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NYSE Vice Chair: ‘Markets have their ups and downs’

Yahoo Finance Editor-at-Large Brian Sozzi is joined by NYSE Vice Chmn. & Chief Commercial Officer, John Tuttle at the 2022 World Economic Forum in Davos, Switzerland as they discuss the forum and the state of the market.

Video Transcript

BRIAN SOZZI: All right, joining me now is New York Stock Exchange vice chairman and chief commercial officer, John Tuttle. It feels like we should be in the Exchange doing this interview. Let's get out of here.

JOHN TUTTLE: I always say, I'll go anywhere to have an interview with you--

BRIAN SOZZI: Aw.

JOHN TUTTLE: --whether it be the floor of the Exchange or the Alps here.

BRIAN SOZZI: That's very nice. You are a Davos veteran. This is your 15th, right?

JOHN TUTTLE: It is. It is.

BRIAN SOZZI: That is amazing. So give me some of your top takeaways. I've seen you working the halls of the Congress Center. What are you hearing from folks?

JOHN TUTTLE: Well, I think, first of all, it's great to get people together again to not only share ideas and best practices, but people come together all around the world, having good conversations. So it's a lighter Davos this year. I have to say I do enjoy the springtime weather a bit more. There's a lot of good dialogue taking place.

But I think what matters most is what happens once everybody leaves here, and making sure that that dialogue turns into action. I'd also say continue to see a trend in the right direction, more diversity here. And I mean diversity from countries, diversity from gender, but diversity from thought as well, too, because we don't want a bunch of like-minded people coming together. We want to actually have spirited debates and drive outcomes here.

BRIAN SOZZI: That is a big change you just highlighted.

JOHN TUTTLE: It is. It is. And hopefully, we continue to see more and more and more of it. And as people come here, they want to find the right outcomes to actually be able to deliver impact because that's why we're all here.

BRIAN SOZZI: I always look at you as my deals and markets guy, like my go-to. So let's split it down the half.

JOHN TUTTLE: Sure.

BRIAN SOZZI: Deals-- what are you hearing? There's a lot of recession talk out there. There's a lot of gloom. What is getting done? What's not getting done?

JOHN TUTTLE: Well, first of all, you get a good sense of the climate when you're here in Davos, because it's a counter indicator. So everybody is very doom and gloom here. So I'm going to be a little bit more optimistic--

BRIAN SOZZI: I'll take it.

JOHN TUTTLE: --about the world that's here right now. So, first of all, from an IPO standpoint, there was a strong backlog of companies that was looking to go public. And market conditions have slowed that down. There's also a strong pipeline of companies considering going public as well. And when the market conditions are right, you'll see those companies come. Now, if we pull the lens back, last time you and I were here together, 2020, we ended up kicking off two of the busiest years in the history of the New York Stock Exchange when it comes to IPOs.

Now, from three factors, I would say, first of all is the macroeconomic environment, what the Fed is going to do, the size, timing, and frequency of rate increases to tackle inflation. The second is the geopolitical environment-- what impact is that having on companies, and how is that driving incremental volatility in the marketplace when it comes to energy prices, food prices, and how that fits into cost structures?

And then the third is just investor sentiment, a rotation out of growth stocks more into value stocks and how that's impacting deals in the IPO pipeline. So a lot of the companies that are thinking of going out are just pulling back and reassessing the timing and perhaps the size and the comparables for when they actually do come to market.

BRIAN SOZZI: Given you have been doing this for a while, is there any sense that we are at some form of valuation bottom? And if we are, that will give us the confidence for companies to come out and come public?

JOHN TUTTLE: Yeah, I'm not a market forecaster, of course. You have plenty of them walking around Davos here. But I will say, from my perspective and just from my observations over the years, that, oftentimes, we can get caught up in the day-to-day and often lose sense that sometimes these things settle out pretty quickly.

And so if we can see the market settle down a bit, volatility quiet down, and hopefully some resolutions to some of these larger issues, or kind of line of sight into resolution to some of these larger issues, I wouldn't be surprised if we started seeing companies start coming out post-Labor Day. I think you're going to see companies with predictable revenue models with pathways to profitability be the ones that lead the way. Other companies will watch it. The market will watch them. And based on their performance, we may see the window reopen.

BRIAN SOZZI: So more established companies might start to become public because one of the biggest-- and I think it was Uber CEO mentioned free cash flow is now the most important metric at companies. Is that right?

JOHN TUTTLE: I would say-- I mean, every investor is going to analyze the fundamentals of a company differently and through their own framework. But I would say there has been less of a focus on rapid growth of top line and more of a focus on free cash flow, on EPS, on EBITDA, and really, the profitability and long-term sustainability of the companies.

BRIAN SOZZI: There's a lot of nervous investors right now. A lot of folks on the Yahoo Finance platform, they've seen their portfolios cut in half, if not even more. Help them understand what has happened out there and what might happen next.

JOHN TUTTLE: Well, I pull back the lens. I mean, you have to look at it in the long run. In the 230-year history of the New York Stock Exchange, the chart starts in the bottom left--

BRIAN SOZZI: And happy belated birthday.

JOHN TUTTLE: Thank you very much. The chart starts in the bottom left, and it ends in the upper right. It's not a smooth ride the whole way. So markets have their ups and downs. Just staying consistent, companies focusing on execution, and hopefully, we'll be through these choppy waters soon.

BRIAN SOZZI: All right, well, good to see you, as always. John Tuttle, have a safe trip back. I'll see you on the New York Stock Exchange floor very soon.

JOHN TUTTLE: I hope so. Thanks so much.

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