December 4, 2023 • 41 mins
Peter Jackson, CEO of Flutter discusses the burgeoning business of sports betting. Mark Dixon, CEO and Founder of IWG talks about the growth of the hybrid work model. Bloomberg Businessweek Editor Joel Weber and Bloomberg News Technology Managing Editor Mark Milian discuss Anduril's tiny, reusable fighter jet. And we Drive to the Close with Jimmy Lee, CEO at Wealth Consulting Group.
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Speaker 1 (00:01):
This is Bloomberg Business Wait inside from the reporters and
editors who bring you America's most trusted business magazine, plus
global business, finance and tech news. The Bloomberg Business Week
Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2 (00:20):
Hey, sports betting, Carol, It's exploded in the US since
twenty eighteen. That was when the Supreme Court allowed such
gambling to expand beyond Nevada. Some three dozen states now
allow sports betting, with the business generating more than ten
billion dollars in revenue just over the last twelve months.
That's according to the market researcher Vixio.
Speaker 3 (00:37):
Well, we've got with.
Speaker 4 (00:38):
Us the head of the parent company of one of
the dominant players in US sports betting. Peter Jackson is
a CEO Flutter, It's a publicly traded owner of fan Duel.
He joins us on Zoom from the UK. Peter, So
nice to have you here with Tim and myself.
Speaker 3 (00:51):
Let's get right to it.
Speaker 4 (00:52):
First of all, later this year, I think early next year,
you're going to be doing a duelisting in the US,
so you'll be traded on the New York Stockerstreet and
the London Stock Exchange. Everything moving ahead as planned.
Speaker 5 (01:04):
Yes, Look, we're very excited about it. So the plan
is that in quarter one next year we will list
our shares on the New York Stock Exchange, so American
investors will be able to buy into Flutter that stage
on their own exchange.
Speaker 2 (01:19):
So what was the decision behind that.
Speaker 5 (01:22):
Look, it's something that we've considered for some time and
it's not straightforward, but we're very excited about it. You know,
I think it's going to be a great opportunity for
American investors to invest in Flutter. It will give us
access to that US capital market, the deepest liquidity pool
in the world.
Speaker 6 (01:41):
We know that.
Speaker 5 (01:42):
You know, actually having a US listed asset will help
us from a retention attraction of talent in America. That's
important for us as a business. And look, we are
the world's leading gaming business and being listed on the
New York Stock Exchange for us like the right thing
to do for us.
Speaker 4 (02:00):
How do you see yourself kind of holding a high
market share in the US sports gaming market, You're.
Speaker 3 (02:05):
Going to have some competition.
Speaker 4 (02:06):
It's pretty you know competitive marketplace, and some big players already.
Speaker 5 (02:12):
It's never been easy from the day we started. But
you know, we deliver the best product to our customers
and we believe that's what sets us apart.
Speaker 2 (02:18):
So are you how concerned are you about the competition
that you have? You know with DraftKings right now roughly
thirty percent thirty one percent of the market at least
depending on you know, which analysts you speak to. How
does that rivalry work? Talk to us a little bit
about that.
Speaker 5 (02:36):
Look, Draft Kings and Fangil were the leading businesses originally
in daily fantasy, and we've both managed to take that
leadership position into sports and.
Speaker 2 (02:46):
You guys were going to merge at one point.
Speaker 5 (02:48):
Well there was talk of that a very long time ago,
in twenty seventeen. Yeah, but look, we were able to
take some of the product advantages we have globally and
bring them to audience. So the parlay product, which we've
become very famous for, is something we'd invented in Australia,
we've perfected in the UK, and we've brought to the
US audience and that's what's given us a real leg forward.
Speaker 2 (03:11):
Can you explain that for people who are not you know, gamblers, Yeah, gamblers,
I mean this is confusing stuff.
Speaker 5 (03:19):
Yeah, Look, It's a relatively straightforward concept and that you know,
if you're watching a game, So you know, if you're
watching the forty nine ers playing over the weekend, you
may wanted to have a bet on the outcome. You
may have thought the forty nine ers were going to win,
but there may also be a couple of players who
you wanted to highlight in the game, who were going
to score some touchdowns. There may be some passing yards
(03:40):
you wanted to capture as well in your bet, and
you can combine all those outcomes into one parlay and
put ten dollars on it and have fun watching the
matches if it comes in.
Speaker 4 (03:49):
So it gives you kind of multiple plays or multiple
bets if you will in one.
Speaker 5 (03:53):
Yeah, exactly, you know you have to hit each of
the legs, but if you do, you get much longer
odds and then you win more money.
Speaker 4 (04:00):
You know, what's Peter, what's the kind of what's the
growth that you've seen in that on your platform?
Speaker 5 (04:06):
We've seen some very extensive take up in it. You know,
if I look at something like the basketball season this year,
you know around you know, eighty percent of our customers
have placed a parlay bet already in this basketball season.
It's something that you know, has really caught the attention
of our betters across the US. They enjoy it and
it brings real excitement to them when they're watching a game.
Speaker 2 (04:28):
There must be regulatory challenges here, given that you know,
gambling like this is only legal in about three dozen
states in the US, and then you have the whole
European element here. Talk to us about tighter regulation specifically
in Europe. It seems like it's moving the other way
in the US, but you know, tighter REGs in Europe,
what's going on there.
Speaker 5 (04:47):
We operate globally, so you know there's many different environments
we participate in. In the UK, there's been some regulatory
reviews of the gambling sector. We changed our position in
the market begin last year and it stood us in
really good stead getting ahead of the regulatory changes. So
we're now taking market share very significantly in the in
(05:08):
the UK market, but around the world, all of our brands,
whether it's Fangil or Paddy Pan, the UK Sports Bed
in Australia, we tend to have the leading positions in
the market and we're very focused on recreational customers, people
who are spending ten pounds a week betting in the UK.
So this is small steak stuff and we take safe
(05:28):
A Gambling very seriously. You know, we want to lead
the race at the top and make sure we provide
all of our customers of the race safe experience.
Speaker 3 (05:36):
Peter.
Speaker 4 (05:36):
You know, I feel like we've been talking about online
gaming for a long time, you know, in the lead
up to the Supreme Court decision which ultimately came down
in twenty eighteen, and then since then, what would surprise
you think the Bloomberg audience about what's going on in
this industry? Is it the growth? And if so, give
us some numbers. What is it that would maybe surprise
our investing audience.
Speaker 5 (05:58):
I think there are several things that people always shopped
at when I talk to them about you know, what
we do. I mean, think about that that match right
when the you know, when the forty nine ers played
their conference rivals, the Eagles in Philly. You you know,
we have to sit there and calculate all the odds
of all the different actions that the players can be
undertaking real time. We're taking tens of thousands of bets
(06:22):
and customers and we have to assess how the probabilities
are changing, take those odds, match them, and you know,
when customers decide to take their money, you know, pay
them out quickly. So it's a very complex set of
challenges that we have from a from a data perspective.
You know, if you look at it that game, there
will have been a trillion different combinations of things that
people could bet on, so that it's an incredibly complicated
(06:45):
set of circumstances and simplifying that for customers so they
can easily find that what they want to bet on.
It is something that's not straightforward. So if you look
at the external references, we've been assessed to be the
best operator in our space. You know, Alison Cridcheck would
rate us number one, and we have been for two years.
(07:05):
And having that leading product is really important to make
sure that customers can cut through all of that complexity,
find the one to bet on and have some fun
when they're watching the game.
Speaker 2 (07:14):
Peter, what's the connection or the correlation with a strong
consumer and strengthen the economy when it comes to usage
of your product, what do you see out there?
Speaker 5 (07:25):
We've been operating for a very long time, as you
were saying, in some of our European markets, and if
we look at the sort of history from a macro perspective,
whilst ever there's strong levels of employment, we see strong
performance in our business. So, you know, around the world
at the moment, we haven't seen any signals that any
of the impact that we're seeing from US a fiscal
(07:48):
and macro perspective is impacting our business at all.
Speaker 2 (07:51):
What about the weakness that that you're reporting in Australia,
what's behind that weakness?
Speaker 5 (07:56):
Look, you're right, we have identified when we announced IQ's
we've seen some weakness in Australia. They had a very
significant lockdown in COVID in Australia. I'm not sure how
much your listeners followed it, you know, I mean there
were police on the streets making sure people can leave
their houses. It is a very difficult situation. So there's
been a big COVID reversion in Australia. They're also pushing
(08:17):
through some tax changes and there's also some regulatory regulatory impacts.
But you know, sports bet, which is our brand in Australia,
we are the you know, we're the biggest business with
a market leader for recreational customers. We just had we
just had the Melbourne Cup, you know, which was you know,
it's the race that stops the nation. So you know,
I'm proud of what the humor doing and the business
(08:40):
are gone to grow in the future for us.
Speaker 3 (08:42):
Then we get a run. So glad we could check in.
Speaker 4 (08:44):
Peter Jackson, the CEO Flutter, joining us on zoom from
the UK.
Speaker 1 (08:48):
You're listening to the Bloomberg Business Week podcast. Catch us
live weekday afternoons from three to six Eastern Listen on
Bloomberg dot com, the iHeartRadio app and the Bloomberg Business app,
or watch live on YouTube.
Speaker 7 (09:02):
Well.
Speaker 4 (09:02):
As the COVID pandemic fades into the past, many things
have returned to normal. The world of work has not. Companies, employees,
and governments still figuring out how to adapt to lasting
changes to corporate life sparked by widespread lockdowns that put
millions onto a work from home schedule. At stakes at
stake really worldwide. Aren't just norms for office life, but
really the economic health of big cities as well, particularly
(09:24):
in the United States. We have a great voice to
talk to us about what's going on in the workplace environment.
Speaker 2 (09:28):
Yeah, let's checked in with him a little over a
year ago. It feels like so much has happened, and
since then, so much has been talked about. One company,
one person who's at a front seat to all of
this is the London listed office space provider IWG. We've
got back with us Mark Dixon, Founder executive director CEO
of IWG, that's International Workplace Group. He's with us here
in our Bloomberg Interactive Broker studio in town for the
(09:50):
company's investor day tomorrow. But you were just telling us
that you're also here because you were in the Midwest
as well. Talk to us a little bit about the
footprint that you have and where else you've traveled.
Speaker 8 (09:59):
Yeah, US is our biggest market's about there's more than
half of the business, and we've been here for more
than thirty years in the US, but the growth is
now really quite dramatic in terms of how we're growing
the platform, how we're growing the number of buildings we
(10:19):
have across the country. So I I've just come from
the Midwest from Minnesota where I've been doing site visits.
But you know, we're growing the business about fifty percent
growth rates in the US and it's got the place
with the highest take up of hybrid working. And so
it's very exciting, so invested day tomorrow, but very useful
(10:43):
to drop in and have a look at what we're
doing in the market.
Speaker 4 (10:46):
So mark return to office, work from home hybrid, what's
winning hybrid?
Speaker 8 (10:52):
So you have to imagine a new world driven by technology.
So everyone a lot of the narrative sort of it
thinks that things are going to go back to normal
and everyone's going to come back to Manhattan. That's not
going to happen. People want can and want to work
(11:12):
at places near to where they live. They don't want
to commute. So the elephant in the room is commuting.
It's not people are working from offices, they just want
to do it locally. Hybrid is a combination of work
from home, work from near to home, and come into
someone like Manhattan or Chicago once a month, get together
(11:32):
with colleagues, business reviews, collaborate.
Speaker 2 (11:35):
So what does that mean for a market like New
York City for example?
Speaker 8 (11:39):
For New York City, it'll need to reinvent itself. I mean,
you can see it coming back here. It's probably a
little over a year since I was last in New
York City. I mean it's more vacant I didn't think
it could get more vacant.
Speaker 2 (11:52):
You think it's more vacant than a year ago.
Speaker 8 (11:53):
Oh, yes, absolutely. I mean you can see it at
the retail level and then you can just got to
look up in the bill. Some mean, look, it's my
I've been doing this for many thirty five years, so
I can tell looking at buildings where they're occupied or not.
There's a lot of vacancy, a lot of sublet and
you know, it's places like New York very very difficult
(12:16):
places and expensive places, time consuming places to commute to
for normal workers. So unless you live here, it's not convenient,
and especially downtown. If you go downtown, you've got that
double commute. So where you have that, it's you know
that people don't want to do that.
Speaker 4 (12:33):
It makes complete sense because I feel like for many
of us who've come back to the pandemic, I like
being actually back in the office.
Speaker 3 (12:39):
I'm so tired of commuting though. I'm tired of it
like you just and you when you have that break
that we've.
Speaker 2 (12:44):
Done, you're going to keep doing it.
Speaker 4 (12:46):
Yeah, I'm not giving up my card anymore, my commuting card.
You work with the likes of or have Disney Uber, Microsoft,
black Rocks Spotify, which got news that it's cutting fifteen
hundred jobs earlier. We got that news Disney earlier this
year again the first round of seven thousand expected job cuts.
Any of that working its way into less demand for
what you are doing, or help me understand more demand.
Speaker 3 (13:11):
You see.
Speaker 8 (13:11):
What's happening is you've got globally pretty much a difficult economy,
so corporations are looking at ways to be more efficient,
to get more productivity, to cut costs, so more and
more a move. You have to imagine us as providing
a platform for work and support of workers. You know,
(13:33):
at the moment in the US, as an example, we've
got twelve hundred buildings every state. We're adding six hundred
buildings next year, so you get this sort of work platform.
It costs half the price, it's near where your people
want to be. And we've also do US airport's airside,
we do railway stations, rest stops, so it's a work
(13:55):
from anywhere. It's not just office buildings, and the future,
a technology powered future, is about being productive wherever you are,
and it's about getting the most overt workforce, and that's
what companies are looking for.
Speaker 3 (14:08):
Today, So what kind of indicator are you? So if
a you know what I mean, if a company is looking.
Speaker 4 (14:13):
To cut costs and tap into more of you, is
that just a smart company or is it a company
feeling squeezed and they're looking to cut like you know
what I'm trying it is because I assume as they
need more space, Well.
Speaker 8 (14:25):
It's not how they save money, is they have less space.
It's a bit like Uber. You don't have a car
in every city you travel to Chicago, you take an Uber,
and you take an Uber when you need it. You
don't have one sitting there all the time. And what
we're doing on our platform, we've got eight million people
using it. They you know, you one day you're in Chicago,
(14:47):
the next day you're working from close to home. We
also support nearly about eight hundred thousand people that work
from home. We have a whole product range that supports
home workers. So it's you know, it's about a technology,
our workplace that's available anywhere. Our job is to create
productive workplaces so that people can do the best work.
Speaker 2 (15:09):
But it's not coworking.
Speaker 8 (15:10):
We do coworking offices, we do work from home, we
do drop in small, little things like a phone box
that you can use in airports. Do your teams?
Speaker 2 (15:22):
How did you watch the bankruptcy of we workplay out?
Speaker 8 (15:27):
What it was wrong, wasn't it?
Speaker 4 (15:28):
I mean it's but they weren't wrong in their concepts.
Speaker 8 (15:32):
Absolutely not wrong. They were wrong in their execution. I mean,
I've been doing this business along. I started with one
building in Brussels in nineteen eighty nine. We've now got
just a little over four thousand that's been pretty much
sell funded. We've had very little capital put into the business,
so we've reinvested capital. They in the contrary, you know,
(15:55):
they've used a huge amount of capital. And so it's
just a different discipline, right idea, It's all about the execution.
This is a detailed and difficult operational business, not easy.
Speaker 2 (16:06):
A lot of people misjudge it.
Speaker 4 (16:08):
How does the business model I'm a bit daft. How
does the business model work in terms of you because
you get investor money, or how does it works because
you don't own because we were getting some clific kitchen
you don't own.
Speaker 8 (16:20):
We have a platform so and that platform is a
digital platform, a sales platform, and we have huge numbers
of customers sitting on one side of the platform. If
you own a property, you're an institution, you're a private owner.
You want to put your property on our platform, you
can do that and we'll operate it for you. That's
(16:42):
what we do. So we're working with the biggest institutions
in the world, insurance companies and someone who are putting
property on the platform so that it's sold in a
hybrid way. We're the middleman in all of that.
Speaker 4 (16:54):
You get a piece of the business piece, so you
don't care if that property isn't rented.
Speaker 3 (16:59):
Out completely of the month. We do well, you do
because you'd make more money off of.
Speaker 8 (17:02):
It, and we want our partners to be successful, so
we're very focused on that.
Speaker 2 (17:06):
Do you have any Are you in any long term leases?
Speaker 8 (17:09):
We have some, We have almost no long term We
have leases, but all of them are short. We option
long and we keep them short. Yeah, pretty much a
year we can get out of anything.
Speaker 3 (17:24):
How has the interest rate environment impacted you?
Speaker 8 (17:27):
If we are where our net debt is small, next
year it would be about the same as our rebit
so about one time.
Speaker 4 (17:34):
But any of your customers who have properties, have they
have you have some of them gone under or because
of the high rate, some.
Speaker 8 (17:42):
Of them, a few, very few have gone on. But
then you get special services. We provide cash flow in
the building, and whoever takes the building, they like our
cash flow.
Speaker 2 (17:51):
So we're the areas of the world that you're concerned
about in terms of economies, economic activity, the consumer.
Speaker 8 (17:58):
I mean, I think there's a not a global squeeze,
but it's pretty much. I think there's a universal squeeze,
both on companies and on the consumer. Is pretty widespread.
I mean, for me, and I've been business for nearly
fifty years, you know how quickly interest rates came up.
(18:19):
Has caught everyone, you know, unawares, if you like. On
the one hand, and that's called businesses that have debt
and that have taken out that debt obviously at low
interest rate comes back higher, but also the consumer cost
of living and squeezing them as well. So that's forcing
companies to take action, whether as you said, whether that's
cutting people are cutting costs, and that's quite a good
(18:41):
environment for US.
Speaker 3 (18:42):
Mark just got like twenty seconds left here.
Speaker 4 (18:43):
So based on what you're seeing, what you are doing,
You've talked about some some pretty impressive growth, especially when
the US market recession. Next year global recess from US
recession very quickly.
Speaker 8 (18:54):
I would say difficult year, small recession.
Speaker 3 (18:59):
Difficult years recession.
Speaker 4 (19:01):
That means a lot because you definitely have like a
front receipt in terms of what many companies are doing.
Come back, please sooner more than a one year. Mark
Dickson is founder, executive director and CEO of IWG International
Workplace Group.
Speaker 3 (19:12):
Here in studio, you're.
Speaker 1 (19:14):
Listening to the Bloomberg Business Week podcast. Catch us live
weekday afternoons from three to six Eastern on Bloomberg Radio,
the Bloomberg Business app, and YouTube. You can also listen
live on Amazon Alexa from our flagship New York station.
Just say Alexa play Bloomberg eleven thirty with us.
Speaker 2 (19:33):
We got Mark Million, Bloomberg News Technology editor and also
the editor of Bloomberg BusinessWeek, Joel Weber, both here in
our Bloomberg Interactive Brokers studio. This is really cool behind
the scenes, look at Anderilla, closely held venture capital backed
company that's competing with the likes of Raithean Joel.
Speaker 9 (19:50):
Yet and the company had been You're right into Oculus
and developed Oculus, which now Meta Facebook acquired an. Ever
since then, it has been more interested in doing military applications.
And this road Runner, which announced on Friday and actually
had an exclusive look at it, attempts to solve a
(20:12):
big problem for the US military. Mark what is that problem?
Speaker 6 (20:16):
The problem is drones. And so in particular in Iraq
and Syria, they the militants there have been able to
import these consumer drones, like the kinds that you buy
for the holidays for your kids. They take them apart,
they attach bombs to them, and they are able to
assemble so many so cheaply that it's become a huge
(20:39):
threat to American forces.
Speaker 2 (20:40):
I mean, these are the drones that are essentially being
used by Ukrainian forces to bomb Russian forces at are
really low cost.
Speaker 9 (20:49):
And right back at Ukraine.
Speaker 2 (20:50):
Yeah, they're like taping Russia. They're taping bombs to them.
Speaker 6 (20:53):
Yes, that's example of an ally using it as a
as a cheap way to kind of part themselves in war.
But it's also a huge threat to American troops and
so they've been working on ways to not just be
able to take out individual drones, but when forces create,
you know, militants create like what's what they call these
(21:14):
swarm assaults where there's like a bunch of them all
coming at at once. You need new technology to take
it out. So this is one answer to that. It's it's,
as you said, like almost a miniaturized fighter jet looking
thing that just goes in and uh and throws a
missile at these like swarms of drones, tries to take
them all out, and then it can it can go back,
(21:35):
and it can land and they can load another missile
onto it and send it back up.
Speaker 9 (21:39):
So how much do we think this technology is actually
gonna cost, because obviously the cost is the thing here.
You weaponize a drone, which I can do some holiday
shopping and acquire many druns. I'm not going to touch
the bomb part, but I can get the I can
get the drones h and I get I get what
we're going for here, Because ultimately it's like, how can
the US military bring the cost down with something that
(22:00):
could be reusable? So what kind of budget do I
need to acquire many of these road runners?
Speaker 6 (22:07):
So traditionally the US military was using patriot missiles just
like kind of the default option. Those can run like
four million dollars a missile. Anderl says that they can
make these these things, these road runners for in the
low six figures, so you know, one two hundred thousand
per unit. So if they can pull it off, and
(22:29):
to be clear, it's it's a star, it's an unproven company.
It's startups, not raytheon. So there's there's doubts about whether
they can pull it off. But if they can, the
US could save a lot of money.
Speaker 4 (22:39):
And it's all right, so so far, so good in
terms of how effective it is in terms of trials
and testing.
Speaker 6 (22:45):
Yeah, it's very early. It's a it's a brand new product.
But they say the US has ordered a bunch of
them and they expect them to be in the field
next year.
Speaker 9 (22:55):
So who else is attempting to come up with solutions
in this space? This is a huge problem, Like I mean,
US forces around the world just basically you know, you
with not that much technology, it becomes a serious problem.
And like you know, anderl can't be the only one
looking for looking at this base to provide potential.
Speaker 4 (23:17):
SLA And I have to say, reading the story, this
is what to me, I said, Okay, this is modern warfare,
this is war going forward, so you really need to
have something to counter it.
Speaker 6 (23:25):
Yeaheah. So the major defense contractors offer options that the USCS,
and again I mentioned the Patriot missile is kind of
the default. It's like, you know, tried and tested and
and they know it works. But Andrels is taking this
bet that they can kind of break into this market
with a very different option.
Speaker 2 (23:45):
Actually makes this point a couple times in the story
that even though this thing, the road Runner, has been unveiled,
it hasn't yet been manufactured at scale. And if there's
one thing that we've learned from testless troubles over the
last six years or so, manufacturing one or ten of
something isn't as difficult does manufacturing a large number doing
this stuff at scale? What are the experts Ashley spoke
(24:08):
to about scaling this say in terms of challenges here.
Speaker 6 (24:12):
Yeah, you're right, it's hard. And it's also not a
traditional consumer electronic where you can use uh, you know,
factories in China schedule.
Speaker 2 (24:20):
You can't buy one of these for the holidays for
your family.
Speaker 4 (24:23):
I'll try still, and but yeah, I mean there's always
the dark web, that's true.
Speaker 6 (24:29):
The philosophy inside this company has been to try to
do everything themselves, and so they're building their own factory capabilities,
their own factory lines, to try to be able to
build the whole thing, uh and do it in America,
which is kind of what the US government would like
to see.
Speaker 4 (24:43):
What's really kind of cool too, is they're not this
is one thing and hopefully if they get it up
and running, this is one thing, but they plan to
take this technology and spread it across other products.
Speaker 3 (24:52):
Right.
Speaker 6 (24:52):
Yeah, yeah, so ander Old already has a bunch of
different products that they sell to uh, to the US
and allies. They do like, you know, Century Towers, a
sort of like a virtual border wall that the US,
their border control has has purchased. But yeah, they've they've
(25:13):
said that they've spent these years developing all this new
technology and they think that it will They haven't gone
as specifics, but they think it some of it will
be useful to some of the other products that they're
working on.
Speaker 9 (25:24):
Okay, So something about this name strikes me as being
a little cheeky road redder. What is that a reference to?
Speaker 6 (25:32):
Yeah? So, so Raytheon has a product called Coyote, So
it's a Looney.
Speaker 9 (25:37):
Tunes Raytheon being a competitor.
Speaker 6 (25:39):
Of exactly right, So they're trying to stick it to
their much bigger rival.
Speaker 9 (25:46):
What is uh the coyote other than you know, just
trying to get the road Runner again and again and
again and again and never quite being.
Speaker 2 (25:54):
Able to it. What in the real world?
Speaker 9 (25:56):
What what is the coyote made by Ratheon do.
Speaker 6 (26:01):
It's another sort of like autonomous defense system that the
main innovation that Androl is talking up with this new
product is that it's reusable. It can land. Like various
companies including Androl, have built counter drone products that can
(26:21):
go and blow up a single drone that's flying around,
and so the main targets here are swarms of drones
and being able to reuse them so that it's you're
not having to buy a new one every single time
you take out.
Speaker 4 (26:34):
My understanding too, is it's just one person that's needed
to kind of actually run it right or operate it
rather than multiples.
Speaker 6 (26:41):
That's part of the pitch. Yeah, yeah, it remains me seen.
But yeah, the part you know, Androil builds this kind
of like software system that they call Lattice where you
can hook in all sorts of different defense products and
they're saying, you know this will work with that that
you can have them all kind of commune kate wirelessly
so you can see where all of your different road
(27:03):
runners are.
Speaker 2 (27:03):
It kind of sounds like the Ring camera system from Amazon,
but for you know.
Speaker 3 (27:08):
You're obsessed with your Ring camera system.
Speaker 2 (27:11):
You just add you know, you add the border wall
to it. I'll take a couple of drag and drop
into your car. I'll take a couple you know, road
runners throw man.
Speaker 9 (27:19):
Well, the bigger thing an opportunity here is obviously the
Vince budget gigantic and being able to crack it even
with something that you know mainly cost him the six figures,
but around the world at scale, if you can manufacture
it there, that's that's huge. But you know, the bigger
challenge here does seem like the US military being geared
(27:43):
for different wars than we've ever seen. And I think,
you know what, what we witnessed in Iraq earlier in
the two thousands was that the US military was basically
ill equipped to fight a certain type of war and
you know when when, And obviously Ashley has spent a
lot of time in this space, but like there seems
(28:04):
to be a new kind of war that the US
may not be ready for, and we're getting glimpses of it.
What else is Androil maybe developing that could help down
the line. Do we have any sense of what this
could look like.
Speaker 6 (28:20):
Yeah. The thing about defense contractors, they don't like to
talk to They don't like to talk about their weapons
until they're until they're ready. But but I mean, you
raised a really good point about the kind of like
the new realities of war. One of the one of
the interesting things and one of the things that Andrel
was trying to address, is this kind of like imbalance
in the in the economics of the of battling drones. Like,
(28:44):
like I said earlier, it's so cheap to assemble like
large quantities of drones and put bombs on them and
create some very powerful weapons and high high quantities. As
it stands now, it's very expensive to take them out.
And so it would cost so much more to blow
up these drones than it would cost to create like
(29:06):
a kamikaze drone that can kind can blow up and
harm a lot of soldiers. And so that's something that
Anderil is trying to address by by focusing on costs
as one of the main things.
Speaker 2 (29:16):
So I just want to make sure I understand the
product here that actually got to see it's a fighter
jet type of drone that takes off autonomously but then
has a and has an explosive projectile that destroys a drone.
The explosive projectile obviously not reusable, but the part that
it's launched from is the part that's reusable exactly.
Speaker 6 (29:36):
Well, so in the current model, it's not reusable once
it once it's it sends off, it's it's missile. The boy,
I mean, the thing tends to blow up and you
can't use it again. They say that they're close to
developing basically a V two that that what you did
there jet the jet can can be reused. So if
(29:58):
you send the jet out in the current model, you
send the jet out, it doesn't see anything that it
that it needs to blow up. It can come back
and it can land. That's that's like an innovation. It's
almost like a tiny SpaceX rocket.
Speaker 3 (30:11):
That's what I was thinking, right, It's the whole kind
of Tesla idea.
Speaker 6 (30:13):
Yeah, and it takes off and lands and it's similar.
It takes off vertically and then it kind of turns
and then flies like a like a jet and so
but but they say, you know, the next big invention
here in the next model will be able to fight,
like take out a drone and then come back and
land and you can load it up with another missile.
Speaker 4 (30:30):
It is, though, something we talk so much about disruption
in so many different spaces, and right it's been these
major defense contractors that have been so involved. But it's
really kind of fascinating to see this company just kind
of coming up potentially with something that would be very
dramatic and would become you know, certainly something that governments
would do.
Speaker 9 (30:45):
What of truck record do they have in this space?
Because this they've been toying around in the military application
space basically since they got out of the headset one, right.
Speaker 6 (30:55):
Yeah, so they're they're relatively new. I mean when you
can pair them to the major defense you know, raytheon
Boeing like that, you know, not they're not super tested,
but they they started early. Really they're started putting out
products early in the Trump administration and they seize on
that as like their first big opportunity was he was
(31:16):
talking a lot about the wall, like why don't we
sell him a virtual border wall? And they bought it.
And so they've like worked on some other products to
varying degrees of success. But they're really making a lot
of noise about this one because they see a really
big opportunity.
Speaker 4 (31:34):
I keep thinking, like, if this engine is so powerful,
like do they sell it to Bezos, you know who
wants to deliver things? Like is there some kind of
you know, commercial not just defense commercial application.
Speaker 9 (31:43):
Storied history of starting with military applications and then turning
finding the commercial finding the commercial application years later. But
I think to their credit, they have looked at this
as like, what is the problem that the US military
is facing in the yield, and how can we perhaps
protect American soldiers? And and that goes for allies as well.
(32:06):
I mean, like we will see where this application ends up,
because clearly as Ukraine is currently shown and other battlefields
around the world, like we will see more and more
and more drums, and currently those are are being used abroad.
But the technology is scary enough that it can be
used to really inflect pain everywhere.
Speaker 3 (32:28):
So yeah, first you got to make sure it works.
Speaker 2 (32:30):
Right, Yes, a good start, tested in the desert. Okay,
not around that anyone.
Speaker 3 (32:37):
All right?
Speaker 4 (32:38):
Note to self Mark Millian, thank you so much, really
appreciate you coming in and spend some time with us.
Bloomberg News Technology editor and of course the editor of
Bloomberg BusinessWeek.
Speaker 6 (32:45):
Tail where.
Speaker 5 (32:49):
Mark the journal?
Speaker 7 (32:53):
How about you let me drive?
Speaker 6 (32:55):
No, no, honey, please, I'll do the driving RIVELA.
Speaker 4 (33:01):
I want to try.
Speaker 5 (33:04):
It's a good question.
Speaker 1 (33:09):
This is good drive to the globe. Well on Bloomberg Radio.
Speaker 4 (33:15):
All right, everybody, just under eighteen minutes left in today's
trading session, getting ready to wrap up the Monday trade,
and our next guest is looking ahead to the new
year and finds it the most important theme for next
year is the shift from interest rates being the problem
to a tailwind.
Speaker 3 (33:29):
So let's ask him exactly what he means.
Speaker 2 (33:32):
Yeah, very please have him with us. Jimmy Lee is
founder and CEO at the registered investment advisor Wealth Consulting
Group based in Las Vegas. But he's here in our
Bloomberg Interactive Brokers studio right now.
Speaker 6 (33:42):
How are you great?
Speaker 3 (33:43):
Thanks for having me, and good to see y'all. Welcome
to Are you here to see the Christmas tree?
Speaker 7 (33:47):
Always come in December to see the Christmas tree?
Speaker 6 (33:49):
But we're actually here.
Speaker 7 (33:50):
We are here for a little bit of a firm
meeting and and uh personal reason, I bet that.
Speaker 2 (33:55):
The Christmas tree that they put on the sphere looks
really cool. I bet they would make a.
Speaker 3 (33:59):
Cool we're dying to see this sphere. Have you been
to this sphere?
Speaker 7 (34:02):
I haven't been to an event there, but I could
see it from my backyard. Seriously, so yes, what do
you stol. It's a pretty cool thing. But they put
some interesting stuff on there, right. So I was actually
at the F one event for one night and they
had some you know, it was right next to it,
so it was it was really.
Speaker 3 (34:15):
Neat November, you know.
Speaker 4 (34:19):
I first, let's talk about what happened in November, stock
rallying broadening out.
Speaker 3 (34:23):
That was a good sign.
Speaker 4 (34:24):
Yes, but you know, you're thinking about next year, and
you're thinking about the shift from the concern on interest
rates to some kind of tailwind.
Speaker 3 (34:33):
What tailwind in particular, Well.
Speaker 7 (34:35):
You know, this year I've personally been a little bit
of a contrarian, and so is our firm, in the
sense that we didn't think that we're going to see
a recession, the consumer was going to remain strong and
spending enough, which which has proven to be the case,
and that we could have a nice you know market
in terms of equity prices and going up which is
what we've seen so far, right, So I think that
that has played out. And I thought that maybe inflation
(34:58):
would come down a little sooner than what we've seen
in reality. But I think if there's going to be
any surprises to inflation, maybe it will be to the downside,
not to the upside. So I'm not in the higher
for longer camp. So I'm a little bit more in
the consensus now that maybe the Fed moves sooner than
what they're saying they're.
Speaker 1 (35:16):
Going to do.
Speaker 7 (35:16):
And that's really what's been helping the push you know,
the market higher. So the three months prior to November,
we lost what eight percent plus in the markets. In November,
what was really interesting was it was a broad base rally,
so you know, the S and P five hundred, Russel
two thousand, the equal weighted S and P five hundred
all did about the same, including the Dow and the
(35:37):
Nasdaq one hundred and the Nasdaq and the Magnificent seven
just did.
Speaker 6 (35:40):
A little bit better.
Speaker 7 (35:41):
So I start, I think we're seeing a little bit
of that, you know, closure of the gap between the
the you know, the seven stocks that really led.
Speaker 3 (35:48):
Great technical signe.
Speaker 7 (35:49):
It really is and I think you know, our base
case has been no recession. So if we don't go
into recession and somehow we get this super soft landing
that you know Pale has been trying to orchestrate, if
that does actually materialize, then I think cyclical start to
do better again.
Speaker 3 (36:05):
And I think you see rotation into some of those.
Speaker 7 (36:07):
Sectors that have been lagging, like small cap, mid cap,
even international.
Speaker 2 (36:12):
What's the market the equity market pricing in right now
in terms of rates, because it feels like, you know,
this equity market has gotten ahead of itself in the
sense of okay, rates are still high, but yes, it's
looking forward. It's looking for the FED to cut, but
what it's going to prompt the FED to cut? And if, when, if,
and when the Fed does cut, does the market then
move highers that already priced in?
Speaker 7 (36:33):
So I think that the market is predicting that the
FED may cut sooner than what they are saying right now.
But I think if what would have what would need
to happen, maybe sooner and more right, it would be
better inflation data, that would, you know, and also softer
economic activity but not too slow right.
Speaker 3 (36:49):
So I think a combination of.
Speaker 7 (36:50):
Those things and hopefully what will happen for stocks is
companies continue to perform well and their earnings are good,
and so all all of the things, all of those
things may be potentially happening, could lead us into I
think even a little bit more of a return before
end of the year this year in a Santa Claus rally,
and then maybe a few points higher back and forth.
But I think the market is going to price a
(37:12):
lot of that in. So in my opinion, by the
time we get our first cut, most of the returns
are probably going to be baked in for inter sensitive
type stocks like tech, real.
Speaker 6 (37:21):
Estate, other sectors.
Speaker 7 (37:23):
And then I think after that you'll start to see
a rotation into a wider gap between the tech stocks
and the other parts of the market. So by what
now between March and May, probably, I mean that's kind
of what the futures markets predicting and sort of buy
what specifically? But by what then you mean like what
time sectors? No, no, no sectors or or specific right,
(37:43):
I think that So I think Tech's got more room
to run.
Speaker 3 (37:46):
Sorry buy versus b y.
Speaker 7 (37:48):
Yes, So I think I think tech has more room
to run in sectors that will benefit from rates starting
to come down, but I think a lot of those
prices will get baked in before the actual first cut. Yeah,
and maybe get a little bit of a rally when
we get that first cut, but I think it'll be
priced in, and then after that, I think you will
see to see more of a rotation out of that
and into more of a difference into like small cabs
(38:10):
value stock cyccles.
Speaker 4 (38:11):
So help me out though, because tech is a lot
of stuff. Sure, so are you talking about the Magnificent
seven or I mean they're not all pure play?
Speaker 3 (38:20):
Maybe tech, but what kind of tech are you thinking?
That's kind of interesting right now?
Speaker 7 (38:24):
You know, I would say those seven stocks for sure,
but high priced, high priced stocks that are in.
Speaker 6 (38:29):
The tech area.
Speaker 7 (38:30):
And you know, while again I think we have another
rally for those stocks potentially because of rates continuing to
hopefully pause and maybe go down, but by the time
that happens, I think those it'll be baked in. And
as we've seen in the past with those companies, you know,
when there's a bad report or a bad quarter, they
get hurt pretty badly potentially. So I think investors need
(38:52):
to be aware that if you're beating the market this year,
you have to be super concentrated, so most investors should
be lagging the indexes right this year. And I think
buyers and investors need to be aware that when you're
buying this be five hundred, you're very concentrated, and you know,
thirty percent of your money could be in seven names.
Speaker 2 (39:08):
That's been but that's been the story for years in
the five hundred.
Speaker 3 (39:11):
Has everybody continue to say, don't buy it?
Speaker 5 (39:12):
You know?
Speaker 3 (39:13):
Yeah?
Speaker 2 (39:13):
And if it's not in Nvidia, you know, it's Apple
and Tesla and Microsoft and Google, Like does that matter?
Speaker 1 (39:19):
You know?
Speaker 7 (39:19):
I think money money, there's so much money going into
index products, yeah, through funds and ETFs that as long
as there's money going in the market, those companies are
going to get bid.
Speaker 2 (39:28):
You know, because on the on the account of that
they comprise so much of these index.
Speaker 7 (39:33):
Absolutely the market, right, I think there are where a
lot of growth is absolutely, but I think that there
are institutional investors and big investors that are starting to
want to be more diversified than just in those sectors
and in those stocks.
Speaker 6 (39:48):
And I think we're.
Speaker 7 (39:49):
Starting to see a little bit of that. And I
think a theme that may play out starting maybe you know,
sometime next year earlier on the next year might be
this rotation from that to other other areas and maybe
finally the people live in you know, international investors I
think will potentially have a chance to make some money
relative to the US.
Speaker 3 (40:09):
What just buy international index find I mean.
Speaker 7 (40:13):
Nobody really wants emerging markets these days, right, so I
think emerging markets might even get a little bit of
a bid. Yeah, but yes, developed international stocks, and I
think the idea of the dollar you know, you know,
has peaked and maybe going down further could help with that.
Speaker 3 (40:26):
Really quickly, this is going to feel random. Your big
companies based in Vegas.
Speaker 4 (40:30):
What's your take on gambling stocks, Flutter Pen, entertainment, DraftKings.
Speaker 3 (40:33):
Do you have any thought being in the midst of it?
Speaker 4 (40:35):
Not necessarily specifically the Flutter, Yeah, coming up, so I'm
curious for.
Speaker 7 (40:39):
Yeah, not specifically on those names, but I think that,
you know, gaming stocks is very dependent on how healthy
the consumer is. And fortunately there's still a lot of
money people, a lot of people like gamble, massive, fluent
and wealthier, have a lot of money sitting on the sidelines.
I mean, I don't know the latest data, six trillion
dollars almost just sitting in money market funds. Yeah, that
could also start chasing the markets too.
Speaker 3 (41:00):
We got a rund.
Speaker 4 (41:00):
Jimmy Lee, Happy Holidays, Founder and CEO at Wealth consult
Wealth Consulting Group.
Speaker 3 (41:05):
This is Bloomberg.
Speaker 1 (41:06):
This is the Bloomberg Business Week podcast of available on Apple, Spotify,
and anywhere else you can get your podcasts. Listen live
weekday afternoons from three to six Eastern on Bloomberg dot com,
the iHeartRadio app tune In, and the Bloomberg Business App.
You can also watch us live every weekday on YouTube
and always on the Bloomberg terminal
This is Bloomberg Business Wait inside from the reporters and
editors who bring you America's most trusted business magazine, plus
global business, finance and tech news. The Bloomberg Business Week
Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.
Speaker 2 (00:20):
Hey, sports betting, Carol, It's exploded in the US since
twenty eighteen. That was when the Supreme Court allowed such
gambling to expand beyond Nevada. Some three dozen states now
allow sports betting, with the business generating more than ten
billion dollars in revenue just over the last twelve months.
That's according to the market researcher Vixio.
Speaker 3 (00:37):
Well, we've got with.
Speaker 4 (00:38):
Us the head of the parent company of one of
the dominant players in US sports betting. Peter Jackson is
a CEO Flutter, It's a publicly traded owner of fan Duel.
He joins us on Zoom from the UK. Peter, So
nice to have you here with Tim and myself.
Speaker 3 (00:51):
Let's get right to it.
Speaker 4 (00:52):
First of all, later this year, I think early next year,
you're going to be doing a duelisting in the US,
so you'll be traded on the New York Stockerstreet and
the London Stock Exchange. Everything moving ahead as planned.
Speaker 5 (01:04):
Yes, Look, we're very excited about it. So the plan
is that in quarter one next year we will list
our shares on the New York Stock Exchange, so American
investors will be able to buy into Flutter that stage
on their own exchange.
Speaker 2 (01:19):
So what was the decision behind that.
Speaker 5 (01:22):
Look, it's something that we've considered for some time and
it's not straightforward, but we're very excited about it. You know,
I think it's going to be a great opportunity for
American investors to invest in Flutter. It will give us
access to that US capital market, the deepest liquidity pool
in the world.
Speaker 6 (01:41):
We know that.
Speaker 5 (01:42):
You know, actually having a US listed asset will help
us from a retention attraction of talent in America. That's
important for us as a business. And look, we are
the world's leading gaming business and being listed on the
New York Stock Exchange for us like the right thing
to do for us.
Speaker 4 (02:00):
How do you see yourself kind of holding a high
market share in the US sports gaming market, You're.
Speaker 3 (02:05):
Going to have some competition.
Speaker 4 (02:06):
It's pretty you know competitive marketplace, and some big players already.
Speaker 5 (02:12):
It's never been easy from the day we started. But
you know, we deliver the best product to our customers
and we believe that's what sets us apart.
Speaker 2 (02:18):
So are you how concerned are you about the competition
that you have? You know with DraftKings right now roughly
thirty percent thirty one percent of the market at least
depending on you know, which analysts you speak to. How
does that rivalry work? Talk to us a little bit
about that.
Speaker 5 (02:36):
Look, Draft Kings and Fangil were the leading businesses originally
in daily fantasy, and we've both managed to take that
leadership position into sports and.
Speaker 2 (02:46):
You guys were going to merge at one point.
Speaker 5 (02:48):
Well there was talk of that a very long time ago,
in twenty seventeen. Yeah, but look, we were able to
take some of the product advantages we have globally and
bring them to audience. So the parlay product, which we've
become very famous for, is something we'd invented in Australia,
we've perfected in the UK, and we've brought to the
US audience and that's what's given us a real leg forward.
Speaker 2 (03:11):
Can you explain that for people who are not you know, gamblers, Yeah, gamblers,
I mean this is confusing stuff.
Speaker 5 (03:19):
Yeah, Look, It's a relatively straightforward concept and that you know,
if you're watching a game, So you know, if you're
watching the forty nine ers playing over the weekend, you
may wanted to have a bet on the outcome. You
may have thought the forty nine ers were going to win,
but there may also be a couple of players who
you wanted to highlight in the game, who were going
to score some touchdowns. There may be some passing yards
(03:40):
you wanted to capture as well in your bet, and
you can combine all those outcomes into one parlay and
put ten dollars on it and have fun watching the
matches if it comes in.
Speaker 4 (03:49):
So it gives you kind of multiple plays or multiple
bets if you will in one.
Speaker 5 (03:53):
Yeah, exactly, you know you have to hit each of
the legs, but if you do, you get much longer
odds and then you win more money.
Speaker 4 (04:00):
You know, what's Peter, what's the kind of what's the
growth that you've seen in that on your platform?
Speaker 5 (04:06):
We've seen some very extensive take up in it. You know,
if I look at something like the basketball season this year,
you know around you know, eighty percent of our customers
have placed a parlay bet already in this basketball season.
It's something that you know, has really caught the attention
of our betters across the US. They enjoy it and
it brings real excitement to them when they're watching a game.
Speaker 2 (04:28):
There must be regulatory challenges here, given that you know,
gambling like this is only legal in about three dozen
states in the US, and then you have the whole
European element here. Talk to us about tighter regulation specifically
in Europe. It seems like it's moving the other way
in the US, but you know, tighter REGs in Europe,
what's going on there.
Speaker 5 (04:47):
We operate globally, so you know there's many different environments
we participate in. In the UK, there's been some regulatory
reviews of the gambling sector. We changed our position in
the market begin last year and it stood us in
really good stead getting ahead of the regulatory changes. So
we're now taking market share very significantly in the in
(05:08):
the UK market, but around the world, all of our brands,
whether it's Fangil or Paddy Pan, the UK Sports Bed
in Australia, we tend to have the leading positions in
the market and we're very focused on recreational customers, people
who are spending ten pounds a week betting in the UK.
So this is small steak stuff and we take safe
(05:28):
A Gambling very seriously. You know, we want to lead
the race at the top and make sure we provide
all of our customers of the race safe experience.
Speaker 3 (05:36):
Peter.
Speaker 4 (05:36):
You know, I feel like we've been talking about online
gaming for a long time, you know, in the lead
up to the Supreme Court decision which ultimately came down
in twenty eighteen, and then since then, what would surprise
you think the Bloomberg audience about what's going on in
this industry? Is it the growth? And if so, give
us some numbers. What is it that would maybe surprise
our investing audience.
Speaker 5 (05:58):
I think there are several things that people always shopped
at when I talk to them about you know, what
we do. I mean, think about that that match right
when the you know, when the forty nine ers played
their conference rivals, the Eagles in Philly. You you know,
we have to sit there and calculate all the odds
of all the different actions that the players can be
undertaking real time. We're taking tens of thousands of bets
(06:22):
and customers and we have to assess how the probabilities
are changing, take those odds, match them, and you know,
when customers decide to take their money, you know, pay
them out quickly. So it's a very complex set of
challenges that we have from a from a data perspective.
You know, if you look at it that game, there
will have been a trillion different combinations of things that
people could bet on, so that it's an incredibly complicated
(06:45):
set of circumstances and simplifying that for customers so they
can easily find that what they want to bet on.
It is something that's not straightforward. So if you look
at the external references, we've been assessed to be the
best operator in our space. You know, Alison Cridcheck would
rate us number one, and we have been for two years.
(07:05):
And having that leading product is really important to make
sure that customers can cut through all of that complexity,
find the one to bet on and have some fun
when they're watching the game.
Speaker 2 (07:14):
Peter, what's the connection or the correlation with a strong
consumer and strengthen the economy when it comes to usage
of your product, what do you see out there?
Speaker 5 (07:25):
We've been operating for a very long time, as you
were saying, in some of our European markets, and if
we look at the sort of history from a macro perspective,
whilst ever there's strong levels of employment, we see strong
performance in our business. So, you know, around the world
at the moment, we haven't seen any signals that any
of the impact that we're seeing from US a fiscal
(07:48):
and macro perspective is impacting our business at all.
Speaker 2 (07:51):
What about the weakness that that you're reporting in Australia,
what's behind that weakness?
Speaker 5 (07:56):
Look, you're right, we have identified when we announced IQ's
we've seen some weakness in Australia. They had a very
significant lockdown in COVID in Australia. I'm not sure how
much your listeners followed it, you know, I mean there
were police on the streets making sure people can leave
their houses. It is a very difficult situation. So there's
been a big COVID reversion in Australia. They're also pushing
(08:17):
through some tax changes and there's also some regulatory regulatory impacts.
But you know, sports bet, which is our brand in Australia,
we are the you know, we're the biggest business with
a market leader for recreational customers. We just had we
just had the Melbourne Cup, you know, which was you know,
it's the race that stops the nation. So you know,
I'm proud of what the humor doing and the business
(08:40):
are gone to grow in the future for us.
Speaker 3 (08:42):
Then we get a run. So glad we could check in.
Speaker 4 (08:44):
Peter Jackson, the CEO Flutter, joining us on zoom from
the UK.
Speaker 1 (08:48):
You're listening to the Bloomberg Business Week podcast. Catch us
live weekday afternoons from three to six Eastern Listen on
Bloomberg dot com, the iHeartRadio app and the Bloomberg Business app,
or watch live on YouTube.
Speaker 7 (09:02):
Well.
Speaker 4 (09:02):
As the COVID pandemic fades into the past, many things
have returned to normal. The world of work has not. Companies, employees,
and governments still figuring out how to adapt to lasting
changes to corporate life sparked by widespread lockdowns that put
millions onto a work from home schedule. At stakes at
stake really worldwide. Aren't just norms for office life, but
really the economic health of big cities as well, particularly
(09:24):
in the United States. We have a great voice to
talk to us about what's going on in the workplace environment.
Speaker 2 (09:28):
Yeah, let's checked in with him a little over a
year ago. It feels like so much has happened, and
since then, so much has been talked about. One company,
one person who's at a front seat to all of
this is the London listed office space provider IWG. We've
got back with us Mark Dixon, Founder executive director CEO
of IWG, that's International Workplace Group. He's with us here
in our Bloomberg Interactive Broker studio in town for the
(09:50):
company's investor day tomorrow. But you were just telling us
that you're also here because you were in the Midwest
as well. Talk to us a little bit about the
footprint that you have and where else you've traveled.
Speaker 8 (09:59):
Yeah, US is our biggest market's about there's more than
half of the business, and we've been here for more
than thirty years in the US, but the growth is
now really quite dramatic in terms of how we're growing
the platform, how we're growing the number of buildings we
(10:19):
have across the country. So I I've just come from
the Midwest from Minnesota where I've been doing site visits.
But you know, we're growing the business about fifty percent
growth rates in the US and it's got the place
with the highest take up of hybrid working. And so
it's very exciting, so invested day tomorrow, but very useful
(10:43):
to drop in and have a look at what we're
doing in the market.
Speaker 4 (10:46):
So mark return to office, work from home hybrid, what's
winning hybrid?
Speaker 8 (10:52):
So you have to imagine a new world driven by technology.
So everyone a lot of the narrative sort of it
thinks that things are going to go back to normal
and everyone's going to come back to Manhattan. That's not
going to happen. People want can and want to work
(11:12):
at places near to where they live. They don't want
to commute. So the elephant in the room is commuting.
It's not people are working from offices, they just want
to do it locally. Hybrid is a combination of work
from home, work from near to home, and come into
someone like Manhattan or Chicago once a month, get together
(11:32):
with colleagues, business reviews, collaborate.
Speaker 2 (11:35):
So what does that mean for a market like New
York City for example?
Speaker 8 (11:39):
For New York City, it'll need to reinvent itself. I mean,
you can see it coming back here. It's probably a
little over a year since I was last in New
York City. I mean it's more vacant I didn't think
it could get more vacant.
Speaker 2 (11:52):
You think it's more vacant than a year ago.
Speaker 8 (11:53):
Oh, yes, absolutely. I mean you can see it at
the retail level and then you can just got to
look up in the bill. Some mean, look, it's my
I've been doing this for many thirty five years, so
I can tell looking at buildings where they're occupied or not.
There's a lot of vacancy, a lot of sublet and
you know, it's places like New York very very difficult
(12:16):
places and expensive places, time consuming places to commute to
for normal workers. So unless you live here, it's not convenient,
and especially downtown. If you go downtown, you've got that
double commute. So where you have that, it's you know
that people don't want to do that.
Speaker 4 (12:33):
It makes complete sense because I feel like for many
of us who've come back to the pandemic, I like
being actually back in the office.
Speaker 3 (12:39):
I'm so tired of commuting though. I'm tired of it
like you just and you when you have that break
that we've.
Speaker 2 (12:44):
Done, you're going to keep doing it.
Speaker 4 (12:46):
Yeah, I'm not giving up my card anymore, my commuting card.
You work with the likes of or have Disney Uber, Microsoft,
black Rocks Spotify, which got news that it's cutting fifteen
hundred jobs earlier. We got that news Disney earlier this
year again the first round of seven thousand expected job cuts.
Any of that working its way into less demand for
what you are doing, or help me understand more demand.
Speaker 3 (13:11):
You see.
Speaker 8 (13:11):
What's happening is you've got globally pretty much a difficult economy,
so corporations are looking at ways to be more efficient,
to get more productivity, to cut costs, so more and
more a move. You have to imagine us as providing
a platform for work and support of workers. You know,
(13:33):
at the moment in the US, as an example, we've
got twelve hundred buildings every state. We're adding six hundred
buildings next year, so you get this sort of work platform.
It costs half the price, it's near where your people
want to be. And we've also do US airport's airside,
we do railway stations, rest stops, so it's a work
(13:55):
from anywhere. It's not just office buildings, and the future,
a technology powered future, is about being productive wherever you are,
and it's about getting the most overt workforce, and that's
what companies are looking for.
Speaker 3 (14:08):
Today, So what kind of indicator are you? So if
a you know what I mean, if a company is looking.
Speaker 4 (14:13):
To cut costs and tap into more of you, is
that just a smart company or is it a company
feeling squeezed and they're looking to cut like you know
what I'm trying it is because I assume as they
need more space, Well.
Speaker 8 (14:25):
It's not how they save money, is they have less space.
It's a bit like Uber. You don't have a car
in every city you travel to Chicago, you take an Uber,
and you take an Uber when you need it. You
don't have one sitting there all the time. And what
we're doing on our platform, we've got eight million people
using it. They you know, you one day you're in Chicago,
(14:47):
the next day you're working from close to home. We
also support nearly about eight hundred thousand people that work
from home. We have a whole product range that supports
home workers. So it's you know, it's about a technology,
our workplace that's available anywhere. Our job is to create
productive workplaces so that people can do the best work.
Speaker 2 (15:09):
But it's not coworking.
Speaker 8 (15:10):
We do coworking offices, we do work from home, we
do drop in small, little things like a phone box
that you can use in airports. Do your teams?
Speaker 2 (15:22):
How did you watch the bankruptcy of we workplay out?
Speaker 8 (15:27):
What it was wrong, wasn't it?
Speaker 4 (15:28):
I mean it's but they weren't wrong in their concepts.
Speaker 8 (15:32):
Absolutely not wrong. They were wrong in their execution. I mean,
I've been doing this business along. I started with one
building in Brussels in nineteen eighty nine. We've now got
just a little over four thousand that's been pretty much
sell funded. We've had very little capital put into the business,
so we've reinvested capital. They in the contrary, you know,
(15:55):
they've used a huge amount of capital. And so it's
just a different discipline, right idea, It's all about the execution.
This is a detailed and difficult operational business, not easy.
Speaker 2 (16:06):
A lot of people misjudge it.
Speaker 4 (16:08):
How does the business model I'm a bit daft. How
does the business model work in terms of you because
you get investor money, or how does it works because
you don't own because we were getting some clific kitchen
you don't own.
Speaker 8 (16:20):
We have a platform so and that platform is a
digital platform, a sales platform, and we have huge numbers
of customers sitting on one side of the platform. If
you own a property, you're an institution, you're a private owner.
You want to put your property on our platform, you
can do that and we'll operate it for you. That's
(16:42):
what we do. So we're working with the biggest institutions
in the world, insurance companies and someone who are putting
property on the platform so that it's sold in a
hybrid way. We're the middleman in all of that.
Speaker 4 (16:54):
You get a piece of the business piece, so you
don't care if that property isn't rented.
Speaker 3 (16:59):
Out completely of the month. We do well, you do
because you'd make more money off of.
Speaker 8 (17:02):
It, and we want our partners to be successful, so
we're very focused on that.
Speaker 2 (17:06):
Do you have any Are you in any long term leases?
Speaker 8 (17:09):
We have some, We have almost no long term We
have leases, but all of them are short. We option
long and we keep them short. Yeah, pretty much a
year we can get out of anything.
Speaker 3 (17:24):
How has the interest rate environment impacted you?
Speaker 8 (17:27):
If we are where our net debt is small, next
year it would be about the same as our rebit
so about one time.
Speaker 4 (17:34):
But any of your customers who have properties, have they
have you have some of them gone under or because
of the high rate, some.
Speaker 8 (17:42):
Of them, a few, very few have gone on. But
then you get special services. We provide cash flow in
the building, and whoever takes the building, they like our
cash flow.
Speaker 2 (17:51):
So we're the areas of the world that you're concerned
about in terms of economies, economic activity, the consumer.
Speaker 8 (17:58):
I mean, I think there's a not a global squeeze,
but it's pretty much. I think there's a universal squeeze,
both on companies and on the consumer. Is pretty widespread.
I mean, for me, and I've been business for nearly
fifty years, you know how quickly interest rates came up.
(18:19):
Has caught everyone, you know, unawares, if you like. On
the one hand, and that's called businesses that have debt
and that have taken out that debt obviously at low
interest rate comes back higher, but also the consumer cost
of living and squeezing them as well. So that's forcing
companies to take action, whether as you said, whether that's
cutting people are cutting costs, and that's quite a good
(18:41):
environment for US.
Speaker 3 (18:42):
Mark just got like twenty seconds left here.
Speaker 4 (18:43):
So based on what you're seeing, what you are doing,
You've talked about some some pretty impressive growth, especially when
the US market recession. Next year global recess from US
recession very quickly.
Speaker 8 (18:54):
I would say difficult year, small recession.
Speaker 3 (18:59):
Difficult years recession.
Speaker 4 (19:01):
That means a lot because you definitely have like a
front receipt in terms of what many companies are doing.
Come back, please sooner more than a one year. Mark
Dickson is founder, executive director and CEO of IWG International
Workplace Group.
Speaker 3 (19:12):
Here in studio, you're.
Speaker 1 (19:14):
Listening to the Bloomberg Business Week podcast. Catch us live
weekday afternoons from three to six Eastern on Bloomberg Radio,
the Bloomberg Business app, and YouTube. You can also listen
live on Amazon Alexa from our flagship New York station.
Just say Alexa play Bloomberg eleven thirty with us.
Speaker 2 (19:33):
We got Mark Million, Bloomberg News Technology editor and also
the editor of Bloomberg BusinessWeek, Joel Weber, both here in
our Bloomberg Interactive Brokers studio. This is really cool behind
the scenes, look at Anderilla, closely held venture capital backed
company that's competing with the likes of Raithean Joel.
Speaker 9 (19:50):
Yet and the company had been You're right into Oculus
and developed Oculus, which now Meta Facebook acquired an. Ever
since then, it has been more interested in doing military applications.
And this road Runner, which announced on Friday and actually
had an exclusive look at it, attempts to solve a
(20:12):
big problem for the US military. Mark what is that problem?
Speaker 6 (20:16):
The problem is drones. And so in particular in Iraq
and Syria, they the militants there have been able to
import these consumer drones, like the kinds that you buy
for the holidays for your kids. They take them apart,
they attach bombs to them, and they are able to
assemble so many so cheaply that it's become a huge
(20:39):
threat to American forces.
Speaker 2 (20:40):
I mean, these are the drones that are essentially being
used by Ukrainian forces to bomb Russian forces at are
really low cost.
Speaker 9 (20:49):
And right back at Ukraine.
Speaker 2 (20:50):
Yeah, they're like taping Russia. They're taping bombs to them.
Speaker 6 (20:53):
Yes, that's example of an ally using it as a
as a cheap way to kind of part themselves in war.
But it's also a huge threat to American troops and
so they've been working on ways to not just be
able to take out individual drones, but when forces create,
you know, militants create like what's what they call these
(21:14):
swarm assaults where there's like a bunch of them all
coming at at once. You need new technology to take
it out. So this is one answer to that. It's it's,
as you said, like almost a miniaturized fighter jet looking
thing that just goes in and uh and throws a
missile at these like swarms of drones, tries to take
them all out, and then it can it can go back,
(21:35):
and it can land and they can load another missile
onto it and send it back up.
Speaker 9 (21:39):
So how much do we think this technology is actually
gonna cost, because obviously the cost is the thing here.
You weaponize a drone, which I can do some holiday
shopping and acquire many druns. I'm not going to touch
the bomb part, but I can get the I can
get the drones h and I get I get what
we're going for here, Because ultimately it's like, how can
the US military bring the cost down with something that
(22:00):
could be reusable? So what kind of budget do I
need to acquire many of these road runners?
Speaker 6 (22:07):
So traditionally the US military was using patriot missiles just
like kind of the default option. Those can run like
four million dollars a missile. Anderl says that they can
make these these things, these road runners for in the
low six figures, so you know, one two hundred thousand
per unit. So if they can pull it off, and
(22:29):
to be clear, it's it's a star, it's an unproven company.
It's startups, not raytheon. So there's there's doubts about whether
they can pull it off. But if they can, the
US could save a lot of money.
Speaker 4 (22:39):
And it's all right, so so far, so good in
terms of how effective it is in terms of trials
and testing.
Speaker 6 (22:45):
Yeah, it's very early. It's a it's a brand new product.
But they say the US has ordered a bunch of
them and they expect them to be in the field
next year.
Speaker 9 (22:55):
So who else is attempting to come up with solutions
in this space? This is a huge problem, Like I mean,
US forces around the world just basically you know, you
with not that much technology, it becomes a serious problem.
And like you know, anderl can't be the only one
looking for looking at this base to provide potential.
Speaker 4 (23:17):
SLA And I have to say, reading the story, this
is what to me, I said, Okay, this is modern warfare,
this is war going forward, so you really need to
have something to counter it.
Speaker 6 (23:25):
Yeaheah. So the major defense contractors offer options that the USCS,
and again I mentioned the Patriot missile is kind of
the default. It's like, you know, tried and tested and
and they know it works. But Andrels is taking this
bet that they can kind of break into this market
with a very different option.
Speaker 2 (23:45):
Actually makes this point a couple times in the story
that even though this thing, the road Runner, has been unveiled,
it hasn't yet been manufactured at scale. And if there's
one thing that we've learned from testless troubles over the
last six years or so, manufacturing one or ten of
something isn't as difficult does manufacturing a large number doing
this stuff at scale? What are the experts Ashley spoke
(24:08):
to about scaling this say in terms of challenges here.
Speaker 6 (24:12):
Yeah, you're right, it's hard. And it's also not a
traditional consumer electronic where you can use uh, you know,
factories in China schedule.
Speaker 2 (24:20):
You can't buy one of these for the holidays for
your family.
Speaker 4 (24:23):
I'll try still, and but yeah, I mean there's always
the dark web, that's true.
Speaker 6 (24:29):
The philosophy inside this company has been to try to
do everything themselves, and so they're building their own factory capabilities,
their own factory lines, to try to be able to
build the whole thing, uh and do it in America,
which is kind of what the US government would like
to see.
Speaker 4 (24:43):
What's really kind of cool too, is they're not this
is one thing and hopefully if they get it up
and running, this is one thing, but they plan to
take this technology and spread it across other products.
Speaker 3 (24:52):
Right.
Speaker 6 (24:52):
Yeah, yeah, so ander Old already has a bunch of
different products that they sell to uh, to the US
and allies. They do like, you know, Century Towers, a
sort of like a virtual border wall that the US,
their border control has has purchased. But yeah, they've they've
(25:13):
said that they've spent these years developing all this new
technology and they think that it will They haven't gone
as specifics, but they think it some of it will
be useful to some of the other products that they're
working on.
Speaker 9 (25:24):
Okay, So something about this name strikes me as being
a little cheeky road redder. What is that a reference to?
Speaker 6 (25:32):
Yeah? So, so Raytheon has a product called Coyote, So
it's a Looney.
Speaker 9 (25:37):
Tunes Raytheon being a competitor.
Speaker 6 (25:39):
Of exactly right, So they're trying to stick it to
their much bigger rival.
Speaker 9 (25:46):
What is uh the coyote other than you know, just
trying to get the road Runner again and again and
again and again and never quite being.
Speaker 2 (25:54):
Able to it. What in the real world?
Speaker 9 (25:56):
What what is the coyote made by Ratheon do.
Speaker 6 (26:01):
It's another sort of like autonomous defense system that the
main innovation that Androl is talking up with this new
product is that it's reusable. It can land. Like various
companies including Androl, have built counter drone products that can
(26:21):
go and blow up a single drone that's flying around,
and so the main targets here are swarms of drones
and being able to reuse them so that it's you're
not having to buy a new one every single time
you take out.
Speaker 4 (26:34):
My understanding too, is it's just one person that's needed
to kind of actually run it right or operate it
rather than multiples.
Speaker 6 (26:41):
That's part of the pitch. Yeah, yeah, it remains me seen.
But yeah, the part you know, Androil builds this kind
of like software system that they call Lattice where you
can hook in all sorts of different defense products and
they're saying, you know this will work with that that
you can have them all kind of commune kate wirelessly
so you can see where all of your different road
(27:03):
runners are.
Speaker 2 (27:03):
It kind of sounds like the Ring camera system from Amazon,
but for you know.
Speaker 3 (27:08):
You're obsessed with your Ring camera system.
Speaker 2 (27:11):
You just add you know, you add the border wall
to it. I'll take a couple of drag and drop
into your car. I'll take a couple you know, road
runners throw man.
Speaker 9 (27:19):
Well, the bigger thing an opportunity here is obviously the
Vince budget gigantic and being able to crack it even
with something that you know mainly cost him the six figures,
but around the world at scale, if you can manufacture
it there, that's that's huge. But you know, the bigger
challenge here does seem like the US military being geared
(27:43):
for different wars than we've ever seen. And I think,
you know what, what we witnessed in Iraq earlier in
the two thousands was that the US military was basically
ill equipped to fight a certain type of war and
you know when when, And obviously Ashley has spent a
lot of time in this space, but like there seems
(28:04):
to be a new kind of war that the US
may not be ready for, and we're getting glimpses of it.
What else is Androil maybe developing that could help down
the line. Do we have any sense of what this
could look like.
Speaker 6 (28:20):
Yeah. The thing about defense contractors, they don't like to
talk to They don't like to talk about their weapons
until they're until they're ready. But but I mean, you
raised a really good point about the kind of like
the new realities of war. One of the one of
the interesting things and one of the things that Andrel
was trying to address, is this kind of like imbalance
in the in the economics of the of battling drones. Like,
(28:44):
like I said earlier, it's so cheap to assemble like
large quantities of drones and put bombs on them and
create some very powerful weapons and high high quantities. As
it stands now, it's very expensive to take them out.
And so it would cost so much more to blow
up these drones than it would cost to create like
(29:06):
a kamikaze drone that can kind can blow up and
harm a lot of soldiers. And so that's something that
Anderil is trying to address by by focusing on costs
as one of the main things.
Speaker 2 (29:16):
So I just want to make sure I understand the
product here that actually got to see it's a fighter
jet type of drone that takes off autonomously but then
has a and has an explosive projectile that destroys a drone.
The explosive projectile obviously not reusable, but the part that
it's launched from is the part that's reusable exactly.
Speaker 6 (29:36):
Well, so in the current model, it's not reusable once
it once it's it sends off, it's it's missile. The boy,
I mean, the thing tends to blow up and you
can't use it again. They say that they're close to
developing basically a V two that that what you did
there jet the jet can can be reused. So if
(29:58):
you send the jet out in the current model, you
send the jet out, it doesn't see anything that it
that it needs to blow up. It can come back
and it can land. That's that's like an innovation. It's
almost like a tiny SpaceX rocket.
Speaker 3 (30:11):
That's what I was thinking, right, It's the whole kind
of Tesla idea.
Speaker 6 (30:13):
Yeah, and it takes off and lands and it's similar.
It takes off vertically and then it kind of turns
and then flies like a like a jet and so
but but they say, you know, the next big invention
here in the next model will be able to fight,
like take out a drone and then come back and
land and you can load it up with another missile.
Speaker 4 (30:30):
It is, though, something we talk so much about disruption
in so many different spaces, and right it's been these
major defense contractors that have been so involved. But it's
really kind of fascinating to see this company just kind
of coming up potentially with something that would be very
dramatic and would become you know, certainly something that governments
would do.
Speaker 9 (30:45):
What of truck record do they have in this space?
Because this they've been toying around in the military application
space basically since they got out of the headset one, right.
Speaker 6 (30:55):
Yeah, so they're they're relatively new. I mean when you
can pair them to the major defense you know, raytheon
Boeing like that, you know, not they're not super tested,
but they they started early. Really they're started putting out
products early in the Trump administration and they seize on
that as like their first big opportunity was he was
(31:16):
talking a lot about the wall, like why don't we
sell him a virtual border wall? And they bought it.
And so they've like worked on some other products to
varying degrees of success. But they're really making a lot
of noise about this one because they see a really
big opportunity.
Speaker 4 (31:34):
I keep thinking, like, if this engine is so powerful,
like do they sell it to Bezos, you know who
wants to deliver things? Like is there some kind of
you know, commercial not just defense commercial application.
Speaker 9 (31:43):
Storied history of starting with military applications and then turning
finding the commercial finding the commercial application years later. But
I think to their credit, they have looked at this
as like, what is the problem that the US military
is facing in the yield, and how can we perhaps
protect American soldiers? And and that goes for allies as well.
(32:06):
I mean, like we will see where this application ends up,
because clearly as Ukraine is currently shown and other battlefields
around the world, like we will see more and more
and more drums, and currently those are are being used abroad.
But the technology is scary enough that it can be
used to really inflect pain everywhere.
Speaker 3 (32:28):
So yeah, first you got to make sure it works.
Speaker 2 (32:30):
Right, Yes, a good start, tested in the desert. Okay,
not around that anyone.
Speaker 3 (32:37):
All right?
Speaker 4 (32:38):
Note to self Mark Millian, thank you so much, really
appreciate you coming in and spend some time with us.
Bloomberg News Technology editor and of course the editor of
Bloomberg BusinessWeek.
Speaker 6 (32:45):
Tail where.
Speaker 5 (32:49):
Mark the journal?
Speaker 7 (32:53):
How about you let me drive?
Speaker 6 (32:55):
No, no, honey, please, I'll do the driving RIVELA.
Speaker 4 (33:01):
I want to try.
Speaker 5 (33:04):
It's a good question.
Speaker 1 (33:09):
This is good drive to the globe. Well on Bloomberg Radio.
Speaker 4 (33:15):
All right, everybody, just under eighteen minutes left in today's
trading session, getting ready to wrap up the Monday trade,
and our next guest is looking ahead to the new
year and finds it the most important theme for next
year is the shift from interest rates being the problem
to a tailwind.
Speaker 3 (33:29):
So let's ask him exactly what he means.
Speaker 2 (33:32):
Yeah, very please have him with us. Jimmy Lee is
founder and CEO at the registered investment advisor Wealth Consulting
Group based in Las Vegas. But he's here in our
Bloomberg Interactive Brokers studio right now.
Speaker 6 (33:42):
How are you great?
Speaker 3 (33:43):
Thanks for having me, and good to see y'all. Welcome
to Are you here to see the Christmas tree?
Speaker 7 (33:47):
Always come in December to see the Christmas tree?
Speaker 6 (33:49):
But we're actually here.
Speaker 7 (33:50):
We are here for a little bit of a firm
meeting and and uh personal reason, I bet that.
Speaker 2 (33:55):
The Christmas tree that they put on the sphere looks
really cool. I bet they would make a.
Speaker 3 (33:59):
Cool we're dying to see this sphere. Have you been
to this sphere?
Speaker 7 (34:02):
I haven't been to an event there, but I could
see it from my backyard. Seriously, so yes, what do
you stol. It's a pretty cool thing. But they put
some interesting stuff on there, right. So I was actually
at the F one event for one night and they
had some you know, it was right next to it,
so it was it was really.
Speaker 3 (34:15):
Neat November, you know.
Speaker 4 (34:19):
I first, let's talk about what happened in November, stock
rallying broadening out.
Speaker 3 (34:23):
That was a good sign.
Speaker 4 (34:24):
Yes, but you know, you're thinking about next year, and
you're thinking about the shift from the concern on interest
rates to some kind of tailwind.
Speaker 3 (34:33):
What tailwind in particular, Well.
Speaker 7 (34:35):
You know, this year I've personally been a little bit
of a contrarian, and so is our firm, in the
sense that we didn't think that we're going to see
a recession, the consumer was going to remain strong and
spending enough, which which has proven to be the case,
and that we could have a nice you know market
in terms of equity prices and going up which is
what we've seen so far, right, So I think that
that has played out. And I thought that maybe inflation
(34:58):
would come down a little sooner than what we've seen
in reality. But I think if there's going to be
any surprises to inflation, maybe it will be to the downside,
not to the upside. So I'm not in the higher
for longer camp. So I'm a little bit more in
the consensus now that maybe the Fed moves sooner than
what they're saying they're.
Speaker 1 (35:16):
Going to do.
Speaker 7 (35:16):
And that's really what's been helping the push you know,
the market higher. So the three months prior to November,
we lost what eight percent plus in the markets. In November,
what was really interesting was it was a broad base rally,
so you know, the S and P five hundred, Russel
two thousand, the equal weighted S and P five hundred
all did about the same, including the Dow and the
(35:37):
Nasdaq one hundred and the Nasdaq and the Magnificent seven
just did.
Speaker 6 (35:40):
A little bit better.
Speaker 7 (35:41):
So I start, I think we're seeing a little bit
of that, you know, closure of the gap between the
the you know, the seven stocks that really led.
Speaker 3 (35:48):
Great technical signe.
Speaker 7 (35:49):
It really is and I think you know, our base
case has been no recession. So if we don't go
into recession and somehow we get this super soft landing
that you know Pale has been trying to orchestrate, if
that does actually materialize, then I think cyclical start to
do better again.
Speaker 3 (36:05):
And I think you see rotation into some of those.
Speaker 7 (36:07):
Sectors that have been lagging, like small cap, mid cap,
even international.
Speaker 2 (36:12):
What's the market the equity market pricing in right now
in terms of rates, because it feels like, you know,
this equity market has gotten ahead of itself in the
sense of okay, rates are still high, but yes, it's
looking forward. It's looking for the FED to cut, but
what it's going to prompt the FED to cut? And if, when, if,
and when the Fed does cut, does the market then
move highers that already priced in?
Speaker 7 (36:33):
So I think that the market is predicting that the
FED may cut sooner than what they are saying right now.
But I think if what would have what would need
to happen, maybe sooner and more right, it would be
better inflation data, that would, you know, and also softer
economic activity but not too slow right.
Speaker 3 (36:49):
So I think a combination of.
Speaker 7 (36:50):
Those things and hopefully what will happen for stocks is
companies continue to perform well and their earnings are good,
and so all all of the things, all of those
things may be potentially happening, could lead us into I
think even a little bit more of a return before
end of the year this year in a Santa Claus rally,
and then maybe a few points higher back and forth.
But I think the market is going to price a
(37:12):
lot of that in. So in my opinion, by the
time we get our first cut, most of the returns
are probably going to be baked in for inter sensitive
type stocks like tech, real.
Speaker 6 (37:21):
Estate, other sectors.
Speaker 7 (37:23):
And then I think after that you'll start to see
a rotation into a wider gap between the tech stocks
and the other parts of the market. So by what
now between March and May, probably, I mean that's kind
of what the futures markets predicting and sort of buy
what specifically? But by what then you mean like what
time sectors? No, no, no sectors or or specific right,
(37:43):
I think that So I think Tech's got more room
to run.
Speaker 3 (37:46):
Sorry buy versus b y.
Speaker 7 (37:48):
Yes, So I think I think tech has more room
to run in sectors that will benefit from rates starting
to come down, but I think a lot of those
prices will get baked in before the actual first cut. Yeah,
and maybe get a little bit of a rally when
we get that first cut, but I think it'll be
priced in, and then after that, I think you will
see to see more of a rotation out of that
and into more of a difference into like small cabs
(38:10):
value stock cyccles.
Speaker 4 (38:11):
So help me out though, because tech is a lot
of stuff. Sure, so are you talking about the Magnificent
seven or I mean they're not all pure play?
Speaker 3 (38:20):
Maybe tech, but what kind of tech are you thinking?
That's kind of interesting right now?
Speaker 7 (38:24):
You know, I would say those seven stocks for sure,
but high priced, high priced stocks that are in.
Speaker 6 (38:29):
The tech area.
Speaker 7 (38:30):
And you know, while again I think we have another
rally for those stocks potentially because of rates continuing to
hopefully pause and maybe go down, but by the time
that happens, I think those it'll be baked in. And
as we've seen in the past with those companies, you know,
when there's a bad report or a bad quarter, they
get hurt pretty badly potentially. So I think investors need
(38:52):
to be aware that if you're beating the market this year,
you have to be super concentrated, so most investors should
be lagging the indexes right this year. And I think
buyers and investors need to be aware that when you're
buying this be five hundred, you're very concentrated, and you know,
thirty percent of your money could be in seven names.
Speaker 2 (39:08):
That's been but that's been the story for years in
the five hundred.
Speaker 3 (39:11):
Has everybody continue to say, don't buy it?
Speaker 5 (39:12):
You know?
Speaker 3 (39:13):
Yeah?
Speaker 2 (39:13):
And if it's not in Nvidia, you know, it's Apple
and Tesla and Microsoft and Google, Like does that matter?
Speaker 1 (39:19):
You know?
Speaker 7 (39:19):
I think money money, there's so much money going into
index products, yeah, through funds and ETFs that as long
as there's money going in the market, those companies are
going to get bid.
Speaker 2 (39:28):
You know, because on the on the account of that
they comprise so much of these index.
Speaker 7 (39:33):
Absolutely the market, right, I think there are where a
lot of growth is absolutely, but I think that there
are institutional investors and big investors that are starting to
want to be more diversified than just in those sectors
and in those stocks.
Speaker 6 (39:48):
And I think we're.
Speaker 7 (39:49):
Starting to see a little bit of that. And I
think a theme that may play out starting maybe you know,
sometime next year earlier on the next year might be
this rotation from that to other other areas and maybe
finally the people live in you know, international investors I
think will potentially have a chance to make some money
relative to the US.
Speaker 3 (40:09):
What just buy international index find I mean.
Speaker 7 (40:13):
Nobody really wants emerging markets these days, right, so I
think emerging markets might even get a little bit of
a bid. Yeah, but yes, developed international stocks, and I
think the idea of the dollar you know, you know,
has peaked and maybe going down further could help with that.
Speaker 3 (40:26):
Really quickly, this is going to feel random. Your big
companies based in Vegas.
Speaker 4 (40:30):
What's your take on gambling stocks, Flutter Pen, entertainment, DraftKings.
Speaker 3 (40:33):
Do you have any thought being in the midst of it?
Speaker 4 (40:35):
Not necessarily specifically the Flutter, Yeah, coming up, so I'm
curious for.
Speaker 7 (40:39):
Yeah, not specifically on those names, but I think that,
you know, gaming stocks is very dependent on how healthy
the consumer is. And fortunately there's still a lot of
money people, a lot of people like gamble, massive, fluent
and wealthier, have a lot of money sitting on the sidelines.
I mean, I don't know the latest data, six trillion
dollars almost just sitting in money market funds. Yeah, that
could also start chasing the markets too.
Speaker 3 (41:00):
We got a rund.
Speaker 4 (41:00):
Jimmy Lee, Happy Holidays, Founder and CEO at Wealth consult
Wealth Consulting Group.
Speaker 3 (41:05):
This is Bloomberg.
Speaker 1 (41:06):
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