Ep.107: Nasdaq 100 Moves Back Into A Bull Market!

Okay, hello and welcome back to episode 107 of the Market Maker podcast. You have to excuse my voice, still recovering from a touch of the man flu, uh, at the moment. So I'll do my best, it might get a bit croaky towards the end. So gonna have to lean on you, I'm afraid, Piers, this episode.

Well, I'm used to carrying you, you know, so That's it, business as usual.

This is my role. My role is to make you shine, so give you the airwaves. But look, we'll, we'll discuss a few things in this episode. It's a little bit different. Last couple we've been quite concentrated on specific topics, but this week overall, I'm not going to say it was dull because there's plenty of stuff going on, but it hasn't been like a one major killer blow for markets. So We're going to talk a little bit about the equity rally, the bull market that we're in. So we'll talk a little bit about that for the technology sector in particular. Then on the other side, not doing so well, are the bankers. Global dealmaking having its weakest start to the year in a decade. And linked to that, we had one of the big first US financial names report their Q1 numbers, Jefferies. Their investment banking fees got hammered. Is this a sign of things to come for the upcoming earnings season? That's not for another 2 weeks or so. So a good litmus test for how they might perform, some of those other financial institutions. And then UBS still in the spotlight, of course, following the Credit Suisse transaction. And they've brought back a very senior figure to the fold. He's been called to arms. So we'll explain a little bit about who Sergio Amati is. And then to finish things off, we have a quick chat about gold. Because this month is the 31st of March recording this, set to be the first month of net inflows into gold ETFs for about 10 months. So might be quite obvious why, but there's some interesting underlying kind of dynamics to be aware of as well. We can discuss and we'll look to wrap things off with a little bit of Apple because they've introduced Apple Pay Later to allow consumers to pay for purchases over time and whether or not that was going to make a big difference to them or They're competitors, of course. Saw the Klarna guy tweeting this morning saying— what was it? Imitation is the greatest form of flattery, he tweeted this morning. Oh yeah, whatever, mate. But look, let's kick things off with the NASDAQ. I mean, I was just looking at the charts, we're still holding up pretty much at the best levels. As, as we stand toward the end of the week, NASDAQ 100 in the middle of the week, Wednesday, for the, for the first time in nearly 3 years, moved into a bull market. And technology stocks outperforming, of course, helping that. Um, a couple of, couple of figures then to, to just add into this. So, well, I guess first of all, why don't you give us the definitions of these, these terminologies that we, that we hear get referred to?

Yeah, well, bull markets, bear markets, uh, corrections, um, so there's, there's a rule, rule for all this stuff. So it's when you're talking about any market, right? But normally when you're talking about the big stock indices, these terms are rolled out. Um, so a bull market is just a situation where the current price moves more than 20% above the recent low, or whenever the low was, if you're now 20% above that low, then technically speaking, that's what we call a bull market. So when you're looking at the NASDAQ, then, um, the low— what we kind of had, we basically had a triple bottom: September— or sorry, October, November, December, um, you could even call it quadruple start of January as well. You had this kind of big technical sort of bottom formation, um, and then this year it's just launched to the upside, um, and actually so quarter one, just so happens the low was basically on the 5th of January, right? And that was at 10,700 on the NASDAQ. And here we are knocking on the door nearly of 13,000, currently trading 12,960. So yeah, technically speaking, that is just a whisker over 20% move, um, to the upside. So that's a bull market. A bear market is just the opposite. That's when your— the current price is 20% below the recent high. And then a correction is kind of in the middle. A correction is a 10% drop from recent highs. So that's just the kind of technical of it all. Um, but I'm quite interested. I mean, it's quite extraordinary. I would say that officially we are in a bull market for the NASDAQ. Kind of seems a bit odd to be saying those words given kind of what's been going on over the last few weeks.

But yeah, last few weeks, like, mass layoffs at all the tech firms.

Yeah, I mean, I think there's two things to talk about here. Firstly, what about the other markets? Obviously the NASDAQ is just tech, so tech has been a big outperformer in 2023. But when you kind of have a look at the S&P 500, for example, over the same period since, let's say, quarter one of 2023, the S&P Well, what do you think? I mean, it's up, but without kind of calculating, what's your broad guess? The NASDAQ's up 20%. What do you reckon the S&P should be up?

5.

Ooh, OK. You've gone lowball there. All right, it's actually 7. So the S&P is up 7%, bearing in mind that 25% of the S&P is tech. Tech has smashed it. So actually 7% is— I mean, that's surprisingly low, I would say, relatively. The FTSE 100, quarter 3, 2% up.

Oh, come on, the UK.

The good old FTSE 100 has smashed a 2%.

Well, you know, London also lost its title, I saw. According to a City of London survey about the financial capital of the world is no longer London for the first time in quite a long time.

What, what do you— what's, what's— how do you measure what the financial capital of the world is? Because I would say London probably lost that a long time ago.

This was a survey run by the City of London Corporation, Piers.

Okay.

They finally admitted, yeah, they're like, come on guys, you're about like 50 points off every other tracker here, you're gonna have to bite the bullet.

Um, look, the FTSE obviously hasn't performed well because there's— it's very heavyweight banks compared to these other indices like the S&P or obviously certainly the NASDAQ. So given recent events, then for sure the FTSE 100 index has suffered more than most. But, um, so yeah, I guess that's one thing, right? Just to say the tech sector has certainly outperformed. Um, but like, what's going on? Because it's a bit strange given this banking crisis and, as you're saying, looming recession fears and all the rest of it. And you're like, well, how the hell does that work? Well, I think it's a kind of a function of an unwind of last year's trade, because last year tech underperformed and was trending lower all year because of higher interest rates and because of the fact that the outlook for interest rates in the future remained, you know, more hikes, more hikes, interest rates higher for longer, inflation staying stubbornly high, you know, more hikes, more hikes, more hikes. And ultimately technology is an interest rate sensitive sector. And that's— we talked about this— is about growth stocks generally. You know, their valuations today are very much, you know, that today's valuation is built out of those, that future growth and the future revenues and the future profits. Okay, but of course, if interest rates are higher, well, then you've got to discount that future cash flow. So future profits becomes less valuable today. And so 2022 was just all about that. It was revaluing growth and tech stocks in particular, factoring in now a higher interest rate environment, discounting those future profits. Now this year has kind of flipped a bit, hasn't it? Because the interest rate outlook has now shifted, um, and it's shifted really in the last few weeks, really because of the banking crisis, because of SVB all of a sudden everyone's kind of pivoted their expectations. And like right now, um, and actually to put some numbers on this, so in December the market implied Fed funds rate, um, oh sorry, not in December, sorry, the market implied Fed funds rate for December 2023, put more simply, what will Fed interest rates be at the end of this year? Markets were pricing in at the start of March, so pre-SVB, they were pricing in rates at 5.5% at the end of this year. Now fast forward 4 weeks, they're now pricing in 4.3%. So that's a huge change in future rate expectations. Markets are pricing in rate cuts. So that's They're the opposite to that 2022 story. So that's why tech stocks are smashing it here, because our interest rate expectations have pivoted.

And to kind of tie that in as well, you had HSBC Global Private Bank come out earlier this week talking about that the greenback is likely to be dragged lower by an economic slowdown in the US and the Fed winding down its campaign of interest rate increases in the second half of 2023, and they were kind of warning about bracing for an extended period of dollar weakness, what they were talking about.

Yeah, I mean, I don't know whether it's, uh, I have a personal opinion here, which, um, is just, I stress, just my personal opinion, uh, but I think that maybe we're in a little bit of a I, I don't think this is sustainable. This NASDAQ move, this tech stock rally, I don't think is sustainable in the short term. And that's just because I think, again, we probably got— I think we've got a bit carried away again with these rate expectations. So the idea the Fed are going to start cutting at the end of this year, I mean, I would say that Firstly, they're data dependent now, so they've moved to the position of being data dependent. And currently we think they might hike once more, then there's going to be a recession and they're going to start cutting. That's what markets think. But, um, they're only going to start cutting if inflation starts to come down, right? And is inflation going to come down? I mean, we're going to find out. We actually got some data today, the PCE figures from the US. Um, and we'll see. We had European inflation figures this morning, um, and if you get your FTs out and read the headlines, you're like, oh wow, inflation's dropped by much more than expected. Except that's not the important part, because underlying that, the core inflation reading continued to go up. So yes, the energy costs are coming down, right? But if you take out the energy costs, the underlying inflationary situation is still moving higher. We had, we had higher than expected inflation figures in the UK as well, right? So I'm not sure that this inflation thing is tamed. I, I think inflation is going to stay higher, and therefore the Fed are going to find it hard to be able to cut rates. So then you move to the next idea. Well, if they— therefore, if they do end up cutting rates this year, it's going to be because we have a big recession. And then you're like, well, okay, if you have a big recession, well, surely stock markets, you know, they're not pricing a big recession at this point. So they're kind of rallying because we're going to get rate cuts at the end of the year without quite realizing the scenario that would need to play out in order for those rate cuts to happen. So I think these— I think a lot of investors in the short term have got a bit carried away. They're kind of in old-school mode buy the dip, you know, money's super cheap. And, and we're just not living in that world anymore.

You sound a little bit like Michael Burry. I don't know if you saw that tweet that he put out.

I didn't see his tweet, but yeah, I'm definitely more in his camp these days. What's he saying?

He originally tweeted sell, referring to equities.

When?

I think this was, um, But probably, I think, at the bottom of the bull market, right? And so the meme that was in circulation yesterday was that he tweeted again and said, I was wrong. And actually, I mean, credit to him, right, for like coming out and just, you know, yeah, taking accountability for that. Um, but yeah, I'll hook you pick you guys up. But let's tie in gold then, perhaps, of all the different subject matter we were talking about. Yeah, so how does, how does gold fit into that mix that you've described? And does that then lend its hands to why it's an attractive investment at the moment? That stat was that March will be the first month of net inflows into gold ETFs for 10 months. While the volume of bullish options bets tied to funds has approached record levels as well.

Yeah, I think so. Gold's trading just shy of $2,000. Okay, um, we've had a big rally just in the last couple of weeks, but really we've had a really big rally over the last 4 months because if you go back to the start of November, we kind of had to bottom out at around $1,600 and it's rallied to $2,000. Okay, so we've had a big move higher. $2,000 is a really critical kind of line in the sand in terms of a price point for gold. We, we breached it, um, well, let me go back further on my chart just to make sure. Yeah, we kind of breached it, uh, briefly in August 2020 during the, obviously, the kind of first round of COVID Um, we then breached it again very briefly March 2022. Um, but each time it was a move above $2,000, hardly, hardly any period, and then down, right? So we've never sustained a move above $2,000, and you're now seeing people starting to say this is the time. Um, I don't know, I would say that the banking crisis particularly was very positive for gold, not only because gold is a safe haven, right? But all of a sudden you have people looking for places to park their cash, you know, other than the usual place of, well, I'll just put it in my bank account. And so I think gold was a particularly, um, you know, go-to vehicle for some of these deposits that were getting pulled out of banks. Now, I think, will gold break $2,000 now and push higher? I think it will if the banking crisis, the SVB crisis, the Credit Suisse crisis, if it's not over, then yeah, sure. But you know, when we talk about the NASDAQ bull market, you know, people are getting more confident that the banking crisis is— has now finished, and you know, that whole risk is going away. So I think gold above $2,000, I don't know. I'm not quite as bullish maybe as some are. Um, I think it's definitely tied to that banking crisis.

Could you explain this element then? There was a piece in the FT where it was a metals analyst at Standard Chartered, and they were talking about the collapse of SVB and Signature, massive increase in tactical positioning, safe haven, so on.

Fine.

They also said in previous crises this impact has been offset by other investors being forced to sell gold to meet margin calls and other investments. However, this analyst said that months of investor outflows have meant the positioning was light at the start of the latest problems, reducing the amount of further selling.

Right, that makes sense, right? Because, yeah, one thing that stops gold going higher in a moment of crisis is people that need liquidity and need cash. They've got margin calls to cover. Where'd you get— where'd you get your cash from? Well, okay, I'm gonna have to sell some asset that I own in order to raise capital to kind of plug that margin call, right? So the go-to— one of the go-to assets to sell is gold. So you sell gold, ironically, in a crisis, because if all you think gold is for is a safe haven, well, you should you should be buying it in a crisis and it should only ever go up. But yeah, there's— you've got to kind of go beyond that. And people selling to cover margin calls. But the point here in that article was that there weren't many people who owned gold in a way, right? So it wasn't— it's no longer the go-to asset necessarily to sell to raise cash for other use. And so yeah, that that sell-side downside pressure has been less strong now than in previous times, which of course helps it move higher.

Cool, right. Well, let's, let's pivot and let's talk a little bit about global deal making. I don't think it will come as much of a surprise to anyone that it's been the weakest start of the year in a decade. Um, to give you a couple of percentages, the value of mergers and acquisitions fell 45% year over year to $550.5 billion US dollars, the largest decline since Q1 of 2001. Europe was the slowest performing region, activity down 63%, followed by US down 47%, and APAC was down 24%. Anything in there that maybe the percentages?

Yeah, that, I mean, they're huge, especially like these are year-on-year percentages, right? And like 2022 wasn't good either. Um, I mean, really 2022, it was more quarter one was the best quarter in that year, but it was a really bad year, right? So these year-on-year comps, you know, to have a massive drop again of these magnitudes is, is, yeah, just showing just how desperately bad deal flow is still.

Um, and I think some of the only deals that are going through is predominantly based in healthcare. Yeah, the kind of larger magnitude deals.

Yeah, so yeah, I mean, exactly. So, you know, if you took out some of the, the super big deals, and there haven't been many of them, like Pfizer bought Seagen for $43 billion, right? That, that one deal is $43 billion, you know, out of a total of $550 billion. That's almost 10% of that entire total, right? So you kind of took that Pfizer deal off the— it's kind of, it's even worse. So yeah, but the biggest percentage decline in deal flow since 2001. So yeah, this is, this is properly bad, and Europe's the worst, the worst of it. I mean, it's not a surprise that it's bad. I mean, I think it is a surprise it's that bad, but your big headwinds are all the obvious stuff. It's rising interest rates has of course made financing these, particularly these larger deals, more expensive. So what we have seen is the number of deals has been quite strong, but the value of them has been really low. So I think you've had quite a lot of activity on the small to mid-size and just hardly anything coming through on that big top level. And that's one, is because interest rates make financing more expensive. Obviously we've had valuations collapse. And so if companies are able to not raise capital— what I mean by that is, have they got enough cash flow, you know, uh, have they got enough working capital to continue? Because some companies that don't have that luxury, they're running out of cash. They're trying to reduce their cash burn by cutting costs, like the Elon Musk, you know, Twitter initiative that sparked a lot of cost cutting in the tech sector particularly, right? So people are trying to cut costs so that their, their kind of runway is extended, delaying their need to raise capital. Because the problem with raising capital now having to have a massive down round, right, where you're raising capital at a valuation that is way, way, way, way lower than the valuation you raised cash at last time. Okay, so let's say if you raised cash in 2021 in the bubble, then you had valuations that were crazy high, right?

So I can give you an example that will connect within some of the other themes we'll talk about. But Klarna.

Yeah.

So Klarna had an initial price tag. They got as high as $46 billion. I think it was less than a year later.

Yeah.

They had a funding round and it put their valuation at 6.7.

Ouch.

Oh, I never felt— well, what's the saying? I would have never felt so poor if I haven't tasted such riches. That poor guy, huh? He was on there. I remember he was on The Diary of a CEO, that podcast.

What, the Klarna founder?

Klarna founder. And the title of the podcast episode was even like, From Zero to $46 Billion and Back to Zero. They could do another episode, back to back to zero again. Well, I'm sure, to be fair, credit to him, he's probably learned a lot through that process, I'm sure.

But so this is a serious headwind to deal flow because companies are desperately trying to avoid raising capital if they can because the discounts are just unbelievable. So obviously investors don't want to have to mark-to-market their book. You know, if you bought— if you were in the round where Klarna raised at $46 billion, you know, what's your investment worth now? You know, it's collapsed, right? So they're trying to put off. And so obviously this means deal flow volume is much lower. And then obviously we've had a banking crisis, which clearly isn't going to help either. So you've— yeah, you've got these kind of you might say 3 big headwinds that are all related. I mean, ultimately all of those things are about interest rates moving higher super fast, okay? Valuations collapsing, obviously the cost of money going up, and the banking crisis is all wrapped up into this super aggressive rate hiking cycle that's fed into, yeah, deal flow. And regionally, it's quite interesting. You mentioned that Europe— Europe are down 63% year on year in terms of in terms of deal flow. That compares to the US down 47% and then Asia Pacific down 24%. So certainly Europe, that seems to be the big loser here. But the activity, yeah, I've got a chart here which is showing the activity, you know, where these deals that are happening. Yeah, healthcare, and technology are the big two. And the ones where you're seeing virtually no action at all is down in like media, telecoms, retail, consumer staples. You're getting virtually no action down there whatsoever.

Um, so the numbers we had from, from Jefferies then this week, not that surprising on that side. The investment banking revenues were down about 42%. That was actually worse than what the Street was expecting. On the flip side though, I think their trading division was really strong. I think it was their capital markets division. I think it was their fourth highest revenue figure they've had in their history. So given all of the macro environment you've discussed, still that imbalance, it feels like a bit of a copy-paste repeat from where we were from last earnings season. So when we think about the other bigger banks that formally kick off the official reporting season, that's not until the 14th of April when we get JPMorgan City, and then the rest follow thereafter. Is earnings season not really, for the banks at least, that big a deal?

Oh, I'd say it's a massive deal for the banks just because— I mean, yeah, all right, if you've got both sides, right? If you've got an investment banking division that's performed really badly, we expect, given deal flow, and Jeffrey's confirming that. If you've also got the kind of sales and trading market side, then fine, that's going to offset it. That's done really well. That side of the bank performs really strongly when markets are super volatile, which of course they have been. That means they make money from trade flow, right? Trade volume. So when markets are all kicking off Volumes are steeply higher and that's how they make their money. Okay, so fine, that can be offset. But we've just had a banking crisis, right? So all these banks, when they're reporting their earnings, everyone's going to be, right, what's going on? Let's have a look at your deposit book. Has your deposit book declined? You know, what's the deposit outflows? Um, are you put— and there's, they're going to be a lot of questions about, well, hang on, all those securities that you're those hold-to-maturity securities that you've got sat on your balance sheet, you know, what's the actual value of those, please? You know, why aren't you marking to market? Because actually the value of those is a lot lower, right? This is what— this was what happened with SVB. Okay, so I think that banks will be under a huge amount of attention given that we've had this banking crisis. Will it spark and flare up another episode of the banking crisis? I think it's the big question, um, yes or no. And I don't know the answer to that. We'll see. Um, but yeah, I think this earnings season is really key. Just stepping outside of the financial sector and looking at it more broadly, you know, you've got the NASDAQ in a bull market, up 20%. Um, and I think actually the next few weeks are really important. Because we're going to start to see the earnings. So how have companies performed in Q1? But more importantly, what's their outlook going forwards? And we got a recession coming, right? So what, what do they think about that, and how is that impacting their forecasts for revenues and profits? And it may be that we start to get some decent-sized revisions lower on their outlook for the rest of 2023, and that could be a negative sort of catalyst. But then also, you know, the next phase of data. So jobs data out of the US, inflation data. You know, if the banking crisis is done and it's behind us, well, look, it's back to inflation, isn't it? And what's happening to inflation? And that's what the Fed are going to make their decisions based on. And so I think the next few weeks with earnings season and then another round of monthly data is, is going to be really key And yeah, is this, is this stock market rally, is it sustainable or not?

Hmm, sustainable. The tech firms will say what an awesome job they've done with streamlining their businesses. Yeah, and let's just talk up, uh, generative AI a little bit more. Let's juice that narrative. And then the bank, the banks, I don't know with the banks. I was thinking from an information flow point of view banks are very good at priming the market for bad news.

Yeah.

And if there was going to be some skeletons that come out and questions of the magnitude that you mentioned, probably you've still got time, right? These things tend to come out nearer to the time of release of the official information. Maybe it's a bit early, but I don't know. I just think you should have heard about this sort of stuff already. There's been enough of a microscope on these financial firms to unearth and extract those kind of skeletons that you were alluding to.

So yeah, you're probably right. Let's see, you're probably right. But I think with the tech sector, I think there's certain companies like Facebook is a really good example, or Meta I should say, where their costs were out of control and that was hammering their share price because investors were losing faith in Zuckerberg's, you know, Holy Mary pass to try and get this Meta thing to dominate the, the meta environment in the future and is just throwing everything at it. And so they've pivoted and started to go through a big cost-cutting exercise. Sure. So should the Meta share price rebound strongly? Yeah, and it has because it was so depressed. Um, so, but that's an extreme example, right? I mean, tech, yeah, they're going through cost-cutting rounds, but that's— most tech companies' stocks weren't as depressed as Meta's. So in theory, there should be less of a rebound sort of opportunity, which is another reason why I think this Nasdaq rally perhaps can't go much further.

But okay, well, look, let's, let's— two more stories quickly to, to wrap things up. So sticking with the banking sector, first you had a chap called Sergio Amati got pulled back into the fray, which is Credit Suisse. Um, so maybe perhaps a little bit of background about our dear Sergio. Yeah, much about this guy.

Well, he's, you know, he's the kind of super experienced— excuse me— safe pair of hands. Like, we need heavyweights at this moment because UBS, us as a bank, we've just taken on Credit Suisse in this fire sale. We've now got a bank that's the fourth biggest in the world. It's got 120,000 employees. It's got $5 trillion under management. You know, this is maybe one of the most important moments in UBS's 161-year history. 2023 and 2024, if the deal gets done, I would say is going to be a super, super, really important moment in their history. Right now, the guy they had in charge, Hammers, was quite fresh. It was quite a fresh new boy on the block. Um, he came in replacing, uh, Moti in late 2020. Um, they got him from the Dutch bank ING, which is a much, much, much smaller bank, um, for sure. And secondly, um, ING didn't— you know, they don't do like UBS's two main business lines, or investment banking and wealth management. and ING don't really do those. So it was like, okay, when he did come in in 2020, it was like, not sure that's a great fit. Um, but UBS have been doing fine, right? So I think he was proving the doubters wrong. But Axel Weber was the chairman of UBS— not, he's not now, but he was when Hammerschmidt was signed in 2020. And the idea was that he'd come in under a strategy of cutting costs and developing a stronger digital strategy, right? And, and, you know, so there was always question marks about Hammers and Keller, who's now the UBS chairman. Basically, the story goes that Keller was, you know, they, there was a conference call, a hastily arranged conference call you know, in the middle of the night during this Credit Suisse crisis, and Keller was watching Hammers field questions from analysts and basically not doing a very good job. I think the word was he was fumbling questions from analysts. And I think at that point Keller was like, oh my God, this guy's, this guy's not our guy. For what will now be one of the most important moments in our history. So we immediately got on the phone to Amati, who had been the UBS chief executive for 9 years before Hammers came in. And it was like, we need this guy back. We need a heavyweight here to come and step in. And apparently they went out for dinner the next night and the deal was signed. So God knows what the money, what money's involved here.

Sergio.

So yeah, it's bad. It makes sense. I mean, I think it is a— this is what chairmen are for. It's making the big calls at the right times, being brave and recognizing probably a change is needed. And then having the balls to just, you know, immediately execute it.

Um, yeah, and his background, when I was reading at the time, was at that point of when he came in, in that 9-year, um, position that he held at UBS, restructuring, pivoting business strategy, and restructuring was getting rid of investment banking, you know, right? And dealing as well with a lot of litigation at the time as well, which is— that's all coming down the pipe for sure. Oh yeah. So yeah, he's kind of— is a well-trodden path, um, for him. But so look, let's, let's go over to Apple then and talk the final one. They've kind of finally, I guess, come out and introduced Apple Pay Later. Bit late to the game, or just inevitability? It's going to happen. So does it make a great deal of difference?

Um, late to the game would be an understatement. I mean, we've been talking— we did a podcast, maybe one of our first ever ones, I think, was about Apple, and they just bought— I can't even remember the details now, but they bought a UK company, and I can't remember the name of it now, but it was very much in the, you know, the kind of buy now pay later sort of space. And it was like, ah, okay, Apple are coming. Okay, they are coming into this little sector, the buy now pay later sector, and they are gonna smash it up. And it was like, then the months went by and it was like, well, where are they? And so yeah, I dunno why, I'm not sure why it's taken so long.

Huge credit kudos.

Right, yeah, that's it. Yeah, the UK lot. Um, so yeah, it's that— that's the first thing to say. It's like, about time. Um, and I don't know the details why it's taken so long, but look, it's here now, I guess. And the, you know, the, the big problem that the Klaners of this world have is, yeah, the Apple The Apple ecosystem is a monster. And if I was the karma dude, you know, your valuation's at $6.7 billion now, having been at $46. I mean, what's it going to be in 12 months' time or 24 months' time when Apple just ride roughshod all over you?

Yeah. And to give it a bit of context, the service will be embedded in the iPhone operating system. Which accounts for more than 50% of smartphones in the United States of America.

Yeah.

So it's like, just like that, update, bang, in your hands now, 50% of all smartphones in America ready to roll.

Yeah. So I don't know how you compete with— well, obviously Klarna, I mean, they don't have a platform like Apple, so They're reliant on other people's platforms. Yeah, I mean, I would fear for these kind of other providers for sure.

That's it. Just invest in the monopoly that are big tech and you'll do all right in the long run.

But I don't know about this buy now, pay later thing, right? Has really been a function of the zero interest rate environment, right? That, that's really where it's been born out of, where a company can actually generate a profit off free lending, right? It's, it's like buy now pay later, 0% interest. But of course they make their money by late payments. That, you know, they're relying on people overstretching, buying stuff they've got no right to buy. Oh yeah, I'll buy it, you know, I don't have to worry about paying for it until later. And then later arrives and, oh, I don't have the money. And then, right, the interest rates on late payments are like super punitive. And so this is kind of how they make their money, right? Um, but yeah, this is when the cost of money was at zero. But I don't know, the cost of money's obviously gone up sharply, so that's going to squeeze their margins. Maybe that's why Apple delayed. Maybe it was just that macro view and the interest rate hike cycle. I don't know, maybe that was the reason.

But I was a bit disappointed because, um I saw those— I saw that collection of Michael Jordan trainers going on at Sotheby's this weekend.

The Dynasty—

what? I can only get buy now pay later, $1,000. I need $5 million. Come on.

The Dynasty collection. Oh, you're all over that.

That would go right there.

So hang on, what was it?

It was the air-sealed lighting.

These are shoes that the, the man himself has worn.

He wore in the final game of the, of the championship of everyone that he won from 1991 through to 1998.

It's the final game pair shoe.

Yeah, from each of his winning championships.

Wow. So that's 6— that's got to be— I didn't realize it was the shoes from the final game of each of the championship-winning— that's going to be more than 5 million.

Yeah, it's gonna break records. That's what they're saying. The, the, the highest selling shoe at the moment as a single shoe, I think, was 1.8 million, which was, um, Kanye's first, um, kind of before Yeezy became Yeezys. This was like the prototype. That Nike had done for him. And it was the first time that Nike pivoted from sports star to musician with their own line of shoe. And, you know, the people who bought it were gonna take the shoe and have digital fractional ownership, right, via NFTs, actually. Yeah, here we go.

Um, Now that you've said that, $1.8 million, I reckon these 6— because it's 6 pairs here, so they're all, they're all going to be more than a million, right? This is going to be— this could hit $10 million, no?

You're gonna have to move a few things about to get to that. Yeah, right.

I'm gonna have to sell my gold. Yeah, it's gold's definitely not going above $2,000.

That's it, margin call. I need to buy these sneakers. Cool. All right, well, look, we'll wrap it up. Thanks as ever, uh, for listening. Thanks, Piers. And everyone have a— well, we're not actually going to have an episode next week, it's Easter, of course. Yeah, I wish everyone a great long Easter break, and we'll be back thereafter. So take care, everyone.

Have a good one.