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All right, let's check in with Alison Williams. She covers the banks for Bloomberg Intelligence. In One of the big banks is JP Morgan, and they're having their investor day today. Allison, give us what have you learned from our good friends at JPM today at their investor day.
So I think, you know, the most important thing is they're keeping their long term seventeen percent targets and then sort of supporting that they did up their net interest income guidance. We don't think that there's going to be much change to I guess the consensus, because I think consensus is already there. So they up the guide ends to reflect fewer cuts. But we already knew that they
also up their expense guidance. Again, we knew that because they you know, have already flagged that they're going to have a gain from some visa shares and they're going to use some of that to pre fund investment, spending some charitable contributions, and then finally, you know, they did some math walking through capital. So Basil three endgame is
the big question. They looked like they would be short based on the last proposals that we had that we got last July, but Powell has said that we're going to see big changes, and so JP Morgan did some scenario analysis around that, and you know, they feel pretty comfortable and they're starting to increase their buybacks and there is a lot more to come if we do get some relief to that proposal.
Also, aside is down like half a percent. Did do I take away anything from that in terms of how investors perceive the numbers?
I mean, I would say that we didn't get any big positive surprises. So I think that's what the stock is, you know, telling you, as I said, they they up there in an interest income guidance, but consensus was already there. We already knew that there were less federate cuts expected, and so they just kind of guided to that. And then you know, they there were questions around their target, but they were so far above that last year. They're operating at such a high level, and again consensus is
already expecting them to beat that target this year. So nothing, I think, no real big surprises. I think the next you know, I guess new news if you will, that we will get o the stress tests in June, where Jason Morgan said today they actually expect their stress buffer their requirement to go up. So I think setting that guideline it sets them up to either you know, meet
or surprise positively. And then when we do get those guidelines the summer on, buzzle through the endgame to see, you know, what the big changes are and if we are going to get uh some of the reliefs that everyone basically expects after Powell has made those comments.
You know, Alex, you mentioned this stocks down about half a percent today, but intra day earlier this morning hit an all time high. Fair enough, all he's unbelievable five hundred and eighty five billion dollars in market cap, Alison interest to refresh our memory, where are we in terms of our discussion of succession for Jamie Diamond? Is that even on the table anymore? We just where are we in that?
You know?
I think that you know, they're sending more and more clear message. Today, having Dan Pinto, you know, sort of walk through some of the opening remarks, I think that you know more and more that really they've they've sort of made clear the plan. You know, Jamie has the running joke about the five years, although you know, more recently it seems like he has talked about getting a little bit closer towards that goal. But I think really at these investor days you see what a strong bench
they have on display. We already heard, you know, from Marion Airdose and we heard from Marion Lake who runs a consumer business. And really, I mean the strength in these stories. There's so much positive going on, you know, just continuing to invest for growth, you know, net influence in the asset management business, building out branches in the consumer business. You know, a lot of positive things going on the business lines, and again a strong bench.
Before I let you go, have you learned anything about investment banking, what the IPO looks like, what the M and A market looks like. We're still waiting for that turnaround moment, any word on that.
So that's I think all coming up on the agenda. As I said, just so far, we really have just been focusing on the asset and wealth and the consumer side. But I think we'll definitely be digging into the details and that in the next few sessions.
Excellent, all right, Alison Williams, thank you so much. We really appreciate you stepping out and chatting with us. Alison Williams is Bloomberg Intelligence Senior US Banks analyst. He also covers basically anything that handles money, so she's very helpless manager, you name it.
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Thirty tatty Monday. I'm Alex Stee alongside Paul Sween need this. In Bloomberg Intelligence Radio, we bring you all the top news and finance and economics through our lens of our Bloomberg Intelligence analysts. They cover two thousand companies in one hundred and thirty industries worldwide. We also take you outside Bloomberg Intelligence and get a look at under the hood and on the street and saying, hey, what are you
doing with your money. It is very clear that we're in an everything rally when it comes to metals and when it comes to the equity markets. John Tucker was just saying, adding twelve trillion dollars in value since the since the S and P bottom back in October. So what's going to disrupt that? I honestly don't have a good answer, but maybe Dana Dioria does, co chief investment Officer over at invest net Is invest net I got there is standing by Dana. What stops it?
Hi?
Thank you for having me.
Well, yeah, I mean we've definitely sort of get it over to this idea that you know, the resilience.
Is the name of the game. The markets are doing well, we're seeing breath.
It's not just you know, obviously the Magnificent seven, but I do look, I mean there are definitely cracks that could potentially and become more of an issue, and and you know, one of them, of course, at a high level, is just the election coming up and the volatility that's going to be coming into markets as a result of that.
I think as the election season heats up, and that's not to.
Say, you know, one winner versus another, there will be definite winners and losers based on how the election pans out. But I think as we head into the election, expect more volatility, uh in markets. And then of course, you know jobs, Employment obviously is a big one. You know, we're not we're not seeing any real cracks there, but if there were to be, that would be an issue. And growth obviously came in this you know, last quarter a little lower than expected as well.
Dana, it seems like some recent move we've seen off that April kind of weakness was maybe driven by good old fashioned earnings. What did you take away from the most recent earning cycle? Again, we have another big name reporting ondesday after the close with Nvidia.
Yeah, I mean, earnings has been what's been propping up the account of me right alongside employment.
I think the fact that you know, we haven't.
Seen the weakness yet on the corporate side, we have seen productivity kind of holding steady. Now that being said, you know, the market to a large extent, I would say.
Has been sort of priced for an expectation.
So you know, individually, when you see anybody kind of coming in not at you know exactly where it needs to be your beating, you know, they kind of get punished, and I expect that we continue, you.
Know, into next quarter as well.
But yeah, earnings have definitely bullied us for you know, not even just.
This last quarter, but in general if you look back to twenty twenty three.
Right, which makes it so hard to then sell because if you take a look at say the EA function on the Bloomberg terminal, and you look at earnings and sales growth year on year, excuse me, quarter on quarter over the next year, it just keeps going up. So it's hard for me to then defind the reason to then sell. How do you look at the next four quarters?
Yes, So one of.
The things I would differentiate, of course, is you know, size of companies interest rate. You know, how dependent is that company I'm going to capital markets, for example, in an environment of.
Higher for longer for example.
Small caps tend to be you know, more interest rates sensitive.
If you're going to look individually just who who's.
Able to fund self fund versus not so in an environment that's higher for longer and as corporate debt starts rolling over. I do think that's one area if for you know, as we're talking about it, to say, okay, this is a place where weakness can come in on the corporate side, because these companies do have to return to capital markets and roll over debt at higher rates than they've needed to in the past, higher rates than you know, they've needed to in a decade. Right, So
I do think that's that's one thing. Now, that being said, I am a proponent of small caps. I just think you have to be able to buy in and hold on because I think the market has priced in that scenario for them.
Data in a fixed income side, how much risk are you suggesting people take because we can sit in to your treasure. You can get four point eight three percent today. How much credit should I be taking out there?
Yeah? I mean, you know, it's a it's it's a funny thing, right, Suddenly you're getting paid whereas you weren't for a long time in the fixed income space, and you really don't need to extend that credit.
So we so.
Coming from you know, a platform that services retail advisors and clients for a long time. You know, we've we saw sort of just a stretching on the fixed income side.
If you look at that standard sixty forty, taking that forty percent and really stretching what could be called, you know, a fixed income position, right, a traditional ballast position that portfolio by pushing into higher and higher you know, higher yielding you know, leverage loans even to an extent dividend payers because you were looking for some return on that.
We're not in that environment anymore, And for the standard investor, I agree with the premise of your question that, yes, it's not the same take credit risk, but you don't have the need anymore that you did, you know, in a period of financial repression, to really move out on the credit risk to be putting in you know, perhaps you know, areas and fixed income on a different place in the capital structure, and areas that are you know, just just higher yielding but also bringing more risk to
the portfolio when you already have that big equity stake.
So you said you liked small caps, but you got to kind of stomach it. Why do you like small caps? Yeah?
Look, I mean small caps, and if you excise.
The growthiest you know, least profitable small caps, which are more like a lotto ticket type payoff structure, then you're living in a world where you know, they have outperformed over time. Small value in particular has tended to not only outperform, but also to outpace inflation.
And so if you look at.
The standard portfolio that most people are sitting in, they have a ton of the big growth just by virtue of the fact that if they're not index ers, you know, the active managers are not going to stray that far.
They can't stray that far to take on that much tracking error.
So small caps are a nice diversifyer that have paid off over time again if you take out those really low profitability stocks. And that's why we see a lot too around, you know, by quality small caps by the six hundred.
Right, because you can you can get.
That diversification benefit, that long run return potential, especially now that there's a cost of capital again, you know, and some of the fundamentals can be reasserting in these you know, style factors for example, in these portfolios.
All Right, Dan, thanks a lot, super appreciated. Dana d'oria joining us CO chief investment officer over at in invest Net, joining us from Connecticut. It just feels like it's going to be really hard to change the narrative at this point. I mean, maybe in Vidia does something.
But yeah, maybe in Vidia does something. Maybe we hear from the FED. That's you know, I don't know what we hear from the FED so often, But what could they say at the next meeting that would freak people out? I think the market they kind of conditioned the market to saying, Hey, we're going to hang here for a little bit, but on the margin, we're going to be cutting more likely than not at some point this year.
I think that in of itself, the anticipation of a cut, to me is almost as good as the cut itself, totally.
And that's what Mike McKee was saying to Rafael Bostik. He was like, I know you guys don't want to do four guidance, but aren't you kind of doing for a guidance by doing all that? Because the market front runs you and you obviously signed up that. But nonetheless.
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All right, let's get to the news item over the weekend, and also take a look back at cut ours economic form because a lot of interesting things came out of that last week. Ronnie and President Ibrahim Ricey died yesterday in a helicopter with his foreign minister. That was the news. We want to go to Bobby Go. She's senior editor at Bloomberg News and he joins us through Zoom. He follows a lot of geopolitical issues along these lines with us. Bobby,
Where does this leave Iran? What is the instability risk here?
Well, this has never happened in Iran's recent history. No sitting president has ever died. So this is a fork in the road that Iran has never come to before. This regime likes to convey a sense of stability and continuity, but it has not been tested in this manner before. I, for one, don't expect a great deal of instability, because let's remind ourselves, the person who really pulls the strings in Iran is not the president. It is the supreme leader,
who is unelected. Ali Khamine is his name. He sits above the entire government and in the frankly the entire administration, and he calls all the important shots. His policies are the ones that the president and others implement. He hasn't changed. He's old and ill and quite ill. He's eighty five years old, and so there are some concerns about succession there, and there was some thought that President Raisi would be the logical successor to the Supreme Leader. Now that's off
the charts. But there's going to be an election in fifty days. Anytime there is an election, there is always an opportunity, however slim it might be, for other voices to be heard. The regime will try to maintain that continuity by making sure that in the new president, whoever he is, is also a hardliner, just like RAYSI. But
you know, this is a black Swan event. And the thing about things about black Swan events now that you really can't be absolutely certain about what's going to happen next, precisely because it's never happened before.
Bobby, is there any reason to believe the death of the reigning president will alter in any way around views or actions or policies as it relates to the broader Middle East? Here, I'm thinking Daza Israels happening today.
I wouldn't be optimistic about that. Again, Kamene is the one whose policies are being implemented. He's not going to change his mind. He's an old school, died in the world hardliner. He hates as well, he hates America, and no matter who becomes president, they will basically have to do what Kamene says. The other joker in the pack is the IRGC, which is the military arm of the
Iranian state. They're also very hardline and they will basically not tolerate a government that is softer towards the West. So I don't expect any significant change in foreign policy from the Iranians no matter who becomes president.
You were also last week at Katar's Economic Forum, I mean huge lineup of guests. What were some of the takeaways that you had from that, like what should we be king in on?
Well, interestingly and coincidentally, the number one theme, and this took me by surprise, was geopolitics and instability. I suppose I shouldn't have been surprised because of what's going on
in the region, the war in Gaza. Now look at it from this distance, you might think, well, that's a very localized conflict that's just taking place in Gaza that does not involve the rest of the Middle East and the price of oil is stable, the governments in the Middle East are all more or less stable, and so they would be concerned. But actually there was a lot of concern. We heard from the Prime Minister of Qatar about his concerns about the fact that the ceasefire talks
between hamas And and Israel are not going anywhere. We heard from the Prime minister from Malaysia. We heard from the President of Indonesia. We also heard about the geopolitical uncertainties that are sort of continuing from the Ukrainian the conflict in Ukraine with the Russia invade in Ukraine. We heard from the President of Poland who talked about that.
So it was really quite My perception was that the sessions, look, it was a very well attended event, and all the sessions were very well attended, but the ones that seem to capture people's imaginations were around the idea that we are now going through a period of instability because of wars, hot wars between countries and the Cold War between the
United States and China and everything else. Everybody's strategy, every company's way of thinking of the world, every government's way of thinking of the world has to be refracted through these lenses of conflict. That was quite striking to me.
Bobby, here's my ignorant question of the day. It's just from a geography perspective, the Persian golf nations are attracting so much capital, and there's so much optimism about many of those that part of the world. There United Arab Emirates Qatar, for example, How I guess how closely are they kind of thought of from investors perspective with the Middle East, with what's gone on in Israel, Egypt and Gazan.
I mean, are they considered two separate regions? So if I'm thinking about investing in you know, Cutter, for example, I'm not too concerned about the regional conflicts or am.
I Well, you would think that, but a lot of international investors outside of the Middle East are not making that distinction, and they are that we've heard recently. For instance, Saudi Arabia, southi Arabia is a long way from the war zone. The Saudist have a robastic well, while gas prices are high, a pretty strong economy. They're sitting on a massive, massive war chest. They're building these gigantic projects, a whole new city in the desert and they're open
for business. They want foreign investors to come, and you think foreign investors would want to get in on the ground floor in a lot of those projects not happening. Not happening the South as RBN Business Business Bloomberg News colleagues have reported they're really struggling to get foreign investors. And some of that is to do with the larger geopolitical instability in the region. Some of it is specifically to do with events in Saudi Arabia.
When we take a look at you politics, how we're very obviously US centric because we're in the middle of New York right, How interested is the rest of the world in the twenty twenty four presidential election? Like, how did the Biden Trump scenario play out? And cut there?
Oh yeah, every conversation I had, bar every conversation with every delegate, all wanted to know, you from New York, what's going on with the election? Is Biden really going to win? Is Trump really going to win? There was some attempt to you know, we heard from Ken Griffin, for instance, on the stage, who said that who gave the impression that it wouldn't really matter. He seems to
favor a Trump presidency, a return of Trump. But there were some attempts on from stage from various speakers to say, oh, you know, the US economy is robust and it doesn't matter. That is not how it was reflected. In my private conversations with people off the stage. A lot of it was really really deep concerned, you know, the things that they are seeing from that distance taking place in America unprecedented, an American former president in court for every day, with
the possibility of going to jail. There's a lot of concern about that. Would that lead to instability, would that lead to something a repetition of the storming of Congress. There's concern about the age of the candidates, even in a part of the world where leaders tend to be quite old. So that was the backdrop against which all conversations do place.
All right, Bobby, thank you so much for joining us there. Bobby go She's a senior editor for Bloomberg News, joining us from New York via zoom Busy on the geopolitical front, and we'd like to have access to Bobby and his world view and all of his experience there again, the death of the Iranian president over the weekend, and then of course the Economic Forum and cut her a lock go on on in that part of the world obviously.
Yeah, and also I'm sure that Ellen g played prominently also just in terms of that being a key product that the US has me as well as Japan and cut her in the AAE, and then also securing that sort of energy security conversation as well. I'm just so interested. If I'm a CEO of a company, how do you possibly make long term investment decisions in this political environment US and globally, Like, how do you do that?
I think, Well, I don't know. I mean, I think you have to think that these investments are going to outlive the next four years, the next whatever.
And yeah, but when you don't have any distanctions and trade restrictions.
Like, how do you And they're so different one side versus the other. I mean before, I mean, there were distinctions between Republicans and Democrats, but like everything else in the world today, those distinctions seem to be more stark these days. And that includes regulatory restrictions when it towers. But now we've got the Biden administration not only maintaining the Trump administration towers but adding new ones, which is something you wouldn't necessarily right.
It's like, how do you deglobalize? How do you deglobalize and also decarbonize and also grow? How do you do all of those three things at once?
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Alex Deal Paul Sweeney. We're live here in our Bloomberg Interactive Broker Studio. We're streaming live on YouTube as well as head over YouTube dot com and search Bloomberg Podcast. Commodities. Let's talk the hard commodities, the metals. We'll get to the safts on another day, another time. It's all about copper and gold and all that kind of stuff. Oh yeah, what's going on here? Mike Mclone does because he's been doing us his whole life. He's a senior commodity strategist
for Bloomberg Intelligence. He's usually down at South Beach, but we got him up here in New York where the real people work. So, Mike, thanks so much for joining us here. First, I haven't heard about copper in a while. Now it's every day we're hitting new highs.
What's going on there, Yeah, it finally has. There's been some nuances there, but it's it's the key thing. You started off with the hard commodities, and there's everything else. The hardest commodities are the metals. So let's point out the Bloomberg Golf Medals Total Index Total return DEX is up twenty percent this year. That just tracks the hard commodities. The copper is a big part of it. But the way you look at copper, it's kind of just catching
up to gold in the stock market. It's made a new high they in the US five dollars and twenty cents a pound.
And what's what's the chicker actually be using for copper?
Hg one.
All right, I'm on it, and that's from versus the LM.
And I knew. I knew Alex would go over and point out the other point out they all made tons. It's in metric tons. But since ver Yanks, we'll talk about the you know, I get knfuzzled with both of them. So the key thing I like to point out is what I'm concerned about is it's catching up to S and P five hundred because it's a very high correlation. I member Alex pointed out once that if you look at those two, they're like tick for tick, but manage
money net possessions. I hedgehunds, futures stuff I used to trade and used to watch the really long thirty two percent of open interest. It's the high since twenty twenty one. So they're on top of this trade. They're making money, and it's rare that markets can really stay going up when they're that longer rangy. So the key thing I look at is then there's a macro. I look at the US stock market in some ways it's very stretched just versus one hundred week movement A is twenty two percent.
And then China. Number one thing is China. Just look at bond yields in China. So those two key factors for copper to stay strong in long term obviously very bullish copper, but China in decline and use stock market very expensive means. I think these headshreens are more likely to have to hit their stops and their lungs and get stopped out of it at some point.
So a couple of things that get you get all.
That I'm stopping out of my cop.
So there's a couple of different exchanges right that you look at, and that's London, then it's the US, and that's Shanghai. And you can do a lot of arm trades right where you can go long one and short at the other base and where you think the demand's going to be. And that's kind of what Mike was talking about in terms of there was a short on the US inventories and a long on the Shanghai copper, and then all of a sudden that you got a
short squeeze that reverse. And now there's stories about let's break this down to what so normal people can understand this doing the bathroom. I was trying to do the bathroom.
Okay, I'm not using a lot of copper. I'm using cross link polyethylene.
Okay. Well, actually that's that's an excellent point because if it gets too expensive, then you're going to see substitutions, right, And that's is the bull thesis for copper, as bullish as the bulls say, which is basically like you're going to have endless demand and the energy transition forever.
HIVR Blast's column this morning, I forget the title of it, was pointed out that is the problem, and Copperer is very article related. It's almost like silver. Silver's to earn the reputation as the devil's metal because it only goes down after it goes up. I'm worried about that happening in copper. It's like, Okay, you had to hear that first, but it's ceuta cordation factor. So I think people are buying into the bullish theory thesis and it makes sense
in the long term. But for a trader standpoint, when you see these type of nuances where stock market is really expensive, it's catching up manage money and positions really strong, and China having problems and by the way, China's the biggest buyer a planet of gold, it kind of makes me very scared about getting longer copper. Now I'm very enduringly bullish gold. I mean, gold could correct ten percent,
it still doesn't matter. It's the fact is central banks are gold, They're not buying copp The key thing is that's one thing I've heard. There's rumors that maybe China's hoarding some other metals.
Have you heard that out?
I have not heard it, but that doesn't surprise me. I mean, it makes sense. You can make an argument that the US should also be having a strategic preserves of things like nickel and lithium and stuff like that for the energy transition. No, we do not tweave oil as far as we know this is true. I'm glad you point out Hoavier's column, So, Javier Blast Bloomberg opinion columnists,
I highly recommend you guys read it. And he was saying that the big distinction between say oil and copper is that oil, once you use it, you burn it, it's done. Copper you use it if you put it in your pipe for your bathroom or whatever, that's going to be there for a very long time. And you can also then reuse copper too, So it doesn't have the same kind of demand pull endless man pull in the same way, even if structurally you are looking at
stronger demand because the energy transition. I found that to be very thought provoking.
The headline of his article was Copper's boom story has some truth and much hogwash.
And that's what I love is that hogwashes when you hear everybody say the same thing.
I've heard it so many times, like Member Crudel two years ago as going to one fifteen and we're heard at nine eighty bucks. Your hearing Commandie's got to be very careful. The only one that usually really works in the long term is gold.
And that's what you've been telling us since day one. So all right. So if I I'm trying to come up without the trade here copper, I feel like it's technically high. Technicals are driving this thing. So it's just a question when I see this thing roll over, yeah, short.
It because well that I look at as a trader, I'd be willing to I can't say it anymore, but I would structure like a plip strategy. I'll be thinking that, and so why not. Also, the thing is that it's the trickle down. If copper starts trickling down, it's probably gonna be really to this US stock market, really to China. And it's that deflationary trajectory. I see you look at cgb's Chinese government bondials at two point three percent versus
our tenure note yield at four point four percent. That's very rare, and that's an indication from a sovereign market of deflationary trends in the world's second largest economy.
Well also, I mean talking about the trade, just because it may go down doesn't mean it's going to go to zero. Like okay, is that like say ten thousand on the lme you take a little bit of heat off, it's not. It's still not. We're still going to be using it. And there is still a both thesis. You don't have to necessarily be a crazy bowl though.
Yeah, Well, commodity people think trading right a lot, so I look in conpric very simply. If you're looking that, people look at four is kind of the key pivot. Once it broke about four hours a pound, which was at the end of March, which shot up. It was a good technical signal. Now it's like it just got to be careful with that big thesis of everybody's piling on.
That's what I point out from a commodity simpoint. Yes, they were very cheap versus the stock market just a few months ago on the start, and I'm hearing a significant allocation towards commodities. But I always like to point out, well, stick with the metals bloombergol medals in the next typically is the best performance over time start with gold, and if you really interest in broader commodities, energy equities typically way outperformed things like like like USO.
Right, let's switch gears to gold another high. So is this I mean you've been saying long, gold, short everything else for years and years and years. Are we what's the case for gold here? Other than I guess the Chinese are buying it.
It starts I think with the macroeconomic situation. You know, unlimited friendship shifted the world order. The world's largest buyer of gold right now is China. Central banks the world's gold The World Gold Council point out of Q one was the biggest Q one ever and their view is it's going to continue. Okay, So that's what matters. But I hear'st put some numbers on it. There's been thirty million outflows from gold ETFs in terms of bounces and about one hundred million purchases of ounces.
From central banks.
So what's been significant is the banks are buying deepest money in pockets we can print dollars are buying gold, and there's issues with you know, China, Russia. But investors like to say in this country is why by gold? If you get five percent t build the stock market's on a tear. That to me is gonna flip at some point because we had so much outflows and ETFs. At some point that's going to turn back up, and that accelerates the gold.
So you give him one question with gold though, just because China keeps buying it doesn't mean they're going to keep buying it exactly.
That's why I had lunch with a World Gold Council member last year and last week, and I always try to put them down, what's your expectation. Yes, that's the rice they could stop, but it's not just China. Like in the last data, the number one buyer was Turkey. Singapore Monetary Exchange was a big buyer. It's just they're starting to add up. And I think it's part of that kind of run away from the dollar situation to worry about. Like I say, it was started with the unlimited friendship.
WTI eighty dollars a barrel here, what are we doing with gold? I mean with oil.
I think it's more likely and I've been wrong, but early maybe more like would go to fifty than higher. Because look at WTI the price right now on the screen. It is first trade in two thousand and seven. And what happens when it goes up, it goes down. Why because it creates more supply and demands. So the key fact is what's pressured Crudel for the last fifteen years is the excess of supply to US and Canada. And
now we have that building surplus out of OPEC. So to me, it's just about matter of time it goes over.
There's also be an example.
Natural gas did it It got too expensive, it got down to low price, cure at the lowest priced since nineteen ninety, and it bounced. I think krudelse found that trajectory. You have to shut off that excess to supply out of the US. And here's key facts. Diesel demand, unleaded gas demand, and container board demand in this country are all in recessionary trajectories.
Okay, we did the container shipping, the container board stuff stuff left. We did hear, Yes we heard that, Yes.
We did hear that. But it also you're having some refiners open up now after maintenance season and it is summer driving season. So even if the demand isn't great. You may just continue to se a little uptick of demand because we're.
Going to drive more.
I don't know.
We see because he drives like seventeen hours a day and the Michael Barr. You put those.
Together, it should be better for them. But you know they're going to complain anyway. So there is that, and then.
They have the congestion pricing they have to pay.
Well, that's a whole different bag of chips on that. Hey, Mike, good to see you. Good to see you in studio. Mike mcgloonan, a Bloomberg Intelligence senior Kammardi Strategy, is always fun to talk to.
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So Alex, you asked if I've ever been in the board Menia answers Yes. My famous board meeting discussion is I literally got thrown out by a top three, top four media mobile on the planet for valuing his satellite company at what he thought was half the price. We literally got thrown out, esquoted out. He didn't pass our fee for like a year. Wow, it was due like the day after good job two years later. Sold it for half of what.
We valued it half of what you valued it at.
Yeah, so we were wrong, but we were high. But anyway, that was my getting thrown out. Our next guest describes participating in board meetings as a quote, punch yourself in the face experience. I've experienced that. Edward Norton joined. He's a co founder of ZECH. He joins us live here in on o Bloomberg Inner Actor Broker Studio. No mailating for this guy. Edward, thank you so much for joining us. Really appreciate it. Talk to us about ZECH. What are you guys trying to do with ZECH.
Well, we're trying to make the experience between management of organizations, and I say that meaning corporations or nonprofits, because obviously we've got a couple million nonprofit organizations in this country that have governance and boards and stuff like that. We're trying to take what we feel is an increasingly toxic dynamic and reform it into being what it's supposed to be which is a relationship that that propels an organizations supports,
you know, brings additional leverage, positivity to an organization. And we you know, I've definitely had some people say to me, like, you have an interesting day job, why would you get involved in.
And your day job? Just for folks that on the radio, Edward Norton actor has been in a bunch of movies in the all kind of stuff.
Yeah, the and I and I will, I will admit that you know, on the surface, like a software platform for for board governance features seems pretty esoteric, but it grew out of it grew out of my own experiences over the last thirty years, not dissimilar to years from serving on the board of arts organizations, serving on you know,
conservation organization boards. And then as I built my own companies, and I've built a few software companies that that we had our own boards, people like Fred Wilson from Union Square or you know Excel or Graylock or these these firms. We were on the management side and we were experiencing what it meant to have a board. And then when I sold one of my companies and I joined the
board of GoFundMe the company that acquired us. You know, I started sitting on corporate boards and we my partners, and I really started feeling that that this there, there's this elephant in the room, which is that is that companies go through four to eight times a year. They go pencils down to get ready for this thing that
essentially to them feels like a hall monitoring moment. And board members, on the other hand, when I was a board member, you got thirty six hours before the meeting, You get a ninety page PDF and you're supposed to read it in the airport terminal, and then you go to the meeting and get it read back to you.
You know what I mean?
Like there was just and so.
You're looking to make it a more what interactive visual engaging experience.
I think we say two things. One is quantitatively, board meetings are an enormous waste of time for everybody, and that has to do with the amount of redundant time waste on setting these meetings up and the presentation materials. And that can be crushed down by having cloud based AI powered tools that make it like a tenth the time for a company on zech a company can set up for a board meeting in one tenth the time
wow that they were using to prep before it. Board members should get to read something that's you know, you wouldn't read in the New York Times or Bloomberg on a PDF. You you read it in a mobile friendly scroll right that we expect that now, and so everything about the user interface should be easier for both sides
of the table. But also think about this, think about how much time, how many professional talented people with time is valuable sit there in board meetings, approving minutes, approvals, approving stock option packages, things that they ought to be able to do from the airport lounge in advance. So we built governance function that can be interactive and mobile.
And also so your customer is the board.
Customer is the company and the board. You know, yeah, both sides, management and board members suffer in different ways, and we've tried to reform it. But when you when you when you crush the redundant inefficiency of time waste, you improve the quality of the meeting too, because a board meeting should be a forward looking experience.
Not a you don't want to spend.
Hours looking backward. Everybody can ingest the looking backward part before the meeting. You want the meeting to be propulsive and additive to where the company or the organization is trying to go. And the best thing about what people are saying to us is not just oh, we really love the user interface. It's much easier, it's easier to read. We love that they're saying to us. This has radically improved the quality and the value of the meeting itself and what we're getting out of our board.
So you guys just raised about seven and a half million Series A led by Salesforce Ventures, including some other guys as well. What are you gonna do with it and what's sort of your angle here?
Well, you know, I think if you look at I mean, first of all, Salesforce to this day is still I mean, they still are the greatest innovator in cloud based corporate tools. And I've known Mark Benioff a long time, even though I never told him that we were doing this with his own team until it was done, because I didn't want to, you know, I didn't want it to come from the top down. The Salesforce team is really phenomenal.
But you know, our fantasy was to work with Salesforce because really nobody nobody understands the business of cloud based corporate tools better than they do. And I also like their ethos as a company. I think I think they have a great customer service ethos there. But you know, if you look at think about today, would you ever get a FedEx package with with signature tabs on your legal documents? No, you get it in DocuSign. Now, right, don't.
You don't manage your cap table in Excel spreadsheets anymore? You use Karta. And we've we've made this evolution towards Lots of aspects of corporate function have gone into the cloud, but this really critical function hasn't. And we think that on a business level, to be honest, if you look at you know, Karta, which is a seven billion dollar private company and DocuSign is a fifteen billion dollar public company, there's an enormous market in in relatively low priced corporate
software tools. And we really thought this this was a good business. We think there's a very large marketplace of companies and nonprofit orgs that need to reform this critical piece of Where are you in the.
Evolution of the company? You signed up clients?
Now, oh yeah, we have, we have We're into the thousands of companies and nonprofit orgs.
Who are our customers like Fortune five hundred companies, what size companies?
Yeah, well, actually it's funny you say that we are just in the process of clearing what they call the sock two software security process, and that that lets you be a platform for public We actually have a number of large public companies using it, but we have been mostly for smaller and mid sized private companies until we clear this this critical kind of So.
You guys have an end goal here because I know with your previous company, crowd Rise, right, that was sold to go fund me. Yeah, the same co found Uh is this the same roadmap for you guys here?
Yeah?
You know, I think that I think that we've been totally focused on the product to date, making sure that it really really works and really gets the kind of response that it's getting. So essentially, we went to Salesforce and said we've here, here's how it works.
Here.
They loved it, and we said, how do we how do we now sell this? You know, how how do we now grow this as a business? And and you know, even even when we present it like Salesforce's Dreamforce and things, you're you're talking to a constituency of many tens of thousands of companies, and and that's and that's our agenda. Now is we we kind of did it in stealth, and as we're doing here with you, we're kind of we're kind of coming up and out.
And is it just a subscription model?
Yeah, yeah, it's for any company, for any company that it's incredibly familiar. And if you subscribe to docu sign if you subscribe to Karta, you're talking sub ten thousand dollars a year type subscriptions for these tools. And that's why we think because it has to work for it has to work for a nonprofit org, it has to work for a small startup company. It's we're not talking about, you know, one hundred thousand dollars year enterprise software contracts.
We're we're literally talking under ten thousand dollars a year.
Interesting stuff. Thanks for stopping absolutely. Edward Norton, he's a co founder of ZECH. He's also got an acting career from what I understand, so he's kind of busy out there doing that there kind of again bringing I bet you're the pandemic. The pandemic accelerated a lot of that stuff.
It's such a good quodcast.
Sign and all that stuff.
I don't know anything on PDF. Ideas were done on my phone, Like of course you're going to want to but you.
Still go to a restaurant and you give them the credit card. They go somewhere, they do it all. They bring you back to seventeen or as you go to one of Europe, somewhere the little person comes up and what's.
The little person comes up and puts the other thing.
I don't know how it works, but the technology serving.
You in Europe, every little people.
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