Latest / Best of Business / Sam Dickie: Fisher Funds expert on what Mastercard's performance says about the economy

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Sam Dickie: Fisher Funds expert on what Mastercard's performance says about the economy · Best of Business

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  Speaker 1: You're listening to a podcast from News Talks B follow
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  Speaker 1: Heather do for see Alan Now.
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  Speaker 2: MasterCard is a great example of what investors are focused
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  Speaker 2: on globally right now. What they're focused on is the
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  Speaker 2: slowdown in US economic growth expectations, regulatory risk and how
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  Speaker 2: that impacts companies, and new technology like open banking and
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  Speaker 2: neo banks and so on. Now, MasterCard. The reason it's
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  Speaker 2: a great example is because it's influenced by all of
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  Speaker 2: those things. And to talk us through it, we've got
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  Speaker 2: Sam Dickey Fisher Funds with us. Hey Sam, So Sam,
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  Speaker 2: let's start by talking about these themes. Okay, slow down
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  Speaker 2: in US growth expectations, what's going on here?
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  Speaker 3: Yeah, you and I talked about that last week. So
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  Speaker 3: there has been a slow down news economic growth expectations
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  Speaker 3: still slowly growing, but just slowing slightly. And MISSUS care
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  Speaker 3: because economic growth drives corporate earning growth and that drive
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  Speaker 3: stock prices.
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  Speaker 2: And then what about the regulatory risk? What are investors
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  Speaker 2: thinking about this?
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  Speaker 3: Well, that that is super interesting because ideally, of course,
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  Speaker 3: you don't long to own companies that run the risk
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  Speaker 3: that the regulator might come knocking. But it turns out
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  Speaker 3: that if you aim to invest in some of the
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  Speaker 3: highest quality companies in the world, they tend to attract
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  Speaker 3: the attention they're regulator because they are just so large
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  Speaker 3: and important. So think of companies like Google and Microsoft.
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  Speaker 3: They dominate their industries, have been fabulous investments over time,
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  Speaker 3: and almost as night follows day, attract the unwanted attention
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  Speaker 3: of the regulator. Open banking, Yeah, think about open banking
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  Speaker 3: is just another I mean, innovation is running at the
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  Speaker 3: fastest pace ever, which brings competition and disruption, and open
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  Speaker 3: banking is no different an opportunity and as you know,
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  Speaker 3: it allows competitors of or two traditional banks would customer
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  Speaker 3: approval to easily access customer data and offer new services
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  Speaker 3: to those customers. So I think about that as an
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  Speaker 3: open up with competition to banks and maybe some disintermediation
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  Speaker 3: of banks. And investors obviously pay attention to that because
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  Speaker 3: banks big part of global stock market.
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  Speaker 2: And so how does master card get affected by all
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  Speaker 2: of these things?
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  Speaker 3: Yeah, well, I think you did right to start. The
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  Speaker 3: best way to bring a live teams that are bests
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  Speaker 3: have focused on around the world, it's through the lens
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  Speaker 3: of a single company, and MasterCard is one of a
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  Speaker 3: handful of global payments network companies, in fact, with the
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  Speaker 3: second largest in the world mine Visa. It doesn't miss
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  Speaker 3: your credit cards. It controls of the very valuable networks
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  Speaker 3: and routes the flow of money between so you and I,
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  Speaker 3: the coffee shop down the road, and banks. And it
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  Speaker 3: is getting buffeted by all three of those things. So
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  Speaker 3: when you think about it slowing the economy and how
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  Speaker 3: that impacts MasterCard, If we spend one hundred dollars with
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  Speaker 3: our on our MasterCard this month, master card clips the
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  Speaker 3: ticket to the tune of about twenty cents. Now, if
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  Speaker 3: we piton our pelts and only spend ninety bucks next month,
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  Speaker 3: master Card on eclips eighteen cents. So it's a sort
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  Speaker 3: of a direct impact to the top line and then
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  Speaker 3: bottom line. You see about the regulator, master Card is
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  Speaker 3: kind of in the round of those companies I talked about,
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  Speaker 3: so Microsoft and Google. It is so critical to global
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  Speaker 3: money flyer as it does attract the attention of the
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  Speaker 3: regulator via fines and legal cases the CEA. And when
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  Speaker 3: you think about disruption or opportunity that comes from say
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  Speaker 3: open banking and neo banks. It might face more competition
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  Speaker 3: from say neobanks, from virtual credit cards for example, but
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  Speaker 3: they can in fact be a beneficiary because those neobanks
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  Speaker 3: don't have their own you know, these networks or old
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  Speaker 3: money routes to control the fly of money. So in
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  Speaker 3: fact the neo banks will end up up using master
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  Speaker 3: cards valuable networks.
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  Speaker 2: So what does this all mean for investors in SAM.
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  Speaker 3: I think most when you think about the economy, the
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  Speaker 3: first one, most high quality companies globia are temporarily impacted
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  Speaker 3: by backmancre backdrop. But the trick is to invest in
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  Speaker 3: companies with really long growth runways, almost in respect of
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  Speaker 3: the economic backdrops. So if you think master Card, for example,
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  Speaker 3: it is directly impacted by the economy as we see
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  Speaker 3: it as people tipen their belts. But on a longer
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  Speaker 3: term view, there's still a very long runway to go,
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  Speaker 3: believe it or not, of switching cash and check payments
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  Speaker 3: to cards around the world. So take Europe, which we
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  Speaker 3: thought fairly developed. It still has forty percent of payments,
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  Speaker 3: particularly in Southern Europe, done by cash and check. And
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  Speaker 3: when you think about regulatory risk, it really just does
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  Speaker 3: go with a territory that most high quality companies on
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  Speaker 3: Earth are traffical, are of the regulator. We do typically
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  Speaker 3: need these companies ore and the market can get overly
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  Speaker 3: concerned about regulation. And as for competition, it is coming
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  Speaker 3: thicker and faster than ever given innovations running faster. So
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  Speaker 3: make sure any company you invest in has a really
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  Speaker 3: wide economic motor out of business and has a service
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  Speaker 3: or product that customers can't do without.
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  Speaker 2: Oh that's really good advice, Sam. Thank you so much,
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  Speaker 2: as always that Sam Dickey of Fisher.
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