 Okay, hello and welcome to episode 61 of the market maker podcast. It's Friday and as ever I'm joined by peers current to just talk over the main topics of the week and some of the three key themes we're going to delve into of course Elon Musk and getting on to the board of Twitter. What's the rationale? Why has he done that? Is he going to get in trouble again with the authorities? We'll discuss also want to take a look at the French election because if you're a student or a trader in the UK you probably really haven't paid too much attention to what's been going on there but I'll explain the process and I'll explain kind of what to look out for going forward because we have seen some sensitivity in the French markets this week on the anticipation of that event. And then going to flip over to the Porsche expected IPO and talk about that in a little bit more detail as well. But to kick things off, Piers, as ever, how's it going? How's your week? How's your quarter been just in general? I know we're eight days in but how's my Q2 being so far? How's the Q1 session been? Yeah, intense. I mean, I think so much going on, I guess on that on Amplify's side, you know, they're not obviously not to mention everything going on out there in the world of well, geopolitics and economics and markets and stuff. But yeah, it's been super intense on the Amplify side. We've got some cool new stuff coming down through the pipeline. So give me one of the cool conversations you've had with anyone over Q1. Well, okay. Well, something quite interesting. We've been partnering up with the MOD, the Ministry of Defence. So what? They want me back. My time at Amplify's done. Let's see, Chuck, Black Ops, Guru. People can't see this, but I'm always dressed in black. No, we did quite a cool new thing with basically trying to help ex-armed forces or current armed forces, people pivot out of the armed forces and into financial services. So the MOD, we've done a deal with the MOD whereby the MOD is sponsoring the training of armed forces personnel. They're sponsoring the Amplify training. And you know, it's about these guys, obviously they've got some great core skills that are transferable to any sector, right? But certainly finance being one of those, you know, being able to work under pressure, being, you know, super organized from an operational point of view, got some phenomenal talent. And so, yeah, it's just about upscaling them on the finance side. So getting crash course through all of our simulations to get, you know, lift the lid on what goes on over here in the financial sector. And then, yeah, looking to get them placed at some of our partner banks. Yeah, it's pretty cool. No, I'm excited for that. Love to get involved and see what they're like. I know over the years I've had, I have had some interactions with training with some kind of different officer inventory and SAS. Yeah, so interested to see over the years how they've how they've performed and thankfully they've all gone on to do actually quite different things. Some some data security. One chap which we both know has a has a new app that he's he's just really so he's getting into the tech side. So, yeah, it's great. Yeah, well, look, look forward to that. And great to be spreading the mission then just beyond our kind of typical student university type demographics. So yeah, all for that, for sure. But let's get to the, to the highlight reel of the week, and going to start off with the Russian ruble because you know you called this last week you were talking about the rationale and if you didn't catch that just go back to the last episode and listen to pierce your brains very eloquently how and why the Russian ruble has been recovering from the absolute bloodbath that ensued on the initial round of the first sanctions that hit the banning of swift and so forth that we had a couple of weeks ago because the ruble actually by Wednesday. It already retraced all of its losses. This comes as well despite NATO foreign ministers been meeting this week in Brussels, they're talking about coordinating a new round of sanctions on Russia, just given some of the pretty awful things that were coming to light this week. So, yeah, at the moment, that's kind of, I guess as it was from a looking at it purely from a markets perspective. At this point, obviously, the, the sanctions that come out of this as a potential response could be quite interesting. I did see turned on my screens this morning. And I was like, looks a little bit risk of initially dollar strength euros coming off of it. So I had a quick scan on the headlines and actually apparently the latest now is that the talks the mood has changed, given some of the developments that have come to light after the Russian exit around the capital of Kiev so it looked like we were heading in positive direction, perhaps this has been a bit of a bump, and there could be sanctions on the horizon so we're still keeping an eye on that. The other thing though, looking, let's stick with a macro view for a moment. So away from geopolitics was the Fed. We had the minutes Fed officials weighing shrinking the balance sheet by $95 billion a month. So a little bit more aggressive than on the historical kind of patterns that they've done with this however market reaction. Pretty tame, I would say not too much of a lasting impact, primarily because Leo brainard, who's the Fed governor who sits just under, if you remember, she was actually tipped as a potential replacement for Rome, not that long ago. And she's a well known leaning dove, and for anyone not aware of all the clunky market language dove just essentially means she would sit on the side of a board of individuals in this case the US central bank, who were on the side of just being more cautious more stimulative to the policy in actually to support the economy, but she came out and essentially said on Tuesday, day before of course the minutes came out that the central bank could start reducing its balance sheet as soon as it could go away, and would be doing so at a rapid pace. And so the markets, definitely reacted to her. Yeah, so I guess it was the blow was softened when when the, the finer detail came out the day after to the final two to touch on in China. Kind of unfortunately going from bad to worse, the China services PMI felt a 42 in March from 50 spot to as a pretty sizable decline there. And that was for the month of February. So it's going to get worse at this point and actually it's the lowest level since the depths of the lockdown that we had on the initial outbreak in Wuhan back in 2020 so I've been saying this for a couple of weeks now. I definitely think the markets are a little bit complacent about the disruption the effect that this will have. Because as we always we've discussed this many times on the podcast of the reasons why but yeah I still think people should keep an eye on the developments that Shanghai obviously has gone into citywide mass testing, kind of full on lockdown at the moment because we've got a team out there I spoke to some of them this week, they were saying how they were explaining to me was really interesting. Put me right back in that that manic period of when I remember going down at the time it was a, I was in East college in London, and it was I remember I think I text you, and I was like, everyone's gone mad. People were frantically shopping, and like just grabbing anything they could get, because it was like, it was sheer panic, kind of like toilet roll situation and apparently in China, I probably shouldn't say this on air because the Chinese authorities might find me but cancel you might cancel me but yeah apparently because of the fact that they've never really had to respond in the same way because it's always been quite kind of very surgical and specific in their lockdowns. But actually now it's just citywide and people have panicked and you're getting that play out on the local level I think and yeah it's, I think this apparently just to add to that apparently like if you live in a kind of high-rised building, apparently government officials are just coming along and literally just locking the front door. Like you literally can't get out, you can move around in the building I guess, but you can't get out like at all and so from a food point of view you just get what you're given and apparently it just depends what I don't know weirdly they had a massive rock load of celery. So apparently there was just suddenly everyone was trying to figure out in front of Google search like a recipes using celery and yeah but yeah I do agree that I guess here in the west we're not really getting much coverage of this. I mean I guess it's a function of the Ukraine, Russia thing which is kind of just dominating and saturating the media. So you're not getting their news from other parts of the world and so yeah I do think it's going under the radar and it will probably progressively or you know as the economic data starts to filter through for the months that we've already had. You've just said with that PMI then I think people are going to wake up and go oh actually, this is a bigger issue than perhaps we thought. There was an interesting measurement just to finish on this story about monitoring of truck servicing data between I think it was distribution centers and the airport. And it wasn't so much about the manufacturing of these goods it was about getting them to the relevant ports for then distribution internationally, and the rate of those at the moment is at 3% of what is a normal tracked rate. So it's like, you know your supply chain problems, they're still quite clearly evident it's just so this inflation situation you know central banks having to go hard and you know doves flipping and all these types of things I mean yeah going going My bigger concern is like all the but like the Fed going super hawkish but the Fed raising rates is not going to solve the supply chain issues. I mean that's just not doesn't have an ability to control that so yeah you might end up with super hawkish much higher rates but actually inflation just stays high. You know in the through the summer let's say so you know it's definitely it's a cock it's a very bad cocktail of negative forces for economies and markets. Okay, well let's talk, let's talk meta platforms and then we'll move on to Twitter. Meta drawn up plans came to light this week they're going to introduce virtual coins tokens and lending services to its apps, otherwise internally said to be known as the Zuck buck. That's just tragic I'm sorry that's just that's just bad PR. That should have had a word with marketing and they should have locked that down. You know the guy is just not to see the face of this like the daily star kind of headline writer. Yeah, but hit me. What's the deal. Well going on here. Well there's a couple of a couple of angles I want to touch on this just I wasn't going to but now you've gone there. I don't know when I read that I thought yeah tragic was definitely probably the first word that's going to mind the second kind of thought process I had was hang on a minute that. That and I've got such a negative bias towards Facebook right that that's my default position is a negative bias and and I've and I've had that for quite a long time. So maybe this is an interesting point to make and where you need to be careful with that, or I need to be careful with that because I'm now conscious I have a negative bias so therefore I force myself to try and view new information about Facebook. You know, and try and judge it on merit first, rather than just my subconscious default will hang on I'm going to take the negative angle on everything. But I feel myself, my subconscious kind of kicking in and going next I when I saw Zuckbuck. Here we go. Another and actually I thought well, actually this is a good example of like a dictatorship where you've got this guy at the top running the show and basically all his minions sit underneath and try and make him happy. And so some some of the minions have come up with this great idea. Let's call it the Zuckbuck and Zuckerberg sat at the top right now. Yeah. Great idea. Let's go with that. You know that was literally that was the first kind of set of thoughts that ran through my head and I thought hang on a minute. I'm victim of my own negative bias here. I need to kind of pull myself back from that and try and view this. The Zuckbuck thing is actually just a nickname for it internally. They're not going to call it that. Well, I hope they're not going to call it that but. But yeah, I mean I think that there's a bigger story here because the other thing that I saw again where I immediately went oh God this just is the fact that this isn't going to be a proper crypto, you know decentralized crypto currency. It's going to be a currency that's controlled by Facebook. And I thought well again that's just another massive error and you know you've got it all wrong right initial reactions but looking into it more deeply. There are basically Facebook have been forced down this path. So here in this year that they, they try to create a crypto proper decentralized crypto currency called DM, but they had to wind it down earlier this year that she sold the assets in that to a California bank called Silvergate, but basically they were forced to shut it down because the US regulator refused to give that project the green light and the regulator were concerned about monetary stability and competition concerns. So if Facebook have tried to create a full blown crypto currency for the metaverse, the regulator has clamped down and prevented it. It could be argued that Facebook are being unfairly dealt with by the regulator, compared to the regulatory oversight that the other big tech firms are getting. That's that's a whole different kind of worms so let's perhaps not go down that path today but so let's wind this back so Facebook trying to crypto currency they got blocked. And actually, the so methods, methods financial division. Basically all the staff walked out after that they're like fed up we literally can't our hands are tied the regulator won't allow us. They had a big team, and apparently they just all walked out. So what's left is the kind of skeleton staff that were left and I'm sure maybe they've rehired but now it's like well okay we need to repivot and what can we do what will the regulator allow us to do. And basically this is, this is now that first kind of for a down that path. So, and then the other thing I read, can you believe, I forgot about this. Do you remember something called Facebook credits. I'll forgive you if you don't know. They launched this in 2009. And it was a virtual currency that enabled users to make in app purchases. So you could use this in games like farmville. I came across that but they created Facebook credits in 2009 a virtual currency and actually when, when they, when the IPO in 2012, their Facebook credits virtual currency made up 16% of their revenues. But they then shut it down in 2013, because it was too costly to maintain. So, a genius. I mean, so far ahead of its time, but then be what an error. Closing I wonder, I wonder when they shut that down, who was head of that division and where that person is now. Yeah, that would be interesting to see what they've gone on to do because they learn the structure the technology right implementation, the team. They must have gone on to do something. That'll be a worthwhile half an hour trying to dig into to that and find that answer. Let's all let's get less. Let's give our listeners that job. Better homework. Yeah, message us. Who used to run Facebook credits. Back in the early days. Okay. email me a dot chunk CHE UNG at amplify training dot com. We want name and current current role, current position. Yeah, could be a little bit of merch in there for the for the best response. Right now we're talking. Well, let's let's leave. Let's leave the Zuckbuck and talk about Elon jumping out of the frying pan into another another heated situation this week because yeah it was quite quite shocking really Twitter shares. They just spiked. I mean pre market there are about 30% early in the week they went about 25 I think they've gone up about 50% it's transpired. Since this steak accumulation coming from the Tesla CEO but Elon Musk has tweeted his way onto the board as well of Twitter, and he's taken a 9.2% stake in the company now. All sorts of headlines I've seen, you know going around about why is he done this and suspicious options activity and some irregularities in filings to circumvent certain responses from the SEC and things like that. Talk to me. What's going on like, I saw I shared a tweet that he did he actually tweeted a meme, a very popular one of him. So he tweeted a meme of himself. Yeah, just saying Twitter's next board meeting is going to be lit. It's him smoking a big cigar. I was just like this guy is just another level. And this week. Let me just get the percentage should just for. Yeah, Tesla shares are down over over 10% this week. Tesla shares. Oh wow I didn't even look at Tesla shares right I'm so obsessed with hang on what's going on with the Twitter share price right so Tesla down 10% yeah well makes sense right in that he's. I just, I don't know he's either just. It's just a rich dude who's bored. Right that's one. That's one angle or or or there's something more. I mean look he's a clever guy so I'll give him the benefit of the day and say there's there's something more to this kind of thought out strategy. So before you give me the details and some of the stuff I mentioned one thing I did read in political, which I like getting from a slightly different and non financing type angle. We're looking at case studies of previous people like Bezos for example and others. And they were looking at this pattern that people like Elon, who are very wealthy individuals tend to have with they get to a point in their professional corporate life, but they start to then move into the media sphere. They start to pick up then and become this kind of media mogul force, because then that gives them influence beyond that of which money can buy. And so, right is us buying was it the Washington Times or post and then Washington Post. And then so they was kind of speculating that that that instills them a longer term immortality and their legacy because they then have this media outreach and control. And you've got people at that level, you know when you've got 300 billion the bank account. Yeah, that's what that's how they, how they think but I thought that was quite an interesting spin and one that makes sense I guess. Yeah, very interesting. I mean I think the other angle to this Twitter thing is, or the Musk Twitter thing is, I mean he's got, I don't know, just looks really dodgy on one. He's got from one angle, and you might have multiple bill, but you can't spend it when you're in jail. He's got to be a little bit careful here when, because the way he went about accumulating his what is it 9.2% stake in Twitter. I don't know when you look into it. It's, there's some pretty dodgy. Well, all I'm going to say is the SEC are definitely going to be very carefully looking into this. And I would probably say quite seriously because back on the 31st of January. Elon Musk owned zero Twitter shares. He now owns eight over 800 million Twitter shares. And he started on the 31st of January started buying, and he pretty much was buying shares every single day, all through February, all through March. What, what, what, what clip sizes are these we have right so I've got the full list here so he started off, he started off small right inverted commas on the 31st of January he bought 620,000 shares at $36.83 per share. So I mean you do the math on that. What is that that's like $18 million worth is it. So you start off with clips around five to 600,000 right then you got the bat out and on March the second he bought 3.6 million shares. He bought another million on March the, sorry February, the, sorry, February the third 3.6 million that February the fourth he bought another million, February the seventh he bought 4.8 million. And that all the clip sizes bearing in mind he's buying every single day, those smallest clip size was 300,000. The next smallest then is a jump to like there's a few at five and 600,000 but mostly it's over a million shares per day. So it's a question then if you're a like a flow trader and you're looking at a stock like Twitter surely it's quite evident as a player in the market who's just absolutely building accumulating a state how did this not come out in the trading community for those stopwatchers who are looking at this top price I mean surely this is abnormal behavior that would trigger a flag. Yeah that is a very good question. Maybe they were and maybe they made they just wrote exactly I'm just going to get behind the whale. Yeah. And that's right it. I mean the share price I mean it did it was dropping. Certainly when you get to the sort of start of March it was on the decline obviously we have that it was it was the phase where tech was getting on a downtrend for sure. Obviously he was just propping up that slide. I mean who knows. I think it bottomed out Twitter bottom that about $33 right. If he hadn't have been buying. Now obviously it's hypothetical but we won't will never know how much lower it would have gone in that downtrend but he certainly was kind of putting the brakes on that downtrend. But do you have any data on his tweets over these periods. Exactly. So this is where it's super dodgy. If I was the SEC, I'd just be putting my best team on this because here's the sequence right in terms of his tweet his tweets and so on. So, well look on March the 14th. This was quite a key day because that was the day where his stake. Cross the 5% threshold. Now you got there's certain regulatory filings you've got to do if you buy up more than 5% you've got to submit these various forms right you're supposed to do it within 10 days. Okay, so on March the 14th so he should have it should have been submitted on March the 24th he should have disclosed is 5% plus holding on March the 24th he didn't disclose it until April the fourth. Now during that period. He's still buying and buying and buying and buying right but he's also tweeting. So remember remember he's got 80 million people on on on Twitter right followers. So let me just see. So, like for example there's a few things here. On March the 24th for example he's tweeting. Well he asked his Twitter followers for a poll basically on whether Twitter algorithm should be open source. He tweeted on the 25th. Musk polls his followers on whether Twitter rigorously adheres to the principle of free speech. As he's tweeting that he's buying three and a half million shares. Okay, I mean then he then said. Hang on a day after tweeting so he then he then tweeted that he's giving serious thoughts to building a new anti censorship social media platform. Basically I'm going to, I'm going to launch a rival to Twitter. He bought 2.6 million shares in Twitter the day he tweeted that. Now I'm sorry but that is seriously dodgy. You cannot tell me that he's not manipulating the share price using his platform. And then on the side just hoovering up. And then of course on April the 4th it's announced he files late. It discloses I've got more than 5% share price up 20% 30% here's his average position buying through day after day after day accumulating 800 million shares his average purchase price was $35.89 per share. When it comes out the share price pops to $49.97 so he's in at 35 and it's trading at 49. What's really interesting then. So there's different filings you've got to do right so there's something called a 13D filing and that revealed that he had. He had a certain number of shares and then there's another filing called the 13G filing which he filed later on April the 4th which actually showed he had less shares. So on April the 4th news comes out, it looks like then the number of shares he owns is starting to go down. I was just starting to book profit. It looks like from one angle this looks like he's just played the entire market. Incredible. It's either the stuff of legend, or he's going to prison. Not quite sure which one yet. I just wonder. If I was him, I'd be looking at the state of the US political system at the time of where we are at the moment about going to midterms. And I'd be saying, they can't touch me. Because they're in disarray and they're going into a period where there's so much stuff to just they have to do now. And it's so fractured on Capitol Hill. I'm going to do whatever I want. And do you know why? Because I can do whatever I want because I'm the richest man in the world. Right. And it's going to be lit. I mean, I can see the attraction because you know, I think you're right. I mean, it's pretty obvious what's happened here. But I don't think they can take him down. Yeah, maybe he's why not? I mean, it's not right. But hey, I mean, how do you get your kicks when you're that rich? Yeah, exactly. Right. So well, look on that on that bombshell, let's move on. What we'll do is we're going to dip into some, some politics, and then we'll come back out and then talk a little bit corporate finance just to kind of cover all bases. So what I'll do is I'll run through this quite briefly just to give you an overview of what's going on. And the reason why I wanted to cover this is that you're probably going to read about this at the weekend because it's the first round of the French election. The French bonds slip quite sharply earlier this week, sending the benchmark 10 year yield in France is highest level since 2015. The cat current, which is the main stock index in France was also underperforming the rest of Europe. They all came because obviously there's a lot of focus on polls. We all know how inaccurate they tend to be but yet human behavior dictates that we're all drawn to it like a moth to the flame and those polls have basically seen the two main front runners converge. And that being that Macron's lead over the far right National Rally Leader Marine Le Pen has narrowed to just five points polls prior to this. The gap was plus 10 points. So this is I would say though this is well a couple things this is quite normal in a sense of in the French system which I'll talk about the moment there's two rounds. And it's kind of an elimination process where they then go into a final presidential runoff. Now, one of the things here is that at the beginning so let's say a few weeks months out, everyone's kind of got a shot and in the polls it's kind of like the start of a horse race everyone starts at the same point. Then as you get closer to the finish line, you start to see a dispersion of the main kind of front runners in that sense, all the others who might look quite hot at the beginning and you think wow there's going to be a big upset. The voters minds tend to get more channeled and focused as we start to get close to the day of which then they get asked who are you actually going to vote for, and people tend to kind of fall in line and that's where more familiar characters often. I must say Macron was an exception to that with his new party when he last won, but generally speaking that's where more familiar characters tend to come to the forefront just more broadly in politics. A couple of other things. The first round then on Sunday it's very much expected Le Pen will make it through to the 24th of April runoff. So the next part of this is not till the 24th of April, and a poll by the economist has had her going through because Macron is expected to go through the bar ahead of everyone else in the polls, in terms of bar Le Pen. They had Le Pen going through at 89%. So it's pretty much not going to say a done deal, not that naive to say it's a done deal but it's looking that way. Now, a couple of things then I guess of why we've had a convergence in the polls, because this is what I, what must be something going on here and his position as president I was reading has prevented him from really campaigning. In fact, he only actually had his first campaign about a week ago. Why? Well, there's this problem in Ukraine that he's had to deal with, and he's been one of the main brokers of the conversation. So he's been absolutely engaged on the geopolitical front which has meant that he hasn't really been able to speak a lot to the electric back home in in France and so while he's dealing with that. He's also like every politician, every incumbent is dealing with this incredible problem of the, the cost of living debate, which is really the main talking point for every base in Western Europe at the moment feeling the plight of just this rampant inflation that we have so that's him. But what about her. So, the her rise is linked to the situation of Eric Zemur, and who also comes from a similar political position perhaps a little bit more far reaching, let's say, in terms of views but in January February he was credited with around 15% of voting intentions, but he's since fallen sharply Zemur's candidacy tended to demonize Le Pen. But basically, this is the risk I guess you run as a candidate when you go down that angle you either capture really capture an unearthed feeling and sentiment, some might say kind of like Trump might have done in previous years, or you go step too far and people go, Oh my God, this is just too much. And actually then as a strategic move Le Pen can appear as a more moderate right leaning candidate. So now she becomes not even though she is the far right leader. She's a moderate far right leader in comparison to now a reference point of someone who's way more out there. Well, and Eric Zemur also I mean he's so extra he know he was convicted for hate speech. I mean he's, he's proper super far right and I think perhaps what unstuck him other than maybe going to extreme. He, he, he loves Putin. He's a big Putin fan. And it's not a great period of time to be a Putin fan in, you know, in the West. Yeah, and on that point I'll come come back to that in a moment because that's a key thing that will come up in a few weeks. My mind's thinking though and I haven't researched his background enough. But if I was working for Le Pen as a strategist, I would be very much talking backdoor to Mr Zemur. Yeah. Okay, yeah, you talk like that. That's fine. Actually, you go for it. You have my backing in fact. And then let him do his thing to the benefit of I know then I'll play tactically my card to my favor so be interested. I wonder the political things do make my head spin sometimes about all the backdoor deals that get cut. Yeah, the the tactically Le Pen though said to have ran a pretty solid campaigns. This is the double whammy kind of problem that Macron has he's been distracted. She's had more time, more planning. She's had more ability to hold big rallies she specifically toward towns and villages of France. Kind of similar I guess to, you know, if I think back because what what's clear to me is 2017 when Macron won last time. And that was just on the coattails of the EU referendum with Brexit, and everyone was panicking about France Frexit at the time, which we thought was a credible risk turned out not to be the case. But now, you know, part of the disconnection, I guess, between big cities comparative to them more, let's say, middle England, in the case of what we had in this case, towns and villages so she definitely knows her audience in that sense. So I try to connect with ordinary people, fundamentally different from Macron. And this is then the next interesting part, because let's say the two go through to the final runoff, which is very much expected to be the case. So current polls, what's important, the current polls do not say anything about the second round, because what happens here is now, this is when the horse trading happens between the fallen candidates and Macron Le Pen need to be thinking who can I strategically get to now vocally back me so that their supporters then fall under my wing. So that's point one point two, there's going to be debates between Macron Le Pen. And I still remember those ones between Clinton and Trump, you remember when he was like stalking her around the stage, but the debates are always always interesting and in the Macron Le Pen one. It's basically going to be played on two fronts from strategically. President of the rich versus the Putin sympathiser. Right. Now she's backed off that very like recently, obviously, she's now the moderate far right. But she's been a sympathiser in the past for some time. He has struggled for throughout with this kind of association with being friendly to the rich and himself being of that particular elite, let's say. And so this is the battleground and that's really going to get quite dirty, as it normally does. Interesting fact here is that no sitting president has been reelected in France for two decades. So I know I thought Nicholas Sarkozy was round for a long time. But he was 07 to 2012. And then he came then Francois Hollande came in, did his five years. Sarkozy 07 to 12, Hollande 2012 to 2017, Macron 2017 to now. So yeah, time, well time flies, obviously, but but yeah, so it's not the so I guess the point I'm making from that statistic is that in recent times, the French public are not afraid to shift leadership in that sense. There are some general points here, and then then we'll jump to Porsche but it's worthwhile remembering them, the analysts are in G were pointing out that presidential elections are followed by legislative legislative elections on the 12th and 19th of June. And that will determine the parliamentary majority majority and whether the president elect will actually be able to implement their program. And this is what this is what people I think forget because the media have such a fanfare, if Le Pen wins it's like, Oh my goodness, like, you know, she's going to withhold payments in the EU budget. She's going to have questioned the supremacy of EU law she's going to intensify border controls, that will be the spin. But in actuality, what can she do. If you haven't got control on the the legislative kind of elections, and you don't have power, you can't do anything. So that's quite key and actually at this point in time reads Marine Le Pen's chances of having parliamentary majority, which is what you need to have passage of your proposals is extremely low. So just the caveat there, but from a trading investment perspective that doesn't mean that in the interim period, you don't see increased positioning for the prospects of heightened volatility. So typically, you know she wins you would anticipate your weakness and increase in French spreads or widening the French spreads against the benchmark and high yield so forth in the interim period. So yeah, that hopefully that just gets that's just a short soundbite to get everyone on point of what's going on on with that. But let's get you back involved and let's talk about Porsche poised to be one of Germany's biggest ever IPOs but I was kind of like okay, and then I saw. They've chosen goldman's Bank of America JP Morgan and city like. How has that happened firstly but look talk to me about why these book, you know, kind of coordinators are important that process. And then let's talk a little bit about the deal and rationale itself. So when you go and when you decide right let's, let's go public, let's list on the stock exchange let's have an IPO and of course, you know you need some bankers to help facilitate that process now when you go in your company the size of a stock exchange and you don't just need one. I think you need several because the amount of stock that you're issuing and selling is so huge that you're going to need multiple banks to kind of mop that up and kind of get access to multiple banks, you know customer books and so on so you know it's about choosing multiple banks and historically, you know the big, you know big European IPOs. Historically, you know you choose European banks you choose your home team, right, and especially in Germany, by the way, especially in Germany. You know, Deutsche Bank, I mean, Deutsche Bank, it would have been like a shoe in given right there actually the lead, you know, you know going back through the years Porsche IPO Deutsche Bank, right bank done, it's not even up for discussion, except that Deutsche Bank are not involved at all. And Volkswagen have said well you know what, we've just forget geography here we've just gone right, leading investment banks of the world. Pitch to us what have you got and we just chose it on merit and they chose for Americans. So they chose Goldman's Bank of America JP Morgan and city. So, you know, quite amazingly not one year so no Deutsche Bank obviously but then no Barclays no BMP Paribas you know the other big kind of European giants. And I guess there's a couple of reasons why Deutsche Bank quite controversially haven't been in the running here number one is and I think I guess this is a function of where US banking has suffered more sorry European banking has suffered more than US over since the financial crisis in 08 and 09. Okay, and that's because Europe almost like had a double crisis it wasn't just the financial crisis then there was a eurozone debt crisis. And so it's almost been a double whammy and as part of that. Banks have had to divest a lot more than US banks there's been a lot more, you know, bad debt. There's been a lot more restructuring. There's been a lot more divesting and streamlining. And so what you're ending up with is these big European banks that are a lot slimmer like Deutsche Bank now they don't have an equity trading division. And right there is a big problem. If you're trying to shift a massive IPO, you know having an equity trading division is pretty critical for facilitating that smoothly right so that's probably the biggest reason why Deutsche aren't in here they've had to streamline themselves so they're not really fit for purpose anymore. And secondly, you know it's about, I guess, Deutsche are, well, well, they've got back, they've they've had a go at trying to get rid of some automotive IPOs in the past and let's just say it hasn't been particularly smooth. For example, they floated they were in charge of floating VW truck unit Tratton in 2019. And the share price is way below what the IPO price was secondly, Deutsche one of the lead runners on Aston Martin's IPO, which has quickly become the perfect company to study, like the masterclass in value destruction, you know it's definitely like go to business schools now MBAs it's like the case study of the disaster of an IPO like up there with like Facebook's actually that's for different reasons but so additionally, Deutsche trying to lead automotive IPOs they don't have a very good track record so it's anyway so these are the reasons and actually just step outside of this one deal for a second. This is crazy this stat JP Morgan has acted as a book runner on 223 European IPOs with a combined deal value of 45 billion dollars since 2008. So since 2008 223 IPOs 4045 billion Deutsche Bank over the same period, just 131 deals worth 28 billion. And these are these are European IPOs. JP Morgan have almost doubled Deutsche Banks activity in European IPOs in the last 14 years which tells you the whole story that the US banks are bossing it, and they're on a level above. And the Europeans can't really do much about it. One of the things that I was looking at was how I think it was Fiat spun off Ferrari to become a list and I actually remember one of the summer analysts that we had probably 2015. Here you went to Goldman's and he was working, he was an equity research analyst on Ferrari. Pretty much landed it there, haven't you. Come out to Italy, come and meet the team tour of the factory, you know, get the merch. Let's hit the track. Do you want to test that? Yeah. But yeah, because that's why I remember that that period, but I was looking at because I guess one of the things when it comes to listing is about timing. And I know we've talked a lot about the EV, but I guess the top level is it I guess is it a better time because the EV boom has kind of come off the boil a bit. The EV direction of travel is still the same. We're heading that way, but is it better value now to go now specifically on the next. And well, so we don't know when exactly when yet, but now it's much more likely to happen now 2022. We're not quite sure when, but yeah, I reckon they I think it's perfect in that they're kind of buying the dip so to speak from a sort of valuation point of view. We've been through the initial EV valuation bubble that has burst. Just go and have a look at Rivian's share price. What are they trading? It's a good question. Why don't I quickly look it up whilst I'm talking, but so they've kind of written through the bubble bursting. And now it's like right valuations are now investors are now right. Let's now take a little bit more time over our due diligence and analysis and let's, you know, they've had their fingers burnt on the more speculative stuff. And now they're looking for proper automotive companies with a track record with a, you know, infrastructure in place to manufacture and distribute. And this is where the likes of Porsche perfect right and secondly, the valuations are more modest, which in the early days is good right because what you want when you're IPOing is right evaluation, but you want to make sure that then you're beating forecasts. You know, after year one, do you beat forecast great if you do investors are keen they'll buy more this is how you get an upward trending share price post IPO. You know, it's about a more modest modest. It's just a realistic valuation. Just looking at Rivian. Oh my goodness. Oh my days. That is. I didn't realize. Yeah. Oh my. That is what I'm looking at IPO to 100 right or sorry it hit the stock market at 100 bucks spike to 170. We're going to get the same chart here. Yeah, but I've got it up at 130 initial pricing and then it's down at 12 sub 40 sub 40. So that's that's what I mean when the bubble has but I was talking about it at the time. You know, go go and listen to our podcast. I mean it was one of the most. It was the most visible bubble. I think I've ever seen. Anyway, it burst so now it's a good timing for Porsche. And then strategically Volkswagen. Right, we were talking or is it Porsche. So we were talking about during the bubble. We talked about Volvo and a Polestar and I mentioned Polestar to you offline because I got pushed some adverts kind of shows my age I guess they're pushing Volvos at me. Shows I've fallen now into the 40 year old demographic. But we were talking at the time that Polestar was going to list and be valued up more than actual to Volvo group which is insane. But one of the things I saw in a Bloomberg article. Just when I was kind of researching for this pod was that Ferrari. Ferrari's enterprise value trades at more than 22 times earnings VW's 1.8. That's crazy. That's crazy. Well, this is why are VW looking to kind of spin off or IPO Porsche. This is for one reason. It's about trying to, you know, really access those much higher valuations that, you know, publicly listed, you know, more premium brand automotives are seeing and especially with their EV play. I mean Porsche. Porsche is the most profitable part of Volkswagen. By the way, just a great story and they they've got history here in getting the reinventing themselves. They pivoted towards the SUV early on before any other kind of more, let's say luxury brand automotive did and they make my, you know, more than half of their revenues from through their SUV series Porsche and they were trailblazers. They were trailblazers head of the game. And now every every other luxury brand has an SUV as a result of the success that Porsche had. Now they're kind of pivoting to EV, which is which is looking like obviously a very successful strategy. So this is kind of why but what's what what I really like. What's really interesting about this is that it's kind of the backstory and the company structure. Like who owns Porsche? Well, it's Volkswagen. Right. But then who owns Volkswagen? Well, it's Porsche. And you're like, what? So basically in the 1930s, this, this, this, the Porsche and P.S. families started an automotive company. Okay. Called Porsche. This is back in like 19, they founded Porsche in April 1931. Okay. But then also the, the, so there's a difference between the Porsche family. Let's just separate this out as the Porsche family. And then there's the Porsche automotive vehicle company. Okay. The Porsche family have the majority control of Volkswagen. They own, they own, well, they own 31.4% of Volkswagen, but they've got 53.3% of the voting rights. So the Porsche family control Volkswagen. Volkswagen owns 100% of Porsche. So it's a bit incestuous. Let's just say, right, the Porsche family own Volkswagen and Volkswagen own Porsche. What's happening here is Porsche, sorry, Volkswagen and I spinning off Porsche while they're selling 25% or they're going to, if the IPO happens, I should say. So they're looking to list and sell 25% of the Porsche automotive company, which means Volkswagen will still wind up owning 75%. And the Porsche family, I guess, will end up owning 25% of the Porsche automotive vehicle company. And you can see straight away, this is already getting massively messy. So from a corporate governance point of view, this is, this is their one banana skin. This is a really tricky one when it, because when it comes to the investor roadshow, you know, you want to set out a great sort of opportunity for investors. You've got to be all clean cut. You've got to be everything, all your ducks have got to be aligned. There's got to be no kind of skeletons hidden in any closets and, you know, clean governance structure really helps with that. But this governance structure is super complex. So that's going to be, that will be their kind of headache. I think it, I mean, look, I don't think it's going to scupper the deal by any means that Porsche is a great company. They've got great performance down the years. They've got a great lineup of exciting, you know, an exciting pivot to EV. It's Volkswagen's golden child. And, you know, there's going to be plenty of demand for this. But yeah, there's just that slight governance sort of risk lurking in the background. On that note, let's let's wrap up this week's episode. Thank you everyone for listening as ever. And yeah, thank you, Pierce. Have a great weekend and I'll see you next week. Yeah, have a good weekend.