Speaker 1: This is Bloomberg Business Week inside from the reporters and
Speaker 1: editors who bring you America's most trusted business magazine, plus
Speaker 1: global business, finance and tech news. The Bloomberg Business Week
Speaker 1: Podcast with Carol Manser and Tim Stinebec from Bloomberg Radio.
Speaker 1: All right, everybody you're listening in watching Bloomberg Business Week,
Speaker 1: what are you thinking. I'm thinking that Romaine is like
Speaker 1: ready to go at it about meta earnings. I keep
Speaker 1: staying with climate change. We're all going to be living
Speaker 1: in the metaverse because you're not gonna be able to
Speaker 1: go outside. But having said that, who knows? I know
Speaker 1: someone who knows everything? Does she? Yeah, we've got Alex.
Speaker 1: We're very pleased with her with us. In fact, she
Speaker 1: was in here before these earnings even came out. She's
Speaker 1: furiously typing away getting to the bottom of what's happening
Speaker 1: with shares of Facebook. It is formally, of course Facebook
Speaker 1: now it's metal platforms just out with earnings. I want
Speaker 1: to get back to uh these right now. And we
Speaker 1: got Bloomberg Technology Report Alex Brinka here in our Bloomberg
Speaker 1: Interactor Broker's studio to do it. Okay, So Alex, I
Speaker 1: know you weren't paying attention to what Carol remained. Katie
Speaker 1: and I were all yelling about because you're actually doing important,
Speaker 1: real work. But now that you've had a good six
Speaker 1: minutes to give I was we were what are you
Speaker 1: seeing what sticks out here? I'll tell you what jumping
Speaker 1: out to me in six minutes that we're also sharing
Speaker 1: on the blog on the terminal revenue beat for the
Speaker 1: fourth quarter um they also seem to have some pretty
Speaker 1: strong revenue estimates for the first quarter. First quarter revenue
Speaker 1: estimates of billion to twenty and a half billion straddle
Speaker 1: what analysts were estimating. So that's exciting. I bring that
Speaker 1: add dollars. That is the majority of their revenue is
Speaker 1: AD dollars, so close to upwards of that is AD dollars.
Speaker 1: So that to me is saying that what we heard
Speaker 1: from Snap yesterday that the malaise in the AD market
Speaker 1: is leveling off, at least to the level of folks expect.
Speaker 1: That seems to kind of play out that narrative. Who
Speaker 1: knows what we'll hear on the call. We're looking for
Speaker 1: some more clues on where the AD market is going,
Speaker 1: but that top line number is really jumping out at me.
Speaker 1: Another number that the back. The buy back was my
Speaker 1: number two forty billion dollars in share buy backs. Look,
Speaker 1: last year two was the worst year on record for
Speaker 1: Meta They fell what six um on the year, So
Speaker 1: we've had a little bit of recovering the stock. Definitely
Speaker 1: a jump of the stock this um this afternoon up.
Speaker 1: But clearly the company thinks that the shares are undervalued now.
Speaker 1: Investors sold off last year basically because they're concerned about
Speaker 1: where this company is going in terms of strategy. You
Speaker 1: have the ad business, like we said, makes up a
Speaker 1: majority of revenue, but a lot of the focus and
Speaker 1: the renaming of the company has been on this kind
Speaker 1: of far flung virtual reality future that the company calls
Speaker 1: the Metaverse. Now, when it comes to earnings, the Metaverse
Speaker 1: sits in a business unit called Reality Labs. Reality Labs
Speaker 1: is a big loser. They lost four point to eight
Speaker 1: billion dollars in the fourth quarter, more than analysts estimated.
Speaker 1: So when it comes to the hard questions that will
Speaker 1: be on costs, and Reality Labs seem to be the
Speaker 1: big cost suck with a big question mark these days.
Speaker 1: But Mark Zuckerbert coming out in a statement saying that
Speaker 1: three the management theme is quote year of efficiency focused
Speaker 1: on becoming a stronger and more nimble organization. Is it
Speaker 1: a nod to the thousands of people who were laid
Speaker 1: off just a few weeks ago of the workforce laid
Speaker 1: off in the end of last year. So yes, it
Speaker 1: needs to be. And it seems like he's projecting that
Speaker 1: it's not just a change in the cost structure, but
Speaker 1: it's a change in how the company is thinking going forward.
Speaker 1: Remember this is a company that's only seen growth up
Speaker 1: into the right right. We we've seen now sales declines
Speaker 1: for the first time a few quarters in the row
Speaker 1: ever for Meta or when it was called Facebook. So
Speaker 1: it seems like they're trying to kind of um at
Speaker 1: least project to the street a reason to give patients,
Speaker 1: which is what he was asking for last quarter. And
Speaker 1: he wasn't afforded by the market when the stock fell
Speaker 1: on the last earnings day, So it seems like he
Speaker 1: is needing to change his tune a little bit more
Speaker 1: from trust us. We know what the future is going
Speaker 1: to look like too. Oh look, we're actually going to
Speaker 1: be efficient now and kind of drive towards running a
Speaker 1: more kind of priority focus business. Is that first quote
Speaker 1: revenue outlook was a miss or disappointing, would we be
Speaker 1: having a much different conversation right now. Absolutely, that's what
Speaker 1: we saw hopping with Snap yesterday. So if that first
Speaker 1: quarter was a miss, I think you can continue to
Speaker 1: have kind of questions around. Look, if you want to
Speaker 1: build a decades of virtual reality future, you've got to
Speaker 1: fund it somehow. Don't forget to forget about the bread
Speaker 1: and butter with the caveat that. This is an impossible
Speaker 1: question to answer. I'm gonna ask you anyway, is the
Speaker 1: sixteen point six percent rise in Facebook stock right now
Speaker 1: about the share buy back or about the revenue number?
Speaker 1: I would guess it's a mix of both. Um, if
Speaker 1: this comes back down to earth, I will say it's
Speaker 1: the share buy back. If it continues to say stay high,
Speaker 1: I would say it's the revenue number and not to
Speaker 1: throw it to tomorrow. But we get Alphabet earnings tomorrow
Speaker 1: as well. Alphabet and Meta are the two kind of
Speaker 1: monsters in the digital ad space. They've really traded all
Speaker 1: off as there's been kind of economic uncertainty and marketers
Speaker 1: pulling back on spending. So if that stays up and
Speaker 1: Alphabet hits, then I think, Um, this is more about
Speaker 1: about the first not necessarily scientific, but just doing our
Speaker 1: g I P O aftermarket you know function on the terminal.
Speaker 1: It looks like as soon as the revenue number hit,
Speaker 1: the stock shot up. I'm not saying that it didn't
Speaker 1: go a tiny bit higher on the buy back news,
Speaker 1: but as soon as that revenue number and I would
Speaker 1: agree that if they're able to fund it right, people
Speaker 1: are going to invest in and say, okay, go ahead,
Speaker 1: because you're still making a ton of money. So Facebook,
Speaker 1: Facebook is an advertising company now that that sells ads
Speaker 1: in Instagram and in Facebook always it has, but you know,
Speaker 1: over the last year, Mark Zuckerberger said, we are a
Speaker 1: metaverse company. We changed the ticker name. We're investing in
Speaker 1: Reality Labs, which, as you noted, lost billions of dollars
Speaker 1: in the fourth quarter. Uh, aleo remain two point Oh well,
Speaker 1: I'm Facebook stock up seventeen point seven percent right now, Alex. Okay,
Speaker 1: So a lot of so many questions for you. Um,
Speaker 1: if we think about this from the perspective of Snap,
Speaker 1: what they get right and Snap get wrong? Meta got
Speaker 1: right not taking a big hit to kind of change
Speaker 1: its ad product in the first start of the year.
Speaker 1: Meta's ad ad ads on Facebook and Instagram are really
Speaker 1: focused on direct response, so that's where you are selling
Speaker 1: products immediately. That's the slice of the digital ad world
Speaker 1: where marketers are still spending because it is seeing their
Speaker 1: dollars go to work immediately. Snap had some very snap
Speaker 1: focus changes yesterday where they said, we're actually rolling out
Speaker 1: a lot of technology updates to our ad product and
Speaker 1: we're going to take a big hit in the first quarter.
Speaker 1: That being said, Meta's the giant right aside techically, so
Speaker 1: Meta carries a lot more weight. They have a much
Speaker 1: larger chunk um. They had to do woppolie them and
Speaker 1: and Google, which they lost um last year, but they're
Speaker 1: still kind of the strongest ones out there. So I
Speaker 1: think again some leveling off in terms of some of
Speaker 1: this malaise in the ad market seems to be positive
Speaker 1: news and that's reading through and at least the revenue
Speaker 1: projection to you. I think on the blog we're saying,
Speaker 1: I think that's the first time that they've hit two
Speaker 1: billion in daily active users. I mean, the behemoth cool stuff.
Speaker 1: Alex Brinka, thank you so much. She covers a lot
Speaker 1: of the technology world for us here at Bloomberg joining
Speaker 1: us in studio. This is Bloomberg business Week Inside from
Speaker 1: the reporters and editors who bring you America's most trusted
Speaker 1: business magazine, plus global business, finance and tech news. The
Speaker 1: Bloomberg Business Week Podcast with Carol Messer and Tim stinebec
Speaker 1: from Bloomberg Radio. All Right, so maybe you've heard of it,
Speaker 1: the nonprofit Core Response started by actor Sean Penn. That's
Speaker 1: really stepped up when it comes to helping people in
Speaker 1: Haiti that after the earthquake, for saving American lives during
Speaker 1: the pandemic and doing so much more so, Tim sounds
Speaker 1: like a lot of good deeds. I'm really coming into
Speaker 1: help up, clean up messy and difficult situations, right and well.
Speaker 1: And yet, as a Bloomberg Business Week investigation has found out,
Speaker 1: what was going on in the inside of the nonprofit,
Speaker 1: according to employees, was another mess as well. It's an
Speaker 1: exclusive story. It's in the upcoming new issue with Bloomberg
Speaker 1: Business Week. It's out on news stands tomorrow. It's already
Speaker 1: online at Bloomberg dot com, slash business Week and of
Speaker 1: course on the Bloomberg terminal. We've got with Bloomberg News
Speaker 1: Wealth Team reporter Sophie Alexander along with the editor of
Speaker 1: Bloomberg Business with Joe Webber, both in our Bloomberg Interactive
Speaker 1: Broker Studio. Joel, I, I I know this charity because they
Speaker 1: did so much work in the in Haiti and so
Speaker 1: much work during the pandemic. What happened, well, when when
Speaker 1: they were when core U was getting started UH in
Speaker 1: places like Haiti really was disaster relief response, right, and
Speaker 1: it was actually fairly modest um not you know, dozens
Speaker 1: of employees, not you know, millions upon millions of dollars.
Speaker 1: But COVID really changed that. And what the Sean penn
Speaker 1: Uh nonprofit did was really doubled down in Los Angeles
Speaker 1: and it became effectively like a de facto healthcare operation.
Speaker 1: But with that growth and this massive influx of money
Speaker 1: that it saw there also created some chaos. And think
Speaker 1: that chaos led to um so if he's reporting? Um so, so,
Speaker 1: if you what did you hear and where did that
Speaker 1: lead you? Yeah? So, like you said, they grew incredibly
Speaker 1: quickly during the pandemic. They were just about a dozen
Speaker 1: employees beforehand, and then they grew to thousands over the
Speaker 1: matter over a matter of months and less than seven
Speaker 1: million dollars in revenue in two million dollars, so that's
Speaker 1: enormous growth. And so I started reaching out to employees
Speaker 1: after I heard about this, and basically they were saying, yeah,
Speaker 1: it was a total mess inside. A lot of employees
Speaker 1: said there were a lot of financial issues, a lot
Speaker 1: of employees told me about sexual harassment, and so some
Speaker 1: of the testing sites, including the one at Dodger Stadium,
Speaker 1: which was the one of the largest, if not the
Speaker 1: largest testing site in the US during the pandemic. What
Speaker 1: I found so remarkable about this was the way head
Speaker 1: count exploded. You point out in your piece that head
Speaker 1: count went to three thousand plus people and some context
Speaker 1: there as you write, Sophie, it's larger in the bill
Speaker 1: and Melinda Gates Foundation at one point, that's right. They're
Speaker 1: an operating nonprofits, so you know, like they had all
Speaker 1: these people on the ground, and they started out just
Speaker 1: by getting volunteers to respond to the pandemic, but quickly
Speaker 1: started turning them into full time employees. And a lot
Speaker 1: of these were young people working their first jobs. Um.
Speaker 1: But then later on they brought also very experienced nonprofit
Speaker 1: employees for from other organizations who knew what how this
Speaker 1: was supposed to go? Okay, So the story starts um
Speaker 1: with the fundraiser and to just give a sense of
Speaker 1: the star power in the setting and where you know
Speaker 1: money money gets raised for a nonprofit like core response
Speaker 1: like take us there, take us to Miami. Sure, so
Speaker 1: nonprofit like this, you know it's a celebrity nonprofit. They
Speaker 1: spend a good amount of time and money on fundraisers.
Speaker 1: And these fundraisers are home to Seam Penn and a
Speaker 1: lot of his rich and famous friends like Leonardo DiCaprio.
Speaker 1: The one um in the story at art Bosel in
Speaker 1: Miami was hosted by the pop singer Anita Delphine or No,
Speaker 1: the heir to the world's largest fortune, was also there,
Speaker 1: and everyone was told that this was going to raise
Speaker 1: money for Latin America COVID response. Um, that's what was
Speaker 1: on the invitations that were shared with Business Week, That's
Speaker 1: what was on the marketing materials. And I spoke with
Speaker 1: employees who said it took a lot of nagging of
Speaker 1: the CEO to hey, why hasn't this money reached Brazil yet?
Speaker 1: Because that was basically the only place they were doing
Speaker 1: such work at the time. And why hasn't gone to
Speaker 1: Brazil yet? Why hasn't gone to Brazil yet? And the
Speaker 1: CEO was essentially like, you know, it doesn't matter if
Speaker 1: we actually spend it in Brazil. Um. That's what these
Speaker 1: employees were telling me. And so according to an email
Speaker 1: that we saw, it ultimately took almost six months to
Speaker 1: make it to Brazil and that's ultimately where all the
Speaker 1: money was allocated. But it's kind of a confusing mess
Speaker 1: in between. So fisis about like an organization, like when
Speaker 1: you talk about the money, how it started out, and
Speaker 1: then you know, you're talking about raising two million dollars.
Speaker 1: Is it a case of an organization and nonprofit that
Speaker 1: all of a sudden just ran really quickly and they
Speaker 1: didn't have the people, the infrastructure, the systems in place.
Speaker 1: Or is this about an organization that maybe internally had
Speaker 1: some really bad eggs. Well, yeah, that that Their response
Speaker 1: to our reporting is basically, you know, they responded really
Speaker 1: quickly to the pandemic. It was a huge challenge and
Speaker 1: an unprecedented one, and they rose their hands and said
Speaker 1: we're going to do this, and they did it well,
Speaker 1: to be fair, and and they did it well. They
Speaker 1: did you know, respond to the to the pandemic. Well, um,
Speaker 1: and that's what they're saying. But you know, I'm talking
Speaker 1: to people who are saying, we're almost three years on
Speaker 1: now and it's still internally a problem, financially a problem.
Speaker 1: And they're saying that a lot of this runs up
Speaker 1: to leadership basically not wanting to do much and so
Speaker 1: walk us through some of the financial problems that some
Speaker 1: of the employees flagged to you and your reporting. Sure,
Speaker 1: so it's a lot of you know, kind of mundane
Speaker 1: stuff that's kind of technical, but like payroll stuff. For example,
Speaker 1: I spoke with an employee who was getting paid months
Speaker 1: after they had quit and they had raised the issue
Speaker 1: with the nonprofit and didn't hear anything. I was going
Speaker 1: to say, beats the alternative, Okay, thank you, you know, no,
Speaker 1: but it sounds like like oversight financially coming in, dollars
Speaker 1: coming in and then somebody who's not even employed anymore
Speaker 1: is still getting paid. It's federal dollars to taxpair dollars,
Speaker 1: right exactly. Um, what about like, who do you hearing
Speaker 1: from beyond the employees, anybody from senior management? They did
Speaker 1: sean calling up, you know, they declined to make Sean
Speaker 1: available for an interview, the CEO and the CEO available
Speaker 1: for an interview. Well, Carol makes a good point. What
Speaker 1: is Sean Penn's involvement. So he's the chair of the board,
Speaker 1: which basically means he's responsible for the thing. If there
Speaker 1: are problems, he's responsible for making sure that leadership is
Speaker 1: doing their job and doing it well and responsibly. UM.
Speaker 1: But on a day to day what people telling me,
Speaker 1: he's not really involved all that much except for kind
Speaker 1: of as a figurehead. And who is Who's who's running point?
Speaker 1: It's the CEO and Lee and and tell us more
Speaker 1: about her and Sean and how they came to basically
Speaker 1: co lead this organization. Sure, so they met in Haiti
Speaker 1: in the wake of the two earthquake. UM. She has
Speaker 1: been had been working in nonprofits in Haiti specifically for
Speaker 1: a while. UM. She kind of bounced around until ultimately
Speaker 1: she was brought into Core made CEO in and people
Speaker 1: say that Sehn and her close, you know, like they
Speaker 1: told us that they meet monthly. UM. People said that
Speaker 1: it seems like a lot of what Anne does is
Speaker 1: to try to make Sean look good and to try
Speaker 1: to keep Sean happy. UM. And a lot of people
Speaker 1: said that, you know, like it ultimately runs up to her.
Speaker 1: Everything runs up to her. She's the one who makes
Speaker 1: their decisions. And if there's an issue and it's ultimately
Speaker 1: run up to her, she's the one who's saying it's
Speaker 1: it's not our problem. Okay. So obviously corn At this
Speaker 1: response to covid um as those test sites and vaccine
Speaker 1: sites have wound down, curious what's happened since uh they
Speaker 1: made those that that initiative. Now they're in Ukraine. UM.
Speaker 1: Sean Penn was with Zelenski the day Russia invaded UM
Speaker 1: and so that really opened up an opportunity for CORE
Speaker 1: at a time when it was kind of hard for
Speaker 1: other international nonprofits to get involved. UM. They're also responding
Speaker 1: to domestic hurricanes, so in Puerto Rico, in Florida, UM.
Speaker 1: And what I've been hearing from not just employees but
Speaker 1: also some partners who are seeing Corps work on the
Speaker 1: ground is that, you know, it seems like they're showing
Speaker 1: up to these disasters, they're taking a bunch of photos,
Speaker 1: they're fundraising a bunch of money, and then they're paying
Speaker 1: less attention to how that money gets spent to actually
Speaker 1: respond to the disasters. Yeah, one of the things that
Speaker 1: sticks with me is like they're known in this world
Speaker 1: for showing up with cameras before almost anything else, right,
Speaker 1: like be seeing in the dollars keep flowing that way,
Speaker 1: but maybe maybe there's not that much impact after the fact.
Speaker 1: That's what felt like one common denominator. They made sure
Speaker 1: that there was good visuals, even if they weren't necessarily
Speaker 1: very involved UM seconds and net net takeaway of kind
Speaker 1: of whirreness is where it stands. It's complicated. I know,
Speaker 1: it's never well one thing that I think it boils
Speaker 1: down to this California All this rolls up to a G.
Speaker 1: So if AG is gonna look at anything, you know,
Speaker 1: they've we've clearly spoken enough current and former employees that
Speaker 1: there's some stuff to look into here. Yeah, and I
Speaker 1: would say definitely do a read through because the sexual
Speaker 1: harassment concerns um which were also brought to the attention
Speaker 1: at the top, that seemed to have been dismissed, at
Speaker 1: least according to the employees accounts. Great story. Sophie Alexander Wealth,
Speaker 1: team reporter at Bloomberg News here in our Interactive Broker studio,
Speaker 1: the story and the upcoming new issue of Bloomberg Business Week,
Speaker 1: or thanks to Joe Webber, the editor of Business Week.
Speaker 1: You can also find it at Bloomberg dot com and
Speaker 1: always on the Bloomberg terminal. You're listening to the Bloomberg
Speaker 1: Business Week podcast. Catch us live week days from two
Speaker 1: to five pm Easter on Bloomberg Radio, the Bloomberg Business
Speaker 1: a band you do. You can also listen live to
Speaker 1: our flagship New York station, Just Say Alexa, Play Bloomberg,
Speaker 1: Elove and Dirty I focused on but just a few
Speaker 1: weeks ago, we were focused on Microsoft, their interests and
Speaker 1: then subsequent further investment in open aies chat GPT, which
Speaker 1: is really kicked off, safe to say, Tim another round
Speaker 1: of euphoria when it comes to all things artificial intelligence.
Speaker 1: You add dot AI to the end of your name,
Speaker 1: or you say that you're you know a company that's
Speaker 1: working with AI or chat GPT like BuzzFeed, and you
Speaker 1: see what investors do. It certainly set the investment world
Speaker 1: scrambling to figure out who will benefit. Carol, our next guest,
Speaker 1: has some thoughts on how chat GPT could change voice
Speaker 1: first products and services. Very pleased to have with us.
Speaker 1: Nitti the Donni CEO at the voice technology software company Rain,
Speaker 1: joining us via zoom in New York City. If you're
Speaker 1: good to have you with us this afternoon. How are you.
Speaker 1: I'm great, Thank you so much. It's good to be here.
Speaker 1: It's good to have you with us. Explain how RAIN works.
Speaker 1: So Rain is a conversational AI company. We build voice
Speaker 1: products for desk less workers. So if you think about
Speaker 1: um Alexa or Google Assistant, we build professional grade versions
Speaker 1: of those assistants specifically for an audience called deskless workers.
Speaker 1: So these are workers who do not work, you know,
Speaker 1: at a desk literally every day. They're moving around in
Speaker 1: their jobs. So in industries like construction, automotive, healthcare, professionals
Speaker 1: moving around in their jobs and they don't you know,
Speaker 1: they need information and data at their fingertips. So we
Speaker 1: are able to give that to them through voice, critical
Speaker 1: information that they need at their fingertips. How fast is
Speaker 1: your business growing? Um? You know, we just raised a
Speaker 1: recent round of funding, so we have fifteen million total
Speaker 1: and funding UM and you know, we're really excited for
Speaker 1: what the next eighteen months is going to bring. But
Speaker 1: but what does that mean in terms of how much
Speaker 1: your business has grown. I don't know, give us the
Speaker 1: last twelve months or so. Yeah, I mean we are
Speaker 1: so right now. Our core product is called ortho UM.
Speaker 1: It is a product for the automotive industry. So if
Speaker 1: you think about technicians who are working on vehicles, UM,
Speaker 1: we essentially provide them o EM data at their fingertips.
Speaker 1: So instead of having to get out from under a vehicle,
Speaker 1: go over to a computer, search a database for specifications
Speaker 1: like fluid type and whatever, you know, whatever whatever else
Speaker 1: they might need in the moment um, they can get
Speaker 1: that at their fingertips. So right now, our products is
Speaker 1: actually you know, we we are piloting in a number
Speaker 1: of different shops UM and and pre revenue at the
Speaker 1: moment is the technology that you have at RAIN? Is
Speaker 1: it about the database? Is about where where things are
Speaker 1: being found, where the answers are being found? Or is
Speaker 1: it about the voice recognition technology? Or is it both?
Speaker 1: It's both right UM. So it's essentially taking what is
Speaker 1: you know, number of different databases that exist today O E.
Speaker 1: M data that then feeds into another database called MOTOR
Speaker 1: for example, where these these technicians typically get their information
Speaker 1: and making that data conversational. And I know we're going
Speaker 1: to talk about chat GPT, but there are just so
Speaker 1: many parallels between that kind of conversational nature of the interaction. UM.
Speaker 1: So you know it's it's it's UM taking this data,
Speaker 1: making it conversational, but also making it domain specific. And
Speaker 1: what I mean by that is a lot of the
Speaker 1: AI that's out there today is generalist. So if you
Speaker 1: think of Alexa, or you think of even chat GPT,
Speaker 1: you're asking a question and you're getting a you know,
Speaker 1: they want to serve the general public, so you're getting
Speaker 1: a response back. UM. When you go really deep into
Speaker 1: an industry like automotive or healthcare, as we are, you
Speaker 1: really need to understand the nuances of that specific industry.
Speaker 1: So I'll give you a little bit of an example here.
Speaker 1: If you were to say we'll hut, which is a
Speaker 1: very common term to a auto technicians who who's repairing
Speaker 1: a car, to our assistant, they'll understand it, as we
Speaker 1: all not. If you were to say that to a
Speaker 1: general assistant like Alexa or Google assistant, they'll hear it
Speaker 1: as will not, and that's because they they're not trained
Speaker 1: to hear we'll not, right. So what we're doing is
Speaker 1: really training our assistance for the way that professionals speak
Speaker 1: to one another. What is the lingo that they use
Speaker 1: every day and how do we make sure that they
Speaker 1: understand that so that they're not changing the way they speak. So,
Speaker 1: in other words, if if they want information or something,
Speaker 1: they're speaking into something and then getting it on some
Speaker 1: kind of devices, that kind of the back and forth
Speaker 1: that ultimately is happening and will happen in your view
Speaker 1: a lot more yes, so they're in in this case.
Speaker 1: You know, the modality can be a tablet, it can
Speaker 1: be a mobile phone, um, but you are essentially kind
Speaker 1: of asking for information. And it can also be a
Speaker 1: you know, a device that doesn't have a screen on it,
Speaker 1: but a microphone, um, but you're essentially asking for information
Speaker 1: in the moment and you're getting an answer back rather
Speaker 1: than kind of getting us a number of links or
Speaker 1: more databases that you have to look into. Again, a
Speaker 1: lot of similarities to chat, GPT and that you know,
Speaker 1: it's kind of taking away the layers of searching that
Speaker 1: you would do on your own and giving you a
Speaker 1: distilled answer. To be fair, like, I walk into the
Speaker 1: house or walk out of the house, and I'm constantly
Speaker 1: like or especially when I'm leaving. Hey, Google, you know
Speaker 1: what's the temperature? Like I am, I'm definitely having a
Speaker 1: conversation increasingly, not just inside my head, but increasingly with
Speaker 1: the devices in my home. And and they're useful, whether
Speaker 1: it's time, whether it's information. So you know, you take
Speaker 1: that on a professional level, and I get where you're going. Um,
Speaker 1: you did say you were pre revenue. Um, talk to
Speaker 1: us though a little bit about chat GPT and all
Speaker 1: the developments that have come out about it. How is
Speaker 1: that impacting how you're thinking about your business and the
Speaker 1: growth of it? Sure? Absolutely, I mean, listen, this, this
Speaker 1: chatbot is kind of truly transformational, right. You've got, um, suddenly,
Speaker 1: something that allows you to ask any question on any
Speaker 1: subject or topic in natural language. So how you and
Speaker 1: I would speak to one another and you're going to
Speaker 1: get an answer back instantaneously in seconds, um, And so
Speaker 1: you know you can ask for you know, the history
Speaker 1: of pop music, and you're going to get an answer
Speaker 1: back within moments, probably faster than you could have asked
Speaker 1: that question. And that's exciting and interesting to us for
Speaker 1: two reasons. Number one is it's not pulling that answer,
Speaker 1: it's generating it, right, It's almost as though the AI
Speaker 1: is reading a number of different information sourcing sources and
Speaker 1: coming up with its own perspective. That's why it's called
Speaker 1: generative AI. But the more interesting thing is that, um,
Speaker 1: it's really doing that in a human and conversational way.
Speaker 1: Uh So, Carol, if you know someone would ask you
Speaker 1: a question and you didn't know that person, you would
Speaker 1: not answer robotically or kind of in a singular way.
Speaker 1: You would make inferences about the person based on the
Speaker 1: context where you are, you know, how they're asking the question,
Speaker 1: who they are, And that's what chat GPT is really doing.
Speaker 1: They are understanding human language, both written and spoken, and
Speaker 1: the nuances of it, and they're trying to mimic that.
Speaker 1: So as that technology kind of moves forward, it's really
Speaker 1: exciting for us, you know, in this conversational way industry,
Speaker 1: to see more and more people engaging in that kind
Speaker 1: of human AI way. Totally can see it. It just
Speaker 1: makes a lot of sense. Um really nice, um Nthia
Speaker 1: to check in with you really appreciate it. She is
Speaker 1: the CEO at the voice technology software company Rain, joining
Speaker 1: us be assum in New York City. Just quick back
Speaker 1: to I guess safe to say, our top headline at
Speaker 1: this hour. Certainly when it comes to earnings, Meta shares
Speaker 1: off and running up eighteen after the first quarter revenue outlook,
Speaker 1: definitely Rosie and a huge share by back authorization a journal. Yeah,
Speaker 1: but you're let me drive? Oh no, no, no, no,
Speaker 1: who's leaves? I want to drive. It's a good question.
Speaker 1: This is the drive to the clothes on Bloomberg Radio. Alright,
Speaker 1: a kill many times everything is awesome. You look at
Speaker 1: the market reaction because we have a rally underways. You
Speaker 1: just heard from Charlie Rocklom everybody. Of course, this is
Speaker 1: Bloomberg Business Week on this FED Wednesday, first FED Meeting
Speaker 1: of three cow Master Tim Stanivic live in our Bloomberg Interact,
Speaker 1: a broker studio streaming on YouTube and Bloomberg Quicktake and
Speaker 1: yields backing off, I mean markets, investors traders saying we
Speaker 1: think the Feds just about done. Yeah. The big question
Speaker 1: is just FED chair j Powell think what this is awesome?
Speaker 1: What he's seeing in markets right now? Well, it was
Speaker 1: interesting and I thought, you know, Jeff Rosenberger black Rock
Speaker 1: making a comment and stressing uh in reaction with our
Speaker 1: TV colleagues as the FED made its decision and we
Speaker 1: went of the pressor certainty is not appropriate. Certainty is
Speaker 1: not appropriate. That's what J Powell said. So you know,
Speaker 1: there is no exact science in all of this. And
Speaker 1: J Powell yes, saying we're making progress on inflation, but
Speaker 1: also saying, hey, folks, we've got some more moves ahead
Speaker 1: of us. Here's some other things that stuck out to me. Carroll,
Speaker 1: further rate hikes will be appropriate. It's premature to declare victory.
Speaker 1: We have a lot of work to do, and if
Speaker 1: our outlook turns true, then I don't see us cutting
Speaker 1: rates this year. I think that's really key. And yet
Speaker 1: the markets saying differently. They just ignore all that. I
Speaker 1: don't know, but the traders have been thinking differently. Despite
Speaker 1: the dot plot that we got in the last updata projections,
Speaker 1: which shows the Fed continuing to raise rates further along
Speaker 1: and above five percent, traders have been saying differently. I
Speaker 1: do think it was interesting that J. Powell said the
Speaker 1: Fed is strongly committed to bring inflation to that two
Speaker 1: percent call. He's not backing off of it. He thinks
Speaker 1: it's doable, and yet we continue to get data that
Speaker 1: point in the other direction. I point no further than
Speaker 1: the Drolts data that we got earlier today one point
Speaker 1: nine jobs available for every unemployed per in here in
Speaker 1: the United States. Well, it's kind in the rock direction.
Speaker 1: And he highlighted that as you know, we're still continuing
Speaker 1: to see some strength, significant strength, if you will, in
Speaker 1: terms of the labor market, and talking about you know,
Speaker 1: reducing inflation likely to require blow trend growth um and
Speaker 1: also talking about you know, the FED having to stay
Speaker 1: the course, but also talking about let's see the base
Speaker 1: cases return to two percent inflation without a big job
Speaker 1: list jump. That's the fingers crossed hopeful that's the soft landing.
Speaker 1: You know, we shall see we you know, we talked
Speaker 1: about living in different times and maybe that will be it.
Speaker 1: All right, So let's get to the markets, because it's
Speaker 1: been an interesting day, no doubt about it. A lot
Speaker 1: of risk on trade here, and we've got a good
Speaker 1: guest who has to make some investment decisions and put
Speaker 1: money to work in specific names and entities. Sandy Hillary
Speaker 1: as portfolio manager at Villary and Co. We got a
Speaker 1: billion and a half dollars in assets under management. They're
Speaker 1: based in New Orleans. On the phone from there, this afternoon.
Speaker 1: The Villary Equity fund. We should note, well this was
Speaker 1: you know, as of this morning, up ten percent so
Speaker 1: far this year. It's beating the S and P five hundred,
Speaker 1: putting it in eighth for centile. When it comes to
Speaker 1: other funds in the category, top holding has included Freeport mcmuren, Visa, J. B.
Speaker 1: Hunt and more. Carol, all right, so let's get to it. Uh.
Speaker 1: He is based in New Orleans and we find him
Speaker 1: uh there on this FED Wednesday. So Sandy, good to
Speaker 1: have you here with us. Um. We do like to
Speaker 1: talk names and stocks with you, but let's talk macro
Speaker 1: first of all. FED decision a bit of surprise or
Speaker 1: the market reaction a bit of a surprise. How do
Speaker 1: you see it? Yeah, and Carol, thanks for having me.
Speaker 1: So you know, when we we looked at, uh, we
Speaker 1: looked at Powell today when he's definitely sounded hawkish. You know,
Speaker 1: he starts saying that rate increases would would be ongoing.
Speaker 1: He gave little indication there at the end of the
Speaker 1: rate hike cycle. You know. But when I look at
Speaker 1: some of the devish language which you all refer in
Speaker 1: too earlier, I mean he said they are acknowledging the
Speaker 1: inflations easing, you know, and they are making progress. So
Speaker 1: I mean he's in a tough spot because he knows
Speaker 1: historically the FED tends to overdo it. They raised too much,
Speaker 1: and he's just trying to keep us out of a
Speaker 1: deeper recession, you know. But he really doesn't want to
Speaker 1: pivot too soon, and then inflation just heats right back
Speaker 1: up again, you know, like it did in the set andice,
Speaker 1: and then we're in all sorts of trouble. So it's, uh,
Speaker 1: it's the cross currents. While you I guess saw the
Speaker 1: market you know, down sharply this morning, then rallying hard
Speaker 1: that people are trying to figure out, you know, which direction.
Speaker 1: And I think the bond market is smarter than the
Speaker 1: stock market, and it is telling you with with the
Speaker 1: ten uere you know falling, the yield falling. Um, I
Speaker 1: think it's telling you that that even though he's saying
Speaker 1: he won't cut by the end of the year, that
Speaker 1: you possibly could see a cut maybe as you know,
Speaker 1: in November December. Well we know they're always dated dependent
Speaker 1: and you know, nothing is certain. J Powell did say
Speaker 1: the FETE is not exploring pausing them restarting rate hikes.
Speaker 1: I think that's a big one, Tim, you know, because
Speaker 1: it's it's not it's that idea of okay, we're not
Speaker 1: going to pause and thinking we're gonna have to raise again.
Speaker 1: So I don't know whether he's just saying, hey, folks,
Speaker 1: we're gonna get it all up now, so we're going
Speaker 1: to continue, or he's just so certain that things inflation
Speaker 1: will continue to trend lower. Why did the mark Why
Speaker 1: did the markets though, uh, Sandy latch onto the Dovish
Speaker 1: language rather than the Hawkish language, because there there was
Speaker 1: certainly some Dovish language in there, but the Hawkish language
Speaker 1: was there as well, and they're choosing to focus on
Speaker 1: the Davish language. It's incredible. But I think maybe they're
Speaker 1: focused on, you know, simply the bond market, and when
Speaker 1: you see those yields fall, it's it's telling you're either
Speaker 1: going as some sort of you know, shallow recession or
Speaker 1: rates are going lower. And so I think they're they're
Speaker 1: looking at the way that that's acting, and then I
Speaker 1: think that's carrying forward into the into the stock market. Um,
Speaker 1: it was interesting. We got that Joelt survey this morning,
Speaker 1: and you look at November, we had ten point four
Speaker 1: four you know, million job openings, and and now we've
Speaker 1: got a little bit over eleven million job openings and
Speaker 1: as you said earlier, one point nine jobs available for
Speaker 1: every every person looking. So I think he's got to
Speaker 1: be a little bit cautious that, you know, you could
Speaker 1: get some wage inflation. But at the end of the day,
Speaker 1: the market, Uh, the market went with the bond market
Speaker 1: and and and started to rally as as you know,
Speaker 1: as yields fell on the tenure. How do you feel
Speaker 1: about valuations right now? You know, I think, uh, I
Speaker 1: think it's a tale of two different markets. If you
Speaker 1: look at two thousand and in twenty two, you saw
Speaker 1: you know, growth stocks off over thirty percent um as
Speaker 1: interest rates went up and and growth stocks tend to
Speaker 1: move of inversely, and and you saw value only down
Speaker 1: about two So clearly last year people hid in the
Speaker 1: large gap dividend value stocks that Johnson and Johnson's, etcetera,
Speaker 1: and uh, and it just left growth, you know, sort
Speaker 1: of for dead, which is what we really do as
Speaker 1: an active stock picker. We tend to try to, you know,
Speaker 1: find these these high quality growth companies that are trading
Speaker 1: at really reasonable prices, and I think there's plenty of
Speaker 1: great valuations in in individual stocks and so UM we
Speaker 1: you know, we like growth. Um. We were you know,
Speaker 1: adding to some of it in some of the lows
Speaker 1: last year and and it's picked up, you know, sharply
Speaker 1: this year. Um. We've seen growth already up you know,
Speaker 1: twelve percent year to date and values only up a
Speaker 1: little bit over too. So there's been a great rotation.
Speaker 1: But I would be fishing in the UH in the
Speaker 1: growth pond rather than the the value pond. Give us
Speaker 1: some of those growth stocks that you'd be fishing for
Speaker 1: in that growth pond. Yeah. So, UM, one of the
Speaker 1: ones we like is is On Semiconductor, a great play
Speaker 1: on the five G build out. Um. They've also got
Speaker 1: a lot of demand from electric vehicles, things like alternative energy,
Speaker 1: industrial automation. UM. We tend to follow great CEOs and
Speaker 1: Hassano Cory UM. He used to run a company called
Speaker 1: Cyper Semiconductor that we were a large shareholder in, and
Speaker 1: he's come over to on Semi some years ago. He's
Speaker 1: already transforming it from you know, a higher growth, higher
Speaker 1: margin business from you know, something that was more commodity
Speaker 1: orient if he's getting. You know, he wanted to have
Speaker 1: gross margins near fort you know, basically two years from now.
Speaker 1: He's already he's already there and he's moving to because
Speaker 1: they're growing an area called silicon carbide um, which is
Speaker 1: which is just growing extremely uh quickly. Um. You know
Speaker 1: this is for things like electric vehicle batteries. And you know,
Speaker 1: Goldman will tell you thirteen million electric vehicle batteries will
Speaker 1: will use silicon carbide by two thousand thirty and that's
Speaker 1: only a one million today. So he's just a great manager.
Speaker 1: It's a great business. And I think this is why
Speaker 1: you're seeing, you know, things like On do quite well
Speaker 1: when you have you know, competitor, maybe like an Intel.
Speaker 1: They can't get out of their own way. So even
Speaker 1: though it's up something like so far, oh forgive me,
Speaker 1: because we've seen in uptick, if you will, in today's
Speaker 1: trade kind of pushing everything higher. I mean alone today
Speaker 1: it's up another six percent here. Valuation feels about right
Speaker 1: here based on the outlook. Yeah, I mean I still see, um,
Speaker 1: I still see these guys making over four dollars and
Speaker 1: in fifty cents uh in in earnings. Um. You know,
Speaker 1: basically this year. So you're looking at Stuck that's under
Speaker 1: sixteen times earnings UM, which is um. You know my opinion, Uh,
Speaker 1: you know, I would say it's fair value or undervalued,
Speaker 1: given the the the transformation of a more profitable business,
Speaker 1: higher margins, and and just growing much more quickly as
Speaker 1: they get into the non commodity side of their of
Speaker 1: their of their business. All right, can I leave it
Speaker 1: on that note. Listen, Sandy, thank you so much, appreciate it.
Speaker 1: Sandy Villery, portfolio manager at Villery and Company, joining us
Speaker 1: on the phone from New Orleans. This is the Bloomberg
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