Startup Credit Crunch

Published Aug 2, 2023, 10:36 PM

Are Traasdahl, CEO at Crisp, discusses the current state of the start-up credit crunch. Elena Popina, Bloomberg Equity Markets Reporter, and Anna Wong, Bloomberg Chief US Economist, talk about Fitch's US credit downgrade. Bloomberg Businessweek Editor Joel Weber and Bloomberg Technology Reporter Matt Day discuss Amazon's grocery reboot. And we Drive to the Close with Nancy Prial, Co-CEO and Senior Portfolio Manager at Essex Investment Management. 

Hosts: Madison Mills and Jess Menton  Producer: Sara Livezey

This is Bloomberg Business Wait inside from the reporters and editors who bring you America's most trusted business magazine, plus gloom O Business Finance and tech news. The Bloomberg Business Week Podcast with Carol Messer and Tim Stenebeck from Bloomberg Radio.

Jess Mitton and Madison Mills here in the Bloomberg Interactive Brokers studio, and Maddie, I know how much you enjoy talking about the consumer, also the retail space because we've talked so much about these big earnings coming up, especially with Amazon tomorrow, but we have another look as far as how retailers really struggled in the midst of COVID and especially when it comes to the inventory issues. So who better to come in and chat with us about the startup space, but then also the retail outlook here as we head into close to the fall season, obviously toward the end of the year, the holiday shopping season. With Ari Trosdale, who's founder and chief executive officer of CHRISP who's here in studio with us, So it's always great having someone here. Thank you so much for coming into the Bloomberg office here in New York. Tell us first off about your company and what it is you do.

Great. Yeah, you've work with a lot of large retailers, about two point five trillion dollars of retail spent to the retailers we work with, and then we have about five six hundred large brand small brands on the platform. What we help with is that change of data between retailers, large distributors and also the large manufacturers and the large large brands. So this has historically been done with that technology called EDI, which was invented fifty years ago the year I was born, and hasn't been a lot of innovation in kind of this connective fabric that ties all these important trading partners together. But through a platform like CRISP, they can exchange information much better, so everybody wins.

So what kind of data do you help these retailers? And again, as Jess mentioned, you've got the names like Amazon, BJ's all the Target, Whole Foods on this list, among many other big ones. What data do you provide them and how do they leverage that data into action?

Yeah, it's particularly in that interface between the large retailers and the brands, and they typically have need for data around understanding how much is on the shelf, how much data is actually or how much is actuly sitting in the distribution center, what.

Was the price or how do you help them know that?

So, yeah, we actually connect into a lot of these legacy systems that the large retailers have, So they have point of sale systems, that have warehousing systems, they have logistical systems. So we help connect into these systems and make bring all of that data into the clouds that everybody can access. This throughout a supply chain. So if I'm now on the brand side and I'm planning advertising and marketing campaign or I'm going to push a new product out, I understand how much I need to manufacture in order to meet the demand. Now they have much better view of everything that's happening across all of the different retailers.

How long does it take for them to access that type of data.

So it's been been a big part of they've recently been able to get so many on the platform. We invested a huge amount of capital into building this infrastructure, but once they come on the platform, it takes less than an hour. And there's a lot of changes in the industry now, and some of them are around advertising right, So that the retailers are leveraging their data and their audience to drive more advertising revenue, they're also leveraging it in data sharing programs. So you have the large Amazons of the world, but you also have like a Walmart, for instance, that have incredible bottom line money now from advertising, and they also have a different program which is called Illuminate where they actively share the data out with their suppliers. So we help in that interface. How do we get all of that data out of Walmart and Illuminate and into all of the different systems that and a brand have. You might have cloud systems that have procurement systems, they have sales systems and all of that, and then we want to have one view of data across all the different places that they don't need the data.

So that's kind of a solution for when there might be an undersupply of inventory for a product that's about to get a big marketing push. But what about access inventory? We saw that coming up a lot during the earning cycle last season, particularly with names like Target. How does your tool help these retailers with that?

Yes, so they calculate based upon sales velocity, so they understand how much each store is selling this particular product, understand pricing, and then understand how much inventory actually sits out in the different stores, and how much inventory sits in the distribution centers that support the stores. So with all of that kind of real time information of consumer behavior because we see every day kind of what's happening in the stores, now they have an ability to do much better forecasts of how much products they actually going to need. And before it was much more reactive because it was based upon a purchase order that would come out. But now actually the suppliers and the brands have an opportunity to kind of see what's going on and then produce the right thing because it takes a while to produce these products. And that's I think what you're alluding to you to is you saw this huge build up in inventory because it takes you you pushed about in today, it going to take three months for this product to actually arrive. So being ahead of that is kind of what the tool helps with.

Talk to us about this startup credit crunch, because we're coming off a few months ago. Obviously all of the drama that went on with these regional banks with SVB I was curious do you have exposure towards any sort of those banks that were in California and how you view that whole city.

Oh, that's a good, big, big shift over to So that makes me very stressed. Right now. I can bring up my SVB card that didn't work for a couple of for a couple of days, but now I feel actually very good and comfortable around it with what the government there to help the banks, as that prevented a big crisis. I think for startups. I actually took the plastic of the televisions for as we've be and then moved into New York twenty years ago Sabina for a very long time and kind of seeing how that changed so quickly. But I also there's a lot of other banks that are coming into the space and seeing that there's a great opportunity in this area. Plus as will be, it's actually continuing operations very well under new ownership.

Do you see sort of red flags brewing up kind of more broadly with startups at this point?

You know, I think, yes, I'm doing this for twenty five years. It always goes in these huge waves of way too much money that comes into the space, and that drives valuations up and everything, and now the pendulum is certainly on the other side of that. And I liked this period more because it actually reads out a lot of the non real type of startups. So I believe if you solve big problems for big companies then and drive high ROI now this is something that's very investable and exciting for investors to be a part of. So so like I love the love both faces in a way, but I like this face a little bit more than the frothy face.

Well's great getting your perspective on all things when it comes to startups, but then also what your startup has been doing. So it's Ari Trossdale, founder in chief executive officer at CHRISP joining us in studio with Madison Mills and myself. So great getting your perspective on all of this.

Yeah, really interesting to think about how startup funding and credit tightening is kind of impacting what we're going to be seeing down the pipeline, and of course getting to check on the retail space as well. Jess, this is Bloomberg.

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 us live on YouTube.

All right, So, in terms of needing some help here, I feel like I'm the one who needs help sussing out the market moves today, because obviously this Fitch downgrade is a huge move, but it seems like the Treasury Department is the real driver on the day because when it comes to that Pitch downgrading, it feels like traders don't really care, economists doubting the credibility of the move. So here to make sense of the day's trade for us is Elena Pappina from Bloomberg's equities team, and our chief economists Anamon joining us from DC. Elena, I want to start with you. Thank you so much for coming on. It's great to have you here. From the perspective of the market's reaction, would you say the Fitch rating is kind of a non event today?

It was a non event yesterday after the well when the decision broke and the futures who are on the spy ETF we're down about zero point ten percent, so it wasn't a big reaction then today. Earlier today when you know, we got the announcement about the Treasury Department increasing the auction size. That's when the decision actually became a much bigger impact on the stock market. So we are now more than down more than one percent on the S ANDV five hundred. Not an unusual move, but it is getting some of the bestors worried about whether there is more to come.

I want to bring Anna into this conversation because do you think that this move was actually warranted by Fitch?

Yeah, so I think the substance of it, which is the fiscal trajectory of the US government balanty, is warranted because part of it is that, you know, just three weeks ago, the US Treasury released the year to date a picture of fiscal deficit, and actually it surprised many people by how we looked for that. In fact, the deficit for twenty twenty three is expected to be much larger than last year, partly because of weaker receipts. That was I think one perhaps one piece of information that Fitch was waiting after the debt feeling was resolved in thinking you should be down road or not so because this year fiscal deficit for you as is expected to surge to five point seven percent, and then on the longer term, the fiscal picture also doesn't look good. We forecast that twenty thirty three fiscal deficit, the debt to GDP ratio would be over one hundred and thirty percent of GDP. So yeah, on that ground, I think the decision was warranted.

Well, and I want to stick with you for a second, because we are obviously seeing some comparisons to twelve years ago. Today, a lot of people saying that it's a completely different situation. Can you tell me exactly in your view how different the backdrop is today versus what we saw with the SMP rating downgrade in twenty eleven.

Well, well, first of all, I would say that my view is different than the predominant view in the market that ultimately the market will shrug it off this downgrade. I do think there's a risk that ultimately the market won't shut shrug it off and we'll be having a repeat of twenty eleven. So I think most people think that it's different than twenty eleven because back then we still have the European debt sovereign sovereign debt crisis, and today we have no well, we actually today we still have a weakening global economic backdrop. Germany is looking like they're in recession, China is fueling hard lending scares, and US also is actually not as strong as many people. I think that's the reason Number one. Number two is, you know, back in and right now, when we look at the US, you know, various asset market like fix equities market, there's just this sort of complacency, and people have been ignoring negative data, negative data surprises in the last couple of months, and I feel like people are kind of well just so in love with that soft lending narrative that they I think markets are actually due for some kind of correction. So in that sense, I think we're pretty vulnerable at the stage.

So Elena, with that said, and looking at the Nasdaq one hundred up i mean forty percent this year, and then the S and P five hundred also up double digits, it's an excuse to take some profits.

It actually can be a lot of traders have been telling me that there hasn't been a catalyst to sell. We did know that no position became overextended, it was time for it. Whether it now comes to the catalyst now the bigger question is is it going to be a five percent correction? Is it going to be just a by the deep situation with the stocks rally tomorrow and into the weekend. So that is the big unknown. And I want to talk about earnings because earnings have been a big supporter to the S and P five hundred rally over the first quarter and earlier over the second quarter results. We do expect to see Apple and Amazon reporting tomorrow, so that can be a potential catalyst. You know, if they do report disappointing earnings, that trail expectations, so that could be a catalyst for a much bigger and potentially a more prolonged sell off.

What does positioning tell us at this point as far as who could potentially be selling if we're talking about hedge funds, too early to really tell that versus retail investors.

That's a great question, but we don't know yet. We do know that retail investors have been buying into last week, So last week was the first one when they were net sellers of equities. You know, whether that's a smart move considering today's route is yet to be seen. But yeah, they kind of paired back their appetite after jumping in earlier in May and earlier in June. So if hedge funds decide to become big sellers, you know that that may be an interesting story for sure.

And bringing you back in here, I'm curious is about how you're viewing the move from Fitch from an economics perspective, because, as you noted, we're hearing a lot of pushback today, Jamie Diamond coming out against the move as well. Does this hurt their credibility and does that matter?

Well? I think Fitch is kind of bringing reality back to everybody. I think, of course, from Jamie Diamond's perspective of market rally is great for Jamie Morgan, right, But but I think, as I was saying before, the market has been complacent in recent weeks because of this, you know, preveillance of the soft lending narrative and on a on on the eve of every recession in the past, you know, half a century, the soft lending narratives tends to dominate to and Fitch sorts of put the focus back on these ugly fiscal numbers. And I thought that one of the most interesting things that the Pitch down grade cost it is to notice is that the Treasury data showing the receipts and deficit that was released a couple of weeks ago, it shows that receipts was weaker than as weakening, and usually before a recession, receipts would weaken, and it's always case, and I think it does confirm our suspicion that maybe a lot of the activity data is overstating the strength in the economy.

Something I'm curious about on a is whether or not when you're thinking about more market moving type reading agencies, whether it's Moody's or S and P, do you think we'd actually see downgrades like that from them.

Well, SMP already downgraded back in twenty eleven and they never re upgraded the US. So right now two of three major rating agencies have taken away the US the Stellar rating, so it's just down to Moodies now.

And on that, I guess, Elena, I want to ask you kind of what Anna was saying earlier. Anna mentioned that you think that the market slugging off this downgrade is not going to be the case in the coming weeks. Do you agree? Do you think that the market is going to start to have a more prolonged reaction to this.

It's interesting that August and September traditionally seasonally the weakest months of the year going back the past thirty years, so there may be a reason for a bigger sell of just because of a confluence of factors.

Right.

Fich obviously was a big surprise for a lot of traders thinking that we're going to go to the moon. It's not the case, and the positioning looks extended on several fronts, and seasonality isn't adding confidence into the stock market trajector in the next couple of weeks. So there might be some choppiness in the next three to four weeks or maybe a couple of months.

Even something I'm curio about anna is what or not this is a wake up call for Congress.

Yeah, I think the debt ceiling fight back in June was a missed opportunity for the both sides addressed the real fiscal challenges, which is social security, healthcare. Right, I mean twenty years ago when al Gore was it twenty years ago, Yeah, twenty years ago when al Gore was debating George Bush as they were talking about reforming social security in lock box. Now, I don't hear that anymore in this presidential debate. I think those issues need to get back on the table, and I think when two of three major ratings agencies have downgraded the US, it certainly is a wake up call.

What's the likelihood of this actually being a wake up call?

Though?

In our next twenty seconds, Anna, I.

Don't Yeah, I'm not optimistic that it was truly.

Wouldn't it be great if the big market moving, headline breaking news was in fact a wake up call for action?

Anna?

Thank you, thank you so much much for joining us and on our chief economists joining us from DC and Elena Papaina, Thank you so much. It was great to have you in studio with us.

You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from three to six Easter on Bloomberg Radio, the Bloomberg Business App, and YouTube. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa play Bloomberg eleven thirty.

It is time for our Bloomberg Business Week segment. Joel Weber is in the house with us in our Bloomberg Interactive Broker's studio Joel, thank you so much for coming into Oh, you know, it's always a pleasure. It's always a pleasure. We're going to talk about Amazon as the next potential grocery.

That's right.

So Matt Day has a very interesting story in the issue forthcoming issue about kind of a reboot that's going to happen at Amazon. Obviously, Whole Food's part of that portfolio, but there's a lot of other things in that portfolio. That's how we're you know, the story basically goes through what Amazon's going to do about it.

Incredible. So I think this is a great time for us to bring in Bloomberg technology reporter Matt Day, who's joining us on zoom here. Matt, thank you so much for joining us. I know you just heard Joel's intro, but tell us a little bit more about your story and what people.

Need to know about it.

So Amazon, over what's called it twenty years of experimenting in groceries. They have a mishmash of businesses, right. They have Amazon Fresh where they'll deliver you know, to your home fresh food. They've got a Whole Foods, which they bought us six years ago, and they've got Amazon Fresh. The brick and mortar store. There's forty four of those, and then Amazon pause when they were cutting costs about a year ago. They're trying to kind of meld those together. They're trying to expand kind of on all fronts. You know, Amazon basically took a hard look at it's grocery business that we still think we want to be here. We just need these pieces to kind of play nicer together. And so they've and that's a bunch of things that maybe that one the stopper is going to notice. First, you know, you don't have to be a Prime member to order groceries at Amazon anymore, at the first for them, since they started selling groceries online in two thousand and seven. Previously you always had to pay into Prime. Now, you know, it's just kind of a referral or at least some sort of some sort of fea gatekeep that. So they're really trying to alight a fire into this business after flailing for a few years.

Why is why do this? Why do any of this? What's the problem that they're trying to solve?

I mean the problem is sort of size and scale. You know, Amazon wants to be a big deal. Amazon wants to be a big retailer, and to be a big retailer, you have to sell food, right, to be a big retailer for certain size. That the Walmart formula. That's how they went from you know, very big superstore to the world's biggest retailer. So over the years, you know, we've we've heard tell of you know, Jeff Bezos back in the day saying, listen, we're not going to be one hundred million dollar business unless we sell groceries, right, unless you get that touch point with customers, and you know, you are the meat and dairy run that causes folks to, oh, hey, I'll you know, grab something else while i'm there.

Right.

Amazon's very cognizant of that fact that it's the most common shop people make, and if you want to, you know, be a big retailer's where you've got to be. They're recent learning, though, is that you also have to be there in person. Amazon learned, you know, kind of the hard way, during the pandemic and coming out of the pandemic that you need a physical point of presence to make a difference in grocery, which is not their comfort zone to say the least.

It's interesting and a little jarring when you see this table in the story of the largest US grocery market by share Walmart number one, Kroger number two, Costco number three, Albertson's number four, and then you get to Amazon Whole Food. So obviously there's some big players there. There's a lot of ground that they have to make up to take on any of those. So, like, realistically, how far do they think they can go just by doing this modest reboot.

I think it's going to take years, and their cognitiance fact that it's going to take years. Their new grocery boss, Tony Hoggitty told me, you know that they're starting to tout this line that you know, listen to all the grocers that are on that list. They've been around for fifty plus years. Right, we're just getting started. We think we're going to be in this for the long haul, you know. But analysts are pretty sober on this.

Right.

Amazon need hundreds more stores, probably if not thousands. Amazon needs to keep working on developing a supply chain in fresh food, right, Like the reason Amazon and Kroger can command such you know, good prices from the suppliers they've got stores everywhere, right, Amazon has none of that so far, and they're gonna have to really work hard to get those kind of economies of scale to become a big grocer. So the way they're setting this up is this is kind of a you know, decade or multi decade project. They're not going to figure this out, you know, next fall or anything. But you know, they say they're in it for the long haul.

Talk to us about the frustrations that customers have gone through if you have to check out through three separate carts, and how that all kind of ties into this.

Yeah, this is really messy for Amazon, but they you know, if you want to buy stuff from Whole Foods, you have a Whole Food's cart and a Whole Foods delivery that you're going to be on the hook for. If you want to buy stuff from Amazon Fresh, same deal. And then maybe most confusingly, you know, you can buy some kind of canned goods and pet food and other things you might find in the grocery market just on regular old Amazon dot Com that has yet another delivery. So Amazon realizes that just doesn't line up at all to the way people shop today, and so they've said, you know, either later this year early next. They're fuzzy in the timeline, but they're going to smush all those together there. So you've got one cart one you know, ideally, one check out experience in one one delivery afterward to get everything you need and make Amazon really one stop shop rather than you know, the kind of the current hodgepodge.

So does that mean that if I go get organic groceries at Whole Foods, I can put a coke and a bag of Rito's in that same cart?

Hypathetically you can, and not only that, but they're going to let you actually get that in the roof of Whole Foods, which is a first.

People.

Right, there's some Whole food fans out there that just like they knew it was coming, man, they knew it was.

Coming, and that was I'm trying to have it both ways a little bit, you know. There. You can get your you know, your your young food at Whole Foods, but it's going to be you know, not on the shelf, right, it's gonna be some sort of click and collect type deal where you know, listen, you know, you know, Joey, you got to get your organics at the end of the day, you order a head and you know you'll get your tide pods or coke or whatever with it.

When I need Drito's, I just go to the sixth floor here at Bloomberg to be clear.

But stuck a confession.

No, but it's a great point. And you talk about this obviously in the story Matt, that Amazon has a thirteen percent markup on the online purchasing. It's just not the same price point as in Walmart. So what are they going to do about that?

They're going to try to get scale and try to drive lower prices. Amazon when they bought into this business, you know, they had an organic supply chain, your door Whole Foods. They had, you know, a set of suppliers that really aren't the same folks as are filling the shelves on Kroger and on Walmart. So they're just trying to get scale and negotiate a better deal. But I think they're also you know, they try to stay close to Walmart, especially on online pricing. But you know, when it comes to the physical Amazon Press stores they're rolling out the kind of aim seems to be undercutting the conventional grocers, right, undercutting your Kroger, undercutting Albertson's, but maybe coming in a little bit above the real big disc owners like a wal Mart or and all the there are Dollar General speaking of things that are growing like crazy.

Okay, so does that mean then that the physical presence is going to grow dramatically of what we see from Whole Foods in Amazon.

If it works, they are rolling out a new version of the fresh stores that they think are going to be more inviting and draw more people in. It's less tech heavy, it's more you know, traditional retail stuff, right, holiday promotions and sales and stuff like that. If that goes to plan, they have hinted they're going to expand, but they haven't. They haven't rolled out anything formal, but you know, they've made clear that they want to take this nationwide and they want to take it bigger from here.

All right, Thank you so much for joining us. Matt Day, Bloomberg News reporter, and of course we have our Bloomberg Business Week editor Joel Weber joining us here in studio. Thank you both so much. You can find Matt's story on the terminal or online. Amazon kicks off biggest grocery rebrouots since buying Whole Foods. This is Bloomberg.

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Honey?

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Let's mate, I want to drive.

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Try This is the drive to the Globe dot Com. Tim think we'll drive around on Bloomberg Radio.

Jessminton and Madison Mills here in the Bloomberg Interactive Brokers studio on a day where you're looking at the S and P five hundred on pace for its worst day in a few months here, and who better to come in and chat with us as we only have a little less than twenty minutes before the closing bell the Nancy Prile, who's co chief executive officer and senior portfolio manager as Essex Investment Management on Zoom from Chicago. Nancy, thank you so much for joining Maddie and myself on what a day in the market's here? And I want to start off with just what's your when it comes to the broader stock market reaction on the heels of obviously a confluence of a lot of events when you have, say this Fitch downgrade, but you're also seeing a lot of activity with these Treasury issuance in the bond market that obviously has made some big moves there in bond yields.

We think that this move is really the pause that we needed. If you think about where we've come from this year. In the beginning of the year, almost everybody was very bearish, still worried about inflation, worried about an imminent recession, or maybe not so imminent recession, but a recession nonetheless. And as the market's gone on, as we've gotten excited about generative AI, as we've gotten excited about the big cap stalwart tech companies, complacency has started to build, and we've seen recently a crumbling of many of the bears who have been pivoting to bullish sentiment. We've seen massive, massive short covering by hedge funds. We've seen money flowing into the market, both from institutions but very important from individuals, and that's led us to a little bit of an over bought position where even though the earnings have been very good, in fact better than expected, and even though the economy is proving to be resilient, expectations were just a little ahead of themselves. We think that the Fitch down Braide was the trigger that gave the book, that gave people who are getting a little bit cautious about this complacency the excuse to do a little bit of selling. But we think this is still very orderly and it's nothing more than a mid course correction.

Is today kind of the perfect example of why we need to continue to worry about narrowness in a rally, specifically speaking about the Magnificent seven kind of bringing up markets so strongly when you have a day where bonds might be weighing on those big tech names, Yeah, well.

I mean I would say today the weakness is weighing on almost everything. It's a pretty broad based sell off, hitting both large caps, small cap, growth value, et cetera. However, you're making a really good point, which is, with a market that has been led by such a small sector of the market, and particularly by such a small number of names, that it's important not to over invest in those well recognized growth areas only, but to have a more diversified portfolio and to look where the strength is emerging. And what we have seen over the last couple of months is that the market is broadening, that strength is broadening. More sectors are participating, and really importantly, more market caps are participating. We've seen some strength building in those small and mid cap areas that we had not seen earlier in the year. Those are still very attractively valued, particularly compared to their larger cap peers.

So how are you positioning then, Did you make any changes today with your portfolio positioning?

Well, we are not short term traders. We are long term investors. So although we do have some open orders, as we all always do, it's not really driven by today's action per se. What we have been doing, though, and we've been doing this all year, is focusing on those areas that we believe will drive economic growth and drive that growth in a way that's better than expected, not just this year but really over the next couple of years. To us, that means a big focus on industrials, on restoring and manufacturing, reindustrialization of the United States and the world, infrastructure spending, the transition and energy and of the economy to a more electrified economy. So really building exposure in those areas and taking selective profits in those companies in those areas that maybe have gotten a little ahead of themselves. So taking our profits on stocks that are up fifty sixty eighty percent year to date.

What's your thinking then, on which of those stocks you need to stay in for a second half of your rally versus the ones that you feel comfortable getting out of.

We think that the second half of the year will be led more down market cap, and we think it will be led more by companies. I would kind of agorize them as GARB companies growth at a reasonable price, rather than deep value companies. We think that the economy is likely to stay sluggish but hopefully positive. We think, I mean, what we've been saying all year, and we're not changing our tune here is that it's going to be a bumpy landing. So at times it may feel like we're going into a mild recession. At times it may feel like we're not. But that means you don't want to go deep value, but you want to focus on those areas where they have tailwinds on economic growth. To us, that means areas like environmental sustainability. So the companies that are doing traditional environmental management. You can think about landfills, you can think about incinerators, you can think about waste clean up. We also want to focus on this transition to this electric economy. We want to think about the companies that are laying the groundwork for generative AI. Now we all know about Nvidia, but there are a lot of other companies that are below the radar screen that are also benefiting from the build out of these data centers. We again want to think about the restoring of manufacturers, maybe semiconductor manufacturing equipment, factory automation equipment, those kinds of names that are selling it multiples that are less than twenty times, with earnings that are coming in better than expected, and revenue growth rates where they're seeing unit growth and not just pricing growth.

We still have about a little under two months before the fed's next rate decision, and but we do have Jacksonville at the end of this month. What's your view on the fed's re hiking cycle and do you think they are done.

Well? I think they are, in fact data dependent. It doesn't feel like that all the time. But I thought from Chair Powell's last comments when he spoke what was it a week ago or maybe a week and a half ago, and he talked about the fact that they need to recognize the direction of inflation and not wait until we reach the target. And that's really the first time I've heard him say that, certainly at least in a long time. So what he said explicitly was that they will need to pause before we get to two percent. They will need to cut before we get to two percent. We just need to see clear indications, clear evidence that we're on the way there. Our best guess is that they won't actually say very much at Jackson Hole, that they will keep things somewhat close to the best, waiting to see the data that comes out between now and September. The data so far has indicated that inflation will continue to moderate, and therefore they could continue to pause. My one hesitation there is that we are seeing some increases in oil and in food, driven mostly by what's going on in Ukraine and Russia on food side with wheat, and that might muddy the waters a little bit in the short run. So we could see one more twenty five.

All right, Nancy, thanks so much for joining us. Nancy Prey, co CEO and senior portfolio manager at Essex Investment Management, giving her perspective here on the markets on a big down day.

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