00:45:59,239
Speaker 1: the podcast, you can always catch us worldwide at Bloomberg Radio.