Speaker 1: Ye. Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene
Speaker 1: Jay Lee. We bring you insight from the best in economics, finance, investment,
Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,
Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg. I
Speaker 1: caught up with JP Morgan's Bob Michael yesterday. Had one
Speaker 1: thing to say to me, enjoy the ride. There's too
Speaker 1: much money in cash. It's been going into cash the
Speaker 1: last three years waiting for the Fed to finish hiking rates.
Speaker 1: They were supposed to finish hiking at the end of
Speaker 1: this year, not last year. That money has yet to
Speaker 1: come back into this market. I want to bring in
Speaker 1: from London Marcus Ashworth Bloomberg Opinion columnists. So Marcus, has
Speaker 1: that cash moved from the sidelines and into equities? It
Speaker 1: sounds so cliche. Just walk me through it. Well, I
Speaker 1: think it has. I think there's there's more to come. Really,
Speaker 1: I mean, I appreciate what Tom is saying about. You know,
Speaker 1: why would you want to buy the high here? But
Speaker 1: and we are close to that selling May. We've got
Speaker 1: another week or two, it's come out the month. Then
Speaker 1: there's a little bit of moving around, going probably out
Speaker 1: of equities today into bonds, which we've seen in the
Speaker 1: price action. But the simple point is the dollar is
Speaker 1: is very very strong. Why because US equities are very
Speaker 1: high and strong and going stronger. And why is that?
Speaker 1: Because the US GDP is going to be a better
Speaker 1: print in quarter one than the market had initially expected.
Speaker 1: The cold snap, the government shutdown that's past. Now, compared
Speaker 1: to everyhe else in the rest of the world, US economy,
Speaker 1: US equities are better than Marcus. You are an expert
Speaker 1: at this, and you wrote an extremely important essay last
Speaker 1: year and asset flows. I don't have it in front
Speaker 1: of me, but I remember it was a jewel. The
Speaker 1: bottom line is the Central Bank of the United States
Speaker 1: reverse course. They've gone all dove essentially with price with
Speaker 1: rate cut stability forever, and that's moved all money to
Speaker 1: all assets at all times. How does that end. What's
Speaker 1: the history of how a central bank driven move ends? Well?
Speaker 1: I don't think The point is is that if you
Speaker 1: listen to Clarita that FED is absolutely on hold. That
Speaker 1: means that the big risk has gone. As you quite
Speaker 1: clearly staid there, the Federal Reserve hiking has been removed,
Speaker 1: and quantitative tightening is also about to be removed. Brexit
Speaker 1: isn't happening for a bit. Oil is going better at
Speaker 1: the moment. There is enough momentum behind the market that
Speaker 1: with nothing else to do, you want to put market
Speaker 1: money to work in the market. And that's what's happening.
Speaker 1: The Fed is not going to hike rates for this
Speaker 1: year and possibly next year, and the next move may
Speaker 1: well be an ease, so that is an incentive to
Speaker 1: get on board. And that's simply the lack of any
Speaker 1: better do. Yes, there's always risks out there, but money
Speaker 1: needs to be put to work, and that's what it's
Speaker 1: what's happening. Well, that's the message coming from a lot
Speaker 1: of people over the last few weeks. And let's be clear,
Speaker 1: it's been the right message because the price action has
Speaker 1: proved to prove that out to to oh higher on
Speaker 1: the equity market for spreads, the grind tighter on high
Speaker 1: yield as well. But Marcus, the cool on the dollar
Speaker 1: is a little bit more interesting for me. Strong dollar
Speaker 1: short over the last couple of days. But the truth
Speaker 1: is we've been stuck in a really narrow training range
Speaker 1: over much of the last six months, we can't seemingly
Speaker 1: sustainably break one twelve on euro dollar zero nine as
Speaker 1: I speak. What's your call there? Well, I'm afraid I'm
Speaker 1: gonna have to say that the euro, you know, try
Speaker 1: to bounce above one thirteen, it's failed. It heads back
Speaker 1: down towards lower levels. Because the European economy is woeful
Speaker 1: and it's continued to be worthful. There is no bounce
Speaker 1: in sight. There's a little bit of a dust production jump,
Speaker 1: but reality, look at orders and forward looking things. The
Speaker 1: European economy has got no good news at Germany, bit Itaally, Bick, etcetera.
Speaker 1: So if you look at what's happening for the euro,
Speaker 1: it's weakning same time so sterling and it's all really
Speaker 1: down to dollar strength. Why is that? Because the quarter
Speaker 1: one GDP number on Friday is going to be strong.
Speaker 1: Marcus As, thank you so much greatly perspective your SMPR
Speaker 1: to record high and a few other industries. Joseph Stiglets
Speaker 1: of Columbia University, the Nobel laureate. He is the liberal
Speaker 1: that conservatives love to hate. Of course, he changed the
Speaker 1: language of economics of no no, they no, no, no, no,
Speaker 1: can't tie Stiglets. Krugman can't tie Stiglets. Shoels is the
Speaker 1: liberal the conservatives love to hate. We like Professor Sticklets.
Speaker 1: We do, okay, thank you. Anyways, Joe Stiglets out with
Speaker 1: the new book, People Power and Profits. And there's like
Speaker 1: thinner Stiglet books and there's thicker one. This is a
Speaker 1: major effort by you. Clearly you're doing it because of
Speaker 1: the time of Trump. But what was the catalyst for
Speaker 1: you to write People Power and Profits? What the catalysts
Speaker 1: were two things. One, Uh, we have these festering problems
Speaker 1: growing inequality. I'd written about that, and after I wrote
Speaker 1: about it, uh night back in twelve, the problems got
Speaker 1: worse and worse, and now they've risen to the top
Speaker 1: of the national agenda. But what worries me is we
Speaker 1: don't have a deep enough diagnosis of well that's well said,
Speaker 1: well said, and what to do about it. And if
Speaker 1: we don't do something about it, it's gonna really tear
Speaker 1: apart our country. And the book with a hundred pages
Speaker 1: of footnotes is that diagnosis type of book? I should
Speaker 1: point out. John Ferrell Krugman of CCN Why the Laureate
Speaker 1: as Well, says Joseph Stigletz is an insanely great economist.
Speaker 1: Krugman is as well. I want you to speak to
Speaker 1: part of our audience that's conservative. They don't like liberals
Speaker 1: like you, but they're miserable. Their kids are miserable, they're
Speaker 1: grand maybe it's their their their parents are misible with
Speaker 1: medications or whatever. Speak to conservatives right now about why
Speaker 1: they need to read your book and start to think
Speaker 1: like liberals of another time and place. Well, if we
Speaker 1: go back, say to the years after World War two,
Speaker 1: America was in that at that moment, creating the first
Speaker 1: middle class society. Everybody thought of themselves as middle class,
Speaker 1: and we were investing a lot in our roads. We
Speaker 1: were investing in education. Uh. Spook Nick motivated us to
Speaker 1: uh government to invest in R and D, and that
Speaker 1: put us on the way to becoming the undisputed to
Speaker 1: global champion in so many areas. Uh. Beginning around I
Speaker 1: think we lost our course. Uh. We adopted a doctrine
Speaker 1: that the market will solve all our problems. Uh it didn't. Uh.
Speaker 1: What it did is lead to actually slower economic growth
Speaker 1: at all of the benefits of the growth went to
Speaker 1: the top one and that has meant that that middle
Speaker 1: class lifestyle that I talked about before has fallen outer
Speaker 1: reach of an increasing fraction of American So professors, is
Speaker 1: a critique of capitalism or a critique of monopolistic behavior
Speaker 1: and abuses of markets. Uh, it's a critique of late
Speaker 1: twentieth century capitalism as critique of early twenty one century capitalism.
Speaker 1: But that's why I called my book Progressive Capitalism for
Speaker 1: an Age of Discontent, because I think the market is
Speaker 1: the only way that you're going to deliver long term
Speaker 1: economic growth. But it doesn't work with unfettered markets markets alone.
Speaker 1: You need government, their collective action, people working together for
Speaker 1: at least two things. One, you have to curb some
Speaker 1: of the excesses, the excesses that we saw in the
Speaker 1: run up to the Great Recession two thousand eight, the
Speaker 1: financial sector, but also uh, the environment. You know, if
Speaker 1: we didn't have good regulations for the environment, New York City,
Speaker 1: Los Angeles would be as unbreathable as Delhi and Embajing
Speaker 1: is today. But the second thing is unique government investment,
Speaker 1: investment for infrastructure, for education, for R and D basic research,
Speaker 1: not all the research, but the basic research. The discovery
Speaker 1: of DNA the discovery of the kinds of things on
Speaker 1: which everything builds. You mean, like fixing terminal five at JFK,
Speaker 1: something like that. Joe Stiglets with a major book. This
Speaker 1: is a thicker one, a deeper one. The subtitle Progressive
Speaker 1: Capitalism for an Age of Discontent. The book is People
Speaker 1: Power and Profits. Joseph Stigletts of Columbia University. It is
Speaker 1: now time to speak with a famed investments for energist
Speaker 1: and equity analyst of higher stock prices. The economist Julia
Speaker 1: Cornado joins us with macro policy perspectives. Julia in any
Speaker 1: level you know, Abel bernanke MANQ whatever the beg, which
Speaker 1: is the British one volume folks on economics in every
Speaker 1: beginning economics book include including Paul Krugman's wonderful two volumes.
Speaker 1: There's one chapter buried in the back which nobody ever
Speaker 1: reads about linking economics into the stock market. Are they
Speaker 1: linked right now? Very much? Though? I mean, I think
Speaker 1: we've been in a financialized world for the last couple
Speaker 1: of decades, and it's something that the FED has been
Speaker 1: catching up to. But clearly the rally we've seen has
Speaker 1: its foundations. The recovery, the rally back in the pivots
Speaker 1: by the FED and other central banks. That provides some
Speaker 1: insurance against what I been a slowing global backdrop. Let
Speaker 1: me ask you the same question answer Michael McKee, and
Speaker 1: both of you informed in your unique way, is what
Speaker 1: happens when the message changes? What's the experience of what happens.
Speaker 1: It will be a speech in Dallas, It'll be cap
Speaker 1: It'll be Caplet's fault, or Powell's fault, or that guy
Speaker 1: up in Boston's fault. What happens when they get that
Speaker 1: one sentence out there? Right particularly when as we watch
Speaker 1: the earning season proceed, it's not all sunshine in roses
Speaker 1: in corporate earnings, so it's not a disaster. But we
Speaker 1: have SMP earnings tracking around four percent right now for
Speaker 1: this year, which is a pretty subdued performance. So um,
Speaker 1: if you don't have the Fed sort of endlessly devish,
Speaker 1: then there may be some disappointment. So it is sort
Speaker 1: of shaky foundations, I think. Um, the real backdrop is
Speaker 1: that growth is slowing and earnings are harder to come
Speaker 1: by in a late cycle with rising labor costs in
Speaker 1: a slower global backdrop. So um, it makes next week
Speaker 1: said in meeting that much more interesting. I don't expect
Speaker 1: the FED to change its tone, but you've had some
Speaker 1: people even get a little excited about the possibility that
Speaker 1: FED could cut right, and I don't think that the
Speaker 1: backdrop we're seeing conducive of that. And as Michael can make,
Speaker 1: you mentioned the spread in opinions now, Julia is shocking
Speaker 1: the the If you take a bell curve, folks of forecasts,
Speaker 1: the tails are dominant right now, with people looking for
Speaker 1: a better economy and rate rises and people looking for
Speaker 1: real stagnation and sluggishness. And even as you say, Dr Cornado,
Speaker 1: speculation of a rate cut, what's your all? I mean,
Speaker 1: I'm kind of in the middle. I think I actually
Speaker 1: do believe in a sort of soft landing, if you
Speaker 1: if you want to use that phrase. I think growth
Speaker 1: is gonna slow this year. I think inflation is going
Speaker 1: to stay subdued, so there's no reason for the FED
Speaker 1: to hike necessarily. But I also think that the FED
Speaker 1: is done enough through pivot, and you've got Chinese stimulus
Speaker 1: now that some of the worst case scenarios are likely
Speaker 1: to be avoided. Uh So, I think that you know
Speaker 1: that that's going to maybe disappoint markets at times, but
Speaker 1: I think it's an open scenario for the Fed. On hold,
Speaker 1: do American executives trying to prop up earnings and margins
Speaker 1: and get decent organic revenue growth, are they going to
Speaker 1: get help with a fiscal up of fiscal stimulus or
Speaker 1: the advantages of the tax bill continuing. I mean, we
Speaker 1: still have a little bit of a tail wind from
Speaker 1: the tax bill, but I don't think we should expect
Speaker 1: fiscal stimulus in this political environment. Um. In fact, we
Speaker 1: have a fiscal cliff coming up in the fall, and
Speaker 1: it will take all the political will in d C
Speaker 1: just to you know, eliminate that fiscal cliff, which would
Speaker 1: be a decline. Describe that. Describe the fiscal cliff. Describe
Speaker 1: that for us. So they passed a two year increase
Speaker 1: in government spending and it is scheduled to expire next
Speaker 1: fiscal year, which would mean government spending would fall back
Speaker 1: down to the prior level and that would be, uh,
Speaker 1: you know, a decline in government spending. So the Congress
Speaker 1: needs to agree to at least at a minimum, raised
Speaker 1: spending back up to where it's been in the last
Speaker 1: two years. So that's going to require bi partisanship in
Speaker 1: an agreement. That's easy. That's that's a heavy lift. So
Speaker 1: I expect I'll get there because nobody wants, uh, you know,
Speaker 1: a headwind like that. But to expect some kind of
Speaker 1: infrastructure package in this political climate, I think that's just
Speaker 1: not going to materialize new things for the optimists. I
Speaker 1: haven't talked about this in Asias, folks. It's good to
Speaker 1: talk with Juliet Cornato macropolicy perspectives about his confidence has
Speaker 1: really held up pretty well. I haven't looked at Michigan
Speaker 1: confidence in a while. I'm going to take the Bloomberg
Speaker 1: chart back to two thousand six and we exceed the
Speaker 1: confidence of two thousand and six seven. That that that
Speaker 1: that provides us with FED stability or even down the road,
Speaker 1: a great rise. Right. Yeah, that's that's the very foundation
Speaker 1: of our expectation that the economy is gonna hold up,
Speaker 1: is that the virtuous cycle between the strong labor market
Speaker 1: and consumer spending. And it doesn't have to be a
Speaker 1: three percent performance that can can but that can pretty
Speaker 1: easily deliver a two percent performance. So you do have
Speaker 1: that virtuous cycle pretty well established and with the labor markets,
Speaker 1: so strong. Consumers are feeling better than they felt in
Speaker 1: a long time. It's been a long time coming when
Speaker 1: consumers actually had a little bargaining power in the labor market.
Speaker 1: You see that in the equity markets as well. Dr
Speaker 1: coronetto things so much, Julia cornetto mecro policies perspective right now,
Speaker 1: the hydro Carbon Interview of the day, Paul Sanky missoo O, Paul,
Speaker 1: it always is fun to see a bidding war and
Speaker 1: grizzled guys like you know, egos getting the way. Who's
Speaker 1: got the bigger ego right now? Well, yeah, he said it.
Speaker 1: I mean it's great. It's historic times here, Tom, and we've,
Speaker 1: as you know, he's had a tough three four five
Speaker 1: years waiting for some of this value to be realized
Speaker 1: that we've seen in these deeply discounted our stocks. So
Speaker 1: who's got the bigger ego? There's no question right here.
Speaker 1: It's oxy CEO of Vicky Hollob who says of this
Speaker 1: morning on her call that she is about to speak
Speaker 1: to shareholders, but on the reggae FD hasn't spoken to
Speaker 1: any I can tell you she's going to have some
Speaker 1: pretty toughations. Well, you and your research note and this
Speaker 1: is really important folks. Thank you writing from a lot
Speaker 1: of experience on what kind of oil, what kind of
Speaker 1: day to day tactical business is it. Oxie really doesn't
Speaker 1: overlap with the anti Darko technological skill olds do that well,
Speaker 1: you know, the former CEO of Boxy, Steve Chas and
Speaker 1: really designed the company not to be offshore, um not
Speaker 1: to be in Africa. If you remember during MRCONDO, the
Speaker 1: stock was a big outperformer during the big oil spill
Speaker 1: because Oxy was very much on shore US, on shore
Speaker 1: Middle East and to the extent that Anadarko is a
Speaker 1: very well known explorer, which Oxy didn't do, but also
Speaker 1: in a massive MOZAMBIICAMERNG project and West Africa in Gulf
Speaker 1: of Mexico. There really isn't a good fit here at all,
Speaker 1: and people don't like the fit at all, whereas with
Speaker 1: with Chevron, you you do have an excellent fit. So
Speaker 1: it's a, to say the least, a brave move by Oxy. So, Paul,
Speaker 1: if I'm a Anadarko shareholder and price aside, let's assume
Speaker 1: the price, you know, the kind of trianglates we get
Speaker 1: to each bid is fairly comparable, Which one do I prefer?
Speaker 1: Do I prefer Chevron or Oxy? Well, I think you
Speaker 1: certainly prefer Chevrons stock here because obviously you've got a bigger,
Speaker 1: more credible bid from a bigger, more credible company in
Speaker 1: terms of, you know, the overlap as we mentioned with
Speaker 1: Anna Darker. I think in regards to the higher bid
Speaker 1: for Oxy from Oxy, we've got to watch what happens
Speaker 1: to Oxy's share price. That's actually holding up now, I
Speaker 1: think partly because people think maybe Oxy did this to
Speaker 1: fight off Exxon. I'm less certain that that's the case.
Speaker 1: In fact, I doubt it, but that's certainly one market
Speaker 1: story as the Oxy went after an a Darker rather
Speaker 1: than lose itself to Exxon. Um. You know. So essentially
Speaker 1: there's some tactical issues here as to why Oxy is
Speaker 1: doing this. But secondly, the chances are that the credibility
Speaker 1: of this bid is so damaging to the current Oxy
Speaker 1: management that the company now becomes in play itself, and
Speaker 1: therefore you Buyoxy on the basis and thinking over subsequent
Speaker 1: to this bid. As a former banker myself, I'm thinking
Speaker 1: about picking up the phone and making the cause and
Speaker 1: trying to shake the tree. What other deals do you
Speaker 1: think are possible in this space, you know, given we
Speaker 1: have a bitting war here for a pretty attractive asset. Well,
Speaker 1: it's known that we've had man change at Pioneer, which
Speaker 1: is a shift back to to the previous CEO, Scott Sheffield.
Speaker 1: You know, he's pretty much seen to be dressing the
Speaker 1: company up for sale. We know in general that the
Speaker 1: Permian needs to be consolidated by the biggest players. So
Speaker 1: you have a number of players in the Permian who
Speaker 1: are relatively smaller but have very good acreage. We're talking
Speaker 1: about the con shows perhaps less willing to sell themselves
Speaker 1: to diamondbacks, but then a whole raft is smaller companies,
Speaker 1: and people question why Oxy didn't just do a you know,
Speaker 1: for the less less risk arguably the same amount of
Speaker 1: money they could have brought three Permian players and being
Speaker 1: consistent with existing strategy. So but Permian is obviously the
Speaker 1: hot area. Paulk you one final question within this hydrocarbon
Speaker 1: roll up that you just described as maybe a what
Speaker 1: if for the reality that we see right now, how
Speaker 1: much of it is oil priced off the memory of
Speaker 1: a hundred and ten to twenty nine back to the
Speaker 1: glory of seventy four brand. How much is the price
Speaker 1: of oil link into the action were from executives. Actually,
Speaker 1: I don't think a whole lot, Tom, It's more the
Speaker 1: scale of the opportunity because this morning, for example, Oxy
Speaker 1: is talking all about the Permian and the attractions of
Speaker 1: the Permian as the primary driver of the deal. The
Speaker 1: other stuff is sort of, you know, an add on
Speaker 1: that they feel they can do well with. There's a
Speaker 1: synergy element here on both sides. So essentially, you know,
Speaker 1: Anadarka has a famously lavish headquarters, the famous double sized
Speaker 1: dancing stag statue outside. You know, there's there's definitely a
Speaker 1: cost savings that can be known across the board here
Speaker 1: from managements that have wildly overpaid themselves. I mean these
Speaker 1: managements they're hated by shareholders for the amount and they've
Speaker 1: paid themselves for not performing very well. So essentially it's
Speaker 1: an industry that needs to be consolidated and cleaned up.
Speaker 1: And the driver here is cost savings and you know,
Speaker 1: synergy improvements really very much late what we saw in
Speaker 1: the late nineties, Tom, when you had you know, struggling
Speaker 1: managements that had high costs and poor performance, and eventually
Speaker 1: the market takes them out, and that's essentially what's happening here. Paul,
Speaker 1: Just real quickly, what does Chevron do here? Did they
Speaker 1: come back? Yeah? I think that the deal has been
Speaker 1: so well received that I can see them atting a
Speaker 1: bit that the Oxy bit is not a knockout blow.
Speaker 1: I mean, there's clearly a fiduciary duty. It's also hostile,
Speaker 1: which is, you know, again, historically a very bad idea.
Speaker 1: I mean, the last hostile might be of this scale
Speaker 1: might be Texico spaghetti, which ended in the bankruptcy of Texica. UM,
Speaker 1: but it's very unusual to go hostile. That's what makes
Speaker 1: this bit of all the more remarkable. But you know,
Speaker 1: I think that they can take a look at Oxy's
Speaker 1: share price at Chevron see how the shareholders uh don't
Speaker 1: like this deal or KNOXI standpoint and then and then
Speaker 1: maybe bump a little bit and get the deal done.
Speaker 1: Welcome bit from Anadarka's point of view, either, I don't think, Paul,
Speaker 1: that was fantastic. Thanks so much for your context and
Speaker 1: color about this transaction. Is probably not the last we're
Speaker 1: going to hear about this deal. Paul Sanky from Miszoo's
Speaker 1: Securities We love having them on talking all things energy
Speaker 1: and we have got an old fashioned a deal at
Speaker 1: war going on here. This is Bloomberg. We'll digress right now.
Speaker 1: For earnings. It's an annual visit and very important always
Speaker 1: for Bloomberg surveillance. They have always supported Bloomberg surveillance right
Speaker 1: from the beginning. The c f A Institute. I'm a
Speaker 1: member of the clan, the Chartered Financial and Analysts program.
Speaker 1: It is three exams. It's a little hard, to say
Speaker 1: the least. And we are honored that Paul Smith UH,
Speaker 1: their president and chief executive officer, joins us UH today.
Speaker 1: Paul the cf A Institute, and I want to get
Speaker 1: right to the heart of so many younger people listening.
Speaker 1: The question I get as a c f A all
Speaker 1: the time is m B A or cf A. You
Speaker 1: get this ten times a day. Yeah, I do. And
Speaker 1: it's a great question. And and the answer, the owners
Speaker 1: answer is it depends depends where you are in your
Speaker 1: career and what you know you want to do. If
Speaker 1: you know you want to be an investment management b
Speaker 1: A c f A, if you're still at the point
Speaker 1: of your career where you're not that sure and you
Speaker 1: want to keep yourself general, and you want more of
Speaker 1: a broader based financial education or a business education allied
Speaker 1: to a financial education than NBA probably enjoys. The gentleman
Speaker 1: from Yeah, so I went to Fucal School of Business,
Speaker 1: that duke from a NBA, like most Like a lot
Speaker 1: of people in my generation, that was the route. Now
Speaker 1: I think there's I'm sensing that there is a lot
Speaker 1: more demand for or attraction. I guess on a part
Speaker 1: of young people for the CFA would have been the
Speaker 1: numbers in terms of people sitting for the test over
Speaker 1: the last five or ten years, well the last five years,
Speaker 1: it's gone from about two hundred twenty thousand people sitting
Speaker 1: the exams in any one twelve month period to about
Speaker 1: three hundred and sixty thousand today. Most of that is
Speaker 1: driven out of Asia, out of China and India, primarily
Speaker 1: Here in the US, we have had growth, but it's
Speaker 1: it's pretty anemic. It's sort of you know, alongside of
Speaker 1: the economy really wants to percent pranum, that sort of
Speaker 1: thing um. But I think, you know, I think for
Speaker 1: young people the payback is just quicker. Obviously, cf A
Speaker 1: costume maybe five grand if you fail one level let's
Speaker 1: say which most people do on average, an NBA is
Speaker 1: going to cost you multiples of that, and so um,
Speaker 1: there's that angle to it. I think the other thing
Speaker 1: which the NBA should sort of kind of think about,
Speaker 1: is you can fail the cf A. No one's ever
Speaker 1: met anyone who's failed the NBA. So from a perspective
Speaker 1: of of what does it do for you as an individual,
Speaker 1: I think it says. It says in a way a
Speaker 1: little bit more about you than perhaps the average NBA.
Speaker 1: I don't want to, you know, delay the program here,
Speaker 1: rip up the script, but can we talk about that
Speaker 1: question on level two? That was a tough one. I
Speaker 1: won't waste their time on the hilarious of the hilarity
Speaker 1: of that moment. Paul Smith, you are here for the
Speaker 1: research Challenge. Full disclosure. I have had the honor and
Speaker 1: I mean honor of judging the cf A Research Challenge.
Speaker 1: And what this comes down to, folks, and this is
Speaker 1: really important. Tom Keene has never written a twelve page
Speaker 1: report on Disney. Paul Sweeney as in the real world,
Speaker 1: and Paul Smith, this is people that really, really really
Speaker 1: want to be like Paul Sweeney, right absolutely that that's
Speaker 1: for them and it's just wonderful, Tom. I mean, as
Speaker 1: you know, firstly to be surrounded by all these kids
Speaker 1: who are nineteen twenty two years of age, who still
Speaker 1: believe in our world, in our profession, haven't become old
Speaker 1: and cynical, and that in itself is a real buzz
Speaker 1: for me to be with these kids. And and they
Speaker 1: are super smart. As you know as an ex judge, UM,
Speaker 1: really focused on on what they can bring to our
Speaker 1: profession and there our futures. And this is really a
Speaker 1: global story. I know you do this, so talk about
Speaker 1: the non US aspect. Yeah, well, it's it's nine schools
Speaker 1: from around the world, um, and I think about half
Speaker 1: of those are outside of the US. The final that
Speaker 1: takes place tomorrow will be two schools from America Moscow
Speaker 1: State University, UM, Lausanne University, Attano from Manila, and then
Speaker 1: as I say too, from the US who are fighting
Speaker 1: out the too from the America's to be precise, we're
Speaker 1: fighting out today in New York, so we'll know tonight
Speaker 1: who those will be. So it's a wonderful. It's a
Speaker 1: wonderful way of bringing the world together. The final is
Speaker 1: going to be going forward always here in New York City.
Speaker 1: So for the non American universities and for those those students,
Speaker 1: is wonderful opportunity for them to come here, to meet
Speaker 1: guys like you and to be part of the world's
Speaker 1: biggest financial system. We'll explain this is in level four,
Speaker 1: Level five cf A Community Adjusted It. But Die Well,
Speaker 1: I think you know, I was. I was listening. You
Speaker 1: had you had Joe Stieglitz on earlier on and he
Speaker 1: was talking, Yeah, but he was talking about he was
Speaker 1: talking about the fact that UH and and many others
Speaker 1: have done this over the last twelve months, how we
Speaker 1: need to reattach finance to a sense of purpose. And
Speaker 1: I think that's really what we try and do at
Speaker 1: the c f A. That's our mission is to say
Speaker 1: that there's a point to what we do, and it's
Speaker 1: to help grow the societies and the communities that we
Speaker 1: live in. It's not just to enrich ourselves. It's important here.
Speaker 1: And I mentioned community adjusted because which is past suiting
Speaker 1: from we work and all the fancy new unicorn and
Speaker 1: metrics as well. Paul. To be fair here, the cf
Speaker 1: A did a lot of naval gazing in two thousand,
Speaker 1: two thou two thousand ten about how the cf A
Speaker 1: Institute and others got us into this mess, Alice Stiglets,
Speaker 1: we learned then, how better are we protected now in
Speaker 1: terms of transparency of what everybody's doing in the world
Speaker 1: of being counting? Um, I think the accounting profession has
Speaker 1: um a lot of challenges going forward. I'm gonna I'm
Speaker 1: an account and the CFA so like a lot of
Speaker 1: charter holders where sympathy, yes, thank you, I'm a reformed
Speaker 1: or recovering accountant. And I think the accounting profession has
Speaker 1: a real challenge because so much of what the analyst
Speaker 1: looks at today is non gap financial measures. And um,
Speaker 1: there you are making the point earlier on about financial
Speaker 1: technology and Netflix and all these companies that now have
Speaker 1: balance sheets and value that is non substantive, and how
Speaker 1: do we measure that as a profession? I actually, for
Speaker 1: financial analysts, Tom, I sort of turn that into a
Speaker 1: positive that I think that means that the human judgment
Speaker 1: is back, that data is no longer king. What you
Speaker 1: need to do is to use your head. And but
Speaker 1: but I think the financial accounting profession needs to catch
Speaker 1: up a little bit with the way the world works. Well,
Speaker 1: Tom and I spent a lot of time looking at
Speaker 1: the asset management business, and we know that the just
Speaker 1: the head count in our set management is flattered down
Speaker 1: at least in the US UM. You know, they move
Speaker 1: towards a passive investing index and things like that. What
Speaker 1: I'm surprised to still see or hear about the rise
Speaker 1: in the c f A exam folks. Where they going right, Well, well,
Speaker 1: that's a great question. I mean, obviously the developing world
Speaker 1: into traditional jobs, so portfolio management, stock analysis. You know,
Speaker 1: in the emerging market world, alpha can still be found
Speaker 1: for all sorts of reasons that we don't have time
Speaker 1: to go into. But but that's for sure. So traditional
Speaker 1: jobs are growing in the developing world, in the in
Speaker 1: the developing world, in the in America and in Western Europe,
Speaker 1: people are moving much more into wealth management, private wealth
Speaker 1: advisory business. That's a boom area clearly that involves our
Speaker 1: members hugely, because if you're an individual, wealthy individual, you
Speaker 1: deserve someone who has a fiduciary standard and the technical
Speaker 1: and ethical ability to look after your money. So wealth
Speaker 1: advisory in the West is a big business. What time
Speaker 1: for one more question, which which I think is important.
Speaker 1: I was mentioning in a meeting yesterday in Folks, the
Speaker 1: cf A Institute I use every single day in some
Speaker 1: kind of conversation, and I was waxing on philosophical putting
Speaker 1: people to sleep about the value of the Financial Analyst
Speaker 1: Journal and the academics that you're doing out of Charlottesville.
Speaker 1: Tell us the state of that right now, right well?
Speaker 1: Very healthy. Um new editor was appointed, Heidi Rabishama, about
Speaker 1: eighteen months ago. She's trying to continue to improve the
Speaker 1: f A J and making it much more insightful to practitioners.
Speaker 1: I think there was a period maybe four or five
Speaker 1: years ago tom ware it had it got a little
Speaker 1: at Greek, was awful, lot of Greek in it, and
Speaker 1: people were, as you say, we're using it as a
Speaker 1: sleep aid rather than as a professional development tool. Hide
Speaker 1: this done a fabulous job bringing that back to the practitioner.
Speaker 1: Wonderful posts revisited. I gotta leave it there, postmid thank
Speaker 1: you so much. He's the chief executive off for the
Speaker 1: president of the cf A Institute. And a major shout
Speaker 1: out to William Gross and Abby Joseph Cohen who wrote
Speaker 1: there a few years ago. Thanks for listening to the
Speaker 1: Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud,
Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at
Speaker 1: Tom Keane before the podcast. You can always catch us worldwide.
Speaker 1: I'm Bloomberg Radio