Markets, Tech, And Air Travel (Radio)

for b Okay Financial. Steve, You're in Oklahoma, isn't it right? And Tulsa, Oklahoma. Tulsa, Oklahoma. So let me just I'm gonna assume that you've got an opinion on oil at w t I crude oil and a hundred two dollars of barrel. What are the smart people in the oil biz that you talked to? What are they saying about? Where do they think oil is going? You know, it's interesting here. Look be Okay Financials, an energy bank, were one of the larger banks and the energy business. And frankly, uh,

not just in Oklahoma, but in Texas as well. We've got kind of a love hate relationship with oil prices. We don't like it. As consumers when gasoline prices are high, just like everybody else. So much of our economy is driven by the energy business, employment, personal incomes, a lot of people with royalties that as oil prices go up, UH, personal incomes are rising in this UH, in this part of the in this part of the country, we're still i would say constructive on the energy business. There's a

lot of moving parts there. There's a lot of things outside of outside of our control. When you start thinking about what's going on with Russia and Ukraine and how OPEC is handling some of this UH, and then you've got some regulatory issues I'm gonna say issues in Washington that almost ironically, if you look at the performance of the energy markets, the more restrictive policies have been, the better the performance of the energy equities in the price

of oil. But to the degree that we see ongoing demand and for energy both oil and natural gas were constructive, we're still constructive. Does it make sense to you, Steve, that the US would go all the way over to Saudi Arabia and ask them to pump more oil rather than just taking a little trip down to Oklahoma in Texas and making it easier for our folks to pull

our own natural resources out of the ground. So one of the hard parts of our job is we try to be as a political as possible when we're when we're answering questions like this. But I didn't say the President. I said America just in general, as we think about how we move forward from an energy policy standpoint, and nobody's pushing back on the fact that the direction that

we're going is towards more green energy. But as we sit here today, Uh, it is hard to understand why the administration would find it better to go to OPEC or Venezuela or countries to ask them to produce more oil when that is a resource that we have domestically. We're the largest producer of oil in the in the world. We've got a h an industry that has that that has you know, built out and put us in a position where we could we could be energy and dependent

if that's what we wanted to do. I understand there's uh competing thoughts around the direction that we should be going to really more around the timing of how quickly we should be moving forward. But yes, it's hard to understand why we're not engaging our domestic energy business at a different level than what it seems we are hasteve you know what I've heard from folks that do follow the energy markets globally, they say, you know, the U S producers, the shell producers, who have been had such

tremendous growth over the last twenty years. Uh, They've been told by their equity holders, by their bondholders, maybe even by their commercial lenders, discipline, do not drill more turned that cash to shareholders and creditors. Is that part of the issue as well? It certainly is, And and you have to look at how again, just go to how

the industry is actually performing. Uh. Since that shift when it was you know, drill, baby, drill, Uh, it has been better from an economic standpoint for the holders of equity energy equities. Uh, it's been better for the debt holders of those energy companies. Energy makes up a pretty large portion of the high yield index. And then in past periods, Uh, the energy sector has been responsible for a lot of the problems in the high market. That's

just not the case. Again, working for a financial company that is in that business, UH, it does not hurt our credit profile when we see oil prices um and natural gas prices as high as they are. All right, talk to us about Oklahoma State football. What's the outlook for this coming year? Steve, I have to look, I went to Oklahoma State. I played on the tennis team there. Interestingly that when I was at Oklahoma State though, to tell you just how long ago that was, Jimmy Johnson

was our head football coach. Um, Look, we've done a fabulous job of being relevant for the last fifteen years. I think as a as a long time Oklahoma State fan. Uh, it's a lesson and expectational management. You never let your expectations get away from you on the high side. But we've certainly done a good job in the last fifteen years or so we being relevant in D one football. Absolutely, Oklahoma State Cowboys had some good stuff there. Uh. Steve Wyatt,

chief investment strategist for be Okay Financial. We were gonna talk like broad Marcus b Someone's are talking about energy oil and with those folks down there, it's their business in Oklahoma and Texas. Uh, they've been quite disciplined. All right,

let's go technology. I'm loving you know. The SMP went down almost almost percent year today, but when you look at the tech heavy nastack that's down almost thirty percent year today, and you think about the nastack tech stocks, they've really lead this market since a great financial crisis, but certainly under performing year to date this year. Let's get a little bit of a preview because we're gonna have some tech earnings really in earnest start next week.

We've got uh Netflix after the close tonight, Ivana the Lefska founder and chief investment officer of Spear invest joins us. Ivana again the underperformance attech this year, Um, what's your view of the tech space here? Is there still? Is this still a core part of people's portfolio? Should it be? Well, I believe it's should Then I believe this major pubek presents a really good, attractive, really attractive entry point. If you look at tech the under performance with them not

that being down. If you look at the big innovators in the space, they're down significantly more than that. So we didn't arcovery universe. Companies that have delivered on earnings and had solid outlooks are still down. Some companies that had some hiccups are down seventy and you have somewhere like the business model is in question that are down, So we think the sweet spot is to look into this area of stocks that are actually performing pretty well.

The fundamentals are strong, but you can still get these stops cheaper compared to what you could have gotten a year ago. How else do you divide the technology sector other than you know innovators UM or by sort of executing on business strategy in terms of you know, the products they make or the services they provide. So we are we've focused on industrial technology. The way we look at technology more broadly is either consumer driven names or

industrial or enterprise driven companies. So in the last text cycle, we saw a lot of in the innovation in the consumer space where you had between streaming social media. Those were really the big companies that drove the the drove the text cycle. Going forward, we think industrial and enterprise technology will be the big driver of the of the

next cycle. We think a lot of the innovation in tech has been around data, how to use data, how to store it in the cloud, how to secure it well, and then how to use it and use processes like ai UM. So we think we're just at the cost of UM where we can start using some of these technologies into mainstream businesses or traditional businesses like autos aerospace, and there is a real potential to transform this entire

end market. So on that end, Ivanna a lot of folks when they're talking about the future, the next three or five years of where investors should really think about the text act, they say cyber security. How do you think about cybersecurity? What what's your view on that space and and how do you think is the best way to play it. So we're really excited about cybersecurity. It's the most it's the largest team within within our portfolio.

We have a publicly listed dts UH Spear Alpha with the ticker SPRX, and cybersecurity is one of the largest teams within that that that portfolio. We love the space for several several reasons. One of them is as architectures have changed and data is no longer centralized. People are using either multiple devices or they're using data that store at the cloud or at multiple clouds. So this change in architecture requires completely different cybersecurity solutions then you would

have needed several years ago. So there are several of the space is pretty fragmented. There's several different areas that we like and we focus on that have over growth of just the end market. Endpoint security is one of them. Here we like companies like crowd strikes. Another area is securing workloads to the cloud and within the clouds. Here

a name is z scaler. And then for people that want to play a more platform approach, power out on networks is a good way to play where they play both on the endpoint UM and the traditional firewall firewall products. What about AI UM it's something we hear so much about and you know, investors put so much faith in it. Obviously, eventually the machines are going to turn against us and then you'll feel guilty about all the money you made.

But is it a good place to go into right now? Well, yes, So it's very interesting because it's been a team for us over the past few years, but we really didn't have any significant investments and as there weren't any ways to play that scale. And over the last year we've seen a lot of developments where AI is becoming at the core of many processes. So even if back to cybersecurity, even if you look at cybersecurity, a lot of the

new products are AI based. So crowds rate products are AI and machine learning based the scalers products same thing. So it's really gaining mainstream adoption. And this is just for running like, uh, processes that you wouldn't necessarily be able to even do manually, right. Uh, This algorithms can pick up on a NORMALI is by just by training training the model. So we think the A is going to gain adoption to even more mainstream like autonomous driving.

We still believe that's several years away because it is a pretty complex problem, but we do see AI is gaining pretty uh, pretty broad adoption. AVNA just real quick thirty seconds. Bloomberg Broker story yesterday that Apple may slow some higher ring in certain businesses and that we've seen that from other companies. We've seen that from other companies. Do you get a sense of Silicon Valley is kind of gearing up for a recession? Yeah? Absolutely. I mean at this point we are at a at a point

where recession is almost a foregone conclusion. Um, We're we trucked a lot of industrial data points and things really became really really turned even since since March, we started seeing the trucking market soft and consumer discretionary softened and that's really now just been affecting the broad at the broader market. So things have just spread to like manufacturing, things have spread to technology. So we're gonna see this from everybody. Microsoft said that they're gonna slow hiring the

same things they're slow and hiring. All right, Evanna, thank you so much for joining us. Ivana Delevska foundery, chief investment officer of Spear invest getting a update on all things technology. I want to check in with Liz McCormick. She's Chief corresponding Global macro Markets for Bloomberg News and a proud bachelor's and NBA graduate from the State University

of New Jersey. That would be Rutgers. Uh, Liz, some smart people tell me I need to pay attention to this yield curve, this two year ten year thing, which I think is inverted. Is that something you worry about? Is that something that you and the smart people in the credit markets think about. Well, it seems like and

go are you um? It seems like definitely. You know, the yield curve when it gets inverted always is kind of in the focus, right because you know, historically and you know a lot of the research was done on the broad curve three month rades versus tenure, which isn't inverted yet, but the two year tenure, like you said, drives a lot of focus. It builds on these recession fears because inverting curves have been linked to recession. So yeah, I don't think you could ignore it, whether you might

want to or not. But yeah, it's kind of adding to you know, a lot of the comments were seeing that the Fed might tighten us into a recession, tighten us into a recession. But we've got about I think a week and a half till or no, wait now, seven days I'm sorry, right, Tuesday, seven eight days until the Federal Reserve next Federal Reserve meeting. Liz, there's this big debate about seventy five or a hundred at the moment. How much more of a difference does a hundred really

make relative to seventy five? As we know Governor Chris Waller, I think it was last week that Mike McKee interviewed him, said seventy five is still a lot. Do we really need that extra five? Right? And I thought that was an interesting point he made, like kind of in a way, what does it matter? I mean, I think it's more psychological because I think he's right. Obviously, seventy five and two in a row. You know, they just did seventy five in June, which was the huge move they haven't

didn't hadn't done since night before. So I think he's right. I mean, I think it's it would just kind of a hundred BIPs would just kind of slap the market, like we are so all in on inflation. So the FED is saying, not that people don't think they're doing that now, but I think, you know, in the bag of Paneta did a hundred, which some people were joking

kind of grease the reels for the Fed. But I do think that, you know, the pricing is getting more like seventy five is looking like the things, So now a hundred would be a little surprong, So that doesn't like to surprise people. So it seems like people are leaning back to seventy five. What's the dollar telling us, Liz, I'm looking at the d X Y index. It's as high as it's been in you know, since like twenty years ago. Um, I can't hear a bear case for

the dollar out there. How do you and some of the smart folks out there that you talked to, How are you thinking about that U s. Dollar? Well, you know, the dollar has been a real headache for many nations, you know, like especially emerging economies which anytime the feed is aggressively tightening, even if they're trying to keep up, you know, there's a negative knock on to them and that they've seen their currencies really weak and even forget

velve economies. Look at the Euro which just you know rising today but you know recently went through parody. Um So a lot of these countries which are trying to combat inflation, and weaker currencies creates important inflation. So it's a headache for them. Um. The FED also, I mean, you know, strong dollar. You might think that's great for the US, but you know, the Fed to a point, it helps tighten financial conditions. So the FED is trying to kind of get their calculus right of how much

to live rates. They got the q T going, you know, they want to tighten financial conditions and they have. But the dollar, if it just keeps plowing on, that does speed things. You know that that's into their models. But yeah, I mean, I don't know, I think the people long dollars, we're really happy, right, Um, those who bought bonds in the US from foreign countries have done well because you know, let's just assume that even they're flat on their bonds,

they convert those dollars back to their home currency. That's an advantage. So there's people who have one from that. But it is creating some kind of more fundamental headaches for some nations. Fundamental head aches for some nations, including the entire euro Area, which brings us to the e c B. I believe they're meeting on Thursday. There are calls out here for not a basis point hike, but

a fifty basis point hike. This week, Liz can explain to our international audience the significance of that fifty Well, yeah, you know, the ECB has been, you know, flower to move than such like the FED. As far as rates, Um, that's one thing that hurt the euro But you know, Christine Lagarde had laid out in the last meeting that hey,

kind of preset we're gonna raise rates. We were looking for about twenty five basis points, and of course we gave some caveats of data changes, but for them to kind of jump on these kind of more aggressive bandwagon like seems to be leaked, but at least some of the hawks at the ECB, you know, that would be a big move. I mean, number one, it would show that central bank is really, really, you know, focused on inflation, you know, more than maybe some people thought, or you know,

it's willing to be more aggressive. Um. It also might help some of these display alreadies. You know, we've seen the euro rally today off those expectations, the markets pricing about as does the ECB do twenty five or fifty basis points um, but would kind of bring them more in line. Of course, the b o J is a whole separate story, but with a lot of central banks that are tightening quite aggressively. You mentioned it be a j and I just want to get your thoughts there.

I mean, we we don't talk about Japan that much relative to Europe these days. But what can the bo J do? What do you think? What are they signaling right now? Well, it seems like they're single signaling that they're going to keep their policies that they've been on the dobsh side. There they have yeel curve control going on which they're targeting the tenure yield to not go above a quarter percentage point over there, and there was

a lot of speculation for a while. Of course, the end has been very weak that the b o j may have to give this up. It's costing them too much to defend this as rates are rising all over, they have a weaker currency. But it seems like people are starting to say, well, it seems for an the Bank of Japan was going to leave this. You know,

they wanted inflation for a long long time. Now there's beings some so I think most economists think they'd be hard pressed to reverse course now, even though the you know, they're most of their peers are tightening um. But you know, they've been wanting this two percent inflation level, so you know, to have a little bit of hot inflation is not so bad for them, and at least it seems to be the consensus view. Alright, good stuff, Liz McCormick. Appreciate

getting your thoughts as always. Liz McCormick, Chief Correspondent, Global Macro Markets for Bloomberg News. Okay, all right, let's talk technology. I'm looking at the you know, the SMP. We're down almost almost year to day. But when you look at the tech heavy nastack that's down almost thirty percent year to date. And you think about the nastack tech stocks, they've really lead this market since a great financial crisis,

but certainly under performing year to date this year. Let's get a little bit of a preview because we're gonna have some tech earnings really in earnest start next week. We've got uh Netflix after the close tonight, Ivana the left, founder and chief investment officer of Spear invest joins us. Ivana again the underperformance attack this year, Um, what's your view of the tech space here? Is there still? Is this still a core part of people's portfolio? Should it be? Well?

I believe it should. Then I believe this major pubic presents a really good, attractive, it really attractive entry point. If you look at tech the underperformance with them now that being down, if you look at the big innovators in the space, they're down significantly more than that. So within our coverage universe, companies that have delivered on earnings

and had solid outlooks are still down. Some companies that had some hiccups are down seventy and you have somewhere like the business model is in questions that are down. So we think the sweet spot is to look into uh, this area of stocks that are actually performing pretty well. The fundamentals are strong, but you can still get these stops cheaper compared to what you could have gotten a

year ago. How else do you divide the technology sector other than you know, innovators UM or by sort of executing on business strategy in terms of you know, the products they make or the services they provide. So we are we've focused on industrial technology. The way we look at technology more broadly is either consumer driven names or industrial or enterprise driven companies. So in the last text cycle, we saw a lot of in the innovation in the

consumer space where you had between streaming social media. Those were really the big companies that drove that drove the text cycle. Going forward, we think industrial and enterprise technology will be the big driver of the of the next cycle. We think a lot of the innovation in tech has been around data, how to use data, how to store it in the cloud, how to secure it well, and then how to use it and use processes like ai UM.

So we think we're just at the cost of um where we can start using some of these technologies into mainstream businesses or traditional businesses like autos aerospace, and there is a real potential to transform this entire end market. So on that end, Ivanna a lot of folks when they are talking about the future, the next three or five years of where investors should really think about the text act, they say cyber security. How do you think

about cybersecurity? What's your view on that space, and how do you think is the best way to play it. So we're really excited about cybersecurity. It's the most it's the largest team within within our portfolio. We have a publicly list todts uh Sphere Alpha with the ticker SPRX, and cybersecurity is one of the largest teams within that that that portfolio. We love the space for several several reasons. One of them is as architectures have changed and data

is no longer centralized. People are using either multiple devices or they're using data that store the cloud or at multiple clouds. So this change in architecture requires completely different cybersecurity solutions then you would have needed several years ago. So there are several of the space is pretty fragmented. There are several different areas that we like and we focus on that have over twenty up growth of just the end market. Endpoint security is one of them. Here

we like companies like crowd strikes. Another area is securing workloads to the cloud and within the clouds. Here a name is the scaler. And then for people that want to play a more platform alo approach, power out on networks is a good way to play where they play both on the endpoint UM and the traditional firewall firewall products. What about AI UM it's something we hear so much

about and you know, investors put so much faith in it. Obviously, eventually the machines are going to turn against us and then you'll feel guilty about all the money you made. But is it a good place to go into right now? Well? Yeah, So it's very interesting because it's been a team for us over the past few years, but we really didn't have any significant investments and as there weren't any ways to play that scale. And over the past year we've seen a lot of developments where AI is becoming at

the core of many processes. So even back to cybersecurity, even if you look at cybersecurity, a lot of the new products are AI based. So Crowdstrate products are AI and machine learning based this kaler's products, same thing. So it's really gaining mainstream adoption. And this is just for running like processes that you wouldn't necessarily be able to even do manually. Right. Uh, this algorithms can pick up on a normally is by just by training training the model.

So we think is going to gain adoption to even more mainstream like autonomous driving. We still believe that several years away because it is a pretty complex problem, but we do see AI is gaining pretty uh pretty broad adoption. Avana just real quick thirty seconds. Bloomberg Broker story yesterday that Apple may slow some hiring in certain businesses and that we've seen that from other companies. We've seen that from other companies. Do you get a sense of Silicon

Valley is kind of gearing up for a recession? Yeah? Absolutely. I mean at this point we are at a at a point where recession is almost a foregone conclusion. Um, We're we trucked a lot of industrial data points and things really became really really turned even since since March, we started seeing the trucking market soft and consumer discretionary soften, and that's really now just been affecting brother at the broad market. So things have just spread to like manufacturing,

things have spread to technology. So we're gonna see this from everybody. Microsoft said that they're gonna slow hiring thing. They're slowing hiring all right, Evana, thank you so much for joining us. Ivana de Levska, founder and chief investment Officer of Spear invest getting a update on all things technology. Nationale Basket joins is here in a Bloomberg Interactive broker studio for our next question on what're bringing our next guest,

we'll talk a little fintech. Yeah, it's perfect timing to have Matt's left chin with us. He's the CEO of a firm. It's just the day after big bank earnings, guys, when we have had some optimism on the consumer, but it left a lot of investors with a lot of worry that a lot of consumers around the country might be buying basic goods on credit given the inflationary crunch. And so Max, you're a great person to talk to about the real state that the consumer is in. You know,

you're buy now, pay later. Craze has really become so popular in the last couple of years. It's now taking different shapes. How are you seeing the health of the consumer when inflation is just troubling them everywhere? Thank you for having me, I think I would so. Summer right is as still healthy but concerned. We saw it just the fourth or July weekend, really healthy spending. So we you know, ten x in concert tickets. People are trying to get out COVID is over. They can't take it anymore.

They gotta go see a concert. Airline purchases up three x year on year. Bridle is really healthy. You know, it's the year of weddings. People are finally getting married after all the postponements, and so there's a lot of good what I would consider to be healthy spending. That said, just in our conversations with our consumers surveys, we see that vast majority are concerned about inflation. They're spending power is weakening fairly quickly. They're turning to Binopaulator and Affirm

in particular to stretch their dollar. And so you're right there, there's some something to be worried about in the horizon, but for the moment, they're still feeling pretty good. So Max talked to us about I'm looking at your stock down seventy year, Dad, I know a lot of the tech stocks have taken it on the chin here uh fintech in particular. Kind of what do you tell your investors, your employees about kind of the future of the of the company, how the prospects for the company as it

relates to its stock price. I think most, if not I hope almost all of my employees and certainly many of my investors joined the affirm mission because they believe in it and are very much concerned with the long term as opposed to the immediate. We're a pretty good company as far as uh down stocks are concerned. But we've been executing really, really well. If you look at our core the earnings. We've only been public for just

over a year and a half. We continue to really perform and deliver all the numbers that we said we would. We continue to grow, we continue to maintain all the credit metrics that we've committed to. So I'm just very very focused on delivering this long term value to my shareholders, and I think my employees are very supportive of that. Are you concerned at all about accumulating debt when it

comes to using this model. I mean, we're already talking about people switching more from using their debit cards to using their credit cards. UM. It's something that also has been a warning. UM. I want to say from some of the major investors in the market at the moment, is that something you're concerned about leverage? UM. I am concernedout leverage, but I would argue that folks that are turning their eye to and B n p L are concerned about the exact wrong thing. It's credit cards that

should be worried about. There's the by now, pay later. Credit cards are by now and pay forever. As soon as you swipe that card, you're gonna start paying interest and interest on interest. Vast majority of Americans are revolving the very very small percentage of people who really understand what their credit card terms and conditions say. If you look at a firm, it's a much about alternative. We

don't charge lead fees, we don't do differred interest. We make sure that you cannot pay more than we showed you on the very first page when you're signing up for the transaction, and we approve or decline every single transaction a consumer asks for it, which allows us to be much safer as a lender. But also allows consumers to be very clear as to when they're over attending themselves.

So I'm a huge believer. Obviously I'm a little bit biased by not appealing a model, but beyond that, I'm I'm a believer in it as a replacement for credit cards. I'm really curious, what should you not buy now pay later with. You know, there's a lot of stories about you know, a lot of consumers putting a lot of money on credit on by now pay later, just kind of spreading out their financial lives in a significant way, and finances are starting to get stretched under this inflationary environment.

And I really believe that byompulator is a better alternative to credit cards. I think, if you're revolving and revolving forever, just because card cards have been around, can you buy anything on it? You know, we are primarily offered at the integrated point of sale, so there are many things that are not yet integrated. Plenty of places for us to go and partner with merchants. That said, we do believe that byopay later is a better model and should

be used ultimately for everything. Everywhere you think you should use your credit card, I think you should stop and think and switch to a firm. Alright, Max, great stuff. I really appreciate you taking some time out of the day, Max Election, founder and CEO of the company called firm.

A f r M is the nastack symbol you can type into your Bloomberg terminal to get a sense of what's going on there in the buy now, pay later space, which is a fascinating space, hnale Um and I think investors are just trying to get a handle what the risk profile is, especially as interest rates start to rise. I think it's an interesting option for consumers, but there

are a lot of questions. You know, in the past, there's been a lot of behaviors like you can and you can't do this with a firm, by the way, but by by now pay later on credit and so you do see some double averaging out there. But again we're gonna leave Max outill clear in this one sale. Thanks so much for joining us. Shall Bass that covers all things Wall Street for us, and we appreciate her chiming in here with Max Election. Thanks for listening to

the Bloomberg Markets podcast. You can subscribe and listen to interviews of Apple Podcasts or whatever podcast platform you prefer I'm Matt Miller. I'm on Twitter at Matt Miller three, put on Falsewheeney. I'm on twit her at pt Sweeney Before the podcast. You can always catch us worldwide at Bloomberg Radio