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Markets, Tech, And Air Travel (Radio) · 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. All right, let's talk
• 0:22
  Speaker 1: to a professional investor now, Steve Wyatt, chief investment strategist
• 0:28
  Speaker 1: for b Okay Financial. Steve, You're in Oklahoma, isn't it right?
• 0:32
  Speaker 1: And Tulsa, Oklahoma. Tulsa, Oklahoma. So let me just I'm
• 0:36
  Speaker 1: gonna assume that you've got an opinion on oil at
• 0:39
  Speaker 1: w t I crude oil and a hundred two dollars
• 0:41
  Speaker 1: of barrel. What are the smart people in the oil
• 0:45
  Speaker 1: biz that you talked to? What are they saying about?
• 0:47
  Speaker 1: Where do they think oil is going? You know, it's
• 0:49
  Speaker 1: interesting here. Look be Okay Financials, an energy bank, were
• 0:52
  Speaker 1: one of the larger banks and the energy business. And frankly, uh,
• 0:57
  Speaker 1: not just in Oklahoma, but in Texas as well. We've
• 0:59
  Speaker 1: got kind of a love hate relationship with oil prices.
• 1:03
  Speaker 1: We don't like it. As consumers when gasoline prices are high,
• 1:06
  Speaker 1: just like everybody else. So much of our economy is
• 1:09
  Speaker 1: driven by the energy business, employment, personal incomes, a lot
• 1:13
  Speaker 1: of people with royalties that as oil prices go up, UH,
• 1:18
  Speaker 1: personal incomes are rising in this UH, in this part
• 1:21
  Speaker 1: of the in this part of the country, we're still
• 1:24
  Speaker 1: i would say constructive on the energy business. There's a
• 1:27
  Speaker 1: lot of moving parts there. There's a lot of things
• 1:30
  Speaker 1: outside of outside of our control. When you start thinking
• 1:33
  Speaker 1: about what's going on with Russia and Ukraine and how
• 1:35
  Speaker 1: OPEC is handling some of this UH, and then you've
• 1:38
  Speaker 1: got some regulatory issues I'm gonna say issues in Washington
• 1:43
  Speaker 1: that almost ironically, if you look at the performance of
• 1:47
  Speaker 1: the energy markets, the more restrictive policies have been, the
• 1:51
  Speaker 1: better the performance of the energy equities in the price
• 1:55
  Speaker 1: of oil. But to the degree that we see ongoing
• 1:59
  Speaker 1: demand and for energy both oil and natural gas were constructive,
• 2:05
  Speaker 1: we're still constructive. Does it make sense to you, Steve,
• 2:09
  Speaker 1: that the US would go all the way over to
• 2:12
  Speaker 1: Saudi Arabia and ask them to pump more oil rather
• 2:16
  Speaker 1: than just taking a little trip down to Oklahoma in
• 2:19
  Speaker 1: Texas and making it easier for our folks to pull
• 2:21
  Speaker 1: our own natural resources out of the ground. So one
• 2:26
  Speaker 1: of the hard parts of our job is we try
• 2:27
  Speaker 1: to be as a political as possible when we're when
• 2:30
  Speaker 1: we're answering questions like this. But I didn't say the President.
• 2:33
  Speaker 1: I said America just in general, as we think about
• 2:38
  Speaker 1: how we move forward from an energy policy standpoint, and
• 2:42
  Speaker 1: nobody's pushing back on the fact that the direction that
• 2:45
  Speaker 1: we're going is towards more green energy. But as we
• 2:48
  Speaker 1: sit here today, Uh, it is hard to understand why
• 2:52
  Speaker 1: the administration would find it better to go to OPEC
• 2:56
  Speaker 1: or Venezuela or countries to ask them to produce more
• 3:02
  Speaker 1: oil when that is a resource that we have domestically.
• 3:05
  Speaker 1: We're the largest producer of oil in the in the world.
• 3:09
  Speaker 1: We've got a h an industry that has that that
• 3:12
  Speaker 1: has you know, built out and put us in a
• 3:15
  Speaker 1: position where we could we could be energy and dependent
• 3:19
  Speaker 1: if that's what we wanted to do. I understand there's
• 3:21
  Speaker 1: uh competing thoughts around the direction that we should be
• 3:26
  Speaker 1: going to really more around the timing of how quickly
• 3:29
  Speaker 1: we should be moving forward. But yes, it's hard to
• 3:32
  Speaker 1: understand why we're not engaging our domestic energy business at
• 3:36
  Speaker 1: a different level than what it seems we are hasteve
• 3:39
  Speaker 1: you know what I've heard from folks that do follow
• 3:41
  Speaker 1: the energy markets globally, they say, you know, the U
• 3:44
  Speaker 1: S producers, the shell producers, who have been had such
• 3:47
  Speaker 1: tremendous growth over the last twenty years. Uh, They've been
• 3:51
  Speaker 1: told by their equity holders, by their bondholders, maybe even
• 3:55
  Speaker 1: by their commercial lenders, discipline, do not drill more turned
• 4:00
  Speaker 1: that cash to shareholders and creditors. Is that part of
• 4:04
  Speaker 1: the issue as well? It certainly is, And and you
• 4:08
  Speaker 1: have to look at how again, just go to how
• 4:10
  Speaker 1: the industry is actually performing. Uh. Since that shift when
• 4:14
  Speaker 1: it was you know, drill, baby, drill, Uh, it has
• 4:18
  Speaker 1: been better from an economic standpoint for the holders of
• 4:22
  Speaker 1: equity energy equities. Uh, it's been better for the debt
• 4:27
  Speaker 1: holders of those energy companies. Energy makes up a pretty
• 4:30
  Speaker 1: large portion of the high yield index. And then in
• 4:33
  Speaker 1: past periods, Uh, the energy sector has been responsible for
• 4:38
  Speaker 1: a lot of the problems in the high market. That's
• 4:40
  Speaker 1: just not the case. Again, working for a financial company
• 4:44
  Speaker 1: that is in that business, UH, it does not hurt
• 4:47
  Speaker 1: our credit profile when we see oil prices um and
• 4:51
  Speaker 1: natural gas prices as high as they are. All right,
• 4:55
  Speaker 1: talk to us about Oklahoma State football. What's the outlook
• 4:57
  Speaker 1: for this coming year? Steve, I have to look, I
• 5:01
  Speaker 1: went to Oklahoma State. I played on the tennis team there.
• 5:05
  Speaker 1: Interestingly that when I was at Oklahoma State though, to
• 5:07
  Speaker 1: tell you just how long ago that was, Jimmy Johnson
• 5:09
  Speaker 1: was our head football coach. Um, Look, we've done a
• 5:14
  Speaker 1: fabulous job of being relevant for the last fifteen years.
• 5:18
  Speaker 1: I think as a as a long time Oklahoma State fan. Uh,
• 5:22
  Speaker 1: it's a lesson and expectational management. You never let your
• 5:26
  Speaker 1: expectations get away from you on the high side. But
• 5:29
  Speaker 1: we've certainly done a good job in the last fifteen
• 5:31
  Speaker 1: years or so we being relevant in D one football. Absolutely,
• 5:35
  Speaker 1: Oklahoma State Cowboys had some good stuff there. Uh. Steve Wyatt,
• 5:39
  Speaker 1: chief investment strategist for be Okay Financial. We were gonna
• 5:42
  Speaker 1: talk like broad Marcus b Someone's are talking about energy
• 5:45
  Speaker 1: oil and with those folks down there, it's their business
• 5:48
  Speaker 1: in Oklahoma and Texas. Uh, they've been quite disciplined. All right,
• 5:55
  Speaker 1: let's go technology. I'm loving you know. The SMP went
• 5:58
  Speaker 1: down almost almost percent year today, but when you look
• 6:01
  Speaker 1: at the tech heavy nastack that's down almost thirty percent
• 6:05
  Speaker 1: year today, and you think about the nastack tech stocks,
• 6:08
  Speaker 1: they've really lead this market since a great financial crisis,
• 6:11
  Speaker 1: but certainly under performing year to date this year. Let's
• 6:15
  Speaker 1: get a little bit of a preview because we're gonna
• 6:16
  Speaker 1: have some tech earnings really in earnest start next week.
• 6:19
  Speaker 1: We've got uh Netflix after the close tonight, Ivana the
• 6:22
  Speaker 1: Lefska founder and chief investment officer of Spear invest joins us.
• 6:27
  Speaker 1: Ivana again the underperformance attech this year, Um, what's your
• 6:31
  Speaker 1: view of the tech space here? Is there still? Is
• 6:34
  Speaker 1: this still a core part of people's portfolio? Should it be? Well,
• 6:40
  Speaker 1: I believe it's should Then I believe this major pubek
• 6:43
  Speaker 1: presents a really good, attractive, really attractive entry point. If
• 6:48
  Speaker 1: you look at tech the under performance with them not
• 6:52
  Speaker 1: that being down. If you look at the big innovators
• 6:55
  Speaker 1: in the space, they're down significantly more than that. So
• 6:58
  Speaker 1: we didn't arcovery universe. Companies that have delivered on earnings
• 7:03
  Speaker 1: and had solid outlooks are still down. Some companies that
• 7:07
  Speaker 1: had some hiccups are down seventy and you have somewhere
• 7:10
  Speaker 1: like the business model is in question that are down,
• 7:14
  Speaker 1: So we think the sweet spot is to look into
• 7:18
  Speaker 1: this area of stocks that are actually performing pretty well.
• 7:21
  Speaker 1: The fundamentals are strong, but you can still get these
• 7:24
  Speaker 1: stops cheaper compared to what you could have gotten a
• 7:28
  Speaker 1: year ago. How else do you divide the technology sector
• 7:33
  Speaker 1: other than you know innovators UM or by sort of
• 7:38
  Speaker 1: executing on business strategy in terms of you know, the
• 7:41
  Speaker 1: products they make or the services they provide. So we
• 7:46
  Speaker 1: are we've focused on industrial technology. The way we look
• 7:49
  Speaker 1: at technology more broadly is either consumer driven names or
• 7:55
  Speaker 1: industrial or enterprise driven companies. So in the last text cycle,
• 8:01
  Speaker 1: we saw a lot of in the innovation in the
• 8:03
  Speaker 1: consumer space where you had between streaming social media. Those
• 8:08
  Speaker 1: were really the big companies that drove the the drove
• 8:12
  Speaker 1: the text cycle. Going forward, we think industrial and enterprise
• 8:16
  Speaker 1: technology will be the big driver of the of the
• 8:20
  Speaker 1: next cycle. We think a lot of the innovation in
• 8:23
  Speaker 1: tech has been around data, how to use data, how
• 8:26
  Speaker 1: to store it in the cloud, how to secure it well,
• 8:31
  Speaker 1: and then how to use it and use processes like
• 8:33
  Speaker 1: ai UM. So we think we're just at the cost
• 8:37
  Speaker 1: of UM where we can start using some of these
• 8:40
  Speaker 1: technologies into mainstream businesses or traditional businesses like autos aerospace,
• 8:47
  Speaker 1: and there is a real potential to transform this entire
• 8:50
  Speaker 1: end market. So on that end, Ivanna a lot of
• 8:53
  Speaker 1: folks when they're talking about the future, the next three
• 8:57
  Speaker 1: or five years of where investors should really think about
• 9:00
  Speaker 1: the text act, they say cyber security. How do you
• 9:03
  Speaker 1: think about cybersecurity? What what's your view on that space
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  Speaker 1: and and how do you think is the best way
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  Speaker 1: to play it. So we're really excited about cybersecurity. It's
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  Speaker 1: the most it's the largest team within within our portfolio.
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  Speaker 1: We have a publicly listed dts UH Spear Alpha with
• 9:21
  Speaker 1: the ticker SPRX, and cybersecurity is one of the largest
• 9:25
  Speaker 1: teams within that that that portfolio. We love the space
• 9:31
  Speaker 1: for several several reasons. One of them is as architectures
• 9:35
  Speaker 1: have changed and data is no longer centralized. People are
• 9:40
  Speaker 1: using either multiple devices or they're using data that store
• 9:44
  Speaker 1: at the cloud or at multiple clouds. So this change
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  Speaker 1: in architecture requires completely different cybersecurity solutions then you would
• 9:53
  Speaker 1: have needed several years ago. So there are several of
• 9:56
  Speaker 1: the space is pretty fragmented. There's several different areas that
• 10:00
  Speaker 1: we like and we focus on that have over growth
• 10:05
  Speaker 1: of just the end market. Endpoint security is one of them.
• 10:09
  Speaker 1: Here we like companies like crowd strikes. Another area is
• 10:13
  Speaker 1: securing workloads to the cloud and within the clouds. Here
• 10:16
  Speaker 1: a name is z scaler. And then for people that
• 10:20
  Speaker 1: want to play a more platform approach, power out on
• 10:23
  Speaker 1: networks is a good way to play where they play
• 10:26
  Speaker 1: both on the endpoint UM and the traditional firewall firewall products.
• 10:32
  Speaker 1: What about AI UM it's something we hear so much
• 10:35
  Speaker 1: about and you know, investors put so much faith in it. Obviously,
• 10:40
  Speaker 1: eventually the machines are going to turn against us and
• 10:42
  Speaker 1: then you'll feel guilty about all the money you made.
• 10:44
  Speaker 1: But is it a good place to go into right now? Well, yes,
• 10:48
  Speaker 1: So it's very interesting because it's been a team for
• 10:51
  Speaker 1: us over the past few years, but we really didn't
• 10:54
  Speaker 1: have any significant investments and as there weren't any ways
• 10:57
  Speaker 1: to play that scale. And over the last year we've
• 11:01
  Speaker 1: seen a lot of developments where AI is becoming at
• 11:04
  Speaker 1: the core of many processes. So even if back to cybersecurity,
• 11:09
  Speaker 1: even if you look at cybersecurity, a lot of the
• 11:11
  Speaker 1: new products are AI based. So crowds rate products are
• 11:15
  Speaker 1: AI and machine learning based the scalers products same thing.
• 11:19
  Speaker 1: So it's really gaining mainstream adoption. And this is just
• 11:24
  Speaker 1: for running like, uh, processes that you wouldn't necessarily be
• 11:27
  Speaker 1: able to even do manually, right. Uh, This algorithms can
• 11:32
  Speaker 1: pick up on a NORMALI is by just by training
• 11:34
  Speaker 1: training the model. So we think the A is going
• 11:37
  Speaker 1: to gain adoption to even more mainstream like autonomous driving.
• 11:42
  Speaker 1: We still believe that's several years away because it is
• 11:45
  Speaker 1: a pretty complex problem, but we do see AI is
• 11:50
  Speaker 1: gaining pretty uh, pretty broad adoption. AVNA just real quick
• 11:55
  Speaker 1: thirty seconds. Bloomberg Broker story yesterday that Apple may slow
• 11:59
  Speaker 1: some higher ring in certain businesses and that we've seen
• 12:02
  Speaker 1: that from other companies. We've seen that from other companies.
• 12:05
  Speaker 1: Do you get a sense of Silicon Valley is kind
• 12:08
  Speaker 1: of gearing up for a recession? Yeah? Absolutely. I mean
• 12:12
  Speaker 1: at this point we are at a at a point
• 12:15
  Speaker 1: where recession is almost a foregone conclusion. Um, We're we
• 12:19
  Speaker 1: trucked a lot of industrial data points and things really
• 12:21
  Speaker 1: became really really turned even since since March, we started
• 12:26
  Speaker 1: seeing the trucking market soft and consumer discretionary softened and
• 12:31
  Speaker 1: that's really now just been affecting the broad at the
• 12:35
  Speaker 1: broader market. So things have just spread to like manufacturing,
• 12:39
  Speaker 1: things have spread to technology. So we're gonna see this
• 12:42
  Speaker 1: from everybody. Microsoft said that they're gonna slow hiring the
• 12:46
  Speaker 1: same things they're slow and hiring. All right, Evanna, thank
• 12:49
  Speaker 1: you so much for joining us. Ivana Delevska foundery, chief
• 12:51
  Speaker 1: investment officer of Spear invest getting a update on all
• 12:55
  Speaker 1: things technology. I want to check in with Liz McCormick.
• 13:01
  Speaker 1: She's Chief corresponding Global macro Markets for Bloomberg News and
• 13:04
  Speaker 1: a proud bachelor's and NBA graduate from the State University
• 13:09
  Speaker 1: of New Jersey. That would be Rutgers. Uh, Liz, some
• 13:13
  Speaker 1: smart people tell me I need to pay attention to
• 13:15
  Speaker 1: this yield curve, this two year ten year thing, which
• 13:18
  Speaker 1: I think is inverted. Is that something you worry about?
• 13:22
  Speaker 1: Is that something that you and the smart people in
• 13:25
  Speaker 1: the credit markets think about. Well, it seems like and
• 13:28
  Speaker 1: go are you um? It seems like definitely. You know,
• 13:32
  Speaker 1: the yield curve when it gets inverted always is kind
• 13:36
  Speaker 1: of in the focus, right because you know, historically and
• 13:40
  Speaker 1: you know a lot of the research was done on
• 13:41
  Speaker 1: the broad curve three month rades versus tenure, which isn't
• 13:44
  Speaker 1: inverted yet, but the two year tenure, like you said,
• 13:47
  Speaker 1: drives a lot of focus. It builds on these recession
• 13:50
  Speaker 1: fears because inverting curves have been linked to recession. So yeah,
• 13:54
  Speaker 1: I don't think you could ignore it, whether you might
• 13:56
  Speaker 1: want to or not. But yeah, it's kind of adding
• 13:59
  Speaker 1: to you know, a lot of the comments were seeing
• 14:01
  Speaker 1: that the Fed might tighten us into a recession, tighten
• 14:05
  Speaker 1: us into a recession. But we've got about I think
• 14:07
  Speaker 1: a week and a half till or no, wait now,
• 14:09
  Speaker 1: seven days I'm sorry, right, Tuesday, seven eight days until
• 14:13
  Speaker 1: the Federal Reserve next Federal Reserve meeting. Liz, there's this
• 14:16
  Speaker 1: big debate about seventy five or a hundred at the moment.
• 14:19
  Speaker 1: How much more of a difference does a hundred really
• 14:21
  Speaker 1: make relative to seventy five? As we know Governor Chris Waller,
• 14:25
  Speaker 1: I think it was last week that Mike McKee interviewed him,
• 14:27
  Speaker 1: said seventy five is still a lot. Do we really
• 14:30
  Speaker 1: need that extra five? Right? And I thought that was
• 14:33
  Speaker 1: an interesting point he made, like kind of in a way,
• 14:38
  Speaker 1: what does it matter? I mean, I think it's more
• 14:40
  Speaker 1: psychological because I think he's right. Obviously, seventy five and
• 14:43
  Speaker 1: two in a row. You know, they just did seventy
• 14:46
  Speaker 1: five in June, which was the huge move they haven't
• 14:48
  Speaker 1: didn't hadn't done since night before. So I think he's right.
• 14:51
  Speaker 1: I mean, I think it's it would just kind of
• 14:54
  Speaker 1: a hundred BIPs would just kind of slap the market,
• 14:57
  Speaker 1: like we are so all in on inflation. So the
• 15:01
  Speaker 1: FED is saying, not that people don't think they're doing
• 15:03
  Speaker 1: that now, but I think, you know, in the bag
• 15:07
  Speaker 1: of Paneta did a hundred, which some people were joking
• 15:09
  Speaker 1: kind of grease the reels for the Fed. But I
• 15:11
  Speaker 1: do think that, you know, the pricing is getting more
• 15:14
  Speaker 1: like seventy five is looking like the things, So now
• 15:16
  Speaker 1: a hundred would be a little surprong, So that doesn't
• 15:19
  Speaker 1: like to surprise people. So it seems like people are
• 15:22
  Speaker 1: leaning back to seventy five. What's the dollar telling us, Liz,
• 15:26
  Speaker 1: I'm looking at the d X Y index. It's as
• 15:28
  Speaker 1: high as it's been in you know, since like twenty
• 15:30
  Speaker 1: years ago. Um, I can't hear a bear case for
• 15:34
  Speaker 1: the dollar out there. How do you and some of
• 15:37
  Speaker 1: the smart folks out there that you talked to, How
• 15:39
  Speaker 1: are you thinking about that U s. Dollar? Well, you know,
• 15:42
  Speaker 1: the dollar has been a real headache for many nations,
• 15:45
  Speaker 1: you know, like especially emerging economies which anytime the feed
• 15:48
  Speaker 1: is aggressively tightening, even if they're trying to keep up,
• 15:52
  Speaker 1: you know, there's a negative knock on to them and
• 15:55
  Speaker 1: that they've seen their currencies really weak and even forget
• 15:58
  Speaker 1: velve economies. Look at the Euro which just you know
• 16:00
  Speaker 1: rising today but you know recently went through parody. Um
• 16:04
  Speaker 1: So a lot of these countries which are trying to
• 16:06
  Speaker 1: combat inflation, and weaker currencies creates important inflation. So it's
• 16:10
  Speaker 1: a headache for them. Um. The FED also, I mean,
• 16:13
  Speaker 1: you know, strong dollar. You might think that's great for
• 16:15
  Speaker 1: the US, but you know, the Fed to a point,
• 16:19
  Speaker 1: it helps tighten financial conditions. So the FED is trying
• 16:22
  Speaker 1: to kind of get their calculus right of how much
• 16:25
  Speaker 1: to live rates. They got the q T going, you know,
• 16:28
  Speaker 1: they want to tighten financial conditions and they have. But
• 16:31
  Speaker 1: the dollar, if it just keeps plowing on, that does
• 16:34
  Speaker 1: speed things. You know that that's into their models. But yeah,
• 16:37
  Speaker 1: I mean, I don't know, I think the people long dollars,
• 16:40
  Speaker 1: we're really happy, right, Um, those who bought bonds in
• 16:43
  Speaker 1: the US from foreign countries have done well because you know,
• 16:47
  Speaker 1: let's just assume that even they're flat on their bonds,
• 16:49
  Speaker 1: they convert those dollars back to their home currency. That's
• 16:52
  Speaker 1: an advantage. So there's people who have one from that.
• 16:54
  Speaker 1: But it is creating some kind of more fundamental headaches
• 16:57
  Speaker 1: for some nations. Fundamental head aches for some nations, including
• 17:01
  Speaker 1: the entire euro Area, which brings us to the e
• 17:04
  Speaker 1: c B. I believe they're meeting on Thursday. There are
• 17:07
  Speaker 1: calls out here for not a basis point hike, but
• 17:09
  Speaker 1: a fifty basis point hike. This week, Liz can explain
• 17:13
  Speaker 1: to our international audience the significance of that fifty Well, yeah,
• 17:19
  Speaker 1: you know, the ECB has been, you know, flower to
• 17:22
  Speaker 1: move than such like the FED. As far as rates, Um,
• 17:25
  Speaker 1: that's one thing that hurt the euro But you know,
• 17:27
  Speaker 1: Christine Lagarde had laid out in the last meeting that hey,
• 17:30
  Speaker 1: kind of preset we're gonna raise rates. We were looking
• 17:33
  Speaker 1: for about twenty five basis points, and of course we
• 17:35
  Speaker 1: gave some caveats of data changes, but for them to
• 17:39
  Speaker 1: kind of jump on these kind of more aggressive bandwagon
• 17:42
  Speaker 1: like seems to be leaked, but at least some of
• 17:44
  Speaker 1: the hawks at the ECB, you know, that would be
• 17:46
  Speaker 1: a big move. I mean, number one, it would show
• 17:49
  Speaker 1: that central bank is really, really, you know, focused on inflation,
• 17:53
  Speaker 1: you know, more than maybe some people thought, or you know,
• 17:55
  Speaker 1: it's willing to be more aggressive. Um. It also might
• 17:58
  Speaker 1: help some of these display alreadies. You know, we've seen
• 18:00
  Speaker 1: the euro rally today off those expectations, the markets pricing
• 18:04
  Speaker 1: about as does the ECB do twenty five or fifty
• 18:08
  Speaker 1: basis points um, but would kind of bring them more
• 18:11
  Speaker 1: in line. Of course, the b o J is a
• 18:13
  Speaker 1: whole separate story, but with a lot of central banks
• 18:16
  Speaker 1: that are tightening quite aggressively. You mentioned it be a
• 18:18
  Speaker 1: j and I just want to get your thoughts there.
• 18:20
  Speaker 1: I mean, we we don't talk about Japan that much
• 18:23
  Speaker 1: relative to Europe these days. But what can the bo
• 18:26
  Speaker 1: J do? What do you think? What are they signaling
• 18:29
  Speaker 1: right now? Well, it seems like they're single signaling that
• 18:33
  Speaker 1: they're going to keep their policies that they've been on
• 18:36
  Speaker 1: the dobsh side. There they have yeel curve control going
• 18:39
  Speaker 1: on which they're targeting the tenure yield to not go
• 18:41
  Speaker 1: above a quarter percentage point over there, and there was
• 18:45
  Speaker 1: a lot of speculation for a while. Of course, the
• 18:47
  Speaker 1: end has been very weak that the b o j
• 18:50
  Speaker 1: may have to give this up. It's costing them too
• 18:52
  Speaker 1: much to defend this as rates are rising all over,
• 18:55
  Speaker 1: they have a weaker currency. But it seems like people
• 18:58
  Speaker 1: are starting to say, well, it seems for an the
• 19:00
  Speaker 1: Bank of Japan was going to leave this. You know,
• 19:02
  Speaker 1: they wanted inflation for a long long time. Now there's
• 19:05
  Speaker 1: beings some so I think most economists think they'd be
• 19:08
  Speaker 1: hard pressed to reverse course now, even though the you know,
• 19:11
  Speaker 1: they're most of their peers are tightening um. But you know,
• 19:15
  Speaker 1: they've been wanting this two percent inflation level, so you know,
• 19:18
  Speaker 1: to have a little bit of hot inflation is not
• 19:21
  Speaker 1: so bad for them, and at least it seems to
• 19:23
  Speaker 1: be the consensus view. Alright, good stuff, Liz McCormick. Appreciate
• 19:26
  Speaker 1: getting your thoughts as always. Liz McCormick, Chief Correspondent, Global
• 19:30
  Speaker 1: Macro Markets for Bloomberg News. Okay, all right, let's talk technology.
• 19:38
  Speaker 1: I'm looking at the you know, the SMP. We're down
• 19:41
  Speaker 1: almost almost year to day. But when you look at
• 19:44
  Speaker 1: the tech heavy nastack that's down almost thirty percent year
• 19:48
  Speaker 1: to date. And you think about the nastack tech stocks,
• 19:50
  Speaker 1: they've really lead this market since a great financial crisis,
• 19:54
  Speaker 1: but certainly under performing year to date this year. Let's
• 19:57
  Speaker 1: get a little bit of a preview because we're gonna
• 19:58
  Speaker 1: have some tech earnings really in earnest start next week.
• 20:01
  Speaker 1: We've got uh Netflix after the close tonight, Ivana the left,
• 20:05
  Speaker 1: founder and chief investment officer of Spear invest joins us.
• 20:09
  Speaker 1: Ivana again the underperformance attack this year, Um, what's your
• 20:14
  Speaker 1: view of the tech space here? Is there still? Is
• 20:17
  Speaker 1: this still a core part of people's portfolio? Should it be? Well?
• 20:22
  Speaker 1: I believe it should. Then I believe this major pubic
• 20:26
  Speaker 1: presents a really good, attractive, it really attractive entry point.
• 20:30
  Speaker 1: If you look at tech the underperformance with them now
• 20:34
  Speaker 1: that being down, if you look at the big innovators
• 20:37
  Speaker 1: in the space, they're down significantly more than that. So
• 20:41
  Speaker 1: within our coverage universe, companies that have delivered on earnings
• 20:46
  Speaker 1: and had solid outlooks are still down. Some companies that
• 20:50
  Speaker 1: had some hiccups are down seventy and you have somewhere
• 20:53
  Speaker 1: like the business model is in questions that are down.
• 20:57
  Speaker 1: So we think the sweet spot is to look into uh,
• 21:00
  Speaker 1: this area of stocks that are actually performing pretty well.
• 21:03
  Speaker 1: The fundamentals are strong, but you can still get these
• 21:06
  Speaker 1: stops cheaper compared to what you could have gotten a
• 21:10
  Speaker 1: year ago. How else do you divide the technology sector
• 21:15
  Speaker 1: other than you know, innovators UM or by sort of
• 21:21
  Speaker 1: executing on business strategy in terms of you know, the
• 21:24
  Speaker 1: products they make or the services they provide. So we
• 21:28
  Speaker 1: are we've focused on industrial technology. The way we look
• 21:32
  Speaker 1: at technology more broadly is either consumer driven names or
• 21:37
  Speaker 1: industrial or enterprise driven companies. So in the last text cycle,
• 21:43
  Speaker 1: we saw a lot of in the innovation in the
• 21:45
  Speaker 1: consumer space where you had between streaming social media. Those
• 21:50
  Speaker 1: were really the big companies that drove that drove the
• 21:54
  Speaker 1: text cycle. Going forward, we think industrial and enterprise technology
• 21:59
  Speaker 1: will be the big driver of the of the next cycle.
• 22:04
  Speaker 1: We think a lot of the innovation in tech has
• 22:06
  Speaker 1: been around data, how to use data, how to store
• 22:09
  Speaker 1: it in the cloud, how to secure it well, and
• 22:13
  Speaker 1: then how to use it and use processes like ai UM.
• 22:17
  Speaker 1: So we think we're just at the cost of um
• 22:21
  Speaker 1: where we can start using some of these technologies into
• 22:24
  Speaker 1: mainstream businesses or traditional businesses like autos aerospace, and there
• 22:30
  Speaker 1: is a real potential to transform this entire end market.
• 22:34
  Speaker 1: So on that end, Ivanna a lot of folks when
• 22:37
  Speaker 1: they are talking about the future, the next three or
• 22:39
  Speaker 1: five years of where investors should really think about the
• 22:42
  Speaker 1: text act, they say cyber security. How do you think
• 22:45
  Speaker 1: about cybersecurity? What's your view on that space, and how
• 22:48
  Speaker 1: do you think is the best way to play it.
• 22:51
  Speaker 1: So we're really excited about cybersecurity. It's the most it's
• 22:56
  Speaker 1: the largest team within within our portfolio. We have a
• 23:00
  Speaker 1: publicly list todts uh Sphere Alpha with the ticker SPRX,
• 23:05
  Speaker 1: and cybersecurity is one of the largest teams within that
• 23:08
  Speaker 1: that that portfolio. We love the space for several several reasons.
• 23:15
  Speaker 1: One of them is as architectures have changed and data
• 23:19
  Speaker 1: is no longer centralized. People are using either multiple devices
• 23:25
  Speaker 1: or they're using data that store the cloud or at
• 23:28
  Speaker 1: multiple clouds. So this change in architecture requires completely different
• 23:33
  Speaker 1: cybersecurity solutions then you would have needed several years ago.
• 23:38
  Speaker 1: So there are several of the space is pretty fragmented.
• 23:40
  Speaker 1: There are several different areas that we like and we
• 23:43
  Speaker 1: focus on that have over twenty up growth of just
• 23:48
  Speaker 1: the end market. Endpoint security is one of them. Here
• 23:52
  Speaker 1: we like companies like crowd strikes. Another area is securing
• 23:56
  Speaker 1: workloads to the cloud and within the clouds. Here a
• 23:59
  Speaker 1: name is the scaler. And then for people that want
• 24:02
  Speaker 1: to play a more platform alo approach, power out on
• 24:05
  Speaker 1: networks is a good way to play where they play
• 24:08
  Speaker 1: both on the endpoint UM and the traditional firewall firewall products.
• 24:15
  Speaker 1: What about AI UM it's something we hear so much
• 24:18
  Speaker 1: about and you know, investors put so much faith in it. Obviously,
• 24:22
  Speaker 1: eventually the machines are going to turn against us and
• 24:25
  Speaker 1: then you'll feel guilty about all the money you made.
• 24:26
  Speaker 1: But is it a good place to go into right now? Well? Yeah,
• 24:30
  Speaker 1: So it's very interesting because it's been a team for
• 24:33
  Speaker 1: us over the past few years, but we really didn't
• 24:36
  Speaker 1: have any significant investments and as there weren't any ways
• 24:39
  Speaker 1: to play that scale. And over the past year we've
• 24:43
  Speaker 1: seen a lot of developments where AI is becoming at
• 24:47
  Speaker 1: the core of many processes. So even back to cybersecurity,
• 24:52
  Speaker 1: even if you look at cybersecurity, a lot of the
• 24:54
  Speaker 1: new products are AI based. So Crowdstrate products are AI
• 24:58
  Speaker 1: and machine learning based this kaler's products, same thing. So
• 25:02
  Speaker 1: it's really gaining mainstream adoption. And this is just for
• 25:06
  Speaker 1: running like processes that you wouldn't necessarily be able to
• 25:10
  Speaker 1: even do manually. Right. Uh, this algorithms can pick up
• 25:14
  Speaker 1: on a normally is by just by training training the model.
• 25:18
  Speaker 1: So we think is going to gain adoption to even
• 25:21
  Speaker 1: more mainstream like autonomous driving. We still believe that several
• 25:27
  Speaker 1: years away because it is a pretty complex problem, but
• 25:30
  Speaker 1: we do see AI is gaining pretty uh pretty broad adoption.
• 25:36
  Speaker 1: Avana just real quick thirty seconds. Bloomberg Broker story yesterday
• 25:40
  Speaker 1: that Apple may slow some hiring in certain businesses and
• 25:44
  Speaker 1: that we've seen that from other companies. We've seen that
• 25:46
  Speaker 1: from other companies. Do you get a sense of Silicon
• 25:49
  Speaker 1: Valley is kind of gearing up for a recession? Yeah? Absolutely.
• 25:54
  Speaker 1: I mean at this point we are at a at
• 25:56
  Speaker 1: a point where recession is almost a foregone conclusion. Um,
• 26:00
  Speaker 1: We're we trucked a lot of industrial data points and
• 26:03
  Speaker 1: things really became really really turned even since since March,
• 26:08
  Speaker 1: we started seeing the trucking market soft and consumer discretionary soften,
• 26:13
  Speaker 1: and that's really now just been affecting brother at the
• 26:18
  Speaker 1: broad market. So things have just spread to like manufacturing,
• 26:21
  Speaker 1: things have spread to technology. So we're gonna see this
• 26:24
  Speaker 1: from everybody. Microsoft said that they're gonna slow hiring thing.
• 26:30
  Speaker 1: They're slowing hiring all right, Evana, thank you so much
• 26:32
  Speaker 1: for joining us. Ivana de Levska, founder and chief investment
• 26:34
  Speaker 1: Officer of Spear invest getting a update on all things technology.
• 26:41
  Speaker 1: Nationale Basket joins is here in a Bloomberg Interactive broker
• 26:44
  Speaker 1: studio for our next question on what're bringing our next guest,
• 26:47
  Speaker 1: we'll talk a little fintech. Yeah, it's perfect timing to
• 26:50
  Speaker 1: have Matt's left chin with us. He's the CEO of
• 26:52
  Speaker 1: a firm. It's just the day after big bank earnings, guys,
• 26:56
  Speaker 1: when we have had some optimism on the consumer, but
• 26:59
  Speaker 1: it left a lot of investors with a lot of
• 27:01
  Speaker 1: worry that a lot of consumers around the country might
• 27:04
  Speaker 1: be buying basic goods on credit given the inflationary crunch.
• 27:08
  Speaker 1: And so Max, you're a great person to talk to
• 27:11
  Speaker 1: about the real state that the consumer is in. You know,
• 27:14
  Speaker 1: you're buy now, pay later. Craze has really become so
• 27:18
  Speaker 1: popular in the last couple of years. It's now taking
• 27:20
  Speaker 1: different shapes. How are you seeing the health of the
• 27:23
  Speaker 1: consumer when inflation is just troubling them everywhere? Thank you
• 27:30
  Speaker 1: for having me, I think I would so. Summer right
• 27:34
  Speaker 1: is as still healthy but concerned. We saw it just
• 27:39
  Speaker 1: the fourth or July weekend, really healthy spending. So we
• 27:43
  Speaker 1: you know, ten x in concert tickets. People are trying
• 27:46
  Speaker 1: to get out COVID is over. They can't take it anymore.
• 27:49
  Speaker 1: They gotta go see a concert. Airline purchases up three
• 27:52
  Speaker 1: x year on year. Bridle is really healthy. You know,
• 27:56
  Speaker 1: it's the year of weddings. People are finally getting married
• 27:58
  Speaker 1: after all the postponements, and so there's a lot of
• 28:01
  Speaker 1: good what I would consider to be healthy spending. That said,
• 28:05
  Speaker 1: just in our conversations with our consumers surveys, we see
• 28:09
  Speaker 1: that vast majority are concerned about inflation. They're spending power
• 28:14
  Speaker 1: is weakening fairly quickly. They're turning to Binopaulator and Affirm
• 28:18
  Speaker 1: in particular to stretch their dollar. And so you're right there,
• 28:22
  Speaker 1: there's some something to be worried about in the horizon,
• 28:24
  Speaker 1: but for the moment, they're still feeling pretty good. So
• 28:28
  Speaker 1: Max talked to us about I'm looking at your stock
• 28:30
  Speaker 1: down seventy year, Dad, I know a lot of the
• 28:33
  Speaker 1: tech stocks have taken it on the chin here uh
• 28:36
  Speaker 1: fintech in particular. Kind of what do you tell your investors,
• 28:41
  Speaker 1: your employees about kind of the future of the of
• 28:45
  Speaker 1: the company, how the prospects for the company as it
• 28:48
  Speaker 1: relates to its stock price. I think most, if not
• 28:54
  Speaker 1: I hope almost all of my employees and certainly many
• 28:57
  Speaker 1: of my investors joined the affirm mission because they believe
• 29:01
  Speaker 1: in it and are very much concerned with the long
• 29:04
  Speaker 1: term as opposed to the immediate. We're a pretty good
• 29:07
  Speaker 1: company as far as uh down stocks are concerned. But
• 29:10
  Speaker 1: we've been executing really, really well. If you look at
• 29:14
  Speaker 1: our core the earnings. We've only been public for just
• 29:18
  Speaker 1: over a year and a half. We continue to really
• 29:21
  Speaker 1: perform and deliver all the numbers that we said we would.
• 29:23
  Speaker 1: We continue to grow, we continue to maintain all the
• 29:26
  Speaker 1: credit metrics that we've committed to. So I'm just very
• 29:30
  Speaker 1: very focused on delivering this long term value to my shareholders,
• 29:33
  Speaker 1: and I think my employees are very supportive of that.
• 29:36
  Speaker 1: Are you concerned at all about accumulating debt when it
• 29:39
  Speaker 1: comes to using this model. I mean, we're already talking
• 29:42
  Speaker 1: about people switching more from using their debit cards to
• 29:45
  Speaker 1: using their credit cards. UM. It's something that also has
• 29:48
  Speaker 1: been a warning. UM. I want to say from some
• 29:50
  Speaker 1: of the major investors in the market at the moment,
• 29:53
  Speaker 1: is that something you're concerned about leverage? UM. I am
• 29:57
  Speaker 1: concernedout leverage, but I would argue that folks that are
• 30:01
  Speaker 1: turning their eye to and B n p L are
• 30:04
  Speaker 1: concerned about the exact wrong thing. It's credit cards that
• 30:07
  Speaker 1: should be worried about. There's the by now, pay later.
• 30:11
  Speaker 1: Credit cards are by now and pay forever. As soon
• 30:13
  Speaker 1: as you swipe that card, you're gonna start paying interest
• 30:15
  Speaker 1: and interest on interest. Vast majority of Americans are revolving
• 30:19
  Speaker 1: the very very small percentage of people who really understand
• 30:22
  Speaker 1: what their credit card terms and conditions say. If you
• 30:24
  Speaker 1: look at a firm, it's a much about alternative. We
• 30:27
  Speaker 1: don't charge lead fees, we don't do differred interest. We
• 30:31
  Speaker 1: make sure that you cannot pay more than we showed
• 30:34
  Speaker 1: you on the very first page when you're signing up
• 30:36
  Speaker 1: for the transaction, and we approve or decline every single
• 30:40
  Speaker 1: transaction a consumer asks for it, which allows us to
• 30:43
  Speaker 1: be much safer as a lender. But also allows consumers
• 30:47
  Speaker 1: to be very clear as to when they're over attending themselves.
• 30:50
  Speaker 1: So I'm a huge believer. Obviously I'm a little bit
• 30:53
  Speaker 1: biased by not appealing a model, but beyond that, I'm
• 30:56
  Speaker 1: I'm a believer in it as a replacement for credit cards.
• 30:59
  Speaker 1: I'm really curious, what should you not buy now pay
• 31:02
  Speaker 1: later with. You know, there's a lot of stories about
• 31:05
  Speaker 1: you know, a lot of consumers putting a lot of
• 31:08
  Speaker 1: money on credit on by now pay later, just kind
• 31:10
  Speaker 1: of spreading out their financial lives in a significant way,
• 31:14
  Speaker 1: and finances are starting to get stretched under this inflationary environment.
• 31:19
  Speaker 1: And I really believe that byompulator is a better alternative
• 31:23
  Speaker 1: to credit cards. I think, if you're revolving and revolving forever,
• 31:25
  Speaker 1: just because card cards have been around, can you buy
• 31:27
  Speaker 1: anything on it? You know, we are primarily offered at
• 31:32
  Speaker 1: the integrated point of sale, so there are many things
• 31:35
  Speaker 1: that are not yet integrated. Plenty of places for us
• 31:38
  Speaker 1: to go and partner with merchants. That said, we do
• 31:41
  Speaker 1: believe that byopay later is a better model and should
• 31:44
  Speaker 1: be used ultimately for everything. Everywhere you think you should
• 31:47
  Speaker 1: use your credit card, I think you should stop and
• 31:49
  Speaker 1: think and switch to a firm. Alright, Max, great stuff.
• 31:53
  Speaker 1: I really appreciate you taking some time out of the day,
• 31:55
  Speaker 1: Max Election, founder and CEO of the company called firm.
• 32:00
  Speaker 1: A f r M is the nastack symbol you can
• 32:04
  Speaker 1: type into your Bloomberg terminal to get a sense of
• 32:06
  Speaker 1: what's going on there in the buy now, pay later space,
• 32:08
  Speaker 1: which is a fascinating space, hnale Um and I think
• 32:11
  Speaker 1: investors are just trying to get a handle what the
• 32:13
  Speaker 1: risk profile is, especially as interest rates start to rise.
• 32:16
  Speaker 1: I think it's an interesting option for consumers, but there
• 32:19
  Speaker 1: are a lot of questions. You know, in the past,
• 32:20
  Speaker 1: there's been a lot of behaviors like you can and
• 32:22
  Speaker 1: you can't do this with a firm, by the way,
• 32:24
  Speaker 1: but by by now pay later on credit and so
• 32:28
  Speaker 1: you do see some double averaging out there. But again
• 32:30
  Speaker 1: we're gonna leave Max outill clear in this one sale.
• 32:36
  Speaker 1: Thanks so much for joining us. Shall Bass that covers
• 32:38
  Speaker 1: all things Wall Street for us, and we appreciate her
• 32:41
  Speaker 1: chiming in here with Max Election. Thanks for listening to
• 32:46
  Speaker 1: the Bloomberg Markets podcast. You can subscribe and listen to
• 32:49
  Speaker 1: interviews of Apple Podcasts or whatever podcast platform you prefer
• 32:54
  Speaker 1: I'm Matt Miller. I'm on Twitter at Matt Miller three,
• 32:58
  Speaker 1: put on Falsewheeney. I'm on twit her at pt Sweeney
• 33:01
  Speaker 1: Before the podcast. You can always catch us worldwide at
• 33:03
  Speaker 1: Bloomberg Radio