This is Bloomberg Business Wait inside from the reporters and editors who bring you America's most trusted business magazine, plus global business finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Carol, you know that I am so excited to talk about this story. It's a mon our, most read obviously, it's among the most talked about on none other platform than Twitter. We're talking about Meta's new app, Threads, the rhinebol to Twitter, right, real threat to Elon Musk and his social media platform that's already been struggling quite a bit since he perhaps overpaid just a touch according to some for the platform. Someone who knows the company very
very well is joining us to discuss this. We've got Bloomberg News Big Tech team leader Sarah Fryar, also the author of No Filter, The Inside Story of Instagram, and she joins us from the San Francisco Bureau. Sarah, thanks so much for coming on, and uh, pick your poison for me here in terms of hot takes to tell me about Threads, what do we need to know?
I mean, the most incredible thing is just the amount of attention. It's getting the amount of people who who actually wanted Meta to copy a product this time and are signing up and trying it out, and the engagement there, the amount of people who are are posting and replying and following people like there is there is pent up demand for this thing, which is which you know, I expect it a little bit, but to see it in
action is another thing. And then and then you know, it just goes to show that having that existing network, that existing Instagram network that they can connect to this new product really made a difference. We've seen so many Twitter competitors, We've seen Blue Sky mass it on posts t too. Like the list goes on, and this is the one where people don't have to do as much work to get started because they can port over what they already have from Instagram, and that barrier to entry
is really making a big difference. Frustrating some people for sure, but for others, cutting down the time to make this useful by a lot.
Well, Sara, you bring up such a great point that this is perhaps the first time that people wanted Meta to copy something. Obviously, what comes to mind is when they copied Snapchat through Instagram Stories, rolling out. This has happened time and time again with them. What do you think was the catalyst behind users being so excited about this copycat move? Is it because of Elon's takeover of Twitter? Or have people been itching for a better version of Twitter for a while.
Now it's because of the takeover, no doubt, I mean, and that is what I've been hearing from my sources, is it came down to the celebrities and brands and folks who were relying on Twitter who have become solutions with a lot of the changes that Musk has has brought upon it, whether it's it's technical difficulties, like over the weekend he was limiting the amount of posts that people could see. There are still rate limits on Twitter,
or the content moderation changes. He's losing the rules. He's made it more possible to see violent content, content that could be harmful or hateful, and people don't Brands, for one, don't want to be in that kind of environment, and they've been asking Meta for an alternative. So here we are.
And I think that building off Instagram is smart because on Instagram you do have those two billion users and you have that existing network of public figures, celebrities, influencers, people in the music industry and the sports industry that can all easily pourt over to Threads as a starting
light for this new community. The big thing that we're looking at now is not just does the launch because it's possible to get a launch right and create a fad, but does it create a habit when you have news to share, when you have a thought, when you have a good meme, are you opening up Twitter first or are you opening up Threads or neither?
Are you?
Are you just over this now?
So Sar for someone who really understands this space, I mean, how do you see it? And I'm assuming you've played with threads? So give us an idea of what it's like and could it possibly be a real threat to Twitter?
Well, I definitely think that it could, not just because of the Twitter users coming over, but because they're also answering a need that I think Instagram and Meta users have right now. If you think about how Meta and Instagram if sorry, Facebook and Instagram have changed over the past couple of years, It's become more about content from people that you don't follow, who aren't your friends. It's become more about video more about reels, those short form
videos that are meant to copy TikTok. It's more of a passive experience. It's more about entertainment. And so the thing that excites me about Threads is it a place where people can actually share their thoughts again on social media, and sharing your thoughts on social media only works to a certain point when people have communities that are nice and small, like they used to have on Instagram and Facebook.
It's very easy to be personal. But when your community balloons into you know, thousands of people, then you don't want to be personal anymore, and especially as you start to use those those profiles for professional reasons. I think that a lot of activity has been moving to group chat, and then that kind of more public facing activity I think will move to Threads.
Yeah, it's like once the adults enter, it no longer becomes a safe space, which is what we've seen TikTok kind of be used for. Sarah talk to me about what happens if Threads goes the way of Facebook and sort of becomes seen as a platform for people who are perhaps in an older demographic to kind of air out their hot takes on politics and things like that. Do you foresee that happening? And how is meta gonna hedge against that?
Well?
I think I think Listen, every network has a demographic that they start with, and I think right now, because Threads is built off of Instagram, it's going to very closely mirror who uses Instagram.
Excuse me, Yeah, that's a really good point. Actually, because the users are younger, they might be they might be able to kind of keep the Instagram audience as opposed to catching more of the Facebook audience, which is aiming a little bit older.
So I do think that Instagram is becoming a little bit older, It is becoming more of a a you know, millennial demographic place. But a new program, a new place to share is always going to catch on with people who want to build a following.
But I do wonder, you know, it's interesting because I think about, you know, Maddie, that we're so entrenched on the news business that Twitter is fun. I find it really fun and helpful when when stories are coming out, And I do wonder, you know, Sarah, would potentially Threads be as useful in that regard for folks like us.
Well, that all comes down to the habit that we build. If people start sharing news there, if they start sharing their insights there, if that becomes a place that we have to go see competitors and what they're doing, we will be there too.
Yeah.
Yeah, do you think Elon's ticked? I wonder if Elon's ticked about this?
I wonder, you know, the Elon zuck thing, you know, I just wish they would go to the mats and just you.
Know, take it to find it out. Do you think Elon's a little little myft here?
Oh?
Absolutely? I mean I think you know, we saw a report by Semaphore just now that that Elon's lawyer is threatening to sue Meta metas as some the claims in that letter are are not valid. So this is just the beginning. I mean, we asked for a cage match. This is the business version of the Elon Musk Mark Zuckerberg cage match. They are certainly seeing each other as rivals in this moment.
God gotta love this.
Sarah Friar's so glad we could check in with her. She's our big tech team leader.
Here at Bloomberg News.
Her book No Filter or the Inside Story of Instagram, so she really understands the space. But in particular Facebook, Meta Instagram and how this continues to evolve. And I guess time will tell what everybody signs up for it. Why haven't you signed up for your like social queen.
No, it's completely like I was in DC yesterday. I'm blaming it on that, but I think I also, like, really don't want to have to do another one.
Well that's the thing, but I.
Have to, so I just need to do it.
We're just good, I.
Know, right right, But I agree with you, it's just like another thing to keep up.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Eastern Listen on Bloomberg Dot, the iHeartRadio app, and the Bloomberg Business App, or watch us live on YouTube.
May not then like the main not then like the thing?
All right, everybody. Carol Master along with Madison Mills live.
Here in our Boomberg Interactive Broker Studio on YouTube.
And of course Bloomberger Originals.
Well.
The Private Real Estate Strategy via Liquid Reads etf at launched last month a little change, I believe, since it's.
Debut on June fourteenth.
When I before the market clothes, I was looking at it versus about a one point eight percent return in the Dow Jones Equity red Total Return Index. Not necessary apples to apples, but just to give you a little bit of a measure. The actively managed GTF investment apartments, single family rentals, manufactured housing, and senior housing reads. So with more on the fund and the strategy, we were delighted to have with us David Auerback, he's managing director
at Armada ETF Advisors. Here in our Bloomberg Interactive Broker studio. Forget me, forgive me.
I'm rushing to get to you. Welcome, Welcome, Thank you so much.
Time to vibe into reads.
Now, let's vibe into reads. I love real estate and it was interesting at Milkin this year. I did a panel that was just about basically focusing on office real estate and trying to get an idea, and we heard a lot about if you're at a top tier property, you're probably okay, but lower tier it might be having some problems. Talk to us, though, David, about your strategy.
Sure, so private real estate and the private real estate strategy b I like with RETTF is more than residential. Right, We're taking the portfolios of the largest private real estate sponsors Blackstone, star Wood, and we can replicate those portfolios using publicly traded reads down to the percentage in terms of sector type and geographic location. So if you look at the weighted average of those portfolios, it's more than
half over fifty percent in residential in those sectors. Twenty five percent or so it's an industrial, and then you've got several percent that are in sectors such as data centers, lodging, office and lab space, strip centers. It kind of sprands across all the other real estate sectors. Remember, these guys have assembled very smart management team rights building great portfolio.
So you're like, they did the work, let me just mimic well.
Using publicly traded reads.
So the reason is really there's three issues that are at stake here, cost, liquidity, and the valuation cost.
The average private.
Real estate fund. When you add in the layered investment fees, including the management fee, the selling and servicing fee, the annual performance the performance fee over a certain hurdle return, those can have to be about three and a half percent a year for an average investor. Those fees add up liquidity. We've seen the headlines about the private responsors where investors can't get their money out. They've gated redemptions versus an ETF go ahead.
So when you're active, you're actively managed, So you're picking what you want to do, but you're not going above and beyond.
You're trusting what they are.
Well, they disclosed their portfolios and a quarterly basis, so we can use their portfolios. But one example, there are no more student housing reads in the public market. So because of that, we can allocate that percentage towards another publicly traded residential rate, or we could use our know how and our expertise to potentially allocate it towards let's say a company like VICH Properties in Las Vegas that owns the Las Vegas Strip.
That's another way to diversify.
So what are the clients looking for and what are they asking you?
Well, that's a great question.
Clients are looking for yield, I mean, especially in this market, in this volatile you know, real estate tried and true, the long term performance of real estate, where they're looking for a good opportunity. We feel that PRVT could either be a good compliment to that private real estate allocation. But more importantly, it goes back to the third point,
which is valuation. The valuation gap between the listed rates and the private real estate funds has never been wider, and there's recent reports out of NAYREATE, the National Association of Real Estate Investment Trusts, that shows that that divergence does come back, and the larger the divergence, basically, the more significance of the performance of the listed reads coming
out of that divergence. So we feel right now, because of this wide delta, it's the perfect time for investors to pivot towards those listed.
Reads because there's opportunity.
Because there's opportunities, so prop it on that gap.
But it's for advisors, it's for investors, high net worth investors, institutional guys. It's giving everybody a chance to play into the listed reed market. David net Worth specifically, no, no, not necessarily high net worth. Again, the average investor who may be shut out of the private reads could benefit from these smart management teams and use a publicly traded red proxy that represents those portfolios.
Two things.
So you said twenty five percent industrial fifty residences, and then twenty five percent was like a mix of commercial.
It would be several other sectors that's correct.
Can you play around with those or is that the is that the percentage?
We can play around this, but again we're using the private real estate sponsors kind of as the bogie.
So as they update their.
Quarterly holdings, like as a good example, one of the guys is selling a big portfolio, like two thirds of their portfolio of single family rentals, one of the publicly traded reads is rumored to be buying it. You guys published a story on it, and so as a result, as that private read sponsor allocation reduces in single family rental overall, our portfolio may change a little.
Bit of you're going to mimic it, because we're going to try to mimic it.
How much money is coming in.
We just launched a few weeks ago, so we're you know, hovering, you know, a few hundred thousand dollars. We think that again because of what's these private responsors have over eighty plus.
Billion dollars of assets into them. If you add including the.
Leverage and that they properties they own, you're talking one hundred and fifty plus million dollars of real estate that these guys are sitting on. There's a huge opportunity for the average investor to benefit from those private real estate funds.
Talk to me about office reads. Have we seen a bottom yet?
Well, you know, it's a good good example is kind of what we saw last week with SA Green announcing that minority station.
Two billion dollar price to their balance sheet.
And just for the industry.
Overall here and you know again and not to not to forty five Park.
When you think of trophy office buildings in Manhattan, personally, two forty five Park is not the first property you think of. You think of one Vandor built, the GM building, the Empire State Building, right, And so I've been saying, look, if they're vowing two forty five at Park, it two doing and I'm sure there's numbers that are going to that number. How much does the Empire State Building work?
Right?
It was a good sign.
And the other thing.
Is these guys have deep sponsors. Remember you have Government of Singapore, candid Pension, more Trust Asian investors. These guys have a long term vision of the value of these properties, and so you know it's an odd lot for them.
David, I want to ask you about the time and Maddie and I have spent so much time today you's certainly talking about the move up in rates again and the concerns here, and the FED expected to probably raise rates again at the next meeting and then probably hover for a while.
So how does that.
Necessarily like I think real estate, and I think about the costs of servicing for these properties, and you know, depending on how much leverage is certainly into it too, So is that problematic potentially?
You know, I want a caution that a read is not a read is not a read. There are so many different sectors that are out there that using a cell phone have a conversation. What does the FED raising interest rates next month have to do with a cell
tower rate and having a conversation? Or if you place an order on your cell phone from Amazon and that utilizes three different reate sectors in case you didn't know, industrial rates, data center reds, and a tower read Right, how does that transaction impacted by the FED raising interest rates?
And the answer is prob So you have a lot of residential is residential, but again that doesn't get impact.
But that benefits the single family rental players, the rental landlords. In fact, we're sitting in one of the hottest apartment markets in the country right now in New York City. So as a result, because the demand.
Is through the roof.
If you're in the market for a seven percent mortgage, that's the new normal that's out there right now. But at the end of the day, there's simply not enough housing inventory for want be buyers that are out there. You're not concerned, I would say, we're minimally concerned.
It's again, we have to focus on the long term picture.
Recession. Would that be more problematic? Potentially?
Again depends on the sector and the story.
Okay, to what extent do you envision your client changing as it gets harder and harder for work young folks like myself to ever buy a home.
I think again, from the rental perspective, the single family landlords that are out there that are growing their portfolios nationwide, are gearing those portfolios towards the next generation. The apartments that are being developed right now, it's not gear really for you know who's there now. It's for the coming in college crowd that's going to be out there. It's
that next wave of demand. If you think about it, if you take a you know, a Class B property put on a flatbed in New York and drop it off in Farga and North Dakota. That's a Class A property up there. So you're bringing that desirable product to where that puck is going. And so as a result, until we see a massive reset in New York prices, and sorry to be the bear bad news, I don't
think we're going to be seeing something affordable. You know, sadly there are people in New York that rent their entire lives that don't get to achieve the American dream. But you can rent from a single family landlord have that four four bedroom, three bathroom house and even though you're paying the rent to the landlord instead.
If you had to say the hottest play in real estate right now, what would you say?
Probably in Dush because we had this price point with pro Logist in Blackstone earlier this week.
So data or warehousing or a little bit, I think.
A little bit of both.
I still think the growth of towers and data centers, especially with how much.
We're doing more and more online.
I mean, I use, I watched Bloomberg twenty four seven, so I'm using my internet stream that you know, if I place some all flows up through the south to the towers, all.
Right, we got to run.
David, thank you so much.
Thank you.
Let'sen know how it goes.
David our Back, managing director at Armada ETF Advisors.
Here in studio.
Right here on Bloomberg, you're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Easter on Bloomberg Radio, the Bloomberg Business App and YouTube. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg eleven thirty.
You remember all the regional banking turmoil that we saw back in March, I mean it was a lot. Now the FED is still thinking about it. We know that Maddie SVB coming up in yesterday's FOMC meeting minutes with credit tightening among the Fed's concerns when they look at the overall economy. Our next guest says, there are better alternatives to traditional banks, and I have to say, Matt Miller came over and it's like you're gonna love David Dindie.
He is co founder and CEO of Atomic invest. They provide an investment platform to third party companies that offer up digital investment advice. He joins us on Zoom from Vienna, Austria. David, it's a pleasure to have you here with Maddie and myself.
Welcome, Welcome.
Tell us a little bit about your company and your platform, who is using it, what it does, give us some background, if you would.
Thank you.
So we provide wide labeled wealth management and treasury management services to FinTechs, banks.
And credit unions.
So that's to say, if you're a fintech and you're looking to offer treasury solutions to make it very easy for companies to invest in money market funds and tea boilts, we would essentially provide you with infrastructure as well as the regulatory solutions to be able to offer that use case to your customers.
This is for investors, but is it also for somebody who runs a business you provide these services?
Well, we operate in a B to B to be manor or B to be so we help both individual investors as well as institutional investors and corporations to manage their assets.
And are you seeing a lot of global demand, particularly from emerging markets. I feel like that's a space that's becoming increasingly interested in this.
Yes, We're seeing a lot of demand not only in the US, but also in Latin in specificuristictions like Brazil and Argentina. We're also seeing quite a bit of demand in the Apec region as well to be able to get access to US securities as well as US treasuries.
So give us an example.
I'm thinking of somebody's listening, so how they would use your platform specifically.
So you would go to one of our partners. We have close to fifty partners today, and you'd be able to onboard through their interface. And through their interface, you'll also be able to purchase stocks if you're looking to trade inequities, or to purchase tea belts if you're looking to trade in tea bolts, and so the interface would really be owned by the partner, but the underlying service provider is atomic enabling those individuals to purchase securities in that respect.
Why did you start this business? I am curious what you saw.
Or Levine, who was on a co founder of Ways, said, you know, figure out the problem and then go create a solution. So what was the problem in that you thought you could do better?
Well, I'm originally from Kenya and in Austria, and moved to the States, and in places like Kenya, it's very difficult to get access to the capital markets the same way you can get access to the capital markets in
the US. And so we built Atomic with the mission of making wealth building accessible to every single human being and realize that the best way to actually actually accomplish this mission is not by providing our services directly to individuals, but instead by partnering with companies that are already serving thousands, if not millions of customers and making it very easy
for them to deliver these value propositions to them. And so we found it automically on the basis of how can we make wealth building a lot more accessible to everyone, regardless of where you are and regardless of where you're starting from.
And like you said, you're already doing that work in the US. Can you talk to me about a partnership that's been particularly meaningful to you and your work so far.
Yes, So we actually power a number of the treasury management platforms in the US today. This was particularly meaningful, especially in light of the sub crisis, where many individuals and many companies software different alternative providers for them to be able to park their assets and so in that space we power companies ranging from early stage treasury management platforms as well as lead stage business banking and business band management platforms.
You know what's interesting too, and you know, in talking with Matt a little bit, knowing that you were coming on, I was curious about for individuals moving into their brokerage, the safety security versus what we perceive as the safety security of kind of your traditional banking and banks.
Yeah.
I think one of the benefits of custoding assets with a broker dealer as opposed to custoding.
Assets with a bank, is that you have.
The ability to hold your assets in government securities like tea builts, where your capital is fully backed by the US government. This stands in contrast to the limited protections that you would get through FDIC insurance with a back. If you're a small depositor, let's say you're a retail investor with several thousands or hundreds of thousands of dollars
in deposits, it's not that big of an issue. But if you're a large depositor holding millions of dollars, only having two hundred and fifty thousand dollars insured is something that is risky, and so we think that the better alternative for large depositors to cost their assets is with providers like broker dealers, where they have the ability to invest directly in these securities where their capital is fully banned.
Have you seen any change in the demand for your platform following the collapse of SVB and also because of like exactly what you're saying, the renewed interest and importance of the FDIC regulations there.
Yes, and the aftermath of the crisis, we've seen significant shift in how custody is performed, where many people are actually moving away from commercial banks towards broker dealers as well as mutual fund companies. I just saw a stat recently that about one trillion dollars of assets have left commercial banks in the last four months to these alternative custody providers. And I think this is really driven by
three main things. The first is, as we talked about, safety, being able to ensure that your full capital is protected. The second is yield with interest rates, where there are today investing in fixed income and in government securities can give you five percent return, which is significantly larger than
what most commercial banks are providing. And the third is just ux in the sense that many FinTechs that we partner with have a product focused approach where they're able to deliver a really unique experience that makes it very easy for commercial depositors to solve their issues in a self service way, an area where traditionally commercial banks have not been as strong in.
So, David, did you directly though, see it uptick in terms of applications or use or demand of your platform in the wake of SVB and a handful of other financial institutions in the regional banking space, the collapse.
Of Yes, we quadruple the number of customers that we serve really in that post SVB, we'll also double the total assets that we manage. And in light of the SMB crisis, we've also had a number of partnerships that have formed with other business banking and B to B platforms that are now looking to leverage our infrastructure to be able to offer a different, alternative, different custody model to their customers.
Can I ask you where the biggest activity level is happening. Is it US develop markets or is it in the developing world.
So we're seeing hotspots in the US because very high there, we're also seeing hotspots in Brazil.
Brazil has its own.
Unique characteristics related to how people perceive holding assets and dollars versus holding assets in REI. We're also starting to see optics in the EU and in the UK as a result of most recent rate hikes by the ECB as well as the Central Bank of England, and.
Really quickly here. How big do you see not just fintech, but your firm specifically getting.
That's a good question. I do think that there is a world in which our firm and the companies that work with us introduce a novel approach to custody that can rival the traditional forms of custody today.
So the ability to.
Pull assets in a safe, secure manner, I think that model itself is something that can span not only in the US, but also in other jurisdictions. As we're seeing today, I.
Mean as big as big as a JP Morgan or a city.
Well, I will say that, I would say that just given what we're seeing, and given the types of platforms that we're partnered with, I wouldn't be surprised if in several years time we will receive will end up being as large as those institutions.
Well, so appreciate getting some time with you. David Dindy, co founder and chief executive officer of Atomic Invest on Zoom from Vienna.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Easter on Bloomberg Radio, the Bloomberg Business App, and YouTube. You can also listen live on Amazon Alexa from our flagship New York station Just Say Alexa playing Bloomberg eleven thirty.
Well.
One story definitely caught our attention on this Thursday. It's about anti woke brands and the platform helping to get their message and products out to consumers. This was really on your radar in a big way, Maddie.
Well, I love this story so much because it points to the perfect kind of threading between the worlds that I love to live in of politics and business, and they're increasingly getting closer and closer.
Yeah, that's a really.
Good way to put it, all, right, So let's get to it. Joining us with more on the story that was written by Clara Hudson and David Hood. David, by the way, is Bloomberg Law Senior reporter, and he's on Zoom from Washington DC David, First up, what do you consider an ant First of all, thank you for being here.
Maddie.
On our morning call this morning, she's like, we gotta do the story. We gotta do the story, and she was right. So an anti woke brand.
First of all, well, thanks for having me and thanks thanks for the read. Uh yeah, I mean they come in in all sorts of forms, right, but but the common thread, the common thread is sort of a a stance against anti e s G or environmental social corporate governance. Uh uh, I guess perspective, and it's it's what makes these brands is like I think it's it comes down
to about three things. One is like the sort of marketing market themselves is like pro America, pro family, pro conservative, like these very conservative values, and that's that's the one thing. But they're also want to they also push back against when I say anti e SG really talking about diversity, equity and inclusion. I really think that that companies that have DEI programs or the initiatives or the use ESG to to to evaluate risk in their businesses is really
imposing an ideology. That's how they view ESG. And so when you see anti woke that really just means like they don't want it's to impose their beliefs on use customers, et cetera.
We saw this with Target and with bud Light recently, right, So I know that this has been on your radar obviously before them, but just as a reminder to folks, Target had a lot of trouble with their Pride products over the summer, employees getting harassed, and also bud Light obviously has been a huge financial declines following their work with Dylan mulvany, a trans content creator who recently said that she had no has not heard from bud Light
since all of the kind of controversy surrounding her. So, David, going back to you here to what extent, is this a move against some of these classic American brands going closer and closer to a more diverse and inclusive product offering, brand offering versus you know, people wanting to specifically go to a conservative company. Is it more just choosing an alternative?
Yeah, I mean, I mean the the alternative or parallel economy as as some folks called it. It was really born out of there's nowhere else to go. Like these companies they see as customers don't represent them and don't represent them, whether it be because of Pride Month or because of you know, merchandise, or because of from an employee's perspective, it's having to sit through DEI trainings or whatever.
It's like they feel like that these companies don't represent them anymore, and there's nowhere for them to go because they're really looking for validation. We're looking for validation of their values of who they are, their identities and so and so that that's sort of created a sort of market opportunity, uh, to create alternatives.
And well, so let's let's let's get to it, because you've got about three minutes left, and where you talk about and you talk about one company, Old Guard, which was a pet food company and basically was nutritious product, nutritious products created with traditional American value. So maybe it wasn't so concerned about the.
Environment or vegan or what have you.
But they used a platform called Public Square.
Tell us about that, because.
That's yeah, public Square. Public Square is uh, you know, when they stumbled across Public Square. That's really, from as far as we know, is like the largest sort of collection of these of these businesses and it's going it's going public via vias back next quarter. It's it's grown to about a million customers and it's got about fifty
thousand of these businesses. And to sign up on the platform from the businesses, they have to you have to sort of sign a pledge of like sort of like a five point pledge, and they they consider those to be sort of pro America, pro family. I think one of them is like defending the Constitution, or another one is fighting for the sanctity of life. And and so Public Square Public Square is a massive collection of these
of of these companies. I mean there are banks, there are insurance companies, there are asset manager, there's there's coffee companies. There's this dog food company, there's I mean, there's there's clothing brands. I mean, it's it's you think of it. It's probably on on Public Square platforms, right, yeah, yes, yes, exactly exactly. There's a there's a there's a job search and uh platform as well, and so it's it's it's
this massive collection. And and when I talked to the CEO, Michael Seaffert, you know, he told me it's like it's that these companies and customers sort of come together to say that mainstream companies like Target, like Amazon, like bud Light have shifted leftward and they know long they no longer feel represented, and that sort of created this market opportunity and seaffert it's interesting.
It's interesting.
So it's another online shopping mall, as you say, and in the reporting you and Clara for the right leaning consumers. So h interesting, just another platform where folks who maybe are are tired of all the wokeness.
Is that a word. I don't know if it's a word, but I get it. It's an alternative. It's an alternative. David, thank you so much.
Glad we could bring this to our listeners and viewers. David Hood is senior reporter at Bloomberg News on Zoom from Washington, DC.
But it is interesting. I get it, Maddie, right, It's just like another community.
Yeah that maybe you feel more a lot or somebody feels more aligned with.
Yeah, And it's just moving closer and closer towards what he says in the story, belief driven buying is continuing.
I love reffords, which I hadn't heard.
Yeah driven, so well said, all right, anyways, find out more just head to Bloomberg dot Com.
A bromackle, a journal now about you let me drive?
No, no, honey, please, I'll do the gravel.
Excuse mate, I want to drive.
It's a good question time.
This is the drive to the globe.
Con trimular thing.
Well Dad on Bloomberg.
Radio, all right, everybody, just about seventeen minutes, seventeen and a half minutes to be exact.
Left in today's creating session.
Carol Mass along with Madison Mills live in our Bloomberg Interact and Broker Studio on YouTube and on Bloomberg Originals. And you know, Maddie, you know, we have seen a lot of pressure on the equity side of things, a bunch of selling, but we're off our lows. But we've really seen some big movements in treasury yields today.
Yeah, it seems like that is the place to be right now, particularly when you look at the two year again, just those highs since two thousand and seven, which feels like, you know, it feels like when it's that high, it just seems like something's going on that I don't feel good about.
It's definitely well, I'm definitely reacting though, to the good like labor data, right economic data. All right, let's see what Cole Smead has to say. He is president and portfolio manager at SMED Capital Management. He joins us on Zoom from Phoenix, Arizona. The Speed Value Fund is a top or four for the past five years in the ninety ninth percentile, returning on average twelve percent annually.
In those five years.
You to date the fund is up about three percent. Hay Smeed, I mean, hey Smeed, Sorry, Hey Cole. Nice to have you here with us on this Thursday. And I know you are really great on names, but is there a macro theme right now that you find is really interesting and that is guiding some of your investment decisions.
Yeah, and thanks for having me. By the way, Carol, that's what my fraternity brothers might call me, so I appreciate that that's a familial statement. So yeah, I think there's a lot of confusion in the stock market, and we were just talking about this earlier today.
Use the credit market as an example.
If you look at the TRIPA a bond rate, you get paid in the mid fores I think it's four point seven, and if you go to short term treasures you get paid over five.
That's riskless.
The corporate bond rate is longer in term, but obviously there's more risk with that.
It's a very strange world.
Where people are really siding on a bed of either they're going to deal with lower rates, they're going to deal with low inflation, or not.
It's either one or the other.
And I think we find it really interesting because these problems are manifesting themselves not because of a weak economy. It's because of a horrendously strong economy. You mentioned the jobs data as an example to that. So I'm kind of working on an idea where this is Jay Powell syndrome. It's not the weakness of the economy like we dealt with in the twenty tens. It's the strength of the patient.
And what it's doing is it's causing the strength of the patient to hurt other organs like the credit market plumbing and the bank plumbing that we've.
Seen in the recent year.
The weird part is, to your point just a second ago, I'm talking about markets, is it hasn't fully affected stock markets like it damage credit.
And that's the interesting part.
And Cole, that's what I want to follow up with you on because we saw record breaking first half of the year in terms of performance on the NASDAC and great performance in the S and P as well. What stops that catalyst in the second half of the year.
Well, I think the rates do have a lot to do with it, because the Fed's blunt policy tool is price of money on the short end of the curve, with the long end of the curve set by markets. Ultimately more so now that QWE is disappearing. So the problem with that is though as we can see, you know, short term rates don't affect the labor market.
They're having no effect on the labor market.
They're really not having an effect on the overall economic growth picture. But what we do know is they can affect asset markets fairly quickly, and that's what we did see. So can you imagine a world where you could wake up getting paid six percent short term for ninety day paper from the US government? What does that cause you to look at other assets? And it becomes a game of opportunity costs in weighing those things against each other.
It just doesn't bode well for risk assets and it will upset the apple cart because people have forgotten what that risk free return can do to asset prices because we haven't had a for so long.
But it's amazing the resilience that we've seen, certainly on the equity side of things, pretty pretty remarkable. Having said that, you do make you know, picks within the equity universe. Coal, let's talk about it, because you do like energy stocks, both oil and gas in the US and Canada and some coal stocks in Australia and South Africa.
Is it just that supply demand? Ultimately when it comes to energy going forward.
It is Carol.
But also I think the underlying assumption again, what do you have to assume based on what we're looking at in markets and things of that nature. The main assumption made by a lot of market participants in it and a lot of economists in central government planners is that we really have too much energy. The world we're going to in the future is going to require a lot less. Therefore the price of these things should be fairly low.
And the risk in my lifetime has never been, you know, we have too much, it's that we have too little. And so again we're breaking all of economic history to say that we have too much energy.
You know, be fruitful multiplies subdue the earth and have.
Dominion was the mandate that God laid out, and I find it interesting that his creation thinks that we need less, so we think energy solves that. But also it's a difference of the Western world versus the emerging world. In the emerging world, available energy supply for your electricity day to day would be really great to have. It just doesn't happen in the West. We're so wealthy that we can choose our energy supply. That's a different problem to have.
I think we ultimately have Western wealth looking at the rest of the world and dictating terms that probably won't be sustained or met in the other parts of the world.
Can you talk specific names with me for the energy space I'm thinking today in particular, Exxon really struggling. Do you look at news like that and think this is a day to buy?
Yeah.
So we think the biggot, the big majors broadly, whether we're talking Europe or the US, are the most unattractive because if you're the large asset management shop, which we have these big asset managers that we've really never had. They want to go and buy a billion or two billion or five billion dollars of oil equities. Only certain
names they can go to do that. And so the opportunity I think really sits in kind of like a sub say seventy billion or sub fifty billion dollar world where you can get plenty of liquidity for someone that likes big equities like us, but you're not paying the
premium for that liquidity. So you know, we own names like Oventive, we own names like Apache APA, and in our US equity portfolio up in Canada, we've been buying the meg energies of the world, the so novass because we just get so so much more attractive terms as an investor, and it is not coming with balance sheet risk like it had prior. It's free cash flow, it's larger turn of equity. Yeah, and that's it's seventy dollars WTI.
You're still in on Occidental and Konco Phillips, that's still.
We still we own, still still own Oxy but Buffett buying that on a regular basis. There's just no question why would I buy it out if I can continue to let the open market allow me to buy this share of the company.
Cole speaking supply demand Metrics and just got about thirty thirty five seconds here. You also, at least based on your late filings, d R Horton, NVR homebuilders still buying into that space.
Yeah, we still own large stakes in those builders, NVR Lennar and Dr Horton. I mean, we just watched the rally that no one thought could be possible at over six percent mortgage rates. So what I love is the market was completely confused of that the credit market damage they thought was going to ruin housing, and yet the scarcity of housing wins overall.
Yeah, really interesting, and I I think I saw a story earlier right about the mortgage mortgage market in particular rates in US jump climbing to the highest since November. So just watching that space as well.
In the impact up. Hey call always fun or Smed? Can I call you Smed?
I think he's saying yes, cal Speed. He's president portfolio manager at Smeed Capital Manager.
Be well. Always good to get.
Him on on Zoom from Phoenix, Arizona. Just about ten minutes left in the tree.
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