Ep.59: Apple Buy Credit Kudos & Why Snap Wants To Read Your Mind!

Okay, hello and welcome to episode 59 of the Market Maker podcast, and I'm joined by Piers Curran, co-founder of Amplify. How's it going, Piers?

It's going very well. Good morning.

Yeah, we've got a whole ton of stuff to talk about, and I'll, um, I'll run through the kind of quickfire of the major headlines for the week. But just to start, it was the 2-year anniversary on Wednesday of March 23rd, 2020 is when we bottomed out in US equities. If you remember on the day, I'm sure you do, Piers, this is when Powell came out and basically said, "To infinity and beyond," which was, "We'll do QE unlimited," basically. That was it. That marked the bottom. I don't know if you remember on that that day what you were doing, but I remember on that day, because that was the same day Boris said we're basically going to go into lockdown, the first major lockdown at the time. And it was all kind of panic because we still didn't even know what this virus was, still didn't know how you catch it, if you remember. And I remember, um, we— that's when we gave the signal, right, everyone's gonna have to work from home because the government said. And I remember just grabbing One of the— on the desks we have these mounts that have like multi-screens. So I just took the entire mount with 6 screens, 2 PCs, stood outside the office in the city and was trying to flag a cab down, which was impossible because there was like me and every other Joe in the city doing the same thing. So I remember I had to call my wife. She was not happy. Because I had to get her to help me lug these, these screens down one of the streets to try and get to an Uber. Um, so yeah, I remember that day very well.

But, um, yeah, it was people like getting on the tube and just people with just, you know, 50% of people on the train had us— had a monitor under their arm. It's like, what?

Do you remember when Boris said that statement? I'm pretty sure He said at the time, this will all be over in— I think it was either 8 weeks or 12 weeks. I can't remember the timeline he said, but it was— yeah.

Well, at least Boris recognized that it was actually a thing. I mean, remember Trump back then was just like, what virus? What Chinese virus? I mean, it was quite shocking. But I guess like from a market's point of view, Yeah, it seems just so like the kind of 2-year anniversary of the low. I think once lockdown came in and the realization was— well, the uncertainty became reality. And so we weren't quite sure what's going to happen. And then suddenly you're at home, working from home. And I think then it was actually quite immediately clear then that this was going to be a hugely positive development for a large number of companies, you know, like the Pelotons and the Zooms and so on. And so then from an investor's point of view, it then became about, right, this is, this is a probably a once-in-a-generation opportunity, investment opportunity, um, if, if you now get your kind of sector plays right. And, um, and yeah, and add in the monster kind of punch bowl from the central banks and the governments on the fiscal side, and you got a recipe for, you know, huge upside, huge asset price, uh, appreciation. And that's— there's nothing more so than in that, you know, those big US indices, and particularly like the NASDAQ, uh, just quite extraordinary.

Well, yeah, the NASDAQ low to high And don't forget the high was only a few months ago. So pre this episode of inflation scare and geopolitics, over 150%, the NASDAQ 100. Obviously we're talking about mega-cap, huge companies, and the index is up over 150%.

Yeah. I'm just looking at the chart now and the COVID— I don't know if anybody can bring up a long-term NASDAQ chart, but the COVID blip, you can hardly see it. I mean, it did lighten In percentage terms though, it did drop. I mean, it was trading at about 9,500 and it dropped to 7,000 in a month. I mean, that's pretty brutal, right?

Felt pretty hairy at the time.

Yeah. It traded below 7,000. And then of course, yeah, the high at the end of last year was north of 16,500. Just extraordinary times.

Yeah, I mean, and fast forward the last 2 weeks, I mean, I'm just looking at the US indices. We're about to head in on Friday into the US Open. Stocks up at the minute, um, from the low that we printed the last 2 weeks. The NASDAQ is up over 14% now, um, the S&P is up nearly 10% in the last 2 weeks as well now. So can it, can it be maintained? I'm not sure, but let's put it in perspective.

I've just, I've just noticed something. The sell-off we've had in the NASDAQ— I know we've bounced, so it's been a good couple of weeks, as you've just said, but prior to that bounce, the sell-off we had back end of last year into this year on all the inflation thing, and then obviously Ukraine, Russia, was actually a larger points sell-off in the NASDAQ than COVID, than the COVID sell-off in spring 2020. We sold off 3,000 points more than, more than 3,000 points in this last sell-off, whereas that COVID sell-off was like 2,500. Obviously in percentage terms though, there's a bigger point sell-off, but obviously in percentage terms—

you sound like, you sound like a journalist talking, Piers, now, picking and choosing your, your optics for maximum impact.

Absolutely. Well, you've just, you've just said what was it, 14% rally in 2 weeks. But actually, we haven't rallied half of the sell-off yet.

So don't worry, it's coming.

It is about optics though. It's so, so interesting with markets, your time frame. What time frame do you use, right? You know, it's very good. Yeah, as you said, the journalist spinning it, spinning it like a journalist. You can pretty much, you can, you can frame an argument whichever way you want, right? Depending on time frame, do you use points or percentage or— yeah, so you got to be, got to be careful.

It's interesting, when the market goes up, no one talks about it. In fact, when the market goes up enough, people start to talk negatively about it. And when the market goes down, people talk about it the most. So in fact, what should be optimism and markets going up, let's say based— I mean, we know it's not as simple as just based on pure economic performance, but it's funny the way of which media taps into that innate human psyche that we like to see things burn just generally. And it's more powerful, the response that they get through talking about the risk factor. I guess it's just built into our caveman instincts to be fearful of certain things. That could impact our livelihood and well-being. It's, yeah, it's amazing that still rings true.

Now look, there's a spectrum of journalism in terms of its going from fair, more neutral, to more kind of left or white ring extremist. And but, you know, no matter where they sit on the spectrum, um, a crisis sells paper. I was going to say papers— who reads the paper anymore? But you know what I mean, right? Crisis sells. So it's like sensationalizing anything that's negative and spinning it into a crisis is, is the modus operandi. It's like, but I think it goes, it's, it goes to disgusting levels in my opinion. Like some of the US stuff, like a good example is the Ukraine-Russia conflict and some of the reporting on that. It's like they're super pumped and excited and, oh my God, we've got a crisis. Oh, we're gonna, guys, don't worry, we've got this, we're gonna We're going to have the best coverage. We're going to be here. We're going to be there. And they're really pumped and excited because they think in their journalist mind, this is a crisis that's going to sell, paying zero kind of consideration to the sort of disastrous humanitarian thing that's unfolding. For them, it's more important about the story and the scoop and being the first, right? So there is a nasty end of that. Journalism spectrum.

Yeah, well, look, I mean, obviously Russia-Ukraine is, is still ongoing. Um, actually Ukraine has reoccupied control of towns and defensive positions just outside the east of the, the capital. But look, I'm going to park that for this episode because we've been talking about that a lot. I did think what was very interesting though, before I give the highlights of the week and the major, major headlines, was that the EU and Biden was talking about China Yesterday, so funny how they tiptoe around China. It's like they're just so scared of the mismanaging of that relationship and the harm, severe harm that could do to them. It's just such a different level of ball game on those geopolitical kind of ties. But yeah, we'll leave that for now. Let me run through some of the other headlines then. And a bit of a mixed bag, actually. Wanted to broaden it out. And Elon Musk, oh, that guy, that guy. I mean, why? But he does it. I mean, he was dancing again. I mean, it's just tragic. But I mean, like you said, he generates clicks and he certainly did. They opened the much anticipated Berlin plant and we're going to talk about that in a little bit more detail in a moment because there's some interesting facts and figures around that. But yeah, Elon's back at it again, just doing all kinds of shenanigans to juice it. And to be fair, he has juiced the share price. I mean, I look at Tesla's share price and oh, that is just a beast. And I say that because of the size of the company. I mean, their shares have risen. I'm just looking back to Last Monday, they've risen nearly 40% since last Monday.

Yeah, they hit— there was it, about $750. They've just crept through $1,000 again. Yeah, today.

Insane.

But hang on, say that again. What, what percentage is that? That's—

yeah, that's a 40% for 2 weeks.

I was gonna kind of temper that by saying, well, yeah, tech stocks are up. You know, broadly, and they are. But as you were saying, the Nasdaq's up 14%, not 40%. So yeah, it's Elon doing his thing and obviously opening the new factory.

Yeah, well, look, we'll talk about the factory opening, but the other thing obviously that we have seen is crypto. Ether is on the ascent as well. It reached its highest level since around 17th of Feb. There's a lot of optimism at the moment over an upcoming major upgrade called the Merge. Which will reduce environmental costs of the blockchain and lower transaction fees. I— my understanding is this has been in the pipeline for a while. There's been lots of issues, and it's just a kind of preparation of this. We've seen so many of these actually over recent times with a lot of the crypto news. It's kind of that total buy the rumor, sell the facts, um, type of mentality. But that's definitely been going on. That's been a talking point.

Apple—

I know we'll delve into this in more detail— but they've acquired UK based fintech startup Credit Kudos, and we'll look at why they've done that. What's the strategy behind that move? On the macro side, Goldman's shifted gears on their Fed call. I mean, they've been pretty hawkish on, on the street. They're looking for back-to-back 50s, May, May and June, gonna double tap in their opinion. Um, couple of Fed speakers have been talking up the 50 again, and the market's shifted in that way, definitely for the next meeting. But what do you reckon, back to back?

Well, I mean, it's kind of— yeah, I mean, the rhetoric at the Fed has again been quite— it's reminiscent of like back in December where they just kept getting more hawkish, and you were like, oh my God, wow, they've been so hawkish, and then they go and meet and be more hawkish. And I guess, yeah, 50s I mean, 50 is in there, right, for the next meeting. I mean, back to back. I mean, look, on the last— literally only a week ago, I was saying my opinion was that the idea of 6 more rate hikes this year, I thought was crazy. And I was more like 4 rate hikes. And yet here we go. Now it's being priced in that we'll have 4 hikes in the next 2 meetings, basically. I don't know. It looks like they'll do a 50 hike. I just think it's an error. If they do back-to-back 50s, I mean, that's a whole new territory. I've never— well, I won't know what to do. I think it would be too much. I don't think markets will deal with that.

Well, a crisis calls for extreme measures, Piers.

Let's see.

I mean, obviously inflation is the key, and what happens with this energy situation. There's a lot of things to monitor there. And China, COVID, supply chain disruptions, it's a lot. There's a lot to happen. One thing I would say, and I, I said this at the time, I think it was when everyone was baking in 50 and it was a month out to the meeting, and I was like, just hold your horses, guys, there's 30 days to run. I mean, we are talking about May's meeting, and as we've seen with the Ukraine crisis, it's what, in its 5th week? So the world can change on a dime.

And right, and I was, I was definitely in agreement with you last time. I actually, I don't agree with you now. I, even though we're 30 days out, I think what they've been saying, uh, we're gonna get a 50 hike. And you've kind of had that— well, obviously you never know what might happen, as you quite rightly say, but like the Russia-Ukraine thing looks like it's kind of entrenched in now. Are we going to see a dramatic sort of, uh, escalation? Could possibly, but chances of a dramatic escalation have reduced, if you see what I mean. But you never know, there might be a whole entirely new kind of black swan event that happens. But I don't know, I think we're probably going to get a 50 now. Yeah, crazy time.

Well, the other thing was the Russian equities resumed trading. The Moscow Exchange resumed trading in 33 Russian equities of the 50 listed in their benchmark. That happened yesterday morning. As soon as it opened, pop, went up 15%. I think Rosneft, Lukoil were up around 20%. That's not to be unexpected, right? It was to be expected. I mean, they were crushed going into this. So seeing these like massive jumps is no big deal, right?

Yeah, I mean, it's just— well, like you say, it's the journalist spinning the kind of the narrative, right? When you say it jumps, what did you say, 20% or something?

Yeah.

But like Rosneft, for example, I'm just looking at that chart now. Like in January, it was trading up at around 632. Okay, um, even with the big rally there, it's now only up to 365. So still trading pretty much— let's just round it— half of its previous value, even though you've seen that big pop. And it's still the lowest share price, you know, we've seen since 2020, um, when we had COVID and the idea of energy demand were just collapsed. So You remember the price of oil went negative in April of 2020, right? And the price of Rosneft is not too far off where it was in April 2020. So even though we've had that sharp jump, I mean, there's a thing called a dead cat bounce. Google it. Um, that's got to be a— it's got to be a dead cat bounce right there.

Okay, and then Sorry, my cat just walked past just as you said that. I kid you not. If only I could show you. But the other news headlines, two more. EU has just made an announcement, the US and the EU, to supply basically gas, LNG, coming from the US to Europe. And obviously this is to lessen the dependence, the heavy dependence obviously that Europe has on Russia. So the US will provide the EU with at least 15 billion additional cubic meters of LNG by the end of the year. Um, and just as a reminder, Russia—

tell me, how much is that? Is that a lot?

Yes, it's a good question. Um, I don't think it is. I mean, I don't have the background in terms of daily consumption or whatever. Yeah, we need— we, um, Context definitely would, would help with that. And let me, let me dig it out when you're— while we're on the pod, while we're going, I can multitask it. We'll find out. And then the final thing, obviously the biggest news of the week, Italy. You know what's happening with Italy? Well, I said, uh, broke English hearts last July. Yeah, but it's extraordinary. Yeah. Failed to qualify for the World Cup for the second straight tournament. The European champions, um, and shock 1-0 defeat, North Macedonia, the mighty North Macedonia.

I mean, that's a— talk about collapsing, um, you know, talking about collapsing price of Rosneft, this is, um, this is an even bigger fall from grace. Quite— it's just so weird sport, isn't it? Just—

what is that, complacency?

It's what's great about sport, I guess, right? It doesn't matter, it's David versus Goliath, but sometimes David wins. Yeah, love it.

Yeah, that's why people love sport.

Yeah.

All right, well, look, let's, uh, let's delve into the first topic, which is, which is Tesla. We briefly talked about Elon's publicity pushes, but it comes as he opened the new Berlin factory. And a couple of statistics here. The actual factory in itself cost $5.5 billion to build. I mean, that's just a lot. That's a lot of money.

I mean, that's how many Teslas has he got to sell to kind of make that back? 5.5 million. Uh, how many zeros is that?

Well, while you work that out, let me go through. So the company— the company— well, this might help. The company sees the Berlin factory producing up to 500,000 vehicles on an annual basis. Now, right, we'll get— we'll get around to what he said in terms of My question when I heard that was, okay, that's cool, 500,000 vehicles. When are you going to hit production rate at 500,000 annually then?

Yeah.

That's not going to happen tomorrow.

There was a stat on that. Yeah. Well, you're going to say it, I guess, right?

Yeah. So there's the stat on that was he said himself, he did a trip to the construction site back end of last year when this was all going on. And he said the start of production is nice, but volume production is the hard part, he said himself. So he was kind of front-running this a little bit, but obviously he's got excited on the actual factory launch day. He added that— he added back then in October that Tesla would target making 5,000 to 10,000 vehicles a week by the end of 2022.

Yeah. So yeah, that's a very big range, by the way. And we're only 9 months away from the end of— what I want to know is, how is that forecast— how is the range of that forecast so monstrously wide just 9 months away from that date? I mean, maybe I'm being unfair. Obviously, we are still in the middle of a supply chain nightmare, so maybe Obviously that makes it a lot harder to forecast, but 5,000 a week is a run rate of about 260,000 a year. 10,000 a week, that's his, that's his capacity. If his capacity is 500,000 a year, then that's obviously 10,000 a week, right? So he's going to be somewhere between operating at 50% capacity or full capacity in 9 months' time. Um, but I don't know, it's only 500,000.

Yeah. And so the, so the interesting thing here was a separate piece I read this week which was talking about Volkswagen, and we've talked about this before, about your Ford Motors, your Volkswagens, you know, companies which have very matured manufacturing processes in place, logistics, distribution. Yeah, all the rest of it. And basically VW have said, I mean, I could like anecdotally, I see, do start to see now EV VWs in different ranges now. I actually, I wasn't seeing that I'd say a couple months ago. Yeah. But you are starting to see more, they're out now. And so a couple of facts here, the number of electric models, including the Porsche Taycan, has already sold out for this year. I mean, I, I guess the run rate of production for that model is probably quite low, but the point being is that the company's EV business is expected to be profitable ahead of schedule. This is for Volkswagen. Now, a bit of context here. Volkswagen has 650,000 employees, 10 distinct brands like I just mentioned, Porsche and so forth. The VW Group is just an absolute giant in auto manufacturing. Last year, the company delivered almost 9 million cars. Yeah. So just shy of 10x what Tesla shipped. And so what this article I read did was a bit of a back-of-napkin calculation. They were saying, look, the rate of improvement that VW are making, the demand and the ability to upscale production, They were still saying that the run, the numbers in the German giant is only about anywhere between 12 to 15 months behind Tesla.

Yeah, that is like the, the best analogy. Do you, do you watch cycling? Cycling? Yeah, like the Tour de France, that kind of stuff. You know, you know, this idea of the peloton, right? Which is when the the group are together, right? And sometimes you get a breakaway. It's like an individual cyclist that's trying to go alone, right? Basically what's happening here, the peloton is catching, right? The, the cyclist that's broken out is Tesla, and the peloton is catching at speed, and it's just gonna gobble it up, sucking him into the peloton. Especially as he said, producing at scale is the hard part, and he is not wrong. I mean, they produced— what, they're about— well, let's just call it a million cars a year now, I think, right? Um, they've just opened in Germany, fine, that might take it to 1.5 million, okay? But they're trying to get out of China, so some of that 1 million that's kind of baked in there, some of that will actually reduce. If he's got to— if he's got to spend $5.5 billion to make a factory that will produce 500,000 cars, to hit 10 million, right, longer term, he's going to need 20 of these factories. That's an investment of $110 billion just to build the production to, you know, capacity to deliver at scale. And bear in mind that, you know, fine, they might sell a car for whatever, whatever they cost— $70 grand, $100 grand, whatever model. All right, they're going to produce cheaper ones as well, but bear in mind the cost that goes into production. The profitability on these things at the moment aren't particularly high. So I guess what I'm trying to say is, for Tesla to try and compete on scale with the mega caps like Volkswagen. I, I still don't buy it. And check— watch, watch out for Twitter, any tweets from Musk. Now the share price is back above $1,000. I wonder whether he's going to send out any new polls on Twitter. Yeah, guys, guys, should I sell another 10% of my stake? What do you think? I'll do whatever you say.

Well, you know, well, his brother needs to keep an eye on his brother in that case.

That's right.

If he starts dumping, you know something's coming. But what's interesting, I put out in our newsletter on, I think it was Wednesday when, when this happened, and I was looking at— there was a good chart about the production. And actually for 2022, it's like more than half, it's approximately 60% of the production of vehicles coming out of Shanghai. Obviously, at the moment, there's kind of big worries again because of COVID and the zero tolerance policy and the impact that's going to have now, meaning that they're going to have to follow that through. And is it going to—

Well, I was talking to Xiao this morning. So he's the guy who heads up Amplify in China. And our offices in China are in Shanghai. And now, as of this week, they're now back into full lockdown, working from home. I know these big factories are— they've gone into bubble, yeah, bubble mode again. Um, yeah, it's obviously a big problem for anybody manufacturing anything in China. Um, and you know, as we were talking about in previous episodes, it's going to accelerate the, uh, you know, the supply chain strategy change. Yeah, and big global corporations, they just gotta move out of China.

Yeah, and now then, on that point, Larry Fink, who's the CEO and chairman of BlackRock, he said that Russia's invasion of Ukraine is reversing the long-running trend of globalization.

Right.

And I know that's something you've, you know, you've talked about many times before, this, this end of globalization.

Yeah.

So you've got Russia now, you've had China already.

Yeah, it's peak— it peaked. I don't know. Well, yeah, I guess Trump and China, the trade war, was probably triggered the beginning of the decline. I think so. Really, globalization peaked pre-Trump, I would say, and now it's on a slide. And that, that, that trend of reversing globalization, that's a very— that's a big ship, right, to turn that thing around. Almost impossible.

This is all very, very reminiscent of that big cycle analogy of Ray Dalio. This is just a slow, gradual shifting of powers. You go back, you reverse then this open trade and global sense back to nationalistic. But people—

right, he's right on the— the difficulty is with Ray Dalio, it's he's right. I mean, history tells you that he's right. And most— I should say most likely he's right, because he's obviously trying to predict the future. So there's always uncertainty with that. But it's such a mega long-term cycle that picking the timing of how that cycle shift is going to have an impact on economies or businesses the timing of that. And it could be that you go, he might be right, but it could be 20 years for this to play out. So rather than— I guess we're so short-termist, we always think there's got to be some kind of monster major tipping point. And look, sometimes there is, right? But often there isn't a major tipping point. It's just more of a slow, gradual grind. And it's been happening for years already, just a lot of people haven't quite noticed or realized.

Okay, well, let's, uh, let's pivot to Apple and what they've been up to, because I know you've got a few, few thoughts on that. And Apple acquires the UK-based fintech startup Credit Kudos, who uses machine learning. So whenever I hear that type of jargon, I'm always a bit— what exactly Is that specifically— because these words do get banded about.

What it means is the valuation, you just add another 10 to the valuation multiple. I think that's what that means.

So what's the deal here then? What have they done? And what's the purpose of this acquisition?

Yeah, well, Apple have got, I guess, in some ways, an unusual acquisition strategy compared to perhaps their kind of big tech rivals. Um, in that they don't— they never make big, giant, you know, multi, multi, multi-billion dollar deals. They never do that. They always tend to buy little guys, little small teams to kind of bring in, and they're often quite secretive about it. Apple now, they don't really say why they've acquired that small company there, or this team they've pulled out of that company there. They never really explain why. Mostly it's always about them bringing in some kind of capability that is a plug-in to the iPhone and therefore a plug-in to their whatever billion users. How many, how many users have Apple got? I always forget, actually. They don't tend to talk about it much, but anyway, billions, right? So it's about, you know, bringing in a product to plug in and give the iPhone user more. And this is just the same, right? It's a small purchase, it's a UK company, but it's a relatively small purchase compared to the size of Apple, I mean. But it's about, it's about buy now, pay later. This is the game that Apple now want to slap on top of their Apple Pay. I have to say This has been a long time coming. I'd say Apple have been a bit slow in kind of moving down that pathway. Apple Pay has been around for years now, but it's only now that they're looking to bring on that capability of being able to rate someone's credit— I was going to say credibility, but hang on, that's not the right word. Their kind of credit rating is what I want to say, right? Rate It's to measure someone's credit rating, so then know if that's an individual that they would like to offer a buy now pay later option when they're purchasing something on their iPhone. Okay, so they're entering the buy now pay later, you know, there's huge— there's a— this is a crowded space already. Let's not forget, you know, Klarna, Afterpay, PayPal do it now as well, right? This is a big very competitive space. But of course, Apple have got a few billion users and Apple Pay is really successful and everyone buys everything on their iPhone. And so Apple can step into this market and really have an impact and take a big market share. So that's their angle. Makes sense. Credit QDOS. I mean, they're— it's about— yeah. It's fintech. It's a fintech disruptor for measuring someone's creditworthiness. So it's not about, you know, historically it was like looking at your bank statement, looking at your previous lending, if you've got any loans, it's looking at utility bills and kind of old-school stuff like that. And actually the problem with that, it's very old. It's actually a lot of the credit rating is being based on someone's sort of financial situation 60 days ago. And the argument is that, well, a lot can change in 60 days, and my position 60 days ago might be very different to where I am now. And so it's kind of outdated. And so these lot have come in and others in this kind of fintech space, and it's, and it's actually using something called the, um, open banking which I don't know if you've heard about, but basically there's this thing back in 2018, I think it was, the UK government made a new legislation forcing this thing called open banking, which basically was new rules that require UK banks to share their current account holder data, share it to third parties including challenger banks, fintech firms, tech companies, credit reference agencies, right? Now when I read it like that, you're thinking, what? What the hell? The government is forcing banks to share my financial information with third parties? No thanks. And this is why it hasn't ever really got off the ground. Open banking was supposed to be this way of making or giving access to new challenger fintech products, give them access to the market. It wasn't a fair level playing field. The problem was here in the UK, no one ever changes their bank. You don't change who you bank with. I've banked with the same bank since I opened a bank account when I was like 10. People just don't change banks. You're just lazy. It's not something that's necessarily on your to-do list. So the regulator considered that to be unfair, that these banks had a monopoly on the— because if you want a loan, right, well, hang on, my bank, can I get an overdraft on my bank account? Yep. OK, great. That's my loan. So these banks had an unfair market share. So this open banking thing was supposed to be, right, let's really disrupt this. And let's give the data out. And then other products and services can come in and offer you better terms on an overdraft type facility than your bank does. So this was the whole idea. But of course, it's never really taken off. Yet at least, because, well, it's just about data, isn't it? And people aren't comfortable sharing data, and especially, especially your financial data, right? There's different types of data, and this is kind of right up there as perhaps one of the more uncomfortable kind of data sets that you want to be kind of flying around out there in the ether to who knows who, right? So it's been a very slow burner, but these these guys are kind of in amongst trying to exploit that legislation. And anyway, Apple have tapped into it. But the other side to this story I just wanted to touch on, possibly a ticking time bomb, is the buy now pay later. I mean, it's now, it's now like commonplace, right? It's, it's everywhere. Um, here's a good stat. On Black Friday 2021, which is one of the biggest shopping— well, it's the biggest retail day of the year, end of November, and there's all these deals, right? And it's all about online. And there was a 400% increase in 2021 of purchases using buy now pay later than in 2020. So you're on a 400% growth rate of usage. I know it's great on the one hand for the consumer, great, I can spread my cost without any interest, great. But the problem is 7 out of 10 Buy Now Pay Later customers have faced late payment fees or interest rate charges because they haven't been able to pay the split payments. And some of the interest rates on these are like 30%. So basically it's just fueling another kind of credit boom. And we know what happens with— yeah, yeah.

And, and like, thinking in quite a sinister fashion, these technology companies are gearing up to target certain socioeconomic situations where they know that they can sell these products to these types of people. And so we're in a situation now in the UK where Inflation's at a 30-year high and life is getting as challenging as it's been since the 1970s. Consumer confidence is crashing. The outlook on personal finances, some data came out in the UK this week, is the lowest since the financial crisis. The problem I have is that the accessibility of being exposed to these adverts now, everyone has a phone. It's just standard smartphone issue these days. And it's people's, I guess, ability to be able to just switch off from that. But it's so powerful, the algorithms that drive these tech marketing strategies. It's almost so passive and subconscious. And it's the vulnerable people that are going to get the pain here. And it's coming at a really bad time. Most— well, I'm talking British people right now, as we know with what the situation that's happening. So yeah, I think you're right. I think it's— I think that's unhealthy, that payment spreading. Um, and it's also from it— from a— what, what I don't like as well is— and this is just sounding like an old man now, and it's my birthday tomorrow, I'm going to be almost 40, so just let me say it. I'm gonna sound like an old man, but, but back, back in my day, right, when I was at university, during the war, during the war, if I wanted something nice, right, either couldn't buy it, yeah, right, or save up, I'd have to work and I'd have to wait for 6 months or something to buy it. Like, a pair of Nike Max were £100. They're £150 now. They were £100 back during the war. So, but like, as a student, £100 is a lot of money. Whereas now, if I could split that to £20 over X period, it's like, it's just—

I'll buy 2 pairs.

Yeah, it's just the whole— the management then of the psychology of how you manage your personal finances starts to become slightly warped, I think. And then, yeah, I just—

you also get— look, it's about discipline, isn't it? And discipline with money. And some people are really disciplined with money, and some people definitely are not disciplined with money. It's just their nature, their personality, whatever their living day by day. And it's like, oh my God, I only have to pay 20 quid to get these shoes now? Great. I'll buy 2 pairs actually then. Great. Perfect. Without quite stopping and thinking, hang on, what does that mean for my monthly outgoings in a month and 2 months and 3 months?

So one of those things here as well is that we work in edtech, but when was the last time your daughter said to you, I had this really great lesson today at school where they taught me about personal finances? And like, where do they teach that? Like, where do we educate young people? So we're throwing these options at them. We're upscaling technology because corporations want growth and want to make more money. And yet our education is the same as it has been for like 100 years. Yeah, it just makes no sense.

Yeah, it's never been easier to get into financial trouble.

Yeah.

And a lot of people will. And I guess there's a bit of a negative feedback loop with that buy now, pay later thing. If you do start missing payments, well, then that kind of snaps back and has a negative impact on your credit rating, right? So then your ability to access credit next time goes down, and then you're left with these huge interest rate payments, and it can get out of control very quickly. So yeah, what, what a weird scenario Like back in your youth, actually only buying something that you could afford. That's a very strange concept.

Or now, or I did see on Selfridges, you can hire designer clothes by the hour.

Uh, you're serious?

Just, you know, just get me the— get your get a good camera, get a good angle, and then we're done. Yeah, but you know, there's— I mean, there's businesses making opportunities out of this, so, you know, credit to them. But yeah, look, one, you mentioned data, and I wanted to mention, um, something else on the data front that I thought was very interesting this week, um, and that was Snap. Snap. Have acquired NextMind. And you've probably never heard of NextMind. They're a Paris-based neurotech company. So just to give this a bit of context, before joining Snap, NextMind developed— and this is an important differential from Tesla and some of the subcompanies that they have and Neuralink and so forth— because NextMind have developed a non-invasive brain-computer interface It's called a BCI, and it's in order to enable users hand-free interaction using electronic devices. So your computer, and namely your, your augmented virtual reality wearables. And obviously Snap are in that space. I think they're already on their third or fourth generation goggles that they have. The technology basically monitors neural activity, so understanding your, your intent when interacting with a computer interface, allowing you to kind of operate stuff by simply just focusing on it. But you caught a really great line, right, from the CEO of Snap on the press release. What was it he said?

Well, yeah, on his press release, the line was, whilst announcing this acquisition, he added and stressed that it does— it was like, don't worry though, guys, it does not read thoughts. Or send any signals towards the brain. He had to very specifically clear that up at the acquisition launch, which in my mind's like, well, hang on, straight away my alarm bells are going off.

So no, I don't know the science here, but they've meant— they've explicitly said the technology monitors neural activity. Surely a thought is a neural activity and it has a code. And what they've said is basically that this technology of, of, of looking at brain activity patterns in a neural sense is not new, but they've figured out a way to decode these brain signals into software commands.

Yeah, that sounds to me like it's reading my thoughts, because how else would it work, right? Because so one simple example of how this will work is you look at the screen and you press a button on the screen. So rather than clicking on it, you actually don't— you just think, I want to click that button, and then it clicks, right? So obviously that's reading your mind, no?

Yeah, I can't actually tell the difference here, but the thing I was to loop this back, can you imagine how rich that pool of data is? You basically know what everyone's thinking. What everyone's thinking. Like, now that is data. Like, and that scares me to a whole nother level of—

Well, I actually think this is an acquisition, it's not for today, Yeah, this is like, it's too early stage. The world is not ready for this. The world is definitely not ready for the idea of me putting on some glasses and a big tech firm reading my thoughts. We're not ready for that. Now, who's to say we're not going to be ready for that in 10 years' time? We probably will, right? The way things are, the direction of travel. It's just today it's so early concept. So it might be one of those acquisitions for the future. Um, but yeah, I'm very wary about this.

Okay, I'll, I'll cancel that, uh, that early Christmas present I was gonna get you then.

We did buy some Snap.

We did, we did actually. We bought the first as a company. We Yeah, we have, um, you know, we'd have all our summer trainee analysts with us. This was, you know, many years ago when this— when they first came out. And we thought, wouldn't it be quite funny to just have— because we used to have, um, social events and stuff like that— that we just pass it around and we just film it in like first person. And to be fair, it was like, it was funny on the day we got it.

Yeah.

And then it just sat in its box for the following 4 or 5 years.

Yeah, literally been in the drawer.

Yes. Yeah, but look, we'll see. All right, well, look, to finish, I think I already touched there a little bit about the UK. Um, and yeah, this morning I saw on Twitter, um, Sainsbury's was trending. And whenever you see stuff like that, you're like, what? Sainsbury's is trending? So given I spend a bit of time on Twitter, I clicked on it and it's just flooded with pictures of our UK Chancellor Rishi Sunak. And I don't know if it— if you've seen it, but, um, he was filling what, what was I guess supposed to be his Kia Rio, which is not the top of the range vehicle. Um, and that the media is obviously very quick to jump on the fact that he's obviously married into a, to a billionaire. Um, yeah, and he's there filling up his 15k car at Sainsbury's, and, and he went to pay for it, and he went to scan his credit card on the barcode reader. And yeah, it was pretty funny. But, um, actually the car ended up— it was actually, he borrowed it from a Sainsbury's worker just for the photo op. Um, but yeah, I mean, the, the reason why this has happened, it always happens the day— it's almost like a routine thing after budget. And this week we had the spring statement from the Chancellor. The same thing happened to Osborne. I don't know if you remember, he got snapped in Byron Burger. So if you're from London, Byron Burger was a classic boom-bust story. I don't know if they still exist anymore, but they were everywhere for a point. And this was when burgers weren't like— this was They weren't common. It was like a cool thing to go and have a burger. So they were quite at the forefront.

It was fast food.

It was a £10 burger, which was expensive. This was the first one to come out before Honest Burger and all the rest of it. George Osborne had bought a Byron burger and then put it in some different packaging. And he got absolutely rumbled the day after the budget as well. So it's a very common thing. I think the media go hell for leather for it.

Well, I think it's a good example of how the media spin things. One of the key things about his budget, he made a few changes, but one of the headline things was he cut fuel duty by 5 pence because he wants to help out in this fuel crisis. And so obviously it was a photo op linked to promote his 5 pence off fuel duty. And from a marketing PR kind of strategy thing, actually, that's quite a good idea. 'You know, this will get in— this will be all over the press, and it'll really shine a great light on the good that we've done here by cutting fuel duty,' right? That's the idea. But of course, the press just take it, and then they just spin it and they spin it, and it becomes this kind of hilarious situation where he's being ridiculed. I mean, look, yeah, it's a cheap car, it's not his, right? He's from a rich family, blah blah blah, cocks up going in to pay for it. Basically showing that he never pays for anything. It's not particularly good filling up a car either in this kind of green EV trends that the government are trying to steer us down. So he's at the petrol station. Yeah, so there's a few things. I could see the idea from his strategist, but yeah, it was just— it's just too good, too good material for the journalists not to just jump all over it.

Yeah, I just had a quick look now. What did— what car does he actually have? That— couldn't find it, but he strikes me as like an Aston Martin kind of guy. But all right, well, look, on that note, thanks, Piers. We'll wrap it up there for, for this episode. Um, as ever, I'll drop a couple of links into the show notes, um, to subscribe to our daily newsletter. Um, had some really great feedback from a couple of people because I send it out myself at the end of every European Trading Day. And just to say, it is me that sends it. I've had some people reply saying, "Can you tell Anthony that I really appreciate this?" And I was like, "No, it is me who writes it." We're not quite that big yet where I deploy my marketing minions to write stuff for me. I'm not that important yet. So yeah, feel free as well if you do engage with the daily newsletter. If you ever have any questions for me specifically, just shoot a reply. Like, absolutely happy to help. Um, and I'll— anyone who's not subscribed, I'll drop the link in the show. But Piers, have a great weekend, and, uh, I'll catch you next week.

Yep, have a good one. Happy birthday! 40 already?

No, no, no, not yet. All right, cheers guys.