History repeats itself. The economy is plagued with mispriced assets, but what’s next? Tune in to hear which era paints a dismal future.
Paul places his bet on private equity for the year, and it’s a big target. Who’s side of the bet are you taking?
Before pressing play, ask yourself: Does money flow in and out of markets?
Co-Produced, Edited, and Mixed by Dylan Seals of Verbell.Ltd
Paul Giannamore: Money doesn't go in or out of markets, it goes through them. Every time an institution buys security, somebody else has to sell it. It goes through the market. There's always the same amount of cash on the sidelines, it's in different hands.
---
Patrick Baldwin: Globetrotter, Paul. I happen to catch you in between trips. I know your schedule is no less busy than before.
Paul Giannamore: Unfortunately, it's not, Patrick. I've had a good run of all sorts of buyers, sellers, clients, and everyone coming down to PR but it's time to get back on the road. It is not a fun time to travel if anyone has been on a plane. The only good news is we don’t have to wear masks anymore.
Patrick Baldwin: There's some silver lining in your travel. You're going to end up on a beach somewhere. Who knows where?
Paul Giannamore: I will not end up on the beach. That was a little inside joke. We might as well talk about it.
Patrick Baldwin: I'm sorry.
Paul Giannamore: I'm going on a business trip. I’m taking my wife. There's a city in an undisclosed area where she thought there was a beach but it happens to be two hours from the water. There was a little bit of a discussion about that.
Patrick Baldwin: There might be a better beach in Waco, looking at where you're heading.
Paul Giannamore: 100% there is, for sure.
Patrick Baldwin: We do have to take care of the business. In Bubble Trouble, you said, “We're going to give away a trip to Puerto Rico.” I picked a winner. You know how I did this. I cut little slips of paper and put everyone's name on them. Can I do that, not get paper cuts? No. I'm a spreadsheet guy. I'm random and done but I got a winner. Are you ready?
Paul Giannamore: I'm ready.
Patrick Baldwin: We're going to dial up our winner, a new group member, Zach Ivey, down in Houston, Cypress Creek.
Paul Giannamore: Are we calling him now?
Patrick Baldwin: Why not? Let's do it. He put his number. When he registered for Bubble Trouble, he showed up for Bubble Trouble. A name out of a hat in this new digital roll. Here we go. We're going to dial and let's see what happens.
Paul Giannamore: Let's do this, Patrick.
Zach Ivey: This is Zach.
Paul Giannamore: We got some funky situation going on, Zach. You're being recorded right now. You're not on the air but we did our Boardroom Buzz Bubble Trouble drawing and the little square paper with your name on it came up as a winner. You, my friend, will be joining us at some point this 2022 in Puerto Rico. We haven't worked out the details yet. We wanted to get through the first part, which was figuring out who the winner is. We'll be in contact with you as we start to plan out when we want to do this. Summer or fall, it'll be your call.
Zach Ivey: That sounds awesome. That's sweet.
Paul Giannamore: The only downside is I've got another Texan coming to Puerto Rico. I've had a lot of these guys lately.
Zach Ivey: Another Aggie, too. That's even better.
Paul Giannamore: Congratulations, brother. Super excited to have you down here.
Zach Ivey: I appreciate it. That’s awesome. That was pretty interesting stuff, too. It was pretty eye-opening.
Patrick Baldwin: Are you saying you enjoyed Bubble Trouble? It sounds like you're saying you enjoyed it.
Zach Ivey: It was very good. I would have enjoyed being there and then having the cigars and drinking the bourbon.
Patrick Baldwin: We'll get there. You're getting there. Hold on.
Paul Giannamore: What you saw on the video was only a fraction of what it is we do down here in Puerto Rico.
Zach Ivey: I can imagine.
Paul Giannamore: Congrats. We will be in touch with you.
Zach Ivey: That's awesome. Thank you very much. I appreciate it.
Patrick Baldwin: See you, Zach. That was great. Zach is coming down. Hopefully, he believes us and he doesn't question that this is not a prank. Zach, you are coming.
Paul Giannamore: Do you think his office assistant there is telling everyone, “Fat Pat from The Boardroom called.”
Patrick Baldwin: Is this my new email signature now? Is that what you're going for?
Paul Giannamore: Patrick, you've been a real trooper during the Fat Pat affair. I know you hate your name truncated to Pat, to begin with. I know that frustrates you. Of course, the modifier “fat” probably doesn't go along with it.
Patrick Baldwin: It's better than Pat.
Paul Giannamore: Fat Pat is way better than Pat, for sure.
Patrick Baldwin: Bubble Trouble, we had a two-hour window max. We had to be out of there shutting the thing down. Questions kept coming. We have questions from Bubble Trouble that didn't get answered. We need to take care of business here, Paul. I've got you nailed down. We're going to do this.
Paul Giannamore: Yes, we do. We have a lot of questions. Patrick, when I went through the questions, they were bucketed so to speak. Some folks wanted predictions, which is difficult to do. Other folks asked questions that we've talked about a million times on The Buzz. We're not going to go through those. Also, I am controlling the questions and not you because there are a lot of them on here that don't necessarily make sense to get to right now. Perhaps in future episodes, we will.
When we did Bubble Trouble, it was a live event and it was extremely difficult. I have a lot of respect for newscasters. People get up there and talk live. We're on this thing live. There are no notes. The camera goes on. For me, there are a lot of things that I wanted to say that I didn't have an opportunity to say, either I went on too long and forgot about mentioning things. Of course, I had Dylan in the background giving me the cut-your-neck-off type sign to shut me down. Anyway, that's what we are going to cover in this episode.
For those of you who haven't watched Bubble Trouble, the main theme of the whole presentation is that we've been through this multi-year, inflationary boom. The US government has created a tremendous amount of credit, almost doubling the debt-to-GDP here in the United States over the past several years. It has done a lot of things to inflate the prices of assets. Anyone that's been in the pest control industry for decades knows that these were 5 to 6 times EBITDA business and 1.2 times revenue companies for decades and decades.
Acutely, over the past several years, we've seen a tremendous amount of asset inflation. Ultimately, valuations will roll over. We're in a different environment now than we have been out of the great financial crisis. The government was able to dramatically increase credit because we didn't have an inflationary problem. Inflation finally hit the consumer. It doesn't give the central banks a lot of maneuverability. This will have a dramatic impact not only on the real economy but also on valuations. That was Bubble Trouble.
Since we did Bubble Trouble, Patrick, there have been a lot of interesting statistics. There's the Federal Reserve's Z1 report, which I tend to look at from time to time. The Z1 report looks at American net wealth and how it changes over time. How the Fed defines net wealth would be a little bit different than how net wealth should be valued in reality. Let me explain that. When you own a business, your wealth is the stream of cashflows that the business produces. We talked about this on Bubble Trouble. You got a stream of cashflow. That's your wealth. The current price of that wealth is how the market values that cashflow stream.
Let's use EBITDA as a proxy for cashflow. In 2010, if I had a pest control business with $1 million in EBITDA, the market was valuing it somewhere around $5 million or $6 million. Fast forward to 2021, if I had a pest control business generating $1 million, the market might value it anywhere between $15 million and $20 million. You could see the dramatic change and that's just the pricing and mispricing of assets by the market. That stream of wealth hasn't changed at all. The current price is how the market is valuing that stream of wealth.
In 2021, in the second half of the year, we saw a dramatic mispricing of assets, which has started to change a little bit. What we tried to do in Bubble Trouble, which was difficult to do because it was live, is to think about everything holistically. Over the past several years, the federal government has spent a ton of money. It ran massive fiscal deficits and it has monetized that debt with the Federal Reserve. When you create a lot of money, it makes people feel wealthier. That's the whole purpose, the wealth effect.
Going back to one of my favorite Seinfeld episodes, The Opposite, of how he reasoned that if creating all of this money makes people feel wealthy, of course, the opposite has to be it makes them feel poor or less wealthy. The Fed looks at net worth, it's the current price of net worth. When they talk about net wealth in a market, they're talking about the current price of household wealth and how the markets valuing it currently. They look at housing stock, cash in the bank, and equity values.
According to the Fed, in the first quarter of 2020 when we hit COVID, US wealth declined by about $6.3 trillion. The stock market rolled over. We had a dramatic impairment on market. Net well took a $6.3 trillion hit. During COVID, we had a staggering, unimaginable response from the federal government. The 2022 numbers aren't out yet. We're going from 2020 into the end of 2021. From the second quarter of 2020 through the end of 2021, the monetary policy in the United States caused a net wealth increase of $34 trillion, or a 36% increase from $110 trillion in Q1 of 2020.
We know that during that time period, the economy certainly wasn't getting more productive. A lot of people were out of work. A lot of people were being paid to sit at home. The creation of money in credit made people feel wealthier because it inflated the prices of assets now. This is an estimate. This is not from the Fed. If you look at the markets, we've probably destroyed around $9 trillion net worth thus far in 2022. We're beginning to see the front end of the impact of the reverse wealth effect, which is exactly what the Fed said they're going to try to do.
In 2010, Bernanke said, “We want to create a wealth effect.” In 2022, the Fed officials are saying, “We want to create a reverse wealth effect.” If we break down equity wealth increased by $23 trillion and housing wealth increased by $8 trillion, there was a further $9 trillion increase direct ownership of private businesses in the United States. During the COVID period from Q2 2020 through the end of 2021, if we look at private businesses, the Fed is estimating an increase of $9 trillion in value. Those are Fed official numbers. I'm not opining on the accuracy. I'm going with a Z1 report.
Patrick, we're in the reverse wealth effect era. We're effectively in an inflationary boom. A lot of guys that I've talked to since Bubble Trouble look at this and say, “Are we going to be in a recession? What's going to happen with valuations?” I don't know exactly where pest control valuations are going. I do know that the Fed is attempting to force those down.
At the end of every cycle, that's when the consumer is in the best shape. When I look at savings rates for American consumers, it peaked in December of 2021. If you think about COVID, we've got the stimulus checks, and we've got extremely low unemployment. All this fiscal and monetary stimulus has caused consumers to be allowed to save a tremendous amount of money. That peaked in December of 2021.
In pest control, we saw a big boom in the industry in 2020 and 2021 due to COVID. A lot of that had to do with consumer behavior and activities being at home. It also had to do with the fact that there was a lot of additional discretionary income available to consumers to spend on these things. If you look across a variety of industries in the United States, everyone's somewhat benefited from that.
We talked about this before on The Buzz that, ultimately, there's a massive fiscal drag of over $1.3 trillion between 2021 and 2022. We're getting a roll-off of a stimulus. Of course, the Fed is tightening. You like interesting facts, Patrick. One thing that I picked up on Bloomberg is Gallup has been doing a consumer survey since 1978. They go out and ask Americans a simple question, “Is now a good time to buy a home?” Since 1978, the answer has never been below 50% except now.
30% of Americans now are saying it's a good time to buy a home for the first time since they started doing that poll in 1978. There are pretty clear reasons why. You've got limited stock. You've got home prices that dramatically appreciated during COVID, due to the monetary stimulus. Mortgage rates are going down to 2.5 or whatever they were. Now, the consumer is looking around saying, “The prices of homes are at all-time highs and there's a tremendous amount of inflationary pressure.”
We're starting to see the housing market on a rate of change basis decelerate from where it was in 2020 and 2021. The consumer is under a tremendous amount of pressure. I was on Bloomberg and I was looking at the various different polls. Another one that's interesting is Biden has lower approval ratings from voters than Trump did at his worst. It is not a good time for the consumer.
As you may know, Patrick, it’s why I am heavily short in consumer discretionaries and retail in the market. A lot of folks that follow this show have never lived through an inflationary boom and bust. They did not live through the ‘70s and ‘80s. They didn't live in the ‘60s. They certainly didn't live in Germany in the ‘20s. A lot of these people don't live in Argentina, Brazil, or Serbia. Although we do have a few followers in Serbia. For the most part, there's not been a lot of folks that have lived through this.
There was a book written in 1974 called the Dying of Money. I picked this book up in 2008, 2009, or 2010, something like that. It was during the great financial crisis. As I started to think through all this deficit spending and this monetary stimulus, it's got to create inflation. Ultimately, it did because inflation is defined as the increase in the money supply.
What people think about inflation is the increase in producer and consumer prices, which we're finally seeing. There are a few interesting passages. Dying of Money is the lessons from our great German and American inflations written in 1974 by a man named Ronald Marcks. He wrote it under a pen name, Jens Parsson, back in the day because some of the things that he said were a little bit controversial.
I'm going to read some passages from this book. Let's see if there are some parallels. I'm going to quote here, “Everyone loves an early inflation. The effects at the beginning of inflation are good. There is steepened money expansion, rising government spending, increased government budget deficits, booming stock markets, and spectacular general prosperity all in the midst of temporarily stable prices. Everyone benefits. No one pays. That's the early part of the cycle.”
“The later inflation, on the other hand, the effects are all bad. The government may steadily increase money inflation in order to stave off later effects. The later effects patiently wait. In terminal inflation, there's faltering prosperity, tightness of money, falling stock markets, rising taxes, still larger government deficits, and still roaring money expansions. It’s accompanied by soaring prices and ineffectiveness of all traditional remedies. Everyone pays. No one benefits. That is the full cycle of every inflation.”
There are a ton of books written on inflationary periods. Constantino Bresciani wrote The Economics of Inflation. This is a masterpiece on inflation. This book was written in 1931 during the Great Depression, The Economics of Inflation – A Study of Currency Depreciation in Post War Germany. It’s extremely technical. I don't expect anyone to run out and buy that book. I've had to read it five times and I still don't understand about 20% of it. The Dying of Money is a more interesting book because it weaves a lot of interesting tales. Patrick, I want to try to draw a few parallels between the early inflation of Germany with what we're seeing here in the United States. Would you indulge me for a moment?
Patrick Baldwin: Bring it. This is good stuff.
Patrick Giannamore: “In 1920 and 1921, there was no surface inflation at all. At the same time, the government began to pump out deficit expenditures, business credit, and money at a renewed rate. Germany's money supply doubled again during this period of stable prices. It was this time when Germany was sublimely unconscious of the fiscal monsters in its closet, which was undoubtedly the turning of the tide toward the inflationary smash. The catastrophe of 1923 was begotten not in 1923 or at any time after the inflation began to mount but in the relatively good times of 1920 and 1921.”
When we start to think about the Federal Reserve making policy errors, everyone talks. You see it in the financial news. The Feds are making policy errors. It's not the tightening of money that's the policy error. It is all the inflationary activity that lays the seed for the boom. The boom is the problem. The recession is the cleansing mechanism. The stimulation of the government's easy money spread through virtually all levels of the German economy. The life of inflation in its ripening stage was a paradox that had its own unmistakable characteristics.
One was the Great Wealth, at least for those who were favored by the boom. He goes on to talk about all of the various activities that took place as the boom began. When money was easy to come by, one took less care to obtain real value for it. Frugality came to seem inconsequential. For this reason, Germans did not obtain so much real wealth as the growth of money alone would have indicated.
As we entered the great financial crisis and the government continued on this debt-financed binge for the past several years, we haven't been creating wealth. In fact, productivity has decelerated dramatically in the United States and most of Western Europe over the past several years but we've increased the money stock.
Side by side with the wealthy were pockets of poverty. Greater numbers of people remained outside of the easy money looking in but not able enter. Over the course of 2020 and 2021, we saw the crypto bubbles and we saw meme stocks. We saw folks that are closest to the money producers. Folks that owned physical, tangible, and financial assets were the ones who became wealthy. The folks that did not own financial assets and did not own anything that would appreciate began to see life become more difficult as consumer prices increased. We saw that parallel in the United States.
“The crime rates soared. Although unemployment became virtually non-existent and many of the workers were able to keep up with inflation through unions, bargaining, and cost of living escalator clauses, other workers fell behind the rising costs of living into real poverty. Salaried and white-collar workers lost ground the same way. Even while total production rose, each individual's own efforts faltered and showed a measurable decline. The quality of productions deteriorated.”
“Accounts of the time tell of progressive demoralization, which crept over the common people compounded by their weariness with the pace, no visible purpose, and their fears from watching their own precarious positions slip while others grew so conspicuously rich. Feelings of disunity and dissent were epidemic among the Germans and nationalism among them was never weaker. Regional separatism was so strong that it came close to breaking up Germany into fragments.”
We see the inflationary boom marching on increasing the value of asset prices. Common people have a hard time, they struggle. Germany experienced significant wealth inequality, which has been a buzzword we've heard quite a bit in the West. Quantitative easing and inflationary monetary policies folks have created a tremendous amount of wealth inequality in the country. Asset prices have increased but those that do not own asset prices did not get wealthier, in fact, they fell behind. This is what happened during the early inflationary boom in Germany.
“Along with a paradoxical wealth and poverty, other characteristics were masked by booms and less easy to see until after it had destroyed itself. One was the difference between mere feverish activity, which did certainly exist, and real prosperity which appeared but only appeared to be the same thing. There was no unemployment but there were vast spurious employment, activity, unproductive, and useless pursuits.”
When governments do tremendous debt financing and they monetize that, it creates a lot of misallocation of resources. You end up with companies like Uber and Tesla that probably would not exist if money were not free. You wouldn't be able to finance these. From November of 2021 through the present, we've seen the Bloomberg Nonprofit Tech index fall by almost 70%. It's profitless companies, zombies, that were propped up. As the government makes money less than free and finances everything, we don't need any bankruptcies. It doesn't happen. We have a lot of zombie companies.
As I continue here, I'm not going to read much more from this, “The incessant labor disputes and collective bargaining consumed great amounts of time and effort.” This was in Germany in the ‘20s and we're starting to see labor militancy. We're seeing Amazon and Starbucks unionization in the United States. We're beginning to see labor militancy.
“Whole industries that have fringe activities, chains of middlemen, and the undergrowth of general economic hanger-on sprang up. Almost any kind of business could make money. Business failures and bankruptcies became few. The boom suspended the normal process of natural selection by which the non-essential and ineffective otherwise would have been called out. Practically, all of this vanished after the inflation blew itself out.” When money costs nothing and it's constantly financed by the government, the boom continues and there's no natural selection. Nothing goes bankrupt.
“Speculation alone, adding nothing to Germany's wealth became its largest activity. The fever to join turning a quick mark infected nearly all classes. Effort expended in simply buying and selling paper titles to wealth was enormous. Everyone from elevator operators and up was playing the market. Volumes of turnover in securities on the Berlin Börse became so high that the financial industry couldn't even keep up with the paperwork. Even with greatly swollen staff and back office, the Börse was obliged to close several days a week to work off the backlog.” Does it remind you of 2021?
Patrick Baldwin: Yeah.
Paul Giannamore: Everyone is getting rich. Something that's more near and dear to my heart is that on The Buzz, we've talked a lot about when financial repression takes place and when central banks drive real interest in the negative territory, it speeds up and fuels consolidation. We've talked about this a handful of times on The Buzz. I’ve always said that those who are closest to the money producer are favored. Rentokil has hundreds of millions of dollars of debt outstanding at 50 basis points. Rentokil has been able to borrow at 50 basis points, 1/2 of 1%.
I don't know any privately-held pest control company that's able to attract debt capital at that rate. Even Anticimex living in negative-yielding Sweden for these many years has been able to borrow at substantially lower rates than every privately-held company in the United States. This drives consolidation and this is what we've seen. Over and over again, through hundreds of years of financial history, we've seen consolidation boom and busts largely driven by inflationary booms.
I’ll take a step back to the Dying of Money for a moment, “The concentration of wealth and business was still another characteristic trend. Mergers, tender offers, takeover bids, and proxy fights were in vogue. Bank mergers were all the rage. At the same time, new and untried banks sprouted up. Great ramshackle conglomerates of all manners and unconnected businesses were collected together by mergers and acquisitions. Armies of lawyers, brokers, accountants, businessmen, and technicians who spent their time pasting together these paper empires bolstered the lists of the more or less employed.”
We have seen that as the inflationary boom has taken off over the last few years. We've seen a dramatic increase in professional services, accountants, and lawyers. Like every inflationary boom throughout history, we see the charlatans, fraudsters, and criminals come into markets, and we also see incompetence. Take pest control, for example. For two decades, it was Potomac and Tullius. We were pretty much the only advisors in this space.
If you look at what we've got going on now, we've got guys that own pest control companies. “I sold my pest control company. I'm an expert and professional in this. I can go out and do it.” I can't even count how many advisors are in this space now. They'll come into this space and when we get the deflationary bust, it's going to wipe most of these guys out. This demonstrates exactly what we're seeing in real-time, what Marcks talked about here in 1974 when he wrote this book.
The last thing I'm going to read out of the book is, “It was typically true that Germans who grew richest and the inflation were precisely those who liked the speculators and the operators. The builders of paper empires were the least essential to German industry operating on any basis of stability or real value. With the end of inflation, they disappeared like apparitions in the dawn and scarcely one of the kings of inflation continued to be important to German industry afterward.” As we have dramatically misallocated resources over the last several years, we've brought in a lot of professional services folks that'll disappear. If you think about who got wealthy in 2020 and 2021, it was the crypto bros. We have the narrative of the crypto empire.
Patrick Baldwin: What does that book say about crypto?
Paul Giannamore: Make sure you buy before 2010 was his prediction. I was looking at some crypto stats.
Patrick Baldwin: You said something about Doge that blew my mind.
Paul Giannamore: We'll talk about Doge. In mid-November 2021, the crypto market was worth $3 trillion. Now, it’s $1.3 trillion. It went from $3 trillion to $1.3 trillion. If you remember when we talked about crypto, we had a nice chat with Teeka, whom I liked. After that, how long did it take me to sell any crypto after we had that discussion?
Patrick Baldwin: Between recording it and publishing it.
Paul Giannamore: Two days. Crypto has become the massive get-rich-quick narrative. Bitcoin is an elegant solution probably still in search of a problem. There has been such a narrative built up around it and it became something. It was a get-rich thing. Patrick, all these guys were staking these new coins. It was a lottery ticket for everyone. In a tightening cycle, we're starting to see that go away.
These cycles, when we think about the structure of production, when we think about economic inputs, first-order goods, and second-order goods, all of these things take a long time to cycle through the system. The consumer is still relatively strong compared to where the consumer is going. Sequoia Capital, I don't know if you picked this up, I was reading on Bloomberg, did you see that 52-page presentation?
Patrick Baldwin: I read something about Sequoia Capital.
Paul Giannamore: I have the PowerPoint here. Sequoia Capital is one of the largest VCs in the United States and they did a presentation called Adapting to Endure, explaining to their portfolio companies that now it's time to cut costs and focus on profitability. It was an interesting read.
Patrick Baldwin: Morning Brew email is where I read it. I got the two-paragraph bullet-point version. I appreciate that. You've said you've read that one book five times and got 20%. To do the quick math on that, it told me, “Patrick, don't waste your time reading this. You'll never understand it.”
Paul Giannamore: It is a dry book. It's interesting but it's dry. A lot of folks asked me what I am personally preparing for over here. We have a lot of questions. I didn't prognosticate and try to predict anything on Bubble Trouble because I don't know how long all of this will take. I do know if financial history serves me that it will.
Patrick Baldwin: History repeats itself.
Paul Giannamore: I believe that it will. Patrick, do you happen to have some of those questions? I talked about mean reversion and somebody tried to argue the alternative. Can you bring that up if you would and let's talk about it for a second?
Patrick Baldwin: Yeah. It is always hard to predict the future. Sure, the multiples will revert. It makes sense. Sure, multiples lag. The multiples pay 1.5, 2, and 2.5, etc. Those sellers wish they would have held on two more years to get the larger multiple. Those multiples might have been lagging. I don't think it will revert all the way down to 1.0. Here's why. Number one, the percentage of households using pest control in the country as a client during this climb, in multiples, nearly doubled. This makes the industry larger and more attractive and riper for consolidation. Look at the big acquirers and all the PE firms which aren't afraid to jump in.
Number two, companies grow and yield dividends/profits even during recessions. It is almost recession-proof and has a better yield than bonds. Number three, home services, in general, are strong. Why? The younger generation doesn't know how to or doesn't care to deal with their home. They hire for it more than any other generation. This bodes well for the industry, low risk?
Paul Giannamore: From an industry fundamental perspective, those are all true. Here's my main issue and here's why I said these things will, at a bare minimum, revert. I don't have this in front of me but when I was on Bubble Trouble, we looked at the equal-weighted S&P index. Patrick, if you recall, I had a slide going back to 1990. For the twenty-some plus of the 30 years, the S&P 500 was on an equal weight basis. Remember, these are some of the largest companies in the United States. Rollins, of course, is included in the S&P 500 as of 2018.
If I go back over 50 or 100 years, I was able to see this in the past 30 years, for more than half that time, the S&P 500 traded at a mean of 0.4 to 0.9 times revenue. Five hundred of some of the largest large-cap companies in the United States traded in public exchanges between 0.4 and 0.9 times revenue for the majority of that timeframe. I don't have to be a rocket scientist to look back and say, “If the broad base indices are trading at 0.5 times revenue, why will a pest control business sell for 1.5 or 2 times revenue?”
I said this in The Buzz before, too. When I started at America Capital, the private equity, the first thing my boss, Mark Schindel, said, “Never get seduced by the natives.” In every single industry, there is an echo chamber of how we are sexy and cool. If you go to pest world, lawn care, and medical devices, if you go to all of these conferences, you hear about how sharing and caring the industry is. You’ll hear about how they help each other. Specifically, the ones that are regional if it's a big national industry. Steel fabrication perhaps, that's not the case. There's this echo chamber about how the industry is great.
There is no doubt that the pest control industry is a solid industry. However, it is a tiny industry. What you were talking about with Dogecoin, Dogecoin at its peak in 2021 had a market cap of $88 billion. That is larger than the entire global pest control industry. This is Dogecoin, which was created as a joke. The creator of Dogecoin came out and said, “I got a funny idea. I'm going to make this joke coin and see what happens with it.”
It is a small industry. All of the narratives and stories about the pest control industry albeit are great and true. If the entire equity market is repriced, it doesn't matter. Pest control is not a big enough industry to be on anyone's radar. We have three publicly traded companies in the space and all of them are relatively small compared to a ton of other companies out there. It's a small industry.
Patrick Baldwin: It turned out to be. I’m pulling one of those out and adding a sprinkle of Ecolab in there, too.
Paul Giannamore: I can see the excitement in the fact that there has been a lot of private equity interest in pest control over the last couple of years. We see a lot of that. We closed two private equity deals. Thompson Street Capital bought Bel-O. Thompson Street also bought Alliance Pest in New Jersey. There's been a lot of interest in the pest control industry from private equity and that's all well and good.
In life, there are winners and losers. Sometimes these things become double-edged swords. If you're in an industry that's undergoing a consolidation boom and your valuations are sky-high, which they are and they have been, it's great for people who are going to monetize that and who are going to take advantage of the market. It's not necessarily good for the ones that are going to hold on to it. From a total shareholder returns perspective, your returns are lower naturally because if you get returns from dividends as well as capital appreciation or depreciation. If you own a company that's overpriced and there's multiple compression, it impacts your returns.
The other thing is we saw this crazy activity where the companies that are closer to the money producers, the private equity firms, and the large corporates are able to get debt capital dramatically cheaper than you and I. They're able to come in and consolidate. All of this attraction of capital into the industry ultimately makes it much more difficult for people to compete. It makes it more difficult for you and me. It's a much different world.
Take a look at what Anticimex has done, they've gone out and bought all these platform companies, gyms, business, Stevenson's business, and all these businesses up and down the East Coast, for example. I have sat through the road shows in Europe and watched Jarl get up there and talk about the tremendous increase in performance of Anticimex over the years. He took that business from an EBITDA margin business that was in the teens into the 20s. He's accelerated organic growth. He's accelerated incremental increases in margins. They've deployed technology. They are getting volume discounts that you and I can't get.
At the end of the day, they are companies that have significant advantages both in terms of financial capital but as well as expertise. You were down here hanging out with Jim. They have taken Jim's business, which was an awesome business. By any stretch of the imagination, it was a business that was $26 million in revenue, doing 25% EBITDA margins, and growing at double digits top and bottom line every year up there in New York Metro under Jim's leadership. It then became part of Anticimex and they shined it up. That business is a race car now.
As you attract sophisticated, smart people into an industry, it makes it more and more difficult to compete. It's not just the old duopoly of Orkin and Terminix back in the 1980s and 1990s. These guys didn't have to do anything. They just had to exist. Now it's starting to change. The attraction of capital is good for folks right now. We're going to wring returns out of this market, which, by definition, lowers forward returns for equity holders. No two ways about it, Patrick.
Patrick Baldwin: A question then because it's no longer the duopoly. You'd have a lot more private equity involved via Thompson Street Capital, AX, with EQT-backed, imperial-backed. For Certus, what private equity is forced? Do you have a prediction on how much they're going to spend on the industry?
Paul Giannamore: Private equity, in general?
Patrick Baldwin: Yeah. I know you control this, Paul.
Paul Giannamore: I'm willing to bet that Potomac will do $1 billion in enterprise value or $1 billion in volume with private equity in the global pest control space.
Patrick Baldwin: I felt Austin Powers, Dr. Evil when you said $1 billion.
Paul Giannamore: Do you want to take a bet?
Patrick Baldwin: I feel like I'm betting against the house. I don't know what you got cooking in the pipeline over there. I've got $50 in my pocket and a common grounds gift card. If you ever make it back to Waco, you can use this gift card.
Paul Giannamore: Think about it, we're in the process of finalizing the sale of Terminix UK and Norway to private equity. Norvestor was our former client. It's now come full circle.
Patrick Baldwin: Can I say double-dipping? Is that wrong?
Paul Giannamore: It’s recurring revenue for us. I like to sell it once and sell it back. We have that. We've done five US private equity deals this 2022 thus far. Of course, as you well know, the first half of the year is always the slowest compared to the second half of the year. In total, it’ll be a good $1 billion in PE deals. I'm going to go out on a limb. I'm going to say Potomac will do $1 billion in PE deals this 2022 excluding Terminix UK and Norway. I'll give you that, Patrick. That's my prediction.
Patrick Baldwin: I'll take it. I feel like I should go ahead and start sending this money to you.
Paul Giannamore: That doesn't count the strategics. That's private equity, Patrick. Here's the thing, if you went out there and you did research on these consolidation booms, this is exactly when private equity typically comes to the party. These guys are all jazzed up and they look at and say, “We're in early innings here. We're going to get out there and do all this consolidation.” A lot of them will. I don't think that this supports prices and valuations at the same levels that they're at now. It'll be half of what they are now.
Patrick Baldwin: I would say you're a student of economic history. Is that fair to say? You studied this.
Paul Giannamore: I would rather believe that.
Patrick Baldwin: I take Paul's notes on a lot of this. When I think about inflation, my salad at Chick-fil-A is now $2 more than it used to be. We're north of $10 here. That's all I think about inflation. That's where it hits me. In terms of recession, I think about the Great Depression, the end of the ‘20s. I think about the ’08 and ‘09 recessions. I think about the dot-com bubble and bust. It's this 2 or 3-year thing and then, in a few years, it's back bigger than it was before. Is that a dangerous assumption to make? When we hit a recession, it's only going to last for 2 or 3 years and we're going to be back cooking with gas like never before.
Paul Giannamore: Right now, it is a twin deficit nation with debt-to-GDP at almost 130%. It's almost like over our 200-plus-year history, we're now starting to move back to almost developing nation status. We're almost like an emerging economy from a financial perspective and the government is running our finances like we're an emerging market country. What I mean by that is blown-out deficits and monetizing debt.
There's about a tremendous amount of fiscal irresponsibility. If you look back over the 20th century, we have not seen this level of government debt and unfunded liabilities in the United States. Patrick, inflation is becoming unanchored. For the first time in our natural lives, we're seeing unanchored inflation. We're seeing the wage-price spiral. We've got an over-levered country. It's not the 1970s when debt-to-GDP was 30% and Paul Volcker can go in and jack up the policy rate and quash it. We can't do that.
We also have the experimental and unorthodox monetary policy that central banks and governments around the world have done over the past several years. It’s unprecedented. You're going to use that word. It's true, negative, real, and nominal interest rates. We've seen negative real interest rates in the ‘70s, ‘80s, ‘60s, and the ‘40s. Seeing real negative nominal interest rates and all of the misallocation of resources and investments that have taken place over the past several years, all the zombie companies that exist.
I'm not a tinfoil hat-type wearing guy as you well know. Number one, I don't fall in love with any asset. I will short my longs and go along with my shorts. You probably know that better than anyone because you're 1 of 2 people on the planet that has peered into my trading account. I don't fall in love with any assets. I'm not worried about recession and stock market crashes. I have begun to prepare myself for greater seismic shifts in the global monetary system.
At some point, the USD as the reserve asset from the US Treasury will find its way into jeopardy. I've had a lot of debate as you know. You were sitting here for one of these debates. You were sitting on my balcony for one of the debates. When I look at Ukraine and Russia, I never thought for a second that this was about Ukraine. I always thought about it from the financial perspective of how can Russia kick the US or the West in the gut? Its energy. Energy is the new gold. Energy is the new currency.
I don't remember who said it but World War III won't be fought on a battlefield, it'll be fought in the financial markets. We've got significant energy problems coming up. We've had this whole ESG thing going on forever. We've had dramatic disincentives to invest. Governments have been on petroleum and energy producers, carbon, or fossil fuel providers. We don't have the capacity. We're going to have energy issues.
The US went out and sanctioned central bank reserves for Russia. Quite frankly, it’s a violation of international law and international norms having done that. Of course, the US has shied away from a country that abides by rule of law and one that makes it up on the fly if it serves the United States. By sanctioning Russian reserve assets, they have told the Saudis, Japanese, and Chinese, “Your reserves are no longer safe under international law in our central bank. You should probably not have reserve assets in US Treasuries or US dollar-denominated linked assets because we control the system and we’ll sanction it.” We've effectively continued to weaponize US treasuries in the US dollar.
I spent a lot of time in places like the Middle East. I'll be back in Egypt. I'll be in Europe. The rhetoric that we're starting to hear more and more is that the US weaponizes the dollar and foreigners don't feel safe holding it. Of course, the DXY, the US Dollar Index is at a two-decade high as there's been a flight to the safe-haven bid during the Russian-Ukraine situation. That will probably continue. Patrick, as you know, I have a lot of USD. At some point, it's going to roll over.
I am prepared for the fact that there's been a tremendous amount of misallocation of resources. It will be different this time around than it was the last time around. All the way up until this point, the central bank loosens policy. There's a boom-tighten policy. There's a bust. The stock market wobbles. The Fed comes in and loosens that again. We’ve got a Fed put. They’re watching the market. That Fed put has been struck dramatically lower than where it is.
For me, I know it's coming. I know M&A is going to 100% rollover. Without a doubt, M&A will be a fraction of what it is right now. Consumers are in the process of getting crushed by high inflation. It has become a political issue. Biden's ratings are at an all-time low. We've got an election coming up here. Like in the 1970s, 1940s, and 1930s, what does the government do when it panics? It comes out with fiat. It comes out with mandates for price controls and capital controls.
We're going to live in a world where globalization is reversed. Everyone's going to be focused on food security. There'll be a lot less free flow of goods and labor over international borders. We're going to have powerful central states that are using decree to control the economic system. That's where we're going. For me, how do I protect myself from that? That's what I've been focused on over the last couple of years.
Patrick Baldwin: The quantitative easing creates such a spinning out of control effect. Now they're going to put the brakes on it. Take us back. What would you compare this to after this?
Paul Giannamore: I compare it almost to an alcoholic. If you are an alcoholic and you drink a lot, your tolerance gets higher. You need more and more alcohol to get that buzz and keep that going. Quite frankly, I don't drink that much. I'm a lightweight. I have a drink or two. I'm giggling like my wife. It's the same thing from an inflationary perspective. The government has to continue to create credit and create liquidity to keep the system going.
We have not even tightened monetary conditions yet. Think about it, we've done no run-off on the balance sheet yet. We got trillions of dollars on the Fed's balance sheet. They're talking about quantitative tightening. We haven't even done that. We've slowed down the easing. We're not tightening yet. We are now easing monetary conditions at a slower rate. We haven't even tightened yet.
Patrick Baldwin: They came out and said they are going to reduce the balance sheet.
Paul Giannamore: They've been threatening that for months. The reality is they've attempted this before. We had taper tantrums and all sorts of things in the past. The problem is if slowing down the easing process creates all sorts of panic and problems in the economy and the stock market, the actual reversal of monetary easing and turning it into tightening is going to create a lot of problems.
We go back to the Z1 report. We're talking about all the wealth that was created. That all disappeared. It affects different people in different ways. The wealthier folks are going to lose more. Owners of businesses, stocks, and real estate had more to gain during the boom. Now, they'll have more to lose during the bust. For me, the only way to keep this party going is to continue to spike the punch bowl and we can't do that with inflation.
You asked the question, is it going to snap back? I don't know. The only instances in history where you see a twin deficit nation with debt-to-GDP greater than 120% that has leveraged its balance sheets and needs to tighten, they've never been able to pull out of what the Fed is going to attempt to do. That becomes a problem.
Patrick Baldwin: You're saying that no country has ever pulled out of a debt-to-GDP.
Paul Giannamore: Let me rephrase that. There’s no easy way out of this. The only way to do this is to liquidate the debt. What does that mean? If we want to get debt-to-GDP back down to 60%, we would have to have nominal inflation rates of 20%-plus per year to deflate the balance sheet. Here's a quote from Dying of Money that I like, it says, “One must be aware of being a creditor whenever the government was a huge debtor.” Think about that, whenever the government is a huge debtor, what do governments do? They liquidate the debt. What does that mean? They inflate it away.
I'll repeat this, “One must be aware of being a creditor whenever the government is a huge debtor.” If the government owes a lot of money, they're going to try to wipe that and inflate away that debt. You don't want to be a creditor. You want to be a debtor. You want to have a lot of debt. Unfortunately, in the US, we've got a lot of folks on retirement fixed income. Ultimately, that's where we're going to end up going. They're going to try to tighten but they're probably ultimately going to loosen into an inflationary spike. It will be interesting to see ultimately where this goes. This is not going to be a repeat of the ‘70s and early ‘80s. This will be a problem of a different kind.
I spend a lot of time investing in emerging markets over the years but I also spend a lot of time studying emerging markets because every year that goes by, the United States is acting more and more as an emerging market would act. When you take a step back, you look at the fact that the US loves to now employ extra-judicial lawmaking. The US government has what we talked about with Russia, the sanctioning of foreign reserves.
Even during the financial crisis, all of these vehicles that were set up by the Federal Reserve Bank to buy specific assets were in contravention of the 1913 Federal Reserve Act. The US is acting not only from a policymaking perspective but also from deficit spending, money production, and the whole nine yards. They're acting like an emerging market, a developing country. Look at Egypt. Egypt has been a developing economy forever. Some countries never develop. It's always developing today or developing tomorrow.
You can always look back at the 1970s and ‘80s and say that's a pure analog for what we're going through and we can raise interest rates and fix it. What has taken place? What are some other prime examples that are more similar? One of the biggest differences between now and the 1970s is that the United States made a lot of things back then. The United States had tremendously lower leverage. Compared to today, the US was a much more productive and stronger country than it is now.
Everything that has taken place over the past several years is now being reversed. Meaning that we had a period of decreasing bond yields, increasing asset prices, and disinflation. Now we're seeing the reverse of that. From a business perspective, we're going to live in an environment where we're going to see valuation multiples go down. We’re going to see sticky and persistent inflation for quite some time.
In my mind where the jury is out is that the central bank could be able to get this under control without breaking the system. Are they going to need to reverse course and ease monetary conditions into an inflation spike? The crux of the problem that we face is that for the US to have to do that, that's a classic emerging market situation, high inflation. They can't tighten monetary conditions otherwise, there'll be a crisis default. We'll have a tequila crisis like in Mexico or the Asian crisis like in 1997 but it comes here.
We have created a lot more imbalances and malinvestments than we did prior to 2008. Now, they're in different areas of the economy. It's not all in some prime mortgage but it's there. It's in the credit markets. It’s in the equity markets. It's in all those zombie companies that exist out there. It's in a lot of the policies the federal government now has established to “help” the consumer. There's no free lunch.
Patrick Baldwin: In Bubble Trouble, you did say there were $17 billion in negative-yielding bonds and now there's $2.5 trillion. Are you telling me that the money flew out of bonds into another asset class?
Paul Giannamore: People often look at things that way. Money doesn't go in or out of markets. It goes through them.
Patrick Baldwin: I feel like this is The Matrix for a second.
Paul Giannamore: Take a step back and let's think about this for a minute. A simple example is the US stock market. Does the money go into the market and out of the market or does it go through the market?
Patrick Baldwin: Four or five seconds ago, I thought it went in and out of the market.
Paul Giannamore: Explain to me how you would think the money goes in and out of the market.
Patrick Baldwin: In its simplest form, I have $1 in my brokerage account, I buy $1 stock, and then it goes to $1.10 if I'm lucky and I sell it. I put $1.10 back in my brokerage account.
Paul Giannamore: I want to talk about that. You raised a great point and it's one that is maddening to me. I want to get this out because I have these discussions all of the time and I have them with a lot of these executives at the publicly traded pest control companies. I have this all the time with private equity guys.
Patrick Baldwin: It's not just me.
Paul Giannamore: No. Let's think about things logically for a second. From the time it's issued until the time it's retired, every security must at all times be owned by someone. Using someone could be an institution or whatever. It's got to have a title holder. For example, Microsoft. I issue a share of stock. It's a one-share trade and not an exchange. Let's make this simple. One publicly-traded company, Microsoft, won the share of stock. That share of stock is trading on the exchange and $1. It's on the exchange. It's out in the public market. That share of stock has to be owned by somebody at any point in time. It can't be owned by anyone.
If you take your dollar from your brokerage account and you say, “I'm going to buy that share of stock for $1.” You take your money out of your brokerage account. It doesn't go into the market. It goes into my pocket because I'm the one that's selling it to you. It goes through the market. It doesn't get stuck in there. For every buyer in a public market or private market, there has to be a buyer and a seller. It’s the same thing in a private pest control business.
The money does not go into the market. It goes through the market. Every dollar that goes into the stock market must come out the other side because every security has to be owned from the time it's issued to the thymus are tired. It’s the same thing with bonds. When I talk about a market being repriced, the money doesn't go out of the bond market, for example. Let's use Microsoft again. Let's say there's one Microsoft share and it's $100. That's the current price. I'm a holder of it. I hold Microsoft for $100.
You want to buy Microsoft but you say, “It's overvalued. I'm not going to pay $100 for it.” You might say, “I'll bid $80 for it. I'm going to open a limit order to purchase at $80.” You and I are the only two participants now in this exchange and I own one share. Let's say that a third buyer comes in and says, “I'm going to bid $70 for it. I'm going to put a limit order for $70.” I think it's worth $100 but it's not because there are no bids below me. Until I decide to sell it, I got to effectively hit the bid wherever that bid is. Your bid is at $80 and somebody else is at $70. That's it.
Now, I say, “I’ve got to sell this. I’ve got to get out because I need this money.” The bid gets hit. You know, buy it for $80. Let's think about that. I owned it at $100 but it wasn't worth $100 because there were no bids at $100. That's how the market works, the bond market, and the stock market. That's why the money doesn't go in or out. It goes through it.
When there's a crash, I could have $1 million in stock. The market is bidding. There are millions of transactions. I look at my portfolio and it's worth $1 million. One hour later, it could be worth $500,000 not because money left the market per se but there are no buyers at $900,000 or $800,000. There were no buyers until we hit the bid at $500,000.
What's maddening to me is people always talk about cash on the sidelines. There's cash waiting on the sidelines to go into a market, which is impossible because it's a financial system. Money can only go through markets. There's no other logical way to look at it. Unless until security, whether it's debt security or equity security, is retired and taken out of existence tendered to the treasury, for example, it has to be owned by somebody.
There's a corollary to the private market, too. What I'm talking about is the pricing and mispricing of assets. If I own a pest control business right now and I go out into the market and I'm like, “I'm going to run this process.” I get all these acquisitions and everyone says, “Here's our bid, we want to buy your business.” I run this competitive process.
In the end, I have three bids, one is for $20 million, one is for $21 million, and one is for $22 million. I'm like, “This is fantastic but I want to hold on there because I'm going to grow it for another year or so.” Even though it's a collision course for the consumer, we've got prices rolling over inflation. We've got the bleakest economic forecasts that we've seen for a long time. I'm going to have at it. I'm going to grow it.”
Let’s, a year from now, I decided to do the same thing. Unfortunately, I didn't get to grow that much but I'm going to take it out to the market and I want to find out where the bidders are. Now I got bidders at $10 million, $11 million, and $12 million instead of $20 million, $21 million, and $22 million. The market has priced my wealth, which is my stream of cashflow. Let’s say the current price is $12 million versus $22 million. Did that money go anywhere? Did it go in that market or out of that market? Where did that money go?
Patrick Baldwin: Through.
Paul Giannamore: It hadn't gone through yet. We haven't even done a transaction. That's the whole point. Whether it's a private market or a public market, you have to look at it as a series of bid-ask prices. If you own security at $100 and it goes to $50, that doesn't necessarily mean that money has left the market because it has not. What that means is now the next bid is at $50 and not at $100.
Crypto is the same way. When there’s a lot of folks buying, there's upward pressure. The bid prices and ask prices change. They go up. That's not money leaving or entering a market. It's the money going through a market. It's a dynamic bidding process, effectively, in a public exchange. No money could sit on the sidelines. People say, “The private equity firms have a lot of money. It's sitting on the sidelines.” Sure. For every buyer, there's a seller. I own Microsoft, I sell it to you, the money comes to me, and you now own it. You can't get rid of it.
Why this is important is that 99% of human society doesn't think about the fact that in the world we live in today, fiat money is a government liability. The US government has the ability to create money and they create it through writing treasury securities. The central bank either leaves the treasury securities in the hands of the investing public or turns those securities into cash.
If the Fed buys them, they turn that into cash. That's the creation of money, so to speak. Every single dollar that the US government creates through fiscal deficit spending, they create dollars through deficit spending and the Federal Reserve turns those treasuries into USD. Every one of those dollars has to be held by somebody until they are ultimately retired.
When the Fed takes those treasury securities, that debt, turns it into cash, it is now in the economy. It is in a bank reserve. It might be in your pocket in the form of a US dollar. That additional base money that's non-interest-bearing, hot potato-based money has to exist until it's otherwise retired or pulled out of the market by the central bank. The liability issued by the US Treasury is retired. That's what ends up happening.
During quantitative easing, you take a lot of the debt instruments created by the US Treasury. It was converted into base money. We got trillions of dollars of extra-base money. It wasn't the Fed creating the money per se. They were changing the mix between whether it's a debt instrument or non-interest-bearing base money. Now you've got all this money and it made investors uncomfortable because it's non-yielding cash.
What did they do? They took that money and they purchased things with it. They purchased treasuries, equities, and all these sorts of things, which drove up prices and drove down returns, effectively pulling returns into the present. When the central bank creates this money, it doesn't sit on the sideline because every time somebody uses it, every time an institution buys security, somebody else has to sell it. It goes through the market. There's always the same amount of cash on the sidelines, it's in different hands.
Patrick Baldwin: We're talking about quantitative tightening potentially. Does that mean that they're going to be retiring fiat money?
Paul Giannamore: How the Federal Reserve is going to do this is let the treasury securities on the balance sheet ultimately run off and terminate. They'll go to the end of the duration. If you've got a two-year treasury note, they'll hold it until it expires. Yes, that quantitative tightening will ultimately suck the base money created out of the economy.
That's exactly what they're doing. They created that excess non-interest-bearing base money and the reverse of that quantitative tightening is removing that. If you think about you having all this hot-potato-type money that no one wanted to hold because you got inflation, there's no yield, everyone's trying to seek yield and buy assets with it, the reverse of that is they’re pulling that out. The opposite should tend to take place and we'll see how it plays out.
Patrick Baldwin: Now with all that in my head spinning earlier, you said something about you don't want to be a debtor in the government. As a creditor, I might have that reversed. You don't want to be a debtor.
Paul Giannamore: You don't want to be a creditor if the government is a debtor. Think about the United States. We've got a debt-to-GDP of 130%. You don't want to be a creditor. Think about this. The government is in a lot of debt. We've got 8% inflation. Do you want to be the guy that two years ago gave out a 5% fixed-rate loan to somebody as a creditor? You gave me a loan. You issued it alone. I took $1 million from you and I said, “Patrick, I'm going to pay you 5% per year for the next ten years.” You're losing in real terms now. We have negative real interest on that debt. You're losing money.
What the author was saying is when governments get themselves into financial problems and create a lot of debt and we see this over and over throughout financial history whether it's France, the UK, or Argentina, you name it. When the government owes a lot of money, the easiest way for them to get out of it is to create money.
There are only two ways to solve the problem when they can't pay it off via your taxes. What is it? It's either default on obligations, quit making payments, don't pay on treasuries, don't pay old people their social security so they can default, or they can print money. Even a moron understands what a default is. I’m waiting for my check and it doesn't come. They're not going to do that.
The majority of society has no idea that a great way for a government to steal from its populace is to create additional money. There's such a lag between when it happens and the insidious effects of money creation. It's a great way to steal. Patrick, we're finally back to audio after long San Juan sessions in video. You've backfilled those now. You and Dylan have taken the audio from the video and have put it on podcasts and Spotify. Is that correct?
Patrick Baldwin: That is correct. If you go to your podcast player, it may still have that short clip to sync over to YouTube. You might have to delete the episode and redownload it. That's the technical support. That's all I can do.
Paul Giannamore: Cool. Perfect.
Patrick Baldwin: Have a great week. Hopefully, I’ll see you here soon. We'll see. You're headed out.
Paul Giannamore: US travel and then European travel and then back. I will catch you soon.
Patrick Baldwin: Safe travels. We’ll see you, Paul.
Paul Giannamore: Perfect. Bye.
---
Dylan Seals: I want to remind you to go ahead and subscribe to The Boardroom Buzz. We have got some incredible episodes coming up that you're not going to want to miss. Also, if you've enjoyed the podcast, please go to the Apple Podcast app and leave us a short review. We'd love to hear from you. Thanks so much again for reading and we'll see you next episode.
Teeka – past episode
Apple Podcast – The Boardroom Buzz
