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Markets, Twitter, And The Night Effect (Podcast) · Bloomberg Intelligence

0:00
Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside
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Speaker 1: my co host Matt Miller. Every business day we bring
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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along
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Speaker 1: with essential market moving news. Find the Bloomberg Markets Podcast
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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and
0:18
Speaker 1: at Bloomberg dot com slash podcast. We were talking about
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Speaker 1: the two year you know, bonds, and this is your
0:24
Speaker 1: Bailey Wick Matt being a German resident for so many years,
0:28
Speaker 1: but again the two year German bond fort the buond,
0:32
Speaker 1: the boon forty two basis points down twenty five basis
0:36
Speaker 1: points today just brutal. So this is perfect timing for
0:39
Speaker 1: our next guest, Pooja kumera European rate strategist at t D. Pooja,
0:43
Speaker 1: do you look at the European you know, just the
0:47
Speaker 1: German bond market. What's it telling us today? Good money? Yes,
0:53
Speaker 1: it doesn't really think that ECB high fifty basics points yesterday.
0:57
Speaker 1: I think what markets are seeing right now is that
1:00
Speaker 1: Europe cannot escape procession, and that has been seen in
1:04
Speaker 1: the last couple of weeks because we are reading more
1:07
Speaker 1: into weaker data than instation strips, and even next week
1:11
Speaker 1: when we are going to get the next euro area
1:13
Speaker 1: of dash PM MICE, I doubt see itsel up that much,
1:16
Speaker 1: just because the move is all towards the growth data
1:22
Speaker 1: I've been instation data. I think I just want to
1:26
Speaker 1: point out that we saw this morning we had more
1:30
Speaker 1: ECB headlines. Kasimir came out and said the September rate
1:33
Speaker 1: hike could be UM fifty as well, obviously or fifty UM,
1:39
Speaker 1: so I think that's what moved markets there. But even
1:42
Speaker 1: here in the U s PUJA we've seen massive moves.
1:46
Speaker 1: I mean, UM Paul and I were just looking at
1:48
Speaker 1: the ten year We're down twenty seven basis points in
1:52
Speaker 1: two sessions. What's going on? It's it's it's been horrible.
1:58
Speaker 1: I think one thing to note yesterday priced action that
2:01
Speaker 1: we saw across rates for mostly driven by a very
2:04
Speaker 1: poor liquidity because we could see a lot of block
2:07
Speaker 1: trades having that cause to move, and today's move us
2:10
Speaker 1: primarily with one of the other. We've got reeper data
2:13
Speaker 1: from Europe MS to us p M, so I think
2:16
Speaker 1: right now any reaction is anyway is getting much more
2:20
Speaker 1: exaggerated because we are heading towards the summer liquidity season
2:25
Speaker 1: and also markets somehow now we know that we are
2:29
Speaker 1: sitting the end of the hiking cycles. They know that
2:33
Speaker 1: we could see maybe a couple of big moves from
2:37
Speaker 1: our central banks bankers, but they cannot continue. And that's
2:40
Speaker 1: the kind of message that we've got from Easy to
2:42
Speaker 1: be itself. They have to move forward rate guidance that
2:45
Speaker 1: we had before. They haven't said that they will be
2:48
Speaker 1: looking for bigger calibrations with respect to rate heights or
2:51
Speaker 1: September that we had before. So September could either be
2:55
Speaker 1: twenty five, fifty or seventy five. And I think if
2:58
Speaker 1: if data continues to decree, rate market will start even
3:02
Speaker 1: thinking about twenty five, markets will think that the ECB
3:04
Speaker 1: is actually done with gritis. So I think you are
3:07
Speaker 1: we will be extremely data dependent and we could see
3:10
Speaker 1: moving much more exacuated just because there's thin liquidity. So
3:15
Speaker 1: put you know, so much news coming out of Europe
3:19
Speaker 1: this week with the ECB and what's going on in Italy.
3:22
Speaker 1: Let's focus on just real quickly on Italy here as
3:24
Speaker 1: we have a little bit of the benefit of hindsight
3:26
Speaker 1: here with drug resignation, how's that viewed within the rates market,
3:32
Speaker 1: the European rates market. It can't be good. But how
3:35
Speaker 1: much of a concern is it? It is a concern.
3:38
Speaker 1: I think markets will get much more concerned when we
3:41
Speaker 1: hit closer to the election in September. Train ships. ECB
3:45
Speaker 1: has announced to tp I tool, but first of all,
3:49
Speaker 1: this tool needs to be activated by the member states
3:52
Speaker 1: and comes with a lot of fistical conditions, so I
3:55
Speaker 1: think no member state would actually be ready to actually
3:58
Speaker 1: use it. It seems more of namesake pool right now.
4:01
Speaker 1: So I think we did see I think today's move
4:04
Speaker 1: is more of a positioning let move, but it's talent
4:07
Speaker 1: politics will start actually getting more and more attention as
4:12
Speaker 1: we had closed it to this September day, so I
4:14
Speaker 1: would actually continue to stay with the moves with respect
4:18
Speaker 1: to wideners in btpsspots, I'm I'm a bit cautious about
4:23
Speaker 1: the rally that we have seen today. All right, Puja Kuma,
4:26
Speaker 1: thank you so much for joining us, Puja Kuma, Europeans
4:29
Speaker 1: Rates strategists for a t D. Looking at the markets here,
4:37
Speaker 1: just kind of churning here. But we've got the SMP down,
4:39
Speaker 1: you know, kind of more or less. We've got the
4:42
Speaker 1: fixed income down double digits wanted to look at the
4:45
Speaker 1: corporates or treasuries. I mean, that's sixty or forty portfolio
4:47
Speaker 1: just got crushed in the first half of the year.
4:51
Speaker 1: I don't know how these people do it for a living.
4:53
Speaker 1: Brent Shooty, he does it for a living. He's a
4:55
Speaker 1: chief investment strategist at Northwestern Mutual. Brent, how do you
4:59
Speaker 1: and your team? But wait, hang on a second, Brent, Paul,
5:02
Speaker 1: you did this for a living for three decades. Yes,
5:05
Speaker 1: I still don't get longer doing it. Probably, yes, exactly.
5:09
Speaker 1: That's why I'm on the radio now. Brent. How do
5:11
Speaker 1: you and your team's kind of reset after that brutal
5:15
Speaker 1: first half of two Yeah, I guess kind of commenting
5:19
Speaker 1: on the stocks and bonds both thing down and how
5:21
Speaker 1: that's kind of I think shell shocked many investors. They
5:23
Speaker 1: shouldn't expect that to happen again. And so if I
5:26
Speaker 1: take you back to ninety six and I look at
5:28
Speaker 1: stocks and bonds, there have been twenty five periods, twenty
5:32
Speaker 1: five annual time horizons in which stocks have been negative
5:35
Speaker 1: since ninety six and bonds were positive, and all but
5:38
Speaker 1: four of those, and so you have this weird period
5:41
Speaker 1: of time beginning of two. The other three time periods
5:45
Speaker 1: or four time periods, where nineteen thirty one, the Great Depression,
5:48
Speaker 1: ninety six, nineteen sixty nine, in nineteen seventy three, besides
5:53
Speaker 1: the Great Depression, the thing that occurred in each and
5:56
Speaker 1: every one of the other ones was high inflation. And
5:58
Speaker 1: this is where we recommend people own commodities because in
6:01
Speaker 1: those other three time periods that I mentioned, besides the
6:03
Speaker 1: Great Depression and now the beginning of two, um, you've
6:06
Speaker 1: seen commodity prices rise. And so I guess two takeaways
6:09
Speaker 1: from that one you need to own some commodities as
6:11
Speaker 1: part of your long allocation. And to don't expect this
6:14
Speaker 1: to happen back to back years because it hasn't happened.
6:17
Speaker 1: It doesn't mean it can't, but it hasn't happened in
6:19
Speaker 1: the ninety other years. So are you saying, then, Brent,
6:22
Speaker 1: A portfolio is not dead. It is not dead. I
6:26
Speaker 1: think it's been declared dead about twenty seven times in
6:29
Speaker 1: my twenty seven year career. Apparently the beginning part of
6:32
Speaker 1: this year was trying. But UM, I don't think that
6:34
Speaker 1: renders it dead for just because it hasn't worked for
6:37
Speaker 1: six or some months, and what about commodities? Retail investors
6:41
Speaker 1: should get that exposure. How do you think, um, actually,
6:45
Speaker 1: you know, um trading futures or buying ETFs or a fund.
6:50
Speaker 1: What do you think is the best way for a
6:52
Speaker 1: retail investor to get pork bellies exposure? Sure probably the
6:56
Speaker 1: easiest in the most efficient way for them to get it.
6:59
Speaker 1: I don't think you need to of it. You saw
7:00
Speaker 1: what actually happened the first part of the year. How
7:02
Speaker 1: a little can go a long way. Uh, And certainly
7:04
Speaker 1: over longer periods of time, it's not going to return
7:06
Speaker 1: as much as the stock market. Um, they should get
7:08
Speaker 1: that through a diversified exposure to commodities. Perhaps something called
7:12
Speaker 1: the Bloomberg Commodities Index is kind of a decent place
7:15
Speaker 1: to think about funds tied to that. Certainly it's not
7:18
Speaker 1: as tax efficient as money, but I think, as we've
7:21
Speaker 1: seen during recent time periods when inflation is rising, it
7:24
Speaker 1: certainly helps shelter you from some of the losses that
7:27
Speaker 1: are occurring in your other parts of the portfolio. You know, Brent,
7:29
Speaker 1: when pros like you say, boy in particularly the fixed
7:32
Speaker 1: income folks say we've never seen negative returns in the
7:36
Speaker 1: fixed income markets like we saw in the first half.
7:38
Speaker 1: When I hear stuff like that, I'm like, well, I'm
7:40
Speaker 1: gonna go out and buy that stuff. But it's not
7:42
Speaker 1: the same for equities, and we're down and equities I
7:45
Speaker 1: don't feel like I have to run out and buy
7:47
Speaker 1: equities here. Um, how are you guys thinking about kind
7:51
Speaker 1: of you know, just maybe valuation or can't get any
7:55
Speaker 1: worse than than the psychology of the markets. Yeah, I mean,
7:58
Speaker 1: you've seen horrible son, I'm and I know that this
8:00
Speaker 1: week we had the Bank of America survey that everybody's
8:02
Speaker 1: in referencing, but you've seen the American Association of Individual Investors.
8:05
Speaker 1: I believe we've had uh eight sub twenty readings, which
8:09
Speaker 1: doesn't occur very often going back to and most of
8:12
Speaker 1: those have given away to positive future year. By the way, Yeah,
8:17
Speaker 1: people's emotion kind of a contraining indicator. And so I'm
8:20
Speaker 1: not suggesting it can't get any worse. It certainly could,
8:23
Speaker 1: But I do think the worst isn't on the inflation side,
8:26
Speaker 1: which I do think will help alleviate those fears, which
8:29
Speaker 1: are essentially that the economy slows but inflation doesn't. And
8:33
Speaker 1: I think the reason why the markets handled. Some of
8:35
Speaker 1: the bad news on the economic side over the past
8:37
Speaker 1: few weeks that we've seen, including today, is because inflation
8:41
Speaker 1: is starting to push lower. I think people are catching
8:43
Speaker 1: on that inflation is being driven lower. You mentioned agriculture
8:47
Speaker 1: in the beginning. I mean I talked about commodities. The
8:49
Speaker 1: irony of commodities is now they're falling just a bit,
8:52
Speaker 1: which is actually good for your stock and bond portfolio.
8:54
Speaker 1: But I think it's also good for inflation pushing forward.
8:56
Speaker 1: And I think you're gonna see inflation fall, which will
8:58
Speaker 1: allow the market to guide. The Bloomberg Commodities Index UM
9:01
Speaker 1: started the year just under a hundred. It peaked in
9:05
Speaker 1: June at UM one thirty six seven, and now we're
9:09
Speaker 1: back down to one seventeen. And it's also been a
9:12
Speaker 1: pretty good month for stocks. I mean, we started the
9:15
Speaker 1: month off at thirty and change I think on the SMP,
9:18
Speaker 1: and now we're pushing four thousand. Okay, it's a down day,
9:21
Speaker 1: but it's been a good week. UM. When markets fall
9:25
Speaker 1: twenty some percent brent, for a retail investor who's got
9:30
Speaker 1: a longer time horizon, isn't it a decent idea to
9:34
Speaker 1: go ahead and at least dollar cost average in or
9:36
Speaker 1: am I dated in that thinking? No, you're not dated.
9:39
Speaker 1: All the all the old rules of investing still work.
9:41
Speaker 1: The first one that I've mentioned to people listening in
9:43
Speaker 1: is don't sell what others are um, even if you
9:45
Speaker 1: don't want to buy, don't sell what you have. But
9:47
Speaker 1: certainly adding to your exposure during downturns, it's historically proven
9:51
Speaker 1: to be a good thing, and I don't think this
9:52
Speaker 1: time will be any different. You certainly may have to
9:54
Speaker 1: go through some uh periods of doubt about what you
9:57
Speaker 1: just did. Um, but certainly, you know, I don't think
10:00
Speaker 1: it's going to be a bad idea if you do,
10:02
Speaker 1: you know, two, three, or four five years from now,
10:04
Speaker 1: which hopefully, if you're buying stocks, you have that horizon
10:07
Speaker 1: for those to actually kind of come to fruition. Alright,
10:11
Speaker 1: good stuff. Brent Shrudy joins his chief investment strategist for
10:15
Speaker 1: Northwestern Mutual. You know, he's in Milwaukee, so that it's
10:18
Speaker 1: summertime now, it's probably like a hundred degrees there and
10:20
Speaker 1: it'll be snow on the ground in two months. He's
10:22
Speaker 1: he's the Chicago guy though NBA from University Chicago. No, Yeah,
10:26
Speaker 1: NBA from those guys work hard, they're smart, they're all
10:29
Speaker 1: about the numbers. Um. I'm more of a big picture
10:32
Speaker 1: story guy. But you know, Chicago people, you've got to
10:34
Speaker 1: be into this, like those freshwater economics come down. Yeah, exactly.
10:38
Speaker 1: All right, good stuff. Bruce Levine joins the CEO of
10:44
Speaker 1: night Shares, and we're gonna talk first, Bruce about what
10:48
Speaker 1: that is. I know that UM for a long time
10:51
Speaker 1: in crypto, it's been a good strategy to buy at
10:53
Speaker 1: the close and sell at the open, or buy on
10:55
Speaker 1: Friday and sell on Monday. Is that a similar idea
10:58
Speaker 1: behind night Shares? What's night Years? Yeah, I think there's
11:02
Speaker 1: some similarity there night chairs. Is this really with the
11:07
Speaker 1: night effect? I should say? Is this really surprising phenomenon
11:09
Speaker 1: that a very large percentage of the returns of being
11:13
Speaker 1: buy and hol they're coming through the night session, and
11:16
Speaker 1: they're coming with substantially less volatility than the daytime session.
11:21
Speaker 1: So from the risk adjested basis, it makes a lot
11:23
Speaker 1: of sense to be playing in the night session as
11:25
Speaker 1: compared with the day session. All right, So what securities
11:29
Speaker 1: in particular have a meaningful night session? If you will, Yeah,
11:36
Speaker 1: it's interesting in the night effect we found is very
11:38
Speaker 1: broad in acrey markets. It exists around the world. So
11:42
Speaker 1: if you were a Japanese investor who would buy the
11:45
Speaker 1: Japanese clothes and sell the Japanese open you'd have good
11:49
Speaker 1: risk agested returns. If you're a German investor, same thing,
11:52
Speaker 1: And um we find it at the single stock level.
11:55
Speaker 1: But what we've decided to launch is to broad based
11:59
Speaker 1: indexes give you this night effect essentially in the large
12:02
Speaker 1: cap in the small cap space. So how many et
12:07
Speaker 1: s do you think you're inna launch and how long
12:09
Speaker 1: is it this going to take? Yeah, So just to
12:13
Speaker 1: give a sense of you know, kind of what I'm
12:15
Speaker 1: talking about and why we launched these, Uh, we were
12:20
Speaker 1: getting returned in the large cap space, let's say over time,
12:23
Speaker 1: you were getting maybe the return coming in the night session,
12:28
Speaker 1: and the volatility of that being uh maybe fifty of
12:33
Speaker 1: buy and hold. So again nice risk of just returns.
12:36
Speaker 1: We saw something really amazing and small caps where the
12:41
Speaker 1: daytime return on the Russell two South over a long
12:44
Speaker 1: period of times was either negative or just about flat.
12:47
Speaker 1: So all of the return was coming in the night session.
12:50
Speaker 1: So so the two that we launched so far are
12:53
Speaker 1: the end spy, So think of a night spy. Uh,
12:59
Speaker 1: and then that also playing on the ticker and the
13:02
Speaker 1: heavily traded russell to E T F I, w M
13:04
Speaker 1: D and w M. So those are the first two.
13:08
Speaker 1: We have four more in registration and we'll see what
13:11
Speaker 1: happens over time. But we think it's a really interesting
13:14
Speaker 1: concept that's never been done in ets before. So have
13:17
Speaker 1: these two E T s have you launched them? And
13:19
Speaker 1: if so, kind of what's the interest been. Yeah, so
13:23
Speaker 1: we launched them on JU and I'd say we're getting
13:26
Speaker 1: a really good reception. People are very interested in the concept.
13:29
Speaker 1: They're trying to figure out how to blend them into
13:30
Speaker 1: their portfolios. And you know, we're just out there telling
13:34
Speaker 1: our story in the down days of summer that we're
13:36
Speaker 1: getting a good responsible. But do you expect to focus
13:39
Speaker 1: on equities? I mean, I type E T F go right,
13:42
Speaker 1: and um, I can put in night shares if I
13:45
Speaker 1: leave it on equity. I see these, but then I'm
13:48
Speaker 1: reminded you could be doing bonds, you could be doing commodities,
13:51
Speaker 1: you could be Because of my experience in crypto, I
13:53
Speaker 1: see that it's worked across asset classes. Yeah, I know
13:57
Speaker 1: it is so now it's equities, and part of that
14:01
Speaker 1: is just the operational complexities of actually doing this. So
14:05
Speaker 1: you know, cryptos obviously there's no cryptos being traded in
14:08
Speaker 1: et F format period other than the futures um you
14:12
Speaker 1: know with UH commodities is a good example where we
14:16
Speaker 1: have looked at it. That's something you might look at
14:19
Speaker 1: on the bond side that you get some interesting results
14:23
Speaker 1: on the on the high yield side, it tends to
14:27
Speaker 1: look a little bit like equities that kind of returns.
14:30
Speaker 1: Yet and sometimes on treasuries you get the opposite of
14:33
Speaker 1: the night effect, which is when people are going out
14:36
Speaker 1: of the equities to get flat at the end of
14:38
Speaker 1: the day, um, they're going into treasuries. So so we're
14:42
Speaker 1: looking at all that. It's really interesting. Are you looking
14:44
Speaker 1: also at crypto Bruce, mean, do you have you know,
14:47
Speaker 1: like SEC news alerts on your phone just in case
14:51
Speaker 1: they do approve of crypto e t f UM Not yet,
14:57
Speaker 1: but you know, we're we're we're just doubt there on
15:01
Speaker 1: the equity side started we're starting down the path here,
15:03
Speaker 1: so we will make sure to put that crypto alert
15:06
Speaker 1: on our phone. It's it's interesting that in such a
15:09
Speaker 1: difficult year for I p O s, you know, no
15:11
Speaker 1: new issues and UM and for the market in general,
15:17
Speaker 1: E t F introductions have still been pretty strong this year,
15:22
Speaker 1: right ye have. But I think I heard a statum
15:26
Speaker 1: about two and the sifty new funds this year, you know.
15:28
Speaker 1: I think what you're seeing is two things. One is,
15:32
Speaker 1: most of the innovation and asset management in my opinion,
15:35
Speaker 1: comes through the et F structure these days. That seems
15:38
Speaker 1: to be the preferred vehicle for most investors. The second
15:41
Speaker 1: thing you're you're seeing is you've seen the mutual fund
15:44
Speaker 1: industry really um embrace the E t F vehicle, and
15:49
Speaker 1: so you've seen conversion. Then you've seen some of the
15:51
Speaker 1: traditional folks get into the industry for the first time.
15:54
Speaker 1: So it's driving a lot of product launch. It took
15:55
Speaker 1: them long enough. So Bruce, you're at I Shares, Black Rocks.
16:00
Speaker 1: Selection of e t F s give us a sense
16:01
Speaker 1: of just how the et F space it's kind of
16:04
Speaker 1: evolved over time, and is it a good attractive area
16:07
Speaker 1: to look at today. It's kind of a duopoly, right
16:10
Speaker 1: with I mean, I Shares and Vanguard are the two
16:15
Speaker 1: biggest shops on the street. They are and they take
16:19
Speaker 1: in you know, the lion's share of the money, and
16:21
Speaker 1: they do it in the more traditional et f that
16:24
Speaker 1: were launched twenty five years ago. You know, I launched
16:27
Speaker 1: actually a number of them, and you know that if
16:31
Speaker 1: you take some of the flows away from them, it's
16:33
Speaker 1: still pretty large numbers. It's still a growth industry and
16:36
Speaker 1: there's always room for innovation. You have seen some good
16:39
Speaker 1: things happening from some of the smaller firms, and you know,
16:43
Speaker 1: I expected to just continue to be the center of
16:46
Speaker 1: innovation and asset management. All right, So you have an
16:50
Speaker 1: affinity here. I'm just looking at kind of your CV.
16:52
Speaker 1: You have affinity for Charlottesville, Virginia, University of Virginia undergrad
16:57
Speaker 1: and then you get the NBA at the Darden School
17:00
Speaker 1: of Business, and I was considering going there. That was
17:02
Speaker 1: my choice between Duke and Virginia. But you know what,
17:05
Speaker 1: the people Bruce at Darden, they just worked too hard.
17:08
Speaker 1: You guys really worked hard at doing that case stuff, right, Yeah,
17:13
Speaker 1: we the series Lament. The type of the law school
17:17
Speaker 1: which was right across from us is really playing softball
17:18
Speaker 1: while we're working on our cases. But um, now I
17:23
Speaker 1: have a greater finishing Charlotte, Like you said, it's a
17:26
Speaker 1: great place. You know. I was down there Matt for
17:28
Speaker 1: my tour and they were just telling me how hard
17:30
Speaker 1: they worked. And I was literally getting off a stretch
17:32
Speaker 1: of like twenty seven days straight work, you know, as
17:35
Speaker 1: an investment banking analyst, scrub analyst. And the last thing
17:38
Speaker 1: I wanted to hear was we worked the hardest. Yeah.
17:41
Speaker 1: So I went to Duke and had a phenomenal two years.
17:44
Speaker 1: And so all right, Bruce, thanks so much for joining us.
17:47
Speaker 1: Bruce Levine, CEO of Night Shairs, I didn't know this
17:49
Speaker 1: night trading thing was a thing. Yeah, it's huge, and
17:53
Speaker 1: um it's amazing if you look at the charts, because
17:55
Speaker 1: you don't expect it to be as successful as it is,
17:58
Speaker 1: and then I guess it would be laborious. Um well,
18:02
Speaker 1: from my perspective, maybe the kids could write code for it,
18:05
Speaker 1: but obviously in E t F just makes it easier
18:07
Speaker 1: and keeps the cost down. Where you go to Man Deep,
18:14
Speaker 1: because we need to get smart here on the social
18:16
Speaker 1: media named snap down thirty, uh pinterest down twelve, Twitter
18:22
Speaker 1: also a down, So Man Deep seeing he covers technology
18:24
Speaker 1: for Bloomberg Intelligence. Man Deep, is this some of this
18:27
Speaker 1: week just we're seeing some of these smaller social media names.
18:30
Speaker 1: Is it just because they're not players and we need
18:32
Speaker 1: to really wait for the facebooks and the Google's next week? Yes,
18:37
Speaker 1: and uh, I think what it shows is that not
18:41
Speaker 1: everything in ad spending is going to be cut. So
18:45
Speaker 1: if companies are looking at their discretionary versus you know,
18:49
Speaker 1: essential ad spend, So in the discretionary bucket, probably snap Pinterest,
18:55
Speaker 1: the smaller social media platform sofall as opposed to the
18:59
Speaker 1: non stationary where you Google search spend is probably the
19:03
Speaker 1: last thing to be cut. So I think that's what
19:06
Speaker 1: the market is hinting at. But who knows, maybe Google
19:09
Speaker 1: disappoints as well. It's very unlikely. And you know, the
19:13
Speaker 1: valuation multiples have compressed a lot in anticipation, so I
19:18
Speaker 1: think even if the report an inline quarter, you are
19:21
Speaker 1: going to see the stock will be up. So uh yeah,
19:24
Speaker 1: I I think a lot has already priced in in
19:27
Speaker 1: terms of weakness. Man, deep, why does um Snapchat have
19:32
Speaker 1: the power to move the market. I mean, it's wiped out.
19:35
Speaker 1: I think eighty billion dollars in social media market cap,
19:39
Speaker 1: but it's not even worth eight billion dollars itself. And
19:44
Speaker 1: I didn't even really know people still used it. I
19:46
Speaker 1: remember back in the day the idea was college kids
19:49
Speaker 1: could text each other and it would disappear or something.
19:53
Speaker 1: But is it still like a big deal. Well, so
19:57
Speaker 1: they still have around three forty and daily active users.
20:01
Speaker 1: So when you start looking at you know a number
20:04
Speaker 1: of platforms that have got over two hundred million daily
20:07
Speaker 1: active users, you can it's probably you know, less intent
20:11
Speaker 1: at this point of time. So clearly they have that
20:14
Speaker 1: user base. Now their engagement seems to be falling, and
20:18
Speaker 1: part of that has to do with competition from TikTok.
20:21
Speaker 1: But at the same time, the advertisers are pulling back
20:26
Speaker 1: because they just don't seem to get the r Y
20:30
Speaker 1: they were getting before. And that is the big change.
20:33
Speaker 1: Because Apple's privacy changes has really heard the r o
20:38
Speaker 1: I on ad spending for some of these platforms, and uh,
20:42
Speaker 1: I think that is the big change. I mean, doesn't
20:45
Speaker 1: warrant eighty billion dollar route in terms of the market
20:48
Speaker 1: cap of all these companies, I don't think so. But
20:52
Speaker 1: clearly there's a lot of uncertainty around how much those
20:56
Speaker 1: changes would affect the large companies like Alphabet and Matter.
21:00
Speaker 1: All right, well, Snap has a market cap at of
21:02
Speaker 1: sixteen point eight billions, a little bit bigger than that,
21:04
Speaker 1: but nothing relative to the Facebook's and Google. So thirty seconds,
21:08
Speaker 1: Man Deep, what's the key thing we should look for
21:10
Speaker 1: from those big companies next week? Facebook and Google? Yeah,
21:15
Speaker 1: direct response adds because those are the ones directly hit
21:19
Speaker 1: by Apple's privacy changes. If Meta can show you know,
21:23
Speaker 1: even an inline quarter, the estimates have been devised the
21:26
Speaker 1: lower by ten percent if they report an inline quarter,
21:29
Speaker 1: I think I thinks those stabilized. All right, Man Deep,
21:32
Speaker 1: good stuff. As always appreciate your phone in it in
21:35
Speaker 1: from home. But I see him here. He's here all
21:37
Speaker 1: the time too, So he's one of those guys A feeling.
21:39
Speaker 1: He also works very hard from home. This is you
21:41
Speaker 1: know the debate, right, do people are they pretending to
21:45
Speaker 1: work from home? As Elon Musk says, or as we
21:47
Speaker 1: see from Man Deep, are they excelling They're? Deep is
21:51
Speaker 1: a smart dude and he's a hard work He puts
21:53
Speaker 1: out some great research. You can get it in b
21:55
Speaker 1: I go. I'll just get right to next guy, Dan Mary,
22:00
Speaker 1: CEO and founder of Vertex Software UM and I also
22:05
Speaker 1: want to talk to about what's going on in great
22:07
Speaker 1: state of Iowa. We'll get to that in a minute. Hey, Dan,
22:10
Speaker 1: thanks so much for joining us. Tell us what Vertex
22:12
Speaker 1: software is, what are you guys doing, and and kind
22:14
Speaker 1: of what's your outlook? Well, hey, thanks for having me.
22:18
Speaker 1: So we have cloud based software that helps manufacturers use
22:23
Speaker 1: three D and sales service, factory and supply chain that
22:26
Speaker 1: helps them increase efficiencies, lower costs, and drive revenue. That's
22:29
Speaker 1: kind of the nutshell. It's kind of like if you
22:32
Speaker 1: think about video games, to do games make today, you
22:34
Speaker 1: make heavy use of three D content. Well, manufacturers have
22:37
Speaker 1: a lot of three D content that they provide. It's
22:40
Speaker 1: just much more complex, a lot bigger, and it has
22:43
Speaker 1: to be more precise. So we help happen leverage that
22:46
Speaker 1: content to get more bang for the buck out of
22:48
Speaker 1: that investment. So is it like CAD your own version
22:52
Speaker 1: of AutoCAD, Well, it's kind of like that, except we're
22:55
Speaker 1: more like Netflix for CAD. So we take their CAD
22:59
Speaker 1: data and we make it easier for them to use
23:01
Speaker 1: it downstream of product of alopment and engineering where they
23:05
Speaker 1: make it so they can use it and put in
23:07
Speaker 1: the hands of a salesperson or someone on the factory
23:10
Speaker 1: for or in the hands of their customers. That historically
23:13
Speaker 1: has been really really hard to do, and we make
23:15
Speaker 1: that easy and orders the magnitude more cost efficient. Dan
23:20
Speaker 1: talks about your partnership with John Deer one of my
23:23
Speaker 1: favorite companies out there, Mine too, Mine too. Yeah, I mean,
23:26
Speaker 1: we're just so grateful to work with. You know, iconic
23:29
Speaker 1: company like John dere is such innovators. So we help
23:33
Speaker 1: them leverage three D cads like you just said, uh,
23:37
Speaker 1: to see the state of the factory for forecasting and planning,
23:40
Speaker 1: for visualizes and equipment of function and for service. Again,
23:43
Speaker 1: that concept of putting three D in the palm of
23:46
Speaker 1: people's hands on devices that they use today. Again, it's
23:50
Speaker 1: been a horse historical challenging. So what is the state
23:53
Speaker 1: of US manufacturing like right now, especially with the supply
23:56
Speaker 1: chain issues? Are they getting any better? Chip short ages
24:00
Speaker 1: really bumming me out? Um, is there an improvement that
24:04
Speaker 1: you see with the partners you work with? Well, I
24:08
Speaker 1: think just generally what I'm seeing is certainly right now.
24:12
Speaker 1: I think everybody knows demand for goods as weakening. You know,
24:14
Speaker 1: consumers are starting to spend more on service, labor, energy
24:17
Speaker 1: costs are rising, and their supply chain bombs. As you mentioned,
24:21
Speaker 1: so I think what I'm seeing, and I was just
24:23
Speaker 1: actually on site of one of our customers earlier this week.
24:27
Speaker 1: I'm just seeing this accelerating need, almost an urgency for automation,
24:32
Speaker 1: automation and distributed collaboration across time zones. They want to
24:36
Speaker 1: shorten a side of supply chain and be more nimble
24:38
Speaker 1: and flexible. That's really what what I see in the
24:41
Speaker 1: microchip shortage. The nail on the head with that is
24:46
Speaker 1: we have customers that have equipment parked in parking lots
24:50
Speaker 1: that they're leasing right because they don't have the parts
24:53
Speaker 1: to complete the production to deliver the orders. So you know, man, Dan,
25:00
Speaker 1: do I understand that? You know, I ordered a Chevy
25:03
Speaker 1: Silverado at the beginning of the year, and it is
25:07
Speaker 1: apparently as far as I can track, built in Mexico,
25:10
Speaker 1: sitting in a lot waiting for I think a window
25:13
Speaker 1: switch chip. I don't ever need to roll the windows down.
25:19
Speaker 1: I'll take the truck now, thank you very much. Hey Dan,
25:22
Speaker 1: you know, Matt and I are stuck here in midtown Manhattan.
25:25
Speaker 1: We have no idea what's going on in the real world.
25:27
Speaker 1: So we left talking the folks that are out and
25:29
Speaker 1: about doing stuff you have a bachelor's mechanical engineering from
25:33
Speaker 1: Iowa State University. That's an eyewa. These days, well, you know,
25:38
Speaker 1: I think, you know, generally speaking, I think things are
25:40
Speaker 1: pretty good in Iowa. We have a you know, state
25:43
Speaker 1: government here that has been really uh you know, supportive
25:47
Speaker 1: of from my world, support of the innovation. I I
25:50
Speaker 1: am excited about what's going on in Congress right now
25:53
Speaker 1: and support for you know, kind of diversifying uh you know,
25:58
Speaker 1: diversity of the investments for National Science Foundation and Department Energy.
26:02
Speaker 1: I think that's something I've heard a lot of excitement
26:04
Speaker 1: about with his latest bill. Um just making it possible
26:08
Speaker 1: for people in more rural states like us to tap
26:12
Speaker 1: into you know, grant money. How's it you the farm
26:14
Speaker 1: economy out there. We've seen big swings and commodity prices
26:18
Speaker 1: that Mett and I like to talk about, but you
26:20
Speaker 1: guys are actually putting the stuff in the ground and
26:22
Speaker 1: taking it out. Yeah, you know, I gotta tell you,
26:26
Speaker 1: I'm in Iowa, and that's not not really my area.
26:30
Speaker 1: Got a lot of friends, and I got a lot
26:31
Speaker 1: of friends in the act. But I grew up in
26:34
Speaker 1: kind of science technology and was a child at the
26:37
Speaker 1: early video game generation, Like, what what are your favorite games?
26:43
Speaker 1: Oh gosh, geez, well, I go all the way back
26:45
Speaker 1: to dude, I was there at the Commodore sixty four.
26:50
Speaker 1: You know. Oh yeah, yeah, oh you that that impossibation?
26:56
Speaker 1: Yeah yeah, all right, dad, good, good, good stuff. We
26:59
Speaker 1: always appreciate checking in with some of these entrepreneurs out
27:03
Speaker 1: there all over the country. Dan Murray's doing it CEO
27:06
Speaker 1: and founder Vertex Software bringing some technology solutions to some
27:10
Speaker 1: industrial companies. And I'm sure that's a big, big plus
27:13
Speaker 1: for a lot of these companies when they can get
27:15
Speaker 1: kind of really step up their tech game, and Dan
27:19
Speaker 1: Murray does that. Appreciate it. Thanks for listening to the
27:23
Speaker 1: Bloomberg Markets podcast. You can subscribe and listen to interviews
27:27
Speaker 1: with Apple Podcasts or whatever podcast platform you prefer. I'm
27:31
Speaker 1: Matt Miller. I'm on Twitter at Matt Miller three. Put
27:36
Speaker 1: on Ball Sweeney I'm on Twitter at pt Sweeney. Before
27:38
Speaker 1: the podcast, you can always catch us worldwide at Bloomberg Radio.