Amazon Slips Below $1 Trillion in Value

You can also listen to our radio show at two pm Eastern Time on Bloomberg Radio, or watch us on YouTube search Bloomberg Global News Amazon, which, as you know, as we've been reporting shocking Wall Street projecting the slowest holiday growth quarter in the company's history. We've seen the stock plunge big time last night and the trade carrying over into the regular day. Today. Amazade's mark market value set to fall below a trillion dollars after its disappointing

earnings report. So let's get to it with our own Matt Day, Matt Day's technology reporter for Bloomberg News, who joins us via zoom from Seattle. Matt, you've had close to twenty four hours to dig into this to report on this the slowest ever growth for the company's holiday quarter. I mean, that's the part that really sticks out to me. What is it? Is this more of an Amazon story? Is it more of an economy story? I think it's both. Amazon has been trying to rein in costs all year.

The last report show they didn't really do that, and I think it would be of a analyst this morning. I think it was who sounded the alarm and said, listen, if Amazon is projecting this week holiday quarter into the can row as lowest two, then we might already be intercession. Um that that on its own as an indication that, you know, it's not just an Amazon story with something

going wrong in the wider economy. Having said that, what are though, the Amazon specific issues, Because there are some, right, Oh there are. Yeah. They when the pandemic hit and everybody you know went home and started shopping online for for everything by choice or by need, Amazon started spending

huge new warehouses. You know, they were still building new data centers for their cloud computing business, and that worked out for you know, called eighteen months late last year, when demand started to dry up, they realized they had way too much based way too many people, and so they've been in cost cutting mode basically all year long. UM. We've seen recently that spread to their corporate ranks as well.

They're starting to wind down some of their marginal products, stuff that they didn't think was going to make it big. They shut down their telehealth service. UM. So there's still you know, investing for the long term as Amazon like Sterm mind folks, but they definitely overbuilt based on what they saw in What about that profit engine known as

Amazon Web Services a WS. What did we learned about the company in terms of how cloud growth is doing, especially in the context of what Microsoft reported earlier this week as Microsoft given warning and Amazon gave maybe even bigger one. Growth is great for a business that prints money, but um, it is the lowest ever since Amazon began breaking out aws back in One worrying thing for analysts on the call yesterday now, Amazon CFO said that some

customers were asking for help cutting their bills. Um, and some pretty dour chatter about what businesses we're doing with cloud spending. We didn't hear much of that at all. During the pandemic. Cloud spending held up really well. So I suggest that this is something new for awus. Wait, am I crazy and thinking that we could be talking about Microsoft right now? Didn't Microsoft essentially say the exact

same thing. Yeah, exactly right. And that's enough enough to compound to worry about a business that you know, people have been saying it's going to grow forever and throwing out a bunch of ludicrous figures on exactly how profit is going to be for Microsoft and Amazon. Amazon said they started seeing a lot of softness and their enterprise customers in the second half the third quarter, and then

it's continued this this quarter. You know it's interesting too, And I know you wrote and reported earlier that you know, we did see actually shares of Amazon and the market capt go below a trillion. Amazon shares they're trading definitely off their worst levels of this session. In fact, it's just the biggest drop since Mayo. So it's not like we haven't seen it in years. If you will, um, so, how do you I don't know, how do we spend this forward? Matt? How do we need to be thinking

about this? Because I gotta say, I keep saying to Tim all week, you know my world is I'm ordering on Amazon, I'm watching Amazon Prime. I use lots of Apple products and I Google everything, so like that's my world. So these three companies, you know, and Amazon and particularly so entrenched in our worlds, are many of our worlds. Long term, Amazon is probably gonna be fine. They're not gonna go out of business. You know, some analysts this morning, are you trying to calm that drop we saw after

hours last night? You've seen it. It bounts this morning. As you said, Um, They're advertising business is still growing. They're probably still going to take share there because they're just so close to people's wallets. Right. You know, Google and Facebook have an idea what you buy. Amazon knows exactly what you buy. So their ad business is still a bright spot form cloud growth. Even if it's only that's still a very lucrative business that's got a long

way to goo. Um, the long term outlook is is okay for them as long as they can get their costs under control. Where analysts most bullish when it comes to what Amazon can do, is it that ad business because I don't know, I mean, do Apple's I d f A changes affect that it doesn't seem like it's a similar type of ad business because people you know, are going there searching for what to buy, and then

they buy the product that they search for. Yeah, exactly, definitely a different story than than kind of the the gut punch to Facebook that that change was ads is is definitely spot People are real optimistic about cloud is too.

I mean, you've seen Amazon trade much more like a tech stock than a retail stock in the last really since they reported AWS results for the first time in so clouds and other obvious area where people are really I think in the long term, people still think that, you know, their retail business can show profits more than a half historically, right, Let's get right, Matt, is there at some point we look at these companies that you know, I mean Amazon for a long time, right, we were

just waiting for it to turn a profit, and there's a lot of investing, and finally it did. But at some point what we consider maybe growth companies, all of a sudden, they still grow, they just don't grow at the dramatic rates. They become these behemoths, you know, in their industry, and moving the needle gets harder and harder. Is that fair to say or maybe not? I think it's definitely something worth watching for Amazon now, like have we hit peak? Amazon was kind of the crazy growth

we saw are in pandemic? Enought to call it and say, listen, this might be a different company now. One of the signs of that yesterday analysts were asking on the conference call after earnings when Amazon might stop investing in new

data centers. That is that is a crazy bit of costume and the suggestion that they should slow down growth on you know, it's thought to be a potential trillion dollar market opportunity, right, Um, yeah, definitely some some caution out there, right everything, And I think about what Mike McKee talked about, like was it some distribution facilities that it was in the latest growth data that you're not seeing as much of it as happening, So you do

wonder about this, right the retrenchment. Hey, Matt Day, thank you so much. Matt is technology reporter at Bloomberg News. Joining us via zoom from Seattle. You're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. For just the second time ever, an entire issue of Bloomberg Business Week magazine is dedicated to a single topic from a single writer. You might

recall Paul Ford's what is Code? That was the first. Well, this time around it is Bloomberg Opinions Matt Levin giving us forty thou words on digital assets, a primer on the innovation that could forever change the way we transact and how we view the world of finance. It is called the Crypto Story, Your guide to what it does, what it means, and why it still matters. Matt, as

you know, covers finance. He was an editor of deal Breaker, an investment banker at Goldman, Sachs and m and a lawyer at Wachtell Lipton, a clerk for the U S Court of Appeals for the Third Circuit. He joins us via zoom from New York City, and he joins us along with the editor of Bloomberg Business Week magazine, Joel whoever he is in our interactive broker studio. So, UM, we want to get to Matt, but tell us a little bit about how this all came to be UM

So earlier UM in the year. Over the summer UM, we started watching Crypto Winter unfold and we started to have several conversations that led to a big conversation where it was like, Hey, what are all the various things we want to try and put in motion? Um, sooner rather than later. And out of that little huddle UM on the afternoon of June. Uh. In the middle of that meeting, actually, um, the number one thing that everybody wanted was how do we get Matt Levin to write

something about crypto? And so I wrote in the middle of that meeting this note, Hey there to Matt, Hey, there any chance you'd like to write like twenty words for us sometime this summer. I could go approximately eighteen thousand words shorter or longer as you prefer. And built into that was this insurance policy that maybe if I couldn't get twenty or forty or sixty, like, maybe I could get two thousand um. Uh. And And it took

him about a week to reply um. And in typical uh Matt fashion, he said, UM, I have not replied to this, sorry because there is some chance like it feels like a bad idea, but I kind of want to what were you thinking? Um? Uh. So that that flirting led to where we are now. We have this amazing issue, UM, which is totally just a testament uh to Matt and um, he and I were talking earlier this week with look, we all a doormat, we love

his newsletter, we love money stuff. His Elon coverage has been sensational, and um, you know, had had any of this madness with Elon transpired any sooner, I don't think Matt would have actually done this. So so thank you for you know, um uh, you know, not having that chaos. But Matt, what was the thing when when we started flirting? What was the thing that you felt was the spark that want you made you want to do this? Uh?

I mean the thing that I really wanted to do is that, you know, crypto feels like a big enough subject that it could support an entire magazine issue, but it's also like a small enough subject that it feels like like one person could almost get their mind around all of it and then like type sequentially an explanation

of all of it. So you can sort of start from the first principles and there's like a real obvious starting point where the Stosia knocking about a bitcoin white paper is like, hey, I've got this idea for crypto, and then everything more or less comes out of that, So you can kind of start from the beginning and build from the basic concepts up to all of the complicated stuff that exists today. And that just seemed like a really fun ellens to try to uh cover everything.

And of course in the end, long though it is, it doesn't cover everything, but like it felt like a good thing to try. Um So the title, um, it started as me saying, um, what what is crypto? Which you know, was loosely inspired by the Paul Ford thing. That was the closest approximation that I could come up with. Um, what was your title, Matt? And and why uh, I wouldn't say I had a title. I had a working title,

joking working title, which was what was crypto? Because we were sort of joking about the fact that that in some ways, you know, it feels a little silly to do this during crypto winter, although actually I think that ended up being helpful because you're not kind of covering the market moves at the moment, but you know, you're kind of taking a step back and looking at the sort of broad sweep of crypto. What's kind of cool. As I have to say, Matt um loved it. I've

read it. I've had to read read things a couple of times because I feel like though for the first time, I understand so much of crypto, and I realized how many things I probably was either using terminology wrong and I just didn't have an understanding. So thank you for that, um, And I do think in terms of crypto, love it, hate it you right, In the past fourteen years, crypto has built a whole financial system from scratch. Whether it

works or not, that's kind of cool, isn't it. Yeah, I mean I like, you know, as I say in the piece, I come to this from finance, and ah, my interest is not so much I'm like, wh're re engineering the internet in society. My interest is, like they

do cool financial stuff. And I think that for me, watching crypto has been fascinating because it's a mix of like very clever essentially financial engineers and like engineer engineers who are who are looking at the problems of existing finance and saying we have a better idea, but also watching people who sort of like our twenty three and like now to program a computer and like I've never heard of the two financial crisis and are like just doing it all over again and making the same mistakes

and kind of hilarious fashion. So you get you get both, right, you get like real like clever financial innovations and also like disasters you can see coming a mile away. So let's talk about some the financial innovations before we talk about some of the disasters. To what extent have you seen the financial innovations actually make their way into the traditional finance system if at all, uh, not too much.

You know, you see banks announcing we're going to do a blockchain project, right and like any time to make fun of that. I got an email from someone at a bank being like, well, we actually deployed a test example of our blockchain products. But in general, like I don't think that you know, the innovations of decentralized finance have come to a stock exchange near you. But what you have seen is people from traditional finance leaving to

go to crypto now. That was largely feature of the crypto bullmarket, and some of them are kind of creeping back to traditional finance now. But I do think it was also a testament like the interestingness of that where like if you felt like you were uh you wanted to build stuff in finance where you wanted to like kind of you know, you saw a problem in the

existing infrastructure and you wanted to make something different. The place where that was easiest to do, where you had the blankest canvas, was in crypto, and so a lot of smart people did leave their you know, hedge fund or high frequency trading jobs to trade crypto instead. So it's not so much that crypto took over traditional finance, but that you know, kind of hired away from it. Okay, So the first time I got to read the draft was in early August, and pat Rickner, who's uh the

story editor, actually cracked it before I could get to it. Um, but he immediately flagged what was the first line? And I think it has not changed since you filed it. And the first line is modern life consists in large part of entries in databases. And what was magical to me about that was that we're gonna we're gonna end up with the story for words about crypto, and you

don't start there, you start somewhere else. And can you can you share how that, how that line came to you and why you thought that was the perfect place to begin. Well, I think that you if you're going to take crypto seriously, you have to sort of start with,

like what problem is it meant to solve? Like what like like in some ways, you know, I said, I want to start at the beginning and go to the end, but you have to start before the beginning, right, you have to start with like what is Satsia Nakamoto sitting around thinking about in two thousand seven, then inspires him to write the Bitcoin white paper? Right, like why have crypto?

And I think that the answer has to do with, like one, the sort of computerization of the world where it's like easier and easier to kind of see that so much of life consists of data structures. And then also with this breakdown and trust where you know, as I say, like the world consists of a lot of entries and databases, and you have like real pressure on trusting the keepers of the databases. Right, you have real worries about you know, two thight you had real worries

about banks. And that's like the sort of like immediate impetus for a bitcoin. Right. You don't trust the bank to keep a record of your money, not so much because they're not trustworthy of doing that, but because you sort of don't trust them generally, where you don't trust the system. You know, you don't trust the regulation um, and that kind of ramifies into a lot of other places where you don't want to rely on some single party.

You don't want to rely on Facebook to kind of keep track of the social graph and so ah, that I think is like kind of the spark for for for crypto many ways, is like is saying, like, you know, if we come with a better way to keep a database that doesn't rely on trusting centralized parties, then that's good. And that's a that's kind of you know, I wanted to start with, like what motivates this rather than like, you know, well, I have to say, like this whole

idea of trust. I love how you kind of wove it through everything, right, Like I throw money in a bank I expected to be there. I invest money in my four O one Kay, I expected to be there. Isn't really working this year. But I mean it's like digital right, Like I don't I have no interaction with the people who are really you know, covering it for me. There's so much trust when it comes to crypto. I keep thinking about, like who are these people? Why should

we trust them? Ultimately? And I understand that if the system doesn't work, then nobody's going to be wanting to participate in it. But I feel like we still don't know these people, you know what I mean, that are

behind it. How do you feel about it having kind of broken it down, Well, you don't know that, you know, Like maybe you do, but I don't know Jamy time right, like uh like like like another reason I wanted to start there is like to convey like just like the strangeness of trust in our everyday life that is sort of like, you know, I wanted to de familiarize that a little bit and be like, look, your whole life is databases and you trust the people who keep them,

and like you don't think about it, right, because like that's just true in the world, and like you have to like think of the reasons why you trust the

keepers of databases. And some large part of that is like there's this regulatory structure where like we sort of trust the government not to let people do crimes with our money, you know, And then other parts of it are like relying on market incentives where like you know, you can kind of like look at a company and be like, well, if this company was stealing people's money. It probably wouldn't be advertising on the subway because people

would stop giving it their money. You know, you're sort of like relying on other people to kind of do the investigation for you. Uh And and in crypto, you know, like it's the same sort of basic set of things, but the mix is different. Right. So in crypto there's you know, round numbers. There's no government regulation, right, I mean there's actually a lot there's a lot of people

doing a lot of things to regulate crypto. But like any given project that you look at in crypto, there's some chance that no regulator has thought about it, right, and they've certainly not like approved it, And certainly there's not legislation being like here's the steps you need to take to become a stable client in the US, right, I mean, like there's perspective legislation, but there's not there's not like a real kind of like working regulatory framework.

And so you know, in much of the bunch of our lives, we trust, you know, people because there is a regulatory structure around them, and here there isn't. And that's weird and in many cases makes things less trustworthy. And so we saw in the crypto meltdown, a lot of like customer facasing brokerage is you know, kind of like lost their customers money because they didn't they were

sort of doing very levered trades without telling anyone about it. Um, there's the market incentives thing, which in crypto is a big deal, right, Like you sort of go around thinking, well, if this is a big crypto exchange, it's probably be trustworthy because everyone else is trusting it, right, And that as a heuristic that's not terrible, but it has you know, in the past, the biggest bitcoin exchange at the time

was blown up. So it's not a perfect heuristic by any means, nor is it in traditional finance, right big banks have blown up. Um. And then the third thing in crypto is like there is this notion that like not in all of crypto, but in lots of crypto, and like in like the core of bitcoin and in like decentralized finance, there is this notion that you can look at the code yourself, that everything is verifiable yourself.

You can look at the codesea it works. You can look at the ledger of transactions, the blockchain and prove that every transaction is correct, and so you said you don't have to trust. You can verify everything without trusting it. In practice, you're not doing that because it would take forever, but you are, Ah, you're sort of trusting the fact that you could do that rapification, so you have you don't have to have as much trust in individuals. But

that's not like the only thing in crypto. I mean, the crypto evangelists will talk about that being like the trustless nature of crypto, but obviously, like day to day, a lot of stuff in crypto involves trusting you know, companies and like individuals with your crypto, and often those people turn out not to be trust really. Yeah, we could do an entire program on talking about, you know, the history of crypto and the grifters or alleged grifters. Colorful,

colorful characters exactly. We're speaking with Matt Lavin. He's a columnist for Bloomberg Opinion. He is the story is The story is his in a Bloomberg Business Week magazine this week. If you haven't read it yet, I think you're the only one. Uh, it is on the Bloomberg terminal. It's a lot of words to get through. Okay, if you haven't started reading it, yet you might be the only one. Um. We also have Joel Webber, the editor of Bloomberg Business Week,

with us in the Bloomberg Interactive Brokers studio. Matt, I want to hear more about your perceptions and conceptions of crypto before going into this versus after doing the reporting and writing, Like you must have gone in with some sort of notion and I'm wondering what that was and and if it changed by the end. I wouldn't say it changed true dramatically, and part of you know, like

like I do come like I don't. I don't come to the story with an angle in the sense of like I'm a crypto booster or I'm a you know, crypto hater, And I kind of felt like that was the only way to do it right. Like I feel like I read a lot by crypto boosters that is very enthusiastic, but like very kind of in the weeds and jargon e and like and like, you know, sort

of assumes you're already a believer. And I read a lot of stuff by skeptics that is just angry, and I wanted to sort of kind of find a middle ground.

But like I do come from to it from the perspective of I am a financial writer, and I'm most interested in the crypto financial system, and so in writing this, I found myself often charmed by the crypto financial system and by like the cleverness of of like what people were doing in decentralized finance, and by the enthusiasm of people who work in crypto finance, not just about like making a lot of money, but about how someone said to me, things just work in crypto, like you just

like if you want to like start trading stuff, you like plug into the exchange and you start trading this stuff.

And in traditional finance, there's a lot more like uh process, right, there's a lot more like you you like call a bank and they send you a contract so you can sign up an account, and then like you know, you have to like call someone else to like hook over your data to the exchange, and it's just like a more manual, complicated, subjective, you know process where like insiders sort of get more access and in crypto everything is sort of straightforward and computerized, and like like that's like

what people told me, Like that's like that was the thing they liked that they could sort of start a product, start trading something, come up with an idea, and implement it without like sort of getting anyone's permission. Obviously there's a flip side to them, which is that like you don't get the regulators permission, and sometimes the product is like,

you know, theft. But m h, that was a sort of that was a thing that like, I was struck by people's enthusiasm for that because I think that when I was you know, when I've written my column about crypto, I've often thought of crypto as being, you know, people call the block chain a slow database, and I think of it as being a sort of like ah, like like it like a difficult to use system in some

ways because it is unintuitive to outsiders. But I think when you like, the people who use it find it so much easier to use than traditional finance because it is you know, kind of like disintermediated and permissionless and just like you can like read the documents and then go do the thing. H haters are gonna hate, and

crypto haters will will ask, sure words, what's crypto for? Still, Yeah, I mean I don't like I I really I share that skepticism, you know, Like I I like there are like people tell stories about how crypto is changing our will change your day to day life, and I often find those stories not particularly compelling. Right, there's a lot of like you could own a share in the bands you like and then if those bands become popular, you'll get rich. It's like why what like how is that

a thing? Um or there? Or like you know, you can like own your data on the on the on, like your social networks and you can get paid to serve ads to you like um, It's it's like it's like these stories of sort of like micropayments and like ownership, like like sort of financializing everything that uh you know,

Like I'm a finance guy. I like that. I like some I like a certain amount of financialization, but I also like I spent a long time reading about like we're gonna like sell equity in college students so that you can like bet on their futures, and like you know, now I'm like, okay, yeah, people, people are gonna keep writing that's ever gonna happen, right, Like there are some things that that sort of resist financialization, and crypto is

like we're going to financialize everything at once, and that seems implausible. To me. Um so in that sense, like I am like, like, I think there's there's you know, potential like stories like that that will come true. But I'm not super bullish. I'm like, we're gonna have a

coin for everything that you do in your life. Um but uh, Matt, Matt, let me just ask you, because you know, we lost what two trillion dollars in crypto wealth, right that happened, and yet, as you point out in your in the magazine, you know, it's not like the rest of the financial markets or the economy came undone because of that. So what is the meeting of it? You know, what does that say about the future in

terms of the value of crypto? Crypto and that First of all, we're glad it didn't bring down the markets, But I mean, what does it say about its real value going forward? Or maybe it doesn't. I don't know.

Uh yeah, I mean I do think that. I mean, first of all, we lost a lot more than two trillion dollars of stock market wealth you know this year, Like uh, Like, you know, like crypto whatever else it is, is a very speculative asset class, right, Like people who invest in crypto for the most part, are like, this is a fun gamble more than they're like, this is where I'm putting my life savings because it's like and

I promised me a study two percent return. So the fact that it crashed, you know, people who were betting on it going up it went down, but they could sort of afford to take that loss because it was essentially a speculative asset. So that's one reason that it didn't really like ramified to the rest of the economy.

But the other reason is definitely that like you're not you know, financing your home or your you know, your business by like going to the crypto lender, and so crypto is not super integrated into into like the financing of real world activity. So it is it is you know, when it crashes, it's not like the crypto bank shuts down and you can't get a mortgage for your house,

like you can still go to the regular bank. Um. So yeah, I mean I think I've said that like like to the if the next crypto financial crisis, because there really was a crypto financial crisis this year with like failing you know, lenders, If the next crypto financial crisis causes a slowdown in the real economy. Then you'll be like, oh, Crypto arrived, Like Crypto is now like meaningfully integrated into everyone's lives such that when it crashes

that affects the world. We're like, we're not quite there yet. So Matt, um, you know we do this every week, um, um, wondering what's your next single topic issue takeover of the magazine and and what kind of deadline I can give you now that we do well, you know I'm gonna I'm gonna do a retrospective on Elon Musk. I'll go, I'm never gonna write it again. Yeah, it right right my control. I mean, I guess the question is kind

of where the story goes from here? To me, that is the most interesting part about Crypto, right, And I won't even pretend to know, And that wasn't really the goal of the project. Um, although I think Matt poses some really and I don't want to give away the ending because he just it's a really majestic way that

I think he wrestles with this question. Um. And boy, I will just say, having been at editor of Business Week for a while, worked at Bloomberg for ten years, it's just like this story makes you just want to get a bowl of popcorn. Uh, read the issue to make sense of everything that we've all lived through, and also just keep eating that popcorn to see what happens. Like I'm really deeply curious. And that was the curiosity that I think Matt infused UH into this story. And

I mean, we're we're just honored to publish it. Matt. You should know. I tell you should know that in the news room, people have been hunting down for the issue. We typically have them. There's so much bitcoin you've got to give me. But I'm just telling you, everybody wants the issue to read, and it's like we've been like, do you have the issue? Do you have the issue? Um? Matt, thank you so much. I really mean it like I've learned so much and I think everybody who reads it does.

It is called The Crypto Story, Your Guide to what it does, what it means, and why it still matters, Written by Bloomberg Opinions Matt Luvin. Check it out. As we said, it's the entire issue of Bloomberg Big Business Week magazine and our thanks to Jill Webber, editor of the magazine, who I guess it's something to do with small, small Matten and Pat get the most props. Well, Joel,

thank you for joining us. Joel Ever, the editor of Bloomberg Business Week, with us in the Bloomberg Interactive Broker Studio. This is Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. All right, so, speaking of metal platforms, they talked an awful lot about the metaverse this week and continuing to spend money on it, and you know, our next guest has some real smart thoughts about it when it comes to shopping in the metaverse.

We please have back with us, Nih has saying founder and a CEO of Obsess. It's a shop of a virtual store platform, and it offers consumers a way that they can shop and experience their products online and in the metaverse. Nia, good to have you back with us. How are you? Thank you so much for having me to encou So when we think about established brands in the metaverse, should we think about this as a way to kind of like the way that companies started offering

their products online. You know, instead of sending you catalogs twenty years ago, you could go to you know, I don't know name the company Patagonia dot com and actually look at a jacket there is this. This is the same thing happening now in terms of the metaverse. Yes, absolutely so. The way, like you know, we define the metaverse is that it is the next generation of the Internet.

Like if you think about their websites started in the nineties, right, they were very plain, they had mostly text, and then we added images, and then we added videos. Um and now with the hardware capabilities that are there in the market as well as our you know, network speeds pushing into I G and more, it's just possible to do much richer graphical interfaces online. And that's really what's leading to the metaverse, which is a three D version of

the Internet. Um So, what you're seeing brands do now is that they're starting to create these more three D immersive experiences that are actually closer to the real world, right, because the real world is three D, it's all around us. We don't look at the real world in a database like we do most of online shopping today. Um So, it's just that technology is now getting to the point that that's possible, and that this is all happening on

mobile devices and on desktop computers. You don't require like we are headsets and you know, to put goggles. It's all happening on the devices that you already have. I

try to think where this could go. Yeah, And I think about, you know, could I essentially have a body scan of me so that there's an avatar that with my dimensions exactly, and I go to the metaverse and I go shopping at the mall or go shopping down you know street in New York City Pappatoo shops, and I can actually try on close with the right digital dimensions,

and I can really get a feel of how things fit. Like, is there's something there that makes me want to do because I gotta tell you, I like living in the real life. So this idea of shopping, you know, I just can't get my head around it. So I'm trying to think, is there some super level that will get

us there? Yeah, So two pass to that. First of all, what you described with you know, having kind of your avatar in the metavers and having your exact dimensions and trying on clothes, that's absolutely sort of the holy grail of the future of fashion shopping. We are not there yet in terms of having the full technology to be able to have that body scan easily or try on clothes easily, because not all brands have three D models of their products yet. But that is the direction that

we are heading into. Um. But the second part I would say is like, think about the things that we are doing with brands in the metabors today is not like you are going into some other world and it's

actually not that foreign. So it is really an improvement over two Day's online shopping interface, which is good for you know, if you want to if you know exactly what you want to buy, and you can search and filter and get to it and it's very efficient, right, But when you go shopping in real life and stores, there's a lot of discovery and you're almost like it's an entertainment experience because you're getting that inspiration from the brand and um, you know their stories. So yeah, it

makes me sorry to interrupt it, It It makes me. It kind of reminds me of the way that we saw news transition from newspapers to online and the way that some people still really like to hold onto a newspaper, you know, on a Sunday, because they might actually see or encounter an article that they wouldn't necessarily click on if it were presented to them h on a web page for example, So how do you replicate that in

the metaverse? Yeah, absolutely, So that's exactly what the brands that we are working with are doing, is that they are creating these UM virtual and I means that again, it's very easy for you to access. It's not like you're going into the metaborse and you don't have to become an amator if you don't want to. It's really a different interface for exploring products in which UM you know, you can discover things that you weren't necessarily like looking for.

And we actually see that from the data, is that customers are buying more in these environments because similar to a retail store, you might just come across something that you weren't necessarily looking for, and it's ultimately a more intuitive shopping interface because while most brands come to us to target a younger audience who's super used to gaming right, and this interface is very similar to gaming UM in

terms of moving to a three D environment. But then we also have customers that are high and luxury brands and their typical demographic is much older and they're seeing they're seeing great results because well, ultimately it's very intuitive. It's like, you know what you do in real life. Nia, We get a round, but we'll check in with you real soon. Nia, seeing founder and CEO of Obsessed, joining s via zoom from New York City and the Michael Jurnal. Yeah, but you let me drive. Oh no, no, no, no,

honey leaved gravels. I want to drive. Its good question. Drive is the drive to the clothes on Bloomberg Radio. All right, everybuddy, we are getting ready to wrap up the last fully glow October trading, which is pretty remarkable. And look at the rally and we are yeah, oh yeah, November stress this week. I mean not on Monday, but right, thirty days has September full week. Yeah, so we still got one more Yeah, we got one more day of launch at the office. But look at the rally we

had it. No, today is the last day. Yeah, okay, all right, we're kind of all over the place. But that's the kind of week it hasn't been. But as Charlie mentioned, stocks holding out of their dames. Let's get into it with Michael shell, An, executive director in chief at Messman officer at High Tower, r DM Financial Group joining us once again on the phone from Westport, Connecticut. Michael, good to have you back with us. How you doing, Thanks very much, pleasure to be here. So, UM, are

we out of the woods? Well? This week has certainly been an impressive rally. UM. I think you have to sort of step back a little bit. The markets bottom around October thirteenth or so, so this is sort of the fourth multi week rally that we've had in this bear market that started back in January, and when the markets hit their lows October, I think sentiment was really

pretty negative and a couple other things have contributed. Recently, There's been a little bit of a pullback in the dollar, which has been super strong this year, and interest rates have started to pull back a little bit as well. So next week will be really interesting because the Fed meets October sorry November one and second, and there's a lot of anticipation of what they will or won't say and whether they'll start to make their shift. But this

has certainly been an impressive rally so far. UM. One thing just to mention is that the TAO, interestingly after today is the first of the major indices to move back above their key two day moving averages. So that's something a lot of investors watched, separating a longer term rally versus a short term rally. None of the other major markets have done that, but that's certainly something to to monitor going forward. So sorry, Carol, So we could be out of the woods when it comes to the

Dow because that technical, but proceed with caution. I mean, what's the takeaway there? Well, I think it's certainly an encouraging sign when the markets, when the different industries move above the moving average. Historically, at least, that helps separate a short term move from a longer term, more sustainable move. But I think in terms of whether we're out of the woods, I think it's a little, certainly, in our opinion,

a little bit too early to say that. If you look at some of the economic data, and I think it's really important to keep an eye in the consumer, for example, because that represents two thirds of the economy. So on the positive side, looking at the consumer, uh, you have the lowest unemployment since nine and you have wages growing at five scent, but that's being offset by higher inflation and rising rates, which are affecting the equity

and housing market. So the consumer appears to be pretty resilient, and you know, that sort of fits in with whether we're in a recession or going into a recession, and so I think there's still some uncertainty about that and what the said will be doing at their next meeting. It's funny too that you mentioned the DOW. I mean, I think I feel like we live in a world where people kind of blow the towel to the side and think about, Okay, what's the SMP doing, what's the

NAZAC one hundred doing. Um, So, how do you kind of factor and what's going on with the doubt of it back above its technical move, you know, above its two day Michael, versus what we're seeing on the SMP and the NAZAC, which is much more representative of a broader part of the market. Yeah, that's a great question. And if you're in the financial markets like we are every day, most investors follow, most individual investors follow the doubt. That's what gets all the headlines you see live on

the newspapers and on the news. But people follow the mark gets on a regular basis, really follow the s and P five hundred and one of the things we're seeing, which is really interesting, is I think you're starting to see in the past couple of weeks a shift, a shift unfortunately out of technology, which has been the market leader from much of the past decade or so. And

the shift is out of out of technology stocks. We already started to see some of the money losing high valuation stocks get hits starting in two thowy one, but the shift is For example, if you look at the equal weighted S and P five hundred this week, that's up about five point four, while the sm P five hundred, which is market cap weighted, is up just three nine.

So not a big difference, and it's only this week, but I think that's an interesting trend that will have to watch heading into the end of this year and next year. Can I just look, you know, it's funny. I was just kind of picking apart the marketer as you're talking. Industrials are up almost seven percent this week. Utilities are up, yeah, I mean real estate, finance souls. I mean, most of the ten of the eleven major

industry groups in the SP five are higher. But it's consumer staples, financials, real estate, utilities, industrials at the top. Um what does that tell you, Michael Well, I think it's sort of a mixed bag. Industrials have been approving recently, We've seen some better relative strength than some of those stocks.

I think investors are still trying to figure out if we're going to be going into a recession or not, and if we are in a recession, is it going to be a mild recession, which to us seems like the most likely scenario because you don't have the kind of major imbalances this time around that you did, for example,

in the banks going into two thousand eight. UM consumers generally, although consumers the household savings rate is down to I think about three point four percent, households in general don't seem to be UM. Household savings in general seem to be okay. Household balance sheets seemed to be okay. UM. The one thing that we're starting to watch is housing is starting to come down, and that's interest sensitive, so that makes sense. But in terms of the sectors UM.

One of the other things to watch, for example, is small caps, which has done well, and that's sort of small caps would do better if we're coming out of a recession, and it's sort of more speculation and people are more optimistic. So I think it's too early to sound the all clear, and it'll be interesting, especially to see what the Fed says next week and what the employment numbers come out as next week as well's week

next week. Yeah, do you expect the Fed to, I don't know, give us some sort of guidance that they're still looking at that they're considering basis points for December, Well, I think it's I think seventy five basis points for November is pretty much baked in the cake. But I think for December that's an interesting that will be a more interesting meeting. For this meeting, we don't have the inflation data in front of us. We had already the

inflation data that came out today. For example, the feds favorite core PC index actually rose month over month to five point one pc, which is the highest level since I think back in March when it was five point four p But it the FED me eating next next week or in two weeks, I think the keys to watch will be one, Uh, does the Fed say we're making progress on inflation, which would be a signal that they're shift starting to shift policy, Or two do they

say that inflation remains higher than we'd like, which continues to be the party line in recent weeks and will probably indicate a seventy five basis point hike in December may be more likely. All Right, we're gonna leave it on that, hey, Michael, have a great weekend. Um, Thank you so much, really appreciate it. Michael Sheldon, executive director and chief investment Officer at High Tower r DM Financial Group, based in Westport, and that's where we found him on

the phone on this Friday. Thanks for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg dot com, and you can also listen to our radio show at two pm Eastern on Bloomberg Radio or watch us on YouTube. Search to Bloomberg Global News.