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SCOTUS Social Media Ruling , FedEx Earnings · Bloomberg Intelligence

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Speaker 2: Let's get back to John Tucker in our New York studio. John,
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Speaker 2: Supreme Court. We got some rulings today, the notable on
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Speaker 2: the crossing the tape. Supreme Court backs White House on
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Speaker 2: social media post removal. What do we know about that?
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Speaker 3: Yeah, the Court issuing several major decisions this week. They
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Speaker 3: could also extend into next week. In fact, twelve opinions
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Speaker 3: left in in this term. Paul on Alex Paper opinions
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Speaker 3: released to the courthouse in Washington just a few minutes
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Speaker 3: before they're posted online. June Grosso, the host of Bloomberg Law,
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Speaker 3: joining me now to go over some of these decisions
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Speaker 3: with respect to the Biden administration. They're social media contexts.
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Speaker 3: What was the decision?
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Speaker 4: So the decision, the complaint by a few Republican states
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Speaker 4: and people was that the Biden administration, and this was
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Speaker 4: during COVID was contacting the social media platforms and getting
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Speaker 4: them to change information. That was the charge. So here
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Speaker 4: in a six to three case, and both the cases
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Speaker 4: today are six to three, which is indicative of how
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Speaker 4: this term might end.
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Speaker 5: Six to three.
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Speaker 4: So the court went off on a standing issue, which
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Speaker 4: is procedural, and I know I've discussed this before, but
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Speaker 4: it's a way for the court not to reach the
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Speaker 4: main issue, but to say the people who are suing
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Speaker 4: here don't have standing to sue because they weren't injured
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Speaker 4: in any way. But also in doing that, just as
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Speaker 4: Amy Cony Barrett, who wrote the majority, said that the
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Speaker 4: Fifth Circuit here was wrong in some of the analysis
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Speaker 4: that it made and that they couldn't really show that
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Speaker 4: it was the government that injured the plaintiffs at all
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Speaker 4: these points. So you know, the question is and also
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Speaker 4: it's sixty three in the.
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Speaker 3: Three, So it sets up how this is going to
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Speaker 3: play out before the election in terms of misinformation on
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Speaker 3: social media.
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Speaker 1: Right.
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Speaker 4: Also, there are two other cases that are sort of
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Speaker 4: joined that are more important as far as social media
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Speaker 4: is concerned, and those are the cases concerning the Texas
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Speaker 4: and Florida laws where they're trying to curtail the platforms
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Speaker 4: into doing you know, into into and it's another thing
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Speaker 4: like a conservative saying that you know they're being unfair
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Speaker 4: to us, and it's a question of free speech. So
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Speaker 4: the dissent here was the three most conservative justices, Alito, Gorsicic,
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Speaker 4: and Thomas.
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Speaker 3: How many more cases are going to be? Is that
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Speaker 3: it for today?
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Speaker 4: There's one other case on public corruption, something that we
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Speaker 4: haven't been following, but it continues the Supreme Court's skepticism
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Speaker 4: of these public corruption laws.
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Speaker 3: All right, June Grasso, the host of Bloomberg Law, with
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Speaker 3: me to break down some of these cases. The Supreme
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Speaker 3: Court again backing the Biden administration on the social post
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Speaker 3: media removal in terms of cases that go against the arguments.
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Speaker 5: Let's get back to FedEx.
3:33
Speaker 6: Thomas black is the Bloomberg opinion columnists covering logistics, manufacturing,
3:36
Speaker 6: and aerospace, joining us.
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Speaker 5: Now, So what did you make of that news? In particular?
3:41
Speaker 6: A strategic spinoff maybe, or strategic options, I should say
3:44
Speaker 6: for its freight unit.
3:45
Speaker 5: That pretty much surprised a lot of analysts. What did
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Speaker 5: you make of that?
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Speaker 7: It was surprising. It potentially could unlock a lot of value,
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Speaker 7: and I think that's why the stock price is up
3:56
Speaker 7: around fifteen percent today. Investors see that as kind of
4:00
Speaker 7: a little gold nugget that's been hidden in FedEx. It's
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Speaker 7: the largest less than truckload carrier, and those trucking companies
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Speaker 7: tend to have pretty high valuations right now, so they
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Speaker 7: could definitely unlock some value.
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Speaker 2: So is the expectation that they will spin that out
4:21
Speaker 2: or ipo it. What mechanism were they discussing?
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Speaker 7: Do you think they didn't want to talk about it?
4:27
Speaker 7: They were asked several questions about that on the conference call,
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Speaker 7: and they batted them all away. They're going to review it.
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Speaker 7: Spin out would be would be easier to do, probably
4:37
Speaker 7: more tax friendly as well. They could sell it, sure
4:42
Speaker 7: there would be some interested buyers in there. It's a
4:44
Speaker 7: pretty high margin business for the trucking company, for trucking
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Speaker 7: industry IPO. I presume they could do that as well.
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Speaker 7: A spin would probably be the better way to get it,
4:56
Speaker 7: you know, trading.
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Speaker 2: Yep, you know, just looking at this just the most
5:01
Speaker 2: recent results. You know, they're talking about their forecast revenue
5:03
Speaker 2: will grow in the load a mid single digit percentage
5:06
Speaker 2: in the upcoming period. But boy, they're talking about a
5:09
Speaker 2: big gain in EPs net profitability. What are they doing
5:13
Speaker 2: on the cost side that's kind of bringing a lot
5:15
Speaker 2: more dollars down?
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Speaker 7: Yeah, the FedEx story is all about cost cutting. The
5:20
Speaker 7: parcel market is a little soft right now. It's been
5:22
Speaker 7: that way for a few quarters. As people the revenge
5:27
Speaker 7: traveling and all the revenge experiences that people are buying,
5:32
Speaker 7: they're not buying as much stuff, so e commerce in
5:36
Speaker 7: the package delivery market's a little flat. So FedEx is
5:40
Speaker 7: cutting costs hard. That the new CEO, Rod Supermanium, came
5:43
Speaker 7: in a couple of years ago and announced this big
5:45
Speaker 7: transformation of FedEx, and he's doing it. There was some
5:49
Speaker 7: skepticism about how this would work, but he's winning over
5:52
Speaker 7: investors now because they've had several quarters in which they
5:57
Speaker 7: have increased margins even though their revenue has been on
6:00
Speaker 7: the decline because of the market pressure. So so far,
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Speaker 7: so good for mister SUPERMANI.
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Speaker 6: So you had a great opinion piece out about FedEx
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Speaker 6: and you sort of broke down this logistics business and
6:14
Speaker 6: then what would be left afterwards, and how FedEx would
6:18
Speaker 6: be then a pure play small packaged delivery company, and
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Speaker 6: then you'd have this behemoth logistics company. And is how
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Speaker 6: much market share they really own? Can you talk us
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Speaker 6: through some of those numbers, because I think of what's
6:28
Speaker 6: left of FedEx will be quite interesting in how to
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Speaker 6: value it.
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Speaker 7: Right, So what they would spin out would be there
6:36
Speaker 7: less than truckbload UH trucking company. And these are these
6:40
Speaker 7: are companies that have a network of warehouses and they
6:44
Speaker 7: bring in customers goods and they consolidate them so that
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Speaker 7: they can fill a full trailer instead of just taking
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Speaker 7: a partial trailer. So they're essentially a trucking It's a
6:54
Speaker 7: trucking company. So FedEx is going to keep all of
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Speaker 7: its UH if it did spin that, it would keep
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Speaker 7: all of its package delivery business. It also has some
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Speaker 7: logistics business in which it helps customers move freight around
7:08
Speaker 7: the world. They do custom stuff and freight forwarding and
7:12
Speaker 7: so forth, so they would keep that as well with
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Speaker 7: the main company. So this would be a trucking company.
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Speaker 7: They've tried in the past to help to merge these
7:26
Speaker 7: companies a little bit more, in other words, having the
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Speaker 7: trucking company do some of the package delivery and so forth,
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Speaker 7: especially some of the large packages. I'm not sure it
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Speaker 7: worked out that well, So maybe that's why they're pivoting
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Speaker 7: and saying, well, maybe we could unlock more value instead
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Speaker 7: of trying to integrate it more into our system, let's
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Speaker 7: just go ahead and carve it out.
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Speaker 2: You know, when we talk cost custs in this business,
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Speaker 2: a lot of times it means headcount. What have they
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Speaker 2: done on the headcount front, because it just seems like
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Speaker 2: a labor intensive business.
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Speaker 7: They've definitely have lowered some headcount. I don't have the
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Speaker 7: numbers off the top of my head, but that's that's
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Speaker 7: one of the things. The other is they're trying to
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Speaker 7: consolidate their networks. And if they're in the past, if
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Speaker 7: there was an express facility and a ground facility in
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Speaker 7: the same vicinity, they would just continue to operate those
8:17
Speaker 7: and the trucks sometimes would arrive at your house. One
8:22
Speaker 7: would be an express truck, one would be a ground truck.
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Speaker 7: They're trying to eliminate a lot of that duplication so
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Speaker 7: in some cases they're consolidating facilities, they're handing off packages
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Speaker 7: so that only one driver comes to your door or
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Speaker 7: your business. So that's another way in which they're cutting costs.
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Speaker 7: It's not all just head counted operational.
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Speaker 6: Yeah, and clearly also, you know, spinning on the logistic
8:47
Speaker 6: business will help them cash flow there real quick before
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Speaker 6: you let you go. If the spinoff of logistic business
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Speaker 6: went the way of M and A, who might be
8:54
Speaker 6: potential buyers?
8:55
Speaker 2: Oh, good question.
8:57
Speaker 7: That's a little bit of shaky ground. But there are
9:00
Speaker 7: some large LTL players out there. I'd have to say
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Speaker 7: XBO would come to mind, maybe because they have their chairman,
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Speaker 7: Brad Jacobs has made a living by acquiring companies, so
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Speaker 7: I wouldn't put them. I would put them on the list.
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Speaker 7: In fact, when Yellow, which is another LTL carrier, went bankrupt,
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Speaker 7: XBO bought the most of the assets. The assets were
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Speaker 7: all divided up and sold and XBO came out with
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Speaker 7: the lion's share of those. So it's it's it's willing
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Speaker 7: to expand through acquisition, So I would put them on
9:36
Speaker 7: the list.
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Speaker 2: All right, Very good, Thomas Black, Thank you very much
9:40
Speaker 2: for joining us. Really appreciate Thomas Black, Bloomberg opinion columnists,
9:43
Speaker 2: just giving us the latest on FedEx better and expect
9:45
Speaker 2: the results. Taking guidance up stock moving up here about
9:48
Speaker 2: about thirteen fourteen percent fifty two week high. About that
9:51
Speaker 2: for our friends at FedEx.
9:54
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Speaker 2: I am, but we will both went to the business exactly.
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Speaker 2: Hey Clark, what do you feel about these markets here?
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Speaker 2: What's kind of how are you approaching them right here?
11:01
Speaker 2: Because we've got a FED that presumably is going to
11:04
Speaker 2: be cutting raged at some time, I guess later rather
11:06
Speaker 2: than that, the sooner we've got decent earnings, how are
11:10
Speaker 2: you guys approaching it?
11:11
Speaker 8: I think the FED is thinking they're going to start
11:13
Speaker 8: cutting rage, So that's what people think in September and stuff.
11:15
Speaker 8: I think every time we talk about this it keeps
11:17
Speaker 8: getting delayed more and more, and I don't I think
11:21
Speaker 8: this market is very dependent on what the FED does,
11:23
Speaker 8: and they're timing of it. So growth is slowing down,
11:26
Speaker 8: unemployment is slowly starting to increase, things are heading in
11:29
Speaker 8: the right direction, Inflation is coming down, and it just
11:32
Speaker 8: depends on how the FED reacts. If they react too quickly.
11:35
Speaker 8: I think we could go the wrong direction. May they
11:38
Speaker 8: react to slow they go the other direction. So I
11:40
Speaker 8: think it's very conditional on how the FED, on how
11:42
Speaker 8: the FED basically performs.
11:43
Speaker 6: What I was struck with over the last day listening
11:46
Speaker 6: to a lot of the Bloomberg in Best Panels is
11:48
Speaker 6: how little the FED was really talked about, Like it
11:50
Speaker 6: was a little bit here and there, but it was
11:52
Speaker 6: mostly about AI, how to invest, what the potentials are,
11:55
Speaker 6: and private credit and sort of what do you do
11:58
Speaker 6: in that sector as part of the family off of
12:00
Speaker 6: how do you guys look at the best investment thesis
12:02
Speaker 6: for AI.
12:04
Speaker 8: AI is moving so fast that I don't think anyone
12:07
Speaker 8: has any idea what's going to happen with it. But
12:09
Speaker 8: it's going at an exponential pace. So you know, we
12:12
Speaker 8: went from like PCs to the internet, to mobile to
12:15
Speaker 8: the cloud, and I think AI is going to be
12:18
Speaker 8: much faster. But I think the things that are gonna
12:20
Speaker 8: change AI for this next generation, I don't think people
12:22
Speaker 8: can even comprehend, like even terms of making like entertainment
12:25
Speaker 8: and stuff like that, the like we don't need actors
12:29
Speaker 8: and actresses. Sora from Open AI can generate a video live,
12:32
Speaker 8: and I think this magic and secret is just in
12:34
Speaker 8: terms of how you prompt it.
12:36
Speaker 5: I think my artist soul is slowly dying, yes, but.
12:41
Speaker 8: It really is changing the world that I don't think
12:43
Speaker 8: people even understand. I think the danger of it is
12:45
Speaker 8: always going to be the deep fakes, the cybersecurity, all
12:49
Speaker 8: that stuff, because I think the hackers are much more
12:52
Speaker 8: innovative than the people defending against it, and they only
12:54
Speaker 8: have to win once. So I think that's the danger
12:57
Speaker 8: of it. I think people are starting to understand this.
12:59
Speaker 8: So I think we're starting to see dedicated AI models
13:02
Speaker 8: for specific countries. So I think Japan just invested in
13:05
Speaker 8: one for their country. I think India is looking at
13:08
Speaker 8: it too, because no one wants to be using the
13:10
Speaker 8: US LM model. Basically, it's using US data and as
13:14
Speaker 8: a result, it reflects more of the US population, the
13:17
Speaker 8: Western society and stuff like that. To do that and
13:19
Speaker 8: to run that in China is useless because the Chinese
13:22
Speaker 8: population they have so many restrictions on jaywalking or chewing
13:25
Speaker 8: gum or whatever that it just may not work over there.
13:28
Speaker 8: So I think AA is gonna be It's gonna be
13:29
Speaker 8: fascinating in terms of how impacts the world.
13:32
Speaker 2: The energy usage is.
13:32
Speaker 8: Going to be a huge issue. And I mean I
13:36
Speaker 8: was I was out in Las Vegas last week and
13:38
Speaker 8: William Jensen was actually speaking at an energy conference and
13:41
Speaker 8: he's you know, he's a tech guy and he's at
13:43
Speaker 8: an energy conference.
13:44
Speaker 6: But he was speaking with Edison International, which is the
13:46
Speaker 6: CEO that I've spoken to about power usage.
13:49
Speaker 5: They're based in California.
13:51
Speaker 6: So to that point, do you invest though in this thesis,
13:54
Speaker 6: like you're absolutely right, like everything you said makes complete sense.
13:57
Speaker 5: Do you make money off of that?
13:59
Speaker 8: No, we could definitely make money off I think it's
14:00
Speaker 8: changing so quickly. I think the problem is knowing who
14:03
Speaker 8: the winner is going to be, no matter what Navidia
14:06
Speaker 8: is doing for now, because everything they produce is sold
14:10
Speaker 8: out and everyone's trying to get ahead. And if you're
14:12
Speaker 8: not buying the chips, you're not going to be on
14:14
Speaker 8: the forefront of this technology. So I mean, if they
14:17
Speaker 8: can keep the market share that it's fantastic. I think
14:19
Speaker 8: they have a mode around them with the software and
14:21
Speaker 8: the chip, but I think it's just a home run
14:24
Speaker 8: right now.
14:24
Speaker 2: And what seems a little bit different AI versus say
14:27
Speaker 2: the Internet, for example, is the Internet was a whole
14:29
Speaker 2: bunch of new companies, disruptors, whether it's Google or Facebook,
14:34
Speaker 2: disrupting the existing business models. Here doesn't seem to be
14:37
Speaker 2: that way. It seems to be in Nvidia is the
14:40
Speaker 2: chip play. Maybe Microsoft's a software play, you know, and
14:44
Speaker 2: it's these existing incumbents that are investing in and building
14:48
Speaker 2: up AI capabilities. I guess that's the way to play it.
14:51
Speaker 8: It's all it's all in the data. The data is oil.
14:53
Speaker 8: The data is what trains these models. The investments that
14:57
Speaker 8: you need in the infrastructure in terms of these data
14:59
Speaker 8: centers can only come from the largest companies, like say Microsoft.
15:02
Speaker 8: I think Microsoft and open ai have a project that
15:04
Speaker 8: we working to build the biggest you know, data center
15:07
Speaker 8: of the world to basically run AI. So I think
15:10
Speaker 8: it is gonna be with those big winners that are
15:12
Speaker 8: out there. But if you're a small company, we see
15:15
Speaker 8: this a lot on the venture side. You develop something new,
15:17
Speaker 8: like say mid Junior, some of these you know videotype
15:20
Speaker 8: of creation models, you're you're basically out innovated within six
15:24
Speaker 8: months when open I released Sora. So like it's happening
15:27
Speaker 8: at such a fast pace set if you're a startup
15:29
Speaker 8: and you don't have the capital and the resources and
15:31
Speaker 8: the talent to innovate faster than the big guys. Your
15:35
Speaker 8: basic business model, business models is basically gone in six months.
15:38
Speaker 6: So you were on a panel that was titled meeting
15:40
Speaker 6: the Needs of the Rising Generation.
15:43
Speaker 5: What does that mean?
15:44
Speaker 6: Is that like, we don't have enough kids and everyone
15:46
Speaker 6: is gonna get old and there's a big fiscal deficit.
15:48
Speaker 6: Does that mean that it's gonna be super isolationist? What
15:51
Speaker 6: does that mean?
15:51
Speaker 8: I mean we do have a demographic problem. I think
15:54
Speaker 8: in the in the modern world where I think the
15:56
Speaker 8: population is declining, I think the people are getting older. Well,
15:59
Speaker 8: we were talking about earlier is more. There's an eighty
16:01
Speaker 8: four trillion dollars of a wealth that's going to be
16:03
Speaker 8: transferred from the baby boomers towards the next two generations.
16:06
Speaker 8: It's going to happen over the next twenty years. And
16:10
Speaker 8: the question is how does it happen? What is this
16:12
Speaker 8: next generation?
16:13
Speaker 7: Like, what are they?
16:14
Speaker 8: What are the what are their intentions? I think I
16:17
Speaker 8: think the the generation that generated the wealth after World
16:20
Speaker 8: War two, through through housing and through the stock market.
16:24
Speaker 8: I mean, their their intention was clear. They were trying
16:27
Speaker 8: to generate wealth and have a good cost of living
16:29
Speaker 8: and stuff like that. I think the next generation, I
16:31
Speaker 8: think is more idealistic, and they do want to help
16:33
Speaker 8: solve income inequality, they want to help solve climate impact ESG. Stuff.
16:39
Speaker 8: I think the danger with that is the fact that
16:41
Speaker 8: if you're not focused on one goal and you have
16:43
Speaker 8: conditional goals where this is the best investment relative to climate,
16:47
Speaker 8: it's it gets hard to measure how you're actually performing.
16:49
Speaker 8: And as a psychologist, we really wanted to make keep
16:52
Speaker 8: things simple. We want to have one goal. You can
16:54
Speaker 8: have another goal for a different part of your business,
16:56
Speaker 8: like say at the foundation, but to combine the two
16:58
Speaker 8: into one, I think you really never know how you're doing.
17:01
Speaker 2: So from an investment perspective, do you have that in
17:05
Speaker 2: your back in your mind?
17:06
Speaker 7: ESG.
17:07
Speaker 2: And let's not even use those letters because they become toxic.
17:09
Speaker 2: I guess it's just just is that part of your
17:12
Speaker 2: investment outlook, or you're just there focus on generating the
17:15
Speaker 2: best returns for your client.
17:17
Speaker 8: We're here to generate returns. And then we have another side,
17:20
Speaker 8: the foundation side that does all the charitable stuff. So
17:22
Speaker 8: we have two distinct goals and two separate parts of
17:24
Speaker 8: our businesses, but we try not to combine the two
17:26
Speaker 8: into one.
17:28
Speaker 6: Then I guess the question then becomes, how do you
17:31
Speaker 6: think of, say the deglobalization part, because you get the
17:34
Speaker 6: transfer of wealth. Yes, and we're also going to be
17:37
Speaker 6: in an entirely different few decades now as we were
17:40
Speaker 6: since like the Industrial revolution, kind of how do you
17:42
Speaker 6: think about that?
17:44
Speaker 8: I think the world is going in a very bad direction.
17:47
Speaker 8: I think if you read Destined for War, you're talking
17:50
Speaker 8: about the changes of economic powers. Every time one and
17:52
Speaker 8: two changes powered, there is some kind of war, whether
17:55
Speaker 8: it be a kinetic war or not. I don't think
17:56
Speaker 8: it's going to be the I think we are in
17:59
Speaker 8: a cyber war. We are in a tech war. I
18:01
Speaker 8: think between China and Russia, North Korea and Iran, they're
18:04
Speaker 8: gonna have their own tech stack and the US is
18:06
Speaker 8: gonna have our own tech stack with our own allies.
18:08
Speaker 8: So there's gonna be two distinct tech stacks are gonna
18:11
Speaker 8: be generated from each of these groups of nations. But
18:14
Speaker 8: I don't think we're going to share stuff. If you're
18:16
Speaker 8: reading the book of How the World Ends, they talk
18:18
Speaker 8: about all the cyber stuff, but it is scary the
18:21
Speaker 8: stuff that they can do. So I think ultimately that's
18:24
Speaker 8: where we're going. And as a result, I think the
18:26
Speaker 8: globalization is going to happen. That is going to be inflationary. However,
18:29
Speaker 8: that's going to go against AI, which is going to
18:31
Speaker 8: be very disinflationary too.
18:33
Speaker 2: Because we grew up in a general I'm gonna say
18:34
Speaker 2: the last at least a generation was all about globalization
18:38
Speaker 2: bringing barriers down out sign and then I know that
18:44
Speaker 2: turned maybe four or five, six, seven years ago. Is
18:48
Speaker 2: globalization dead?
18:49
Speaker 5: Do you think?
18:49
Speaker 8: I don't know if it's dead. It just made me
18:51
Speaker 8: more compartmentalized within each country's allies and stuff like that.
18:55
Speaker 8: It's just but I don't think it's going to be
18:56
Speaker 8: as global as it was before because China wasn't a threat,
18:59
Speaker 8: nor were the power economic power we were trying to
19:02
Speaker 8: I can convince him to come towards the US type
19:05
Speaker 8: of you know, type big Colombian market, but they're not
19:07
Speaker 8: going to head in that direction. So I think the
19:09
Speaker 8: world is changing right now and it's gonna be really
19:12
Speaker 8: interesting for this next generation.
19:13
Speaker 6: All right, Clark, we really appreciate Clark Chang's CEO and
19:16
Speaker 6: CIO of Marymac Corporation joining us here at Bloomberg invest
19:21
Speaker 6: I have to say, I don't envy having to think
19:24
Speaker 6: about these themes in the next few decades when literally
19:26
Speaker 6: nobody knows what it's going to be, whether it's AI
19:29
Speaker 6: and how that cyclical nature of that industry works, whether
19:32
Speaker 6: it's deglobilization and what that winds up looking like.
19:35
Speaker 5: It is very confusing.
19:39
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
19:43
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19:46
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19:49
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19:53
Speaker 1: Just Say Alexa Play Bloomberg eleven thirty.
19:57
Speaker 5: Alex you alongside Paul Sweeny.
19:59
Speaker 6: We are live from the Bloomberg and Best Conference in Manhattan,
20:02
Speaker 6: Lawer Manhattan, a beautiful.
20:03
Speaker 5: Two two five a Liberty Street.
20:04
Speaker 6: We're bringing together leaders from asset management, banking and private markets.
20:08
Speaker 6: Well here on set, I have a special guest for you.
20:10
Speaker 6: Rebecca Lynn is co founder and general partner of Canvas
20:13
Speaker 6: Ventures now. Canvas Ventures was founded in twenty thirteen and
20:17
Speaker 6: focuses on leading Series A and Series B investments around AI, say, fintech,
20:22
Speaker 6: digital health, A lot of stuff going on in that space,
20:25
Speaker 6: and Rebecca joins us.
20:25
Speaker 5: Now, Rebecca, thank you so much for joining us.
20:28
Speaker 9: Thank you for having me.
20:29
Speaker 6: So what do you like right now? Like, what's interesting
20:32
Speaker 6: to you? What's the market like? Give us some perspective
20:35
Speaker 6: of how you're thinking about things.
20:37
Speaker 9: Yeah, there's a lot that's happening right now in the
20:39
Speaker 9: market overall. I think AI is creating a real catalyst.
20:42
Speaker 9: We're hearing a lot about, you know, jen Ai with
20:45
Speaker 9: the launch of chat JPT just a year and a
20:47
Speaker 9: half ago. And the interesting thing is is this has
20:50
Speaker 9: been evolving for some time. I mean, we've been tracking
20:53
Speaker 9: the LLLM and the AI space for many years. We've
20:55
Speaker 9: had a number of exits in this space, you know,
20:57
Speaker 9: way dating back to Siri, you know, in my prior
21:00
Speaker 9: and most recently case text. And so what we're seeing
21:03
Speaker 9: is that Jenai can really supercharge many of the theses
21:07
Speaker 9: we've had for a very long time in both fintech
21:10
Speaker 9: and in digital health. One example is the ability to
21:15
Speaker 9: actually take all the call volume, for example, off of
21:18
Speaker 9: a physician practice is an incredible opportunity. Wealth Management is
21:21
Speaker 9: another company that we recently recently let an investment in
21:25
Speaker 9: where the company can actually perform all of the back
21:30
Speaker 9: office functionality that a wealth manager would typically do and
21:33
Speaker 9: quite frankly doesn't really want to do, right, all of
21:35
Speaker 9: the back office compliance, the emails, the reporting, the generation
21:39
Speaker 9: of reports, things that would take them ten to fifteen
21:41
Speaker 9: hours on average a week. JENAI can now lift off
21:45
Speaker 9: their shoulders and let them do what they do best,
21:47
Speaker 9: which is really interface with the clients.
21:49
Speaker 2: Right. So one of the things as I talked to
21:52
Speaker 2: just investors, they're saying, where's that AHA moment for AI?
21:57
Speaker 2: From an IPO perspective? So for example, for search we had,
22:00
Speaker 2: for social we had Facebook. Should we be anticipating an
22:05
Speaker 2: Aha ipel to come out of Sandhill Road and just
22:07
Speaker 2: blow the market away?
22:10
Speaker 9: You know, as an investor in early stage or early growth, right,
22:14
Speaker 9: we actually think the Aha moment is M and A OK.
22:17
Speaker 9: And so what's going to happen is all of these
22:20
Speaker 9: companies that are focused on solving real world problems with
22:24
Speaker 9: AI are going to be acquired by these very large
22:28
Speaker 9: tech companies that have consumer bases they can sell into.
22:30
Speaker 9: And that's what happened with case Text, right. Case Text
22:33
Speaker 9: had ten thousand of its own users, but their AI
22:36
Speaker 9: product was fundamentally disrupting all of Thompson Router's Oh and
22:39
Speaker 9: so Thompson Reuters had said publicly that they were going
22:43
Speaker 9: to invest a billion dollars in AI technology because they
22:46
Speaker 9: saw it disruptive to their entire business, right, and instead
22:51
Speaker 9: they bought case text, which they could plug right into
22:53
Speaker 9: their existing customer base.
22:55
Speaker 6: Do you feel like the regulatory environment is going to
22:57
Speaker 6: allow for stuff like that? Because I feel like, if,
23:00
Speaker 6: if anything, big tech making making big deals based on
23:05
Speaker 6: things that they need and don't want to compete against,
23:07
Speaker 6: it's not going to.
23:08
Speaker 5: Go so well.
23:09
Speaker 9: I mean, if they if they truly have a monopoly, right,
23:11
Speaker 9: But I think regulatory right now has bigger fish to
23:13
Speaker 9: fry personally.
23:14
Speaker 2: Okay, how about just fundraising in general? If I have
23:17
Speaker 2: an idea, I go to Sandhill Road and I try
23:20
Speaker 2: to get some capital. What's it like these days in
23:23
Speaker 2: raising capital? If I do I have to have an
23:25
Speaker 2: AI angle, can I get something done? Otherwise? What's it
23:28
Speaker 2: like raising money these days?
23:30
Speaker 9: You know what it's like raising money? I think it's
23:32
Speaker 9: very like the general the ecosystem. I first came into
23:36
Speaker 9: venture in in that O eight O nine time period
23:39
Speaker 9: where you know, the markets were a little bit frozen.
23:43
Speaker 9: In terms of early stage, we're seeing a decrease in
23:45
Speaker 9: like the seed and the A funding. Definitely seeing a
23:48
Speaker 9: lot more down rounds in the later stage. However, that
23:51
Speaker 9: was the biggest fund I've been involved in. That was
23:53
Speaker 9: a monster fund, right because what's happening right now is
23:56
Speaker 9: the same thing that happened back then. Where you know,
23:59
Speaker 9: venture capital firms have record amounts of cash, but because
24:02
Speaker 9: their valuations of their current companies got so over their skis,
24:06
Speaker 9: they're having to put their money and their current companies
24:08
Speaker 9: and not invest as much in new companies. And so
24:11
Speaker 9: if you kept sort of, if you kept sort of
24:13
Speaker 9: in a steady pace like we did, you're able to
24:16
Speaker 9: still invest in all of those new y early stage companies.
24:18
Speaker 9: But for the early stage company, it's nice because you
24:21
Speaker 9: don't have fifty other competitors being also backed, so you
24:24
Speaker 9: have some runway to move.
24:27
Speaker 6: In terms of exit strategies. I know you said M
24:28
Speaker 6: and A, is you think how it's going to go?
24:30
Speaker 6: What do you think the IPO market does, like when
24:32
Speaker 6: does that open up?
24:33
Speaker 7: When?
24:34
Speaker 9: So my crystal ball is not here with me today, However,
24:38
Speaker 9: you know, I think it's incredible what we've seen in
24:41
Speaker 9: the pipeline for IPOs. Right when we took Doximity public,
24:45
Speaker 9: the rule of thumb back then was, you know, one
24:48
Speaker 9: hundred million plus in revenue, you know, thirty percent to
24:51
Speaker 9: fifty percent growth year over year, you know, profitability. And
24:55
Speaker 9: they were profitable and they went out, which I think
24:57
Speaker 9: is very important.
24:58
Speaker 5: In the hopper we have.
25:00
Speaker 9: We have companies that have a billion dollars of revenue
25:03
Speaker 9: and are profitable, and so I think, what as soon
25:07
Speaker 9: as they're still private and they're still private, and we
25:10
Speaker 9: can talk about maybe why they're still private, but they're
25:12
Speaker 9: still private. And so when those go out and they
25:14
Speaker 9: go public and they have already proven their ability quarter
25:17
Speaker 9: over quarter to hit their plan and to hit their
25:19
Speaker 9: benchmarks and to be able to predict it. It's the
25:21
Speaker 9: number one recipe for success is to be able to
25:24
Speaker 9: being able to forecast and predict accurately. It's what we found.
25:27
Speaker 9: I think that's going to bolster the market overall and
25:30
Speaker 9: really open the gates for other companies when that happens real.
25:33
Speaker 2: Quick thirty seconds. What's it like for you to raise
25:35
Speaker 2: venture capital money? Are people still looking to put money
25:37
Speaker 2: and venture.
25:38
Speaker 9: You know they are looking to put money. Investor but
25:40
Speaker 9: in venture. But it's tough because they are really people
25:43
Speaker 9: are for some reason are focused on these multi billion
25:45
Speaker 9: dollar funds which probably aren't going to return more than
25:47
Speaker 9: the public markets. Okay, and so yeah, for an early
25:50
Speaker 9: stage fund, I think we have a lot of opportunity.
25:52
Speaker 2: Great stuff, Rebecca, thank you so much for joining us.
25:54
Speaker 2: Rebecca Lynn, she's a co founder and general partner of
25:57
Speaker 2: Canvas Ventures based in San Francisco, but she found her
25:59
Speaker 2: way here to Lower man and to be at the
26:01
Speaker 2: Bloomberg invest conference here in Lower Manhattan. I always wonder
26:05
Speaker 2: what it's like if it's gonna be M and A
26:07
Speaker 2: because it just doesn't seem like the IPO market is
26:09
Speaker 2: as as I thought it would be up fifteen percent
26:12
Speaker 2: this year up, you know, thirty forty percent off that
26:14
Speaker 2: October twenty three.
26:16
Speaker 6: Low.
26:16
Speaker 2: I mean, back in the day, I could get these
26:18
Speaker 2: companies out the door. Right, I don't know what's going on.
26:19
Speaker 6: I mean, but back in the day, would the M
26:21
Speaker 6: and A market have been as robust as maybe it
26:23
Speaker 6: could be now?
26:23
Speaker 2: Yeah, I don't know. I'm just thinking this younger generation
26:26
Speaker 2: just not as Oh, Paul, exactly right.
26:32
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
26:36
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26:40
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26:43
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26:46
Speaker 1: Just Say Alexa playing Bloomberg eleven thirty.
26:51
Speaker 2: Alex Steel Paul Sweeney were live here in a Bloomberg
26:53
Speaker 2: Interactor Roker Studio actually downtown at the Bloomberg invest Conference.
26:57
Speaker 2: We've moved it downtown to the World Financial ud Bloomberg
27:00
Speaker 2: Invest Conference. A lot of good stuff going on down here.
27:03
Speaker 2: You know, there's one of the great stories in global
27:05
Speaker 2: financial services and wealth management is this supposed transfer of wealth,
27:08
Speaker 2: like a jillion dollars of wealth from baby boomers, which
27:11
Speaker 2: I qualify by like a year to like the Gen
27:14
Speaker 2: X and gen Z. Well, I'll tell you what I've
27:16
Speaker 2: told my kids, four of them. The last check I
27:19
Speaker 2: write is going to bounce, So don't wait on me,
27:21
Speaker 2: get the work and start saving. But I understand it's
27:24
Speaker 2: a thing. Emily Green Joints is ahead of wealth management
27:27
Speaker 2: at Elvest. Emily, can you frame out what this opportunity
27:31
Speaker 2: is in wealth management? Because people are telling me there's
27:34
Speaker 2: gonna be a pretty big wealth transfer over the next
27:36
Speaker 2: generation or.
27:36
Speaker 10: So, Yeah, definitely, and it's already started. Okay, So the
27:40
Speaker 10: numbers vary depending on what people say, but it's looking
27:44
Speaker 10: at anywhere from eighty four trillion to one hundred and
27:46
Speaker 10: twenty nine trillion have been named to actually move to
27:50
Speaker 10: the next generations. There's been a lot of talk millennials,
27:53
Speaker 10: but to your point, actually Gen X and Gen Z
27:55
Speaker 10: have been talked about a lot more more recently as well.
27:59
Speaker 10: And what people have really forgotten is actually the first
28:01
Speaker 10: transfer is going to go from the husbands to the
28:04
Speaker 10: wives within there. And so we talk a lot about
28:06
Speaker 10: those millennials, but the wives are actually getting the money already,
28:09
Speaker 10: and so this is something that's already ocurring. And so
28:11
Speaker 10: you look at thirty trillion dollars by twenty thirty should
28:15
Speaker 10: have transferred to women.
28:16
Speaker 6: Oh wow, which is really where labs comes in your
28:19
Speaker 6: CEO of Sally crowcheck yep. And this is all about
28:22
Speaker 6: sort of helping investing in wealth management company that's built
28:25
Speaker 6: by women and for women. How does this differ from
28:29
Speaker 6: another wealth manager?
28:30
Speaker 10: For example, Yeah, I worked at a traditional wealth manager,
28:32
Speaker 10: one of the biggest wealth manager for a long time,
28:36
Speaker 10: and people often ask us this, and you know number one,
28:39
Speaker 10: just the numbers of financial advisors. I think what people
28:41
Speaker 10: also forget in this great wealth transfer is that over
28:44
Speaker 10: fifty percent of advisors are over the age of fifty five.
28:47
Speaker 10: There's going to be an enormous transfer of advisors as well.
28:50
Speaker 10: We're starting to see it a lot of people coming
28:52
Speaker 10: to us and saying, advisors, my advisor retired, what do
28:54
Speaker 10: I do?
28:56
Speaker 5: And so?
28:57
Speaker 10: And you sit in a lot of rooms. In seventy
28:59
Speaker 10: percent of advisors, there's a lot of time or over
29:00
Speaker 10: the age of seventy and not below the age of thirty.
29:03
Speaker 10: So what's going to happen within here? And so what
29:05
Speaker 10: all of us eighty three percent of our team is women. Overall,
29:09
Speaker 10: all of our advisors are women. It's very rare within here.
29:13
Speaker 10: And so just that we are her within there and
29:16
Speaker 10: so that we hear her. And so when people when
29:18
Speaker 10: women are going through divorce, widowhood, inheritance, all these things
29:22
Speaker 10: that are occurring that our team actually reflects. That has
29:25
Speaker 10: been an enormous way for us to actually gather clients
29:29
Speaker 10: within here. And then the other thing that we really
29:31
Speaker 10: see is these women, this next generation has been looking
29:34
Speaker 10: for more impact ESG investing, impact, whatever we want to
29:37
Speaker 10: call it. We can throw a lot of labels at this,
29:39
Speaker 10: but how do we actually align their values to their money?
29:43
Speaker 2: So on the first point there, where do you get
29:45
Speaker 2: these young women to be advisors? Where do you get them?
29:49
Speaker 2: Because I know even the traditional investment banks have a
29:51
Speaker 2: hard time.
29:51
Speaker 6: Yeah, No, we just went we just went to an
29:54
Speaker 6: event in Nashville. Yeah, and we're just you know.
29:56
Speaker 10: It's not easy. And I'll tell you that I spent
29:58
Speaker 10: a lot of time looking at it, a lot of
30:00
Speaker 10: resumes of people who apply and such. It's not all
30:02
Speaker 10: young women, you know. I have some advisors. I one
30:05
Speaker 10: of the top advisors on my team a woman in
30:07
Speaker 10: her mid fifties. She was a large advisor at Wells
30:12
Speaker 10: Fargo for a long time. She went through something that
30:14
Speaker 10: was really soul searching for her. She had breast cancer
30:18
Speaker 10: and it made her really realize she needed to do
30:20
Speaker 10: something more meaningful in her life. And so finding advisors
30:22
Speaker 10: like that where she was making a ton of money,
30:24
Speaker 10: she was good, she had a huge book of business.
30:26
Speaker 10: She didn't need to leave Wells Fargo. You know, these advisors,
30:28
Speaker 10: they don't need to make that transition. But she decided
30:32
Speaker 10: she'd need to do something more meaningful, and that a
30:34
Speaker 10: lot of advisors I find that are in their you know,
30:37
Speaker 10: mid thirties and trying to figure out, like how do
30:39
Speaker 10: I make something for myself? And really those advisors who
30:43
Speaker 10: may be at that point where they're going to have children,
30:46
Speaker 10: they're thinking about what their career is going to look
30:48
Speaker 10: like at these big banks, at these large broker dealers,
30:51
Speaker 10: and they start to reflect and say, I'd rather be
30:53
Speaker 10: somewhere like Elevest. And so we've recruited a lot from
30:56
Speaker 10: these large broker dealers.
30:57
Speaker 6: Well, I was gonna say, what is your recruitment process?
31:00
Speaker 6: Like how easy is it to pitch? Like what's the
31:02
Speaker 6: what's the track record?
31:03
Speaker 10: It's pretty good. We get a lot of applications. I
31:07
Speaker 10: always joke to people, people be like, did you see
31:09
Speaker 10: my friend's application? Because I do get the emails. I
31:11
Speaker 10: don't read everyone's application every single day. We get a
31:13
Speaker 10: lot of them. That's so great, it's wonderful in a
31:17
Speaker 10: lot of So what do you look for them? It's
31:19
Speaker 10: it really varies within here. So I always tell people
31:21
Speaker 10: I need a couple of different things. And actually, my
31:24
Speaker 10: biggest problem of hiring advisors, especially from the big broker dealers,
31:28
Speaker 10: and I come from I worked at JPMorgan where they
31:30
Speaker 10: tell you what to say every day. You know you're
31:32
Speaker 10: very trained, and is really finding people who can have
31:37
Speaker 10: that ability to think for themselves and to learn and
31:42
Speaker 10: to realize that our business six months ago was different
31:44
Speaker 10: than it is six months from now, and it will
31:46
Speaker 10: be different twelve months from now. And so how are
31:48
Speaker 10: you actually building with us within there and then really
31:52
Speaker 10: thinking about that person who was passionate to our mission.
31:55
Speaker 10: I can feel from an advisor if they're just trying
31:57
Speaker 10: to come work for Sally Crotcheck or if they really
31:59
Speaker 10: want to we want to do and it is always amazing.
32:02
Speaker 10: Like I work with Sally very closely. I forget that
32:04
Speaker 10: she's Sally, and people you know, they want to meet her,
32:07
Speaker 10: they want to go through it, they want to do that.
32:09
Speaker 10: And so we do get a good amount of that
32:11
Speaker 10: within the process.
32:12
Speaker 5: Start with people have oh wow, Sally.
32:14
Speaker 10: And so you have to work through the people who
32:16
Speaker 10: are going to be able to sit in a room,
32:17
Speaker 10: hold their own and show that they actually care about
32:20
Speaker 10: the last mission and that they're going to be able
32:22
Speaker 10: to relate to women.
32:24
Speaker 2: What's a typical Elvest client look like? So and what
32:28
Speaker 2: do they need?
32:29
Speaker 10: We have clients Elevest overall, we have clients from zero
32:33
Speaker 10: to tens of millions. Within there, I run our wealth
32:36
Speaker 10: management business and so that has kind of two parts
32:38
Speaker 10: within it. We have a mass affluent business and a
32:40
Speaker 10: traditional more high ultra high network business. Our average client
32:44
Speaker 10: sets between two and ten million of investable assets. We
32:47
Speaker 10: do have family offices who come in and we do
32:50
Speaker 10: a lot of more private investing within there, and so
32:53
Speaker 10: they're typically people who need a financial plan, need that guidance,
32:57
Speaker 10: need some decision making in order to think about what
33:01
Speaker 10: does retirement look like. I would tell you none of
33:04
Speaker 10: our clients. I have one client where retirement means golf
33:07
Speaker 10: every day. Most of them it means I want to
33:09
Speaker 10: leave my huge mag seven job and go do something different.
33:14
Speaker 10: I need to do something meaningful, I want to start
33:15
Speaker 10: a business. Whatever that means in us helping guide them
33:18
Speaker 10: through that. And then we invest across all ASCID classes.
33:22
Speaker 10: So we do stocks, bonds, and alternative investing, and that's
33:24
Speaker 10: where we've gathered or a lot of clients. Actually is
33:27
Speaker 10: the differentiated alternative investing that we really do, which is
33:30
Speaker 10: not the big guys, It's not the names that we
33:32
Speaker 10: all know. It's not the places that all the large
33:35
Speaker 10: broker dealers put on their platform. These are like bespoke
33:38
Speaker 10: managers that could be fifty to a couple hundred million
33:42
Speaker 10: in AUM managers, and people really leave some of these
33:45
Speaker 10: big broker dealers to have some of these very opportunistic ideas.
33:50
Speaker 5: So interesting, really cool.
33:52
Speaker 6: I'm the women who come to you, are they also
33:54
Speaker 6: tend to be married or is it more just like
33:55
Speaker 6: you really focus on the women's side.
33:57
Speaker 10: Great question. People ask me this all the time. Yes,
34:01
Speaker 10: forty percent of our clients are actually meant in wealth
34:03
Speaker 10: management because sometimes women marry men. It happens, and so
34:08
Speaker 10: most of them are married. Actually, And what you find
34:10
Speaker 10: is a lot of times the woman has to have
34:12
Speaker 10: some authority over the money. So she made it, she
34:15
Speaker 10: inherited it, she's the one who controls it in some way,
34:19
Speaker 10: and she comes and we have clients who maybe for
34:22
Speaker 10: a little while they manage their money separately, and then
34:25
Speaker 10: a year later he comes overtly, Yeah, comes across the corner,
34:29
Speaker 10: you know, comes to that zoom meeting and it's like
34:31
Speaker 10: I don't like me.
34:32
Speaker 6: Yeah, really amazing, This is such great stuff. I learned
34:35
Speaker 6: a lot on the Green Thank you so very much.
34:36
Speaker 6: Head of Wealth Management at.
34:37
Speaker 5: Elves CEO, of course, is Sally Crocheck.
34:40
Speaker 10: There.
34:42
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35:00
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35:01
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Speaker 6: day and a half. We also keep you updated on
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Speaker 6: all the fun, juicy Wall Street stories, and for that
35:19
Speaker 6: we're going to go back to seven thirty one legs
35:22
Speaker 6: to shrin Anarajan in the Bloomberg Interactive Broker Studio. A. Shri,
35:25
Speaker 6: you have an amazing big take story that you co
35:28
Speaker 6: authored and it's called the last seventy two hours of
35:30
Speaker 6: our kegos. I can't imagine what reporting this story out
35:33
Speaker 6: must have been like, can you walk us through can
35:36
Speaker 6: you give us the cliff notes to the seventy two hours.
35:39
Speaker 11: Look, this is a story that's fascinated Wall Street for
35:41
Speaker 11: much of the last three years. Right Billhong out of nowhere,
35:45
Speaker 11: had built up such enormous wealth, had a family office,
35:50
Speaker 11: and yet hid wealth had gone from a billion to
35:53
Speaker 11: four billion, from four billion to thirty six billion in
35:56
Speaker 11: a span of six months. That all collapsed very publicly
36:00
Speaker 11: in March twenty twenty one, when in a matter of
36:02
Speaker 11: days he lost his entire fortune. Everyone on Wall Street
36:06
Speaker 11: has been trying to figure out what happened, how it happened,
36:09
Speaker 11: and a lot of the details have been dribbling out
36:11
Speaker 11: for the last few years. But over the last few
36:13
Speaker 11: weeks any court room in downtown Manhattan, Bill Huong is
36:17
Speaker 11: on trial. Prosecutors accused him of manipulating markets, of defrauding lenders.
36:23
Speaker 11: But after having spent a lot of time in the courtroom,
36:26
Speaker 11: another key takeaway from it all has been that Wall
36:29
Speaker 11: Street doesn't look all that great. Here was someone whose
36:33
Speaker 11: personal wealth might have been thirty six billion dollars, but
36:36
Speaker 11: he had another one hundred and twenty five billion dollars
36:38
Speaker 11: in borrowed money. He had a gross portfolio size of
36:41
Speaker 11: one hundred and sixty billion dollars, making concentrated bets on
36:45
Speaker 11: much of the same names, and all the banks were
36:48
Speaker 11: largely caught unawares. Yes, they got vague answers, evasive answers,
36:55
Speaker 11: but they also relied on pinky promises effectively to give
36:58
Speaker 11: him so much fire for his bets. And in the
37:01
Speaker 11: end the banks were burnt badly, lost over ten billion dollars,
37:04
Speaker 11: and one of those banks, the most badly hit credit Squeeze,
37:07
Speaker 11: doesn't even exist anymore, and you could argue Bill Hung's
37:09
Speaker 11: firm played a key role in that.
37:14
Speaker 2: So Shree, what I found fascionating about this article, and
37:16
Speaker 2: it's a great minute by minute walk through a seventy
37:19
Speaker 2: two hour period when it all kind of came to
37:21
Speaker 2: an end for everyone involved, was that the banks did
37:24
Speaker 2: not know that Bilhuang and his firm was layering on
37:28
Speaker 2: such concentrated bets across various firms. One bank didn't know
37:32
Speaker 2: what the other bank was doing. Therefore they didn't know
37:33
Speaker 2: the magnitude of the exposure. How did that happen?
37:37
Speaker 11: And look in all the conversations we have, they will
37:39
Speaker 11: tell you we're not allowed to ask. If you're in
37:41
Speaker 11: the prime brokerage business, if you're in the business of
37:43
Speaker 11: extending leverage to your client, the client doesn't necessarily have
37:47
Speaker 11: to tell you or show you their exact portfolio. They
37:50
Speaker 11: will claim secrecy, they will claim proprietary information. But at
37:55
Speaker 11: the end of the day, banks can also say, if
37:57
Speaker 11: you don't give me as many disclosures as possible, I
38:00
Speaker 11: will not give you that money.
38:02
Speaker 2: That never happened.
38:03
Speaker 11: These guys would come in and say, yes, we have
38:05
Speaker 11: a diversified portfolio, and yes, don't worry, we have all
38:08
Speaker 11: the controls in place, and it's across a mix of names,
38:11
Speaker 11: and the banks would believe that, Yes, they expect honesty
38:15
Speaker 11: and truthful answers. And if they didn't get that, and
38:18
Speaker 11: you can see why the DOJ wants to go after
38:20
Speaker 11: Billhong and Archie goes. But just think about it for
38:22
Speaker 11: a moment. You walk into a bank today as a
38:24
Speaker 11: retail customer and want a ten thousand dollars loan or
38:28
Speaker 11: a mortgage, or you are trying to get into a
38:31
Speaker 11: co op. The hoops that one has to jump through,
38:34
Speaker 11: the signatures you have to get I mean to get
38:36
Speaker 11: into a co op. You will need three witnesses, three friends,
38:40
Speaker 11: your high school teacher, your college professor, and so many other.
38:43
Speaker 5: People when you're first born man, and if you're getting
38:45
Speaker 5: into a co op.
38:46
Speaker 11: Pretty much and in this case, he as someone who
38:49
Speaker 11: said I would like five billion dollars in capacity, Actually,
38:52
Speaker 11: can we increase it ten billion now? Because my portfolio
38:55
Speaker 11: sizes increase and all the banks are doing you're sure
38:58
Speaker 11: you're you're good for that right and we can trust
39:01
Speaker 11: you that you're investing well and you're doing this responsibility.
39:03
Speaker 10: Yep, yep.
39:04
Speaker 11: Great not They didn't even require written declarations about what
39:07
Speaker 11: the portfolio looks like. These were phone conversations and that
39:10
Speaker 11: was convincing enough for them to extend this kind of money.
39:13
Speaker 11: And that's why for us it's yes, the legal process
39:16
Speaker 11: will follow its own path, and the jury of twelve
39:19
Speaker 11: New York because will decide whether Bill Hoong his CFO
39:22
Speaker 11: if they are guilty or not on the charges that
39:24
Speaker 11: have been brought against them. But it's not a great
39:28
Speaker 11: look for Wall three.
39:31
Speaker 6: So in terms of Wall Street, could this happen again
39:34
Speaker 6: or do you think now things will be rethought? Those
39:37
Speaker 6: pinky pinky swears will be by the wayside.
39:41
Speaker 11: By the way, I was told by one of the
39:42
Speaker 11: editors that pinky swears are the highest grade of promises
39:47
Speaker 11: out there. So if you can't rely on that, what
39:49
Speaker 11: do you rely on. I will make the point though,
39:52
Speaker 11: that the lack of copycats before our kid goes or
39:56
Speaker 11: even after our k goes, isn't necessarily reflection of a
40:01
Speaker 11: new regime of banking, of strengthen controls of great oversight.
40:06
Speaker 11: As much as in the case of our gecos there
40:09
Speaker 11: was one man who was willing to take a pliant
40:13
Speaker 11: system to the extremes. There was a lot of noise
40:16
Speaker 11: about bringing in rules. Family officers don't face the same
40:19
Speaker 11: kind of oversight as hatch funds, and they will talk
40:21
Speaker 11: about what can be changed, how the rules need to
40:25
Speaker 11: be modified. Some have been put in place, but for
40:27
Speaker 11: the most part it's been a lot of talk, and
40:29
Speaker 11: these things take time. The worry still remains. And look,
40:34
Speaker 11: this happened recently, so the banks are perhaps shry of
40:37
Speaker 11: doing this with someone else, but it's not entirely clear
40:40
Speaker 11: to me how they avoid a repeat of this situation.
40:44
Speaker 11: If someone else comes along and follows this, you know,
40:48
Speaker 11: you may want to call it what might have looked
40:50
Speaker 11: like genius investing to start with, but really at the
40:53
Speaker 11: end of it reckless investing. If they follow the same pattern,
40:57
Speaker 11: can we be guaranteed that they won't be a repeat?
41:00
Speaker 11: I don't know, and Credit Swiss will tell you it
41:03
Speaker 11: doesn't even matter, because they don't. They don't exist anymore
41:06
Speaker 11: to be able to tell you if there will be
41:08
Speaker 11: a repeat or not. That was the kind of consequence
41:10
Speaker 11: we saw from the collapse of this one film.
41:13
Speaker 2: Any says how this trial is gonna gorocery, Well, it's
41:17
Speaker 2: it's fascinating.
41:19
Speaker 11: It's happening in the court room of a nineteen year
41:21
Speaker 11: old judge, right, and you have you have a jury
41:26
Speaker 11: most of them, well all of them had never heard
41:28
Speaker 11: of Bill Hoong or archade Goes before, and and that
41:31
Speaker 11: kind of means that they have been getting a finance
41:34
Speaker 11: one o one finance one on one sounds challenging in itself,
41:37
Speaker 11: But then if the prosecutors and the defense lawyers have
41:41
Speaker 11: to spend much of their time trying to explain security
41:43
Speaker 11: based swaps, margin leverage, even discuss what memes talks and
41:48
Speaker 11: what they're not, and have to define for some of
41:50
Speaker 11: these people what Goldman Sachs is It'll be very interesting
41:55
Speaker 11: to see how it pans out. Because when you're listening
41:57
Speaker 11: to some of the arguments in court, when you when
41:59
Speaker 11: you when you hear prosecutors talk about a lot of
42:02
Speaker 11: heavy investing towards close of market, they were lifting the
42:05
Speaker 11: firm limit to dry and drive the price up. And
42:08
Speaker 11: yet on counter you kind of understand that that is
42:11
Speaker 11: how business is done on Wall Street. I mean, some
42:14
Speaker 11: of this jargon sounds sinister, but isn't necessarily sinister. But
42:20
Speaker 11: how we see and perceive it doesn't matter. It's what's
42:23
Speaker 11: getting through to the jury. The prosecution rests its case today,
42:26
Speaker 11: the defense gets another couple of days, and after a
42:29
Speaker 11: break next week, we will come back with closing remarks,
42:32
Speaker 11: and then we will get the final verdict on this one.
42:35
Speaker 2: All right, that's gonna be fascinating. This is a fascinating article.
42:38
Speaker 2: Big Take article on the Bloomberg trumbling check out on
42:40
Speaker 2: a Bloomberg dot com slash Big Take as well. Shrinanna
42:42
Speaker 2: Roger and Bloomberg News senior financial reporter on the Big
42:45
Speaker 2: Take story. The last seventy two hours of our chae
42:49
Speaker 2: goes and you I've been reading it this whole time.
42:51
Speaker 2: Here It's just minute by minute, and it is a
42:54
Speaker 2: really amazing look at this explosion.
42:57
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