 Okay, hello and welcome back to the market maker podcast is episode 52 quick update on our end of cuban target on the ratings on Spotify peers. We're coming on 141 target is 250, but we're only a third of the way through the quarter so I'm feeling quite bullish at the moment. Yep, come on. Let's go guys. We need another another boost. You know, February has begun. So let's see if we can lift it to 250. Can we bring forward our, you know, we can revise our forecasts, right? Well, look, in the spirit of quarterly earnings season, exactly. You are the CFO figure. So you want to get people excited about the stock price choose up the target. Yeah, well, although historically analysts tend to revise down their expectations going into earning season only for then these companies normally to kind of come out and smash it. Obviously, one company in particular that we're going to spend some time talking about failed spectacularly to do that. But yeah, I'm going to alter our forecast. Hold on, hold on. Given what you've just said, as your chief market analyst, I suggest you keep the forecast as it is, even if you feel incredibly bullish. I'm raising targets, raising targets. So our quarter end target I'm raising from 250 to 300. So the market's down. That's a challenge to you, the listeners. Don't let me down here. Actually, I'm going to bet you 10 pounds. I'm going to put money on the line here. 10 pounds is not a serious bet. There's a there's a watermark of 50. All right, 50, 100 pounds. Oh, that we hit 300 by the end of March. Okay. Do you take the bet? Well, I mean, I'm, yeah, we smash it. The community is amazing. Of course, we hit that target. I think that we should take if we don't hit that target, we should do some sort of forfeit. Maybe we record this video, right? And we put it on our YouTube channel at the weekend. So we record this podcast by Zoom. The video goes up on our YouTube channel. If we do not hit 300, right? Yeah. What I will do is I will shave my head bald on camera during that podcast on the first week of April. You have it here. So take your 100 pounds, but get your 100 pounds. I will shave my head. I've got, I've got electric during the pandemic. It's cut your own hair, right? So I still got it. DIY style. I will do it live. Well, live recording broadcast. And I kid you not, you can watch it on YouTube if that occurs. Okay. Wow. I mean, I can't stop that. You're on your own there. Maybe I should reverse this. Maybe I should say if we hit 500 by the end of Q1, I will do that. Maybe we will have this certification. All right. Well, look, quick, quick runs through the end of the week. What a week. Yeah. I mean, it's just been a crazy beginning of the year really. So obviously meta Facebook shares got absolutely killed post earnings. And we're going to dive into that in a moment. Google brushed off fears that the waning impact of the pandemic lockdowns was going to put an end to the kind of tech boom. But for them, they smashed wall street profits and they announced a 20 for one stock split of which we're going to explain a little bit more of what exactly that is and why they would do that and the mechanics behind it. The Bank of England delivered their first back to back interest rate increase since 2004. So, I mean, that was, well, I started my career in markets 2005. And I remember that was when we were on the way to 6% at the time. And before then we obviously the financial crisis hit but yeah, long time since that had happened and it was a surprise and we're going to begin to also talk in depth about the BOE and the vote composition, which was really interesting. And then the ECB renewed its pledge to withdraw pandemic stimulus only gradually, despite they are also facing record high inflation. However, forget for the moment, the Bank of England, the euro actually sold the biggest move yesterday. A lot of that in part because of Lagarde not really pushing back a great deal against more aggressive tightening pricing in the markets that we're seeing. And always on cue, they dropped source comments immediately after it came out and the sources suggested that the central bank ECB is to prepare for a potential March policy recalibration and that they agree that it's sensible not to exclude a rate hike this year. So, for those who are not familiar with all of this a source comment basically is the non official voice of the ECB using the avenue of a, in this case Bloomberg to drip feed in. So they've got flexibility to alter the communication the future but obviously giving some guidance to the market away from central banks, Vladimir Putin said he hoped that dialogue will continue. This comes despite Joe Biden ordering deployment of additional 2000 more troops to bolsters NATO's defense in Europe, and then looking ahead, we're recording this Friday morning. So we're, we're ahead of non farm payrolls, but that is coming out in a few hours time from this so probably by the time you listen to this you might well have know what the number is but one thing there. The number that could happen today is a negative number. And that would be the first time pretty much since the initial pandemic hit and we saw that massive duration in jobs. And the reason for that is is that with payrolls very simply. It's not a case of the number of jobs created in America non farm jobs from Jan first to 30 first. And that reference week, and that reference week is bang on queue, the peak of covert in America. If you look at covert cases now in the US, they are decelerating rapidly. So whether or not you get a negative number today, quite frankly, I think is a is a non issue, as far as the Fed and the market is concerned. I wouldn't say that with a caveat. It depends really how bad, but what the Fed officials will be thinking is that look, even if it's a negative number, that's not going to detract from our kind of path that we're now down. And therefore, unless we see back to back soft numbers, nothing's going to change really so just to put that out there. And then finally, the other big story of the week, of course, Rafael Nadal, winning the Australian Open and his 21st grand slam, making him the greatest of all time fears. Well, I mean, well, yes, if you've got us. I mean, the one thing about Rafa is, obviously, half of those have come from the French Open. So he's a bit more of, well, I was a specialist. Not one trick pony. I was going to say one trick pony and that would have been the rageous thing to say but yeah, he's more of a specialist, I guess. Yeah, I mean, phenomenal, phenomenal. I mean, they're kind of just the sheer grit and determination and the strength of will at that age, you know, what a guy. Yeah, I mean, and your mate, your mate Novak, I mean, I'm not stressing about Novak. Novak's going to smash 25. So this is just a little blip on the journey to greatness for the man that everyone hates. Yeah, but Rafa's going to win in Paris. So that'll take him to 22. Right. Okay. Yeah, that's fine. So, yeah, Rafa greatest of all time. Well, I know I know one person Sam Norse would agree with you on that one of our former former colleagues but yeah it's this is always a massive debate right how do you define the greatest full time. It's very subjective people often put other sporting heroes in this don't they, you know, Muhammad Ali's the political as well as sporting impacts and social impacts. Yeah, yeah, just from the yeah I mean I'm still I'm still a Roger fan that to be honest in terms of what spectating. I think watching Federer play is just a different level. I think he's the best tennis player of all time. Maybe not the best, the best competitor. That'll be maybe Rafa or not the most annoying. That'll be Novak. Anyway, we'll reconvene when Novak surpasses Nadal which he will in time so anyway, meta earnings. So we'll go straight in at that. And, yeah, pretty much. I think a catastrophe their shares at the open yesterday, we're down at the bottom 26%, which is the largest I think I saw a graphic the market cap they lost in one day was like 230 billion. I mean, a monster move, which actually, which actually puts it as the biggest ever stock sell off in history in one day, the biggest market cap loss in one day biggest ever in history. Right. So let's break this down because there's a number of elements of which when put together, make a very, very compelling negative case here, I guess of why the impact was so large. So in terms of the top line kind of figures for the quarter, their revenues were actually a slight beat 33.67 billion against 33.43 billion. Their EPS was a miss earnings for share 367 against $3.84. The thing that really I think caught the initial attention was this daily active and monthly active user figures so let's just start the conversation there. Their daily active user figure was 1.93 billion. And expectations were for one nine 1.95 billion more worryingly though was not only has this trend plateaued. But if you look at the geographic breakdown of the DA use the US. It's massively important, of course, and the rest of the world so exit Europe and Asia was declining. Yeah. And that's, it's not supposed to happen. So initial thoughts there on the active user front, if any. Yeah, it's, it's massively significant that that number and look with these with these companies, you know, if you're in the business of social media. It's all about your active users. And in the end, this is the, well I won't go as far as say the first nail in the coffin of Facebook I mean meta will split the two out in a minute but yeah from Facebook's point of view this is, I mean it's a disaster. And yet not surprising. I wouldn't say or certainly I'm definitely not surprised but yeah because when a company generates. Here's the point. When the company generates almost all of its revenue from advertising and the advertising revenue channel is through people on your device on your app. So every day, and then all of a sudden, the number of people on your app every day starts to decline. And by the way, this is just the beginning right in terms of declines I mean I think now as you say it's plateaued last year. Now it's begun to decline I mean I would expect an acceleration of that decline. And you know when these trends shift. I mean it's very, very difficult to, to kind of reverse that I mean obviously when the, when a CEO comes on it's quite a remarkable earnings call. I mean literally one of the, to put this in perspective I think it's one of the most shocking earnings releases ever. It's certainly in my, in my career, I can't I can't remember an earnings release, just quite a sensational as this Zuckerberg said, I mean obviously he's worried about tick tock is, is, is the thorn in his site he said that and I'm directly quoting the thing that is so unique is that tick tock is so big as a competitor already, and also continues to grow at quite a fast rate off a very large base, even though we're compounding extremely quickly. We also have a competitor that is compounding at a pretty quick rate to. I mean, quite extraordinary for him to come out and basically just say, we're losing, we're losing the race, and we're falling further behind and almost like hands in the air. Got no answer to it. He needs to, he needs to call up Rafauna down bring him on the board. Yeah, they are two sets to love down here. It's broken in the third set. I mean, you know, and I think that there's a few headwinds here and it's not just the user numbers I guess, you know, as I've been saying, Facebook has been in my opinion like that kind of dinosaur social media app for a while now and you're seeing that in the user numbers finally coming through but you know, so where does Facebook go from here well obviously they've changed their name to meta. And it's about it's about meta and it's about the future of the metaverse and can they nail that but I think another big thing about this earnings call wasn't just the whole tick tock thing but it was also just how much money they're losing to funds this this mega project. And I mean, and so that's so you got three things I guess at this call maybe we'll drill into each. Obviously the daily active users, you've then got the issue around revenue and how much they've lost as a result of Apple, who brought out their kind of software privacy changes last year they lost 10 billion, 10 billion worse off Facebook, because of that change. And then yeah, you just the stats on the amount of money they're losing. I can add two more bearish factors to your on your case here. Yeah, the macroeconomic challenges impacting advertising budgets at the companies who are using your spend or using your product and then foreign currency headwinds on a year over year growth impact. But it keeps coming. But that first one, how can Facebook say, well hang on, we had a bad quarter because of macroeconomic headwinds and yeah there's this inflation thing you might have heard of it and the supply chain issues and it means our customers don't have enough money, or don't have an, don't have as much money to spend on advertising and blah blah blah blah blah, and then Google come out and smash it at the park. How does that add up, right. So we know, we know what they're trying to do there. Well, yeah, fine, the finding excuses, right, it's just that excuse doesn't kind of fly, although what's really interesting I think is just kind of touching on that that kind of Google thing, it is maybe the case that what we're seeing is further evidence that the kind of newsfeed social media advertising format is perhaps now dying to death. And of course Google's advertising format is very, very different. You know that they, in terms of Google AdWords and that you know users going on to Google and searching for something. Right, they're specifically looking for something and then Google serves them ads that are related to the thing that they're looking for right. It's a whole different type of reaching an audience obviously on social media you're not on social media for ads, you're on social media to whatever watch videos and right and then you're getting served ads alongside and you know do you look at those do you not and, and you know, so I think it's quite interesting that Google's advertising revenue has been nice and solid and beating expectations when this kind of newsfeed social media style advertising, you know is taking a hit. I was just trying to find you were talking about Google and ways they they create money. So they generated $8.6 billion in Q for a loan from YouTube. Yeah, that was up 25% year on year. That's more than the entire Netflix revenue. Right, just from YouTube. So, but yeah, I mean pivoting back to before we'll talk about Google I'm sure but one of the things to add to what you were discussing was the amount of money they're losing and obviously the crisis is the pivot to chase the kind of dream if you like, reality labs operating loss was 3.3 billion. The new disclosure of reality lab segments operating loss actually was 10.2 billion for 2021. An analyst was saying that points to at least a 1010 percentage point drag on overall operating margin, which most would expect is going to get worse in the near to medium term as they accelerate this, they have to accelerate the spending right in that division. So, like the whole the whole drive for winning the metaverse race. Yeah, here's some stats in terms of revenue because things like reality labs and Oculus and stuff they are. They are making money right that they are selling stuff there is revenue there. So if you look at the revenue side so in 2019 Facebook, because they've just started splitting out their kind of revenue figures on the kind of meta side. In 2019 they made $500 million revenue. Okay, that part of their business. But I had a net loss of 4.5 billion. Okay. 2020 they doubled their revenue. So great the revenue growth rate is great right so they made 1.1 billion revenue in 2020, but their net loss went up to 6.6 billion. They doubled revenue again. So in the last two years they're on a doubling revenue run rate, which is great right about 2.25 billion revenue but a 10 billion loss so as they're doubling revenue their spend is just exponential. And the point is it's going to continue to be. I mean again quoting directly from, from Zuckerberg he said that, you know he warned in the last quarter that the investor the investment was not going to be profitable for us anytime in the near future. And I guess the bottom line with this whole meta thing it's like, doesn't exist. This is something that's going to play out and pay off maybe in a decade's time. What we do as investors here, because they're mega engine of revenue is stalling. And what are we supposed to just go along with their massive punks and huge cost layout to hopefully they might win this race and in 10 or 15 years time. What they're going to crack it. I mean. And to compound the issues that you've mentioned analysts believe the impact of the iOS overall is a headwind. This is from the CFO to their business in 2022 to the order of 10 billion. Right. It just gets worse every term. But and you know just in terms of can can Facebook, I mean ultimately the big question is can they win the meta race right. And there was further news about how that's, there's a lot of risk around that I don't know if you saw the news I think you might have even been last week now where they've, you know, DM, which is their attempt at a cryptocurrency, well they've given up on actually spinning that often selling it. Their whole kind of effort is called DM Association, it launched in 2019, and basically it was a collection of 25 different businesses and nonprofit kind of groups. And this was their big drive to kind of create their crypto and this will be a big part of that metaverse and yeah winding it down selling it off for 200 million quitting done. So can Facebook I keep going to Facebook can meta, should we trust them to win this decade long race well, not on evidence like that. So this is why their stock got absolutely demolished it's not just because of Facebook and advertising revenue and concerns around Apple's privacy it's it's just about this pivot and actually is it going to work. Yeah, and we've discussed this in previous episodes about who we favor more so into that degree so go back and check some of those episodes out but perhaps I can use a little bit of a hook here to take us into the Amazon discussion. One of the things that came out with Amazon's numbers. By the way, it was like, Facebook down 20 Amazon up 20%. I mean they were literally flipping the opposite directions. But interestingly, Amazon for the first time ever disclosed revenue from its advertising business last night. Yeah. So using that as a hook then into this, their advertising advertising services grew 32% year over year. Still a small figure it's 9.7 billion. For context, Google's pumping out like 60 billion. So it's a minnow in that world. But surely that's another, another blow to Facebook because Facebook only get 32.6 billion. So they're half of Google already. And all of a sudden Amazon's just flown in there with a 32% year over year increase. Yeah. And these are quarterly revenue figures you're talking about here right so Google yeah 60 billion yeah because they're about 250 billion. But by the way Google is quite we'll talk about them later I guess but it's quite extraordinary. Google rake in 250 billion, the entire planet's advertising revenue across all platforms all companies across the whole world is 700 billion a year. And Google take 250 of that I mean their market share is just extraordinary. Anyway, yes, I mean, yeah, Amazon we talked about how these the big tech giants and their revenue streams are overlapping. And ever more so and they're competing against one another increasingly and increasingly and you know this is a really nice case study on that front with Amazon, you know their revenue. Their advertising revenues growing really strongly and it's just another slap in the face for Zuckerberg. Because, you know if Amazon can can deliver a 32% increase on their advertising revenue, Amazon don't do ads. And yet, they can pull that off. So yeah, Zuckerberg's just, you know when a man's down I mean he's just getting kicked in the balls by everyone. And some of the pictures of baseless these days I mean he is loving life. He looks like Hulk Hogan or something nowadays but yeah so Amazon by the numbers I mean check out this revenue figure for the quarter. I mean we talked I think about the monster Apple quarter. How's 137.4 billion in one quarter, and that misses estimates. And these numbers are just getting a bit silly now there's just, I mean certainly in our careers I mean these numbers you wouldn't even dreamed of 10 years ago. And here we are I mean, breaking the split down so revenues were 137.4 beams actually just a shy short of estimates that AWS revenues, particularly of focus of course was 17.8 billion that actually exceeded expectations, marginally. The outlook though was pretty weak. And actually, I think this is a good talking point because their shares obviously responded very forcefully to the upside in post market trade. But the outlook for Q1 revenues was a range, which is quite typical that companies issue a range 112 to 117 billion so a market slow down from the prior quarter, but was lower than estimates on the street of 120.5. So numbers were lukewarm. Yeah, and yet the stock responded with a 17% pop so. Yeah, I mean firstly that 17% pop. It was it was 8% down on the day before then it rallied 17%. So let's just put that into context it was 8% down because tech was getting hammered in the aftermath of the meta disaster. Earnings the night before right so the NASDAQ was coming off sharply everything was dumping. So they were down 8% and then rallied 17% from that base. So you can kind of have that actual rally I would say the main reason. Well, because yeah I didn't think the numbers were all that we'll talk about that. That if you strip out AWS which is obviously their golden child. We'll talk about that in a minute but I think one of the reasons for the lift was that change in price right so they're increasing the price of Amazon Prime, and they're increasing it in their key market of the US and I mean going back to 2005, when Amazon Prime was first introduced as an offering. This is only the second. Sorry, this will be the third price increase in 17 years. So it's quite it's quite an unusual. Yeah, that is why it's such a success. I mean, it's just incredible it's still at that price point. Right, especially like, but, but this is quite a large jump so in the US they're taking it from that increasing it by 17%. So it's going to be rather than $119 per year, it's going to go up to $139 per year. And on the one hand you think well it's so cheap. There are 17% increase from something that's ridiculously cheap adds 17% and it's slightly less ridiculously cheap. Right, that's one way of looking at it but another way is like well actually 17%. And especially when household budgets are getting kind of strained because of inflation and we'll talk about energy prices in the UK in a minute and it's like well actually that 20 bucks extra. I guess, is it a dangerous, some analysts are saying this is a potentially dangerous move because you know is it actually going to, is this a move that the critics are saying it's a move to please the markets at the expense of the consumer. And so it'll be interesting to see how consumers, you know, I guess the problem a consumer has is, you know if you vote with your feet. You know what Amazon you're raising the price. No, I'm out. Where are you going to go. You know what's the rival platform that you're going to go and take your money to I mean, and this is the thing about monopolies right I mean Amazon, I've got it all locked up so not so. I mean I think actually this price increase will get pushed through no problem at all, which is why it's not valid. I was just fact checking the number of prime members in the US. Yeah, to give it I guess the numbers context 148.6 million. That's half the population, right. Include includes kids right. What's the population to $2 increase on the monthly rate. Yeah, over 150 million 50% of the entire population. Yeah. That's quite extraordinary right but I think so fine the stock rallied they're going to hike the price and you're right right I straight away that's 17% on the top line just bang. And will that drop down to 17% or will all that money extra money just dropped straight down onto the bottom line more profit. And here's the thing that I mean fine they're stock rallied but I thought their earnings are actually pretty worried. Take out AWS and I know, I know, you know, well, you can't take out AWS it's like the star performer. And but let's just take it out. Okay, because Amazon have not had a very good time of it from a cost perspective. They're really suffering and actually if you took out AWS, they're operating income. Well, they'd have lost money. They'd have lost 1.8 billion on the quarter. And that's because you're seeing huge staffing cost increases. They've been hit a lot by COVID. There's been a lot of absences because of COVID actually in certain cases on the earnings call they were talking about how some kind of warehouse. Their hours were costing them two or three times above what it ordinarily would do having to deal with staff that are missing and so they've had huge staffing cost increases, they added. I mean this is crazy but in quarter four, they added 140,000 employees. That's not their entire staff number that they added that number. Obviously it's the holiday season so they're always going to be having a peak of staff and certainly on the delivery side and on the logistics side of course they can have a peak in their kind of staff count in that quarter but nevertheless it's quite an extraordinary, quite an extraordinary number. And the other thing that massaged their numbers higher was their Rivian stake which we've talked about this in the past but they had a pre-tax valuation gain of 11.8 billion just because of their Rivian holding. I mean how's that for a trade though? They invested 1.3 billion into Rivian taking a 22.4% ownership and the IPO was 78 bucks so that's 66.5 billion then they shoot up to 100. Yeah. They need to get out of that trade. Well yeah. But that's like you said though it's another reason really why I mean this should be xed out right of really how you should interpret these numbers. Yeah and look forecast going forward as you said forecast lower than expected sales. So their forecasts aren't looking good. I mean still 100 range 112 to 117 billion but still Wall Street was expecting 120 billion right so lower than expected forecasts you've got massive pain on the kind of staffing cost side because of COVID and inflation. So if it wasn't for AWS and they are advertising part okay all right that's doing well but yeah it's not just all I guess we're used with these tech companies we're used to just it's just smashing it out of the park on all levels is kind of what we're used to. And that's why these stocks have doubled and tripled and quadrupled in value in recent years so now that they're not smashing it out of the park on all fronts is then well okay. It does actually feel like having this conversation does actually feel like that that positioning for web three and what the future holds because actually we're talking about what is quite an archaic model in what Facebook was innovative 15 years ago or so. And now it's about pivoting to the metaverse we're talking about Amazon and the actual delivery logistical part of the business is kind of a tiring expensive thing, and it's AWS where the margins are better and the growth is there, and so forth. And then we look at Google it's almost the same thing it's almost like it's such a strategic almost like a real important part in history for these companies it feels like as we're making this transition from to web two to three. Yeah, coming years. But it's Facebook that is the only one who's original business is dying. Quite rapidly, and it's one of you know it's all about the matter and that race, and it's all or nothing for Facebook or as at least, you know, Amazon. I mean, fine that e-commerce platforms not going anywhere we're not going to stop buying stuff online, quite the opposite, right, Google's, you know, and we're still going to search for stuff. Well, Google's got in that in this basis of looking at in this the cold light of this angle, Google is the best positioned right because they're already an online search based web based service so talking of Google then. Yeah, their shares were up around 10% after their Q for numbers beat revenues. Yeah, not a smash but a comfortable clearance over the hurdle of 771.9 billion printed at 75.3 on the quarter EPS beat cloud revenues beat service revenues beat operating margin up a touch. 28.8% against 28.8 expected. But I guess the thing that I thought could be quite good to talk about with Google, because not many people might understand the rationale behind it or the mechanics of how it works is they declared a 20 for one stock split. How many Google shares have you bought this week or whenever this kicks in explain explain a little bit about how this works this whole stock split, the mechanics of what is a stock split and then why they would have done it. Right, so wow okay firstly the mechanics of a stock split and this is a big one in terms of. So it's 20 for one right not just to give you an idea I mean stock stock splits. They're not. Common but it's not like they never happen and in the amongst the tech giants we kind of keep it just to the tech giants Apple, Apple tend to do it every sort of five years or so so Apple did a four for one split in 2020. They did a seven for one split in 2014. In 2005 Apple did a two for one. So Apple have actually done five stock splits in their life, the latest being in 2024 for one so Google, I think this is only their second ever one so they've a lot less frequent. Which is why I think they're going for the strategy of less frequent but much bigger when we actually do one so 20 for one the important thing to say the mechanics of this is it doesn't alter the market cap of the company. But it just means for every one share you own, that's now going to be 20 shares. Okay, so therefore the price per share is reduced by 120th, but because you've got 20 times more of them. The value of your shares doesn't change. So if the value of the shares in total issuance doesn't change the market cap doesn't change. Okay, this is purely the strategy behind this is purely to reduce the value of one share so that it can really be more attainable for a wider pool of investors. Alphabet share price has been knocking on the wall knocking on the door of $3,000 right before the split. So to buy one to get any kind of action, you need 3000 right now, you know it's going to be 120th of that I mean how many people can buy one share for $3,000. Well, a lot, but not your smaller retail guy right so reducing this by 120th is a strategy to maybe kind of open up an opportunity to be invested in Google to a wider audience now the technicalities are but it doesn't alter the market cap. But, historically what we've seen is when people do this, it tends to increase demand for the reasons I've explained and if it increases demand, because you've got a wider pool of people that can participate, then that actually tends to lead to upside on the share price. For example, Apple for example, their stock split was the summer of 2020 and their share price they kind of after the split, the share price was about 100 I'm going to round it there's about $100 after their split. So there's now 180. But obviously, you know, tech tech has been going up nice and strongly but you know you get my point historically this has been a positive thing in the short to medium term for the share price. Yeah. And for full disclosure, I was a buyer on the Apple split. And, yeah, probably will be without a bet but the, this is just educational this is not investment advice. We must stress for anyone nails us to the post on this but yeah you see the rationale it kind of, you know, it makes sense and yeah I mean if the trade is it fuels demand and layering in that fundamentally I love alphabet well yeah makes sense right so yeah. The trade, the trade has been we were talking about this I don't know last year but rather than like taking an outright kind of punts or exposure on any one tech company. Basically just take the big five and pick your favorite and pick your least favorite and go along your favorite short your least favorite. And that's a trade that's if you get it right obviously that's a trade that's going to pay out pretty handsomely over the medium to long term I'm talking like put that spread trade on for five 10 years. I didn't quite think it would be paying out so well so quickly, give them what happened to some matter but yeah matters by least favorite so yeah that's what that. Okay. Cool. Let's, let's conclude with a quick conversation about the Bank of England. Yes, because let me just go over the kind of top level what happened so they hiked interest rates. It was back to back time they've done that since 2004. That was not a surprise though everyone was expecting them to do that. However, one of the things that we get which is very unique to the Bank of England is the vote split. Now they were all unanimous in the idea that they wanted rates to go up. The problem here, or not problem but very interesting thing that occurred was that the vote split actually to raise rates was five four in which five people. So, thus, the action that was taken, wanted a quarter basis point moves so or 25 basis point moves so rates went up that much, but there were four others. Just by a whisker got out voted who wanted a 50 basis point move. Now that's pretty unprecedented and certainly hasn't happened since the independence of the Bank of England back in the late 90s in 97 so I don't know if you know peers but when was the last time they did a 50. I mean, it was pre pre the 90s right. It was, I, I don't know. I mean, so, so the idea here then is that there's a significant part of the monetary policy committee who wanted to be more radical. Now the main rationale here of course is this inflation situation here in the UK inflation at the end of last year you're in the opposite 5.4%. Even without the fact that households are now preparing for tax hikes in April, the jumping cost electricity and natural gas. And so, most analysts are now anticipating inflation in the UK is going to peak at 7%. I think it was the November monetary policy report they issued. I don't remember peers but they said the inflation was going to peak at 5% in November, I think it was fast forward to the beginning of February, they've just added two more percentage points on that. And so what do you what do you make of this, this 50 basis points I mean that was a big surprise when I heard that when the announcement came. It was a definite Wow, got a shock sort of moment. Because it's so impressive I was just looking at China look it was actually back in the 80s wasn't it where we had some pretty extraordinary stuff going on with interest rates. So we definitely had some, I think we even had I think we had a 5% increase in rates in one meeting was in the 70s when we have this inflation crisis. Anyway, so, but yeah I mean I think that in this era. Yeah, unprecedented I mean it's not only first back to back hikes, right so that they hiked, but they also hiked in the last meeting. So it's the first back to back hike since 2004. They were a whisker off that 50 basis point height which would have been unprecedented. I guess the main takeaway here other than why that's really surprisingly hawkish is I think it's for me, even though it's the Bank of England right is interest rates in the UK for me is actually yet another signal that the global monetary conditions are going to continue to tighten faster than we had expected and that's been the trend of things for months right and we often talk about the Fed. And why are they getting more hawkish and why even more hawkish now and even more hawkish, and this is the Bank of England they're doing the same and so the Bank of England just gone another step on the more hawkish pathway. Further evidence in my opinion that they are panicking and not just the Bank of England I mean the Fed, they're panicking that they're behind the inflation curve. There's these inflation expectations as you've just said keep getting, you know, dramatically revised up and each time they get revised up, there's more panic. The thing is, at least the Bank of England are actually tightening. I mean if you're panicking right and then they're talking about, they also announced with regards to the money supply side. They also announced that they're going to definitely not reinvest any of the bonds that they own on their balance sheet these bonds they bought through quantitative easing it's basically not reinvesting is a mild quantitative tightening. I think in money terms I think they've got 28 billion pounds worth of bonds that are reaching maturity in the coming months and they're not going to reinvest that so essentially they're reducing the money supply by 28 billion. And that 28 billion is in context of their 895 billion in holdings. Right, exactly. So it's a small incremental reduction in the money supply. I think next year, just from not reinvesting I think next year it's like in the whole of next year is another 40 billion or something. So, and then they might sell some of their corporate bonds are basically to put it simply in the next in the next two years, they're, they'll reduce the money supply by 10% of their balance sheet. I don't mean 10% of money supply I mean 10% of the 800 billion they pumped in, they will take back out in the next two years. So the Bank of England are tightening. They're worried that inflation is too high it's getting out of control they're actually acting. When you think about the Fed, they're worried as well, but the Fed are still stimulating. They haven't ended their QE program yet, right. Right, so to make that clear, they're tapering, which means is they're incrementally winding down their active purchasing of bonds that's still adding to the balance sheet. And even though markets have panicked, because the Fed have pivoted to a more hawkish stance really quickly, they're not moving as quick as the Bank of England are. And my point is, the way I read this Bank of England news is that it's a signal the Fed are going to accelerate their hawkishness again. And this is why I said I mean I know for me I'm still a little bit worried I know I know stocks bounced quite radically last week. Or sorry this week of the start of this week I should say, you know you had really strong rebounds, but I don't think we're out of the woods yet on this whole story around inflation around interest rates going to have to go up faster. You know the negative impact that might have. And so that almost uncertainty is definitely what's being conveyed on Wall Street at the moment. It's a real division between the bulls and the bears here because the calls at the moment in the short term direction of travel for equities in the US. I think are looking at another 500 point decline from where we're at at the minute, but they're the bear bears on the other side of the trade is JP Morgan just looking to pile in on every time the market comes up a few ticks. So, yeah, I mean that's what's contributed to one of the most volatile episodes of market activity we've had the last couple of years in January. This is that kind of thinking I guess. And look the by the dip brigade have always been right. You know, if you go back over the last decade by the dip every time, and here we are we've dipped. It's just, I'm definitely the least confident about buying the dip than I have been for a decade. Let's put it like that. I'm not saying that this is only the beginning and this thing's going to collapse even more but I'm just, I don't know that that kind of guts. It's hard to explain kind of gut feel. I think this time is different. And I think the interest rates are going up fast. And we're not quite sure how fast yet, and we're not quite sure if we are behind the curve on inflation and even putting rates up fast maybe that doesn't actually contain this inflation drive and so, and then it might lead to recessions, I guess let's put it like that. And when we talk about the UK. This kind of Bank of England thing it's got got the UK the UK household is going to get punched in the face from all sides in 2022. Because it's not just the cost of borrowing going up which obviously impacts people's, you know monthly disposable income you know if you if you're on a mortgage, you know rate that's that's variable then right you're going to be paying more in interest and you know if your credit card bills are going to if you're interested in your credit card bills are going to go up you know you've got less money to spend and then. Yeah then throw in the electricity and gas bills for households going up 54% as announced earlier this week already on top of the 12% increase for 15 million households in Britain. And then on the back end of Q4 of last year with an anticipated the other another increase on the semi annual off gem is like the regulator reviewing and they're probably going to increase the cap again. So you're talking about 100% increase in the pretty much 12 months period, throw in a little hand grenade in Russian Ukraine oil prices at 100 almost now we're tracking now wci at 92 this morning. Yeah, and inflation is through the roof right so it's not just energy. Everything's gone up in price and I think right we've been through, I guess we've enjoyed a post COVID lockdown sort of rebound and resurgence. But I think 2022 reality is going to bite pretty hard. I can't see how the UK avoids a recession, when you have interest rates going up quickly, inflation's super super high, your energy bills are doubling. I mean, that's not a good story. So I think that this time it's a bit different. And whilst by the day brigade, you know, the bandwagon rolls on and they're kind of shouting and screaming it's always by the dip I just think I'm just, I'm just way more cautious this time. Okay. So on that cautious note, we'll wrap it up there. So thank you, as ever, Piers for the conversation last hour hope everyone found that in some way useful and insightful and don't forget as well to hit that ratings on Spotify help us hit that target. And yeah, have a great weekend. Have a good week, and we'll catch you for the next episode. Thanks very much everyone. Cheers. Bye.