Speaker 1: From Marhart where Innovation, Money and Power Collie in Silicon
Speaker 1: Vallet NBN.
Speaker 2: This is Bloomberg Technology with Caroline Hyde and Ed loved Love.
Speaker 3: Live from Bloomberg's World headquarters in New York. I'm Caroline
Speaker 3: High and i me.
Speaker 4: Ladlow right next door. This is Bloomberg Technology.
Speaker 5: Coming up.
Speaker 3: Cisco buying Splunk and a twenty eight billion dollar deal
Speaker 3: that pushes it into AI.
Speaker 5: Will bring you the terms of the deal and what.
Speaker 4: It means for em and A and from m and
Speaker 4: A to IPOs, we'll get a read on the state
Speaker 4: of the market with Jeff Thomas from NASDAK as companies
Speaker 4: see their trading debut.
Speaker 6: Pop begin to fade.
Speaker 5: Plus, we'll bring you the latest in the media world.
Speaker 5: Robert Murdoch steps down from the Fox and News Corp.
Speaker 3: And writers and studios that are inching closer.
Speaker 5: To a deal.
Speaker 3: All that and so much more ahead, Let's bringing Jim Fish,
Speaker 3: analyst of Pipe Sanla, who has a neutral rating on
Speaker 3: Cisco fifty seven dollars price target and ultimately, is this
Speaker 3: a good deal despite the amount that they're paying in
Speaker 3: terms of premium?
Speaker 7: Yeah, thanks for having me.
Speaker 8: First off, Secondly on your question here, look Splunkhead been
Speaker 8: a target for Cisco for a little while here Back
Speaker 8: in January of twenty twenty two, it was rumored that
Speaker 8: Cisco had made a offer at that point. Now today
Speaker 8: you get the conclusion of that, or almost conclusion as
Speaker 8: we work through a nine to twelve month deal cycle here.
Speaker 7: On this one forward to close.
Speaker 8: But this is the name that we have pointed out
Speaker 8: for quite some time that is most strategic to Cisco
Speaker 8: when you look at what Chuck Robbins and his team are.
Speaker 7: Trying to do around AI cloud security, this one just
Speaker 7: fits the bill.
Speaker 8: It really merges that world between app experiences that they
Speaker 8: call it with the security side and fills a big
Speaker 8: hole in the security portfolio that we pointed out for
Speaker 8: a long time in the security Incident and Event management
Speaker 8: or SIM space. Splunks the big eight hundred pound gorilla
Speaker 8: in that space, and it really is the backbone of
Speaker 8: security operations centers, and Cisco really needed that kind of
Speaker 8: backbone to really push the push the envelope a little
Speaker 8: bit more on its security business that's really been lagging
Speaker 8: against other security peers out there in terms of a
Speaker 8: growth ring.
Speaker 4: So Chuck Robins reckons this transaction is going to close
Speaker 4: in nine to twelve months, and then Gary Steele, who
Speaker 4: is the CEO of Splunk, is going to join the
Speaker 4: executive team reporting to Chuck Robbins. You gave an excellent
Speaker 4: explanation there of what Splunk brings to Cisco. Have a
Speaker 4: second go at it from a layman's perspective.
Speaker 6: What is Splunk? What are we talking about here?
Speaker 7: Yeah, so gets back to actually the name of Spunk.
Speaker 8: Really, what Splunk is named after is going splunking, which
Speaker 8: is going cave diving, and in this case, it's going
Speaker 8: after essentially data, trying to understand your data, being able.
Speaker 7: To search through it.
Speaker 8: So when you have a you know, breach for example,
Speaker 8: that you don't know about, but you can kind of
Speaker 8: search through all of your data with spunks tools and
Speaker 8: be able to find you know what's actually going on
Speaker 8: inside your environment, which is why it's so important for
Speaker 8: your security operations center as well as for an instant
Speaker 8: response and management perspective. And actually, while we talk about
Speaker 8: Splunk as a security tool, its foundation was actually on
Speaker 8: the IT operation side, in sort of the performance management.
Speaker 7: So how is your network actually performing?
Speaker 8: How how are your applications performing via on prem or
Speaker 8: in the cloud as we shift to you know, a
Speaker 8: nature AWS Google environment and being able to manage across
Speaker 8: the entire environment, not just you know, on prem and
Speaker 8: that's been a big shift for Spunk over the last
Speaker 8: few years.
Speaker 7: Here.
Speaker 6: Yeah, I knew that, we knew that. I was just checking.
Speaker 9: Jim.
Speaker 7: We're a smart guy, So thank you.
Speaker 5: I don't serve ability.
Speaker 6: Let me just ask you this.
Speaker 4: A regulator is going to let this one go through,
Speaker 4: I said, Chuck thinks nine to twelve.
Speaker 7: Yeah, it's a question we're getting this morning.
Speaker 8: We're actually we cover VMware as well, and that's been
Speaker 8: a fun one in terms of regulation. I'd argue a
Speaker 8: longer time period on that one. Look, I think you're
Speaker 8: starting to see things go through. Even of VMware size.
Speaker 8: For Cisco and Splunk, there's a little bit of overlap
Speaker 8: in terms of, for example, market share with the powerful
Speaker 8: combination of app Dynamics, thousand Dies and now Spunk altogether,
Speaker 8: but there really isn't much on the security side, and
Speaker 8: so from the both the application experiences and the security businesses.
Speaker 8: While Splunk is a decent sized i'm sorry one, while
Speaker 8: Cisco is a decent sized player in each as well. Splunk,
Speaker 8: you know, the two of them combined are really still
Speaker 8: part of this really fragmented set of industries that there
Speaker 8: really isn't the antitrust issue here in our.
Speaker 3: View, What then, of the competitive landscape those that Splunk
Speaker 3: was up against Data Dog based here in New York,
Speaker 3: com thing in Dina Trace as well. Digital's actually under
Speaker 3: pressure some three percent to day.
Speaker 5: Does it not make it more attractive?
Speaker 7: You know? It's interesting, right because M and A can
Speaker 7: be disruptive to.
Speaker 8: The business being bought and potentially act as a tailwind
Speaker 8: for competitors.
Speaker 7: Look, I don't cover Davia Dog.
Speaker 8: That's carved by my peer, Rob Ewens, but you know,
Speaker 8: David Dog itself has been doing good things in sort
Speaker 8: of cloud observability and that's where essentially workloads are going
Speaker 8: correct and is considered one of, if not the leaders,
Speaker 8: in that observability space. But when you kind of stack
Speaker 8: up what Splunk could do for Cisco, you know, it
Speaker 8: does make Cisco a more relevant competitor in this space,
Speaker 8: especially given Cisco has a huge reach, right and Gary
Speaker 8: and Chuck talked about it on the call this morning,
Speaker 8: where about two thirds of Spunk as domestic and a
Speaker 8: third is international. Well, while Cisco has arguably the best
Speaker 8: go to market program out there and can really penetrate
Speaker 8: their roughly a million customers with splunks.
Speaker 7: Offering, and so that could potentially box out a competitor.
Speaker 4: When do you think about it, Jim Fish or Piper Sandler,
Speaker 4: just not just so good on the deal, but also
Speaker 4: where it fits in the landscape.
Speaker 6: Also very kind about me, Thank you very much.
Speaker 4: Now, coming up from the show, we're going to turn
Speaker 4: from M and A to IPO's. Jeff Thomas, Executive vice
Speaker 4: president of nasdaq's Corporate Platforms, is joining us next character.
Speaker 3: Meanwhile, look, let's just get to check in on how
Speaker 3: these IPOs are the week affairing, because instagrat actually it's
Speaker 3: still clinging to a gain over the last three days,
Speaker 3: but coming off well from that pop after.
Speaker 5: Its initial IPO.
Speaker 3: We're currently training at thirty spot zero five, a tiny
Speaker 3: gain on the thirty dollars pricing, but is that we
Speaker 3: know remaining open Look up an eye for you from
Speaker 3: New York.
Speaker 5: This's a Bluemberg technology.
Speaker 3: We're just taking you over to a either then happening
Speaker 3: the Bloomberg Global Credit Form. It's not a way in London.
Speaker 3: You've got panels and KKR, Apollo, Barclays. They're all discussing
Speaker 3: at this very moment the rise of private credit. And
Speaker 3: if you want to be digging into that a little
Speaker 3: bit more, you can go to Life, go on a
Speaker 3: Bloomberg terminal. But the credit more broadly ed is important
Speaker 3: to our viewers in technology, whether it happens to be
Speaker 3: the public companies seeking to raise funds to the bond
Speaker 3: market and indeed the private.
Speaker 6: Co yeh lok.
Speaker 4: Cost of capital is important to any technology company. It's
Speaker 4: a part of the balance Sheeper. Think back to May
Speaker 4: Apple and Meta returned to the blue chip usbon market,
Speaker 4: we get super excited.
Speaker 6: Haven't heard anything since.
Speaker 4: So I just wanted to remind our audience, like tech,
Speaker 4: companies in debt pay close attention.
Speaker 3: Particularly when rates from the treasury perspective are on the rise,
Speaker 3: and whether in Central Bank really starts to impact the
Speaker 3: desire there. Meanwhile, I mean this all comes in a
Speaker 3: global narrative when we're thinking of the health of the
Speaker 3: twenty twenty three IPO landscape. At the moment, we're facing
Speaker 3: uncertainty after Armen in Stacart reverse gains after popping during
Speaker 3: their debut.
Speaker 5: So let's get a little tape new Egsaba Girl Digital.
Speaker 5: He's here for more a weldcare line.
Speaker 10: It is really pretty interesting here because we did, of
Speaker 10: course have the big IPO pops last week for ARM,
Speaker 10: and then earlier this week for both Instacart and Kleviyo.
Speaker 10: Here's ARM, though, giving back its first twenty four percent
Speaker 10: gain that first day pop down each subsequent day overall
Speaker 10: down about one point seven percent. So what really raises
Speaker 10: the question begs the question of whether or not this
Speaker 10: IPO window is healthy. In fact, if we take a
Speaker 10: look at both ARM and cart, we are going to
Speaker 10: see over this time period there's the ARM loss, but
Speaker 10: KRT actually a small gain here a four tens of
Speaker 10: one percent, not so shabby.
Speaker 5: But what comes to mind for me why I.
Speaker 10: Was initially questioning whether or not these pops were good enough.
Speaker 10: If we take a look at what happened back in
Speaker 10: the pandemic, we of course had Airbnb up one hundred
Speaker 10: and thirteen percent, a firm up sixty four percent, Bumble
Speaker 10: up almost one hundred percent, and then posh up one
Speaker 10: hundred and forty two percent.
Speaker 5: So the pops that we've seen over the last two weeks.
Speaker 10: Not quite as strong. Have we greased the IPO window.
Speaker 10: It's not entirely clear at this point. More needs to
Speaker 10: be seen.
Speaker 11: For sure.
Speaker 4: You know Shnalibus was on the show yesterday lamenting how
Speaker 4: that's it now? All the IPOs ha done. We've covered
Speaker 4: them to death. There won't be any tillbuck and stock.
Speaker 4: And she's really sad about it. That's not quite true, though,
Speaker 4: is it abby?
Speaker 5: Yeah, we to be seen. It's good.
Speaker 10: It's going to have a lot to do with this macro.
Speaker 10: I mean, the macro environment right now relative to the
Speaker 10: FED is not so great, and it's.
Speaker 5: Not also bad.
Speaker 10: Take a look at Clavio still holding on to a
Speaker 10: gain of five point three percent. And I would also
Speaker 10: point to back in the day there was a company
Speaker 10: that ipoed, and in the first couple of months we
Speaker 10: go into the Bloomberg terminal, this stock absolutely tanked down
Speaker 10: you can see here, down more than fifty percent of
Speaker 10: those couple of months. It came back in a big,
Speaker 10: big way, though, And at this point is that more
Speaker 10: than seven hundred percent since that ipo? Any any takers
Speaker 10: on what this is and why these IPOs right now?
Speaker 5: Maybe we shouldn't bring to me.
Speaker 6: It wasn't around then Okay.
Speaker 5: So it was Meta Facebook.
Speaker 4: Oh yeah, so previously known as Facebook.
Speaker 10: Yes, previously known as Facebook at that time had a
Speaker 10: very very difficult first couple of months. But if we
Speaker 10: take a look at what Facebook has done, Meta has
Speaker 10: done since that, I po, well, not so shabby at all,
Speaker 10: especially given last year's big plunge.
Speaker 5: It's really come back.
Speaker 10: So you know, it's just too early to say what's
Speaker 10: going on with these IPOs A bit.
Speaker 4: That's why people say I'm a long term investor.
Speaker 10: Yes, that is a that is a perfect chart for
Speaker 10: the idea of a long term investor, not a trader.
Speaker 4: Bloomberg's Abagail do Little the b chartress name on point.
Speaker 6: Thank you so much.
Speaker 4: Okay, let's stick with the IPO market and bring in
Speaker 4: our next guest. It has been a busy few days,
Speaker 4: right carro with three listing, some on the Nasdaq, some
Speaker 4: on the New York Stock Exchange. Let's go to the
Speaker 4: Nasdack side of this story and bring in Jeff Thomas.
Speaker 4: And Jeff I want to start by asking you, you know,
Speaker 4: we say here on the Bloomberg Technology Show, the euphoria
Speaker 4: of the IPO winding opening up was short lived. Is
Speaker 4: that your conclusion as well.
Speaker 2: I think, you know, companies look at the IPO as
Speaker 2: a moment in time.
Speaker 7: It's a financing event.
Speaker 2: It creates great opportunities for liquidity for their shareholders, creates
Speaker 2: an acquisition currency by their stock. So I don't think
Speaker 2: they get too hung up on exactly how their stocks
Speaker 2: trading day day to day. If you look at what's
Speaker 2: happening this week, you know, we had kind of a
Speaker 2: hawkish pause by the Fed yesterday where again they paused
Speaker 2: rates but had some hawkish overtones. So of course that's
Speaker 2: going to drive them macro. That's going to drive some
Speaker 2: of these stocks. But when you look at the pipeline
Speaker 2: that we've got with some great companies lined up to
Speaker 2: get out to the market both in Q four and
Speaker 2: a really strong pipeline in the first half of next year,
Speaker 2: I think there's still a lot of reasons to be optimistic.
Speaker 2: The VIX continues to be relatively low, indices are still
Speaker 2: well up for the year, and I think companies that
Speaker 2: raised capital back in twenty twenty and twenty twenty one
Speaker 2: i'll really some pretty healthy valuations. They're going to need
Speaker 2: to go back and raise another round of capital, and
Speaker 2: so it'll be a choice do they want to raise
Speaker 2: that capital privately or do they want to tap the
Speaker 2: public markets. And I think there's a lot of reasons
Speaker 2: to expect that many of them will come to the
Speaker 2: public markets.
Speaker 3: Speaking to your colleague Karen last week on the day
Speaker 3: of the arm listing, Jeff, and when you're looking at
Speaker 3: one hundred and fifty seven active s ones or f
Speaker 3: one file, how many of those companies that are eyeing
Speaker 3: the markets are going to have to use the play
Speaker 3: But we've just seen Cornerstone Investors Limited supply to ensure
Speaker 3: you get that initial pop, given well, Instacata is on
Speaker 3: the downside already.
Speaker 2: Well, look, I think it's all about how you want
Speaker 2: to build your book. Companies are always going to want
Speaker 2: to have those long term anchor investors. There's always going
Speaker 2: to be room for some companies that or some investors
Speaker 2: that are going to be short term in nature.
Speaker 7: And that's because, honestly.
Speaker 2: When you look at the opening cross where we're bringing
Speaker 2: together buyers and sellers for that all important first trade
Speaker 2: through our technology called the IPO Book Viewer, the only
Speaker 2: people that can sell into that transaction are the people
Speaker 2: that got shares on the IPO. So there's of course
Speaker 2: going to be buyers that got fewer shares than they wanted.
Speaker 2: Those are going to be the ones that are looking
Speaker 2: to acquire more shares, And then you've got to have
Speaker 2: some sellers in there as well. That's why we see
Speaker 2: the stabilization. A agent sometimes taking an hour to even
Speaker 2: three hours to open these stocks because a lot of
Speaker 2: times it's having to flush out the sellers and find
Speaker 2: people that are looking to unload the stock in addition
Speaker 2: to all the long term shareholders that they bring in
Speaker 2: through the IPO.
Speaker 3: Yeah, that was a key no hour that we're talking
Speaker 3: well this time last week around on Jeff. I'm interested
Speaker 3: there for as to who's coming in to want to
Speaker 3: be that demand, that marginal purchaser. Is it we're getting
Speaker 3: more retail interest? Does it largely tend to be the
Speaker 3: institutions that are willing to take the risk right now?
Speaker 2: Yeah, I think it's really the institutional investors that are
Speaker 2: going to be the major major.
Speaker 7: Buyers of IPOs.
Speaker 2: You know, you kind of look at how the class
Speaker 2: of twenty twenty and twenty twenty one perform. Obviously a
Speaker 2: lot of those didn't turn out the way that the
Speaker 2: investors were hoping to Now you come into this year again,
Speaker 2: the indices are up, the volatility is low. They're going
Speaker 2: to be looking for ways to differentiate, and that means
Speaker 2: they're going to have to take some risks in terms
Speaker 2: of some new issues. So we see a lot of
Speaker 2: demand on the buy side. I think, really what it is,
Speaker 2: it's the companies coming to market, the banker's kind of
Speaker 2: adjusting the valuations to match the expectations of the market,
Speaker 2: and of course that all important narrative around profitable growth
Speaker 2: and not just growth at all costs.
Speaker 4: You know, I want to go back to something that
Speaker 4: Caroline pointed out that if there is anything in common
Speaker 4: across the last week, it was the Cornerstone investor the
Speaker 4: small flow. But I get what you just said about
Speaker 4: the buyers, But these some of these IPOs were like
Speaker 4: ten x oversubscribed. Why is there not the same tenex
Speaker 4: demand three days of trading in.
Speaker 2: You know, I think there's always going to be buyers
Speaker 2: at different price levels. And again, what you have to
Speaker 2: remember here is that companies are laying out their vision
Speaker 2: for the future, that they're saying, here's where we can get
Speaker 2: to in terms of revenue, in terms of earnings, and
Speaker 2: so the investors are going to be watching not just
Speaker 2: in the first few days after the IPO, but.
Speaker 7: The first few quarters.
Speaker 2: And that's really what's going to determine the success of
Speaker 2: these companies is can they come out of the gates strong,
Speaker 2: can they hit their numbers in the first few quarters.
Speaker 2: And I think that's really what's going to tell the
Speaker 2: story IPO market versus the first few days of trading.
Speaker 3: We were just talking about long term investment THESS following
Speaker 3: on from the Messa listing years and years ago. Jeff Thomas,
Speaker 3: and we thank you so much, executive vice president of
Speaker 3: Nasdak's Corporate Platforms.
Speaker 6: Right time for talking tech.
Speaker 4: First off, Japanese electronics company Toshiba is clearing.
Speaker 6: A new path to go private.
Speaker 4: It received a thirteen point five billion dollar buyout from
Speaker 4: the Japan Industrial Partner's private equity fund, which now holds
Speaker 4: nearly eighty percent of all the company's shares.
Speaker 6: The deal pays the way.
Speaker 4: For the fund to squeeze out the remaining shareholders and
Speaker 4: take full control of the company. And Google's considering dropping
Speaker 4: chip maker Broadcom as a supplier of AI chips as
Speaker 4: soon as twenty twenty seven. That's according to report from
Speaker 4: The Information. Apparently, Google executives has set out a goal
Speaker 4: earlier this year to move away from Broadcom after a
Speaker 4: standoff over the cost of its chips. However, in the
Speaker 4: last few minutes, Google has just issued a statement saying
Speaker 4: it sees quote no change in its relationship with Broadcon.
Speaker 4: Broadcompared some of his stock declients plus in Video is
Speaker 4: betting on India's potential to become a key global market
Speaker 4: for AI. During a trip to the country earlier this month,
Speaker 4: CEO Jensen Hwang visited multiple cities and met with leaders,
Speaker 4: including Prime Minister Mody Caroline.
Speaker 5: Fascinating global perspective.
Speaker 3: Meanwhile, I mean, let's just stick on the world of
Speaker 3: artificial intelligence, because this week we've had so much Amazon,
Speaker 3: Google both integrating more generative AI products into their offerings.
Speaker 5: Well, today we've got some similar news out of Microsoft.
Speaker 3: The company will start rolling out as AI Assistant from
Speaker 3: Windows as soon as Tuesday. Will be widely available in
Speaker 3: office apps starting November the first This is for corporate customers.
Speaker 3: We're going to be bringing in now Rishid Juluria, it's
Speaker 3: managing director of Software Equitan Research over at RBC Capital Markets.
Speaker 3: Currently on an outform rating on the shares of Microsoft.
Speaker 3: And what is this to show you about the ability
Speaker 3: to integrate underlying technology largely coming from open AI that
Speaker 3: quickly into its own product offerings.
Speaker 12: Yeah, and thanks so much for having me. Look.
Speaker 13: I think this shows us a couple of things, right.
Speaker 13: It shows us that Microsoft isn't selling vaporware. The fact
Speaker 13: that there's a timeline on getting Windows Copilot out, that's
Speaker 13: as you mentioned in five days. The fact that we're
Speaker 13: talking forty days until Office U sixty five copilot comes out.
Speaker 13: This is incredible timing and contrast that with what we
Speaker 13: see alswhere and enterprise software micros off.
Speaker 12: Is clearly boo moving really quickly.
Speaker 13: What I think is two things that really come out
Speaker 13: to this for me. Number one is Microsoft is actually
Speaker 13: integrating all of these aspects. So your Office rough cty
Speaker 13: five copilot talks to your Windows Copilot, talks to your browser,
Speaker 13: talks to your Bing copilot. So there's actually a very
Speaker 13: integrated generative AI experience across the entire Microsoft stack, which
Speaker 13: I think is incredible and really showcases the portfolio approach
Speaker 13: Microsoft has. The second thing is, you know, the question
Speaker 13: we have to ask is how is Microsoft able to
Speaker 13: move soft fast. Remember, they have a huge headstart versus
Speaker 13: anyone else because they invested in open AI going back
Speaker 13: to twenty nineteen.
Speaker 12: And you know, Microsoft was, you know, deeply.
Speaker 13: Thinking about generative AI long before chat tpt became a
Speaker 13: household name, you know, almost about a year ago.
Speaker 4: They Richie You pointed out they're integrating this into existing platforms.
Speaker 4: And Microsoft has always been really good at selling software
Speaker 4: that loads of others give away for free. So my
Speaker 4: question is do they grow sales by doing this, by
Speaker 4: this investment in AI.
Speaker 12: I think the answer to that is absolutely yes.
Speaker 13: There's going to be certain areas where you know, they're
Speaker 13: not going to directly charge for generative AI. It's more
Speaker 13: going to be about gaining market share, like on the
Speaker 13: dynamic stack, right. But if you think about Microsoft through
Speaker 13: sixty five copilot, that is something that I believe they
Speaker 13: were distinctly charged for a lot of these other open
Speaker 13: AI services, especially built on Azure, they get monetized indirectly
Speaker 13: through underlying stories and consumption because it's on a consumption model.
Speaker 13: So I absolutely think this translates into better revenue numbers
Speaker 13: for Microsoft. And we're already seeing that, right. I mean,
Speaker 13: as much as we can talk about how jen AAI
Speaker 13: is still really early. Remember Microsoft is already doing more
Speaker 13: than half a billion dollars of generative AI revenue two
Speaker 13: quarters after launching this, and that number is probably going
Speaker 13: to get to you know, two five ten billion dollars
Speaker 13: before we know it.
Speaker 3: And you heard really talking about how it's the second
Speaker 3: half of their fiscal year whether this is going to
Speaker 3: rump up Rishie.
Speaker 5: Great to have your analysis.
Speaker 3: Thank you so much, mischie Julurier, he's over at RBC
Speaker 3: Capital Markets.
Speaker 5: Welcome back to New meg Technology.
Speaker 4: I'm Caroline Hyde and I'm me Dudlow. Let's get a
Speaker 4: quit check on the market. It's at a high level.
Speaker 4: It really is the Fed in economics that are driving
Speaker 4: these markets under performance in tech and aw's that one
Speaker 4: hundred down one point three percent yesterday. The Fed holds
Speaker 4: rates as expected. We get economic data on Thursday morning
Speaker 4: that just re enforces this idea that the Fed leaves
Speaker 4: rates higher for longer.
Speaker 6: But AI is also.
Speaker 4: Story when you think about specific movers on the Nasdaq
Speaker 4: one hundred, the two. I'm looking at Microsoft in Amazon.
Speaker 4: Actually Microsoft is paired much of its gain after giving
Speaker 4: us those dates. We just went over for the release
Speaker 4: of generative AI tools co Pilot and Office coming November one.
Speaker 4: Now completely flat, flat as a pancake. But Amazon is
Speaker 4: really accelerating its declines three point five percent. It fell
Speaker 4: yesterday as well after it announced its generative AI offering
Speaker 4: in the context of elect So we had Dave Lint,
Speaker 4: the outgoing devices chief, on the show. It really didn't
Speaker 4: do much to persuade investors to buy into this stock
Speaker 4: right now. The idea that they've brought AI to their
Speaker 4: hardware offering. Caroline that, of course a big points drag
Speaker 4: on an Azdak one hundred right now.
Speaker 3: And let's meanwhile, of course, talk about how AI is
Speaker 3: interweaving itself into just about everything, calling, of course, the
Speaker 3: discourse of leaders from around the world. They gathered right
Speaker 3: here in New York City this week for the seventy
Speaker 3: eighth session of the UN General Assembly, and as they
Speaker 3: discussed the biggest issues facing the planet. Yes, you've got
Speaker 3: climate change, Yes, of course you've got the war in Ukraine.
Speaker 3: But you've also been having more and more on tech
Speaker 3: and artificial intelligence. In fact, President Biden called on world's
Speaker 3: countries to regulate artificial intelligence so that it doesn't so
Speaker 3: called govern us. As part of his speech at the
Speaker 3: Assembly earlier this week. Meanwhile, former UK Prime Minister Tony
Speaker 3: Blair he actually sat down with our own David Western
Speaker 3: and was talking about how AI perhaps what ought to
Speaker 3: change government.
Speaker 14: The big real world event is this technology revolution, and
Speaker 14: particularly with generative AI, it's going to check everything. It's
Speaker 14: going to change the way we live, the way we work.
Speaker 14: It should change government by the way the way government operates,
Speaker 14: the way public services operate. It's got enormous potential to
Speaker 14: change the healthcare system for the better. But then there
Speaker 14: are huge risks. Because it's a general purpose technology. You
Speaker 14: can use it for bad as well as for good.
Speaker 9: Oh.
Speaker 3: I mean all of this comes as we prepare ourselves
Speaker 3: for the UK to host its first ever Global AI
Speaker 3: Safety Summit's coming in early November, convening international governments, industry experts.
Speaker 3: We understand Kamala Harris is going to be flying over
Speaker 3: for it.
Speaker 5: Let's just talk.
Speaker 3: About all of the AI presence and UK's well focus
Speaker 3: on it as Joe White's with US UK Tech Ambassador
Speaker 3: and you're sat there in San Francisco day to day
Speaker 3: role really trying to export the UK to these big
Speaker 3: Silicon Valley giants tech giants of the US saying.
Speaker 5: Look, this is what the UK has to offer.
Speaker 3: Why is the UK so focused on putting its stake
Speaker 3: in the ground when it comes to AI?
Speaker 6: Pleasure to be here, wanting no thank you?
Speaker 1: The UK US is one of the only leading economies
Speaker 1: which has some of these frontier AI labs, Google deep
Speaker 1: Mind being founded there more than ten years ago. Now
Speaker 1: for the top ten global universities, we have an enormous
Speaker 1: base of talent and research around AI as a sector
Speaker 1: and I think Prime Minister Suna really understands the importance
Speaker 1: of this and to a certain the reason the AI
Speaker 1: Safety Summit is created as is is to in order
Speaker 1: to unleash the enormous potential of AI for positive change
Speaker 1: both in the UK and around the world. Getting some
Speaker 1: of those initial guardrails and that common understanding globally is
Speaker 1: incredibly important to keeping us safe with this technology as it.
Speaker 4: Develops, Joones, does the UK genuinely believe it has a
Speaker 4: leadership role in the field of AI, or, if you're
Speaker 4: honest with yourself, is the UK moving quickly to catch up?
Speaker 6: Now?
Speaker 1: I think the UK genuinely does have a leadership position
Speaker 1: in this. As I said, a lot of the fundamental
Speaker 1: AI research has been done in the UK's extraordinary university
Speaker 1: based for years. When Demis founded deep Mind, he did
Speaker 1: so in the UK. He was keen to keep it there.
Speaker 1: We're seeing now with Open AI and Anthropic and others,
Speaker 1: when they open their first international offices, they're choosing the UK.
Speaker 1: The pool of talent there is pretty extraordinary and I
Speaker 1: think the UK has a quite a unique global role
Speaker 1: as convena to bring together countries from across the world
Speaker 1: to talk about some of these major risks and issues,
Speaker 1: whiles still having very much its own position in the
Speaker 1: AI race with a lot of the companies and labs
Speaker 1: which are based in the UK.
Speaker 4: Well, exactly so the race with the companies. You know,
Speaker 4: Cambridge one is one of the leading supercomputers in the world,
Speaker 4: built on Nvidia DGX, largely for the healthcare use case.
Speaker 4: I'm really interested in your day to day Joe. I
Speaker 4: know that the UK is negotiating with the GPU makers.
Speaker 4: Have you yourself held talks within Video or AMD and
Speaker 4: Intel to secure the computes for the future work the
Speaker 4: UK hopes to do in the field of AI.
Speaker 6: Well, we feel a number of visitors here.
Speaker 1: We've actually got the Chancellor here this week who's engaging
Speaker 1: across the West coast in San Francisco, LA and then Seattle,
Speaker 1: and so we do talk with both big cloud providers
Speaker 1: as well as the big chip suppliers to talk about
Speaker 1: the UK's needs and of course willing to increase the
Speaker 1: amount of compute capacity that we have in the UK.
Speaker 1: The chance committed to about nine hundred million pounds for
Speaker 1: an AI supercomputer which was announced in the last budget,
Speaker 1: as well as the AI Task Force, which is now
Speaker 1: having a specific GPU cluster built for.
Speaker 6: AI safety research.
Speaker 3: Jeremy Hant was fielding a fair few questions on China
Speaker 3: and the fact that the UK decided to invite the
Speaker 3: Chinese delegation to this AI safety summit.
Speaker 5: Joe, do you.
Speaker 3: Defend that decision as well?
Speaker 1: I think AI will be a global both benefit and challenge,
Speaker 1: and I think it's a technology which will be relatively borderless,
Speaker 1: and so I think the UK recognizes that for us
Speaker 1: to get the kind of benefits that we want, we
Speaker 1: also have to have a baseline of technology and the
Speaker 1: Foreign Secretory confirmed earlier this week that we have in
Speaker 1: fact invited to China to the summit now for them
Speaker 1: to determine who they will send and how they will engage.
Speaker 1: But I think there are common issues that we can
Speaker 1: all agree on. I think again, this is where the
Speaker 1: UK has a great space as convener to bring different
Speaker 1: parties together to get that initial baseline.
Speaker 3: I think it's interesting that Nick Klegg's also been invested.
Speaker 3: I was with him yesterday having a discussion about the
Speaker 3: future of AI regulation and he almost called it a
Speaker 3: frenzy of everyone trying to be hosting these discussions AI
Speaker 3: summit with the UK. You've got the G seven meeting
Speaker 3: in November two in Japan, the Hiroshima AI process as
Speaker 3: they call it. You've just had government here in the
Speaker 3: United States convening the most powerful AI CEOs plus civil society.
Speaker 3: Is this just like a rush of discussion but nothing
Speaker 3: actually happening.
Speaker 1: Well, No, the UK's in touch with all the organizers
Speaker 1: of these events and sees the Safety Summit very much
Speaker 1: just building on these pieces. When Zunak agreed this with
Speaker 1: Biden back in June for the UK Safety Summit, it
Speaker 1: was really based on the existing White House commitments. So
Speaker 1: we're not trying to diverge from these things and the
Speaker 1: specific focus of the Safety Summit, which is on the
Speaker 1: frontier risks AI posts both short, medium and long term challenges,
Speaker 1: let's say, and the specific ones that the summon is
Speaker 1: looking at is things like the risks posed by frontier
Speaker 1: models I think, like biosecurity and so on. But this
Speaker 1: will really build on the commitments made of the White
Speaker 1: House and in some ways demonstrate how these are being
Speaker 1: operationalized by the companies.
Speaker 3: Now, it's all coming back to regulation and actually where
Speaker 3: does the UK sit within that? Joe, You're sort of
Speaker 3: trying to straddle a relatively easy regulation as the global
Speaker 3: world tends to view the US. You've got stricter EU
Speaker 3: pushing through regulation very quickly.
Speaker 5: But then you think of the CMA.
Speaker 3: Dare I say at flip Flop on Activision Blizzard, I'm
Speaker 3: thinking of new digital competition rules coming in Joe. How
Speaker 3: do these big tech companies view the UK's regulation.
Speaker 1: Well, the UK has a real strength in its regulators.
Speaker 1: I think the UK is widely seen as having sensible,
Speaker 1: engaged proportion at regulation. We do have independent regulators. So
Speaker 1: as the chance of saying you can't always get the
Speaker 1: regulator necessarily to do what they want from a political perspective,
Speaker 1: that's in fact a feature, not a bug. But I
Speaker 1: think the UK's history process of law engagement and now
Speaker 1: you saw this with our AI white paper published earlier
Speaker 1: in the year. We're not standing up a different body
Speaker 1: for AI regulation, but in fact get our existing regulators,
Speaker 1: whether across health or education or broadcast, to look at
Speaker 1: the specific AI challenges within their sector and therefore you
Speaker 1: get the expertise and the ability to adapt within that.
Speaker 1: So the UK does see AI as one of those
Speaker 1: areas that needs that ongoing iterative conversation with regulators, but
Speaker 1: not where we need to create perscriptive rules which may
Speaker 1: turn out to be added day quite quickly.
Speaker 4: You know, Jerry, I get the UK is developing a
Speaker 4: position on AI, and you have an outgoing message. But
Speaker 4: you're in San Francisco and you're talking to tech, you're
Speaker 4: talking to allies. What is the biggest question you get
Speaker 4: from them, the inbound about what you t can offer.
Speaker 1: Well, I think folks really do see the UK as
Speaker 1: the first natural expansion point from the US often really
Speaker 1: going to Europe. UK is still the first place that
Speaker 1: is chosen to go into. And we've had this conversation.
Speaker 1: Recently with that, we saw Andrews and Horowitz announce their
Speaker 1: new office outside the US in the UK during London
Speaker 1: Tech Week earlier, and so I think folks really do
Speaker 1: continue to see the UK as the first natural choice externally.
Speaker 1: They're fascinated in the regulator environment that you do see
Speaker 1: the UK as having a fantastic tech sector. It's only
Speaker 1: third tech sector now valued more than the trillion dollars more,
Speaker 1: more unicorns in the UK than France, Germany and the
Speaker 1: nord it's combined, and so they recognize that talent, they
Speaker 1: recognize the regulatory adaptability that's there, and so they're very
Speaker 1: keen to understand how the UK is going to continue
Speaker 1: to develop its position there.
Speaker 4: Joe White, UK Tech combatsastor that they're really really appreciate
Speaker 4: having you here on Bloombow Technology add a SX pleasure.
Speaker 6: Thank you so much.
Speaker 4: All Right, coming up here on the show, AI co
Speaker 4: pilots are all the rage, and we're going to be
Speaker 4: joined by Duck Bill co founder Meghan Joyce and four
Speaker 4: Run Adventures Kirston Green for more on that conversation next
Speaker 4: and exciting news coming from those two.
Speaker 6: This is Bloomberg technology.
Speaker 5: Are the joy of.
Speaker 3: The idea of a tech driven personal assistant. It's long
Speaker 3: kind of been a bold ambision of Silicon Valley got Siri,
Speaker 3: Alexa in task Rabbit.
Speaker 5: To do the physical.
Speaker 3: But with recent AI advancements, there's a personal assistant that
Speaker 3: perhaps could be actually the next level and around the corner. Now,
Speaker 3: this is what duck Bill is promising. It's an AI
Speaker 3: powered personal assistant tackling.
Speaker 5: Consumers to do lists. The company has recently come out
Speaker 5: of stealth.
Speaker 3: They've just raised yet another round of money twenty five
Speaker 3: million dollars Series A, and it's being led by four Unadventures.
Speaker 3: We're very pleased to welcome therefore four Runners founding partner
Speaker 3: Kirstin Green.
Speaker 5: He's also been joined by on the board of duck Bill.
Speaker 3: She's going to be alongside Duckville CEO and co found
Speaker 3: of Megan Joyce Meghan be Causin.
Speaker 5: It's great to have you both.
Speaker 3: With us, and Meg and I start with you, because boy,
Speaker 3: if we've got a day of talking of these assistants
Speaker 3: basically co pilots Microsoft announcing their Microsoft three six five
Speaker 3: Copilot two. They're also being run and built on open
Speaker 3: AIS underlying foundational models.
Speaker 5: What makes les different.
Speaker 11: So what makes Duckbill unique is the fact that we
Speaker 11: combine two things, the best of expert humans who add
Speaker 11: the personal touch and nuance to your tasks, along with
Speaker 11: AI tooling that allows efficiency and breadth and scale of
Speaker 11: the underlying legwork. So Duckbill's personal assistance are assigned to
Speaker 11: tasks and they use custom built AI tooling that leverage
Speaker 11: existing large language models with our own fine tuning and
Speaker 11: retrieval augmented generation to fulfill tasks. And what that allows
Speaker 11: us to do is to actually tackle the long tail
Speaker 11: of to do's and the tasks you dread most end
Speaker 11: to end, including what AI can handle and where AI
Speaker 11: bumps up against limits and the human can take the
Speaker 11: baton kusin.
Speaker 3: To that point, you must be bombarded with companies offering
Speaker 3: AI services. You have made the name really of foreign
Speaker 3: adventures backing some really well companies that blew out in
Speaker 3: terms of the consumer. How is dug Bale setting itself apart?
Speaker 3: Why write this check?
Speaker 15: Thank you for the question. So you know, I think,
Speaker 15: as you mentioned, there are there's a tremendous amount of
Speaker 15: activity in the AI space right now. The venture industry
Speaker 15: is rightfully I think really excited about. AI represents a
Speaker 15: major leap for technology. There really are two major ways
Speaker 15: that AI, you know, companies are approaching AI. One is
Speaker 15: the architecture, architecting the foundation for the AI and the industry,
Speaker 15: and the other is really implementing and using AI to
Speaker 15: deliver business efficiencies or better and even all new products
Speaker 15: and services. And Duckbille really falls into the latter. So
Speaker 15: this notion of a digital assistant has really been on
Speaker 15: people's minds for a long time. We've heard about it
Speaker 15: over the years. If only I could have help with
Speaker 15: my to do list, if only I could manage my
Speaker 15: busy life, I never see.
Speaker 7: The bottom of my two do list.
Speaker 15: The first generation of offerings like Siri and Alexa, they
Speaker 15: were delivering some value along those lines, but I don't
Speaker 15: think they've scaled anywhere near to kind of what the
Speaker 15: most ambitious hope was for the potential there. And AI
Speaker 15: really changes all of this. And in the case of Duckbill,
Speaker 15: as Megan reference, the integration of AI and human in
Speaker 15: the loop offers the ability to contextualize discovery and execution,
Speaker 15: and that really feels like it changes the game for
Speaker 15: the consumer in making an offering like an AI assistant
Speaker 15: or a digital assistant valuable. It enables a business model
Speaker 15: that we think is scalable and compelling.
Speaker 4: So there's days I wake up, you know, my wife's
Speaker 4: left to post it note on the phrase where she
Speaker 4: just stuck it to my forehead, and I think, if
Speaker 4: only I could do those things. But here's the thing,
Speaker 4: duck Bill, Megan, is ninety nine dollars a month.
Speaker 6: How do you arrive at that?
Speaker 11: So we've found over the course of our year long
Speaker 11: beta that that's the price point at which we can
Speaker 11: support unlimited tasks for the vast majority of users.
Speaker 12: And we look at it as the uber.
Speaker 11: Black version of what duck Bill is today, moving towards
Speaker 11: a more mass market product built on the learnings of
Speaker 11: that premium offering.
Speaker 5: And so what we are.
Speaker 11: Excited about is continuing to serve more and more people
Speaker 11: with that premium price point subscription and learning from that
Speaker 11: to eventually serve the people who need it most, who
Speaker 11: are the mass market, the people who cannot afford a
Speaker 11: personal assistant but deserve help just like anybody else from
Speaker 11: mass And by continuing no, no, no, sorry to jumping Meghan,
Speaker 11: I know, I mean I find that business concept fascinating
Speaker 11: Uber Black to the mass market model.
Speaker 6: You needed the funds to do that.
Speaker 4: In Kirstin coming out of self with this kind of money,
Speaker 4: that's a lot, and it's interesting you going to take
Speaker 4: a board seat. What are you going to be advising
Speaker 4: Meghan to do in the next few months as they
Speaker 4: get off the ground.
Speaker 15: Well, certainly one of the most compelling parts of the
Speaker 15: investment was the opportunity to work with Megan, who is
Speaker 15: an experienced executive and in many ways has led companies
Speaker 15: in similar endeavors related to Duckbill. So I'm looking forward
Speaker 15: to learning with her and from her. But you know,
Speaker 15: as we mentioned earlier, the question was posed about this
Speaker 15: is a consumer product. This is about delighting a consumer,
Speaker 15: meeting a customer's need, resonating with the consumer. I certainly
Speaker 15: hope that our years of experience in living in the
Speaker 15: heads of consumers and working with some great founders that
Speaker 15: brought products that have become you what is to life
Speaker 15: is something we can do here at duck Bill. Also,
Speaker 15: I think, as Megan articulated, like Uber Black, you know,
Speaker 15: duck Bill Black is the start, but the vision really
Speaker 15: is to reach mass audiences and help people navigate their
Speaker 15: lives and the Internet more effectively.
Speaker 5: And Megan's love.
Speaker 15: To mention for a moment, just this idea of like
Speaker 15: reimagining search and duck Bill really leading the way, or
Speaker 15: something like duck Bill leading the way in that like
Speaker 15: search really hasn't been reimagined for twenty years. It's been
Speaker 15: a blank page with a bar, or it's been an
Speaker 15: ad led query field. And I do think that, you know,
Speaker 15: the companies that brought us those services are incredibly well resourced,
Speaker 15: with really smart people around the table, and they're also
Speaker 15: thinking about AI making their products and services better. But
Speaker 15: their business models rely on ads and they in many
Speaker 15: ways that's not customer aligned. And I do think there's
Speaker 15: a chance here for a company for Duckbill to take
Speaker 15: on this idea of being an entry point to the
Speaker 15: Internet and contextualizing search and discovery and execution.
Speaker 3: We've referenced a fair few times Megan, your experience, you
Speaker 3: of course will helping grow ober GM of US and
Speaker 3: Canada your oscar health as well. You know how to
Speaker 3: build Is this money going to be put towards talent?
Speaker 3: Are you're going to be ferociously trying to take that
Speaker 3: talent from the search ogs who aren't quite reimagining things
Speaker 3: quickly enough.
Speaker 11: So we've learned an enormous amount over the course of
Speaker 11: the past Y're operating and operating in data, and what
Speaker 11: this funding will allow us to do is take the
Speaker 11: roadmap that we've laid out for the next few years
Speaker 11: and really accelerate it. Our mission is to serve that
Speaker 11: mass market, to leverage AI, to help ensure that the
Speaker 11: rising tide lifts all boats, and that it's not just
Speaker 11: the privileged who are benefiting from AI or benefiting from HELP,
Speaker 11: but that everyone has access to it.
Speaker 12: And we will be.
Speaker 11: Investing deeply and quickly to get to that mission even
Speaker 11: faster over the coming months and years.
Speaker 4: All Right, four run Aventures founding partner Chist and green
Speaker 4: Backing Duck Bill CEO and co found and Megan Joyce
Speaker 4: Thanks to you both. The Author's Guild, the country's oldest
Speaker 4: and largest organization representing writers and authors, sued Open AI
Speaker 4: for copyright infringement. They alleged that the company's large language
Speaker 4: models engage in quote systematic theft on a mass scale.
Speaker 4: They filed the proposed class action alongside over a dozen
Speaker 4: well known authors like George R. R. Martin and John Grisham,
Speaker 4: an Open AI spokesperson, said in a statement the company
Speaker 4: believes writers and.
Speaker 6: Authors should quote benefit.
Speaker 4: From AI technology and that they're optimistic they will continue
Speaker 4: to find mutually beneficial ways to work together.
Speaker 3: Carolin, Well, we're just hearing what the writer of Game
Speaker 3: of Thrones was thinking about in his current iteration.
Speaker 5: Look, we go from those sorts of.
Speaker 3: Writers, the Writers Guild of America and a group representing
Speaker 3: major Hollywood studios. They would meet, of course for a
Speaker 3: second day. We understanding and encouraging sign talks of progressing
Speaker 3: in this pretty long labor standoff that has lasted for months.
Speaker 3: So it's say executives, some Disney, Netflix, and we see
Speaker 3: Warner Brothers, Discovery.
Speaker 5: They took part in these talks.
Speaker 3: Let's get out to Blue Mugs, Lucas share and I
Speaker 3: mean we've had a few full starts.
Speaker 5: Any light at the end of the tunnel.
Speaker 6: Here, Yeah, I think real light at the end of
Speaker 6: the tunnel.
Speaker 16: You know, they last had substantive conversations in August. The
Speaker 16: studio's offered a proposal that I think made some real advances.
Speaker 16: The writers said it wasn't enough, and then they sort
Speaker 16: of broke and couldn't make any progress. The studios have
Speaker 16: made yet another offer on Wednesday, and they meet this morning,
Speaker 16: Thursday morning, where the writers are expected to counter. And
Speaker 16: how the negotiation or conversation today goes, I think will
Speaker 16: determine a lot.
Speaker 14: You know.
Speaker 16: If they make progress, I think we could see a
Speaker 16: deal relatively quickly.
Speaker 7: If they don't, then who knows.
Speaker 4: Lucas's used in the media landscape was well, not surprising really,
Speaker 4: but li Rupert Murdock stepping down as chairman of boards
Speaker 4: for both Fox and News Corp. Lachlan Murdock taking the
Speaker 4: chair of News Corp. Just just talk us through this
Speaker 4: process and what we've learned.
Speaker 16: I mean, look, we're watching the slow but inevitable handoff
Speaker 16: from Rupert, one of the great media moguls of of
Speaker 16: our age, whatever you think of him, to his son Lachlan,
Speaker 16: who has been taking on more and more responsibility at
Speaker 16: the company.
Speaker 6: I don't think this is it is. It is huge news,
Speaker 6: but not shocking news.
Speaker 12: You know.
Speaker 9: Rupert Murdoch is.
Speaker 6: In his nineties.
Speaker 16: There have been kind of constant rumors about his health,
Speaker 16: but nothing confirmed. You know, I think people closed Hi
Speaker 16: would probably say that he's doing just fine. And so
Speaker 16: he's he's giving his son more and more of a
Speaker 16: presence at the company.
Speaker 3: Succession in real life. Luca Shaw, brilliant. Thank you very
Speaker 3: much for keeping us up to speed with it. I meanwhile,
Speaker 3: that does it for this edition of Bloomberg Technology.
Speaker 4: Yet you can recap this episode on our podcast Apple Spotify,
Speaker 4: iHeart wherever you get you will pollcast car.
Speaker 3: I mean, well, we want to send it back to
Speaker 3: the Bloomberg Global Credit form.
Speaker 5: It's on the way in London.
Speaker 3: And in fact, Joshua Eastleys now speaking, he had some
Speaker 3: interesting things to say about the downfall of SVB earlier
Speaker 3: in the year. Now, remember he's a co CEO and
Speaker 3: co president at Sixth Street.
Speaker 5: Just take a lesson in.
Speaker 17: A lot of those industries have those dynamics. But I think, again,
Speaker 17: going to back to recoveries, I think in default, I
Speaker 17: think private credit has real two advantages. One is that
Speaker 17: they have the ability to industry tilt and active manage.
Speaker 17: And the second thing is is that the documents tend
Speaker 17: to be tighter and the recoveries tend to be higher
Speaker 17: because there's less on the margin flexibility or do you
Speaker 17: for asset liability management trades for the sponsor and less
Speaker 17: lender and lender of violence. So I think private credit
Speaker 17: has ways to win that are significant structural ways that
Speaker 17: when between industry tilt and the dynamics.
Speaker 9: And private credit that I think should prove well.
Speaker 18: So you think maybe as on a return basis, isn't
Speaker 18: that this works well with our poll question what will
Speaker 18: perform best over the next twelve months? High old bonds,
Speaker 18: leverage loans, clos private credit or distressed debt? You have
Speaker 18: a story career in distressed. Do you really think this
Speaker 18: stress might be the play for the next twelve months
Speaker 18: or do you have a different view.
Speaker 17: Look, we have this great thing about one of the
Speaker 17: advantages that Sixth Street has, it's a seventy five bone
Speaker 17: dollars asset manager, is we have a whole bunch of windows.
Speaker 9: And markets, and we're in basically all these markets.
Speaker 17: From structured credit, a little bit high yield leverage loans,
Speaker 17: obviously private credit, distressed on a cycle basis. And the
Speaker 17: one thing I would say about distressed is is that.
Speaker 9: I think that market today if you really think about distress.
Speaker 17: In a narrow way, which is by a bond or
Speaker 17: buy a bank loan on the equity on the other side,
Speaker 17: I think.
Speaker 9: Prices in distress.
Speaker 17: Are not really reflective of the environment we're in today.
Speaker 17: They're artificially too high. And when you think about what
Speaker 17: the in the bank loan market today, I think cols own.
Speaker 17: You know, there's a billion seven of clos there's really
Speaker 17: no new inventory.
Speaker 9: They have to be fully invested, and so.
Speaker 17: There's really not any real price transparency or force selling.
Speaker 17: And so I think artificially, structurally, bank loan prices are high.
Speaker 9: You've seen that. You see the tails get a little
Speaker 9: bit wider.
Speaker 17: But you've seen the average bank loan price go from
Speaker 17: ninety four to ninety seven. The tails get a little
Speaker 17: bit larger from under seventy I think, from three percent
Speaker 17: to six percent, but they're not really they're not really
Speaker 17: there's not really distressed.
Speaker 9: And then you overlay the asset.
Speaker 17: Liability flexibility that sponsors and issuers have on those capital structures.
Speaker 17: Recoveries and probably CITYK loans have been quite poor, and
Speaker 17: so you know, you buy something at seventy, you wake
Speaker 17: up there's an asset there's an asset liability trade that
Speaker 17: gets done where a whole bunch of collaudals stripped out
Speaker 17: your loan trades down fifty points, so I just don't
Speaker 17: I'm not sure I see the clear opportunity in distress today,
Speaker 17: given there feels like a technical uplift on prices, and
Speaker 17: there's a lot of flexibility in those documents that create
Speaker 17: a lot of liquidity options for the issuer