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

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Speaker 1: my co host Matt Miller.

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Speaker 2: Every business day, we bring you interviews from CEOs, market pros,

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Speaker 2: and Bloomberg experts, along with essential market moving news.

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Speaker 1: Find the Bloomberg Markets Podcast on Apple Podcasts or wherever

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Speaker 1: you listen to podcasts, and at Bloomberg dot com slash

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Speaker 1: podcast turning stories. As Bailey was just talking about, it's

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Speaker 1: on the retailers, it's Target, it's TJX. Some decent numbers,

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Speaker 1: kind of in line, I guess you'd call it, but

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Speaker 1: definitely some cautious outlooks. Let's kind of get a sense

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Speaker 1: of what that means for these retailers and what it

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Speaker 1: means for the consumer overall. Sor't going to round table

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Speaker 1: this same a couple of smart voices. Jen Bartashi's senior

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Speaker 1: industry analysts with Bloomberg Intelligence. She joins us, as does

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Speaker 1: Bloomberg macro strategist Vince Cignarella, both on the phone here.

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Speaker 1: So Jen, let's start with you here. What's your takeaway

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Speaker 1: from a couple of big retailers, Target and TJX.

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Speaker 3: Yeah, it's good morning, Paul. Really, the takeaway is that

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Speaker 3: there's no news good news actually in this market, and

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Speaker 3: that everybody understands that the consumer discretionary spending is continuing

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Speaker 3: to soften. I think that one of the things that

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Speaker 3: we're looking at with Target is how well they're going

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Speaker 3: to be able to manage that, And one of the

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Speaker 3: positives this morning was really about how they've reduced their

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Speaker 3: inventory and they seem to be positioned to be able

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Speaker 3: to respond a little bit more quickly than they have

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Speaker 3: historically to changes in that consumer spending.

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Speaker 4: Well, Jen, the inventory story seemed to be this overhanging

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Speaker 4: for both Target and tj MAX for the entirety of

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Speaker 4: last year. Is that problem in the past now or

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Speaker 4: is there any remnants of it?

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Speaker 3: Really that pattern that that problem is really in the past.

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Speaker 3: I think both of the retailers have really reduced their inventory,

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Speaker 3: especially in critical areas. So for example, with Target, their

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Speaker 3: inventory is down sixteen percent, but it's down twenty five

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Speaker 3: percent in discretionary categories, and TJX is also really worked

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Speaker 3: to offload the excess inventory that they had, so the board,

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Speaker 3: I think in the retail space, inventory is really pretty

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Speaker 3: well positioned as we go into the summer months and

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Speaker 3: more importantly into the critical back to school and back

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Speaker 3: to college seasons, which it's hard to talk about already,

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Speaker 3: but it is just around the corner.

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Speaker 1: My last back to college is starting at Start in

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Speaker 1: the fall after four. This is my fourth and last.

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Speaker 1: Thank goodness, Vince Agnirella, love to get your thoughts here.

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Speaker 1: What are you hearing out there on the street? You know,

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Speaker 1: we see these retailers today and they're to me reasonably cautious.

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Speaker 1: That drives of some of the ego data we've seen.

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Speaker 1: And there, what are you hearing out there as it

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Speaker 1: relates to the consumer inflation? How's everybody doing?

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Speaker 5: Everybody's sort of so so to be honest, I mean,

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Speaker 5: I think the interesting point when you're talking about the

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Speaker 5: retailers and you're talking about reducing inventories, think about just

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Speaker 5: a short time ago we were talking supply chain and

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Speaker 5: balances and people couldn't get product. One of the things

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Speaker 5: that's troubling, and I think just the whole economic space

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Speaker 5: and what people are talking about is their huge search

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Speaker 5: and consumer credit outstanding. We're seeing very large consumer credit balances.

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Speaker 5: It's positive for the credit card companies and when you

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Speaker 5: see big games for people like MasterCard, Annex, etc. And visa.

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Speaker 5: You know, in normal times that's a positive, but in

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Speaker 5: times like this, I think we look at that as

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Speaker 5: a negative, and that consumers are stretched in terms of

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Speaker 5: disposable income visa, the inflation, and more and more purchases

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Speaker 5: are being basically bought on time, if you will, and

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Speaker 5: that's just borrowing from economic growth in the future. And

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Speaker 5: you know, I think markets and traders are still thinking

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Speaker 5: that we are potentially going to see a recession before

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Speaker 5: this year's out.

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Speaker 4: Vince, following up on that story, the timeline here is

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Speaker 4: really interesting because and Jen correct me if I'm wrong here,

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Speaker 4: but both Home Depot and Target kind of said, look,

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Speaker 4: we're expecting some sort of pullback in the consumer. It's

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Speaker 4: not here yet, but it's coming, and it feels like

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Speaker 4: it's a narrative we've heard from last year. So in

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Speaker 4: terms of timing, e Vince, we know a lot of

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Speaker 4: people are pricing in that final economic recession by the

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Speaker 4: end of the year. But where are the signs of

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Speaker 4: the consumer pullback.

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Speaker 5: Well, I mean we're naturally not seeing them in I mean,

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Speaker 5: if you look across the board, you look at the

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Speaker 5: housing market, especially in the tri State there, it's off

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Speaker 5: the charts. Where there's no inventory, so pricing it's totally

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Speaker 5: a seller's market. People are paying well above ask and

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Speaker 5: they're continuing to do that simply just to get a home.

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Speaker 5: We're not seeing inventory because of high interest rates. So

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Speaker 5: in a way, you know, I am a major critic

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Speaker 5: of that said, because I think they've totally missed the

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Speaker 5: whole idea of monetary policy. Just raising interest rates without

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Speaker 5: reducing money is not being more than changing the price

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Speaker 5: of money. It's not actually reducing demand, so that money

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Speaker 5: is still out there and the consumers are still spent.

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Speaker 5: But I think we're getting to a point where they're

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Speaker 5: reaching the end of their rope. And until we get

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Speaker 5: to that point, we're not going to see the pullback

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Speaker 5: and spending that you know that people are talking about.

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Speaker 5: You know when that happens. Timing is everything, but I

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Speaker 5: wouldn't dare to try to call it necessarily and say

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Speaker 5: at the end of this year or early next year

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Speaker 5: or whatever. But it does come eventually. It does come.

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Speaker 5: You run out of you just run out of places

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Speaker 5: where you have income to spend.

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Speaker 1: Jen both T tj X and Target called out, as

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Speaker 1: have other other retailers recently, that the rise in shrink.

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Speaker 1: What is shrink and how problematic is it for the retailers.

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Speaker 3: Yeah, so shrink is is really loss of goods either

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Speaker 3: due to cesser damage, and it's really as simple as that.

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Speaker 3: And it's it's an issue that has always been around retail,

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Speaker 3: but has been amplified significantly in the last year or so.

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Speaker 3: And we've actually even heard retailers like Kroger talk about

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Speaker 3: retail shrink and theft of you know, of actual retail

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Speaker 3: gangs coming in and stealing products. It's something that is

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Speaker 3: always there because you know, people you know, pocket things

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Speaker 3: as they're in the stores. But when people are under

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Speaker 3: economic stress, it sort of leads an opening, leads an

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Speaker 3: opening to an increase in theft. And that's what we're

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Speaker 3: seeing across the industry when we.

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Speaker 4: Talk about the theft story, though, Jen, I mean, what,

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Speaker 4: what is what's driving that exactly? Because has that target

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Speaker 4: always kind of had this issue to some extent.

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Speaker 3: Well, all retailers have this issue to some extent. It's

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Speaker 3: it's it's a matter of how well it's being managed.

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Speaker 3: And and when you think about, you know, where the

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Speaker 3: consumer sits, especially consumers who shop in the lower to

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Speaker 3: mid tier stores, they've seen their discretionary income start to

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Speaker 3: be under more pressure, and it lends itself to more

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Speaker 3: of that that type of theft than we see when

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Speaker 3: people have free or spending capabilities. And it is something

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Speaker 3: that is it goes in cycles, and we've seen it

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Speaker 3: in the past with retail when we were in other

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Speaker 3: recessionary type environments, and so it's nothing new, but it

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Speaker 3: is a new issue, and it's remarkable in targets respect

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Speaker 3: and that they're calling out a five hundred million dollars

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Speaker 3: potential impact of profits this year.

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Speaker 1: Yeah, that's that's the number that kind of trumps out

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Speaker 1: at me. Hey, Vince, what are the next data points

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Speaker 1: that you'll be looking for that the market's really focusing

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Speaker 1: on you, abilieity.

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Speaker 5: You know, not a lot this week, unfortunately, for us

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Speaker 5: to really get our hands on where we get the

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Speaker 5: usual jobless claims weekly number Philly FED is probably going

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Speaker 5: to be interesting following what we saw in New York

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Speaker 5: home sales. I don't think anyone's expecting any any major surprises.

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Speaker 5: I think until we get to the f MC minutes

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Speaker 5: on the twenty fourth, there's there's nothing amazingly substantial I

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Speaker 5: think to really shift market sentiment. It's all going to

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Speaker 5: be given taken. When I'm watching markets now, which you know,

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Speaker 5: we're just we're in a bit of a seesaw trend

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Speaker 5: that it simply feels like the day traders are ruling

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Speaker 5: the roost and just just moving things back and forth

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Speaker 5: and just taking taking advantage of enter day trends. But

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Speaker 5: we're not seeing a really good feel I think for

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Speaker 5: a market trend. I think it's that's going to come,

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Speaker 5: hopefully with the statement that follows the f O MC

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Speaker 5: or maybe they'll give us that word that everyone's looking for,

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Speaker 5: which is pause, right.

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Speaker 1: The P word, the pause were okay?

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Speaker 6: All right?

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Speaker 1: Jen Bartash is a senior industry anasal with Bloomberg Intelligence

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Speaker 1: and Vince Cignerella, Bloomberg macro strategist. Thanks you guys for

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Speaker 1: stepping in here talking about these big retailer starting reportant earnings.

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Speaker 1: We've got Walmart tomorrow, so I'm sure we'll be talking

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Speaker 1: to Jen again about that. We had TJ Max and

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Speaker 1: Target reporting today. You know, cautious that that's the word there.

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Speaker 7: You're listening to the team.

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Speaker 8: Ken's a line program Bloomberg Markets weekdays at ten am Eastern.

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Speaker 7: On Bloomberg dot com.

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Speaker 8: The iHeartRadio app and the Bloomberg Business app, or listen

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Speaker 8: on demand wherever you get your podcast.

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Speaker 1: Pretty it seems like we kind of joke about this

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Speaker 1: that every company in every industry, what did they all

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Speaker 1: talk about on their conference? Cause AI? I mean your

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Speaker 1: dog make dog food maker. You're talking AI and how

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Speaker 1: that's going to drive your business. I think it's a

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Speaker 1: scam approaching scam like levels. But how does it imply

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Speaker 1: to investing? Our next guests can help us out there,

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Speaker 1: Hugh Roberts, head of analytics at quant Insight. The name

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Speaker 1: says it all, Hugh, I got to ask you AI.

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Speaker 1: It's all over the place. How does it apply, if

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Speaker 1: at all, to investing. You're the guy to have an answer.

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Speaker 9: I think, yeah, Well, we think it massively does. The

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Speaker 9: key difference to what we do is we don't have

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Speaker 9: a kind of a large language model. It's obviously making

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Speaker 9: all the hype around chat, gbt Bard and all the others,

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Speaker 9: so we've not gone down the natural language processing route. Instead,

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Speaker 9: we used the smart machine and just basically trained it

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Speaker 9: on a range of financial securities single stocks, equity indices, yields,

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Speaker 9: FX crosses and the like, and the macro environment, because

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Speaker 9: the problem with macro more often than not, is not

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Speaker 9: that we're we don't know what the mysterious X factor

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Speaker 9: is it's driving ten new yields or dollar yen or spoos.

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Speaker 9: It's that we don't know what the right pattern and

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Speaker 9: the right jigsaw is. You know, our FX trading off

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Speaker 9: interest rate differentials, are spoos trading off the strength or

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Speaker 9: weakness of the dollars. You know, it's putting the different

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Speaker 9: moving parts of growth, inflation, financial conditions, risk, appetite together

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Speaker 9: in the right order. And that's exactly what AI can

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Speaker 9: help with. So AI can help, but not necessarily the

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Speaker 9: natural language processing the LLM models, more just using to

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Speaker 9: train it on smart data, on understanding the patterns of

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Speaker 9: association between financial markets and the broader macro environment.

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Speaker 4: Does that apply to every asset class though, I mean,

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Speaker 4: or is this just a stock market kind of thing?

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Speaker 9: Well, we train that on everything, but it's a really

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Speaker 9: fair question because obviously you do see discrepancies within that.

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Speaker 9: So sometimes you know, commodities get driven exclusively by a

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Speaker 9: supply squeeze, in which case, you know, you've got to

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Speaker 9: get into the weeds in terms of you know, is

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Speaker 9: it a weather event that's impacting crop production levels, for example,

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Speaker 9: or within the equity space. You know, there are certain

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Speaker 9: sectors and I think even the most bottom up company

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Speaker 9: fundamental guy would acknowledge a macro place. They're typically the

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Speaker 9: interest rates sensitive sectors like finance like housing, et cetera,

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Speaker 9: or even growth versus value thinking about the level that

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Speaker 9: bond yields play in that kind of style allocation. But

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Speaker 9: then we'd be the first to admit, you know, if

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Speaker 9: you're talking about a new biotech stock where it come

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Speaker 9: up with a new prescriptive drug of some kind, and

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Speaker 9: it's about their R and D capabilities, it's about their

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Speaker 9: ability to patent it so they can monetize it properly.

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Speaker 9: But that's always be more radiosyncratic. So there are variances

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Speaker 9: across the entire kind of capital market structure. If you

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Speaker 9: think about it, what financial asset is completely impervious to inflation?

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Speaker 9: The fed financial conditions, risk appetites, these are just truisms

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Speaker 9: in our life.

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Speaker 1: So Hugh, right now, what are some of the data points,

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Speaker 1: data sets that you guys at quant Insights are really

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Speaker 1: focusing on now?

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Speaker 9: Yeah, So what we're lediting is is a little bit

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Speaker 9: of a regime change for US equity markets. I mean,

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Speaker 9: it is a little bit self evident, because obviously the

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Speaker 9: narrative has been out there for some time, but we're

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Speaker 9: seeing that while everyone's talking. Obviously all these amazing stats

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Speaker 9: about Apple being the size of the russel. Two thousand

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Speaker 9: or half dozen stocks explain the entire performance for twenty

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Speaker 9: twenty three, and you can ascribe that to AI, you

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Speaker 9: can ascribe it to a little bit of safety status,

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Speaker 9: and also maybe the moving yields as the bond market

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Speaker 9: starts for discount and easier fed. You've got to be

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Speaker 9: more nuanced than that, we would argue if you're actually

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Speaker 9: trading this stuff. So it's not actually the level of

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Speaker 9: bond yields and that is driving US tech stocks on

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Speaker 9: our models. It's actually a the shape of the yield

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Speaker 9: curve and b bond revolve interstrate volatility that is more important.

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Speaker 9: And what we're finding at the moment is that the

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Speaker 9: move lower. We actually use Swatch involve rather than the

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Speaker 9: move index, but the move index tends to be more

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Speaker 9: well known. The fall in the move index over the

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Speaker 9: last month or so has been a huge tailwind. That's

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Speaker 9: been a positive, and that's raising model value for spoos,

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Speaker 9: NAVVAC XLK.

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Speaker 5: All this stuff.

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Speaker 9: A steeper yield curve is also a big tail wind,

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Speaker 9: and that's helping move model value higher against that given

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Speaker 9: that we finally feels it's most eagerly anticipated recession in

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Speaker 9: a long time, and it feels like everyone's been waiting

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Speaker 9: for it. For the data in the last month or so,

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Speaker 9: it's felt like it is starting to roll over, but

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Speaker 9: at the margin, both in the States and Europe and China,

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Speaker 9: and that's been a headwind to macro warranted serve value

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Speaker 9: for all this stuff. So what we do is obviously

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Speaker 9: balance up the tailwinds and the headwinds. And at the moment,

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Speaker 9: the moves in the bond market are more than offsetting

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Speaker 9: the negative drag from gross the negative drag from inflation expectations.

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Speaker 9: But the trouble is is that markets have moved equity

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Speaker 9: markets have leaved ahead of that. So we've got the nowsack,

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Speaker 9: for example, about five percent rich.

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Speaker 5: To where it should.

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Speaker 9: Be at the moment. So the good moves is macro warranted,

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Speaker 9: macro momentum is moving higher, but the health warning is

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Speaker 9: the market's ahead of itself.

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Speaker 4: Well, it's interesting that we say the market's ahead of

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Speaker 4: itself when it's kind of been stuck range bound for

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Speaker 4: two months now, how much of the kind of carnage

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Speaker 4: of last year is almost a tailwind as well to

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Speaker 4: the stock market this year around, even as we're staring

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Speaker 4: at a recession.

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Speaker 1: Does it? Is it just up from here?

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Speaker 9: Yeah? I think that's really fair comment, at least for

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Speaker 9: justifying price action in January. And it did feel like

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Speaker 9: a lot of last year's losers, the ones that got

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Speaker 9: beaten up the most, did see a reallocation towards them

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Speaker 9: at the beginning of the year. And I think that's

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Speaker 9: a really fair comment, and there is flow evidence to

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Speaker 9: back that up as well. But it has to be

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Speaker 9: more than that when you look at the price action,

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Speaker 9: and I think what started off was a twenty twenty

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Speaker 9: two losers reallocating into twenty twenty three winners morphed into

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Speaker 9: a bit of a bond yeel trade and more in

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Speaker 9: the last whatever it is six to eight weeks, is

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Speaker 9: morphed into a generative AI trade. But our point would be,

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Speaker 9: is it interestingly if we look at the nasdak so

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Speaker 9: we have we compute and our squared steps, that's just

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Speaker 9: goodness of fit how good a job are our macro

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Speaker 9: factors doing of explaining price action from whatever we're looking at.

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Speaker 9: If we looked at the Nasdak from January up until

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Speaker 9: about ten days ago, our our squared was below our

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Speaker 9: threshold for macro regime, So that would speak to the

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Speaker 9: fact in January now that was driving off flow and

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Speaker 9: in February and March it was trading off the generative

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Speaker 9: AI hype. Now it's back above our threshold. We explained

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Speaker 9: seventy percent of price action in the Nasdak and we

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Speaker 9: have a five percent rich So our message to people

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Speaker 9: at the moment is the generative AI hypeer taking us

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Speaker 9: this far. But it's not the only game in town anymore.

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Speaker 9: There's also macro factors at work, and that's the headwind

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Speaker 9: that you're seeing from growth and the reflation dynamic and

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Speaker 9: lower commodity markets. But the tail when they're getting from

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Speaker 9: moves in boon vol and the yield curve, and you've

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Speaker 9: got to try and weigh all those up. And that's

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Speaker 9: what that's where back to the original conversation where AI

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Speaker 9: can help Q.

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Speaker 1: I know you guys are are macro focused. Do you

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Speaker 1: care at all about the micro like do you care

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Speaker 1: the fact that you know we're finishing up earning the

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Speaker 1: season here, and do you even look at that kind

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Speaker 1: of stuff.

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Speaker 9: Well, our clients do. I mean, we don't have any

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Speaker 9: kind of bottom up variable so that we model. And

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Speaker 9: that's simply a commercial division, to be completely honest, it's

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Speaker 9: because that area of the research world is incredibly well covered.

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Speaker 9: If there are so many people looking at company fundamental,

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Speaker 9: there's just no edge there as far as we can tell.

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Speaker 9: But the way our equity clients would use us is

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Speaker 9: they would still do their bottom up analysis. They'd look

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Speaker 9: at the target earnings, the home depot yesterday and they'll

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Speaker 9: do their kind.

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Speaker 5: Of bottom up analysis.

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Speaker 9: But then they'd say, well, we know we're in macro

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Speaker 9: markets as well, so we need to put a macro

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Speaker 9: overlay on top of this as well. And then you

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Speaker 9: get the holistic picture. It's where bottom up meets top down.

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Speaker 9: But we only provide one half of that equation.

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Speaker 5: To be honest, h.

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Speaker 4: You about thirty seconds here in your analysis, where does

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Speaker 4: the currency picture fall of How much of a ripple

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Speaker 4: effect is the dollars well stagnation for now going to

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Speaker 4: have on the rest of the markets?

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Speaker 9: YEA, the most interesting thing on the FX models at

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Speaker 9: the moment is actually that you're a dollar, and factually

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Speaker 9: this speaks to equities as well European assets, both European

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Speaker 9: equities relative to the S and euro dollar. Europe is

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Speaker 9: the highbe to growth play. It is most sensitive to

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Speaker 9: global GDP improving to commodity market rallying, and euro dollar

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Speaker 9: screens is very slightly rich and eased you. The Eurozone

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Speaker 9: ETF screens is very slightly rich relative to spy. So

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Speaker 9: if you think we are about to get the recession

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Speaker 9: we've all been waiting for and global growth is going

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Speaker 9: to turn aggressively lower YEP, then all those trades that

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Speaker 9: have over what Europe might need to be reconsidered.

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Speaker 1: You always good to chat with you a different perspective,

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Speaker 1: refreshing perspective from the macro side of the equation. Hugh Roberts,

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Speaker 1: head of analytics at Quat Insights. They are based in

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Speaker 1: the UK in London.

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Speaker 8: You're listening to the tape can Tour live program Bloomberg

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Speaker 8: Markets weekdays at ten am Eastern on Bloomberg Radio, the

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Speaker 8: tune in app, Bloomberg dot Com, and the.

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Speaker 7: Bloomberg Business app.

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Speaker 8: You can also listen live on Amazon Alexa from our

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Speaker 8: flagship New York station. Just say Alexa play Bloomberg eleven thirty.

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Speaker 1: The next guest I really want to talk to because

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Speaker 1: I'm really interested in this fund. Here Savina Risova, global

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Speaker 1: head of Research for Dimensional Fund Advisors. Now I'm a

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Speaker 1: little I'm a little nervous here because she has her

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Speaker 1: MBA and PhD from the University of Chicago, which means

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Speaker 1: they really like numbers. And I was told that there

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Speaker 1: would not be math on this show. But we'll see

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Speaker 1: what we can do here, Savina. I see Dimensional. Why

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Speaker 1: I pull up the stockholders list. I see Dimensional as

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Speaker 1: top top, top shareholder and a number of big companies

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Speaker 1: tell us about Dimensional First, what do you guys do?

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Speaker 1: What's your strategy? Sure?

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Speaker 10: Yeah. They Mentional as combining the best of kind of

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Speaker 10: two words or two ways of investing, the best of indexing,

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Speaker 10: low costs, broad diversification, transparency with the best of her

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Speaker 10: active systematic active investing, which is pursuit of premiums and

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Speaker 10: a daily, flexible implementation process. And we offer kind of

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Speaker 10: that type of approach both in equities and fixed income.

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Speaker 10: One investment philosophy, many investment solutions, and.

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Speaker 11: It sounds like though you favor kind of the indexing overactive.

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Speaker 11: Is that right? Based on your.

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Speaker 10: Note, it's a combination essentially of the benefits of both.

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Speaker 10: Indexing has a lot of nice features with it, as

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Speaker 10: they mentioned, broad diversification and low costs are the first

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Speaker 10: that come to mind, but also it has costs, and

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Speaker 10: I think in the last few years we've seen the

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Speaker 10: pandulum swing a lot away from traditional active to indexing,

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Speaker 10: which journey has been a great trend, but people have

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Speaker 10: also started to perceive indexing as a free lunch out there.

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Speaker 10: It has its own costs. There are regiditis associated with

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Speaker 10: indexing and also lack of pursuit of premiums in general

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Speaker 10: when it comes to playing market index solutions. So we

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Speaker 10: try to basically deliver the benefits of indexing, but also

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Speaker 10: go beyond indexing by focusing on pursuit of premium systematically,

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Speaker 10: day and daily in our investment solutions.

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Speaker 1: So, Sabine, I know you at Dimensional to really take

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Speaker 1: a look at the retirement business, and you've got to

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Speaker 1: paper out entitled A Little Goes a Long Way. What

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Speaker 1: do you mean by that?

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Speaker 10: What do you mean by that is that if people

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Speaker 10: in their retirement accounts, which are, by the way, the

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Speaker 10: largest share of household well according to the twenty twenty

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Speaker 10: US Census. Instead of focusing on a plane market index,

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Speaker 10: Solutions goes for a little bit of a pursuit of

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Speaker 10: premiums with inequities. That is, go for a portfolio that systematically,

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Speaker 10: but in a controlled manner, emphasizes smaller, deeper value, more

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Speaker 10: profitable stocks. Then they can actually improve significantly their outcomes

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Speaker 10: for retirement, namely more asseted retirement, better chance of not

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Speaker 10: running out of money in retirement, and the potential to

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Speaker 10: live larger bequests. That's kind of what the study focuses on.

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Speaker 10: What can you how can you improve your retirement outcomes

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Speaker 10: if you move away from plane market index in your

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Speaker 10: equity allocation for retirement to a portfolio that, in a

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Speaker 10: broadly diversified manner pursues the long term drivers of returns

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Speaker 10: with inequities.

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Speaker 11: So what's the best way for folks listening to try

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Speaker 11: and accomplish that.

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Speaker 5: Yeah.

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Speaker 10: So, usually when you have a research paper, even if

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Speaker 10: it has a compelling message, it's hard to act on

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Speaker 10: it under your word, Yeah, not the case with this paper. Actually,

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Speaker 10: anybody who listens today to the show can take action

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Speaker 10: on that because you can switch from a plane index

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Speaker 10: for equity portfolio to a systematic active solution in your

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Speaker 10: for one K and your ERA, in your other taxable

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Speaker 10: accounts you use for retirement, even in HSA health savings accounts,

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Speaker 10: which are essentially longs, can be used as long term

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Speaker 10: vehicles saving for retirement. So in all of those types

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Speaker 10: of accounts used for saving for retirement, investing for retirement,

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Speaker 10: or you can have options practical real world solutions like

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Speaker 10: the dimensional investment solutions in equities that offer that type

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Speaker 10: of approach focus balance, integrated, focus on size, value and profitability,

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Speaker 10: which can improve retirement outcomes. And the other great kind

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Speaker 10: of message from the paper is the findings of the

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Speaker 10: paper applied not only to someone who is very far

436
00:23:32,720 --> 00:23:36,080
Speaker 10: away from retirement like age twenty five, let's say, lots

437
00:23:36,119 --> 00:23:39,160
Speaker 10: of time to save for retirement. They actually can improve

438
00:23:39,240 --> 00:23:42,640
Speaker 10: retirement outcomes even for people who are about to enter

439
00:23:42,680 --> 00:23:45,600
Speaker 10: retirement or who are already in retirement. It's not too

440
00:23:45,680 --> 00:23:47,840
Speaker 10: late to read some of those benefits.

441
00:23:48,240 --> 00:23:50,040
Speaker 1: All right, Savina, thank you so much. We appreciate it.

442
00:23:50,040 --> 00:23:53,440
Speaker 1: Savina Reserve, a global head of research and Dimensional Fund Advisors.

443
00:23:54,160 --> 00:23:58,000
Speaker 8: You're listening to the Team Cancer online program Bloomberg Markets

444
00:23:58,040 --> 00:24:01,159
Speaker 8: weekdays at ten am Eastern on Bloomberg dot com, the

445
00:24:01,240 --> 00:24:04,359
Speaker 8: iHeartRadio app and the Bloomberg Business app, or listen on

446
00:24:04,440 --> 00:24:06,400
Speaker 8: demand wherever you get your podcasts.

447
00:24:08,640 --> 00:24:12,760
Speaker 1: All right, let's switch gears. Let's talk energy here. You know,

448
00:24:12,880 --> 00:24:15,080
Speaker 1: we're talking a lot. We just had the CEO of

449
00:24:15,280 --> 00:24:18,439
Speaker 1: Bentley on Bentley Automotive and they're talking about, you know,

450
00:24:18,560 --> 00:24:23,040
Speaker 1: transitioning to electric vehicles, and there's obviously huge energy components

451
00:24:23,080 --> 00:24:27,680
Speaker 1: to all of this. We're welcome to bring in Robert Picconi.

452
00:24:27,760 --> 00:24:30,000
Speaker 1: He's the CEO and co founder of Energy Vault. Energy

453
00:24:30,040 --> 00:24:33,000
Speaker 1: Vault is a New York Stock Exchange listed public company

454
00:24:33,040 --> 00:24:35,520
Speaker 1: and our GV is the ticker to put into your

455
00:24:35,520 --> 00:24:38,160
Speaker 1: Bloomberg terminal. Rob thanks so much for joining us here.

456
00:24:38,160 --> 00:24:39,880
Speaker 1: You join us here in our studio. We know you're

457
00:24:39,880 --> 00:24:41,920
Speaker 1: based out in California, so we appreciate you coming into

458
00:24:42,080 --> 00:24:44,840
Speaker 1: our studio here in New York. What do you guys do?

459
00:24:44,880 --> 00:24:46,359
Speaker 1: What Energy volt Just give us a quick, you know,

460
00:24:46,440 --> 00:24:48,320
Speaker 1: kind of elevator pitch for energy Vault here.

461
00:24:48,480 --> 00:24:52,000
Speaker 12: Sure, we're focused on energy storage, and energy storage is

462
00:24:52,040 --> 00:24:55,280
Speaker 12: going to be fundamental for the deployment of renewables to

463
00:24:55,440 --> 00:24:57,760
Speaker 12: be deployed in more volume for us to wean our

464
00:24:57,760 --> 00:25:01,639
Speaker 12: way off of fossil fuels. Our storage is broad We

465
00:25:01,720 --> 00:25:05,560
Speaker 12: use a software platform where we can handle short duration

466
00:25:05,680 --> 00:25:08,399
Speaker 12: storage and integrate that long duration. We do that with

467
00:25:08,440 --> 00:25:12,800
Speaker 12: our proprietary gravity solution, and we also is just announced

468
00:25:12,880 --> 00:25:15,480
Speaker 12: last year to do ultralong duration with green hydrogen. So

469
00:25:15,520 --> 00:25:20,160
Speaker 12: we broadly play in energy solutions for utilities, independent power

470
00:25:20,200 --> 00:25:24,320
Speaker 12: players and also large consumers of energy, large industrial players.

471
00:25:24,520 --> 00:25:27,040
Speaker 11: And the gravity based storage feels like a big deal

472
00:25:27,160 --> 00:25:28,959
Speaker 11: for you guys, Can you explain what that is?

473
00:25:29,320 --> 00:25:32,560
Speaker 12: It's a big deal and it's also big as a building. Yes,

474
00:25:32,880 --> 00:25:37,000
Speaker 12: we innovated with gravity as a solution for energy storage

475
00:25:37,240 --> 00:25:40,600
Speaker 12: that would be sustainable, low cost, something that could be

476
00:25:40,680 --> 00:25:43,920
Speaker 12: deployed quickly, and that you could essentially build anywhere you

477
00:25:43,960 --> 00:25:46,480
Speaker 12: can build a building. So ninety percent of all energy

478
00:25:46,480 --> 00:25:50,560
Speaker 12: storage today are actually pumped hydro electric dams that use gravity.

479
00:25:50,920 --> 00:25:53,920
Speaker 12: In that case, it's water that traverses down and turns

480
00:25:53,920 --> 00:25:56,280
Speaker 12: a motor and discharges electricity, and then that water is

481
00:25:56,320 --> 00:26:00,320
Speaker 12: pumped back up into the reservoir into the dam. We

482
00:26:00,400 --> 00:26:02,639
Speaker 12: came up with a way to use that same gravity

483
00:26:03,359 --> 00:26:06,000
Speaker 12: and build a structure in a building that you could

484
00:26:06,000 --> 00:26:09,679
Speaker 12: build basically anywhere, not have the reliance on building dams

485
00:26:09,720 --> 00:26:13,080
Speaker 12: damming up rivers for example, or the large cost, and

486
00:26:13,119 --> 00:26:15,600
Speaker 12: to do that very economically. We have a very low

487
00:26:15,720 --> 00:26:18,000
Speaker 12: levelized cost to do that, which is a big issue

488
00:26:18,000 --> 00:26:19,359
Speaker 12: with energy storage's cost.

489
00:26:19,680 --> 00:26:20,479
Speaker 1: What are you storing?

490
00:26:20,600 --> 00:26:25,560
Speaker 12: Actually, we're storing electrons, so we're essentially taking ideally excess

491
00:26:25,600 --> 00:26:29,120
Speaker 12: wind and solar when it's not needed. So solar typically

492
00:26:29,160 --> 00:26:32,760
Speaker 12: overproduces during the day because the demand isn't there, and

493
00:26:32,840 --> 00:26:36,239
Speaker 12: that excess wind and solar actually powers the motors and

494
00:26:36,320 --> 00:26:39,639
Speaker 12: moves these large composite blocks. We don't use concrete in

495
00:26:39,640 --> 00:26:42,639
Speaker 12: those blocks. They are twenty five metric tons each, so

496
00:26:42,680 --> 00:26:45,240
Speaker 12: that powers these blocks to a height, and then at

497
00:26:45,240 --> 00:26:47,639
Speaker 12: height it's all potential energy. So this goes back to

498
00:26:47,680 --> 00:26:50,720
Speaker 12: your physics classes and it can sit there and last

499
00:26:50,800 --> 00:26:54,280
Speaker 12: literally days, weeks, months. However, it's designed to cycle every day,

500
00:26:54,320 --> 00:26:56,800
Speaker 12: so when the energy is needed by the grid, for example,

501
00:26:57,320 --> 00:27:00,000
Speaker 12: in the morning when we get up and we're using energy,

502
00:27:00,080 --> 00:27:02,359
Speaker 12: or in the evening when people come home, we lower

503
00:27:02,400 --> 00:27:05,959
Speaker 12: those blocks, all automated with software, and that turns the

504
00:27:05,960 --> 00:27:08,840
Speaker 12: motor and discharges that electricity back to the grid.

505
00:27:09,080 --> 00:27:10,919
Speaker 11: Wow, you got to be really smart to figure this

506
00:27:10,920 --> 00:27:13,120
Speaker 11: stuff out. That's amazing. That's pretty cool.

507
00:27:13,240 --> 00:27:13,560
Speaker 7: All right.

508
00:27:13,600 --> 00:27:15,159
Speaker 1: I had to ask one question because I know you

509
00:27:15,200 --> 00:27:20,159
Speaker 1: made an investment. You've got something in rudin China. So

510
00:27:20,160 --> 00:27:22,720
Speaker 1: you're nearing completion of the world's first commercial long duration

511
00:27:22,800 --> 00:27:26,120
Speaker 1: gravity energy Storm says, I've been dying to meet somebody

512
00:27:26,119 --> 00:27:29,080
Speaker 1: who's investing in China. What are you doing investing in China?

513
00:27:29,160 --> 00:27:32,600
Speaker 12: Yeah, by the way, great question, and it's really fundamental.

514
00:27:32,680 --> 00:27:36,360
Speaker 12: So first of all, China produces more greenhouse gases than

515
00:27:36,400 --> 00:27:40,600
Speaker 12: the next seven countries combined, twelve billion tons. The US,

516
00:27:40,640 --> 00:27:44,080
Speaker 12: by the way, second at about five billion, so number one.

517
00:27:44,119 --> 00:27:46,760
Speaker 12: With our mission of decarbonization, China was going to be important.

518
00:27:46,800 --> 00:27:50,200
Speaker 12: It's a very large market that's good for investors unique

519
00:27:50,600 --> 00:27:52,959
Speaker 12: to disrupt with new technology to introduce there. We had

520
00:27:54,000 --> 00:27:57,720
Speaker 12: a very good leadership partnership with a company called China

521
00:27:57,760 --> 00:28:01,199
Speaker 12: Taianying that partnered up with the Book Family Foundation in

522
00:28:01,280 --> 00:28:05,040
Speaker 12: Texas to support us with a license to go ahead

523
00:28:05,080 --> 00:28:08,080
Speaker 12: and build that technology in China and start right away.

524
00:28:08,200 --> 00:28:11,120
Speaker 12: So they broke around last year in March and moved

525
00:28:11,280 --> 00:28:14,920
Speaker 12: very very quickly, and we signed a large license deal

526
00:28:14,960 --> 00:28:16,720
Speaker 12: that will have a royalty component so for all the

527
00:28:16,800 --> 00:28:19,200
Speaker 12: volume that gets built there. So, given the size of

528
00:28:19,240 --> 00:28:21,680
Speaker 12: the market, given it's going to be the largest energy

529
00:28:21,720 --> 00:28:24,520
Speaker 12: storage market in the next few years, and given just

530
00:28:24,560 --> 00:28:27,639
Speaker 12: the need for the world to decarbonize, it became a

531
00:28:27,720 --> 00:28:30,040
Speaker 12: very strategic point for US.

532
00:28:30,480 --> 00:28:34,320
Speaker 11: It's strategic, but it's still China. Are you concerned at all?

533
00:28:34,560 --> 00:28:37,040
Speaker 12: Not the way we structured the deal. So we structured

534
00:28:37,080 --> 00:28:39,560
Speaker 12: in a way where they invested fifty million dollars in

535
00:28:40,000 --> 00:28:43,480
Speaker 12: our company in the IPO as well, they prepaid fifty

536
00:28:43,520 --> 00:28:46,240
Speaker 12: million dollars up front to have the license to deploy it.

537
00:28:46,960 --> 00:28:49,760
Speaker 12: So we structured something in a way that financially would

538
00:28:50,320 --> 00:28:53,280
Speaker 12: I think help investors get that coverage upfront. And I

539
00:28:53,480 --> 00:28:56,440
Speaker 12: really believe with a partnership, they're a publicly company in China,

540
00:28:56,840 --> 00:28:59,920
Speaker 12: they want to deploy very quickly and protect the technology.

541
00:29:00,000 --> 00:29:01,200
Speaker 12: It's the investments they made in.

542
00:29:01,240 --> 00:29:04,520
Speaker 1: So are you licensing your technology to this Chinese partner?

543
00:29:04,760 --> 00:29:05,160
Speaker 6: Correct?

544
00:29:05,240 --> 00:29:08,200
Speaker 1: Okay, okay, I understand, okay, So what are you doing

545
00:29:08,240 --> 00:29:10,760
Speaker 1: here in the States? What are the growth drivers for

546
00:29:10,840 --> 00:29:12,680
Speaker 1: you here or just rest of world? I would guess

547
00:29:12,680 --> 00:29:13,000
Speaker 1: I'm not.

548
00:29:12,920 --> 00:29:13,720
Speaker 6: Sure, We're sure.

549
00:29:13,720 --> 00:29:16,000
Speaker 12: Well, the US is the largest market, so why don't

550
00:29:16,000 --> 00:29:17,760
Speaker 12: we start there. We're doing a lot in the US.

551
00:29:17,800 --> 00:29:20,719
Speaker 12: We had our first year of recognized revenue last year

552
00:29:20,760 --> 00:29:22,440
Speaker 12: where we did one hundred and forty six million, but

553
00:29:22,520 --> 00:29:26,920
Speaker 12: we announced one point seven gigawat hour of projects that

554
00:29:27,000 --> 00:29:31,160
Speaker 12: included short duration lithiumayan projects as well as a large

555
00:29:31,200 --> 00:29:34,240
Speaker 12: green hydrogen project with Pacific Gas and Electric, which is

556
00:29:34,440 --> 00:29:38,000
Speaker 12: the largest California utility. So we are addressing the short

557
00:29:38,080 --> 00:29:40,760
Speaker 12: duration market because that is the market in the United

558
00:29:40,800 --> 00:29:43,680
Speaker 12: States today and we'll continue to be for the next

559
00:29:43,720 --> 00:29:46,400
Speaker 12: few years. And in the rest of the world. We're

560
00:29:46,400 --> 00:29:50,480
Speaker 12: doing things internationally in India and Australia, and we'll be

561
00:29:50,480 --> 00:29:52,360
Speaker 12: announcing some other things in other parts of the world

562
00:29:52,400 --> 00:29:54,640
Speaker 12: as well. We announced some recent license deals as well,

563
00:29:54,680 --> 00:29:57,480
Speaker 12: in Greece and Cyprus and Egypt, for example.

564
00:29:57,920 --> 00:30:00,640
Speaker 1: So is that your primary business model, licensing your time technology.

565
00:30:02,360 --> 00:30:04,360
Speaker 12: Yeah, that's one of the business models we use for

566
00:30:04,400 --> 00:30:07,560
Speaker 12: our gravity system in particular. Why because that's basically a building,

567
00:30:07,640 --> 00:30:09,680
Speaker 12: So it's a structure you build that's lifting and learn

568
00:30:09,680 --> 00:30:12,160
Speaker 12: in those weights. So that is a very easy license model.

569
00:30:12,200 --> 00:30:16,120
Speaker 12: We also build commission transfer will also own projects and

570
00:30:16,200 --> 00:30:19,120
Speaker 12: own them in under long term tolling agreements or power

571
00:30:19,120 --> 00:30:19,960
Speaker 12: purchase agreements.

572
00:30:20,520 --> 00:30:23,640
Speaker 11: Does something like the Inflation Reduction Act in the US

573
00:30:23,680 --> 00:30:25,400
Speaker 11: make deals more attractive here?

574
00:30:25,720 --> 00:30:26,360
Speaker 7: Absolutely?

575
00:30:26,760 --> 00:30:28,719
Speaker 12: In fact, I'm here in New York this week because

576
00:30:29,160 --> 00:30:31,400
Speaker 12: I met with the World Economic Forum and there's a

577
00:30:31,600 --> 00:30:35,560
Speaker 12: leaders focused on energy innovation. So I'm one of about

578
00:30:35,600 --> 00:30:39,800
Speaker 12: thirty CEOs that participate in that, and the IRA it

579
00:30:39,880 --> 00:30:42,600
Speaker 12: has the world looking at the US. In fact, other

580
00:30:42,720 --> 00:30:46,440
Speaker 12: projects in other countries very interestingly are getting canceled to

581
00:30:46,520 --> 00:30:49,360
Speaker 12: come here, for example in green hydrogen. So the IRA

582
00:30:49,600 --> 00:30:53,000
Speaker 12: for US is a tremendous impetus because it's domestic content.

583
00:30:53,040 --> 00:30:56,520
Speaker 12: Our gravity is domestic for projects. The benefits are anywhere

584
00:30:56,520 --> 00:30:59,320
Speaker 12: from thirty to fifty percent, and it's going to be

585
00:30:59,320 --> 00:31:01,000
Speaker 12: great for jobs, and it's going to be great to

586
00:31:01,080 --> 00:31:04,360
Speaker 12: make the United States the leader in renewables. So it's

587
00:31:04,400 --> 00:31:05,720
Speaker 12: having its intended effect.

588
00:31:06,120 --> 00:31:08,800
Speaker 1: So how would you size up this industry here? I

589
00:31:08,800 --> 00:31:11,800
Speaker 1: guess is energy storage industry? I'm not sure, but how

590
00:31:11,800 --> 00:31:14,280
Speaker 1: would you kind of size up this market and kind

591
00:31:14,280 --> 00:31:15,840
Speaker 1: of where's your place in that market?

592
00:31:15,880 --> 00:31:19,800
Speaker 12: Sure, it's by twenty thirty and by many accounts, somewhere

593
00:31:19,840 --> 00:31:22,600
Speaker 12: between three hundred billion to four hundred billion is going

594
00:31:22,600 --> 00:31:25,280
Speaker 12: to be spent. There's estimates that go up to a

595
00:31:25,320 --> 00:31:27,600
Speaker 12: trillion when you get out to twenty forty and twenty fifty,

596
00:31:27,640 --> 00:31:32,560
Speaker 12: and so it's a massive market. It's required for renewables

597
00:31:32,560 --> 00:31:36,040
Speaker 12: to actually replace what is base load power from fossil fuels.

598
00:31:36,280 --> 00:31:38,640
Speaker 12: The issue with renewables, of course, is they're intermittent, So

599
00:31:39,120 --> 00:31:43,000
Speaker 12: if you're going to shut down predictable baseline energy, you

600
00:31:43,120 --> 00:31:46,200
Speaker 12: need to have storage to make up for that intermittency

601
00:31:46,200 --> 00:31:48,120
Speaker 12: when you can't predict when the sun shines or when

602
00:31:48,120 --> 00:31:51,959
Speaker 12: the wind blows. So it's a massive market. Unfortunately, there

603
00:31:51,960 --> 00:31:53,520
Speaker 12: are not a lot of solutions in the market. You

604
00:31:53,600 --> 00:31:57,200
Speaker 12: have lithium ion batteries. They're not ideal, but they're good

605
00:31:57,200 --> 00:31:59,920
Speaker 12: for short duration that's fine. They compete with electric vehicles,

606
00:32:00,000 --> 00:32:03,520
Speaker 12: so you have massive demand. The components come from only

607
00:32:03,560 --> 00:32:06,400
Speaker 12: a few countries, hence this IRAAC to try to get

608
00:32:06,480 --> 00:32:09,320
Speaker 12: us more energy independent. What's happening in Russian and Ukraine,

609
00:32:09,440 --> 00:32:13,320
Speaker 12: So it's a difficult problem to solve. With electrons, we

610
00:32:13,360 --> 00:32:15,800
Speaker 12: can make wind and solar today for one to two

611
00:32:15,840 --> 00:32:18,600
Speaker 12: cents of killawot hour just versus fossil fuels. That five

612
00:32:18,680 --> 00:32:22,000
Speaker 12: cents fully amortized, already built. The problem is to store

613
00:32:22,040 --> 00:32:24,080
Speaker 12: those same electrons, which you have to do if you're

614
00:32:24,080 --> 00:32:27,080
Speaker 12: going to replace fossil fuel. It costs five to ten

615
00:32:27,120 --> 00:32:30,160
Speaker 12: times that in some cases. So it's a difficult problem

616
00:32:30,160 --> 00:32:32,680
Speaker 12: to solve. It's a difficult problem to solve sustainably. And

617
00:32:33,000 --> 00:32:34,880
Speaker 12: I would say as an industry, and this may surprise

618
00:32:34,960 --> 00:32:38,200
Speaker 12: you to hear me say this, we are behind because

619
00:32:38,560 --> 00:32:40,560
Speaker 12: things got started late. I think the world, I think

620
00:32:40,600 --> 00:32:41,600
Speaker 12: has woken up that we do.

621
00:32:41,560 --> 00:32:42,200
Speaker 6: Have a problem.

622
00:32:42,240 --> 00:32:44,280
Speaker 12: It needs to be solved. A lot of money now

623
00:32:44,320 --> 00:32:46,240
Speaker 12: is being invested in a lot of new technologies that

624
00:32:46,240 --> 00:32:48,200
Speaker 12: can help us, and we're going to be leading away

625
00:32:48,240 --> 00:32:50,000
Speaker 12: for sure with the big.

626
00:32:49,800 --> 00:32:52,840
Speaker 1: I'm sorry, would the big energy companies have an incentive

627
00:32:52,840 --> 00:32:55,800
Speaker 1: to do this? Like you're a small company recently came public.

628
00:32:56,120 --> 00:32:58,400
Speaker 1: Who are the big players here? If somebody want to

629
00:32:58,440 --> 00:33:00,320
Speaker 1: play this in addition to your company.

630
00:33:00,080 --> 00:33:02,920
Speaker 12: Sure, well there are large players that are playing in here.

631
00:33:02,920 --> 00:33:05,440
Speaker 12: So Tesla is one of them that not only for

632
00:33:05,480 --> 00:33:08,160
Speaker 12: their cars, but they're using those same litinum batteries to

633
00:33:08,200 --> 00:33:13,920
Speaker 12: provide utility short duration storage technology. In addition, you have

634
00:33:14,320 --> 00:33:16,840
Speaker 12: you mentioned oil and gas with the big players, they

635
00:33:16,880 --> 00:33:19,960
Speaker 12: have to make their own clean energy transition. So for example,

636
00:33:20,320 --> 00:33:23,960
Speaker 12: as investors, we have Saudi Ramco that invested in the

637
00:33:24,000 --> 00:33:26,800
Speaker 12: company the largest energy company in the world, PHP, the

638
00:33:26,880 --> 00:33:29,240
Speaker 12: largest mining company in the world for the transition they

639
00:33:29,280 --> 00:33:32,160
Speaker 12: need to make and Creating is another one, large non

640
00:33:32,160 --> 00:33:35,280
Speaker 12: farest metals producer. They made these investments because they're going

641
00:33:35,320 --> 00:33:38,320
Speaker 12: to need longer duration technology, long duration storage and saw

642
00:33:38,400 --> 00:33:42,080
Speaker 12: us as an innovator. So it's happening and the largest

643
00:33:42,080 --> 00:33:45,520
Speaker 12: companies are looking at investments to help them make that transition.

644
00:33:46,440 --> 00:33:48,920
Speaker 11: And do you anticipate in our kind of final thirty

645
00:33:48,920 --> 00:33:51,520
Speaker 11: seconds with you, how worried are you about the macro

646
00:33:51,720 --> 00:33:54,000
Speaker 11: environment impacting that investment plan.

647
00:33:54,200 --> 00:33:56,160
Speaker 12: You know it's going to continue to be volatile as

648
00:33:56,160 --> 00:34:00,600
Speaker 12: we see in the stock market. Absolutely, but he continue

649
00:34:00,600 --> 00:34:03,680
Speaker 12: to see investment and demand coming. In other words, I'm

650
00:34:03,720 --> 00:34:06,040
Speaker 12: not seeing and he drops in demand. In fact, in

651
00:34:06,080 --> 00:34:09,000
Speaker 12: our last quarter we announced a forty percent growth in

652
00:34:09,080 --> 00:34:12,400
Speaker 12: our sales funnel, which already is about twelve billion dollars.

653
00:34:12,560 --> 00:34:16,600
Speaker 12: So and we announced also about a billion dollars in

654
00:34:16,640 --> 00:34:19,719
Speaker 12: new project awards just last quarter. So we are not

655
00:34:19,760 --> 00:34:22,759
Speaker 12: seeing a slowdown in demand from where we sit and

656
00:34:22,840 --> 00:34:25,839
Speaker 12: the IRA is going to just accelerate that at least

657
00:34:26,120 --> 00:34:28,840
Speaker 12: for sure for demand and also profitability in the United States.

658
00:34:29,239 --> 00:34:31,120
Speaker 1: Robert, thanks so much for joining us. Really appreciate you

659
00:34:31,120 --> 00:34:34,000
Speaker 1: coming in here. Robert Picconi, he's the CEO and co

660
00:34:34,080 --> 00:34:37,000
Speaker 1: founder of energy Vault again the ticker on the Bloomberg

661
00:34:37,080 --> 00:34:41,200
Speaker 1: terminal nur GV. Very interesting story. I think I learned

662
00:34:41,239 --> 00:34:43,560
Speaker 1: a lot there about how this whole stuff works. You

663
00:34:43,600 --> 00:34:47,160
Speaker 1: got to store It's not just creating the alternative energy,

664
00:34:47,239 --> 00:34:48,440
Speaker 1: so you got to store it. So I think I

665
00:34:48,440 --> 00:34:50,919
Speaker 1: got a better understanding of that, and that's what energy

666
00:34:51,000 --> 00:34:52,080
Speaker 1: Vall is trying to solve for.

667
00:34:52,480 --> 00:34:53,760
Speaker 7: You're listening to the tape.

668
00:34:53,880 --> 00:34:57,239
Speaker 8: Catch our live program Bloomberg Markets weekdays at ten am

669
00:34:57,280 --> 00:35:01,400
Speaker 8: Eastern on Bloomberg Radio, tune in app, Bloomberg dot Com.

670
00:35:01,080 --> 00:35:02,520
Speaker 7: And the Bloomberg Business App.

671
00:35:02,600 --> 00:35:05,399
Speaker 8: You can also listen live on Amazon Alexa from our

672
00:35:05,400 --> 00:35:10,560
Speaker 8: flagship New York station. Just say Alexa play Bloomberg eleven thirty.

673
00:35:11,280 --> 00:35:12,960
Speaker 1: All right, let's bring in our next guest. We'll have

674
00:35:13,040 --> 00:35:15,560
Speaker 1: chatting with Neil Grossman. He's a former CIO a t

675
00:35:15,719 --> 00:35:20,279
Speaker 1: k NNG Capital Neil million. Ways to go here. I'm

676
00:35:20,320 --> 00:35:22,200
Speaker 1: just going to start with because we had President Biden

677
00:35:22,200 --> 00:35:24,560
Speaker 1: speaking a little bit earlier, is now shaking hands getting

678
00:35:24,600 --> 00:35:27,880
Speaker 1: ready to head over to Japan. But he and his

679
00:35:27,920 --> 00:35:29,879
Speaker 1: friends in Congress, I got to get a debt deal done.

680
00:35:29,880 --> 00:35:33,839
Speaker 1: And my question is what are we going to get

681
00:35:33,840 --> 00:35:35,600
Speaker 1: if they do agree? Is it just to raise the

682
00:35:35,640 --> 00:35:37,800
Speaker 1: debt limit and kick this can down the road another

683
00:35:38,200 --> 00:35:38,920
Speaker 1: period of time.

684
00:35:39,200 --> 00:35:43,120
Speaker 6: You're very, very intelligent. Yeah, I think that's most likely

685
00:35:43,480 --> 00:35:46,719
Speaker 6: because I don't think the Democrats are going to be

686
00:35:46,840 --> 00:35:50,400
Speaker 6: willing to go as far as the Republicans want, and

687
00:35:51,280 --> 00:35:52,799
Speaker 6: you know, so they're going to have to find some

688
00:35:52,920 --> 00:35:55,520
Speaker 6: way to get this done. I'll tell you, just as

689
00:35:55,520 --> 00:35:58,920
Speaker 6: an aside, what I find very interesting, you know, you

690
00:35:59,000 --> 00:36:01,680
Speaker 6: really want to scratch your They put through a one

691
00:36:01,719 --> 00:36:04,799
Speaker 6: point seven trillion dollar package at the end of last

692
00:36:04,920 --> 00:36:08,000
Speaker 6: year with a lot of spending. They had to know

693
00:36:08,640 --> 00:36:11,279
Speaker 6: that they were going to create a problem for themselves

694
00:36:11,560 --> 00:36:15,439
Speaker 6: if they didn't resolve this Number one. Number two. There's

695
00:36:15,480 --> 00:36:17,479
Speaker 6: been a lot of interesting discussion if you've been paying

696
00:36:17,480 --> 00:36:20,560
Speaker 6: attention about constitutional issues, which I'd love to sit down

697
00:36:20,600 --> 00:36:23,600
Speaker 6: with Lawrence Tribe and discuss. But what I find very

698
00:36:23,640 --> 00:36:26,560
Speaker 6: interesting is they could have started to do things like

699
00:36:27,200 --> 00:36:30,719
Speaker 6: cut expenses about three or four months ago to give

700
00:36:30,760 --> 00:36:31,920
Speaker 6: themselves more running.

701
00:36:31,640 --> 00:36:35,799
Speaker 11: I mean decades ago, right, decades decades another run DC right, Like,

702
00:36:36,160 --> 00:36:39,239
Speaker 11: there's not a lot of long term planning necessarily.

703
00:36:39,520 --> 00:36:42,319
Speaker 6: Well, you know, the entire process. This is an interesting thing,

704
00:36:42,400 --> 00:36:46,040
Speaker 6: the entire process for how debt and spending and all

705
00:36:46,040 --> 00:36:49,360
Speaker 6: these programs are done based on the Congressional Budget Office

706
00:36:49,400 --> 00:36:53,200
Speaker 6: projections are only ten year projections. So what the Congress

707
00:36:53,239 --> 00:36:55,319
Speaker 6: tends to be very good at is dumping a lot

708
00:36:55,320 --> 00:36:59,000
Speaker 6: of additional expenses into back years so they don't get measured.

709
00:36:59,520 --> 00:37:02,120
Speaker 6: In fact, by the way, I wrote a book about

710
00:37:02,120 --> 00:37:05,000
Speaker 6: this about ten years ago called Generation WTF. I'm very

711
00:37:05,040 --> 00:37:06,640
Speaker 6: much on the side of young people.

712
00:37:07,000 --> 00:37:08,680
Speaker 1: And thanks Neil.

713
00:37:09,520 --> 00:37:13,680
Speaker 6: But the actuarial problems of this country are roughly speaking,

714
00:37:13,719 --> 00:37:16,640
Speaker 6: two hundred trillion plus. You have to understand the government

715
00:37:17,400 --> 00:37:20,280
Speaker 6: GDP is about twenty five trillion now, so we've already

716
00:37:20,280 --> 00:37:23,719
Speaker 6: committed functionally almost eight to ten years of GDP already.

717
00:37:23,920 --> 00:37:26,280
Speaker 6: The government spends let's say about five or six years

718
00:37:26,760 --> 00:37:29,320
Speaker 6: trillion dollars a year, so in theory we've spent close

719
00:37:29,400 --> 00:37:32,799
Speaker 6: to forty years of GDP already. So I mean, the

720
00:37:32,840 --> 00:37:36,759
Speaker 6: hands are tied significantly. And you know, look, nobody has

721
00:37:36,960 --> 00:37:39,720
Speaker 6: the willingness to do anything. Even this. McCarthy and Biden,

722
00:37:39,760 --> 00:37:41,520
Speaker 6: to start with, both said we're not going to touch

723
00:37:41,520 --> 00:37:45,400
Speaker 6: in titlements. Well that's ninety percent of the problems basically,

724
00:37:45,800 --> 00:37:47,560
Speaker 6: and it's not what they do, which is just keep

725
00:37:47,600 --> 00:37:50,160
Speaker 6: pushing into the back years. It's a problem.

726
00:37:50,200 --> 00:37:50,359
Speaker 7: Now.

727
00:37:50,440 --> 00:37:54,160
Speaker 6: My guess is, roughly speaking, the actuarial change in liabilities

728
00:37:54,560 --> 00:37:58,920
Speaker 6: tied to those to the entitlement problems primarily, it's probably

729
00:37:58,960 --> 00:38:02,280
Speaker 6: four to five trillionion dollars a year. And so whatever

730
00:38:02,320 --> 00:38:08,520
Speaker 6: you see being measured understates the accumulation of these problems enormously.

731
00:38:08,840 --> 00:38:11,600
Speaker 1: Yeah, that's just, yeah, that's just Those are discussions at

732
00:38:11,600 --> 00:38:15,200
Speaker 1: the market. I don't think the market remotely can deal.

733
00:38:15,040 --> 00:38:16,719
Speaker 6: With Well, they're going to have to at some point

734
00:38:16,840 --> 00:38:21,120
Speaker 6: social Security the trust fund runs out someplace around twenty

735
00:38:21,280 --> 00:38:23,320
Speaker 6: thirty three. I mean, that was a two year cut

736
00:38:23,400 --> 00:38:25,520
Speaker 6: from what they are fired for thirty three ten years.

737
00:38:25,600 --> 00:38:26,840
Speaker 1: That's scary y.

738
00:38:27,520 --> 00:38:27,840
Speaker 7: Yes.

739
00:38:27,960 --> 00:38:29,440
Speaker 6: So, by the way, I've been talking to a lot

740
00:38:29,440 --> 00:38:33,000
Speaker 6: of young people about getting you may make the problem

741
00:38:33,040 --> 00:38:38,200
Speaker 6: is the young. So my suggestion is young people should

742
00:38:38,200 --> 00:38:41,040
Speaker 6: call their congressman and say, listen, you need a second

743
00:38:41,040 --> 00:38:44,000
Speaker 6: trust fund. Every penny we put in cannot go into

744
00:38:44,040 --> 00:38:46,440
Speaker 6: that trust fund. That's not our problem. You tell them

745
00:38:46,480 --> 00:38:48,480
Speaker 6: to pay for it. Let's set up a fund for

746
00:38:48,520 --> 00:38:52,560
Speaker 6: ourselves and we'll be we'll be accumulating money for our retirements.

747
00:38:53,000 --> 00:38:56,680
Speaker 6: But you know that leaves the other other fund out

748
00:38:56,680 --> 00:38:58,720
Speaker 6: of money in a number of years. By the way, Medicare,

749
00:38:58,760 --> 00:39:02,520
Speaker 6: Medicaid ran out of money in twenty fifteen, so those

750
00:39:02,560 --> 00:39:05,560
Speaker 6: are now on budget as well. So these are big

751
00:39:05,560 --> 00:39:07,600
Speaker 6: problems too. Out of every three dollars give or take,

752
00:39:07,840 --> 00:39:10,480
Speaker 6: that the US government now spends is for entitlements.

753
00:39:11,280 --> 00:39:13,200
Speaker 11: What is the one thing then that you would want

754
00:39:13,239 --> 00:39:16,680
Speaker 11: Congress to do specifically to protect my social security?

755
00:39:16,840 --> 00:39:19,120
Speaker 6: Well, me, I am having to be quite extremely I

756
00:39:19,160 --> 00:39:21,840
Speaker 6: think they should shut it down right now. And what

757
00:39:21,880 --> 00:39:23,480
Speaker 6: they should do is that you can't do things. But

758
00:39:23,520 --> 00:39:25,200
Speaker 6: they ought to go back and say, look, this is

759
00:39:25,239 --> 00:39:28,919
Speaker 6: the amount of money we have to spend, and let's

760
00:39:28,960 --> 00:39:31,279
Speaker 6: get this right. Because, to be honest with you, if

761
00:39:31,320 --> 00:39:33,840
Speaker 6: they work with a cap this way, forget the deficit

762
00:39:33,880 --> 00:39:36,160
Speaker 6: cap and say they're going to get a lot more.

763
00:39:36,200 --> 00:39:39,680
Speaker 6: There's so much waste in this system, right, I mean,

764
00:39:39,680 --> 00:39:41,759
Speaker 6: I think this is roughly estimated one hundred and fifty

765
00:39:41,760 --> 00:39:43,600
Speaker 6: to two hundred and fifty billion dollars a year of

766
00:39:44,320 --> 00:39:49,319
Speaker 6: medicare medical fraud that by itself is almost as you know,

767
00:39:49,640 --> 00:39:52,439
Speaker 6: would provide enormous additional coverage. But you've got to sit

768
00:39:52,480 --> 00:39:55,680
Speaker 6: there and be willing to say, Look, we cannot simply

769
00:39:55,760 --> 00:39:58,680
Speaker 6: continue to have I call it ostrich economics and stick

770
00:39:58,719 --> 00:40:00,759
Speaker 6: our heads in the ground, because all we're doing is

771
00:40:00,800 --> 00:40:04,160
Speaker 6: providing a staggering problem to the future and that's.

772
00:40:04,040 --> 00:40:04,640
Speaker 7: Not really fair.

773
00:40:05,400 --> 00:40:08,480
Speaker 1: All right, back down to earth a little bit. Sure,

774
00:40:08,719 --> 00:40:10,120
Speaker 1: what else do you think about? What are you doing

775
00:40:10,160 --> 00:40:12,120
Speaker 1: in the markets? How are you viewing these markets? We just

776
00:40:12,160 --> 00:40:14,640
Speaker 1: got through the bulk of earnings. We heard some from

777
00:40:14,640 --> 00:40:18,360
Speaker 1: some retailers today and they're reasonably cautious and the outlook

778
00:40:18,360 --> 00:40:19,759
Speaker 1: and on the consumer. But what are you looking at?

779
00:40:19,880 --> 00:40:21,959
Speaker 6: Well, First of all, it's been and we've talked about

780
00:40:21,960 --> 00:40:24,239
Speaker 6: this for a lot while. I've been doing reasonably well

781
00:40:24,280 --> 00:40:26,640
Speaker 6: because I've been ranged, trading and trying to take advantage

782
00:40:26,640 --> 00:40:29,560
Speaker 6: of volatility. I think we also discussed the fact that

783
00:40:29,760 --> 00:40:33,360
Speaker 6: there was likely to be some upward migration and prices,

784
00:40:33,360 --> 00:40:36,759
Speaker 6: which we're having right now. So you know, in the

785
00:40:36,800 --> 00:40:39,880
Speaker 6: shorter run, I mean, this death issue is a concern

786
00:40:39,960 --> 00:40:42,719
Speaker 6: because I'm very very flat basically beause I don't know

787
00:40:42,719 --> 00:40:44,400
Speaker 6: how this is going to come out. I guess is

788
00:40:45,120 --> 00:40:48,120
Speaker 6: they're going to You're gonna You're gonna basically push it

789
00:40:48,160 --> 00:40:50,279
Speaker 6: to the limit. There'll be some real ugly days, they'll

790
00:40:50,320 --> 00:40:54,640
Speaker 6: get it done, and you'll be relatively okay. Inflation has

791
00:40:54,719 --> 00:40:56,719
Speaker 6: been coming down. The interesting thing to me is a

792
00:40:56,760 --> 00:40:59,280
Speaker 6: little lesson. I would have expected you have a couple

793
00:40:59,320 --> 00:41:03,040
Speaker 6: of more good mone of relative comps, and so I

794
00:41:03,040 --> 00:41:06,799
Speaker 6: think that as a concept concept gives you because the

795
00:41:06,840 --> 00:41:09,640
Speaker 6: market likes lower inflation because it thinks it takes the

796
00:41:09,640 --> 00:41:12,040
Speaker 6: fed out of the picture. I think the problem is

797
00:41:12,080 --> 00:41:13,719
Speaker 6: going to be that when we begin to move into

798
00:41:13,800 --> 00:41:15,880
Speaker 6: the fall, the year on year comps with inflation get

799
00:41:16,000 --> 00:41:18,560
Speaker 6: very ugly. And so because if you go back I

800
00:41:18,560 --> 00:41:20,480
Speaker 6: think last year, like five or six months, they were

801
00:41:20,480 --> 00:41:23,440
Speaker 6: averaging point one a month. We're averaging point three a

802
00:41:23,520 --> 00:41:28,200
Speaker 6: point four months. So any additional improvement is likely to

803
00:41:29,040 --> 00:41:31,279
Speaker 6: go away, and then you're going to have issues which

804
00:41:31,320 --> 00:41:35,640
Speaker 6: I suspect we have not seen the full full impact

805
00:41:35,719 --> 00:41:38,280
Speaker 6: on the economic side, So you're going to probably continue

806
00:41:38,320 --> 00:41:40,759
Speaker 6: to see economic slowing. You're going to probably see some

807
00:41:40,880 --> 00:41:43,719
Speaker 6: upward pressure on unemployment. By the way, anyone thinks you're

808
00:41:43,760 --> 00:41:46,920
Speaker 6: going to have a significant rise and unemployed by the

809
00:41:47,000 --> 00:41:48,360
Speaker 6: end of the year, the only way that's going to

810
00:41:48,360 --> 00:41:51,160
Speaker 6: happen is if we start losing. You know, one hundred

811
00:41:51,200 --> 00:41:53,640
Speaker 6: thousand jobs a month will not change the unemployment rate.

812
00:41:53,680 --> 00:41:56,919
Speaker 6: You've got to go way below that to really get

813
00:41:56,920 --> 00:41:59,240
Speaker 6: a significant rise. So I think you're going to find

814
00:41:59,320 --> 00:42:04,120
Speaker 6: less progress us on that side, economic slowing, upward pressure

815
00:42:04,480 --> 00:42:07,640
Speaker 6: on prices, and the FED is going to have its

816
00:42:07,760 --> 00:42:11,440
Speaker 6: hands tied unless something extreme happens. So that's sort of

817
00:42:11,520 --> 00:42:15,560
Speaker 6: my basic mindset for how I'm going to be approaching

818
00:42:15,640 --> 00:42:17,560
Speaker 6: the markets for the next six to eight months unless

819
00:42:17,600 --> 00:42:18,360
Speaker 6: something changes.

820
00:42:18,960 --> 00:42:21,719
Speaker 11: So with the year on year comms for inflation like

821
00:42:21,760 --> 00:42:25,360
Speaker 11: you mentioned, and the tight labor market and strong consumer spending,

822
00:42:25,680 --> 00:42:28,880
Speaker 11: how do we possibly predict that the Fed is going

823
00:42:28,920 --> 00:42:31,000
Speaker 11: to have this massive string of rate cuts.

824
00:42:31,200 --> 00:42:33,279
Speaker 6: I think they're out of their mind. I don't think that.

825
00:42:33,400 --> 00:42:35,239
Speaker 6: I don't think. First of all, let's be clear about

826
00:42:35,280 --> 00:42:38,960
Speaker 6: one thing. The Fed's mandate, and we've talked about this

827
00:42:39,040 --> 00:42:41,840
Speaker 6: is zero. They've self defined it to be two percent,

828
00:42:41,920 --> 00:42:46,560
Speaker 6: which is fine. They're not going to do anything unless

829
00:42:46,560 --> 00:42:48,160
Speaker 6: they want to try and change it, and if they

830
00:42:48,239 --> 00:42:51,000
Speaker 6: change it, watch out for the bond market until you

831
00:42:51,040 --> 00:42:53,359
Speaker 6: get near two percent, but you have if you have

832
00:42:53,440 --> 00:42:57,120
Speaker 6: three and three quarter percent unemployment, which is historically low.

833
00:42:57,640 --> 00:43:01,719
Speaker 6: Even with modest growth. Remember the growth they report real

834
00:43:01,760 --> 00:43:06,840
Speaker 6: growth is nominal less inflation. Nominal growth right now is

835
00:43:06,880 --> 00:43:09,560
Speaker 6: still quite healthy, and that's one of the reasons I

836
00:43:09,600 --> 00:43:12,680
Speaker 6: think we've seen less slowing than people think. It's not

837
00:43:12,719 --> 00:43:15,960
Speaker 6: like we're growing at two percent nominal with one percent

838
00:43:16,000 --> 00:43:17,960
Speaker 6: inflation to get to one percent. You're growing at like

839
00:43:18,000 --> 00:43:21,239
Speaker 6: five and a half six percent with four percent or

840
00:43:21,239 --> 00:43:23,960
Speaker 6: four and a half percent inflation to get to that level.

841
00:43:24,480 --> 00:43:26,719
Speaker 6: So I just think the bottom line in the back

842
00:43:26,920 --> 00:43:29,360
Speaker 6: we may not have to see any more hike. Personally,

843
00:43:29,400 --> 00:43:31,360
Speaker 6: I would have stopped hiking a little while ago. But

844
00:43:31,400 --> 00:43:33,239
Speaker 6: I think the FED should be selling assets off their

845
00:43:33,239 --> 00:43:35,920
Speaker 6: balance sheet, which they're not doing, not just simply letting

846
00:43:35,920 --> 00:43:39,279
Speaker 6: them run off. I think I call it quantitative dribble basically.

847
00:43:39,920 --> 00:43:45,480
Speaker 6: But the bottom line is that until something extreme happens

848
00:43:45,480 --> 00:43:48,680
Speaker 6: that will force their hand. As long as the economic

849
00:43:48,800 --> 00:43:52,560
Speaker 6: data is reasonable enough and in prices are still high,

850
00:43:52,960 --> 00:43:55,799
Speaker 6: you're not going to see them cut rates at least

851
00:43:55,840 --> 00:43:56,839
Speaker 6: that's my perspective.

852
00:43:57,239 --> 00:43:59,120
Speaker 1: Interesting, all right, Neil, thanks so much for joining us.

853
00:43:59,160 --> 00:44:03,120
Speaker 1: Neil Grossman, co founder and former CIO of tk NNG Capital.

854
00:44:03,520 --> 00:44:06,640
Speaker 8: You're listening to the tape cats are live program Bloomberg

855
00:44:06,719 --> 00:44:10,279
Speaker 8: Markets weekdays at ten am Eastern on Bloomberg Radio, the

856
00:44:10,360 --> 00:44:12,440
Speaker 8: tune in app, Bloomberg dot Com.

857
00:44:12,160 --> 00:44:13,600
Speaker 7: And the Bloomberg Business app.

858
00:44:13,640 --> 00:44:16,440
Speaker 8: You can also listen live on Amazon Alexa from our

859
00:44:16,440 --> 00:44:20,880
Speaker 8: flagship New York station, Just say Alexa play Bloomberg eleven thirty.

860
00:44:22,719 --> 00:44:24,360
Speaker 1: I want to get right to our next guest in

861
00:44:24,400 --> 00:44:27,359
Speaker 1: our c suite conversation today, Anna Bryson. She's a chief

862
00:44:27,400 --> 00:44:30,960
Speaker 1: financial officer for the company's Doximity New York Stock Exchange

863
00:44:31,000 --> 00:44:35,920
Speaker 1: symbol DOSDCS. It is in New York Stock Exchange listed

864
00:44:36,000 --> 00:44:39,120
Speaker 1: stock and thanks so much for joining us here. Let's

865
00:44:39,120 --> 00:44:41,759
Speaker 1: start off just real quick. Give me the twenty or

866
00:44:41,840 --> 00:44:44,680
Speaker 1: thirty second pitch on what you guys do at Doximity.

867
00:44:44,719 --> 00:44:46,960
Speaker 1: Then we'll get into your earnings and kind of the outlook.

868
00:44:48,320 --> 00:44:50,360
Speaker 13: Sure, well, thanks so much for having me. You know,

869
00:44:50,360 --> 00:44:53,840
Speaker 13: at dot Simity, we are building the leading digital platform

870
00:44:53,880 --> 00:44:57,080
Speaker 13: for US medical professionals, so we serve over two million

871
00:44:57,120 --> 00:45:01,399
Speaker 13: members including over eighty percent of USA positions across all

872
00:45:01,440 --> 00:45:05,360
Speaker 13: specialties and practice areas. So what we're building here is

873
00:45:05,360 --> 00:45:08,640
Speaker 13: really the physician Cloud. We provide our members with digital

874
00:45:08,680 --> 00:45:11,839
Speaker 13: tools that are built for medicine, which is enabling them

875
00:45:11,880 --> 00:45:14,960
Speaker 13: to collaborate with colleagues. They can stay up to date

876
00:45:15,000 --> 00:45:18,640
Speaker 13: with the latest medical news and research, manage their careers,

877
00:45:18,800 --> 00:45:22,320
Speaker 13: and conduct virtual patient visits. So we are really focused

878
00:45:22,440 --> 00:45:26,560
Speaker 13: on making physicians more productive to provide better care for

879
00:45:26,600 --> 00:45:27,400
Speaker 13: their patients.

880
00:45:28,120 --> 00:45:29,799
Speaker 11: All right, So just to get it out of the way,

881
00:45:30,000 --> 00:45:32,880
Speaker 11: a tough morning, dropping as much as eleven percent in

882
00:45:32,960 --> 00:45:36,799
Speaker 11: pre market trading. Analysts are looking for a lot of

883
00:45:37,080 --> 00:45:39,560
Speaker 11: growth in the second half of the year after some

884
00:45:39,719 --> 00:45:44,120
Speaker 11: product delays. What's the plan to turn those delays into progress?

885
00:45:45,520 --> 00:45:48,480
Speaker 13: Sure, So we're really proud of the new products that

886
00:45:48,480 --> 00:45:51,120
Speaker 13: we've launched for our customers. We think they will be

887
00:45:51,320 --> 00:45:55,400
Speaker 13: critical to our success over time and contribute to our

888
00:45:55,440 --> 00:45:58,520
Speaker 13: top line growth. We are in a regulated industry, so

889
00:45:58,560 --> 00:46:00,359
Speaker 13: we are facing a few delays and getting the new

890
00:46:00,360 --> 00:46:03,680
Speaker 13: products live. But if you look at our quarterly revenue curve,

891
00:46:03,960 --> 00:46:06,080
Speaker 13: the cadence of our quarterly revenue curve that we're guiding

892
00:46:06,080 --> 00:46:08,960
Speaker 13: to for this year actually looks very similar to last year,

893
00:46:09,080 --> 00:46:11,759
Speaker 13: so it really isn't that different versus what we've seen

894
00:46:11,800 --> 00:46:14,239
Speaker 13: in the past. And we're really proud of the fact

895
00:46:14,239 --> 00:46:17,080
Speaker 13: that we're guiding to another year as a rule of

896
00:46:17,160 --> 00:46:20,719
Speaker 13: sixty plus company with twenty percent top line growth and

897
00:46:20,960 --> 00:46:24,440
Speaker 13: forty four percent adjustedy bits don margins, which is something

898
00:46:24,680 --> 00:46:27,560
Speaker 13: top macro environment. I think we're really proud of being

899
00:46:27,560 --> 00:46:30,640
Speaker 13: able to maintain our long term target of a rule

900
00:46:30,640 --> 00:46:31,800
Speaker 13: of sixty plus company.

901
00:46:32,160 --> 00:46:35,560
Speaker 1: I'm a big fan of subscription revenue businesses, and I

902
00:46:35,600 --> 00:46:38,040
Speaker 1: see that's a big, big part of your business. Talk

903
00:46:38,080 --> 00:46:40,800
Speaker 1: about kind of what drives your revenue, what are the

904
00:46:40,880 --> 00:46:42,439
Speaker 1: key metrics that I need to get right and looking

905
00:46:42,440 --> 00:46:45,239
Speaker 1: at your revenue sure, I.

906
00:46:45,280 --> 00:46:47,640
Speaker 13: Think one of the key pieces there is our net

907
00:46:47,680 --> 00:46:51,000
Speaker 13: revenue retention rate. We've been able to post very high

908
00:46:51,000 --> 00:46:54,200
Speaker 13: net revenue retention over the last several years. So this

909
00:46:54,280 --> 00:46:57,680
Speaker 13: last quarter we reported one hundred and seventeen percent net

910
00:46:57,719 --> 00:47:01,080
Speaker 13: revenue retention rate, and that was even hire amongst our

911
00:47:01,080 --> 00:47:04,239
Speaker 13: top twenty customers. So our top twenty customers had a

912
00:47:04,280 --> 00:47:07,120
Speaker 13: net revenue retention rate of one hundred and twenty four percent,

913
00:47:07,400 --> 00:47:10,480
Speaker 13: which implies that we're actually able to scale the quickest

914
00:47:10,560 --> 00:47:13,479
Speaker 13: with our largest customers, which we think is a really

915
00:47:13,480 --> 00:47:16,120
Speaker 13: good indication of what's to COG over the next five

916
00:47:16,160 --> 00:47:19,000
Speaker 13: to ten years as we continue to get more and

917
00:47:19,040 --> 00:47:20,520
Speaker 13: more large customers.

918
00:47:20,920 --> 00:47:23,920
Speaker 11: What are some of the biggest headwinds that you're concerned

919
00:47:23,920 --> 00:47:26,239
Speaker 11: about in that same time period, the next five to

920
00:47:26,320 --> 00:47:28,200
Speaker 11: ten years, and how do you plan to kind of

921
00:47:28,239 --> 00:47:29,360
Speaker 11: hedge against them.

922
00:47:30,800 --> 00:47:34,560
Speaker 13: Sure, I think from our perspective, while we may remain

923
00:47:34,680 --> 00:47:38,680
Speaker 13: focused on building out tools for our physicians, that is

924
00:47:38,800 --> 00:47:43,000
Speaker 13: our key focus area, we're less concerned about headwinds. I

925
00:47:43,080 --> 00:47:46,680
Speaker 13: think you know we've achieved a record number of qaus

926
00:47:46,719 --> 00:47:49,640
Speaker 13: across our entire platform this last quarter. I think if

927
00:47:49,640 --> 00:47:51,920
Speaker 13: you had asked me this question maybe a year ago,

928
00:47:52,040 --> 00:47:54,600
Speaker 13: as we were coming out of the pandemic, the concern

929
00:47:54,640 --> 00:47:57,319
Speaker 13: would have been can we maintain the engagement levels on

930
00:47:57,320 --> 00:48:00,640
Speaker 13: our platform that we saw during the pandemic. And today

931
00:48:00,719 --> 00:48:02,960
Speaker 13: we're not only seeing that we're able to maintain the

932
00:48:03,000 --> 00:48:06,360
Speaker 13: engagement levels, we're actually seeing higher engagement than we saw

933
00:48:06,760 --> 00:48:10,520
Speaker 13: during the pandemic, which is something that we're incredibly proud

934
00:48:10,560 --> 00:48:13,480
Speaker 13: of and I think just speaks volumes to our ability

935
00:48:13,520 --> 00:48:17,160
Speaker 13: to continue to make our platform very sticky and we're

936
00:48:17,160 --> 00:48:19,720
Speaker 13: continuing to build new tools, Like we're really excited about

937
00:48:19,719 --> 00:48:23,000
Speaker 13: the docs GPT tools we're building for our physicians to

938
00:48:23,440 --> 00:48:26,160
Speaker 13: help them. You know, we like to call it cut

939
00:48:26,200 --> 00:48:28,520
Speaker 13: the scut, so get rid of a lot of that

940
00:48:28,760 --> 00:48:31,880
Speaker 13: day to day work that really takes them away from patients.

941
00:48:32,360 --> 00:48:36,120
Speaker 13: So yeah, I would say our engagement is a really

942
00:48:36,160 --> 00:48:37,759
Speaker 13: strong indicator of what's to come.

943
00:48:38,560 --> 00:48:42,800
Speaker 1: And telehealth that is something that not a lot of

944
00:48:42,840 --> 00:48:45,800
Speaker 1: people were adept at before the pandemic. But boy, that

945
00:48:45,920 --> 00:48:48,080
Speaker 1: that change. I mean, I'm not even going to a

946
00:48:48,120 --> 00:48:50,520
Speaker 1: doctor's office like unless a limb is hanging off, you know.

947
00:48:50,640 --> 00:48:53,120
Speaker 1: I mean, so and you talk to us about telehealth,

948
00:48:53,120 --> 00:48:57,200
Speaker 1: how you guys incorporate that into your system.

949
00:48:57,280 --> 00:49:00,479
Speaker 13: Yeah, So we have a telehealth tool that is both

950
00:49:00,560 --> 00:49:04,879
Speaker 13: voice and video. We've built it by physicians for physicians,

951
00:49:04,960 --> 00:49:08,160
Speaker 13: meaning it has a lot of unique features that really

952
00:49:08,160 --> 00:49:11,120
Speaker 13: help the physician communicate with the patient in a more

953
00:49:11,120 --> 00:49:15,160
Speaker 13: clinical way. And our telehealth tools alone were used by

954
00:49:15,160 --> 00:49:19,200
Speaker 13: our record three hundred and eighty thousand unique providers last quarter.

955
00:49:19,360 --> 00:49:21,680
Speaker 13: So to put that in perspectives, there's just over a

956
00:49:21,719 --> 00:49:24,960
Speaker 13: million doctors in the United States, So we have very

957
00:49:25,000 --> 00:49:28,520
Speaker 13: high engagement on our telehealth platform, and we continue to

958
00:49:28,560 --> 00:49:32,359
Speaker 13: build out more than just telehealth, other workflow tools that

959
00:49:32,520 --> 00:49:35,680
Speaker 13: our doctors are using daily to be more efficient in

960
00:49:35,719 --> 00:49:36,360
Speaker 13: the office.

961
00:49:37,360 --> 00:49:39,960
Speaker 11: You guys have two of the big buzzwords that everyone

962
00:49:40,000 --> 00:49:43,440
Speaker 11: loves in your description here, cloud and AI. Talk to

963
00:49:43,480 --> 00:49:47,080
Speaker 11: me about how you're gonna become the go to when

964
00:49:47,120 --> 00:49:51,120
Speaker 11: it comes to the healthcare provider that really is nailing

965
00:49:51,200 --> 00:49:52,120
Speaker 11: the AI space.

966
00:49:53,840 --> 00:49:56,960
Speaker 13: Yeah, you know, we're learning a lot about how generative

967
00:49:57,000 --> 00:50:00,319
Speaker 13: AI can serve doctors. So the one thing we've arted

968
00:50:00,320 --> 00:50:03,200
Speaker 13: out with here is docs GPT. I think you can

969
00:50:03,239 --> 00:50:05,600
Speaker 13: think of it as a chat GPT integration with a

970
00:50:05,640 --> 00:50:09,520
Speaker 13: healthcare twist. So we've developed a library of healthcare specific

971
00:50:09,600 --> 00:50:14,280
Speaker 13: prompts and we've trained the AI on common healthcare specific documents,

972
00:50:14,360 --> 00:50:17,680
Speaker 13: so physicians can use it to appeal an insurance denial

973
00:50:17,719 --> 00:50:21,200
Speaker 13: for a patient with a chronic condition, for example. And

974
00:50:21,320 --> 00:50:24,319
Speaker 13: that's an area that we're continuing to focus in on

975
00:50:24,640 --> 00:50:27,680
Speaker 13: and or we're you know, we're really encouraged by the

976
00:50:27,800 --> 00:50:31,080
Speaker 13: early adoption and I think at the end of the day,

977
00:50:31,160 --> 00:50:33,759
Speaker 13: you know, as we think about a generative AI is

978
00:50:34,160 --> 00:50:37,120
Speaker 13: very promising, but you know, it's not without errors, and

979
00:50:37,160 --> 00:50:41,720
Speaker 13: it should be approached judiciously. So we're enabling the position

980
00:50:41,920 --> 00:50:45,480
Speaker 13: to test and use this technology and provide the appropriate

981
00:50:45,520 --> 00:50:48,400
Speaker 13: feedback for us to help ensure the best best applications

982
00:50:48,600 --> 00:50:49,640
Speaker 13: in healthcare context.

983
00:50:50,640 --> 00:50:53,600
Speaker 1: And in your subscription model, who pays the subscription? Is

984
00:50:53,600 --> 00:50:57,600
Speaker 1: it the doctor individually is at the hospital? How does

985
00:50:57,600 --> 00:50:57,959
Speaker 1: that work?

986
00:50:58,320 --> 00:50:58,480
Speaker 10: Yeah?

987
00:50:58,600 --> 00:51:01,440
Speaker 13: Sure, good question. We are free for physicians, that is

988
00:51:01,520 --> 00:51:04,319
Speaker 13: very important for us. We are all free for physicians,

989
00:51:04,400 --> 00:51:09,080
Speaker 13: but we are monetized by health systems and pharmaceutical manufacturers.

990
00:51:09,280 --> 00:51:13,719
Speaker 13: So those are two key customers where pharmaceutical manufacturers can

991
00:51:13,960 --> 00:51:17,759
Speaker 13: get information to physicians about clinical trials for example, and

992
00:51:17,840 --> 00:51:21,000
Speaker 13: health systems can get information to physicians about, you know,

993
00:51:21,360 --> 00:51:23,839
Speaker 13: a new innovative treatment that they might have.

994
00:51:24,239 --> 00:51:27,160
Speaker 1: So thirty seconds, how's your recession model?

995
00:51:27,239 --> 00:51:27,439
Speaker 7: Look?

996
00:51:27,680 --> 00:51:29,920
Speaker 1: How susceptible do you guys think? Are you to a

997
00:51:29,920 --> 00:51:30,760
Speaker 1: slow economy?

998
00:51:32,200 --> 00:51:32,399
Speaker 2: Yeah?

999
00:51:32,440 --> 00:51:38,080
Speaker 13: So, pharma is a very recession resilient industry. And so

1000
00:51:38,600 --> 00:51:41,200
Speaker 13: while you know, if we look at the pharma ETF,

1001
00:51:41,560 --> 00:51:44,000
Speaker 13: I think it's only down about five percent this year.

1002
00:51:44,040 --> 00:51:49,280
Speaker 13: It's an industry that's proven to be very recession resilient.

1003
00:51:49,400 --> 00:51:52,120
Speaker 13: Healthcare in general is recession resilient because the need for

1004
00:51:52,160 --> 00:51:54,799
Speaker 13: life saving treatments doesn't change just because we're in a

1005
00:51:54,800 --> 00:51:57,600
Speaker 13: tough economic time, so we think we have a strong

1006
00:51:57,640 --> 00:52:00,439
Speaker 13: ability to weather a recession. I mean you and see

1007
00:52:00,440 --> 00:52:04,280
Speaker 13: that as we're continuing to post north of twenty percent

1008
00:52:04,320 --> 00:52:06,720
Speaker 13: revenue groups and north of forty percent margins.

1009
00:52:06,760 --> 00:52:08,600
Speaker 1: All right, and great stuff. Thank you very much for

1010
00:52:08,640 --> 00:52:12,080
Speaker 1: taking the time and chatting with us. Anna Bryson, CFO

1011
00:52:12,120 --> 00:52:15,040
Speaker 1: of Proximity DCS is the ticker.

1012
00:52:16,600 --> 00:52:19,680
Speaker 2: Thanks for listening to the Bloomberg Markets podcast. You can

1013
00:52:19,719 --> 00:52:23,520
Speaker 2: subscribe and listen to interviews on Apple Podcasts or whatever

1014
00:52:23,600 --> 00:52:27,320
Speaker 2: podcast platform you prefer. I'm Matt Miller. I'm on Twitter

1015
00:52:27,520 --> 00:52:29,439
Speaker 2: at Matt Miller nineteen seventy three.

1016
00:52:29,880 --> 00:52:32,280
Speaker 1: And I'm Paul Sweeney. I'm on Twitter at pt Sweeney.

1017
00:52:32,400 --> 00:52:35,040
Speaker 1: Before the podcast, you can always catch us worldwide at

1018
00:52:35,080 --> 00:52:36,839
Speaker 1: Bloomberg Radio.