Latest / Bloomberg Intelligence / China, Ukraine, And Markets (Podcast)

Transcript

China, Ukraine, And Markets (Podcast) · Bloomberg Intelligence

0:00
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
0:04
Speaker 1: my co host Matt Miller. Every business day, we bring
0:06
Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
0:11
Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
0:15
Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
0:18
Speaker 1: at Bloomberg dot com slash podcast. Let's go right to
0:22
Speaker 1: our next guest, Hans Dal, CEO of the Mitchell Madison Group.
0:25
Speaker 1: I want to talk to him because he had some
0:28
Speaker 1: weaker than expected, much weaker than expected economic data come
0:31
Speaker 1: out of China overnight, and that's kind of spooky markets
0:34
Speaker 1: a little bit. So so let's talk to somebody who
0:36
Speaker 1: kind of doves this stuff. But here. So he's the
0:37
Speaker 1: see of Mitchell Madison Group. But here's the scam. Jackson Wyoming.
0:43
Speaker 1: You were doing the remote thing, Hans, before it was
0:46
Speaker 1: the cool thing to do. How are you working this
0:49
Speaker 1: scam to be working from Jackson Way. I mean, that's
0:51
Speaker 1: the first question. You know that the truth of this
0:53
Speaker 1: even worse. I split my time between Jackson Hole and Mala,
0:56
Speaker 1: who I just got back. You're killing us. It is
0:59
Speaker 1: even worse, all right, Well, the good stuff is Matt
1:02
Speaker 1: he has got his undergraduate from the University of Michigan.
1:04
Speaker 1: You'll be having but even more impressive for me NBA
1:08
Speaker 1: from the Tux School. The Touch School is such an
1:10
Speaker 1: awesome school, a Dartmouth dart meth for for the NBA program,
1:13
Speaker 1: and that all the Tux that I know are really
1:16
Speaker 1: smart and they're super duper loyal to their school for
1:19
Speaker 1: some unknown reason. It's what's going on in China here
1:21
Speaker 1: this data, I mean, it just seems they've got some
1:24
Speaker 1: challenges over there. What do you make of it? Well,
1:27
Speaker 1: I think what's going on in China is just the
1:29
Speaker 1: result of COVID lockdowns. That's insane. Zero COVID policy has
1:34
Speaker 1: taken a text obviously we've all seen that. But it's
1:37
Speaker 1: also a significant wealth effect from the property crash, right,
1:40
Speaker 1: I mean, if the population has been it's highly leveraged,
1:44
Speaker 1: it's invested in property, it's not going well. That is
1:47
Speaker 1: of course going to put a crimp on spending. And
1:50
Speaker 1: I think in the medium to longer term you will
1:52
Speaker 1: see an impact of the writing interest rates in the
1:54
Speaker 1: West that would just simply have the normal micro economy
1:57
Speaker 1: in macro economic impact that always pass slowing demand, and
2:01
Speaker 1: it's going to slow down. The problem with China is
2:04
Speaker 1: that their populations at its Factson depends highly on growth, right,
2:08
Speaker 1: So they're in a bit of the trouble. So what
2:10
Speaker 1: does that mean though for us? What does it mean
2:12
Speaker 1: for you Jackson Wyoming? I mean I saw I saw
2:19
Speaker 1: a headline that said no one is immune, um JP
2:22
Speaker 1: Morgan says, and I thought, wow, they're really playing this
2:25
Speaker 1: a little bit dramatic. And then this morning, you know,
2:28
Speaker 1: everybody was it's all in the Asia focus, and of
2:31
Speaker 1: course it was our top headline. But we're only off,
2:35
Speaker 1: you know, thirteen points on the SMP five. Is it
2:38
Speaker 1: really that important to markets in the US? Hard to say.
2:43
Speaker 1: I mean, it's it's you mentioned Dartmouth, right, NBA. It
2:47
Speaker 1: was really interesting. This whole thing reminds me a little
2:49
Speaker 1: bit of Japan in the late eighties and nineties and
2:53
Speaker 1: even the nineties. I remember going to class and listening
2:56
Speaker 1: to professors, you know, telling us how the Japanese SYS
3:00
Speaker 1: more government direction might be superior. And then the next
3:03
Speaker 1: class you would learn about the pre market micro economics
3:06
Speaker 1: the normal way. If you pointed out that the trichotomy,
3:08
Speaker 1: that they just be like well maybe that's a different class, right.
3:12
Speaker 1: So I think what's going on is is economic reality,
3:16
Speaker 1: the Western system, free calcitualism is right. China is not
3:20
Speaker 1: playing the game correctly. They have tremendous problems with demography.
3:26
Speaker 1: I think they are going to be a long term
3:28
Speaker 1: declining power, right, and we're gonna have to deal with that, right,
3:33
Speaker 1: I think would be very very dangerous. Declining powers are unstable,
3:37
Speaker 1: they do crazy things. Yeah, you see it in While,
3:42
Speaker 1: you see it in Ukraine, you see it. You could
3:44
Speaker 1: see in Taiwan, which would be much more of a problem.
3:46
Speaker 1: China obviously much bigger, much more interdependent, and I don't
3:50
Speaker 1: know if we can as business people count on you know,
3:54
Speaker 1: government solved this problem. So I think what I see
3:56
Speaker 1: and what I what I would do, And this is
3:58
Speaker 1: my background. Supply team manage man is advising corporations that
4:02
Speaker 1: what they have done the last twenty thirty years getting
4:05
Speaker 1: it to China has to be done in some way
4:08
Speaker 1: going backwards, because really bad stuff could happen, right, and
4:12
Speaker 1: when really bad stuff could happen, it's a game of
4:15
Speaker 1: musical chairs. And there's not enough industrial capacity on the
4:18
Speaker 1: planet to replace China. For everybody at the same time quickly.
4:23
Speaker 1: And when you look at the biggest US manufacturers, Um,
4:27
Speaker 1: is it scary? Are too are too many of them?
4:30
Speaker 1: Too deep in? I think so? I think overall, I
4:34
Speaker 1: think overall it is um it's too much, right, I mean,
4:38
Speaker 1: you can't you can't replace China with something else in
4:40
Speaker 1: the in the short term, It's not possible, right. So,
4:43
Speaker 1: but that's also on the it's also a good news
4:46
Speaker 1: story in some ways because if there's you know, a
4:48
Speaker 1: great degree of mutual dependency creates polygo stability, right So,
4:52
Speaker 1: I for example, I envisioned that when Biden talks to
4:55
Speaker 1: z they're going to talk about removing parraffs, right mean,
4:58
Speaker 1: Biden needs it for use and play, and China it's
5:01
Speaker 1: just for growth. And they're going to think about this
5:02
Speaker 1: Taiwan thing. That's kind of where I wanted to go.
5:05
Speaker 1: H Hans. I mean President gy and President Biden are
5:07
Speaker 1: set to meet later this year. That seems like a
5:10
Speaker 1: big deal to me at least. What would you like
5:14
Speaker 1: to see on the agenda on the table for a
5:16
Speaker 1: discussion that maybe we could actually get something done. Yeah,
5:21
Speaker 1: I think, like I said, I think it's in a
5:22
Speaker 1: mutual interest to get better trade relations going, and I
5:26
Speaker 1: think they're going to do something on the tarifor front.
5:28
Speaker 1: I'm pretty sure about that. I mean, it's it's in
5:30
Speaker 1: everybody's best interest, right. It will certainly have a short
5:34
Speaker 1: term positive impact on US inflation, which is critical, and
5:38
Speaker 1: I also wonder what kind of impact we'll have on China.
5:42
Speaker 1: You know, we spoke with the Chinese econost this morning,
5:44
Speaker 1: who seemed very worried that, you know, Europeans and Americans
5:48
Speaker 1: would stop buying their goods or not buy their goods
5:50
Speaker 1: as much, and that's a big problem for them. I
5:53
Speaker 1: can't imagine that people will always always go for price,
5:56
Speaker 1: and most people don't even know what's meet in China,
5:59
Speaker 1: so I find that a little bit hard to believe. Well, No,
6:01
Speaker 1: the idea was that if we go into a recession,
6:04
Speaker 1: we just won't have the you know, the purchasing power
6:07
Speaker 1: to to keep up the kind of consumerism that we've
6:09
Speaker 1: been practicing. No, I think that, Like I said that,
6:12
Speaker 1: I think that's going to happen. I think that's part
6:13
Speaker 1: of the reason why China might be slowing down. But
6:15
Speaker 1: I don't think that we're going to follow up the
6:17
Speaker 1: cliff here in the West in the US. All right, Hans,
6:20
Speaker 1: great stuff. Really appreciate getting your perspective there, Hans dal
6:23
Speaker 1: See of the Mitchell Madison Group. Kind of red and
6:29
Speaker 1: green on the screen here to market, not sure what
6:31
Speaker 1: it wants to do here. We've obviously had that big
6:34
Speaker 1: move off the bottom after that brutal first half of
6:37
Speaker 1: the year for both socks and bonds. A lot of
6:39
Speaker 1: folks de scratching their heads saying, okay, now what want's
6:43
Speaker 1: check in with Jay Hatfield, CEO, founder and portfolio manager
6:46
Speaker 1: of the Infrastructure Capital Advisors. Jay, Now, what, good morning,
6:52
Speaker 1: Thanks for having me back on Well, it's a little
6:55
Speaker 1: bit complicated. We had been constructive on stocks editing into earnings,
7:02
Speaker 1: and we were correct that earnings are relatively strong compared
7:06
Speaker 1: to expectations. And we do think the economy is relatively
7:10
Speaker 1: strong because of pandemic tail winds, but the negatives are
7:16
Speaker 1: an erratic fed We think that two target is arbitrary
7:20
Speaker 1: and way too low, so they're going to pursue that
7:23
Speaker 1: to percent target. They tend to focus on backward looking
7:28
Speaker 1: indicators like employment and CPI, whereas they should be looking
7:33
Speaker 1: at the money supply, which is down and already this
7:37
Speaker 1: year and then finally the other negatives were headed into September,
7:42
Speaker 1: which is typically a terrible month for stocks, lack of
7:46
Speaker 1: information about earnings, and then you have a closing of
7:50
Speaker 1: the buy back window. So we're we're relatively neutral to
7:56
Speaker 1: cautious on stocks here after this big run. But you
7:59
Speaker 1: think so j just to go back to the beginning,
8:02
Speaker 1: you don't have a negative outlook on the economy. You
8:05
Speaker 1: think the US economy, even after two quarters of contraction,
8:09
Speaker 1: is still in a pretty strong place. Yeah. The key
8:12
Speaker 1: facts there if you look back at the eleven post
8:15
Speaker 1: World War Two recessions, they all had a crash in
8:18
Speaker 1: housing and autos. But we have a pandemic recovery tail
8:23
Speaker 1: winds in that we're record low housing inventories one point
8:28
Speaker 1: two million units versus normal two seven thousand new cars
8:34
Speaker 1: versus a million, So the chances of mass layoffs in
8:38
Speaker 1: those cyclical sectors or zero. And then you have strong
8:41
Speaker 1: employment because we're moving from goods which you're mostly made
8:45
Speaker 1: overseas to services which are all provided in the US
8:48
Speaker 1: and labor intensive. It's a strong job market and the
8:53
Speaker 1: normal sectors that crack all time lows for inventories, we
8:59
Speaker 1: do see talked about the economy. We do see what
9:02
Speaker 1: looks like some real weakness in the tech sector, and
9:05
Speaker 1: I don't know if that's because they you know, overhired
9:09
Speaker 1: um last year at the beginning of this year, but
9:11
Speaker 1: there you know, some of the biggest companies are cutting
9:15
Speaker 1: by some of the growthier for off of yer companies cutting,
9:21
Speaker 1: a lot of them are doing hiring freezes. Is this
9:23
Speaker 1: just a sector specific issue, we think so. What is
9:28
Speaker 1: obviously entirely unique about this cycle is the pandemic. So
9:33
Speaker 1: during the pandemic, those are the big beneficiaries. But of
9:38
Speaker 1: course UM services was getting smashed, so you're just seeing
9:43
Speaker 1: a rotation from those goods producing companies. And also they
9:46
Speaker 1: have exposure to foreign currency. You know, keep in mind,
9:49
Speaker 1: almost no one focuses on the fact that the set
9:52
Speaker 1: is already reduced the monetary base or money supply by
9:56
Speaker 1: fifteen percent this year, which is the biggest decline since
10:00
Speaker 1: the Great Depression. That's caused a dollar to skyrocket. So
10:03
Speaker 1: that's going to make those large cap exporters earnings weaker.
10:08
Speaker 1: But if you look, they're not really doing mass layoffs,
10:10
Speaker 1: are just hiring at a slower pace, So that's not
10:12
Speaker 1: enough to derail the US economy. Jay, You've had a
10:15
Speaker 1: long and varied career on wall straight by side, sell side,
10:19
Speaker 1: wanted it. The industries that you've really focused on has
10:21
Speaker 1: been energy, global power, more in Stanley and so on.
10:25
Speaker 1: You know, what we're really starting to understand here is
10:28
Speaker 1: we've got oil pulling back yet again now were and
10:30
Speaker 1: change on w T I CRWEDE. It just seems like
10:33
Speaker 1: the supplying to demand are kind of out of whack.
10:35
Speaker 1: You know, as we make this transition to green energy,
10:38
Speaker 1: there's still a big demand for traditional energy fossil fuels
10:44
Speaker 1: and are good friends in Europe. Boy, they're gonna have
10:47
Speaker 1: a tough winter. How do you think about this economy
10:51
Speaker 1: and how it's trying to manage the transition from fossil
10:54
Speaker 1: fuels to green fuels. Seems like there's gonna be some
10:58
Speaker 1: problems there. Well, I think we've made a massive mistake
11:02
Speaker 1: by not recognizing that natural gas is a very clean fuel.
11:07
Speaker 1: It's the only efficient way to transport hydrogen because pure
11:12
Speaker 1: hydrogen you have to cool to negative for hundred fifty
11:15
Speaker 1: one degrees fahrenheit to transport it, whereas natural gas is
11:19
Speaker 1: to only two fifty. So the Europeans blew the energy
11:23
Speaker 1: transition by not procuring enough natural gas, which then allows
11:27
Speaker 1: you to shut down coal. In the US, we the
11:31
Speaker 1: free market did that. That's why we're the leader in
11:33
Speaker 1: the world for reducing carbon not because of any policy
11:37
Speaker 1: coming from the government, but just because the economics of
11:39
Speaker 1: having excess natural gas. So but to your point, the
11:45
Speaker 1: we're relatively constructive on the oil market. We're still projecting,
11:50
Speaker 1: but the key factor to watch is European natural gas prices.
11:54
Speaker 1: They're trading at the equivalent of four dollars a barrel
11:58
Speaker 1: of oil and a btu basis, So that's a huge
12:00
Speaker 1: support for the market. And these China blips are usually temporary.
12:05
Speaker 1: They're pretty sticky demand in China, right, Yeah, it's interesting
12:08
Speaker 1: to see how this plays that And again we'll be
12:09
Speaker 1: focusing on Europe this winter. It seems like it's going
12:11
Speaker 1: to be a big challenge for them. Jay half Fields, CEO,
12:14
Speaker 1: founder and portfolio manager at Infrastructure Capital Advisors, giving us
12:18
Speaker 1: his thoughts on these markets. Matt, our next guest you
12:24
Speaker 1: and we struggle with English, which is a challenge because
12:26
Speaker 1: we speak for living, but our next guest speaks English
12:28
Speaker 1: and Hebrew. Okay, I get that. Then Russian and Ukrainian
12:32
Speaker 1: I'm like, who really cares about that? But now that
12:36
Speaker 1: is absolutely front and center. Dr Ariol Cohen, Senior Fellow
12:40
Speaker 1: for the Atlantic Council the Eurasia Center. Dr Cohen, thanks
12:43
Speaker 1: so much for joining us here. You know, I guess
12:48
Speaker 1: we'd love to get an update on what you think
12:50
Speaker 1: the current status is in Ukraine. But what I'd really
12:53
Speaker 1: love to get is why did Putin do this? It
12:56
Speaker 1: just seems like a monstrous miscalculation here, but I'd love
12:59
Speaker 1: to get your perspective. The dean of my alma matter,
13:03
Speaker 1: the Fletcher School of Loyal Diplomacy, former Dean adimiral Stavridian's
13:08
Speaker 1: former Supremah Yeah, former Suprema UH Allied commander NATO said
13:15
Speaker 1: that Putty realizes that he made a mistake. I meant
13:18
Speaker 1: putting ten times. So this is kind of a guy
13:22
Speaker 1: who will never admit that he made a mistake. Whether
13:25
Speaker 1: he realizes he made a mistake or not. There's some
13:29
Speaker 1: indications he may be realizing it, but he is desperate
13:33
Speaker 1: to say face. He's not going to give Ukrainians any quarter.
13:39
Speaker 1: So one would hope that we can extricate ourselves out
13:45
Speaker 1: of this horrible war in a few months. But for
13:50
Speaker 1: that Ukrainians need to deliver the Russians more blows, especially
13:55
Speaker 1: in the south when where they are using the Western
14:00
Speaker 1: supplied long range range rockets to disrupt the Russian logistics
14:04
Speaker 1: and they're destroying methodically the key bridges. So if the
14:09
Speaker 1: Russian troops are, for example, on the left bank of
14:13
Speaker 1: the right bank of the NAPER, they would pull out,
14:16
Speaker 1: possibly because they don't want to stuck there with other bridges. UM.
14:21
Speaker 1: So the logistics is extremely important in the war UH.
14:26
Speaker 1: And there's another dimension that I'm very worried about, and
14:30
Speaker 1: that's the nuclear power stations. Remember, Ukraine is producing of
14:35
Speaker 1: its electricity through nuclear um contributing less to global emissions
14:43
Speaker 1: than many other countries. But the Russians and the Ukrainians
14:47
Speaker 1: of bombarding some of these UM stations, including the huge
14:53
Speaker 1: uh power station and Zapariga four reactors four units. And
14:59
Speaker 1: the last thing we need is one of these reactors
15:03
Speaker 1: to be punctured by a show and have a radioactive
15:07
Speaker 1: emissions there. So God forbid, you know something like ser no,
15:12
Speaker 1: we don't want that. So Dr Cohen, I would you know,
15:14
Speaker 1: initially I would think um for the whole conflict there
15:19
Speaker 1: should be some back channel way to communicate UM with
15:24
Speaker 1: Vladimir Putin, figure out a solution. Even if you can't
15:28
Speaker 1: get them to pull completely out of Ukraine, maybe you
15:30
Speaker 1: can say, hey, let's all avoid these nuclear power plants.
15:34
Speaker 1: But then I wonder, how does the chain of command,
15:38
Speaker 1: How well does the chain of command actually work, how
15:41
Speaker 1: strong is the link, how how um efficient is communication?
15:46
Speaker 1: Or are these units on the ground really just operating
15:49
Speaker 1: on their own In a sense, I don't think they're
15:52
Speaker 1: operating on their own. The Russian military is extremely centralized.
15:57
Speaker 1: Who is less centralized actually are the Ukrainians. But what
16:02
Speaker 1: we've seen is that the Russians cut a deal with
16:06
Speaker 1: the Turks and with Ukraine, and they are going to
16:09
Speaker 1: allow the grain to flow out of Ukraine, out of
16:13
Speaker 1: the port of Odessa on the Black Sea. UM to
16:17
Speaker 1: the world market's very important, So we don't contribute to
16:21
Speaker 1: or the conflict doesn't contribute two people starving in Africa
16:25
Speaker 1: or something like that. And the next day the Russian
16:28
Speaker 1: military is delivering a rocket strike on the part of Odessa.
16:33
Speaker 1: So questions were raised about that, uh, and then it stopped.
16:37
Speaker 1: So hopefully the command and controlled chain in Russia is
16:43
Speaker 1: still intact. However, Uh, you raised the very important question,
16:48
Speaker 1: and that is who is communicating with the Russians. And
16:52
Speaker 1: we saw recently that Russia said that Switzerland is not
16:58
Speaker 1: going to be the go between because Switzerland imposed sanctions
17:03
Speaker 1: on Russia and therefore the Russian said they're not impartial.
17:08
Speaker 1: So having a channel of communication, it is important, having
17:13
Speaker 1: people who could go back and force, like the late
17:17
Speaker 1: Great German foreign minister uh Gensher. I think it's from
17:24
Speaker 1: ye Han has so Dr Coleman, what yeah, go ahead?
17:32
Speaker 1: So I guess the question is how strong is the
17:35
Speaker 1: support within Russia for Putin and this war? I think
17:39
Speaker 1: about just our country here. When the dead bodies start
17:42
Speaker 1: coming back, that's when people start taking notice here, how
17:46
Speaker 1: strong is his support? Remember Russia, the country is a
17:50
Speaker 1: lost twenty seven millions in World War Two, civilians and military. Uh,
17:56
Speaker 1: they do recognize that wars come with a body count. However,
18:00
Speaker 1: having said that a lot of Russian families have only
18:04
Speaker 1: one child, that's only one son, and I do believe
18:08
Speaker 1: that there's more discontent, especially among the relatives of the
18:14
Speaker 1: men who died. But Putin's regime is not unlike the
18:18
Speaker 1: Soviet predecessors who kept a tight lid on the public opinion,
18:25
Speaker 1: but we see four now. For now, I stressed the
18:30
Speaker 1: public support is anywhere between sixty and that's quite considered considerable.
18:36
Speaker 1: But in the future that the economic situation is going
18:40
Speaker 1: to deteriorate, and it is deterierating. We can see it
18:43
Speaker 1: right now with Western technology management investment all drying up abruptly,
18:50
Speaker 1: and the Chinese are not capable but don't want to
18:53
Speaker 1: replace the Western economic partners. Russia will continue to deteriorate
18:58
Speaker 1: and with that the public support of this war will
19:02
Speaker 1: go down. I just want to quickly ask about the gas.
19:06
Speaker 1: How difficult is it going to be this winter for
19:08
Speaker 1: the Europeans to access Russian supplies? You know, it's not
19:13
Speaker 1: going to be pleasant. However, the projections are that by
19:18
Speaker 1: December nine of German um storage will be filled with gas.
19:25
Speaker 1: And Germany is a key country here. Other countries will
19:28
Speaker 1: need to scramble. The Italians are getting more gas from
19:31
Speaker 1: from Algeria on the existing pipeline. They're putting more pumping
19:35
Speaker 1: stations on that pipeline, and countries like Qatar and Australia
19:41
Speaker 1: and others who have any extra lergy and we in
19:45
Speaker 1: the United States can sell more lergy. They're more regasification
19:51
Speaker 1: ships that are heading towards Europe. It will be more,
19:54
Speaker 1: expect more expensive, but I do not believe it will
19:57
Speaker 1: be a catastrophe. Aerial co and thank you so much
20:01
Speaker 1: for your time. You really appreciate getting your informed insights.
20:03
Speaker 1: Dr Errol Cohen. He's a senior fellow the Atlanta Council
20:06
Speaker 1: Eurasia Center. Deep deep background and experience uh in European politics, geopolitics.
20:17
Speaker 1: You know, last week we had in video they disappointed
20:20
Speaker 1: with a big miss and revenue. They called out a
20:23
Speaker 1: slump in their gaming business, and I think that caused
20:25
Speaker 1: a lot of folks in the industry to kind of
20:27
Speaker 1: step back and say, all right, let's get a sense
20:29
Speaker 1: of where the gaming industry, which has been such a
20:31
Speaker 1: great growth story within the communication space, where that is
20:34
Speaker 1: right now, where it's going as we come out of
20:36
Speaker 1: the back end of this pandemic. So our next guest
20:38
Speaker 1: is really a timely one and hand CEO and chairwoman
20:42
Speaker 1: of Super League Gaming that as a publicly traded company
20:45
Speaker 1: on the NASTAC s l g G as a ticker
20:48
Speaker 1: you can put into your Bloomberg Professional Service and get
20:51
Speaker 1: all the information you need on that and thanks so
20:53
Speaker 1: much for joining us here. UM give us just kind
20:56
Speaker 1: of tell us what you guys are doing at Super
20:58
Speaker 1: League Gaming, what your company is all about, and kind
21:01
Speaker 1: of how you fit into this gaming ecosystem. Yeah, thank
21:03
Speaker 1: you for having me. UM. Super League started about eight
21:07
Speaker 1: years ago, and our focus was really on the fact
21:10
Speaker 1: that these days, if you, if you know, speak to
21:13
Speaker 1: young kids, pretty much everyone's a gamer. Over eight percent
21:16
Speaker 1: of kids say that gaming is their favorite form of entertainment.
21:19
Speaker 1: And this was all pre COVID, right, so it was
21:22
Speaker 1: already bigger than the film box office, bigger than tv UM,
21:26
Speaker 1: and we were really focused on kind of debunking the
21:29
Speaker 1: myth of who these gamers are, because gaming these days
21:32
Speaker 1: isn't something that they're going to grow out of, very
21:34
Speaker 1: different than the gaming that we did as kids. It's
21:38
Speaker 1: it's not just you against the machine. It's actually got
21:42
Speaker 1: a fair amount of community and and um commerce. It's
21:46
Speaker 1: really a place where kids are expressing their physical selves
21:49
Speaker 1: in this digital world and so they see it as
21:52
Speaker 1: one blended life. And how we fit in is we
21:54
Speaker 1: really focus on what we call metaverse games or open
21:59
Speaker 1: world gaming platfor forms, because that really speaks to kind
22:01
Speaker 1: of Generation Z and and Gen Alpha these days. Um,
22:06
Speaker 1: they're not just there for the competition. They want to
22:08
Speaker 1: step into these games like Minecraft and Roadblocks. You know,
22:11
Speaker 1: Minecraft has been around for over a decade um, and
22:14
Speaker 1: and hundreds of millions of kids are spending a lot
22:17
Speaker 1: of their playtime in these worlds where they can create,
22:22
Speaker 1: they can become game designers and developers. But it's also
22:25
Speaker 1: the digital cul de sac. It's it's where their friends
22:28
Speaker 1: are and where they want to interact with their digital
22:31
Speaker 1: selves as much as they want to interact with their digital,
22:34
Speaker 1: um physical life. So they kind of call it a
22:36
Speaker 1: digital world that we're living in. And so what I
22:40
Speaker 1: often say to brand's anti investors is is, you know,
22:43
Speaker 1: we're not talking about um, you know, metaverse capital m
22:47
Speaker 1: and something that's kind of abstract in five to ten
22:49
Speaker 1: years away. Um, you know, these games have been around
22:52
Speaker 1: for some time and this is where kids are. And
22:54
Speaker 1: what we do is we bring brands and advertisers into
22:57
Speaker 1: those worlds to create exciting experiences and content for them.
23:01
Speaker 1: So how come investors don't seem to get the story
23:06
Speaker 1: or or believe in it? Judged by the stock performance?
23:11
Speaker 1: I mean, yeah, yeah, I had a huge jump during
23:14
Speaker 1: the pandemic, but let's leave that out. Um, we've still
23:18
Speaker 1: seen the stock come down to a dollar from you know,
23:24
Speaker 1: leaving out the ten dollar peak, um, you know six
23:27
Speaker 1: at least. Yeah, absolutely, UM, I think some of this
23:32
Speaker 1: is just that fundamentally, when when we're kind of sitting
23:34
Speaker 1: in that nano cap space, you know, the stock doesn't
23:37
Speaker 1: have a lot of stability, that that kind of anomaly
23:41
Speaker 1: spike that we had that you pointed out, we became
23:43
Speaker 1: a bit of a meme stock during that time and
23:45
Speaker 1: got swept up in and what was happening with a
23:48
Speaker 1: MC and game stop. By the way, do you actively
23:51
Speaker 1: work to shun that? Because if I google s l
23:54
Speaker 1: G G, I'm I'm looking at you know, all these
23:56
Speaker 1: meme stock um kind of results and not so much
24:00
Speaker 1: about the actual company and what you do. Yeah. No,
24:03
Speaker 1: So that was definitely one of those kind of times
24:06
Speaker 1: where we had that kind of unusual spike. But but
24:09
Speaker 1: for us, really I do agree with you that I
24:12
Speaker 1: think that right now, you know, the the market doesn't
24:16
Speaker 1: really um, we're not getting the credit probably um that
24:19
Speaker 1: I believe we would deserve for the kinds of step
24:22
Speaker 1: change revenue growth that we are showing, and so I
24:25
Speaker 1: have to believe that as we get the more attention
24:28
Speaker 1: to the stock and and show those keep delivering those
24:31
Speaker 1: types of results that you know, over time, the share
24:34
Speaker 1: price will reflect that we went from you know, we
24:37
Speaker 1: we went public when we were pre revenue and so
24:40
Speaker 1: um in we did about two million in revenue last year,
24:43
Speaker 1: about eleven million this year. We gave guidance that we
24:46
Speaker 1: would do UM twenty to twenty two million. We're beating
24:50
Speaker 1: analysts estimates and and on plan to deliver those results.
24:53
Speaker 1: And so we feel like that step change um top
24:57
Speaker 1: line growth that we continue to deliver against overtime will
25:00
Speaker 1: be reflected in the in the share price, in the
25:03
Speaker 1: ultimate market cap of the company. And what's your maybe
25:06
Speaker 1: like three to five year outlook for the sports business
25:09
Speaker 1: in general? Again, it's it's a business that you know,
25:11
Speaker 1: a lot of investors aren't really familiar with, but it
25:13
Speaker 1: certainly has the growth characteristics that I'm sure they would appreciate. Yeah,
25:17
Speaker 1: you know, the the E sports category was really where
25:19
Speaker 1: we started as a company. We were really focused on
25:22
Speaker 1: creating a bit of a little league for youth. So
25:25
Speaker 1: think of E sports as just competitive video gaming um.
25:28
Speaker 1: You know a lot of projections were saying, hey, that's
25:31
Speaker 1: going to be about a three billion dollar business. By
25:34
Speaker 1: that's not that big. We all know that, right. I
25:37
Speaker 1: mean I ran a three billion dollar P and L
25:39
Speaker 1: at BP globally and it was small fish. So UM,
25:44
Speaker 1: so that E sports category, most of that value is
25:46
Speaker 1: really talking about those the establishment of those professional teams
25:50
Speaker 1: in leagues. You saw the recent I p O of
25:53
Speaker 1: Phase Clan UM and so that is an exciting but
25:57
Speaker 1: a very small subset. What we started to do the
26:00
Speaker 1: company really around the pandemic. And I think our response
26:03
Speaker 1: is something else that I think that over time investors
26:06
Speaker 1: will will give us credit for. UM is we really
26:09
Speaker 1: cast a much wider net. We said, look, we already
26:12
Speaker 1: have an interesting foothold with young gamers, but let's speak
26:15
Speaker 1: to all the segments of gamers, not just the highly
26:17
Speaker 1: competitive ones. So we now reach with that strategy that
26:21
Speaker 1: we put into place during COVID about seventy million unique
26:26
Speaker 1: under eighteen gamers a month, namely in games like Minecraft
26:30
Speaker 1: in Roadblocks. UM that's sizeable reach, really second only to
26:34
Speaker 1: the people who make those platforms themselves, Microsoft and and Roadblocks,
26:39
Speaker 1: and so we have sizeable reach in haft and we
26:42
Speaker 1: speak to a very diverse audience of gamers. So now
26:45
Speaker 1: we're talking about there's three billion gamers on the planet
26:49
Speaker 1: and in game advertising is projected to be a fifty
26:52
Speaker 1: six billion dollar um um category by four We think
26:56
Speaker 1: that's far more interesting than just those the more narrow
27:00
Speaker 1: segment of just e sports. And you expect to make
27:03
Speaker 1: a profit in your your time at the company. Oh absolutely,
27:09
Speaker 1: I mean what we've talked to two. We just had
27:11
Speaker 1: our earnings call. In fact, we took UM investors into
27:14
Speaker 1: the metaverse. We did a video um um earnings announcement,
27:18
Speaker 1: and and what we talked about is the fact that
27:21
Speaker 1: not only are we delivering UM faster on the top line,
27:25
Speaker 1: but we're also seeing our operating losses shrinking faster than
27:29
Speaker 1: expected this year. And so we're very mindful in the
27:32
Speaker 1: current state of the market that while investors last year
27:35
Speaker 1: we're pushing us hard on top line top line, now
27:38
Speaker 1: they wanted both. They want top line delivery and they
27:40
Speaker 1: want us to get cash flow positive fast. All right,
27:43
Speaker 1: and thank you so much for joining us, and hand
27:45
Speaker 1: CEO and chairwoman of Super League Gaming, thanks for listening
27:49
Speaker 1: to the Bloomberg Markets podcast. You can subscribe and listen
27:53
Speaker 1: to interviews with Apple Podcasts or whatever podcast platform you prefer.
27:58
Speaker 1: I'm Matt Miller. I'm on Twitter at Matt Miller nineteen
28:01
Speaker 1: seventy three pt On False Sweeney, I'm on Twitter at
28:04
Speaker 1: p T Sweeney. Before the podcast, you can always catch
28:06
Speaker 1: us worldwide at Bloomberg Radio