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Speaker 2: All Right, everybody, Well, one of the risk overhangings on
Speaker 2: financial Marcus, we've been talking about this certainly over the
Speaker 2: last week or so, is that UAW strike now and
Speaker 2: its second week, with economic losses already estimated at one
Speaker 2: point six billion dollars. The standoff between the union and
Speaker 2: the big US automakers remained far apart on key issues
Speaker 2: such as pay benefits, also on terms I own. A.
Speaker 3: Bloomberg News team spoke with struck some striking workers about
Speaker 3: what has them worried and whether politicians can change that.
Speaker 3: Here with the latest on the situation and what's on
Speaker 3: the minds of those striking workers is Bloomberg News Real
Speaker 3: Economy Team reporter Mark Niquette. He joins us on so
Speaker 3: Marco to have you this afternoon, some really fantastic reporting
Speaker 3: from the inside with you, Gaby Koppola, Josh Idelsin. First up, though,
Speaker 3: just describe sort of the mood or the moods of
Speaker 3: those that you know, you spoke to, who you worked with,
Speaker 3: how would you describe how they're feeling.
Speaker 4: Well, we essentially went to the picket lines of the
Speaker 4: factories that are on strike. The UAW is doing sort
Speaker 4: of a unique approach this time where they're striking all
Speaker 4: three autoworkers a big three at the same time, but
Speaker 4: limited plants, not all clients. And the workers who are
Speaker 4: out on strike, I would say it's sort of a
Speaker 4: mixed mood. They're happy to be fighting for what they
Speaker 4: think they deserve, particularly after they gave up pay and
Speaker 4: benefits after the financial collapse, but they're also worried about
Speaker 4: obviously their jobs and.
Speaker 5: The future, particularly for their job security.
Speaker 4: One of the big issues on the picket line is
Speaker 4: the transition to electric vehicles. It's sort of emerged as
Speaker 4: a big issue in this strike right now because the.
Speaker 5: Auto workers are very concerned.
Speaker 4: That the fact that it takes fewer workers to put
Speaker 4: together these electric vehicles, this could mean less job security
Speaker 4: in the future.
Speaker 2: You know what struck me. I think it was Jacob Bishop,
Speaker 2: aged twenty three, you talked to and it said, you know,
Speaker 2: in this transition to EV's like they get it, they
Speaker 2: understand it's happening. He said. Many of us have accepted
Speaker 2: that we want to make sure that in this transition
Speaker 2: the companies don't try and use that as a little
Speaker 2: bit of a scapegoat to try and transition. They are
Speaker 2: relatively good paying union jobs, and you do wonder you know,
Speaker 2: it wouldn't be the first time a company, you know,
Speaker 2: kind of as we're going through, transition is a tough time.
Speaker 2: And sorry, you know so, I mean, you understand really
Speaker 2: these real concerns of these workers who are wondering, like
Speaker 2: do we get lost in the shuffle right?
Speaker 4: And then again, like you said, some of our outright
Speaker 4: seguente about it, they would say, look, you know, we know,
Speaker 4: you know, coal miners lost their jobs and when we
Speaker 4: after the industrial revolution, you know, this is just sort
Speaker 4: of the natural progress of things and has consequences. But
Speaker 4: like I said that they definitely want to see in
Speaker 4: the short term at least.
Speaker 5: That they're taken care of. In particular, they.
Speaker 4: Want to see pensions restored. It's going to be a
Speaker 4: big issue in the negotiations because it's not clear yet,
Speaker 4: you know, how we'll get to an agreement with the
Speaker 4: automakers and and the u A w on pensions, but
Speaker 4: they want to have that sense of security that you know,
Speaker 4: they'll have something when they retire, in addition to the
Speaker 4: colon and the pay increase and the other benefits that
Speaker 4: they're looking for.
Speaker 2: We want to ask you about Trump, because that was
Speaker 2: certainly a factor, but I want to also ask you
Speaker 2: what happened. What happened to those auto jobs that used
Speaker 2: to provide a really good middle class you know living,
Speaker 2: you know, a family that could not only just survive,
Speaker 2: they could actually thrive.
Speaker 4: Yeah, that's another issue in the strike is sort of
Speaker 4: these tear pays where you know, the folks who come
Speaker 4: into the shops in the union at you know, the
Speaker 4: entry level are paid less than the workers who have
Speaker 4: been there longer. And you know, there's there's real concern that,
Speaker 4: particularly on the on the entry level, it's not a
Speaker 4: livable wage or it's not a wage that would allow
Speaker 4: even these autoworkers to buy the products that they're making,
Speaker 4: the cars that they're building. So it's and it's it's
Speaker 4: a thorny issue because this is the sort of the
Speaker 4: pay structure that the automakers have worked out in the
Speaker 4: industry has worked out to allow them, the RT makers,
Speaker 4: to be profitable. But you're right, it doesn't work for
Speaker 4: a lot of workers, particularly at the lower end.
Speaker 3: I mean, let's talk numbers here, because one thing that
Speaker 3: we have heard throughout the strike and even ahead of
Speaker 3: the strike is the way that real wages have come
Speaker 3: down as a result of inflation, but also as a
Speaker 3: result of their wages just not keeping up with inflation
Speaker 3: and not getting raises. One person who you and the
Speaker 3: team spoke to, Robert Schuch, says that he earns only
Speaker 3: two dollars and fifty three cents an hour more than
Speaker 3: he did all the way back in two thousand and eight,
Speaker 3: and that he and his wife they have to work
Speaker 3: to put in overtime to make ends meet. Uh, this
Speaker 3: is pretty shocking to see, given that how long ago
Speaker 3: that was, how much more expensive things are now, and
Speaker 3: their wages are still haven't haven't kept anywhere close to inflation.
Speaker 4: Yeah, and that's another factor that's that's playing out right
Speaker 4: now with the strike, and that's just the high inflation environment.
Speaker 5: You know who we are in the economy right now.
Speaker 4: You know, these workers, like like everybody else, you know,
Speaker 4: they have to buy red milk and gas and and
Speaker 4: and they're seeing the prices moderate for sure, but you know,
Speaker 4: not not enough for them to make ends meet. And
Speaker 4: you know, it's sort of another worry because you know,
Speaker 4: they do get a strike benefit while they're on the
Speaker 4: picket line, but.
Speaker 5: It's nowhere near with their salary. Is so more of
Speaker 5: a complicated actor.
Speaker 2: I want to ask you, you and Gabby and Josh,
Speaker 2: what did as you were talking to workers, what was
Speaker 2: the mood or the moods of those that you worked
Speaker 2: with and and just kind of, you know, just get
Speaker 2: a feel of how they were feeling. Were they just
Speaker 2: you know, were they angry? Were they.
Speaker 6: I don't know, like how.
Speaker 2: Would you describe them? Was there a couple of words
Speaker 2: to describe overall the group?
Speaker 5: Yeah, I don't know if there was a sort of
Speaker 5: a consistent theme there. I mean it was it was almost,
Speaker 5: you know, depending on the individual and what the individual
Speaker 5: circumstances were.
Speaker 4: Some were definitely angry, you know that they had to
Speaker 4: be out on this picket line.
Speaker 5: They felt like, you know, this, this this could have
Speaker 5: been avoided that you.
Speaker 4: Know, the company, particularly with the company executives making millions
Speaker 4: of dollars, they feel like, you know, there could have
Speaker 4: been more spreading around of the money and you know, taking.
Speaker 5: Care of them without having to go on strike.
Speaker 4: Others are are sort of happy, i would say, for
Speaker 4: the ability to fight for what they think they deserved.
Speaker 4: So while they would prefer, I'm sure, not to be
Speaker 4: on strike, you know, they're certainly willing to, you know,
Speaker 4: stand next to the barrel and you know, wave the signs.
Speaker 4: And I think they're also encouraged by the support they're getting.
Speaker 4: If you stand on the picket lines in Detroit, you know,
Speaker 4: cars passing our hopey horns, and you know folks are
Speaker 4: bringing in uh water and you know, donations to buttress
Speaker 4: the workers. So I think there's a society they are
Speaker 4: being supported in the strike.
Speaker 2: Well, the reporting you did and Gabby Coppola and Josh Eidelson,
Speaker 2: it really just give us a feel of truly how
Speaker 2: these guys are feeling and why they're at on strike,
Speaker 2: So we so appreciate it. Bloomberg News Real Economy Team
Speaker 2: reporter Mark Naquette joining us on zoom and Columbus, Ohio.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 6: On Bloomberg dot com, the iHeartRadio app, and the.
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Speaker 2: All right, everybody, This week has been full of AI
Speaker 2: related news.
Speaker 7: We just talked about Nvidia, the raid over in their
Speaker 7: French offices, concerns about anti competitive practices. Of course, that
Speaker 7: has been the AI stock I feel like of the year,
Speaker 7: or at least one of them meta platforms. Those shares higher
Speaker 7: on today, I should say, in the trade after Alice
Speaker 7: Wad and positively on the AI potential of the new
Speaker 7: artificial intelligence features that we talked about yesterday. The company
Speaker 7: unveiling its annual developers conference yesterday and veiled there. Wall
Speaker 7: Street Journal also reporting earlier this week that Open Ai,
Speaker 7: the company behind chat chept, tim exploring a sale of
Speaker 7: shares that could value the company up to ninety billion.
Speaker 2: That's a pretty big deal.
Speaker 3: It's a huge deal. Okay, So we know we can
Speaker 3: use AI to chat with Tom Brady if you're soon,
Speaker 3: if you're using meta platforms new Thing or Snoop dogg
Speaker 3: or like you know, help you with recipes if you're
Speaker 3: using chat gpt. But what about AI when it comes
Speaker 3: to medicine, Carol? How can it help doctors make better
Speaker 3: decisions and ultimately make us healthier and live longer.
Speaker 2: All right, well with us to talk about that. Elizabeth Stoddinger.
Speaker 2: She is managing board member at Seamen's Health and Years.
Speaker 2: It's a fifty seven billion dollar medical tech company that
Speaker 2: does medical imaging, testing, diagnostics and more. Delighted to have
Speaker 2: her with us on Zoom from Munich, Germany. Elizabeth, thank
Speaker 2: you so much for joining us on Bloomberg Business Week.
Speaker 2: I think we are all curious about the value of
Speaker 2: AI as it starts to seep into all walks of
Speaker 2: life personally and professionally. Give us some insight about how
Speaker 2: you all are thinking about it.
Speaker 8: If you think of a world where getting healthy and
Speaker 8: staying healthy is a right and not a luxury, regardless
Speaker 8: of whether you are in Vietnam or a head of state.
Speaker 8: If that's a vision you want to buy into and
Speaker 8: you believe in, then AI actually can be one of
Speaker 8: the leavers that can help us get there.
Speaker 3: Okay, So what does that look like in terms of
Speaker 3: diagnostic imaging? I mean this is when I think about
Speaker 3: a lot. You know, we have people reading mammograms, and
Speaker 3: people reading mammograms miss things, They make mistakes.
Speaker 8: That's absolutely right, because reading mammograph is quite it's not
Speaker 8: so easy to do and you need a lot of experience.
Speaker 8: And that is one of the beautiful use cases and
Speaker 8: examples where artificial intelligence really can help physicians find the
Speaker 8: most suspicious parts of the mammogram much faster and also
Speaker 8: can help with guiding attention to potentially suspicious lesions and
Speaker 8: thereby support physicians to make diagnosis in a more accurate
Speaker 8: way and also look after more patients. So this is
Speaker 8: actually one of the really very real use cases which
Speaker 8: already make a difference for patients today.
Speaker 2: Elizabeth, as a world globally, are we all going to
Speaker 2: work together on this so that we can get to
Speaker 2: the power of generative AI and its impact on the
Speaker 2: global world sooner rather than later. And I asked that
Speaker 2: because you have is Tim reminded me incredible experience working overseas,
Speaker 2: especially in China in particular you lead the Semen's Health
Speaker 2: and Ear's business in Asia Pacific. There's just lots of
Speaker 2: experience with that at a time where there's lots of
Speaker 2: global tensions. I mean, just this week or we recently
Speaker 2: talked about technology rules and the EU model versus the
Speaker 2: US model. Versus the Chinese model and how it plays out.
Speaker 2: So give us some insight and smart narrative if you will,
Speaker 2: or a smart narrative on how we need to think
Speaker 2: about this and what kind of collaboration we need.
Speaker 8: If you think about building high quality AI solutions which
Speaker 8: make a benefit for patients, there is a few ground
Speaker 8: rules you have to follow. First of all, you have
Speaker 8: to make it easy for physicians to adopt the tools
Speaker 8: and the possibilities of AI in their tools. And secondly,
Speaker 8: and this is very important, you need high quality data
Speaker 8: and you need lots of it. And in order to
Speaker 8: provide that strong foundation to build meaningful and impactful AI algorithms,
Speaker 8: you do benefit from leveraging a global network to collect
Speaker 8: the images. Make sure you annotate the images in a
Speaker 8: good way that you can use them for training AI algorithms.
Speaker 8: So we collaborate with scientists and clinical partners all over
Speaker 8: the world. We've collected more than a billion images and
Speaker 8: we then feed these images into our supercomputer, which is
Speaker 8: actually based in the United States, and we call the
Speaker 8: computer Charlocke because it helps us find the most relevant
Speaker 8: bits and pieces of information.
Speaker 3: I want to go back to just talking about China,
Speaker 3: because you did spend so much time in China, and
Speaker 3: I'm curious, Elizabeth, you must still know people on the
Speaker 3: ground there. We've talked so much over the last few
Speaker 3: months about the economic woes facing China. What are you
Speaker 3: hearing from your contacts there right now.
Speaker 8: I mean, China is and always has been a very
Speaker 8: fascinating place for me personally. It's a place where I've
Speaker 8: spent a lot of time, where I keep going back
Speaker 8: to regularly, and I've always been really inspired by the
Speaker 8: energy and by the drive of the people in China,
Speaker 8: by the willingness to continue to build their country and
Speaker 8: their economy. Now, following the experience of the last three
Speaker 8: years with the very stringent COVID measurements, I mean, there
Speaker 8: is some thought process going on where people go back
Speaker 8: and say, well, maybe we could have done this differently
Speaker 8: as well, and people are feeling the impact now of
Speaker 8: the slower economy. At the same time, I continue to
Speaker 8: be optimistic and positive about China. The economy continues to grow,
Speaker 8: and I'm quite confident we will see it picking up
Speaker 8: a game.
Speaker 2: Put on a corporate put on a corporate perspective. Is
Speaker 2: China still the friend of EU? Corporations or companies in
Speaker 2: the EU, companies in the United States, is there going
Speaker 2: to be that collaboration on things like new science or
Speaker 2: new technology.
Speaker 8: I mean, for us, over the past years, we have
Speaker 8: moved focus into also understanding what do patients in China need.
Speaker 8: China has a population of one point four billion people,
Speaker 8: and these people need healthcare and want better healthcare. So
Speaker 8: we have added also our and d activities in China
Speaker 8: to our global network, and we continue to believe that
Speaker 8: for the benefit of patients globally, there is value in
Speaker 8: keeping the collaboration and working together on addressing some of
Speaker 8: the most some of the most challenging topics for mankind, like,
Speaker 8: for instance, addressing the threat of cancer.
Speaker 2: Just one last question and just got about thirty forty
Speaker 2: seconds here, how are you thinking about how AI could
Speaker 2: really change the way medicine works.
Speaker 8: ICAI as a phenomenal opportunity because it will help us
Speaker 8: to address some of the most pressing needs that we're
Speaker 8: facing in healthcare systems. We don't have enough people. There
Speaker 8: is mistakes that people grow older, there is certain diseases
Speaker 8: which become chronic, and in all of these areas AI
Speaker 8: can and will make a difference. So to me, AI
Speaker 8: is really it's not a threat, it's an opportunity and
Speaker 8: if we make right use of it, it can help
Speaker 8: us focus us humans on what we do best and
Speaker 8: get the support of the AI to treat more people
Speaker 8: in more places and on a higher quality level around
Speaker 8: the world.
Speaker 2: Elizabeth a great. I really appreciate your time, Elizabeth Stottinger.
Speaker 2: She is managing board member of its Semen's Health and Yours.
Speaker 2: Joining us on zoom from Munich, Germany, you're.
Speaker 1: Listening to the Bloomberg Business Week podcast. Catch us live
Speaker 1: weekday afternoons from three to six Eastern on Bloomberg Radio,
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Speaker 1: Just Say Alexa playing Bloomberg eleven thirty.
Speaker 2: So over the summer. In July, to be exact, Bloomberg
Speaker 2: News came out reporting that US venture capital deal spending
Speaker 2: fell by half in the second quarter, funding fewer startups,
Speaker 2: especially at the early stages of a company's life. This
Speaker 2: is according actually to data from research firm Pitchbooks. So
Speaker 2: we'll be looking for kind of the update on these numbers.
Speaker 3: You know what, they say you got to adjust for
Speaker 3: one time things. Okay, So if you do the math,
Speaker 3: take out that more than six five billion dollars that
Speaker 3: investors spent on payments company Stripe, and the total looks
Speaker 3: even worse. That's according to Pitchburg analyst Kyle Stanford. We
Speaker 3: got a great guest on the VC world.
Speaker 2: Yes, let's get to it. Michael Marx is with us,
Speaker 2: founding managing partner at the venture capital firm Celesta Capital.
Speaker 2: He's with us on Zoom from Mulla, Nebraska. By the way,
Speaker 2: his firm is funded over one hundred tech companies twenty
Speaker 2: nine exits to date, and prior to Celestia, Michael was
Speaker 2: a founding partner at Riverwood Capital, a Menlo Park based
Speaker 2: private equity firm. He also served as partner and senior
Speaker 2: advisor at kk R. He'spent thirteen years of CEO and
Speaker 2: then chairman of Flextronics International. Also served as an interim
Speaker 2: CEO a Tesla three months back in seven. So he
Speaker 2: comes at this just to remind everybody with a great perspective. Michael,
Speaker 2: great to have you back with us. How are you
Speaker 2: and how would you describe the VC space right now?
Speaker 9: Well, thanks for having me on I've been great. Look,
Speaker 9: the VC space is fantastic.
Speaker 5: Now.
Speaker 9: There's lots of lots of noise in the system because
Speaker 9: of you know, the stock market going down and less
Speaker 9: I pos and so on, but it is an incredibly
Speaker 9: active environment. We're seeing better companies than we've really ever seen.
Speaker 9: It's great.
Speaker 3: What's so great about it? Well, what's great? I got
Speaker 3: the memo. But rates are high right now?
Speaker 9: Yeah, Actually that that's actually helping the in the venture world.
Speaker 9: So look what you know, values go up and go down.
Speaker 9: It's better for venture capitalists when values are down. And
Speaker 9: values are down now because of the reasons we just
Speaker 9: talked about it, there's you know, there's there's less exits
Speaker 9: and and frankly, the venture firms are husbanding their cash
Speaker 9: to be able to support their best companies, and so
Speaker 9: there's less money for new companies, which is which is
Speaker 9: good if you have capital to deploy, which we do.
Speaker 9: What's great about this environment and and and I think
Speaker 9: it's what really defines venture capital these days is that
Speaker 9: you know, venture I've been around for a long time.
Speaker 9: Venture capital started in the sixties and the seventies with
Speaker 9: you know, Sequoia Capital and Kliner Perkins and any of
Speaker 9: these companies you know started come you know, out of
Speaker 9: fair Child Semiconductor, National Semiconductor there for the name Silicon Valley,
Speaker 9: and so the venture business in those days was pretty
Speaker 9: much limited to semiconductors. Then you had computers and cell phones,
Speaker 9: whole computing revolution, you know, than than enterprise software and
Speaker 9: sasact and then came e commerce. And now here you
Speaker 9: are in twenty twenty three with you still have all
Speaker 9: those I'm sure you recognize what's happening to the semiconductor world.
Speaker 9: But now we have you know, bioconvergence, all kinds of biotechnology,
Speaker 9: of climate investing, of energy investing, and so there are many,
Speaker 9: many more companies and more choices to invest in it.
Speaker 9: So it's a great time to be a venture capitalist.
Speaker 3: Hey, okay, forgive me here, but this is you're based
Speaker 3: in Menlo Park. We spoke to Steve Case yesterday who
Speaker 3: talked all about the opportunities between California and New York.
Speaker 3: You're in Mullen, Nebraska right now. What brings you to Mullen.
Speaker 9: I'm just visiting friends, okay.
Speaker 3: Because this is a tiny town with like five hundred people.
Speaker 9: I do exactly.
Speaker 3: I don't know if you were exploring some venture opportunities
Speaker 3: in Mullen. I am, okay, we'll tell Steve case.
Speaker 2: Well, it's interesting, you sound very upbeat and you talked
Speaker 2: about the rate environment. How that's a helpful to you.
Speaker 2: I also was curious about before we get into some
Speaker 2: of the areas you're investing the private lending space. I
Speaker 2: know they tend to play more in the middle market
Speaker 2: and it's not necessarily early in startups, but is that
Speaker 2: at all having an impact on deals or valuations for you?
Speaker 9: It is, in fact, it's having a big impact in
Speaker 9: a couple of ways. One is that you know, the
Speaker 9: cost of borrowing, you know, if you think about venture debts.
Speaker 9: So venture debt, which is important in the venture industry,
Speaker 9: has taken two hits. The first hit was Selgan Valley
Speaker 9: Bank went out and that was the biggest lenders to
Speaker 9: the space. And the second is the cost of capital
Speaker 9: has gone way up. And so when it comes to
Speaker 9: raising capital, for example from limited partners. You know, now
Speaker 9: limited partners can get can invest in credit funds and
Speaker 9: get twelve to fifteen percent IRRs without taking very much risk.
Speaker 9: And so that does siphon capital out of the out
Speaker 9: of the venture world.
Speaker 2: All right, so let's talk about where you're investing. We know,
Speaker 2: deep technologies where you play, so AI, semis, semi conductor's, biotech,
Speaker 2: cloud infrastructure. What's really exciting and active right now where
Speaker 2: you are looking and hungrily to kind of amp your
Speaker 2: exposure in the VC space.
Speaker 9: Well, thank you for that question. It's actually a really
Speaker 9: good question because there are lots of opportunities and we
Speaker 9: have to get focused. I'd say there are two areas
Speaker 9: that we find the most attractive right now. One is semiconductors.
Speaker 9: I mean, it's amazing how few people have wanted to
Speaker 9: invest in semiconductors over the last twenty or thirty years.
Speaker 9: And now you have you know, my good friend Jensen
Speaker 9: Wang at Nvidia, and you've got you know, hot Tan
Speaker 9: over Broadcom and Qualcomm and so on. You know, these
Speaker 9: are becoming some of the most valuable companies in the world.
Speaker 9: And then you have a generative AI, which requires much
Speaker 9: higher speeds, you know, much more memory management, and so
Speaker 9: there's an explosion of new kinds of semiconductors. So we
Speaker 9: have two companies in our portfolio that make processors along
Speaker 9: the lines of what Nvidia does, but more specialized for
Speaker 9: certain applications, but then you also have you know, connectors, semiconductors,
Speaker 9: you need a lot more throughput and so on. So
Speaker 9: this is actually placed right to our strength and we've
Speaker 9: made a number of investments that are doing really well.
Speaker 2: You mentioned it, Can I just say you mentioned Nvidia
Speaker 2: And we did a story earlier at the top of
Speaker 2: our broadcast about how there are French offices were rated
Speaker 2: by France's Anti Trust authority over concerns the companies engage
Speaker 2: in anti competitive behavior. This is coming from the Wall
Speaker 2: Street Journal. Any thoughts though about Nvidia and practices And
Speaker 2: I don't know about the industry, I.
Speaker 9: Really don't, you know, I don't know about that, so
Speaker 9: I really couldn't get any about it. But it's a
Speaker 9: wonderful company, do you think, and a very company.
Speaker 3: These it's really really tough to make semis and uh,
Speaker 3: you know, we've seen the way that TSMC is doing well.
Speaker 3: We've seen just the in the in the industry, like
Speaker 3: you know, we covered TSMC and video. Can startups actually
Speaker 3: pull it off or is this something that you know
Speaker 3: you have to rely on the big guys.
Speaker 9: For you know, it's another tough question. The answer is
Speaker 9: it takes a lot of support to be a semiconductor
Speaker 9: company today. You're exactly right. I mean, to tape out
Speaker 9: a three three narimeter chip at TSMC can be one
Speaker 9: hundred million dollars, So that is typically So what we
Speaker 9: do from a venture standpoint is help get these companies started,
Speaker 9: but they really need growth capital or private equity capital
Speaker 9: to get to the finish line in that kind of
Speaker 9: a semiconductor segment. There are other semi conductor segments. Center
Speaker 9: and is expensive. But of course TSMC is one of
Speaker 9: the most powerful companies in the world because they're the
Speaker 9: only company that can really do this at the most
Speaker 9: you know, the smallest geometries. But yeah, that's this is
Speaker 9: the world that takes a lot of capital.
Speaker 2: Hey, Michael, sorry, we're run out of time. Do come
Speaker 2: back soon because I'd love to talk more about where
Speaker 2: you guys are investing in this world. Michael Marks, founding
Speaker 2: managing partner at the venture capital firm Celesta Capel, joining
Speaker 2: us on Zoom from mull In, Nebraska, but as we know,
Speaker 2: he is based out there on the West Coast. You're
Speaker 2: listening and watching Bloomberg Radio.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: Live weekday afternoons from three to six Eastern Listen on.
Speaker 6: Bloomberg dot com, the iHeartRadio app and the.
Speaker 1: Bloomberg Business app, or wants us Live on YouTube.
Speaker 2: All right, this next story safe to say. We're trying
Speaker 2: to figure out exactly who may be the bad actors here.
Speaker 2: You can say bad boys, bad boys. Step back first. Google,
Speaker 2: as you know, maintains one of the world's most comprehensive
Speaker 2: repositories of location information. It can often estimate a user's
Speaker 2: weirreabouts two within several feet. The company mainly gathers this
Speaker 2: information to sell advertising, but in recent years police started
Speaker 2: dipping into it to further their investigations.
Speaker 3: Yeah, the company's trove of user data now attracts thousands
Speaker 3: of requests from law enforcement across the US in cases
Speaker 3: large and small. Police say the warrants can unearth valuable
Speaker 3: leads when the texts are at a loss. But to
Speaker 3: get those leads, cops often have to rummage through Google
Speaker 3: data on people who had nothing to do with a crime.
Speaker 2: Car There's a lot of information there for them to
Speaker 2: go over to better understand this process and its consequences,
Speaker 2: we dive into this week's Bloomberg Business Week cover story
Speaker 2: with our Bloomberg News Tech team of Julia Love and
Speaker 2: Davey Alba, as well as the editor of the magazine,
Speaker 2: Joel Weber. Jill's here in our Bloomberg Interactor Brokers studio,
Speaker 2: Julia out there in our San Francisco bureau, and Davy
Speaker 2: on the phone from Stanford, California. As you said, it's
Speaker 2: the cover story in the new issue on newstands online,
Speaker 2: and of course on the Bloomberg Jel Killer story.
Speaker 10: Julia, Davey and company have been working on this for
Speaker 10: a while and I from the moment I found out
Speaker 10: about it, I was like, tell me everything. And it
Speaker 10: required just a ton of data and analysis for us
Speaker 10: to actually be able to look at this story. But
Speaker 10: what it revealed is that there's a troubling element to
Speaker 10: how law enforcement has turned increasingly to Google over the
Speaker 10: past couple of years, and the location history that people
Speaker 10: have on their phone search data. All of that is
Speaker 10: basically become a tool that can reverse engineer people who
Speaker 10: were at scenes of crimes, and sometimes being at a
Speaker 10: location neurolocation does not actually mean that you did the crime,
Speaker 10: and that's sort of where it gets interesting. And where
Speaker 10: privacy experts in particular are a little terrified of how
Speaker 10: this is actually shaping up in the real world. So Julie,
Speaker 10: let's start with you. How did you, how did how
Speaker 10: did you happen upon this story? And where did where
Speaker 10: did you have to go in order to piece it
Speaker 10: all together?
Speaker 11: Sure, well, in the wake of the Supreme Court's decision
Speaker 11: to overturn Roe versus Way, there was a lot of
Speaker 11: interest in how law enforcement would use all of the
Speaker 11: data that DOODLE has about us, and so we wanted
Speaker 11: to look at the search warrants that police are submitting
Speaker 11: to DOODLE because we knew that that was the best
Speaker 11: way that we did a handle on what was actually happening.
Speaker 11: And so to do that and I and our colleges
Speaker 11: fanned out to different courthouses around the country and we
Speaker 11: just took it page by page, thumbing through these warrants,
Speaker 11: identifying the ones that were submitted to DOODLE, and then
Speaker 11: scrutinizing them to see the nature of the case and
Speaker 11: what cops ultimately got.
Speaker 10: So give us an example of how this has played
Speaker 10: out in the real world.
Speaker 11: So one interesting example, there was a young detective in
Speaker 11: North Carolina. He's getting ready for work.
Speaker 8: He leaves his.
Speaker 11: Car running and he comes out and the car's gone
Speaker 11: and inside is sent the car. Hearne like, yes, it
Speaker 11: is personal vehicle. Yeah, but but but there's near inside
Speaker 11: and it's done, and you know, the department tells him,
Speaker 11: you know, they're very supportive. They reassure him it'll be
Speaker 11: all right. But then they go to work and they
Speaker 11: turn to Doodle. They send them a warrant for everyone
Speaker 11: who's devices were near the place where the vehicle disappeared.
Speaker 11: And they also asked for information about people who searched
Speaker 11: for the model of the radio. And Goodle told us
Speaker 11: that they didn't provide search data, but they did provide
Speaker 11: some location data. And so this is, you know, just
Speaker 11: a real world example of how property crimes are attracting
Speaker 11: these requests.
Speaker 3: And obviously with that information they were able to get
Speaker 3: the radio back, right, they were not the radio outstanding.
Speaker 3: Can you see?
Speaker 2: So Davey, come on in on this, because what it
Speaker 2: really turns upside down And you guys lay this out
Speaker 2: so clearly in the story. The idea of a search warrant,
Speaker 2: right would be typically on an individual, right, And now
Speaker 2: you've got thanks to Google, you can take a location
Speaker 2: and kind of search for information. But it feels like
Speaker 2: it opens up that information can reach a wider swath
Speaker 2: potentially of individuals, some who may not at all be
Speaker 2: connected to a possible crime. So come on in a that.
Speaker 12: Yeah, absolutely so. Tech companies hold a lot of data
Speaker 12: on people. That's no surprise. But usually when you think
Speaker 12: of search warrants in the traditional sense, you would think, Okay,
Speaker 12: police are looking at this one suspect, let's go and
Speaker 12: learn more about them, and maybe we'll serve a search
Speaker 12: warrant to a company to get information on a particular
Speaker 12: individual a suspect. In this case, police are using the
Speaker 12: most basic parameters to even jumpstart sort of leads when
Speaker 12: they don't have any leads. So they'll they'll, for instance,
Speaker 12: give for location coordinates. These are just x y coordinates
Speaker 12: on a map, and then within these four points you'll
Speaker 12: draw like a little polygon. And then they will say
Speaker 12: that to a judge, like, we have reasonable expectations that
Speaker 12: there will be a criminal that we can find within
Speaker 12: this area if you sign off on this warrant for
Speaker 12: a certain period of time. So that's geofen's warrants, and
Speaker 12: then you know police are also increasingly using search warrants,
Speaker 12: keyword search warrants, I should say, which are you know,
Speaker 12: sort of warrants that are served to Google to try
Speaker 12: to surface people who have Googled a certain term. So
Speaker 12: in one of the cases that we covered in our story,
Speaker 12: there was a terrible crime. It was an arson and
Speaker 12: a family died in this fire. And what investigators did
Speaker 12: was go to Google and say, hey, did anyone search
Speaker 12: for this address? So that that yield did some some
Speaker 12: suspects in that case, Well.
Speaker 10: Let's let's stick with that one, because that one hasn't
Speaker 10: totally played out yet and it gets to I think
Speaker 10: maybe the ultimate tension in the story, right.
Speaker 12: Yeah, absolutely that that one. You know, the Colorado Supreme
Speaker 12: Court is going to rule on it. We don't know
Speaker 12: exactly when, but we're expecting it to come down at
Speaker 12: some point this year to just sort of decide whether
Speaker 12: or not Google providing that data to investigators was an
Speaker 12: overreach on the investigator's part. And and if you think
Speaker 12: about especially searching on Google, that is just so many
Speaker 12: people that that could ensnare you know, going back to
Speaker 12: the example that Julia mentioned at the at the very beginning,
Speaker 12: they police had served Google with a warrant for anyone
Speaker 12: searching on this particular car radio model, and Google did
Speaker 12: not turn over data in that case, to be clear,
Speaker 12: But you could imagine people like radio enthusiasts who might
Speaker 12: be searching for a particular radio model completely innocently, who
Speaker 12: could potentially get swept up in one of these wants.
Speaker 10: So I'm guessing privacy experts have something to say about
Speaker 10: this and activists because you know, if Carol Tim and
Speaker 10: I get swept up in the same search, I didn't
Speaker 10: do it. Okay, truly I didn't do it, but I did.
Speaker 10: I'm making fun of something that is incredibly serious. But
Speaker 10: what do the privacy advocates have to say about all
Speaker 10: of this?
Speaker 2: Julie, you want to come back?
Speaker 11: Yeah, sure, yeah, So privacy advocates are very concerned about
Speaker 11: both of these techniques. You know, the thing is, if
Speaker 11: there's no suspect involved, then the only way that goodle
Speaker 11: can provide a list of hits is to search everyone's data.
Speaker 11: And so law enforcement will receive, you know, a short
Speaker 11: list of people who fit the criteria, and they then
Speaker 11: have to go through and identify who they think, you know,
Speaker 11: might be their suspect. But everyday, people who had nothing
Speaker 11: to do with the crime are often swept up by
Speaker 11: these by these warrants, and so I think that's really
Speaker 11: the heart of privacy advocates concerns, and legislation has been
Speaker 11: proposed in California and New York that would ban the
Speaker 11: police from seeking these warrants of Google. The legislation has
Speaker 11: stalled so far, but activists are still hoping to get
Speaker 11: something done on that front. And the Colorado case would
Speaker 11: also be the first time that a court weighs in
Speaker 11: on the on the constitutionality of that keyword search technique.
Speaker 10: Okay, so how does Google feel all about this?
Speaker 11: It puts them in a difficult spot. You know, these
Speaker 11: are court orders, they're they're not optional. Doodle has to
Speaker 11: comply and they often are important cases. However, safegriving user
Speaker 11: privacy is you know, a key responsibility that they have,
Speaker 11: and so they have to walk a very fine line there.
Speaker 10: Okay, so what about insight. There's the official Google response,
Speaker 10: and then there's what you were able to report from
Speaker 10: within the company with some great reporting. What did what
Speaker 10: did some of those sources reveal?
Speaker 11: Yeah, so we found that there there's a department within
Speaker 11: Doodle that's responsible for scrutinizing these requests. It's a midst
Speaker 11: of lawyers and l i S specialists, and those specialists,
Speaker 11: you know, the rank and file there are often just
Speaker 11: a few years out of college. Some of them harbor
Speaker 11: dreams of becoming a lawyer, and I think they're often
Speaker 11: quite motivated by, you know, this job of really scrutinizing
Speaker 11: law enforcement requests. We heard of examples in which they
Speaker 11: were really just looking for any reason to send the
Speaker 11: request back to law enforcement. In one case, you know,
Speaker 11: an officer might send a request for email from an
Speaker 11: account ending in at gmail dot com. But if the
Speaker 11: officer has a typo, if they say at gamble dot com,
Speaker 11: that's a note, they would send that request back. But nonetheless,
Speaker 11: if it's been signed off by a judge, you know,
Speaker 11: eventually they're going to get something.
Speaker 10: And by the way l i S Legal Investigation Support.
Speaker 10: I find this just fascinating because it's like Google's kind
Speaker 10: of their hands are tied here, right, like, yeah, if
Speaker 10: law enforcement asks for something, a judge signs off on it,
Speaker 10: they're gonna have to comply. But I love that there's
Speaker 10: like this element within the company that's like you spilled
Speaker 10: Gmail wrong, You're not going to get to what you're
Speaker 10: asking for.
Speaker 3: I want to spilled Gmail wrong when I'm trying to
Speaker 3: pay a traffic take it so I parking ticket, so
Speaker 3: I had to pay it twice. Oh yeah, because I
Speaker 3: got a late fee for it. So I'm never I
Speaker 3: always check how I spelled to you.
Speaker 2: But the point is, once they give information on a
Speaker 2: case like, how can they pick and choose right, like
Speaker 2: once the door is open like you do? Wonder if
Speaker 2: they're asked and requested, as long as they get the
Speaker 2: Gmail right, you know, do they just have to do it?
Speaker 11: Julia?
Speaker 5: Yes, you know.
Speaker 11: I think there's an old dodge in Silicon Valley. If
Speaker 11: you build it, they will come, they say. Essentially, if
Speaker 11: you collect this data, law enforcement will come knocking and
Speaker 11: they will eventually find a way to get it. And
Speaker 11: so I think that's just the heart of this issue.
Speaker 11: Google collects this data in large part because it helps
Speaker 11: them sell advertising, and as a result they they are
Speaker 11: in this uncomfortable position.
Speaker 3: Davy al will come back in here. I always wonder,
Speaker 3: when you know people work on a story like this
Speaker 3: and learn so much about how our information is collected,
Speaker 3: are you going to change the way you use these
Speaker 3: services after reading a story I want to change the
Speaker 3: way I use these services.
Speaker 12: Well, yeah, I mean I think it's it's a good
Speaker 12: reminder to all of us to take a look at
Speaker 12: our opt out slash opt in options on our settings
Speaker 12: for various Google services. You know. Google told us that
Speaker 12: this one product that they particularly used to store location data,
Speaker 12: called location History, is off by default, but there they
Speaker 12: do send notifications to people to sort of suggest, hey,
Speaker 12: do you want to turn this feature on? It could
Speaker 12: help you in all sorts of ways. For instance, if
Speaker 12: you wanted to remember where you were last week, or
Speaker 12: see how many miles you've traveled, or just kind of
Speaker 12: have a cool record of where you've been and you
Speaker 12: know what places you visited. And I think that that's
Speaker 12: not always clear when you're getting these like features pitched
Speaker 12: to you, that there could be privacy consequences there.
Speaker 10: I just want to end U in a big number.
Speaker 10: Google says it received a record sixty four hundred and
Speaker 10: seventy two search worms in the US last year. That's
Speaker 10: more than double the number from twenty nineteen.
Speaker 2: So this is their use, all right, Julia Love David
Speaker 2: Alban Of course, Joe Weber. This is the cover story.
Speaker 2: Check it out. Lots of details in that story.
Speaker 8: Umbrother mac.
Speaker 9: A Journal.
Speaker 2: How about you let me drive?
Speaker 5: Oh no, no, no, no, who's going to drive?
Speaker 1: Alright please, I'll do the gravel.
Speaker 6: Let's wait, I want to drive.
Speaker 9: It's a question.
Speaker 3: This is the drive to the clothes dot com effect.
Speaker 5: Well, buy around it.
Speaker 1: On Bloomberg Radio.
Speaker 2: All right, everybody, just about thirteen minutes left in today's
Speaker 2: trading session. Kicking around, bouncing around, definitely off our loads
Speaker 2: of this session here, Charlie, just breaking down those numbers
Speaker 2: for you. So much of the week and I for
Speaker 2: the last couple of weeks. Sin since that latest FED meeting,
Speaker 2: we've been obsessed with what's going on in the rates market,
Speaker 2: and you are seeing rates pulled down a little bit.
Speaker 2: We'd talked about consumption spending, personal consumption spending. It is
Speaker 2: down some data points this morning. But and then of
Speaker 2: course we just.
Speaker 3: Heard from Tom Barkin from the Richmond Fed, President of
Speaker 3: the Richmond Fed. Yeah, Carol, what did he say about
Speaker 3: the bond market?
Speaker 2: Slow your role, everybody stopp being so obsessed.
Speaker 3: One takeaway Carol had from that twelve minute interview that
Speaker 3: Mike McKee just did with the president of the Richmond Fed.
Speaker 3: It's trying to spend too much time.
Speaker 2: Because we pars over every little I.
Speaker 3: Mean, the bond market. Well, let's hear what Samir Samana
Speaker 3: has to think about the bond market. Samir Samana's senior
Speaker 3: global market strategist at Wells Fargo Investment Institute. He's at
Speaker 3: joining us in our Bloomberg Interactive Brokers studio. Okay, before
Speaker 3: we get to the bond market, you're expecting more weakness
Speaker 3: and equities with the S and P five hundred now
Speaker 3: below it's fifty day and one hundred day moving averages.
Speaker 3: Talk to us a little b about the equity picture
Speaker 3: for the rest of the year.
Speaker 13: Yeah, I mean, look with rates soon what they're doing.
Speaker 13: And sorry to talk about the bond market, and we're
Speaker 13: supposed to say you're done, you're out all about it. Yeah,
Speaker 13: but I mean rates are basically a soft cap on valuations,
Speaker 13: right and you're you know, trading a basically low twenties
Speaker 13: on the S and P right now, at least based
Speaker 13: on our earning's number. And that's just too high with
Speaker 13: rates being as high as they are, so in our opinion,
Speaker 13: you know, probably fair value somewhere in that four thousand,
Speaker 13: forty two hundred area. Now, it could be that we
Speaker 13: end the year at those levels because again we think
Speaker 13: of recession you know, starts to kind of you know,
Speaker 13: unfold at the very tail end of twenty twenty three
Speaker 13: into early twenty twenty four. But we would be pretty
Speaker 13: cautious on equity markets here.
Speaker 2: What's interesting too, though, is I am thinking about you say,
Speaker 2: like a value cap right in terms of the higher
Speaker 2: rate environment when it comes to the equity side of things.
Speaker 2: But if growth comes in right Tom Barkin mentioning, it's
Speaker 2: hard to see inflation coming down because of the growth picture,
Speaker 2: how do you kind of strategize around higher rates but
Speaker 2: maybe a fairly okay growth environment. So what does that
Speaker 2: mean for the value cap or what is the right
Speaker 2: value cap?
Speaker 8: Then?
Speaker 13: Well, that means inflation doesn't down, and that means the
Speaker 13: FED has to revisit rate hikes and or the long
Speaker 13: end has to do the work for the FED because
Speaker 13: they're on pause, which means maybe, you know, five percent
Speaker 13: isn't the right level for long rates. Maybe it's something
Speaker 13: even higher.
Speaker 2: But if we have growth in the economy, even in
Speaker 2: a higher rate environment, like what's the right thinking in
Speaker 2: terms of what equity valuation should be.
Speaker 13: Well, eventually those higher rates will put downward pressure on growth, right.
Speaker 13: I mean when you look at what's going on with
Speaker 13: existing home sales, right, I mean, I think turnover this
Speaker 13: year on existing home sales is like one percent throughout
Speaker 13: the economy, right, And when you think about basically that
Speaker 13: big a part of the economy that's just frozen.
Speaker 3: Right.
Speaker 13: People aren't moving for jobs, they're not selling their homes,
Speaker 13: the realtors aren't earning the commissions, you're not redecorating a
Speaker 13: house after buying it.
Speaker 12: You know.
Speaker 13: Again, you're going to see that more and more on
Speaker 13: things like autos and maybe even things like you know,
Speaker 13: your credit card. So we think after the holidays especially,
Speaker 13: people are going to head a pretty pretty strong wall,
Speaker 13: you know, with respect to the consumer. And it's just
Speaker 13: very difficult for the economy to continue going if the
Speaker 13: consumer's setting a wall.
Speaker 2: So the weakness in terms of the consumer side of
Speaker 2: consumer spending picture, which I know some analysts I think
Speaker 2: the Nike down growth and I think right, or the.
Speaker 3: Concerns over Nike about the consumer right.
Speaker 2: Exactly, So some concerns about consumer spinning do you think
Speaker 2: we're going to see that and it's going to be rough?
Speaker 5: We do?
Speaker 13: I mean, look Q two GDP came out this morning,
Speaker 13: right and the part that was revised down by fifty
Speaker 13: percent is personal consumption and that was Q two, So
Speaker 13: that was before oil prices and gas prices did what
Speaker 13: they're doing right now.
Speaker 3: Okay, so it's not sounding that pretty. What are what
Speaker 3: does our investing audience need to know about?
Speaker 2: You use the word recession.
Speaker 13: I did use the word recession.
Speaker 5: I did.
Speaker 13: I mean, look, we would focus on larger cap you know,
Speaker 13: US equities, We've been favorable there for almost as far
Speaker 13: back as I can remember. On the flip side, we'd
Speaker 13: avoid smaller caps in the US, and we would more
Speaker 13: avoid emerging market equities, so.
Speaker 2: Their evaluation play looks a little bit better than larger
Speaker 2: caps right now.
Speaker 13: Yeah, they're cheap for a reason, though, I think I
Speaker 13: think that's the tricky part is those are value traps.
Speaker 13: So now when the cycle turns, you're absolutely right, those
Speaker 13: valuations have a lot of room to expand, but we
Speaker 13: wouldn't mess with those until you get to the recession.
Speaker 3: Do you think there's more downside to the S and
Speaker 3: P five hundred this year.
Speaker 13: We do we would not be surprised to see US
Speaker 13: trade with a three handle during the midst of recession.
Speaker 3: Would the midst of recession.
Speaker 13: Be so we would probably say probably early part of
Speaker 13: next year. Again, it probably starts later this year and
Speaker 13: probably you know, bleeds into twenty twenty four.
Speaker 8: You know.
Speaker 2: I think of Tim this conversation we had with Peter
Speaker 2: at order of William and Mary and Chris runs his
Speaker 2: own financial insights firm. But I do wonder if any
Speaker 2: his concern was are we missing some of the bad stuff?
Speaker 6: Right?
Speaker 3: Yeah, but it hasn't been concerned about that for.
Speaker 2: Months he has been but like it just there's this
Speaker 2: feeling out there, Oh, we're gonna bounce back, because we
Speaker 2: have been only bouncing back thanks to stimulus and so
Speaker 2: on and so forth. But I do wonder if it
Speaker 2: gets bad, and if we do get a recession, is
Speaker 2: it why deep?
Speaker 4: Long?
Speaker 2: So we would say we really know, say.
Speaker 13: Moderate, We would say moderate, and we would say a
Speaker 13: couple of quarters. I think what you have to watch
Speaker 13: for is the Fed's reaction function is how quickly do
Speaker 13: they switch from inflation fighting mode to propping up the
Speaker 13: economy mode and to the extent that the FED is late,
Speaker 13: to the extent that they're folks on inflation, which is
Speaker 13: probably the most lagging indicator of all time. I think
Speaker 13: that's where things could get really.
Speaker 3: Tricky when I mean, I have so many questions here.
Speaker 3: Fortunately we have a few more minutes, Uh, Samir, When
Speaker 3: when would you think the FED would need to start
Speaker 3: cutting rates given where you think that a recession is happening.
Speaker 13: I mean it's probably going to be the middle to
Speaker 13: later part of next year. Yeah, yeah, I mean they're.
Speaker 3: Going to be love you talk about rate cuts this year.
Speaker 13: I know, I think they may compound the inflation is
Speaker 13: transitory mistake with a possibility that disinflation is transitory mistake.
Speaker 3: Right, But if you're saying, if you're saying that it's
Speaker 3: such a lagging indicator, then ostensibly what you think the
Speaker 3: FED needs to do is cut rates earlier than anticipated.
Speaker 13: Well, I mean again, first, I think we have to
Speaker 13: enter the recession, right, I mean it's part of the
Speaker 13: kind of slow year role theme of this interview, right,
Speaker 13: I mean, it can't cut until we actually see the recession.
Speaker 13: You can't see the recession until financial markets comply, right,
Speaker 13: because right now they're all out fighting the FED. Right
Speaker 13: when you look at credit spreads, when you look at
Speaker 13: equity multiples, I mean, the market isn't making the FED
Speaker 13: jobs fairly easy?
Speaker 3: Okay? What happened here? Because six weeks ago, Carol, all
Speaker 3: we were talking about was a soft landing and you had,
Speaker 3: you know, adjustments coming from so many of the major things.
Speaker 2: Everybody picked piles on it.
Speaker 3: Okay, that's what you're like, even you know, a recession
Speaker 3: wasn't a base case for the FED anymore. What happens
Speaker 3: to mar what changed?
Speaker 5: Look?
Speaker 13: Six weeks ago I went through probably the roughest you know,
Speaker 13: stretch that we've had this year. Right with respect to you,
Speaker 13: guys are crazy. This is a new bull market. You've
Speaker 13: missed it. My clients have too much cash. You know,
Speaker 13: great job, thanks a lot.
Speaker 3: So great August, so June July, right when.
Speaker 13: We had forty six hundred for you, we got to
Speaker 13: and you know, we had this four thousand to forty
Speaker 13: two hundred year on target for twenty twenty three, and
Speaker 13: we were basically talking to the clients, to advisors and saying, look,
Speaker 13: this will turn. I mean, this can't keep going.
Speaker 2: Because again, why was the street though constantly playing ketchup
Speaker 2: and ratcheting up their numbers. To me, it's always a
Speaker 2: contrarian indicator when everybody piles on.
Speaker 13: That's exactly how I viewed it as well, and you
Speaker 13: could see that in the flows data. You could see
Speaker 13: that in sediment, and that was the reason why we
Speaker 13: were like in a look, fundamentals matter. You can't just
Speaker 13: base a whole you know, investment philosophy on sentiment, technicals
Speaker 13: and momentum.
Speaker 3: So what's your end of your target for the SMBF.
Speaker 3: I've heard now it's four thousand and forty two hundred
Speaker 3: for this year.
Speaker 13: That being said, it's forty six hundred to forty eight
Speaker 13: hundred for next year. So again, as we get those opportunities,
Speaker 13: what is it for.
Speaker 3: These four thousand to forty two hundred.
Speaker 2: Four thousand to forty two hundred that's for this year
Speaker 2: and then forty six to forty eight for next year exactly,
Speaker 2: So look.
Speaker 13: For opportunities for those brighter days ahead.
Speaker 2: You're a global market strategist, so that to me says
Speaker 2: you can kind of go anywhere and go into a
Speaker 2: lot of different asset classes. What's your number one investment
Speaker 2: idea right now?
Speaker 13: I would say commodities look really interesting to us. We've
Speaker 13: been favorable for a long time. We think we're in
Speaker 13: a bull super cycle for commodities. We think there are
Speaker 13: a great diversifier and what's going to surprisementities or we
Speaker 13: really like a basket because in a bull super cycle,
Speaker 13: what you tend to see is different commodities tend to
Speaker 13: come in and out of favor, and so rather than
Speaker 13: you know, individual clients trying to figure out which commodities
Speaker 13: currently most in favor, just own a broad basket and
Speaker 13: then you know, I know. So it's probably a little
Speaker 13: bit how.
Speaker 2: Much of is it the energy story or it's not
Speaker 2: just that.
Speaker 13: A lot of it's the energy story, but I think
Speaker 13: a lot of it's just supplied discipline. You've just had
Speaker 13: a lot of folks that overinvested in supply during the
Speaker 13: go go China years, and with China having really slowed down,
Speaker 13: a lot of the supplied discipline is going to find
Speaker 13: its way into thse higher commodity.
Speaker 2: We have a great story about ag and supremacy, US
Speaker 2: supremacy in the agricultural world and how that is shifted.
Speaker 2: It's at the end of our broadcast, so highly recommend
Speaker 2: everybody stick around for that.
Speaker 3: Hei Samir, you said avoid small caps and avoid emerging markets,
Speaker 3: right now, what else? What else would you avoid? We
Speaker 3: would we would avoid the consumer.
Speaker 13: We would avoid consumer discretionary so like Nike, like Nike exactly,
Speaker 13: and we would also, you know, avoid real estate. We
Speaker 13: don't like rates. Again, they're hit only you know, not
Speaker 13: only by higher interest rates, but also all these issues
Speaker 13: surrounding probably a economist that's still probably over retailed, overbanked,
Speaker 13: all these physical spaces probably will will kind of be
Speaker 13: reduced over time as we all move online.
Speaker 2: What's like the number one you think about when you
Speaker 2: get up in the morning and you're thinking about the
Speaker 2: market and the environment.
Speaker 13: Right now, it's I mean, if there is one chart
Speaker 13: to watch, it's oil because again it's tripping rates, it's
Speaker 13: firing up the FED with respect to what does this
Speaker 13: mean for inflation? That's the number one chart I'd have
Speaker 13: my eyes on right now.
Speaker 2: Yeah, really interesting. And from the FED speakers, do you
Speaker 2: pay attention? I mean, forgive me, Mike, we love you
Speaker 2: and anybody you.
Speaker 3: Talk to pay attention.
Speaker 2: But is it do you like look for little nuances?
Speaker 12: You know?
Speaker 13: I think the FED kind of gave up some of
Speaker 13: their importance when they said that they're data dependent rights
Speaker 13: the transitive property in math. Right, if the fed's watching
Speaker 13: the data and I can watch the data instead of
Speaker 13: watching the FED, I'll just watch the data and I'll
Speaker 13: go even a step further. I would say the markets
Speaker 13: usually tend to run a step ahead of the data. Yeah,
Speaker 13: And I think that's that's what's telling the story right now,
Speaker 13: is when you look at small's relative to large, when
Speaker 13: you look at what's going on with certain parts of
Speaker 13: the credit markets. I mean that's really where the game's
Speaker 13: being played.
Speaker 2: Well, thank you for playing. Speaking of games, playing along
Speaker 2: with the slow the role kind of game today, so
Speaker 2: appreciate it's some mere Samanas, Senior at Global Market Strategist
Speaker 2: at Wells Fargo Investment Institute, joining us here at our
Speaker 2: Burg Interactive Roper State. I know it's Thursday, but have
Speaker 2: a good weekend.
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