Interest Rates, Data Protection, And NBC

to get a sense. Let's talk about one of the fastest growing areas UH in the financial markets MAT, which is E t F's That's where the kids are playing today. Sylvia Jablonski, chief investment officer co founder at Defiance E t F s H. Sylvia, thanks so much for joining us here. I would love to just get your thoughts here um on these markets. In two you know, Matt Night, we talked a lot about rising interest rates. We're not sure how much and how fast. We've got a slowing economy.

We're not sure how much and how fast. But given that backdrop, how are you thinking about these markets? Hi, good morning and great to be here with you today. Well, you know, I think that these markets were a little bit of a wake up call from the way that we had did one in terms of UM, you know, some of the fear and panic and volatility that we've seen, you know, following a dramatic fiscal and monetary policy UM. You know, year of year of support in twenty one.

The markets now in two are are sort of in a transition as some of those policies and and economies moved towards a more normalized state. And you know what we're trying to figure out is, you know, how does that look? And I think that by itself would sort of be okay, and maybe we would see you know, sort of less a little bit less liquidly, a little bit less free money things like that, maybe a little

pullback on high returns. But what I think to add some some volatility and uncertainty is essentially, you know, the supply chain disruptions UM, the upsurgeon demand for for goods that's keeping implacent high and some of these other risks to the market. It's and it's not just high, right, I mean, the seven and a half percent print is getting people to flip out UM. Jim Bullard said yesterday, in another time, they would have caused called an emergency

meeting and really done something about it. And there are a lot of critics out there who say, why in the heck aren't they doing that? Um, it's the highest inflations, Ben since I was eight, So you know, I think I was seven. One is the last I graduated high school. That was a fantastic year. That's awesome for you. I was also awesome being eight, But it wasn't awesome living with this much inflation for my parents, and it certainly isn't for me now or a lot of especially lower

income people in this country. Um, what kind of rate hike schedule do you see as a result? I mean, are we going to see fifty basis points in March or at least one of the next few meetings because Bullard wants to see four rate hikes in the next

three meetings. You know, it's it's so hard to call, right because you see what Bullard am out with, and then you know sort of the response to that that that the feed is going to wait and see and and and you know, be reactive and reactive to what's going on in the actual economy, and month by month, you know, sort of take a look and and go

step by steps. So it feels like you know that the feed wants to come in for a soft landing, and you can see the reaction of the markets UM to some of his comments about you know, perhaps doing more and more quickly at higher rates and things like that. So I just, you know, my my sense of this is that it's going to be a slow and steady

right hike process. And I think part of that is because, yes, inflation is at all time highs, but we still don't know how much of this, you know, supply chain disruption clearing out, you know, wages sort of easing out, UM of a full sort of reopen getting back into the market is going to pull that down where you know, we might be at all time highs there and we sort of keep saying that I thought that last month, and you know here we are a little bit higher.

But I do think that we're peeking out here. UM. So you know, I would expect it to be hopefully, but you know, so so my you know, my guests will be four to five on this UM and I don't you know, see two fifty to see UM moves in a row. But we'll well, we'll sort of see how that turns out. Thirty seconds, Sylvia, what are the sectors that you like the most right here, giving that backdrop, Yeah, I really like well two things. One would be the

reopen trade right. Um, we're we're kind of exaccinated. The numbers are getting better, so cruizes, hotels, airlines, and number two, disruptive technology. You've got to be invested in five G you've got to be invested in web three point oh um. It's certainly the future, and I don't think that these items issues right now are a huge factor on the future growth stories there. All right, Sylvia, thank you so

much for joining us. Sylvia Jablonski, chief investment Officer, co founder Defiance et f H. I want to talk about NBC. Boy are they busy. They got a super Bowl, Matt, they got the Olympics, they got Mike Treko back and forth between the Olympics and the super Bowl. You know who follows all that media stuff? You or Bloomberg News? Yeah I did, I did it back in the day. But Jerry Smith follows it for Bloomberg News. And we've got Jerry Smith here right now. Jerry, is it a

good time to be NBC right now? It's definitely a busy time to be working at NBC. Um. Yeah, they have the Super Bowl on Sunday night, and their Olympics coverage, uh started late last week. So they've got a lot of employees in Beijing, a lot of employees in Los Angeles, which is already complicated, and then you're talking about doing all this in the middle of a pandemic. So it's um, it's a busy time to be at NBC right now. Well.

And are other people besides Paul watching the Olympics? I mean I barely know they're going on, although I have to say that I also go to bed at six pm every night. Um is it as popular as? Um? NBC what have hoped when they were bidding for it. It's certainly not what they hoped. The ratings so far for the Olympics are down almost from the Winter Games four years ago. UM. Well, not a lot of reasons for that. I mean, just in the last four years, a lot of people have cut the cord and are

watching a lot less TV than they used to. Um. There's also just a lot of challenges NBC face with these games. The the controversy over China and their human rights record, A thirteen hour time difference between the East Coast and Beijing, so a lot of these events are happening while people are asleep. Um, you know, there's a potential fatigue factor. We just had a Summer Games. They're

normally spaced out two years between summer winter. This time, there's just six months between the Summer Olympics and the Winter Olympics. So you know, there's a lot of different reasons why the ratings might be down. Jerry Is the NBC even making the argument that, oh, they're not capturing all our digital viewership. Is that are you trying to be made? Yeah? I mean NBC is is actually trying

to Uh. They've been on this campaign for a while now where they're trying to replace uh Nielsen, which is the industry standard for ad deals. They feel like Nielsen isn't capturing all the viewers on outside of the TV landscape. They've been promoting data from a company called i Spot TV, which does its own sort of measurement. Um. I mean that's been the challenge for NBC is just trying to get the Olympics in front of people who are not

watching TV anymore. So they've struck deals with TikTok um, you know, Snapchat, Twitter, They have pe streaming service where for four nine a month, you can watch every Olympics event for the first time. So, Jerry, there's concept in the TV world of make goods, which is, boy, if your audience comes in way below what you told me it was going to be, you gotta give me some more ads. Is that something that NBC is talking about

here for the Olympics, right? I mean the I've been talking to NBC executives, an average rising executives, and no one is surprised that the ratings are down. In fact, NBC lowered um it's expectations with advertisers, um you know, by about before the games began. So ultimately, you know, and when you lower your your expectations for your audience, you also lowered pride. So NBC was charging a lot less for these ads, and they did four years ago.

And the hope is is that they can make up for those lower prices with a lot more ad inventory. I mean, if you think about all the different platforms that the Olympics are on, now, that's a lot more ad inventory that NBC can sell. All right, interesting, We'll continue to pay attention to that. Plus we got a Super Bowl, maybe they can make it up there. This Sunday, because this is likely to be maybe the highest rated super Bowl in a long everyone's gonna bet, I know,

everybody's bet. Everybody's got some schedrol on this thing. So we'll see. All right, Let's check in with our next guest, Dave Ellison, portfolio manager at the Hennessy Large in small cat financial funds. Dave, how are financials going to perform? And what is a rising interest rate environment? How do you think about that? You know, I, you know, I think generally the market has been you know, in lockstep, meaning that rates go up, financials go up, and vice versa.

And that's been kind of a a theme that's been playing out for you know, a year or so now, and I'm not sure if that continues, depending what happens to the yield curve. But I think generally the banks in particular are you know, they've got good earnings visibility, the valuations aren't crazy relative to history, and I think they're becoming kind of a safe haven in a market where you know, it seems like daily there's blow ups, you know, not necessarily all in financial stocks, but across

the board. So I generally think we are in a significant correction in the market, a significant downturn in the market. It's not showing up in the indexes, but boy, there are stocks that have just gotten absolutely hammered. I look at Bank America's up ten percent this year, and I look at, for example, of Firm Holdings, which is a by Now paid later, a finance company that's down about

almost fifty this year. So there are significant things happening in the market, and I think the problem is valuation, and the problem is delivering on their you know, on what they told people they were going to do, meaning the business models aren't working and the stocks are just getting absolutely hammered. But you're not saying, oh, now a firm has a better evaluation, I want to go in

and buy that by now pay lead business. Well in that in that specific case, I'm just picking out the fact that there's significant negative performance happening in the market despite the index. Is what is the sm T flat this year? This week? I I think so, I think my math is kind of correct, maybe not, And yet you've had these massive draw downs in these companies. You know, you just mentioned Goodyear Tire leading up into this into

my segment here that's down. I mean, in my days of fidelity, you had a stock down, it wrecked your performance if it was a big position in the fun and it would destroy your performance for the year. So so you were having in massive, you know, performance destructive stocks in these portfolios that are not showing up in the indexes. So that this is a we are in a significant correction in the market. Well, you mentioned that,

you mentioned the yield curve. I mean yesterday we saw the two year yield rise twenty five basis points in one session. I mean that right. Well, I think that the problem is, you know, the Fed governors talk too much, and they need to shut up and not talk as much. It creates these problems in the market. The market is going to go there anyway. It was going to go there anyway, meaning that I don't know it was going

to go or that day. But if we do have a persistent inflation problem, we need to get rates more normalized. I don't think raising rates is gonna impact inflation that much, at least in the near term, because there are other issues impacting it. And the question, whether you know, discussion on inflation is a big one. The question is my view is that companies seem to be raising prices because they can politically get away with it and socially get away with it. And they're going to do that as

long as they can. And you have examples like Tyson Foods this week where you know, they raise prices across the board and the stock is up. So every CEO sees that and says, okay, I can raise prices, it will help my stock price. I mean twenty years ago it was basically move all your production to China and the stock went up. So everybody went to China, got the cheap labor, expanded their margins, and their stock went

went up. And now if we're in a trap now, where are going to raise prices to hang onto margins, You're gonna have persistent inflation despite what the FED does on rates. Hey, Dave, thanks so much for joining us. Appreciate getting your thoughts as always. Dave Ellison, portfolio manager, Hennessey Large and small cap financial funds. They're joining us all right. During this pandemic, more and more people working

from home, more and more people learning from home. That means more and more data goes up into the cloud. That parent raises data security issues. Um, let's get to the bottom of that. Get some more details. Sanse Merchant Donnie. He's the CEO of Common Vault. Common Vault is a public and traded stock UM under on the NASTACS. Cv lt is the symbol for you, Sance, I think so much for joining us here. Are we seeing more security issues? Data issues again as more and more people do they're

computing from remote areas now during this pandemic. Sure, hey you good to be there. The company's compolled cb lt UM. You know, is your question is is data more at risk? Well, data has never been more valuable, and I would say when more vulnerable because to your point, it's being created, you know, from remote work. Data is being used in new use cases for you know, data lakes, data warehouses, analytics,

customer service and so data is in flight. There's a lot more data being created, and yes there's a lot more happening around that data. You know, if you've seen an incredible increase in cyber threat cyber attax on that data UM over the past few years, but really around the pandemic where companies had to pivot, you know, into a whole new way of working and UM and we're exposed to we help customers every day literally every day and the customers and I wonder if it just gets

harder and harder. It's an uphill battle, by the way, to repeat for viewers, it's Convolt not Common Vault Systems, Paul has Paul has an issue speech issue. Yes, com Vault systems um of course. And you know, as we create and produce more and more data, I mean, we're expecting exponential climbs, right, So how much more difficult does this fight get? It gets? You know, it is it is why convolts And you know during the data we think we're in the data protection, data management, uh sort

of space. We've seen a real tail willing enough business over the past couple of years because all of a sudden, um companies boards. It's at you know, see you on board levels. They're making decisions around having a uniform platform to manage all the data assets. And data assets for most companies have come over, you know, over generations literally, so you're running you have you have business applications of

well built decades ago. They're still running businesses and you have to protect those as well as as well as the new workloads in the cloud, the cloud native workloads, and and that's where we commit. Just as an example, in in just in the past three years, we have moved forward two and a half exabytes of data for customers into the public cloud. And that is that has

literally grown five times in the past three years. So you can see the pace at which customers are embracing public cloud services, public cloud capabilities, and that brings about a whole new way of thinking about protecting the data. Santa, what you know, I think about you know, data security, cybersecurity, and you know, oftentimes we hear from you know, big large, publicly traded corporations SMP companies. How about some of the small to mid size companies, how are they equipped to

kind of secure their data, to secure their networks. It's it's a it's a it's a very important question. It's a reality because today no one's in you. No company, regardless of side, is immune to decide with threats. It doesn't matter what side you are, um what they wanted to data, what they want us to be able to

hold you for ransom? And and what's happening is we, you know, the expectations become that you know, a small accounting firm with let's say fifty people have to have the same defenses as a pentagon to protect their customer information, the client information. It's hard, it's super hard. And so what we're doing is and and then there's another you know, with with ransomware, which is which is the latest sort

of threat vector. What's happening is that traditional NT organizations um find themselves you know, the crosscreas of of of sort of what I call, you know, I ke collision, which is is it a security problem or is it an infrastructure problem? Who you know, who owns the backup? Is that the best way to go about it? And and so this, this whole thing is causing companies small and big to rethink data protection, which is why we've you know, we've been hard at work creating super super

easy to use um stas based solutions. As an example, we've all the metallic because of the customers getting access to the world class capabilities to protect themselves. That's that's that's been our you know, our direction. So what kind of growth do you expect? You know, we we we just announced to three results. Uh and you know we

we it was a record sitting quarter for us. We you know, we exceeded over twelve two hundred million dollars in quality total revenue for the first time of the company, so it was quite a quite a threshold. UM. You know,

we we we we we continue to see growth. We've had UM, you know, really good results over the past couple of years, are new products which we sort of capture under the subscription and SASS A r r OUR SASS products and our subscription oriented products sort of group forty year on year and more than half of our UM total A R R M and recurring revenue. So you know, we're we're seeing great motion and there's no reason to believe that it would still down. Sanj. Thanks

so much for joining us. Really appreciate your time, san J. Virgin Donnie there is the CEO of Convolt again. The ticker on the NASDAC is see v lt UM. Go ahead and check that out if you want to see more about Convolt Systems UM. The stock over the past year has UM come down a little right now six eight UM, but it had a big jump throughout one and like the rest of the market's been very vulnerable.

Thanks for listening to the Bloomberg Markets podcast. You can subscribe and listen to interviews with Apple podcasts or whatever. Podcast platform you prefer. I'm Matt Miller. I'm on Twitter at Matt Miller three. Pt on Fall Sweeney, I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Bloomberg Radio